GLOBAL EDUCOM PRIVATE LIMITED,AHMEDABAD vs. THE ITO, WARD-2(1)(1), AHMEDABAD

7. The Ld. CIT(A) has erred in law and on facts of the case in confirming initiation of penalty proceedings u/s. 271AAC of the Act.

at the time of or before the hearing of the appeal.”

4. The brief facts of the case are that for the impugned assessment year 2017-18 the assessee had made cash deposits of ₹39,33,000/- during the demonetization period (9/11/2016 to 30/12/2016) in it’s bank account held with Kotak Mahindra Bank. During the course of assessment proceedings, the assessee submitted that that these deposits were sourced out of regular business sales and withdrawals from bank accounts, and that all such transactions were duly recorded in the books of accounts and disclosed in the return of income. To verify the genuineness of these claims, the Assessing Officer examined past and current year sales figures, cash deposits, and the cash book maintaining by the assessee. The Assessing Officer noted that the cash deposits in assessment year 2017-18 had significantly increased (₹61.77 lakhs) compared to the previous assessment year (₹2.85 lakhs), and that there was a sharp increase during the demonetization period. Similarly, the cash sales during April to November 2016 were ₹14,09,800/-, whereas there were no cash sales for the comparable period in the previous year. Further, month- Global Educom Pvt. Ltd. vs. ITO Asst. Year –2017-18 - 3– wise analysis of the cash book showed an abnormal increase in cash on hand, rising from ₹1,48,000/- as on 8/11/2015 to ₹39,87,103/- as on 8/11/2016 - an increase of over 2500%. The Assessing Officer also noted that cash sales were disproportionately high compared to credit sales (which were nil), and that no corresponding direct or indirect expenses were incurred to justify the sudden increase in turnover. Further, the Assessing Officer noted that the gross profit ratio also showed high variation over the three assessment years - from 7.56% in A.Y. 2016-17 to just 0.13% in A.Y. 2017-18, raising further suspicion on the source of cash deposits made by the assessee. In view of the above discrepancies, the AO held that the books of account maintained by the assessee were unreliable and he proceeded to reject the books of account under section 145(3) of the Act and treated the cash deposits as unexplained income under section 68 of the Act, thereby adding the said amount to the total income of the assessee.

5. In appeal, CIT(Appeals) dismissed the appeal of the assessee due to complete non-compliance by the assessee. The CIT(Appeals) noted that during the appellate proceedings, despite being issued multiple notices under section 250 of the Act, the assessee failed to respond, nor did the assessee seek any adjournment and nor did the assessee file any written submissions or supporting evidence. The CIT(A) held that the burden of proof was on the assessee to rebut the AO's findings, which the assessee completely failed to do. Since the only material available was the assessment order and Form 35, and no grounds had been effectively argued by the assessee, the CIT(A) found no reason to interfere with the findings of the Assessing Officer. Accordingly,

6. The assessee is in appeal before us against the order passed by CIT(Appeals) dismissing the appeal of the assessee on account of non- appearance on part of the assessee. We have considered the facts on record and submissions made by the Counsel for the assessee. It is observed that during the relevant assessment year 2017-18, the assessee had deposited cash amounting to ₹39,33,000/- during the demonetization period in its bank account with Kotak Mahindra Bank. The assessee claimed that the source of such deposits was regular business cash sales and cash withdrawals from bank accounts, and that all such transactions were duly recorded in its books of accounts. However, on scrutiny, the Assessing Officer noted several discrepancies including a disproportionate increase in cash deposits and cash on hand as compared to the previous year, absence of credit sales, non- maintenance of day-to-day stock records, and significant fluctuation in gross profit ratios across various assessment years. Accordingly, the AO rejected the books of accounts under section 145(3) of the Act and treated the cash deposits of ₹39,33,000/- as unexplained cash credits under section 68 of the Act. In appeal, the CIT(Appeals) dismissed the assessee’s appeal on ex-parte basis due to complete non-compliance. Despite issuance of multiple notices under section 250 of the Act, the assessee failed to appear before CIT(Appeals) and also did not submit any explanation and nor did the assessee file any supporting documentary evidence. The CIT(A) proceeded to decide the matter based on the assessment order and Form 35 and since the assessee did not furnish any material to counter the adverse findings of the Global Educom Pvt. Ltd. vs. ITO Asst. Year –2017-18 - 5– AO, the CIT(A) confirmed the addition made by the Assessing Officer. However, before us, the ld. counsel for the assessee submitted that the assessee wishes to adduce evidence in support of the cash deposits and explain the same on merits. On going through the order of Ld. CIT(A), we note that a total of three notices were issued by CIT(Appeals) out of which two were falling during the Covid pandemic period. Therefore, evidently, the assessee did not get adequate opportunity to present its case on merits. Given that the appellate order was passed without affording a full and fair opportunity to the assessee, and considering the principles of natural justice, we are of the considered view that the matter should be restored to the file of the CIT(A) for fresh adjudication.

Sd/- Sd/- (DR. BRR KUMAR) (SIDDHARTHA NAUTIYAL) VICE PRESIDENT JUDICIAL MEMBER Ahmedabad; Dated 25/08/2025 TANMAY, Sr. PS TRUE COPY आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��थ� / The Respondent. 3. संबंिधत आयकर आयु� / Concerned CIT 4. आयकर आयु�(अपील) / The CIT(A)- 5. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER,