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Facts
The assessee made substantial cash deposits of Rs. 11,98,000/- during the demonetization period, which the Assessing Officer added as unexplained money under Section 69A due to lack of satisfactory explanation and documentary evidence. The assessee failed to comply with notices during the assessment proceedings and subsequent appellate proceedings before the CIT(A), leading to the ex-parte confirmation of the addition.
Held
The Income Tax Appellate Tribunal (ITAT) noted that both the assessment and CIT(A) appeal were completed ex-parte. In the interest of justice and to afford the assessee an opportunity to present necessary evidence, the ITAT set aside the CIT(A)'s order and restored the matter to the Assessing Officer for fresh adjudication, allowing the appeal for statistical purposes.
Key Issues
1. Whether the addition under Section 69A for unexplained cash deposits was justified given the assessee's claim of business income and recorded transactions. 2. Whether the assessee should be granted a fresh opportunity to present evidence when prior proceedings were ex-parte due to non-compliance.
Sections Cited
143(1), 143(2), 142(1), 69A, 115BBE, 271AAC, 250
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD
Before: DR. BRR KUMAR & SHRI SIDDHARTHA NAUTIYAL
(Assessment Year: 2017-18) Kamlesh Vishandas Mirani, Vs. Income Tax Officer, 303/A, Dev-181, Sterling City, Ward-5(3)(2), Nr. Tulip International School, Ahmedabad Bopal, Ahmedabad-380015 [PAN No.AWEPM8083F] (Appellant) .. (Respondent) Appellant by : Shri Rajendra Singhal, AR Respondent by: Shri B. P. Makwana, Sr. DR 15.07.2025 Date of Hearing Date of Pronouncement 29.07.2025 O R D E R
PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER:
This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals), (in short “Ld. CIT(A)”), National Faceless Appeal Centre (in short “NFAC”), Delhi vide order dated 23.09.2024 passed for A.Y. 2017-18.
The assessee has raised the following grounds of appeal:
“1. The order passed by the ld. Commissioner of Income-tax, National Faceless Appeal Center (NFAC) Rajkot-1 is bad in law, invalid.
2. The ld. CIT(A) erred on facts as also in law in dismissing the appeal without giving adequate opportunity as well as in deciding the appeal without considering the facts as available before him.
The ld. CIT(A) erred on facts as also in law in upholding the addition made u/s. 69A of the Act of Rs. 11,98,000/-, though the relevant transactions are duly recorded in the books of account maintained for the year under consideration.
Kamlesh Vishandas Mirani vs. ITO Asst.Year –2017-18 - 2– 4. The ld. CIT(A) erred on facts as also in law in upholding aforesaid addition made u/s. 69A of the Act made on presumption and conjecture, ignoring the audited books of accounts.
The Appellant prays that the addition of Rs. 11,98,000/- made u/s. 69A of the Act may kindly be deleted.
6. The grounds of are without prejudice to one another.
7. Your Honour’s appellant craves leave to add, to amend, alter, vary and / or withdraw any one or more grounds of appeal
on/or before hearing of appeal.”
3. The brief facts of the case are that the assessee filed return of income for A.Y. 2017-18 declaring income of Rs. 8,41,360/- which was processed under section 143(1) of the Income Tax Act (Act). The case of the assessee was selected for complete scrutiny, however, the assessee failed to comply to notices under sections 143(2) and 142(1) of the Act. Upon scrutiny of case records, the Assessing Officer noted that the assessee had made substantial cash deposits of Rs. 11,98,000/- during the demonetization period in three bank accounts held by him, which he could not satisfactorily explain despite being given multiple opportunities of hearing. Since no credible source or documentary evidence was furnished by the assessee, the Assessing Officer proceeded to add the entire amount of Rs. 11,98,000/- as unexplained money under section 69A of the Act. The addition was taxed at 60% under section 115BBE of the Act, and penalty proceedings under section 271AAC were initiated.
4. In appeal, CIT(Appeals) noted that during the appellate proceedings, multiple notices under section 250 of the Act were issued to the assessee, but there was no compliance or request for adjournment sought by the assessee. This consistent non-appearance indicated that the assessee was not interested in pursuing the appeal. CIT(Appeals) by placing reliance on various judicial Kamlesh Vishandas Mirani vs. ITO Asst.Year –2017-18 - 3– precedents stressing on the necessity of effective pursuit of appeals, held that the assessee had failed to demonstrate any objection against the assessment order or intention to contest it meaningfully. Accordingly, the additions and disallowances made by the Assessing Officer were confirmed, and the appeal of the assessee was dismissed by CIT(Appeals) due to total non-compliance and absence of any submissions from the assessee.
5. The assessee is in appeal before us against the order passed by CIT(Appeals) dismissing the appeal of the assessee. Before us, the Counsel for the assessee submitted that the deposits made by the assessee during demonetization period were sourced out of business income of the assessee. It was submitted that the assessee is running a small business and that such deposits were sourced out of the business activities carried out by the assessee. It was submitted that the Assessing Officer erred in not appreciating that relevant transactions were duly recorded in the books of accounts, regularly maintained by the assessee.
In response, the Ld. DR placed reliance on the observations made by the Assessing Officer and Ld. CIT(Appeals) in their respective orders.
We have heard the rival contentions and perused the material on record. During the course of hearing, the learned Counsel for the assessee submitted that the cash deposits in question were made out of business income and that the assessee was engaged in small-scale trading activities. It was further submitted that the relevant transactions were duly recorded in the books of accounts regularly maintained by the assessee and that the Assessing Officer did not properly consider this aspect while making the addition. The Kamlesh Vishandas Mirani vs. ITO Asst.Year –2017-18 - 4– assessee sought an opportunity to furnish necessary documentary evidence and books of accounts to substantiate the claim. Having considered the rival contentions and the material available on record, we are of the view that the matter requires reconsideration. The assessment in this case was completed ex-parte and the appeal before the CIT(Appeals) was also dismissed due to non-compliance on the part of the assessee. In the interest of justice, and to afford the assessee an opportunity to present the necessary evidence in support of the claim, we are of the considered view that the matter may be restored to the file of the Assessing Officer for de novo consideration. Accordingly, the impugned order of the CIT(Appeals) is set aside, and the matter is restored to the file of Assessing Officer for fresh adjudication after giving due opportunity to the assessee to present his case and furnish the required documentary evidence.
In the result, the appeal of the assessee is allowed for statistical purposes. This Order pronounced in Open Court on 29/07/2025
Sd/- Sd/- (DR. BRR KUMAR) (SIDDHARTHA NAUTIYAL) VICE PRESIDENT JUDICIAL MEMBER Ahmedabad; Dated 29/07/2025 TANMAY, Sr. PS TRUE COPY आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��थ� / The Respondent. संबंिधत आयकर आयु� / Concerned CIT 3. 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,