DUSHYANT SHANTILAL PATEL,AHMEDABAD vs. THE DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1(1), AHMEDABAD

This appeal by the assessee is directed against the order dated 18.12.2023 passed by the learned Commissioner of Income Tax (Appeals)-11, Ahmedabad [hereinafter referred to as “CIT(A)”], confirming the assessment order passed by the Assessing Officer (AO) u/s. 143(3) of the Income Tax Act, 1961 [hereinafter referred to as “the Act”] on 17.12.2019 for the A.Y. 2017–18.

The AO also examined the impounded documents and books of accounts obtained during the survey. It was noticed that while the total sales as per the books were shown at Rs.5,53,053/-, the actual monthly sales recorded in the seized material aggregated to Rs.19,69,592/- for a period of 9 months. The difference of 3 Rs.14,16,539/- was treated as suppression of sales. The assessee did not offer any reconciliation or evidence to explain the discrepancy. Consequently, the AO added Rs.14,16,539/- to the total income as undisclosed turnover. Further, the AO observed that the assessee had deposited cash amounting to Rs.8,34,500/- in his bank account during the demonetization period between 09.11.2016 to 30.12.2016. The assessee was called upon to explain the source of these cash deposits and to substantiate it with documentary evidence. Despite repeated notices and show cause opportunities, the assessee did not furnish any explanation. In view of the absence of any credible source, the AO treated the said cash deposit as unexplained money under section 69A of the Act.

The AO initiated penalty proceedings under section 270A for under-reporting and misreporting of income and under section 271AAC on the additions made under sections 68, 69, and 69A. Interest under sections 234A, 234B, 234C and 234D was also levied. Accordingly, the assessed income was computed at Rs.1,31,23,819/- which was rounded off to Rs.1,31,23,820/-. The assessment was completed ex parte as the assessee failed to furnish complete details or comply with the notices.

The assessee preferred appeal before CIT(A), who dismissed the appeal of the assessee ex parte after issuing multiple notices (as tabulated in paragraph 3 of the appellate order). The CIT(A) noted that despite lapse of more than 3 years and 11 months since filing of appeal, the assessee had not made any effective representation. Relying on the judgments in CIT v. B.N. Bhattacharjee [(1979) 10 CTR 354 (SC)], Estate of Late Tukojirao Holkar v. CWT [(1979) 223 ITR 480 (MP)] and Jamunadas v. CST [1993 38 MPLJ 462], the CIT(A) dismissed the appeal for non-prosecution. Without prejudice, the learned CIT(A) also upheld the additions on merits by relying on judicial precedents such as CIT v. Durga Prasad More [(1971) 82 ITR 540 (SC)], Sumati Dayal v. CIT [(1995) 80 Taxman 89/214 ITR 801 (SC)], and CIT v. P. Mohanakala [(2007) 291 ITR 278 (SC)].

Aggrieved by the order of CIT(A), the assessee raised revised and additional grounds of appeal as detailed below:

During the course of hearing before us, the learned AR submitted that the impugned additions have been sustained ex parte without appreciating the factual difficulties faced by the assessee. In 5 support of such contentions, two affidavits dated 13.03.2025 and 03.04.2025 were placed on record, wherein the assessee detailed his medical ailments including cardiac complications, spinal injuries from a car accident in 2017, partial paralysis in 2019, and COVID- related hospitalization in 2021. It was further submitted that the failure to file submissions before the lower authorities was due to ineffective representation by erstwhile authorised representatives and loss of documents during business closure. The AR submitted that the assessee has now collected relevant records and filed a paper book listing documents such as bank statements, medical records, GST cancellation certificate, adjournment letters, and correspondence with the AO and CIT(A). However, no fresh documentary evidence was actually filed before us. The AR prayed for one last opportunity to submit all materials before the AO and requested restoration of the matter to the file of AO for de novo adjudication on merits.

The learned Departmental Representative (DR) did not raise any objection to the request for remand.

We have considered the rival submissions and perused the materials available on record. We find that the appeal has been dismissed by the CIT(A) primarily for want of prosecution. Though the assessee claims to have faced genuine medical and procedural hardships, it is admitted that even before us, no additional documentary evidence has been produced to substantiate the grounds of appeal. However, in the interest of justice, we deem it fit to grant one final opportunity to the assessee to present his case before the Assessing Officer.

The impugned assessment order dated 17.12.2019 and appellate order dated 18.12.2023 are hereby set aside. The entire matter is restored to the file of the Assessing Officer with a direction to examine the issues afresh after giving due opportunity to the assessee to file necessary documentary evidence in support of his claims. The assessee shall furnish the evidence promptly and cooperate in the proceedings. The restoration is subject to the payment of cost of Rs.10,000/- by the assessee before commencement of the reassessment proceedings.

In the result, the appeal of the assessee is allowed for statistical purposes.