NARAVATSINH JAGATSINH CHAUHAN,MEHSANA vs. I.T.O. WARD 1, PATAN

The AO made an addition of Rs.14,01,00,425/- under section 68 on account of unexplained cash credits in the bank account maintained with Sri Renuka Mata Multi State Co-op Credit Society Ltd. Despite multiple notices, no compliance was made by the assessee. for A.Y. 2016–17, similar proceedings were initiated on the basis of information received post-search in the case of the said Co-op Credit Society. A sum of Rs.2,32,40,022/- was found credited in the assessee’s account. Since the assessee did not file a return or respond to notices under sections 148 and 142(1), the assessment was completed under section 147 r.w.s. 144 by making a full addition of the said amount under section 68 of the Act. for A.Y. 2016–17, penalty of Rs.80,42,907/- was levied under section 271(1)(c) on the above addition, alleging concealment and furnishing of inaccurate particulars of income. The penalty was confirmed by the CIT(A), NFAC without considering any submission on merits.

The assessee filed three separate appeals before the learned CIT(A), challenging the reassessment orders passed under section 147 r.w.s. 144 for A.Ys. 2015–16 and 2016–17, and the penalty order passed under section 271(1)(c) for A.Y. 2016–17. In all three matters, the appeals were dismissed ex parte by the learned CIT(A) on the ground that despite issuance of statutory notices under section 250 on multiple occasions, the assessee failed to file any submission on the ITBA portal. In each appeal, the assessee had filed an application for condonation of delay explaining that the delay occurred as the matter was initially entrusted to a tax practitioner who failed to file the appeals in time, and the default came to light only upon receipt of demand notices, following which a Chartered Accountant was appointed. The learned CIT(A) condoned the delay in all three cases but proceeded to confirm the respective additions and penalty on merits owing to the complete absence of representation and supporting material. The assessee's principal contention across both quantum years was that he was engaged in Angadia business, where cash belonged to third parties and his role was limited to handling such transfers against nominal commission. However, in the absence of any evidence or explanation placed on record, these contentions were not examined by the appellate authority. The distinct factual details of the appellate orders are tabulated below:

Aggrieved by the orders of CIT(A), the assessee is in appeal before us raising following grounds:

The appellant craves to reserve his right to add, alter, amend, or delete any ground of appeal

The Departmental Representative raised no objection in restoring back all three appeal to the file of Assessing Officer.

We have carefully considered the rival contentions, the materials placed on record, the affidavits filed by the assessee in support of condonation of delay, and the ex parte orders passed by the learned CIT(A) in all three appeals. It is evident from the record that the , 1254 and 1255/Ahd/2024 7 assessment orders for both A.Ys. 2015–16 and 2016–17 were passed under section 147 r.w.s. 144 of the Act, in absence of any compliance by the assessee, and were based on alleged unexplained cash deposits in the bank account of Sri Renuka Mata Multi-State Co-operative Credit Society Ltd. The assessee’s case, as submitted by way of an affidavit, is that he was a small commission agent in the Angadia business, that the bank accounts were operated by others, and that he had no ownership over the funds deposited therein. However, the said explanation was not supported by documentary evidence at the assessment stage or before the CIT(A), resulting in confirmation of additions and levy of penalty under section 271(1)(c).

Before us, the learned Authorised Representative has submitted that the assessee is an uneducated individual with limited financial means, who acted under the influence and guidance of an accountant who misled him regarding timely filing of appeals. Affidavits have been placed on record explaining the reasons for the delay in filing the Tribunal appeals, which we have already condoned by separate order. It is also submitted that the assessee was not furnished with the copies of the statement or material relied upon by the Assessing Officer while making the additions, despite repeated efforts to obtain the same. The learned AR therefore urged that the matter be remanded to the file of the Assessing Officer to enable the assessee to submit his explanation and supporting material, and to ensure fair opportunity of hearing in accordance with principles of natural justice.

We find merit in the contentions of the assessee. The fact that the assessments were framed ex parte, and that the CIT(A) also disposed of the appeals in a summary manner without any discussion on merits, clearly points to a denial of proper opportunity. While the assessee failed to discharge his obligations during the earlier proceedings, the explanation now furnished in the form of sworn affidavits, coupled with , 1254 and 1255/Ahd/2024 8 his limited educational background and lack of legal knowledge, warrants one final opportunity to present his case.

We also note that the assessee has placed on record sworn affidavits explaining the background of the cash deposits, claiming that the bank account in question was opened at the behest of the branch manager of the credit society and was operated by third parties, with the assessee receiving only a nominal commission per transaction. The assessee has further averred that he was unaware of the nature and scale of transactions undertaken through the said account. These claims, which go to the root of the matter and form the basis of the explanation against the additions under section 68 and the levy of penalty under section 271(1)(c), have not been verified at any stage of the proceedings. In our considered view, the facts as stated in the affidavits require proper examination by the Assessing Officer. It is only after such factual verification, including inquiry into the ownership and control of the deposits and the alleged role of the assessee in the banking transactions, that a just conclusion can be drawn in accordance with law.

At the same time, we cannot ignore the fact that the assessee remained grossly non-compliant throughout the original and appellate proceedings, both before the AO and the CIT(A), resulting in wastage of judicial time and resources. Therefore, in order to deter such conduct and to inculcate a sense of responsibility in the litigating public, we deem it appropriate to impose a cost of Rs.10,000/- per appeal, to be paid by the assessee to the credit of the Income Tax Department.

Accordingly, the orders passed by the CIT(A) as well as the Assessing Officer are set aside, and the matters are restored to the file of the Assessing Officer with a direction to adjudicate the issues afresh after furnishing the assessee a copy of the material relied upon and affording , 1254 and 1255/Ahd/2024 9 adequate opportunity of being heard. A cost of Rs.10,000/- per appeal is levied on the assessee, which shall be deposited to the credit of the Income Tax Department within 30 days from the receipt of this order. Proof of such deposit shall be furnished to the Assessing Officer during the remand proceedings.

In the result, all three appeals filed by the assessee are allowed for statistical purposes.