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Facts
The assessee failed to file its income tax return for AY 2017-18. The Assessing Officer (AO) identified cash deposits of Rs. 16,00,000 and credit entries of Rs. 10,12,398 in the assessee's bank accounts and treated them as unexplained income. The assessment was completed at Rs. 26,12,400.
Held
The Tribunal condoned the delay in filing the appeal. While the AO was not entirely correct in treating all credits as income without considering debit transactions, the assessee also failed to provide explanations and fresh evidence was filed before the Tribunal. The matter was set aside to the AO for a fresh opportunity.
Key Issues
Whether the lower authorities correctly treated bank deposits as unexplained income without proper examination and opportunity to the assessee; whether delay in filing appeal should be condoned.
Sections Cited
142(1), 133(6), 69A, 144, 250
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Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD
Before: MS. SUCHITRA KAMBLE & SHRI NARENDRA PRASAD SINHA
This appeal is filed by the assessee against the order of the National Faceless Appeal Centre (NFAC) [hereinafter referred as ‘CIT(A)’] dated 29.10.2024 for the Assessment Year (A.Y.) 2017-18.
There was a delay of 20 days in filing of this appeal. The assessee has filed an affidavit explaining the reason of delay. It is explained that the assessee couldn’t timely access the order received on the email account, hence the delay. Considering the explanation of the assessee, the delay in filing the present appeal is condoned.
The brief facts of the case are that the assessee did not file its return of income for the A.Y. 2017-18. The case of the assessee was identified in Actionable Information Monitoring System (AIMS) for cash deposit of Rs.16,00,000/- during demonetization period. Therefore, notice u/s 142(1) of the Income Tax Act was issued to the assessee on 04.06.2019 to file the return. The assessee neither filed its return nor made any compliance during the assessment proceeding. In the course of assessment, the AO made enquiries u/s 133(6) of the Act from the bank and found that total cash deposit of Rs.16,00,000/- and credit entries by cheque/RTGS of Rs.10,12,398/- was appearing in the bank accounts of the assessee. In the absence of any explanation on the part of the assessee, the Assessing Officer treated the entire cash deposits as well as credit entries in the bank accounts as unexplained money of the assessee under section 69A of the Act. The assessment was completed under Section 144 of the Act on 15.12.2019 at total income of Rs.26,12,400/-.
Aggrieved with the order of the Assessing Officer, the assessee had filed an appeal before the First Appellate Authority which was decided vide the impugned order and appeal of the assessee was dismissed.
The assessee is now in second appeal before us. The following grounds have been taken in this appeal: - 1.1 The order passed by U/s.250 passed on 29.10.2024 for AY 2017-18 by NFAC, [CIT(A)], Delhi (for short CIT(A)" upholding the impugned assessment as well as addition aggregating to Rs.Rs.26,12,398/- in respect of cash deposits of Rs.16,00,000/-and credits of Rs.10,12,398/- in various bank accounts made by A.O as unexplained income is wholly illegal, unlawful and against the principles of natural justice,
2.1 The Id. CIT(A), has grievously erred in law and or on facts in not appreciating that there could not be compliance to the notices claimed to be issued because there appears from IT Portal that no such service of notices was made on email. Moreover, the appellant is running activities in a very small village: Boriavi wherein it is difficult to avail the services of a competent tax consultant and has to rely upon accountant so that the appellant was unaware about the same. Thus, there was a sufficient cause for failure to comply with the notices claimed to be issued by NFAC. There was gross violation of the principle of natural justice
3.1 The Id. CIT(A) has grievously erred in law and or on facts in upholding that the cash deposits of Rs.16,00,000/- and credits of Rs.10,12,398/- in various bank accounts made by A.O as unexplained income and thereby confirming addition of Rs.26,12,398/- u/s. 69A.
3.2 That the in the facts and circumstances of the Id. CIT(A), ought not to have upheld that the cash deposits of Rs.16,00,000/- and credits of Rs.10,12,398/- in various bank accounts made by A.O. as unexplained income and thereby confirming addition of Rs.26,12,398/- u/s.69A.
It is therefore, prayed that the additions of Rs.26,12,398/- upheld by the CIT(A) may kindly be deleted.”
Shri S N Divetia, Ld. AR of the assessee submitted that the Ld. CIT(A) has dismissed the appeal of the assessee without examining the merits of the addition. He explained that no compliance could be made by the assessee before the Ld. CIT(A) and for this reason the appeal was dismissed. He, therefore, requested that the assessee may be allowed another opportunity to explain the deposits in the bank account and the matter may be set aside to the file of the Assessing Officer.
Per contra, Ms. Bhavnasingh Gupta, Ld. SR-DR submitted that the assessee neither made compliance before the Assessing Officer nor before the ld. CIT(A). She, therefore, strongly supported the orders of the lower authorities.
We have considered the rival submissions. The undisputed fact is that the assessee neither complied before the Assessing Officer nor before the Ld. CIT(A) and the source of the credits appearing in the bank account was not explained. We, therefore, deem it proper to impose a cost of Rs.5,000/- on the assessee which should be paid to the Income Tax Department within 15 days of the receipt of this order. We are also of the opinion that the Assessing Officer was not correct in treating the entire credits in the bank account as income of the assessee without taking into account the debit transactions. The assessee has now filed fresh evidences before us in the form of copy of bank statement, cash book, bank book, audited accounts etc. These are fresh evidences and were not examined by the lower authorities at any stage. We, therefore, deem it proper to set aside the matter to the file of the Jurisdictional Assessing Officer with a direction to allow another opportunity to the assessee to explain the source of credits appearing in the bank account. The assessee will be free to place the fresh evidences filed before us or any other evidence, before the Assessing Officer, to explain the credits as appearing in the bank account. The assessee is also directed to appear before the Assessing Officer and not to seek any unnecessary adjournment.
In the result, appeal of the assessee is allowed for statistical purpose.
This Order pronounced on 08/05/2025
Sd/- Sd/- (SUCHITRA KAMBLE) (NARENDRA PRASAD SINHA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 08/05/2025 आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : अपीलाथ� / The Appellant 1. ��थ� / The Respondent. 2. 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,