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Facts
The assessee, an individual with agricultural income, failed to file an income tax return for AY 2011-12. The Assessing Officer observed significant cash deposits in the assessee's bank accounts and, deeming the explanation inadequate, made an addition of Rs. 41,07,568/- as unexplained income.
Held
The Tribunal condoned the delay in filing the appeal. It held that both the Assessing Officer and the CIT(A) acted against the principles of natural justice by not allowing the assessee, an illiterate farmer, to present evidence and by adding entire deposits without considering withdrawals, and thus restored the matter to the CIT(A).
Key Issues
Whether the CIT(A) erred in rejecting additional evidence and dismissing the appeal without considering the assessee's status as an illiterate farmer and the principles of natural justice? Whether the addition was made without considering withdrawals and allowing proper opportunity to explain cash deposits?
Sections Cited
250, 148, 46A
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Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD
Before: SHRI SIDDHARTHA NAUTIYAL & SHRI MAKARAND V. MAHADEOKAR
(Assessment Year: 2011-12) Mr. Pankajsinh Sabubhai Vaghela, Vs. Income Tax Officer, 142, Nr. Derasar, Village: Godhavi, Ward-3(2)(4), TA: Sanand, Ahmedabad-382110 Ahmedabad [PAN No.ABMPV3310M] (Appellant) .. (Respondent) Appellant by : Shri Pradeep Tulsina, A.R. Respondent by: Shri Ravindra, Sr. DR Date of Hearing 05.05.2025 08.05.2025 Date of Pronouncement 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 17.05.2024 passed for A.Y. 2011-12.
At the outset, we observe that the appeal is time barred by 209 days. The assessee filed an Affidavit for condonation of delay dated 20.02.2025, wherein the assessee stated that the order of CIT(A) under Section 250 of the Act passed on 17.05.2024 which was received by the assessee on 08.02.2025. The assessee stated that the aforesaid order was served on his email address rather than serving it on his communication address. The assessee was not conversant with the emails and login of the Income Tax portal and therefore, was not aware about the order passed by CIT(A) which caused delay in filing of the appeal by 209 days. The Counsel for the assessee submitted that there was no mala fide intention in delaying the filing of the appeal and hence the same may be kindly condoned.
Mr. Pankajsinh Sabubhai Vaghela vs. ITO Asst.Year –2011-12 - 2– 3. Looking into the instant facts and the reasons cited by the assessee for the delay of 209 days in the filing of the present appeal, in the interest of justice, the delay in filing of the present appeal is hereby condoned.
The brief facts of the case are that the assessee is an individual, having mainly agricultural income and the assessee did not file return of income during the impugned year consideration. The Assessing Officer observed that during the year under consideration, the assessee had deposited a sum of Rs. 13,20,000/- in his bank account held with Syndicate Bank. Further, the Assessing Officer observed that assessee had deposited a sum of Rs. 3,00,000/- on 29.11.2010 in his bank account held with HDFC Bank, Sanand. The Assessing Officer observed that though the assessee had deposited cash in his bank account amounting to Rs. 16,20,000/- during the year under consideration, the assessee failed to file return of income for the impugned assessment year. Accordingly, notice was issued to the assessee under Section 148 of the Act asking the assessee to furnish return of income and also to submit copy of bank statements to submit the source of cash deposits appearing in the bank account held by the assessee. During the course of assessment proceedings, the assessee filed certain details, which as per the Assessing Officer were inadequate to explain the sources of cash deposits in the bank accounts held by the assessee. Accordingly, the Assessing Officer made an addition of Rs. 41,07,568/- in the hands of the assessee.
In appeal before Ld. CIT(A), the assessee submitted that during the course of assessment proceedings, the assessee had provided land ownership documents and had also given explanation regarding source of cash deposits. However, the Assessing Officer without calling for any further information, proceeded to add the entire deposits and credits Mr. Pankajsinh Sabubhai Vaghela vs. ITO Asst.Year –2011-12 - 3– appearing in the assessee’s bank account as his unexplained income. Before Ld. CIT(A), the assesse wanted to file additional evidence, however, Ld. CIT(A) refused to admit the same and dismissed the appeal of the assessee with the following observations:
“From the plain reading of the rule 46A(1), it is observed that none of the conditions is fulfilled in the case of appellant. During the appellate proceedings also the appellant has failed to demonstrate the source of cash so deposited during demonetisation period. The arguments that are being taken before me were not at any point of time taken before the Id AO inspite of several opportunities of being heard. He never informed the Id AO that relevant supporting documents are not readily available with him and he needs time to find them. It seems the story now presented before me is an after taught. Thus, considering the discussion made above, I am declined to accept any new evidence at this stage. Since the appellant failed to demonstrate with cogent evidence of the source of cash, therefore, I find no reason to alter the decision of the ld. AO and accordingly confirm the addition of Rs.41,07,568/-. The grounds of appeal are dismissed.”
6. The assessee is in appeal before us against the order passed by Ld. CIT(A). Before us, at the outset, the Counsel for the assessee submitted that the entire assessment proceedings as well as proceedings before Ld. CIT(A) have been conducted against the principles of natural justice. The Counsel for the assessee submitted that assssee is an agriculturist and in support of cash deposits, the assessee had submitted various details like details of agricultural land holding amounting to 16 Bighas, it was submitted before the Assessing Officer that assessee was carrying out farming activities on such land for past 20 years, the assessee filed 7/12 extracts in respect of it’s land holdings etc. However, the Assessing Officer, without asking the assessee for any further information / documents and without disputing the veracity of the documents submitted by the assessee during the course of assessment proceedings, added the entire amount of cash deposits as well as credits appearing in the bank account of the assessee, as his unexplained income.
Mr. Pankajsinh Sabubhai Vaghela vs. ITO Asst.Year –2011-12 - 4– 7. In appeal, the Ld. CIT(A) without going into the merits of the case simply rejected the appeal of the assessee in a summary manner without allowing / permitting the assessee to file necessary documentation / supporting evidence in support of it’s case. Before us, the Counsel for the assessee submitted that the assessee has substantial land holding as well as adequate documentary evidences to show / demonstrate that the cash deposits were sourced out of sale of agricultural produce by the assessee. The Counsel for the assessee drew our attention to page 42 to 44 of the Paper Book showing receipts of agricultural proceeds i.e. invoices on sample basis. Further, the Counsel for the assessee submitted that the asssse was having adequate proof of land holding, which has not been disputed by the Revenue Authorities. It was submitted before us that if given an opportunity of hearing, the assessee would be in a position to demonstrate the source of cash deposits in his bank accounts.
In response Ld. D.R. placed reliance on the observation made by the Assessing Officer and Ld. CIT(A) in their respective orders.
On going through the facts of the instant case, we observe that during the course of assessment proceedings, the Assessing Officer has added the entire amount of cash deposits and credits appearing in the bank account of the assessee, without giving the benefit / deduction with respect to withdrawals made by the assessee from the said bank accounts. Before us, the Counsel for the assessee submitted that substantial amount of withdrawals were also made from the same bank account for carrying out agricultural activities. However, both the Assessing Officer as well as Ld. CIT(A), added the entire amount of deposits and credits appearing in the bank accounts of the assessee, without even looking into the withdrawals which were made by the assessee from the same bank accounts. Further, Mr. Pankajsinh Sabubhai Vaghela vs. ITO Asst.Year –2011-12 - 5– in appeal, Ld. CIT(A) failed to appreciate that the assessee is an illiterate farmer and did not allow the assessee to present factual evidences in support of it’s claim on the technical ground that conditions of Rule 46A of the Income Tax Rules had been violated in the instant case. On going through the case records it is found that the assessee has all throughout remained complaint and cooperative, both during the assessment proceedings as well as proceedings before Ld. CIT(A). Accordingly, looking these facts, Ld. CIT(A) ought to have allowed the assesse to present it’s case on merits and file any additional evidence in support of it’s case. However, Ld. CIT(A) without taking into consideration the fact that the assessee is an illiterate farmer has proceeded to confirm the entire deposits / credits in the assessee’s bank account as his unexplained income, without even giving the corresponding credit for withdrawals made by the assessee from the same bank account and without giving the assessee an opportunity to file additional evidences in support of it’s case. We also note that during the course of assessment proceedings as well the assessee had filed certain details in support of the source of cash deposits. However, without pointing out any specific defect in the evidences furnished by the assessee during the assessment proceedings, the Assessing Officer proceeded to add the entire amount of credits / deposits in the hands of the assessee, as his undisclosed income. Accordingly, looking into the assessee’s said of facts, we are of the considered view that order passed by Ld. CIT(A) is opposed by the principles of natural justice, keeping into consideration the fact that the assessee is an agriculturist having little education, assessee has remained cooperative all throughout the assessment and appellate proceedings, entire amount of cash deposits and credits have been added as undisclosed income of the assessee without giving the credit of withdrawals made by the assessee from the same bank accounts and also denying the assessee an opportunity to present additional evidences in support of it’s case during the course of appellate proceedings.
Accordingly, in the interest of justice, the matter is restored to the file of Ld. CIT(A) so as to allow the assessee to furnish complete evidences in support of it’s case.
In the result, the appeal of the assessee is allowed for statistical purposes. This Order pronounced in Open Court on 08/05/2025
Sd/- Sd/- (MAKARAND V. MAHADEOKAR) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 08/05/2025 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,