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Facts
The assessee, a housewife, failed to file her income tax return for AY 2017-18. Despite notices and opportunities, she did not comply, leading the Assessing Officer to treat cash deposits and credit entries in her bank accounts as unexplained income under Section 69A and complete the assessment under Section 144.
Held
The Tribunal condoned the delay in filing the appeal, noting that the assessee was dependent on her accountant. While the Assessing Officer was not entirely correct in treating all deposits as income, the matter was set aside to the Assessing Officer for a fresh assessment, allowing the assessee an opportunity to explain the transactions. A cost of Rs. 10,000 was imposed on the assessee.
Key Issues
Whether the delay in filing the appeal should be condoned, and if the entire bank deposits should be treated as unexplained income without considering debit transactions.
Sections Cited
142(1), 133(6), 69A, 144, 115BBE, 234A, 234B, 234C, 234D, 271AAC(1)
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Income Tax Appellate Tribunal, “B” BENCH, AHMEDABAD
Before: SHRI SANJAY GARG & SHRI NARENDRA PRASAD SINHA
This appeal is filed by the assessee against the order of the Commissioner of Income Tax (Exemption), Ahmedabad, (in short ‘the CIT(E)’), dated 14.02.2024 for the Assessment Year (A.Y.) 2017-18.
There was a delay of 267 days in filing of this appeal. The assessee has filed an affidavit explaining the reason of delay. It has been submitted that the assessee being housewife her trading business activity was looked after by her husband. The notices were received on her email id hemaarora@gmail.com which was not operated by her. That she was dependent on her accountant for compliance to income tax matters and due to lapse of the accountant there was no compliance made before the ld. CIT(A). For this reason, there was delay in filing the present appeal as well. She has submitted that the delay in the filing of the present appeal was not intentional but due to lack of proper and prompt action on the part of the accountant and that there was no mala- fide intention on the part of the assessee. The ld. SR-DR, on the other hand, objected to the condonation of delay on the ground that the assessee has not neither complied before the lower authorities nor properly explained the delay.
2.1 We have considered the explanation of the assessee. It is found that the assessee being a housewife was dependent on her husband and the accountant for timely action in the matter of income tax proceedings. As explained, the delay was due to fault of the accountant who didn’t take timely action in the matter. Though the assessee should have remained vigilant for the timely action on her part, the fact remains that the AO had treated the entire credits in the bank account as income of the assessee. If the delay is not condoned and the matter is not examined on merits, it will cause injustice to the assessee, as only the profit element arising out of the bank transactions was required to be taxed. It has been held by Hon’ble Gujarat High Court in the case of Vareli Textile Industries (154 Taxman 33) (Gujarat) that while rejecting application for condonation of delay in filing appeal/cross-objections, meritorious case should not be thrown out on ground of limitation. Considering the fact that all the credit entries in the bank account was treated as income of the assessee and the matter was not examined on merits, the delay in filing the present appeal is condoned.
The brief facts of the case are that the assessee did not file her 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.20,28,646/- during demonetization period. Therefore, notice u/s 142(1) of the Income Tax Act was issued to the assessee on 09.02.2018 to file her return. The assessee neither filed her return nor made any compliance during assessment proceeding. In the course of assessment, the AO made enquiries u/s 133(6) of the Act from various banks and found that total cash deposit of Rs.76,88,646/- and credit entries by cheque/RTGS of Rs.2,10,49,015/- was appearing in the three 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.2,87,37,661/-.
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. That the notice issued under section 142(1) of the Act and all the subsequent proceeding including transfer of case without passing order under section 127 of the Act are bad in law and therefore the Order passed by Assessing Officer is required to be quashed and the additions made therein are to be deleted in full.
2. That the learned National Faceless Appeal Centre, Delhi has erred in law and facts by confirming the addition of Rs.2,87,37,661/- (Cash Deposited of Rs.76,88,646/-+Other Credit Amount of Rs.2,10,49,015/- into the bank accounts), under section 69A of the Act, and therefore the learned AO should be directed to delete the said addition white computing the total income.
3. That the Ld. NFAC has erred in law and on facts of the case in confirming application of provision of Section 115BBE of the Act.
4. That the Ld. NFAC has erred in law and on facts of the case in confirming action of the Ld. AO in levying interest u/s.234A/B/C/D of the Act.
5. The Ld. NFAC has erred in law and on facts of the case in confirming action of the Ld. AO in initiating penalty proceedings u/s.271AAC(1) of the Act.
6. That your appellant craves a leave to add, alter or amend any grounds at the time of hearing.”
Shri Prakash D Shah, 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. The ld. AR didn’t press the ground no.-1 as taken by the assessee.
Per contra, Shri Rohit Asudani, Ld. SR-DR submitted that the assessee neither made compliance before the Assessing Officer nor before the ld. CIT(A). He further submitted that the ld. CIT(A) had allowed as many as seven opportunities to the assesses but no compliance was made by the assessee on any of these occasions. The ld. CIT-DR, therefore, strongly supported the orders of the lower authorities.
We have considered the rival submissions. The ground no-1 as taken by the assessee was not pressed, hence the same is dismissed.
8.1 As regarding ground no-2, 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.10,000/- on the assessee which should be paid to the Prime Minister National Relief Fund 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 cash deposits and credit entries in the bank account as income of the assessee without taking into account the debit transactions. The ld. AR of the assessee has submitted that a detailed explanation in respect of cash deposits and credit transactions have been prepared which will be filed in the set aside proceeding. 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 cash deposits and the credit entries appearing in the bank accounts. The assessee will be free to bring on record the evidences before the Assessing Officer, to explain the cash & credit entries as appearing in the bank accounts. The assessee is also directed to appear before the Assessing Officer and not to seek any unnecessary adjournment. The ground is allowed for statistical purpose.
8.2 All other grounds taken by the assessee are only consequential, hence allowed for statistical purpose.
In the result, the appeal of the assessee is partly allowed for statistical purpose.
This Order pronounced on 07/05/2025
Sd/- Sd/- (SANJAY GARG) (NARENDRA PRASAD SINHA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 07/05/2025 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,