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Facts
The assessee filed an appeal after a delay of 410 days, citing a lack of computer literacy and not receiving the CIT(A) order. The case involved scrutiny of large cash deposits during demonetisation, leading to an ex-parte assessment and additions. The CIT(A) partly allowed the assessee's appeal.
Held
The Tribunal condoned the delay in filing the appeal, recognizing that the matter was not examined on merits and denying an opportunity for hearing would cause injustice. The Tribunal set aside the matter to the CIT(A) to allow the assessee another opportunity to present facts and evidence regarding the additions made, particularly concerning cash deposits during demonetisation.
Key Issues
Whether the delay in filing the appeal should be condoned and whether the assessee was given a proper opportunity of hearing before the lower authorities, especially regarding the additions made on account of cash deposits during demonetisation.
Sections Cited
144, 115BBE, 40A(2)(b), 68, 41(1), 69A, 250
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Income Tax Appellate Tribunal, AHMEDABAD “A BENCH, AHMEDABAD
Before: MS. SUCHITRA KAMBLE & SHRI NARENDRA PRASAD SINHA
O R D E R
PER NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER:
This appeal is filed by the assessee against the order of National Faceless Appeal Centre (NFAC) dated 20.09.2023 for the Assessment Year (A.Y.) 2017-18.
There was a delay of 410 days in filing of this appeal. The assessee has filed a condonation application stating that he is an under-graduate and did not have computer literacy to check the details online. It is submitted that the order of Ld. CIT(A) was not received by him either physically or through e-mail. It was his Tax Consultant who informed in the month of October 2024 about the order passed by the NFAC and Assessment Year: 2017-18 Prakash Dhudalal Sanghvi, HUF vs. ITO Page 2 of 5 thereafter the present appeal was filed. It was submitted that the delay in filing of the appeal was inadvertent.
We have considered the explanation of the assessee as well as the facts of the case. Though we are not fully convinced with the explanation for delay in filing the appeal, it is found that the matter was not examined on merits at the lower stage. Since the denial of opportunity of hearing will cause injustice to the assessee, we deem it proper to condone the delay in filing of the appeal by the assessee.
The brief facts of the case are that the return of income for the A.Y. 2017-18 was filed by the assessee on 30.10.2017 declaring total income of Rs.6,17,390/-. The case was selected for scrutiny to examine large cash deposits during demonetisation period and abnormal increase in sales. In the course of assessment, no compliance was made by the assessee in spite of four opportunities provided by the Assessing Officer. Therefore, the assessment was completed ex-parte under Section 144 of the Act on 10.12.2019 at a total income of Rs.1,00,60,900/-. The Assessing Officer had made addition of Rs.29,90,500/- on account of unexplained cash deposit during the demonetisation period and certain other additions were also made.
5. Aggrieved with the order of the Assessing Officer, the assessee had filed an appeal before the CIT(A) which was decided vide the impugned order and the appeal of the assessee was partly allowed. The assessee is now in second appeal before us.
The following grounds have been taken by the assessee in this appeal:
1. The Learned CIT (Appeals) has passed order without giving proper opportunity of being heard.
Assessment Year: 2017-18 Prakash Dhudalal Sanghvi, HUF vs. ITO Page 3 of 5 2. The CIT (Appeals) has grievously erred in law and or on facts by not considering fully and properly the fact that the assessee is selling CNG by operating CNG pump and permitted to sell CNG by receiving old SBN during demonetization period. Hence, Addition of Rs.29,90,500 is on account of SBN deposited in bank to total income and taxed u/s. 115BBE is vague, bad in law, without any base and verification of books and required to be deleted.
3. The CIT (Appeals) has grievously erred in law and or on facts by not considering fully and properly the fact that the disallowance of Rs.1,74,288/- which is 20 percent of expenses of Rs.8,71,440/- is vague, out of context and bad in law as no opportunity of being heard is given to the assessee.
4. The CIT (Appeals) has grievously erred in law and or on facts by not considering fully and properly the fact that the disallowance of Rs.2,91,636/- which is 20 percent of salary expenses of Rs.14,55,818/- covered u/s. 40A(2)(b) is vague, out of context and bad in law as no opportunity of being heard is given to the assessee.
The Ld. CIT (Appeal) is not justifying in passing the order u/s.250 of the Act, treating unsecured loans of Rs.11,94,268/- as undisclosed income and added back to total income u/s.68 without giving an opportunity to establish loaners identity, creditworthiness and genuineness is vague, out of context and bad in law.
6. The Ld. CIT (Appeal) is grossly wrong in disallowing and adding back interest of payment 1,49,208/- u/s. 40A(2)(b) reasoning interest bearing unsecured leaners are also added as undisclosed income.
The Ld. CIT (Appeal) is grossly wrong in adding back creditors of Rs.9,62,094/- by treating it profit and gain from business and profession within the meaning of provision laid down u/s.41(1) of the IT. Act and treating it unexplained cash credit u/s.68 of the I.T. Act.
The Ld. CIT (Appeal) is grossly wrong in treating loans and advances of Rs.34,38,955/- as undisclosed investment u/s.69A and unexplained investment and adding back to the total income as no opportunity of being heard is provided.
7. Shri Biren Shah, Ld. AR or the assessee explained that the assessee is operating CNG Pump and was permitted to sell CNG by receiving old SBN during demonetisation period. Therefore, the addition of Rs.29,90,500/- on account of old denomination notes deposited in the Bank account during the demonetisation period was not correct. The Ld. AR submitted that no compliance could be made by the assessee before Assessment Year: 2017-18 Prakash Dhudalal Sanghvi, HUF vs. ITO Page 4 of 5 the Ld. CIT(A) and, therefore, he had decided the appeal ex-parte. He, therefore, requested that the assessee may be allowed another opportunity to present all the facts before the Department and the matter may be set aside to the file of the Assessing Officer.
8. Per contra, Shri B.P. Srivastava, Ld. DR submitted that the assessee did not make any compliance either before the Assessing Officer or before the Ld. CIT(A) in spite of repeated opportunities provided by them. He, therefore, strongly supported the order of the Lower Authorities.
We have considered the rival submissions. No explanation has been given by the assessee for non-compliance before the Assessing Officer. In Form No.35. the e-mail address mentioned was “aangisanghvi999@gmail.com” and an option was given that notices & communications may be sent on this e-mail address. In spite of this categorical admission that the assessee was willing to receive communications on his e-mail address, no compliance was made by the assessee to any of the notices sent by the Ld. CIT(A). We, therefore, deem it proper to impose a cost of Rs.15,000/- on the assessee which should be paid to the Income Tax Department within 15 days of receipt of this order. At the same time, the fact that the assessee was operating CNG Pump and was eligible to receive old SBN notes during the demonetisation period was not considered by the lower authorities. In view of these facts, the addition of Rs.29,90,500/- in respect of cash deposit made during the demonetisation period, requires to be re- examined. We, therefore, deem it proper to set aside the matter to the file of Ld. CIT(A) with direction to allow one more opportunity of hearing to the assessee to explain the various additions made by the Assessing Officer Assessment Year: 2017-18 Prakash Dhudalal Sanghvi, HUF vs. ITO Page 5 of 5 and also to bring on record additional evidence, if any, in support thereof. The Ld. CIT(A) will be free to call for a remand report from the Assessing Officer on the additional evidences brought on record before him and, thereafter, re-decide the matter in accordance with the provisions of law.
In the result, appeal for the assessee is allowed for statistical purpose.
Order pronounced in the open Court on this 30th April, 2025.