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Facts
The assessee, Ajay Kumar And Sons HUF, challenged an addition of Rs. 40,66,000/- made by the AO for cash deposits in an Axis Bank account during demonetization, which the assessee claimed belonged to a partnership firm 'M/s Sauhagan Gem Store'. The assessment was completed ex-parte by the AO under Section 144 due to non-compliance, and the CIT(A) dismissed the appeal allegedly without providing a reasonable opportunity of being heard.
Held
The ITAT condoned the 118-day delay in filing the appeal, finding reasonable cause. It was held that the CIT(A) failed to provide adequate opportunity to the assessee after the communication window was enabled. Therefore, the matter was restored to the Assessing Officer for fresh adjudication, directing the AO to provide reasonable time to the assessee and for the assessee to cooperate.
Key Issues
Condonation of delay in filing appeal; Lack of reasonable opportunity of being heard by CIT(A); Validity of addition made under Section 144 due to non-compliance related to cash deposits during demonetization.
Sections Cited
144, 143(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, CHANDIGARH BENCH “B”, CHANDIGARH
Before: SHRI. RAJPAL YADAV, VP & SHRI. KRINWANT SAHAY, AM
िनधा�रती की ओर से/Assessee by : Shri Sudhir Sehgal,Advocate राज� की ओर से/ Revenue by : Shri Vivek Vardhan, Addl. CIT, Sr. DR सुनवाई की तारीख/Date of Hearing : 02/07/2025 उदघोषणा की तारीख/Date of Pronouncement : 29/07/2025 आदेश/Order PER KRINWANT SAHAY, AM:
This is an appeal filed by the assessee against the order of CIT(A), dated 18.04.2024 for A.Y. 2017-18. Revised grounds of appeal were filed by the assessee, which are as under:-
1. That the Ld. CIT(A) has erred in dismissing the appeal of the assessee without giving reasonable opportunityof being heard.
2. Notwithstanding the above said ground of appeal
, the assessee has valid explanation regarding the deposit of cash of Rs.40,66,000/- in the bank account, which is a subject matter of addition in the case of assessee,
3. That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off.”
At the very outset, the Ld. Counsel of the assessee submitted that the appeal is late by 118 days as under:- Date of CIT (Appeals) Order : 18.07.2024 The appeal was due to be filed by : 16.09.2024 The appeal was filed on : 26.01.2025 The appeal is late by : 118 days
The application for condonation of delay was filed alongwith affidavit of the assessee concerned, wherein, it was stated that the appeal was filed before the Ld. CIT(A) on 23.01.2020 and the Ist notice was received from the Ld. CIT(A) on 11.03.2020, which could not be replied due to COVID 19 and subsequently, the communication window was enabled on 04.12.2022, but no further notice was received by the assessee. The order was passed on 18.07.2024 but the assessee did not receive any email on the registered ‘email or SMC” and it was only in January 2025 that the assessee received a call regarding the deposit of outstanding demand from the Income Tax department only, thereafter, the assessee engaged another counsel and filed the appeal on 26.01.2025. It was, thus, contended that the delay was on account of reasonable cause and it pleaded that the same may be condoned. The Ld. DR argued that the issue of delay be decided on merits. After going through the arguments and affidavit, the delay in filing the appeal is condoned.
On merits, it was argued by the Ld. Counsel that the return declaring Nil Income was filed and the case was selected in CASS for verification of cash deposits during demonetization period amounting to Rs. 40,66,000/- with Axis Bank in the name of ‘Gem Store’. Later on, the name in the Bank account of the partnership concern was changed to new name as“M/s Sauhagan Gem Store”, it was argued that the bank account with ‘Axis Bank’ did not belong to “Ajay Kumar & Sons HUF”, but belonged to firm “M/s Sauhagan Gem Store”, and the said bank account had been reflected in the audited balance sheet of the firm, but the said Bank account could not be updated. It was also argued that the return of partnership firm had been filed before the AO and certain information was further called for by the Assessing Officer but the same could not be filed due to lack of communication and, therefore, the Ld. Assessing Officer made an addition of Rs. 40,66,000/- and this fact of non- compliance has been mentioned in ‘para 6’ of the order of the Ld. Assessing Officer. The assessment have been completed u/s 144 of the Income Tax Act as per para 6, page 6 of the order of the Assessing Officer.
It was further argued that, though, the first notice was received from Ld. CIT(A) on 11.03.2020, but it could not be responded due to COVID. The communication window was enabled on 04.11.2022 and without any further hearing notice, the Ld. CIT(A) passed the order on 18.07.2024. It was, thus, prayed that, since the proper opportunity have not been afforded by the Ld. CIT(A) and the assessee was prevented by sufficient and reasonable cause in not submitting the complete documents before the Ld. AO as the Ld. AO has passed the order u/s 144 of the Act as per para 6, Page 6 of the order. Thus, it was prayed that in the interest of justice and equity, the proceedings may, please, be set aside to the file of Ld. AO to decide the issue denovo.
The Ld. DR relied upon the order of AO and CIT(A).
We have considered the arguments of the Ld. Counsel alongwith ‘Paper Book’ and ‘Brief Synopsis’ and find that, though, the AO at page 1 of the order has mentioned that the order has been passed u/s 143(3), but as per page 6 of the order of Ld. AO, it has been mentioned by the Ld. AO that complete information requisitioned as per the notice have not been furnished. Further in para 6, page 6 of the order, it has been mentioned by the Assessing Officer, while passing the order as under:- “Perusal of records of this office reveals that no compliance to the above notice has been made by the assessee till date. Therefore, it is presumed that the assessee has nothing to say inn this matter and the assessment proceedings are being completed u/s 144 of the Income Tax Act, 1961 to be best of judgment on the basis of material available on record.”
We also find that the by the Ld. CIT(A), after communication window was enabled on 04.11.2022, no opportunity was given to the assessee and, thus, under such circumstances, we deem it fit to restore the matter to the Assessing Officer, who will pass the order after giving a reasonable time to the assessee and the assessee shall also cooperate with the same.
In the result, appeal of the Assessee is allowed for statistical purposes. Order pronounced in the open Court on 29/07/2025.