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Facts
The assessee, a small shop owner, did not file an income tax return for Assessment Year 2012-13. The case was reopened under Section 147, and an ex parte assessment under Section 144 treated cash deposits of Rs. 43,49,092/- as unexplained income under Section 69. The assessee claimed the deposits were from prior withdrawals and the sale proceeds of his wife's agricultural land, but the CIT(A) dismissed the appeal in limine due to non-compliance without examining the merits.
Held
The Tribunal condoned a three-day delay in filing the appeal, finding sufficient cause. It held that the CIT(A) erred by dismissing the appeal solely for non-prosecution without adjudicating the grounds of appeal on merits, especially when the assessee raised factual claims not examined by lower authorities. Upholding principles of natural justice, the Tribunal set aside the CIT(A)'s order and restored the matter to the Assessing Officer for de novo adjudication, granting the assessee an opportunity to present evidence.
Key Issues
Whether the CIT(A) was justified in dismissing an appeal for non-prosecution without considering the merits of the addition, and if the matter should be remanded for fresh adjudication based on principles of natural justice.
Sections Cited
147, 148, 144, 69
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आयकर अपीलीय अिधकरण,च"ीगढ़ "ायपीठ “बी” , च"ीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “B”, CHANDIGARH HEARING THROUGH: HYBRID MODE "ी लिलत कुमार, "ाियक सद" एवं "ी कृणव" सहाय, लेखा सद" BEFORE: SHRI. LALIET KUMAR, JM & SHRI. KRINWANT SAHAY, AM आयकर अपील सं./ /Chd/2024 िनधा"रण वष" / Assessment Year : 2012-13 Sh Balraj बनाम The ITO Gali No.-1, Opp. Blue Bird High Ward-1 School Satish Colony Fatehabad- Fatehabad, Haryana 125050, Haryana "ायी लेखा सं./PAN NO: ASUPB7977R अपीलाथ"/Appellant ""थ"/Respondent िनधा"रती की ओर से/Assessee by : Shri Rajat Garg, C.A (Virtual Mode) राज" की ओर से/ Revenue by : Shri Vivek Vardhan, Addl. CIT, Sr. DR सुनवाई की तारीख/Date of Hearing : 30/04/2025 उदघोषणा की तारीख/Date of Pronouncement : 30/04/2025 आदेश/Order PER LALIET KUMAR, J.M:
This is an appeal filed by the Assessee against the order of the Ld. CIT(A)/NFAC, Delhi dt 18/06/2024 pertaining to Assessment 2012-13. 2. At the outset, it was noted by the Registry that there is a delay of three days in filing the present appeal. In this regard, the assessee has filed an application for condonation of delay supported by an affidavit, which is placed on record.
The Ld. Departmental Representative has submitted that he has no objection if the delay is condoned.
We have heard the rival contentions and perused the application for condonation of delay along with the accompanying affidavit. Upon consideration, we find that the assessee has demonstrated sufficient and reasonable cause for the delay. Accordingly, the delay of three days in filing the appeal is condoned. The appeal is admitted for adjudication on merits.
2 5. In the present appeal Assessee has raised the following grounds:
1. On the facts and circumstances of the case, the order passed by the learned CIT(A) is bad, both in the eye of law and on the facts.
2. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts & in law in confirming the addition despite the fact that learned AO has passed the assessment order without providing reasonable opportunity of being heard to the assessee by violating the principle of natural justice. 3. On the facts and circumstances of the case, the learned CIT(A) has erred in upholding the assessment order passed by the ld.AO despite the fact that no service of notice was made by the Ld.AO during the course of assessment proceedings. 4. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in confirming the proceedings under Section 147 read with Section 148, ignoring the fact that the same was bad in the eye of law as the conditions and procedure prescribed under the statute have not been satisfied and complied with. 5. (i) On the facts and circumstances of the case, learned CIT(A) has erred in upholding the reasons recorded for the issue of notice under Section 148 are bad in the eyes of law and are vague.
(i) That the CIT(A) has erred in analyzing the fact that there is no live nexus between the reasons recorded and the belief formed by the Assessing Officer. 6. (i) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts & in law in upholding the addition made by the AO treating the peak cash deposit balance in bank account of assessee amounting to Rs.43,20,500/- as unexplained and added to the income of the appellant despite the fact that the same has been partly sourced from the sale of agricultural land by his wife and partly from the earlier cash withdrawals made by the assessee and past saving of the assessee's family.
(i) That the learned CIT(A) has erred in upholding the order of AO even when the AO has not taken all the cash deposit and withdrawals. The CIT(A) has erred in not calculating the actual peak of cash deposit which is well within the limit of cash available with the appellant origínated from the sale of property by his wife.
(iii) The CIT(A) has erred both on facts & in law in confirming the addition of Rs.43,20,500/- without seeking any further clarification and explanation.
Brief facts of the case are that the assessee, a small kiryana shop owner, did not file the return of income for the relevant assessment year. The case was reopened under section 147 of the Act, and the assessment was completed ex parte under section 144. The Assessing Officer treated the entire cash deposits of Rs. 43,49,092/- in the assessee’s bank account as unexplained income under section 69 of the Act.
6.1 During proceedings, the assessee contended that the cash deposits included amounts previously withdrawn and redeposited during the year and further explained that part of the deposits represented proceeds from the sale of rural agricultural land held by his wife. These amounts were allegedly deposited into the assessee’s account due to her serious illness.
The assessee challenged the said assessment before the Ld. CIT(A). However, the appeal was dismissed in limine due to non-compliance and non-attendance. The Ld. CIT(A) did not adjudicate the matter on merits and relied on judicial precedents related to non-prosecution.
Aggrieved, the assessee has preferred the present appeal. At the outset, the Ld. AR submitted that the non-appearance before the Ld. CIT(A) was due to circumstances beyond the control of the assessee, including personal hardships and lack of understanding of legal processes. The assessee is a small shopkeeper and was not conversant with the procedural intricacies. It was submitted that given an opportunity, the assessee is ready to present his case along with supporting documents.
The Ld. DR supported the order of the lower authorities and submitted that sufficient opportunity had already been provided.
We have heard the rival submissions and perused the material available on the record. It is evident that the assessee had raised a factual claim that the cash deposits were out of earlier withdrawals and the sale proceeds of rural agricultural land, an exempt capital asset. However, these contentions were never examined on merits by the lower authorities. Further, the Ld. CIT(A) has dismissed the appeal solely on the ground of non- prosecution without adjudicating the grounds of appeal on merits.
10.1 Considering the principles of natural justice and the fact that the assessee was prevented by sufficient cause from appearing before the Ld. CIT(A), we are of the considered opinion that the matter needs to be re- examined afresh.
10.2 Accordingly, we set aside the impugned order of the CIT(A) and restore the matter to the file of the Ld. AO for de novo adjudication. The Ld. AO shall grant reasonable opportunity to the assessee to submit relevant explanations and documentary evidence in support of his claims and decide the matter in accordance with law.
In the result, the appeal of the assessee is allowed for statistical purposes.