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Facts
The assessee, engaged in the retail cloth business, filed an original return of income. The case was later reopened, and a notice under Section 148 was issued. The assessee deposited a substantial amount of cash during the demonetization period, which was later treated as unexplained income.
Held
The Tribunal, noting that the assessee did not avail opportunities to represent their case before the CIT(A), decided to set aside the impugned order and remand the case back to the CIT(A) for a fresh denovo adjudication. This was to provide the assessee with one final opportunity to be heard.
Key Issues
Whether the addition of unexplained cash deposits is justified, and if the assessee was denied adequate opportunity of hearing.
Sections Cited
254, 143(1), 148, 143(2), 142(1), 44AD, 69A, 115BBE, 246A, 250
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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: PHYSICAL MODE "ी िव"म िसंह यादव,लेखा सद" एवं "ी परेश म. जोशी, "ाियक सद" BEFORE: SHRI. VIKRAM SINGH YADAV, AM &SHRI. PARESH M. JOSHI, JM आयकरअपील सं./ िनधा"रण वष" / Assessment Year : 2017-18 Amit Prop: M/s Shree Ram Textile बनाम The ITO, C/o Tejmohan Singh, Advocate Ward-1, Ambala # 527, Sector 10 D, Chandigarh- 160011 "ायीलेखासं./PAN NO: ATWPA4708J अपीलाथ"/Appellant ""थ"/Respondent िनधा"रती की ओर से/Assessee by : Shri Tejmohan Singh, Advocate राज" की ओर से/ Revenue by : Shri VivekVardhan, Addl. CIT, Sr. DR सुनवाई की तारीख/Date of Hearing : 20/02/2025 उदघोषणा की तारीख/Date of Pronouncement : 25/02/2025 आदेश/Order PER PARESH M. JOSHI, J.M. :
This is an appeal filled by the Assessee under section 254 of the Income Tax Act (hereinafter referred to as the Act) before this Tribunal. The assesssee is aggrieved by the order bearing number :ITBA/NFAC/S/250/2023-24/1062946490(1) dated 19/03/2024 of CIT(A) passed under section 250 of the Act, which is hereinafter referred to as the “impugned order”. The relevant assessment year is 2017-18 and the corresponding previous year period is from 01/04/2016 to 31/03/2017. Factual Matrix 2. The Assessee is engaged in the business “retail business of 2.1 cloth” in and around village in District Ambala, Haryana.
2.2 That the Assessee had e filed original return of income on 05/11/2017 declaring total income at Rs. 4,29,700/-. The return was processed u/s 143(1) of the Act. 2.3 Subsequently, the case was reopened by way of issue of notice under section 148 dt. 30/03/2021 and that the same was duly served on the assessee. That in response there to the assessee filed the return of income on 24/12/2021 declaring therein a total income of Rs. 4,29,100/-. 2.4 Accordingly statutory notice under section 143(2) and 142(1) of the Act alongwith the questionnaire calling for various details were issued and duly served on the assessee. 2.5 That in response to the notice the assessee has submitted that he has deposited the cash of Rs. 15,41,000/- in the bank account instead of Rs. 10,00,000/-. It was stated that he deposited cash in the course of his business in order to make further payments. It was further stated by the assesee that he had deposited Rs. 2,00,000/- on 10/11/2016 and Rs. 8,00,000/- on 11/11/2016 due to following reasons: “ Demonetization period- has been started w.e.f. 08/11/2010 lo 31/12/2016. We have tried our best to deposit all the previous monthly cash sales, old debtors receipts, personal saving. Secondly during the Demonetization period 08/11/2016 to 31/12/2016 we have purchased the good for the business and make payments with new currency.”
2.6 That the explanation filed and offered by the assesee was not found to be satisfactory.
2.7 That the Ld. AO held that the explanation filed by the assesse is considered but not acceptable. The assessee has generated huge cash just before demonetization period. The assessee is dealing in the cloth and that the assesse has filed the return u/s 44AD of the Act and turnover of assesse is only Rs.42.25 lakhs through out the year and suddenly the huge cash generated just before the demonetization period. On verification of bank statements, it is seen that there are very few cash transactions in bank statements through out the year from assessee's business and just before demonetization cash amounts are generated and deposited during demonetization period. Therefore, Ld. AO held that the amount of Rs. 10,00,000/- is unexplained money possessed by the assessee and that the same is deposited in bank account during demonetization period. As the assessee failed to justify the sources of above cash deposits, which, clearly indicates that the assessee is not having any supporting evidence to prove the sources thereon. Hence, the assessee has actually incorrect explanation to offer in respect of his source of above said cash deposited in Bank Account.
2.8 That the Ld. AO to by an assessment order bearing number ITBA/AST/S/147/2021-22/1040167752(1) dt. 28/02/2022 treated the aforesaid amount of Rs. 10,00,000/- as unexplained money u/s 69Ar.w.s 115BBE and quantified total income of assessee as Rs. 14,29,100/-. The aforesaid assessment order is hereinafter referred to as the “impugned assessment order”.
2.9 That the assessee being aggrieved by the aforesaid “impugned assessment order” preferred first appeal under section 246A of the Act before Ld. CIT(A) who by the impugned order has dismissed the same. 2.10 That the assessee being aggrieved by the impugned order has preferred an appeal before this Tribunal and has raised following grounds of appeal in Form 36 against the impugned order which are as follows:
1. That the Ld. Commissioner of Income Tax (Appeals) has erred in passing an ex-parte order without affording a proper opportunity of hearing which is against the Principles of Natural Justice and as such the order passed is arbitrary and unjustified.
2. The Ld. Commissioner of Income Tax (Appeals) has erred in law in upholding the re-opening of the assessment applying the provisions of section 148 of the Act in as much as there was no escarpment of income warranting action under section 148 of the Act and as such the order passed is illegal, arbitrary and unjustified.
3. Without prejudice to the above, the Ld. Commissioner of Income Tax (Appeals) has erred in upholding the addition of Rs. 10,00,000/- made on account of alleged unexplained cash deposit inthe bank account treating the same to be unaccounted income of the assessee applying the provisions of Section 69A which is arbitrary and unjustified.
4. That the provisions of Section 69A are not attracted in as much as the entire business receipt including cash deposit of Rs. 10,00,000/- which was deposited on account of earlier withdrawals already stands declared in the return filed u/s 44AD and as such treating Rs. 10,00,000/- to be unexplained is illegal, arbitrary and unjustified.
5. That the Ld. Commissioner of Income Tax (Appeals) has further erred in upholding the charging of tax at 60% applying the provisions of Section 115BBE which are not applicable in the instant case.
6. That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off.
7. That the order of Ld. Commissioner of Income Tax(Appeals) Officer is arbitrary, opposed to the facts of the case and thus untenable.