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Facts
The assessee, who did not file a return of income for AY 2017-18, had made cash deposits totaling Rs. 10,56,500 in bank accounts during the demonetization period. The Assessing Officer (AO) initiated assessment proceedings under section 144 of the Income Tax Act, 1961, treating a significant portion of these deposits as unexplained income.
Held
The Tribunal, considering that the assessee was not given adequate opportunity to present their case and that the appeal was decided ex-parte, decided to restore the matter to the Assessing Officer for a fresh decision. This was done to provide the assessee with one last opportunity to present their case and necessary evidence.
Key Issues
Whether the assessment order passed under section 144 was justified without providing adequate opportunity of being heard to the assessee and whether the cash deposits were correctly treated as unexplained income.
Sections Cited
144, 69A, 115BBE, 271AAC, 271F, 133(6), 142(1), 10(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, SMC BENCH, LUCKNOW
Before: SHRI. SUDHANSHU SRIVASTAVA
O R D E R This appeal has been preferred by the Assessee against the order dated 18.03.2025, passed by the National Faceless Appeal Centre, Delhi (NFAC) for Assessment Year 2017-18.
2.0 The brief facts of the case are that the assessee had not filed the return of income for the year under consideration. The Income Tax Department was in possession of information that the assessee had made cash deposits totaling to Rs.10,56,500/- in his following bank accounts during the demonetization period (9.11.2016 to 30.12.2016):
S Name & address Bank Account No. Cash No of bank deposit 1. Axis Bank, Khutar 915010013988094 3,26,500/- Khas, Shahjahanpur 2. HDFC Bank Ltd. 20851000004709 50,000/-
Puranpur 3. HDFC Bank Ltd. 50200002684989 6,80,000/- Puranpur Total 10,56,500/- 2.1 The Assessing Officer (AO) issued statutory notices along with questionnaire to the assessee, requiring the assessee to explain the source of cash deposits made in his bank accounts during the year under consideration. However, there was no response from the side of the assessee. The AO, therefore, proceeded to complete the assessment on the basis of Best Judgment Assessment. Accordingly, the AO issued show cause notice dated 30.08.2019 to the assessee, requiring the assessee to show cause as to why the provisions of section 144 of the Income Tax Act, 1961 (hereinafter called “the Act’) may not be invoked. There was no response from the assessee. The AO, thereafter, called for the details from the assessee, vide questionnaire under section 142(1) of the Act dated 19.09.2019, in response to which the assessee filed reply, stating therein that the assessee was a farmer and whole of the income earned by him were from agriculture and that the assessee also disclosed the accounts maintained with State Bank of India and Axis Bank. The AO also issued notice under section 133(6) of the Act to Axis Bank, Khutar Khas, Shahjahanpur and HDFC Bank Ltd., Puranpur and obtained bank accounts statements of the assessee for financial years 2015-16 and 2016-17. The AO noticed that the assessee had made cash deposits of Rs.16,09,500/- and there were credit entries of Rs.4,29,797/-, totaling to Rs.20,39,297/- during the period between 01.04.2016 and 31.03.2017 in his bank accounts. Out of the total credits of Rs.20,39,297/-, the AO accepted the claim of the assessee of Rs.4,89,160/- being receipts from sale of agricultural produce. The AO accordingly treated the amount of Rs.12,51,637/- (Rs.20,39,297 – Rs.4,89,160) as the unexplained income of the assessee and added the same to the total income of the assessee under section 69A of the Act. The AO completed the assessment under section 144 of the Act, computing the income of the assessee as under:
Unexplained income u/s. 69A of the Act : Rs.12,51,637/- Exempt income (u/s.10(1) of the Act) : Rs.6,87,660/- Total income : Rs.12,51,637/- 2.2 The AO also invoked the provisions of section 115BBE of the Act and initiated penalty proceedings under sections 271AAC and 271F of the Act, separately.
3.0 Aggrieved, the Assessee preferred an appeal before the NFAC, which dismissed the appeal of the assessee ex-parte qua the assessee and confirmed the order of the AO.
4.0 Now, the assessee has approached this Tribunal challenging the orders of the AO as well as the NFAC, by raising the following grounds of appeal:
1. That since appellant's case is not falling in any of the three mandatory conditions of section 144(1) of the Act, hence assessment proceedings initiated u/s 144 of the Act and order passed under said section of the Act is illegal and without jurisdiction.
2. That appellant has done full compliance of notices issued and communicated to him during the assessment proceedings, hence Ld.AO erred to complete the assessment under the provisions of section 144 of the Act.
That sources of credit-transactions in the bank accounts of the appellant was crop-sale and straw-sale, which is duly explained through transactions of Kisan Credit Card and banks. Ld.AO arbitrarily ignored the facts of the case and records furnished before him during assessment proceedings, hence computation of un-explained income u/s 69A amounting to Rs.12,51,637/- is against the facts, illegal and without jurisdiction.
That out of total cash deposit amounting to Rs.16,09,500/- , appellant deposited cash total amounting to Rs.12,80,000/- in HDFC Kisan Credit Card. So, he deposited only Rs.3,29,500/- in his saving bank maintained with Axis Bank. Transactions of Kisan Credit Card pertains to agricultural operation only. So, entire payments from such Kisan Credit Card is towards agricultural expenses and entire deposit in said Kisan Credit Card is from crop and straw sale only. Hence, Ld.AO erred to treat crop-sale proceeds as unexplained money u/s 69 of the Act, which is against the facts, illegal and without jurisdiction.
5. That since notices towards appellate proceedings were never served upon the appellant, hence he could not respond. Hence appeal-order is illegal and against the law of natural justice.
That the appellant reserves right to modify and/or add any other ground or grounds of appeal as the circumstances of the case might require or justify. 5.0 The Ld. Authorized Representative for the assessee (Ld. A.R.) submitted before me that the NFAC has passed an order ex- parte qua the assessee, arbitrarily upholding the order passed by the AO. The Ld. A.R. further submitted that the AO had not allowed adequate opportunity of being heard to the assessee and had passed the impugned assessment order under section 144 of the Act, without bringing on record any material in support of the addition which was made on the basis of presumption and surmises only. The Ld. A.R., therefore, prayed that, in the interest of justice, the matter may be restored to the file of the AO for deciding the same afresh after providing reasonable opportunity of being heard to the assessee. He submitted that the assessee undertakes to produce all the relevant documents in support of his claim before the AO.
6.0 The Ld. Sr. D.R. objected to the restoration of appeal to the file of the Assessing Officer and submitted that the appeal of the assessee be dismissed.
7.0 I have heard both the parties and have also perused the material on record. Looking into the facts of this case, I am of the considered view that the assessee deserves one last opportunity to present his case and, therefore, in the interest of substantial justice, I restore this file to the Office of the AO with the direction to provide one more opportunity to the assessee to present his case along with necessary evidences. I also caution the assessee to fully comply with the directions of the AO in the set-aside proceedings when called upon to do so, failing which, the AO would be at complete liberty to pass the order in accordance with law, based on the material available on record even if it is ex-parte qua the assessee.
8.0 In the result, the appeal of the assessee stands allowed for statistical purposes.
Order pronounced in the open Court on 31/12/2025.