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Facts
The assessee's assessment was framed under section 144 of the Income Tax Act, 1961, due to the assessee's inability to represent their case effectively. The Assessing Officer (AO) determined the total income at Rs. 36,23,480/- against the returned income of Rs. 4,10,858/-. The CIT(A) dismissed the appeal, confirming adhoc disallowances and additions, including a deposit of Rs. 27,00,000/-.
Held
The Tribunal held that the assessment order was passed without providing the assessee with adequate opportunity to explain information received from the bank, thereby violating principles of natural justice. The Tribunal deemed it necessary to set aside the impugned order and restore the assessment to the file of the AO.
Key Issues
Whether the assessment order passed under section 144 of the Income Tax Act, 1961, violated the principles of natural justice by not providing sufficient opportunity to the assessee to explain adverse information received from the bank.
Sections Cited
144, 68, 44AB
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, LUCKNOW BENCH “SMC”, LUCKNOW
Before: SHRI KUL BHARAT
Assessment Year: 2017-18 Ranjana v. Income Tax Officer-4(3) 17, Kashimpur Birooha Anshik, Pratyaksh Kar Bhawan, Lucknow-227125. 57, Ram Tirath Marg, Lucknow-226001. PAN:AYOPR9593F अपीलार्थी/(Appellant) प्रत्यर्थी/(Respondent) अपीलार्थी कक और से/Appellant by: Ms Gurneet Kaur, Advocate प्रत्यर्थी कक और से /Respondent by: Shri Amit Kumar, Addl. CIT(DR) सुनवाई कक तारीख / Date of hearing: 24 11 2025 घोर्णा कक तारीख/ Date of 26 11 2025 pronouncement: O R D E R PER KUL BHARAT, VICE PRESIDENT.: This appeal, by the assessee, is directed against the order of the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi dated 26.10.2023 pertaining to the assessment year 2017-18. The assessee has raised the following grounds of appeal: -
1. Because on the facts and in the circumstances of the case, the Ld. CIT(A), NFAC has passed the order without providing the assessee with a due and proper opportunity of hearing.
2. Because the Ld. CIT(A), NFAC has erred on facts in determining the total income of the appellant at Rs. 36,23,480/- as against the returned income of Rs 4,10,858/- by confirming the adhoc disallowances of Rs. 5,12,625/- and section 68 of Income Tax Act, 1961 Rs. 27,00,000/- and confirming the addition of Rs.32,12,625/- which are seriously challenged.
3. Because the Ld. CIT(A), NFAC has erred on facts and in law in confirming provision of section 68 of the Income Tax Act, 1961 on deposit of Rs. 27,00,000/- as SBN during demonetization period.
Page 2 of 5 4. Because the Ld. CIT(A), NFAC has erred on facts and in law in confirming the provision of section 68 of the Income Tax Act, 1961 on deposit of Rs. 27,00,000/- as SBN during demonetization period generated out of business proceeds in regular course of business, having already been credited to revenue.
Because the Ld. CIT(A), NFAC has erred on facts and in law in confirming the adhoc disallowances of Rs.5,12,625/- ignoring the audited accounts filed under section 44AB of the Income Tax Act, 1961 which is illegal, against the facts and inequitable.
Because on the facts and in the circumstance of the case, the order of Assessment has been passed in absolute violation of the principles of Natural Justice, without providing adequate Opportunity of being heard and therefore deserves to be declared a nullity.
The humble assessee, craves for leave to add/amend any other ground with the prior permission of the Hon’ble Tribunal.”
At the outset, the Ld. Counsel for the assessee, apropos to the grounds of appeal, contended that in this case, the assessment has been framed u/s 144 of the Income Tax Act, 1961 (“Act”, for short) as the assessee was unable to effectively represent her case during the assessment proceedings. Therefore, the Assessing Officer determined the total income at Rs.36,23,480/-, as against the returned income of Rs.4,10,858/-. It is contended that aggrieved by the assessment order, the assessee preferred appeal before the Ld. CIT(A), who also dismissed the appeal of the assessee without considering the fact that the cash deposited in the bank account of Rs.27,00,000/- was out of the business receipts which had already been included in the total business turnover. The Ld. Counsel for assessee contended that the assessee is ready to furnish the requisite details before the lower authorities. She prayed that the matter may be remanded back to the Assessing Officer for verification and fresh adjudication.
3. On the other hand, the Ld. Departmental Representative (DR) opposed the submission and supported the orders of the lower authorities. He contended that the sufficient opportunity Page 3 of 5 was granted to the assessee, but the assessee failed to furnish supporting evidences. He submitted that in the absence of supporting evidence, the AO was justified for treating the amount into the bank account as unexplained investment.
4. I have heard the Ld. Representatives of the parties and perused the material available on record. There is no dispute regarding the fact that in this case, the assessment was framed u/s 144 of the Act vide order dated 09.12.2019. It is noticed by the Assessing Officer that a show-cause notice was issued on 23.11.2019, and the assessee filed her reply on 02.12.2019. The reply explained the transactions in the bank account bearing No. 415506520001463 with Union Bank of India, Branch Amethi, Lucknow, which was opened on 27.06.2016. It is further noted that the Assessing Officer received certain information from the bank on 07.12.2019, and the assessment order was thereafter passed on 09.12.2019. Therefore, there was insufficient time available to confront the assessee with the said information. In my considered view, if, anything adverse is recovered from the bank account of the tax-payers, the same may be dealt with by the authorities in accordance with law by giving opportunity to the assessee for explaining the same. If the assessee is not provided such opportunity that would clearly violate the principles of natural justice. Therefore, considering the totality of the facts and the material placed before me, to sub-serve the principles of natural justice and to be fair with both the parties, I deem it necessary and expedient under the facts of the present case to set aside the impugned order and restore the assessment to the file of the Assessing Officer. The Assessing Officer shall afford adequate opportunity to the assessee with regard to the information received from the bank about the account in Page 4 of 5 question held by the assessee. The grounds raised in the appeal are allowed for statistical purposes in the terms indicated hereinabove.
5. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on 26/11/2025.