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Facts
The assessee, a welfare society, failed to file its Income Tax Return for AY 2017-18. The AO initiated ex-parte assessment under Section 144 after finding significant unexplained cash deposits totalling over Rs. 25 lakhs in the assessee's bank accounts during demonetization, adding these amounts under Section 69A. The NFAC confirmed the AO's order, prompting the assessee to appeal to the Tribunal.
Held
The Tribunal condoned a 22-day delay in filing the appeal, recognizing the assessee as a minority welfare society. Concluding that the assessee deserved a fair chance, the Tribunal set aside the NFAC's order and remanded the case back to the Assessing Officer. The AO was directed to provide the assessee with another opportunity to present evidence and explain the deposits, with a caution for the assessee to fully cooperate.
Key Issues
Whether the ex-parte assessment and additions under Section 69A for unexplained cash deposits were valid given the assessee's claim of natural justice violation and lack of opportunity to explain student fee collections.
Sections Cited
144, 133(6), 69A, 115BBE, 271AAC, 272A(2)(e)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, SMC BENCH, LUCKNOW
Before: SHRI. SUDHANSHU SRIVASTAVA
Assessment Year: 2017-18 All India Minorities v. The Income Tax Officer Welfare Society (Exemption) 4-A, La Palace, Shahnajaf Lucknow Road Lucknow (U.P) TAN/PAN:AACTA4540P (Appellant) (Respondent) Appellant by: Ms. Gurneet Kaur, Advocate Respondent by: Shri Amit Kumar, D.R. O R D E R
This appeal has been preferred by the Assessee against the order dated 17.02.2025, 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 to the tune of Rs.12,29,000/- in its bank account maintained with Allahabad Bank, Lakhimpu Kheri during the demonetization period (from 08.11.2016 to 31.12.2016). The Assessing Officer (AO) issued statutory notices to the assessee, requiring the assessee to furnish the source and nature of cash deposits. However, there was no compliance from the side of the assessee. The AO, therefore, proceeded to complete the assessment ex-parte under section 144 of the Income Tax Act, 1961 (hereinafter called “the Act’). Subsequently, the AO obtained the bank account statements of the assessee from Allahabad Bank, Lakhimpur Kheri and Bank of Baroda, Lucknow, under section 133(6) of the Act, as per which the assessee had made cash deposits of Rs.16,17,000/- in its bank account No.50285540277 maintained with Allahabad Bank, Lakhimpur Kheri during the year under consideration. Since no document had been filed by the assessee regarding the source of these deposits, the AO treated the same as unexplained money of the assessee and was added to the income of the assessee under section 69A of the Act.
2.1 From the aforesaid bank statements, the AO also noticed that the assessee had made deposits of Rs.63,244/- other than cash in its bank account No.50285540277 maintained with Allahabad Bank, Lakhimpur Kheri and of Rs.7,21,250/- in its bank account No.00500200001553 maintained with Bank of Baorda, Lucknow, totaling to Rs.7,84,494/- during the year under consideration, which was also added to the income of the assessee under section 69A of the Act.
2.2 The AO further noted that the total cash/credit deposits for the year under consideration as per the bank statements was Rs.24,01,494/-, whereas, as per return of income for the year under consideration, the aggregate of income was Rs.25,73,977/-. The difference of these two amounts comes to Rs.1,72,483/-. Since the assessee had failed to explain the said difference with supporting documentary evidence, the AO added the same also to the income of the assessee under section 69A of the Act.
2.3 The AO completed the assessment under section 144 of the Act, assessing the total income of the assessee at Rs.25,73,980/-.
2.4 The AO also invoked the provisions of section 115BBE of the Act and initiated penalty proceedings under sections 271AAC and 272A(2)(e) of the Act, separately.
2.5 Aggrieved, the Assessee preferred an appeal before the NFAC, which dismissed the appeal of the assessee and confirmed the order of the AO.
2.6 Now, the assessee has approached this Tribunal challenging the order of the NFAC, by raising the following grounds of appeal:
1. Because on the facts and in the circumstances of the case the order of Ld. CIT(A) is bad in law and deserves to be quashed being illegal.
2. Because without considering the facts and circumstances of the case, the Ld. CIT, Appeals erred in confirming the addition made by the Assessing Officer treating the deposit of Rs.12,39,000/- made by the society during the period of Demonetization as income of the assessee, ignoring the fact that the amount was deposited in the account under the pretext of being student fees, which is not an income of the assessee.
3. Because without considering the facts and circumstances of the case, the Ld. CIT, Appeals failed to appreciate that the cash deposit of Rs.25,73,980/- made during Demonetization was a temporary deposit and does not represent an actual income of the society. The amounts were merely collected in the normal course of business and for educational purposes.
4. Because without considering the facts and circumstances of the case, the Ld. CIT, Appeals erred in confirming the deposit of Rs. 25,73,980/- as income by classifying it under unexplained cash deposits u/s 69A, ignoring the fact that the deposits were duly explained and were part of the society's normal fee collection process.
Because without considering the facts and circumstances of the case, the Learned Commissioner of Income Tax (CIT), Appeals confirmed the assessment without evaluating the nature of the deposits in question, which were clearly part of the student fee collection, and were not unaccounted or unexplained funds as presumed by the authorities.
Because without considering the facts and circumstances of the case, the CIT confirmed the addition without allowing the assessee a fair opportunity to provide proper
documentation and explanations regarding the purpose and source of the deposits. 7. 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. 8. The appellant craves for leave to add, modify, amend or delete any other and further grounds of appeal with permission.
3. During the course of hearing, it was brought to my notice that the appeal is time barred by 22 days and no application for condonation of delay has been filed by the assessee. However, the Ld. Authorized Representative for the assessee (Ld. A.R.) submitted at the Bar that the assessee is a Society for the welfare of minorities and that the nominal delay of 22 days was not intentional and, therefore, the delay be condoned and the appeal be admitted for hearing on merits.
Per contra, the Ld. Sr. D.R. opposed the condonation of delay.
5. In view of the prayer made by the Ld. A.R., I condone the delay in filing of the appeal and admit the appeal for hearing.
3.0 The Ld. A.R. submitted that the assessment order was passed under section 144 of the Act without affording reasonable opportunity of hearing to the assessee and that complete evidences could not be filed before the Ld. First Appellate Authority, resulting into dismissal of the appeal by the Ld. First Appellate Authority. The Ld. A.R., 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. She submitted that the assessee undertakes to produce all the relevant documents in support of its claim before the AO.
4.0 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.
5.0 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 its 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 its 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.
6.0 In the result, the appeal of the assessee stands allowed for statistical purposes.
Order pronounced in the open Court on 21/11/2025.