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Facts
The assessee filed a return declaring an income of Rs. 31,54,290/-. The case was selected for limited scrutiny regarding the source of cash deposits. The AO added Rs. 1,03,75,000/- as unexplained cash credit, treating it as income.
Held
The Tribunal condoned the delay in filing the appeal and restored the case to the NFAC for a fresh hearing. The assessee is directed to fully explain the source of impugned cash credits.
Key Issues
Whether the addition of Rs. 1,03,75,000/- as unexplained cash credit is sustainable when the assessee claims it to be a loan, and if the NFAC order rejecting the appeal without proper opportunity was justified.
Sections Cited
68, 143(3), 115BBE(1), 271(1)(c)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, LUCKNOW BENCH “A”, LUCKNOW
Before: SHRI. SUDHANSHU SRIVASTAVA & SHRI NIKHIL CHOUDHARY
This appeal has been preferred by the assessee against the order dated 24.04.2023, passed by the National Faceless appeal Centre (NFAC), Delhi for Assessment Year 2015-16.
2.0 The brief facts of the case are that the assessee filed his return of income for the year under consideration on 31.03.2017, declaring a total income of Rs.31,54,290/-. The case of the assessee was selected for limited scrutiny on the issue ‘Whether the cash deposit has been made from disclosed sources’. During the course of assessment proceedings, it was noticed by the Assessing Officer (AO) that there was cash withdrawal from the Bank account No.18560000100747049 maintained with Punjab National Bank, Rajendra Nagar, Lucknow and the sources of these cash withdrawals were against the credit entries on various dates, amounting to Rs.1,83,75,000/-. In response to the show cause notice issued by the AO, it has been submitted by the assessee that the assessee had taken loan of Rs.80,00,000/- from Shri Keshav Gurnani S/o Late Shir Bhola Ram R/o C-24/A- 1, Mahanagar, Lucknow. The assessee had also furnished before the AO confirmation by Shri Keshav Gurnani that he had given loan totaling to Rs.80,00,000/- to the assessee on various dates. However, for the remaining credit entries, no satisfactory explanation could be furnished by the assessee before the AO. Therefore, the AO treated the remaining credit entries, amounting to Rs.1,03,75,000/- (Rs.1,83,75,000 – Rs.80,00,000) as the unexplained cash credit and added the same to the income of the assessee under section 68 of the Income Tax Act, 1961 (hereinafter called “the Act’). The AO completed the assessment under section 143(3) of the Act, assessing the total income of the assessee at Rs.1,35,29,290/-.
2.1 The AO also invoked the provisions of section 115BBE(1) of the Act and initiated penalty proceedings under section 271(1)(c) of the Act, separately.
3.0 Aggrieved, the assessee preferred an appeal before the ld. NFAC, which dismissed the appeal of the assessee by passing an order by observing that all the relevant details were not furnished by the assessee.
4.0 Now, the assessee has approached this Tribunal challenging the dismissal of his appeal by the NFAC by raising the following grounds of appeal:
1. Because, the Ld. CIT (A) has erred on facts & law while sustaining the addition of Rs.1,03,75,000/-, case was selected under CASS for limited Scrutiny being "Whether the cash deposit has been made from disclosed sources" however additions were made on other reasons being credit transactions through banking channel at Rs.1,03,75,000/- by various entries without obtaining approval from prescribed Authority as per Board Circular No. 7/2014 dt. 4th March, 2014 for complete Scrutiny.
2. Because, the Ld. CIT (A) has erred on facts & law while sustaining the addition of Hon'ble Rs.1,03,75,000/-, ignoring the ratio laid down by Courts/Authorities regarding Board Circular binding in nature for Assessing Officer.
3. Because, the Ld. CIT (A) has erred on facts & law while sustaining the addition of Rs.1,03,75,000/-, ignoring the facts that alleged bank credits at Rs. Rs.1,03,75,000/-in PNB A/c 47049 were duly part of regular records and available for verification.
4. Because, the Ld. CIT (A) has erred on facts & law while sustaining the addition of Rs.1,03,75,000/-, against the peculiar facts & circumstances of the case, related law and also on the ground of natural justice.
5. Because, the Ld. CIT (A) has grossly erred in rejecting the appeal of the assessee without providing the assessee with a due and proper opportunity of hearing and therefore the impugned order deserves to be set-aside being bad in law.
6. Because, the Ld. CIT (A) has grossly erred in rejecting the appeal of the assessee purely on the basis of conjectures and surmises and hence bad in law and liable to be set- aside and quashed.
7. The humble assessee, craves for leave to add/amend any other ground with the prior permission of your honours.
5.0 None was present for the assessee when the appeal was called out for hearing nor was any adjournment application moved in this regard. However, looking into the facts of the case, we proceed to adjudicate the appeal ex-parte qua the assessee.
6.0 During the course of hearing, it was brought to our notice that there is a delay of 24 days in filing the appeal before the Tribunal. The assessee has filed an application dated 15.07.2023, supported by Medical Certificate, for condonation of delay, stating therein that the assessee was suffering from fever from 04.06.2023 to 11.07.2023 and was under treatment and that after his recovery from fever, he immediately contacted his Counsel for filing the appeal before the Tribunal. It has been prayed that the delay caused in filing the appeal was not deliberate and was beyond the control of the assessee, which may please be condoned and the appeal be heard on merits.
7.0 The Ld. CIT (D.R.) had no objection to the delay being condoned.
8.0 In view of the prayer made by the Assessee and no objection by the Ld. CIT (D.R.), we condone the delay in filing of the appeal and admit the appeal for hearing.
9.0 The ld. CIT (D.R.) had no objection to the restoration of appeal to the NFAC.
10.0 We have heard the ld. Senior Departmental Representative and have also perused the material on record. Looking into the facts of this case, we are of the considered view that the assessee deserves one more opportunity to present his case and, therefore, we restore this file to the Office of the NFAC with the direction to hear the appeal on merits after providing reasonable opportunity of hearing to the assessee. We direct the assessee to fully explain the source of impugned cash credits before the NFAC. We also caution the assessee to fully comply with the directions of the NFAC in the set-aside proceedings when called upon to do so, failing which, the NFAC would be at complete liberty to pass the order in accordance with law, based on material available on record even if it is ex-parte qua the assessee.
11.0 In the result, the appeal of the assessee stands allowed for statistical purposes.
Order pronounced in the open Court on 31/07/2025.