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Facts
The appellant, an individual running a textile business, deposited Rs. 10,21,000/- in cash during demonetization but did not file a return under section 139 nor respond to notices under section 142(1). The AO made a best judgment assessment, treating the cash as unexplained money. The CIT(A) dismissed the appeal for non-prosecution and on merits, confirming the AO's action.
Held
The Tribunal found that the CIT(A) failed to consider a specific ground of appeal, which detailed the appellant's lack of awareness about email requests for documents and provided an explanation for the cash deposits as business proceeds. Therefore, the Tribunal restored the matter to the file of the CIT(A) for de novo adjudication, granting the appellant a reasonable opportunity of being heard.
Key Issues
Whether the CIT(A) erred in dismissing the appeal without considering specific grounds related to lack of opportunity and explanation for cash deposits; and the correctness of treating cash deposits as unexplained investment under section 69.
Sections Cited
139, 142(1), 69
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Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI INTURI RAMA RAO, AM
O R D E R This appeal filed by the assessee is directed against the order of the National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 29.11.2024 for Assessment Year (AY) 2017-18.
Brief facts of the case are that the appellant is an individual deriving income from business of textiles in the name and style of Bhagavathy Textiles. No regular return of income was filed under the provisions of section 139 of the Income Tax Act, 1961 (the Act) for AY 2017-18. However, the Income Tax Officer, Ward-1(4) (hereinafter called "the AO") based on the information that the Viraram Choudhary appellant made cash deposit of Rs. 10,21,000/- in the specified bank notes (SBN) during demonetisation period issued a notice u/s. 142(1) of the Act calling upon to file the return of income. The appellant had neither complied with the notice u/s. 142(1) nor furnished the information called for during the course of assessment proceedings. In the circumstances, the AO was constrained to make best judgement assessment treating the cash deposit as unexplained money of the assessee.
Being aggrieved, an appeal was filed before the CIT(A) contending that the cash deposits were made out of sale proceeds of the business as evident from the books of account and also contended that no reasonable opportunity was given before passing the best judgement assessment order. Even before the CIT(A) the appellant could not put his appearance despite several opportunities given to him. In the circumstances, the learned CIT(A) had proceeded to dispose the appeal for non-prosecution as well as on merits and confirmed the action of the AO.
Being aggrieved, the appellant is in appeal before the Tribunal in the present appeal.
I heard the rival contentions of both the parties and perused the material available on record. On a careful perusal of the order passed by the learned CIT(A) it would be clear that the CIT(A) had passed exparte order on merits and dismissed the appeal for non- prosecution. Although, I do not find any reason to interfere with the Viraram Choudhary order of the CIT(A) for dismissal of the appeal for non-prosecution but it appears that the CIT(A) had failed to consider ground of appeal
No. 3, which reads as under: -
3. Submissions and Arguments: 3.1. Lack of Awareness Regarding Email Requests: The appellant respectfully submits that the requested details were not submitted to the CIT(A) because the appellant was unaware that such details would be sought via email. The emails sent by the CIT(A) were not checked by the appellant in time, and it was only after receiving the final order that the appellant became aware of the request for the documents. This was an inadvertent oversight and not a deliberate act of non-compliance. 3.2. Unintentional Failure to Submit Evidence: Due to the appellant's lack of awareness regarding the requirement for details via email, the appellant could not provide the requested evidence during the appeal proceedings. Had the appellant been aware of the request for the documents, the supporting documents and working papers would have been submitted to justify the cash deposits and explain their source. 3.3. Explanation of Cash Deposits: The appellant contends that the cash deposits of Rs. 10,21,000/- made during the demonetization period were sourced from legitimate business income, and supporting documents like sale receipts, books of accounts, and ledger entries can prove this. The appellant could not submit these documents earlier due to the misunderstanding regarding the request via email. 3.4. Request for a Fair Opportunity: Given the circumstances of the appellant not being aware of the requirement to submit documents via email, the appellant requests that the ITAT provide a fair opportunity to submit Viraram Choudhary the required details and explain the source of the cash deposits. The appellant is fully prepared to present the required documents and reconcile the business income with the cash deposits. 3.5. Section 69-No Unexplained Investment: The addition of Rs. 10,21,000/- under Section 69 of the Income Tax Act as unexplained investment should be reconsidered. The appellant is willing to provide evidence and explanation regarding the cash deposits, which were, in fact, business proceeds. Therefore, the appellant respectfully submits that the addition made should not have been treated as unexplained investment.”
6. Furthermore the CIT(A), while dealing with the merits of the issues in appeal is bound to dispose of each ground by adverting to the statements of facts, even in the case of exparte order. Therefore, I am of the considered view that the interest of justice would be met, if the matter is restored to the file of the CIT(A) for de novo adjudication in accordance with law decide the issues in the appeal in accordance with law after affording reasonable opportunity of hearing to the appellant due opportunity of being heard to the appellant.
In the result, the appeal filed by the assessee stands allowed for statistical purposes.
Order pronounced in the open court on 25th March, 2025. 8.