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Facts
The assessee filed an appeal against the order of the CIT(A) which upheld the addition of Rs. 11,93,300/- made by the AO under section 68 of the Income-tax Act. The addition was for unexplained cash deposits made during the demonetization period. The assessee contended that adequate opportunity of hearing was not given by the CIT(A).
Held
The Tribunal noted that while the CIT(A) had provided opportunities for hearing, the assessee was negligent in filing rejoinders. However, considering the principles of natural justice, the Tribunal decided to give the assessee another opportunity to present their case.
Key Issues
Whether the CIT(A) erred in dismissing the appeal without granting adequate opportunity to the assessee, and whether the cash deposits were indeed unexplained.
Sections Cited
250, 143(2), 142(1), 129, 68, 115BBE, 271(1)(c)
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Before: SHRI SANJAY GARG & SHRI BIJAYANANDA PRUSETH
आदेश / O R D E R
PER BIJAYANANDA PRUSETH, AM:
This appeal by the assessee emanates from the order passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’), dated 04.10.2024 by the Commissioner of Income-tax (Appeals), National Faceless Appeal Centre, Delhi [in short ‘CIT(A)’] for the assessment year (AY) 2017-18.
Grounds of appeal
raised by the assessee are as under: “1. The Assessing Officer and Commissioner Appeal have erred in law and in facts, in considering the cash deposit as un-explained cash deposit.
2. The Ld. AO has erred in law and on facts in applying provisions of section 115BBE.
3. The Commissioner Appeal has not allowed us enough opportunity to represent our case.
4. I pray to you to allow us to add, edit or delete any of the grounds of appeal during hearing.”
/AY.2017-18 Iqbal Sabbirahmed Desai 3. The facts of the case in brief are that the assessee filed his return of income for AY 2017-18, declaring total income of Rs.23,080/-. The case was selected for scrutiny under CASS for the reason of “Cash deposit during demonetization period.” Various statutory and show notices were issued u/s 143(2), 142(1) and 142(1) r.w.s. 129 of the Act, requesting the assessee to furnish specific details. There was a non-compliance on the part of the assessee. Hence, AO issued a show-cause notice on 13.10.2019. In reply, the assessee submitted that he holds total 5 lands, but he failed to furnish copies of 7/12 and 8A of the impugned lands. The Assessing Officer (in short, ‘AO’) issued further show cause notice to the assessee as to why cash deposits of Rs.11,93,300/- should not be treated as unexplained u/s 68 of the Act. The assessee submitted that cash deposits into his bank account was out of cash withdrawals from bank since last 3 years and opening balance of Rs.15,00,000/- as on 01.01.2016. No evidence was filed in support of the claim. Hence, the AO observed that adequate opportunities were given to assessee, but he failed to justify source of cash deposits made during the demonetization period. He also observed that the assessee filed his return of income for AY 2015-16 and 2016-17 only after demonetization period, i.e., 23.02.2017 and 02.03.2017. Hence, the source of cash deposits of Rs.11,93,000/- was treated as unexplained cash u/s 68 of the Act and the same was taxed @ 60% u/s 115BBE of the Act. Total income was determined at Rs.12,16,680/- as against returned of income of Rs.23,080/-. Penalty proceedings u/s 271(1)(c) also initiated by the AO.
/AY.2017-18 Iqbal Sabbirahmed Desai 4. Aggrieved by the order of AO, the assessee filed appeal before CIT(A). The CIT(A) reproduced the written submission made by appellant, which is at pages 3 to 9 of the appellate order. He forwarded the same and called for a remand report from AO. In response, the AO submitted remand report dated 26.07.2027, which is at pages 10 to 14 of the appellate order. The CIT(A) observed that the AO examined all the issues and demonstrated that the certain details provided by the appellant were not admissible evidence. A copy of remand report was forwarded to the appellant on 07.08.2024 and rejoinder was called for on or before 22.08.2024. On request of the appellant, the case was adjourned to 10.09.2024. A request for adjournment which was not granted because sufficient time had been granted. The CIT(A) discussed the findings of AO and the remand report, which is at pages 14 to 16 of the appellate order. He has finally upheld the addition made by AO and dismissed the appeal.
Aggrieved by the order of CIT(A), the assessee filed the present appeal before the Tribunal. The learned Authorized Representative (ld. AR) of the assessee submitted a paper book containing 33 pages, including various details. He submitted that the CIT(A) passed the appellate order without hearing the appellant properly on merit. Adequate opportunity of hearing was not given to the assessee during the appellate proceedings. The appellant is now ready to submit all details and evidences in support of the grounds raised by him before the CIT(A). He requested that one more opportunity may be given to the appellant to plead his case on merit.
/AY.2017-18 Iqbal Sabbirahmed Desai 6. On the other hand, the learned Senior Departmental Representative (ld. Sr. DR) for the revenue supported the order of lower authorities. He submitted that adequate opportunity was given to assessee by the lower authorities.
We have heard both the parties and perused the materials available on record. The AO made the addition of Rs.11,93,300/- u/s 68 of the Act. The CIT(A) has dismissed appeal due to failure of appellant to submit any rejoinder against the remand report submitted by AO. After considering the contentions of both parties, we find that the CIT(A) has given opportunity of hearing after forwarding remand report of AO to assessee. He adjourned the case fixed on 22.08.2024 to 10.09.2024. Again assessee requested for 15 days’ time, i.e., upto 25.09.2024. Though, the CIT(A) refused adjournment but he has passed order u/s 250 of the Act on 04.10.2024. i.e., after 25.09.2024. He has passed order after considering the submission of assessee and rejoinders of AO. But rebuttal of assessee was not received. Considering all these facts, we are of the view that the assessee was negligent and non-cooperative before the CIT(A). The Id. AR submitted that the non-compliance was neither deliberate nor intentional. He requested that another opportunity may be granted to the assessee to submit all the required explanations and details and plead his case on merit. We are of the view that the principles of natural justice would call for giving another opportunity of hearing to the assessee. Accordingly, we hold that the interests of justice would be met in case the CIT(A) re-adjudicates the entire issue afresh subject to payment of cost of Rs.5,000/- (Rupees five thousand only) by the assessee to /AY.2017-18 Iqbal Sabbirahmed Desai the credit of the “Prime Minister’s National Relief Fund” within one month from receipt of this order. Subject to payment of above cost, we set aside the order of CIT(A) and remit the matter back to the file of CIT(A) for fresh adjudication in accordance with law after granting adequate opportunity of hearing to the assessee. The assessee is directed to be more vigilant and diligent and to furnish all the details and explanations as needed by the CIT(A) by not seeking adjournment without valid reasons. With these directions, the grounds of appeal
raised by the assessee are allowed for statistical purposes.
8. In the result, appeal of the assessee is allowed for statistical purposes. Order is pronounced under provision of Rule 34 of ITAT Rules, 1963 on 21/11/2025