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Facts
The assessee filed an appeal against an order confirming an addition of ₹13,09,000/- as unexplained cash deposit during demonetization. The assessment order was passed ex-parte under section 144 of the Income Tax Act, 1961, as the assessee failed to provide compliance to notices issued by the AO. The CIT(A) also confirmed the addition, noting the assessee's failure to furnish submissions and evidence.
Held
The Tribunal condoned the delay in filing the appeal, finding sufficient cause. The Tribunal set aside the order of the CIT(A) and restored the appeal to the CIT(A) for disposal on merit, directing that the assessee be given a reasonable opportunity of being heard.
Key Issues
Whether the addition of unexplained cash deposit is justified without providing proper opportunity of being heard and whether the appeal should be remitted back to the assessing officer for fresh adjudication.
Sections Cited
250, 144, 133(6), 143(2), 142(1), 69A, 46A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PATNA BENCH AT KOLKATA
Before: SHRI SONJOY SARMA & SHRI RAKESH MISHRA
PER RAKESH MISHRA, ACCOUNTANT MEMBER:
This appeal filed by the assessee is against the order of the Commissioner of Income Tax (Appeals)-NFAC, Delhi [hereinafter referred to as Ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for AY 2017-18 dated 07.01.2025, which has been passed against the assessment order u/s 144 of the Act, dated 23.12.2019. 1. 1. The Registry has informed that the appeal filed by the assessee is barred by limitation by 98 days. An application seeking condonation of delay has been filed by the assessee stating as under:
“1. That this is the petition for condonation of delay on behalf of the appellant, I.T.A. No.: 315/PAT/2025 Assessment Year: 2017-18 Asif Iqubal.
That the petition delves the reason of delay to the tune of 117 days in filing this instant appeal before ITAT. 3. due to That the delay, stated herein above, crept into some unavoidable reason, and hence are enumerated hereunder.
That the appellant is suffering from critical disease and is not in a position to take much burden.
That the appellant needs intensive care of near relative and hence running under intensive care.
That the appellant assigned the work and papers to an advocate for filing appeal, but he was not good to do this case rather he wasted the time and hence this delay caused in filing appeal.
That the addition made by the Ld. A.O. is based upon flimsy ground without looking into the merit of the matter and without giving reasonable opportunity of being heard to the appellant.
That the policy of natural justice has not been followed as the genesis for the disposal of the said case.
That in the event this appeal is dismissed only on the ground of delay the appellant shall suffer from irrepairable inflict on the contrary in case this delay is condoned, there will be no harm upon the department whatsoever.”
Considering the application for condonation of delay and the reasons stated therein, we are satisfied that the assessee had a reasonable and sufficient cause and was prevented from filing the instant appeal within the statutory time limit. We, therefore, condone the delay and admit the appeal for adjudication.
The assessee is in appeal before the Tribunal raising the following grounds of appeal:
“1. Whether ITO WARD 2(3), SIWAN was justified in treating the deposits during demonetization period as unexplained money u/s 69A without looking into the debit entries in the account and transaction in the previous or subsequent period in the said bank account of the appellant?
Whether ITO WARD 2(3), SIWAN was justified in not giving opportunity of being heard to the appellant? I.T.A. No.: 315/PAT/2025 Assessment Year: 2017-18 Asif Iqubal.
Whether ITO WARD 2(3), SIWAN was justified in not ensuring the proper service of notice, calling upon the appellant to produce the documents requisitioned?
Whether ITO WARD 2(3), SIWAN was justified in ignoring the trading business and turnover of the appellant in his VAT return?”
Brief facts of the case are that the assessee had filed his return of income for AY 2017-18 declaring total income of ₹4,75,020/-. The case was selected for scrutiny for verification of cash deposited during the year. During the assessment proceedings, notice u/s 143(2) and 142(1) of the Act were issued, in response to which the assessee did not make any compliance. The Assessing Officer (hereinafter referred to as Ld. 'AO') issued notice u/s 133(6) of the Act to the Branch Manager, Canara Bank, Rajendra Path, Siwan for obtaining bank statement and denomination wise details of cash deposits of during the demonetization period. As per the information provided by the Bank, cash to the tune of Rs.13,09,000/- was deposited during demonetization period. Since the assessee failed to furnish any explanation regarding the nature and source of cash deposited in the bank accounts during demonetization period, the Ld. AO treated the same as unexplained credits and added the same to the income of the assessee. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A) without filing any written submission in respect of the grounds of appeal and therefore, the statement of facts mentioned in Form-35 was taken into consideration by the Ld. CIT(A) for deciding the appeal and which is extracted as under: "The appellant is an individual carrying an Automobile business. He has deposited cash during demonetization period of amounting rs. 13,09,000 out of sale proceeds and collection from debtors. The order of the learned income tax officer is erroneous on the facts and in the law. As per the Ld. AO, the notice u/s 142 was issues on 15.09.2018 requiring the appellant to file an income tax return and on various date to comply the notices. The I.T.A. No.: 315/PAT/2025 Assessment Year: 2017-18 Asif Iqubal. Notice u/s 142 has not been received by the appellant due to poor postal service. The addition was erroneous on the basis of the fact that the appellant did not get the opportunity of being heard and hence the order is against the natural justice of law. Therefore the various reasons given by the Ld. AO to uphold the ex parte assessment u/s 144 and addition of Rs. 13,09,000/- to the income of appellant on account of unexplained cash deposit are misconceived and incorrect.”
The Ld. CIT(A) held that during the course of the assessment proceeding the assessee was granted several opportunities of being heard before the Ld. AO but failed to furnish complete documentary evidences in respect of cash deposit. During the appellate proceeding also, the assessee failed to furnish any submission in support of the grounds of appeal raised by the assessee. Therefore, as the assessee failed to discharge the onus to explain the nature and source of cash deposited in the bank account, the Ld. CIT(A) found no infirmity in the order of the Ld. AO and the same was confirmed.
Aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before the Tribunal.
Rival contentions were heard and the submissions made have been examined. Before us, in Ground nos. 1 and 2 the assessee has submitted that proper opportunity of being heard was not provided to the assessee and the addition was confirmed on account of non- prosecution.
The Ld. DR stated that both at the stage of assessment and at the appellate stage the order was passed ex parte.
We have considered the submissions made. Since there was no proper compliance before both the Ld. AO as well as the Ld. CIT(A), in the interest of justice and fair play it was considered that the request of the assessee to set aside the case before the Ld. AO may be allowed so I.T.A. No.: 315/PAT/2025 Assessment Year: 2017-18 Asif Iqubal. that a proper opportunity of being heard may be provided. After examining the facts of the case and the law, we deem it appropriate to set aside the order of the Ld. CIT(A) and restore the appeal back to the Ld. CIT(A) for disposal of the grounds of appeal taken by the assessee on merit by passing a speaking order. Needless to say, the assessee shall be given a reasonable opportunity of being heard to make any further submission it wants to make in support of its grounds of appeal and shall not seek unnecessary adjournments and rule 46A of the I.T. Rules, 1962 shall also be followed and an opportunity of being heard may be provided to the Ld. AO, if required. Accordingly, the grounds taken by the assessee in his appeal are partly allowed for statistical purposes.
In the result, the appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced in the open Court on 9th October, 2025. [Sonjoy Sarma] [Rakesh Mishra] Judicial Member Accountant Member Dated: 09.10.2025 Bidhan (Sr. P.S.) I.T.A. No.: 315/PAT/2025 Assessment Year: 2017-18 Asif Iqubal. Copy of the order forwarded to:
Asif Iqubal, Station Road, Siwan, Bihar, 841226. 2. ITO, Ward-2(3), Siwan.
CIT(A)-NFAC, Delhi.
CIT-
CIT(DR), Patna Bench, Patna.
Guard File. //// By order