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Facts
The assessee filed an appeal against the CIT(A)'s order which upheld the assessment order passed by the AO. The AO made additions to the total income of the assessee based on cash deposits during demonetization and other periods, treating them as unexplained money and business turnover.
Held
The Tribunal acknowledged the assessee's submission of illness and inability to provide proper compliance before the AO and CIT(A). In the interest of justice, the Tribunal decided to set aside the orders of the CIT(A) and AO.
Key Issues
Whether the additions made by the AO towards unexplained money and business turnover were justified, and whether the assessee was denied a proper opportunity to present their case due to illness.
Sections Cited
250, 144, 69A, 115BBE, 44AD, 234A, 234B, 271AAC, 270A, 142(1), 133(6)
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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 25.01.2024, which has been passed against the assessment order u/s 144 of the Act, dated 17.12.2019. 2. The assessee is in appeal before the Tribunal raising the following grounds of appeal:
“1. For that, the grounds of appeal hereto are without prejudice to each other.
For that, the assessment u/s 144 is though completed on the basis of information and documents available with the AO and according to his best I.T.A. No.: 402/PAT/2024 Assessment Year: 2017-18 Ajay Kumar. judgment which is illegal, invalid and bad in law on the facts and circumstances of the case.
For that, the Ld. A.O. has erred in assessing the total income of appellant being a sum of Rs. 41,12,820/- which is arbitrary and unjustified on the facts and circumstances of the case, as just being filed on 13.07-2018 which is prior to assessment proceedings is arbitrary and unjustified as against return income of Rs. 5,94,303/- But the learned assessing office is said that return was not filed is arbitrary and unjustified.
For that, the Ld. A.O. has erred in adding a sum of Rs. 24,25,800/- as unexplained money as u/s 69A of the I.T. Act,1961 read with section 115BBE of the I.T. Act,1961 which is arbitrary and unjustified on the facts and circumstances of the case.
For that, the Ld. A.O. has erred in adding a sum of Rs. 12,97,020/- as income on the basis of the transaction in bank account and the nature of the trade of the appellant which is arbitrary and unjustified on the facts and circumstances of the case.
For that, the Ld. A.O. is not justified in adding a sum of Rs. 3,90,000/- under the head capital which is wholly arbitrary and unjustified on the facts and circumstances of the case.
For that, the demand made on account of interest u/s 234A and 234B is unsustainable in law being mechanical and without the sanction of law.
For that, the initiation of penalty proceedings u/s 271AAC of the I.T Act, 1961 is wholly arbitrary and unjustified.
For that, the initiation of penalty proceedings u/s 270A of the I.T Act, 1961 is wholly arbitrary and unjustified.
For that, the appellant craves to urged, add or alter any of the ground or grounds at time of hearing.
Brief facts of the case are that as per the information received by the Assessing Officer (hereinafter referred to as Ld. 'AO') the assessee was found to have deposited cash of ₹24,25,800/- during the demonetisation period in his two bank accounts maintained with State Bank of India. A notice u/s 142(1) of the Act calling for the return of income for AY 2017-18 was issued but the assessee did not respond to the said notice. The Ld. AO issued notice u/s 133(6) to the bank to obtain the details of the bank accounts and thereafter issued another I.T.A. No.: 402/PAT/2024 Assessment Year: 2017-18 Ajay Kumar. notice u/s 142(1) of the Act dated 25.11.2019 along with the draft assessment order to which also the assessee did not respond. The Ld. AO observed that apart from the cash deposited during the demonetisation period, the assessee had deposited cash of ₹1,62,12,750/- during the pre-demonetization and post-demonetization period in both the bank accounts. Since the source of the cash deposits was not explained, the Ld. AO added a sum of ₹24,25,800/- as unexplained money u/s 69A of the Act. For the amount of ₹1,62,12,750/- during the pre- and post-demonetization period in the bank accounts the Ld. AO treated the same as business turnover of the assessee and applied provisions of section 44AD of the Act and computed the profit @ 8% thereon and made an addition of ₹12,97,020/-. As regards the capital requirement for running the business by adopting the peak cash deposit of ₹3,90,000/- made on 04.04.2016 in the bank account, the Ld. AO passed an order u/s 144 dated 17.12.2019 assessing the total income of the assessee at ₹41,12,820/-. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A). Since the assessee did not furnish any reply in response to the notices of hearing, the Ld. CIT(A) did not find any infirmity in the order of the Ld. AO and dismissed the appeal of the assessee.
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. The Ld. AR submitted that the assessee could not file proper reply before the Ld. AO as he was suffering from serious illness. It was also submitted that the accounts were not related to the assessee and the assessee was not able to file proper reply before the Ld. CIT(A) I.T.A. No.: 402/PAT/2024 Assessment Year: 2017-18 Ajay Kumar. because of having serious diabetes issues and therefore, requested that another opportunity may be provided and the matter may be remanded to the Ld. AO as the assessee has sufficient evidence that the accounts do not belong to the assessee. It is further mentioned in Ground nos. 4 and 5 that though the assessee had filed the income tax return properly but had shown that he did not file the return.
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 that a proper opportunity of being heard may be provided. Hence, after examining the facts of the case, we deem it appropriate to set aside the order of the Ld. CIT(A) as well as the order of the Ld. AO and remit the matter back to the Ld. AO for making the reassessment de novo. 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. Accordingly, the grounds taken by the assessee in his appeal are 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 8th October, 2025. [Sonjoy Sarma] [Rakesh Mishra] Judicial Member Accountant Member Dated: 08.10.2025 Bidhan (Sr. P.S.) I.T.A. No.: 402/PAT/2024 Assessment Year: 2017-18 Ajay Kumar. Copy of the order forwarded to:
Ajay Kumar, S/o Yamuna Singh, Vill Manupur, Po Saidpur, PS Dighwara, Chhapra, Bihar, 841207. 2. ITO, Chapra.
CIT(A)-NFAC, Delhi.
CIT-
CIT(DR), Patna Bench, Patna.
Guard File. //// By order