Loading judgment…
Facts
The assessee filed an appeal against the order of the CIT(A), which upheld the assessment order passed u/s 144 of the Income Tax Act. The Assessing Officer (AO) had added an amount of Rs. 49,74,000/- deposited during the demonetization period to the assessee's total income, as the assessee did not provide evidence for the source of these funds. The assessee claimed to have maintained books of accounts, but due to non-compliance and lack of proper representation at various stages, natural justice was denied.
Held
The Tribunal noted that the assessee did not have proper representation at both the assessment and appellate stages. The Tribunal, in the interest of justice, decided to set aside the order of the CIT(A) and remit the appeal back to the CIT(A) for a fresh adjudication. The CIT(A) was directed to provide an opportunity to the assessee to represent their case properly and also to the AO, if required.
Key Issues
Whether the addition made by the AO on account of unexplained cash deposits during the demonetization period was justified without proper application of wisdom and evidence, and whether natural justice was denied to the assessee.
Sections Cited
144, 250, 143(2), 142(1), 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 CIT(A)- 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 21.11.2023, which has been passed against the assessment order u/s 144 of the Act, dated 23.12.2019. I.T.A. No.: 220/PAT/2024 Assessment Year: 2017-18 Subhash Kumar.
The Registry has informed that the appeal filed by the assessee is barred by limitation by 2 days. An application seeking condonation of delay has been filed by the assessee. However, the content of the application is as follows: “The above appeal has been preferred against the order of the CIT(A) received on 21/11/2023 on Income Tax Portal. Thereafter, on appeal on 13/01/2024, the requisite appeal fee was paid. The due date for filing the appeal before the ITAT on the basis of CIT-A order falls on 20/01/2024 which was Saturday, a non-working day. 21st January, 2024, being Sunday, was again a non-working day. Immediately, thereafter on 22/01/2024, the appeal has been submitted. Therefore, the delay of 2 days as mentioned in the notice may kindly be condoned and oblige.”
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. That the order of the AO is bad without proper application of wi om.
Though the ITR and Form 3CD had already been filed on the portal in time, no cognizance of the figures of Profit & Loss Account was taken by the AO while passing the order against deposit of currency during demonetization period and the same was passed without considering turnover, business module and cash generation in the business. Therefore, the true income of the assessee could not be determined in the order so passed and the addition of cash deposited during demonetization period is completely on hypothetical assumption.
As the assessee is not so literate but was maintaining books of accounts as also given in Form 3CD, for the fault of the counsel of not appearing before the AO, with books of accounts and other details and again at the stage of I.T.A. No.: 220/PAT/2024 Assessment Year: 2017-18 Subhash Kumar. CIT(A), the natural justice has been denied to the assessee in making the addition of Rs. 49,74,000/-.
That the arbitrary assumption of unexplained money without bringing to the record, the source of that money, the same money should have been considered a receipt from business and the corresponding income only on that money should have been made subject of addition under the head PGBP.”
Brief facts of the case are that the assessee is an individual and derived income from fish trading on wholesale basis. The assessee filed the return of income on 21.05.2017 showing total income of Rs. 3,27,830/-. Statutory notices u/s 143(2) and 142(1) of the Act were issued and duly served upon the assessee which were not complied with by the assessee. The Ld. AO found that an amount of Rs. 49,74,000/- was deposited during the demonetization period. The assessee did not produce any evidence regarding the deposit. The Ld. AO, therefore, assessed the total income of the assessee at Rs. 53,01,830/-. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A) who dismissed the appeal of the assessee after observing as under:
“5. This case was taken up for scrutiny in order to examine the cash deposited in bank account during the demonetisation. However, the appellant did not co-operate with assessment proceedings and the AO added to the total income, the cash deposited during demonetisation. During appellate proceedings also the appellant was afforded several opportunities to present his case. However, in the absence of any response, I compelled to dismiss the appeal of the appellant. "Vigilantibus non dormientibus iura subveniunt" Laws aid those who are vigilant and not those who sleep.
In the result, appeal is dismissed.”
Aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before the Tribunal. I.T.A. No.: 220/PAT/2024 Assessment Year: 2017-18 Subhash Kumar.
Rival submissions were heard and the record and the submissions made have been examined.
We find that at both the stages of assessment order before the Ld. AO as well as before the Ld. CIT(A) in the appeal, proper representation was not made on behalf of the assessee. The Ld. AR requested that the matter may be remitted to the Ld. CIT(A) while the Ld. DR supported the order of the Ld. CIT(A). Therefore, we deem it appropriate in the interest of justice and fair play that another opportunity needs to be provided to the assessee to represent his case properly before the Ld. CIT(A). We, therefore, set aside the order of the Ld. CIT(A) and remit the appeal to him to be decided afresh, who shall allow an opportunity of being heard to the assessee and also grant an opportunity of representing the case and to be heard to the Ld. AO as per rule 46A of the Income Tax Rules, 1962, if required, and thereafter pass an order in accordance with law. For statistical purposes, the appeal of the assessee is allowed.
In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on 4th April, 2025. [Sonjoy Sarma] [Rakesh Mishra] Judicial Member Accountant Member Dated: 04.04.2025 Bidhan (P.S.) I.T.A. No.: 220/PAT/2024 Assessment Year: 2017-18 Subhash Kumar. Copy of the order forwarded to:
Subhash Kumar, C/o M/s Subhash Enterprises, At- Mahadeviya Taluka, PO-Parsa Patti, Karnaul Chaturbhuj Sahebgunj, Muzaffarpuar, Bihar, 843125. 2. ITO, Ward-2(1), Muzaffarpuar.
CIT(A)-NFAC, Delhi.
CIT-
CIT(DR), Patna Bench, Patna.
Guard File. //// By order