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Facts
The deceased assessee, who ran a petrol pump, filed an income return disclosing Rs. 13,78,690. The case was selected for scrutiny due to high cash deposits during demonetization. The assessee explained cash deposits totaling Rs. 2,90,48,640 as from debtors and daily sales.
Held
The Tribunal noted that the CIT(Appeals) dismissed the appeal due to the assessee's failure to substantiate claims with documentary evidence, despite multiple opportunities. The assessee's counsel argued for a remand to the CIT(Appeals) to allow the legal heir to present evidence.
Key Issues
Whether the CIT(Appeals) order dismissing the appeal without considering the merits, despite the legal heir's willingness to provide evidence, was justified? Whether the matter should be remanded for fresh adjudication.
Sections Cited
143(2), 142(1), 133(6), 68
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, KOLKATA-CUTTACK ‘e-COURT’, KOLKATA
Before: Shri Duvvuru RL Reddy, Vice-(KZ) & Shri Rajesh Kumar
Per Duvvuru RL Reddy, Vice-President (KZ):- The present appeal is directed at the instance of assessee against the order of ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, dated 5th June, 2025 passed for assessment year 2017-18.
(A.Y. 2017-2018) Samir Kumar Paikaray 2. Brief facts of the case are that the deceased assessee derived income from running a petrol pump in the name and style of M/s. Paikaray Filling Station under authorization from Indian Oil Corporation Limited. The assessee (now deceased) deals with purchase and sale of diesel, M.S. Oil and lubricants. The assessee (now deceased) filed his return of income on 31.10.2017 disclosing total income at Rs.13,78,690/-. The return of income for the assessment year 2017-18 was selected for scrutiny under CASS so as to examine higher value receipt of cash shown from third parties in response to data and to examine large value cash deposit during demonetization period. Accordingly, notices under section 143(2) and 142(1) of the Act were issued electronically and served on the assessee in the given e-mail ID. In response to the notices, the assessee-firm filed submissions through e- filing account electronically from time to time. After examining, it was found that the assessee maintained four bank accounts in different banks wherein cash deposits during demonetization period were made aggregating to Rs.2,90,48,640/-. The assessee was asked to explain the source of cash deposits of Rs.2,90,48,640/- made in his bank accounts during the demonetization period. The assessee explained that a sum of Rs.77,24,640/- was received from nine different debtors and the balance amount of Rs.2,13,24,000/- was deposited from day-to- day sale proceeds of petrol, diesel and lubricants during the demonetization period. The assessee was asked to (A.Y. 2017-2018) Samir Kumar Paikaray furnish confirmation from the debtors along with their ledger accounts for FY 2016-17. The assessee filed confirmation from the debtors through e-proceedings. It is seen that the confirmations were hand-written in a stereotyped manner and signed by the parties. It is also seen that the parties claimed to have paid the amounts on 10.11.2016 to the assessee in cash. The assessee was also requested to furnish the complete postal address of the parties for cross examination of the claim of the assessee. The assessee has furnished the complete postal address of the parties. However, in response to notice under section 133(6) dated 19.11.2016, one of the alleged debtors Shri Pradeep Kumar Sahoo, Chhatrama, Dist. Khurda has replied in the designation based official mail that he has not made any transactions with the assessee and he is not knowing the person /assessee (now deceased). From the record, it transpires that the assesese has deposited 488 numbers of 1000 rupees notes on 25.11.2016 and 20 numbers of 1000 rupee notes on 28.11.2016. The Government of India authorized the petroleum outlets to accept SBN of 1000 rupee note till midnight of 24.11.2016 in its gazette notification. After midnight of 24.11.2016 acceptance and deposit of 1000 rupee note cannot be considered as a legal tender. But in this case, the assessee had accepted 1000 rupee notes from customers and deposited in its bank accounts on 25.11.2016 and 28.11.2016 totalling to Rs.5,08,000/-. The assessee was asked to explain as to why the cash deposits of (A.Y. 2017-2018) Samir Kumar Paikaray Rs.5,08,000/- should not be treated as unexplained cash credit under section 68 of the Act. The assessee furnished a reply stating that cash deposit of Rs.4,88,000/- consisting of 488 numbers of 1000 rupee notes were collected out of sale proceeds of 24.1.1.2016 during the late hours which could not be deposited on the same day. It was deposited immediately on the next day. With regard to the deposits of Rs.20,000/- made on 28.11.2016 in 100 rupee notes, the assessee did not furnish any explanation. Depending on the same observation on different items, ld. Assessing Officer determined the total taxable income of the asessee at Rs.86,83,190/-, which reads as under:- Income as per IT return Rs.13,78,690/- (+) Income from other Rs.57,24,640/- sources being unexplained cash credit under section 68 (+)Income from other Rs.5,08,000/- sources being unexplained cash credit under section 68 representing deposit of SBN (+) Addition on account Rs.41,456/- of undisclosed asset being undisclosed income (+) Disallowance of Rs.8,02,695/- evaporation of loss (+) Disallowance of sales Rs.2,27,715/- promotion expenses On being aggrieved, the assessee preferred an appeal before the ld. CIT(Appeals).
The ld. CIT(Appeals) dismissed the appeal of the assessee saying that the assessee has not been able to substantiate his claim by producing relevant documentary evidence. Moreover, the assessee was provided multiple opportunities to submit documents and make submissions in support of his claim. However, the assessee has not exercised this option despite multiple reminders.
On being aggrieved, the assessee preferred an appeal before the Tribunal. It was the submission of the ld. Counsel for the assessee that the legal heir of the deceased assessee is willing to prove the same with supporting evidences and materials and to prosecute the appeal before the ld. CIT(Appeals) on merit and he pleaded to set aside the order passed by the ld. CIT(Appeals) and restore the matter to the file of ld. CIT(Appeals) to decide it afresh.
On the other hand, ld. Departmental Representative submitted that as the ld. Counsel on behalf of the legal heir of the assessee did not file any documentary evidence in support of his claim inspite of providing sufficient opportunities, the ld. CIT(Appeals) has left no other option but to dismiss the appeal of the assessee. He pleaded to confirm the order passed by the ld. CIT(Appeals).
We have heard both the sides and perused the material available on record. By considering the totality of the facts and (A.Y. 2017-2018) Samir Kumar Paikaray circumstances of the case, we are of the view that it is a fit case to set aside the order passed by the ld. CIT(Appeals) and remit the matter back to the file of ld. CIT(Appeals) with a direction to dispose of the appeal without any inference on the observations of earlier order passed by him and to decide it afresh on merit. At the same breath, we also hereby caution the assessee to promptly co- operate with the proceedings before the Ld. CIT(Appeals) failing which the Ld. CIT(Appeals) shall be at liberty to pass appropriate order in accordance with law and merits of the case, based on the materials available on the record. Thus, the grounds raised by the assessee are allowed for statistical purposes.
In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on 30/10/2025.