RAKESH KUMAR GUPTA, AMBIKAPUR,SURAJPUR vs. INCOME TAX OFFFICER, WARD-2, AMBIKAPUR, AMBIKARPUR

At the outset, it is noted that there is a delay of 479 days in filing of this appeal before the Tribunal. Learned counsel for the assessee had filed a condonation petition along with affidavit and explaining the reason for such delay, it has been mentioned that assessee is a small retailer doing top-up mobile phone recharge of Idea Cellular Ltd. in the village Salka, Tehsil Bhaiyatan, Dist. Surajpur (C.G.) and his annual income is estimated around at Rs. 50,000 – 60,000. In this background, for the relevant assessment year, the assessment order was passed u/sec. 144 of the Act wherein an addition of Rs.62,95,035/- was made by the Assessing Officer (for short, "AO"). That, being a small time retailer of mobile top-up charging, the assessee was in deep shock and mental trauma after receiving huge demand notice from the Department. The assessee had not filed any return of income for the relevant assessment year, however, as per the information received from ITBA’s portal, the assessee deposited cash in his bank account which in fact resulted for the department to take cognizance in the case of the assessee. The assessee having annual income of Rs. 50,000 – 60,000 and after deducting his sustenance/ expenses, he is left with meagre balance and therefore, he was under huge depression regarding addition made in his case by the 3 ITA.No. 132/RPR/2025 Department. He was suffering from anxiety, sleep disturbance, suicidal thoughts for which assessee had annexed prescription of the Primary Health Centre (PHC), village Salka. Due to complexity regarding his health condition, the said PHC’s doctor referred the assessee to DHT Care Hospital, Ambikapur where he was under- treatment of Dr. Ashok Toppo, MBBS, MD (Medicine), who was the Asst. Professor of Govt. Medical College. The relevant prescriptions have also been annexed along with condonation petition and affidavit filed by the assessee.

We have considered the contents in the affidavit and the delay condonation petition along with relevant medical prescriptions that have been filed. We are of the considered view that there is merit in the argument of the assessee and he was prevented from sufficient cause in filing the appeal within the relevant time since the treatment started from 26/07/2023 and even today also, the assessee is suffering from the same problem, but it is of a lesser proportion as compared to earlier period, due to which the appeal which was supposed to be filed on 28/11/2023 could not be filed. Ld. Sr. DR fairly conceded that since the delay was circumstantial, and that, it was neither deliberate nor malafide on the part of the assessee,

That, regarding merits, the assessment in the case of the assessee was completed u/sec. 144 of the Act and it was a time when e-proceedings had started, a notice u/sec. 142(1) along with questionnaire was served on the assessee through regd. e-mail ID and speed post also. However, there was no compliance by the assessee and it was submitted in this regard by the learned counsel that being from village background and having lesser knowledge about the intricacies involved in the law of taxation, and for the fact that, he was not properly guided also by his then tax practitioner, therefore, was 5 ITA.No. 132/RPR/2025 not aware at all with regard to the hearing notices sent to him. That, as per the information with the AO, as evident from page No. 5 of the assessment order, wherein the table has been provided regarding the cash deposits made during the F.Y. 2016-17 relevant to the A.Y. 2017-18 which is extracted as follows:-

That, since source and nature of such cash deposits remained unexplained, the AO added the total cash deposits as unexplained money in the hands of the assessee u/sec. 69A of the Act i.e. Rs. 62,95,035/-.

That, before the ld. CIT(A)-NFAC since there was no compliance, ex-parte order has been passed in the case of the assessee.

We have heard the parties herein, provided careful consideration to the facts and circumstances and the documents on record in this case. It is a case where no return of income was filed by the assessee, who is a small-time retailer, doing business of mobile recharge and top-up in the village Salka, Dist. Surajpur (C.G.). That, as per the affidavit filed by the learned counsel, the annual income of the assessee was ranging from Rs. 50,000 – 60,000 from the said business. The facts emanating from the assessment order provides that as per the information available with the Department with regard to cash deposits, it was observed by the AO that the source and nature of such cash deposits remained unexplained by the assessee which resulted in addition of Rs. 62,95,035/- (rounding off Rs. 62,95,000/-) u/sec. 69A of the Act. That, due to non-compliance before the ld. CIT(A)-NFAC, an ex-parte order was passed confirming the said addition.

At the time of hearing, the assessee himself put up an appearance before this Bench and confirmed the contents filed in the affidavit regarding his source of income and the extent of income which 7 ITA.No. 132/RPR/2025 he earns in a particular year. He had also confirmed the mental trauma, which he is suffering and still undergoing treatment because of the unwarranted, arbitrarily huge demand made against him by the department and he also submitted that the nature of addition does not match with the total annual income earned by him and since his income was far below taxable, therefore, he had not filed return of income. That, on perusal of the assessment order, it is crystal clear that the entire addition has been made in different parts; (i) cash deposit for the F.Y. 2016-17 (excluding demonetization period) amounting to Rs. 39,79,743/-; (ii) cash deposit during demonetization period amounting to Rs. 17,60,350/-; (iii) credit entries (other than cash deposits i.e. through RTGS/NEFT/ Cheque etc.) amounting to Rs. 5,54,942/-. That, on perusal of the entire order of assessment, it is observed that the AO has failed to conduct basic preliminary investigation regarding such cash deposits to understand what exactly were the amounts in the specified bank notes (SBNs) which were banned from being deposited in any bank after demonetization and were not allowed as valid currency in the country and such cash deposits during demonetization period, if it is in form of SBN’s, then the amount in question is only Rs. 17,60,350/-. Be that as it may, the 8 ITA.No. 132/RPR/2025 AO further has not doubted the business activity of mobile recharge etc. of the assessee nor has brought on record that the assessee was also having any other source of income which he has not disclosed. The AO has also not brought on record whether the assessee was earning through any undisclosed source of income, other than known source of income. Similarly, the ld.CIT(A)-NFAC had passed an ex-parte order without conducting any enquiry in terms with sec. 250(4) & (6) of the Act.

As a rule of consistency in an ex-parte order, generally this Bench has provided a final opportunity to the assessee to represent his matter on merits before the first appellate authority and had remanded the matter to the file of the ld.CIT(A)-NFAC, but in this case, we intend to carve out an exception. The assessee had put up an appearance along with his counsel and we observed from his physical appearance and by the way he has spoken during the hearing that he was in real distress and mental agony and was in deep shock regarding the ex-parte proceedings culminating in such massive financial burden. We are of the considered view in these facts the matter shall have to be remanded to the file of the ld.AO for denovo adjudication as per law complying with principles of natural justice. At the same time,

As per the above terms, the grounds of appeal stands allowed for statistical purposes.

In the result, appeal of the Assessee is allowed for statistical purposes.