AHMEDALI KURBANHUSAIN PIPLODWALA & CO.,DAHOD vs. THE ITO, WARD-1, DAHOD

The present appeal has been filed by the Assessee against the order of the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (hereinafter referred to as “NFAC”), Delhi (hereinafter referred to as “CIT(A)”) dated 30.07.2025 passed under Section 250 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) and relates to Assessment Year (A.Y.) 2017-18.

The grounds of appeal raised by the assessee are as under:

We have heard both the parties. The assessment order reveals that the case of the assessee was reopened noting that there was cash found deposited in his bank account during Kurbanhusain Piplodwala & Co. vs. ITO] A.Y. 2017-18 - 3 – demonetization period amounting to Rs.42 Lakhs. The cash was found deposited in two bank accounts which was alleged by the Department to belong to the assessee both the accounts being in The Godhra Urban Co.Op. Bank Ltd. The assessee, however, demonstrated to the AO that only one bank account in The Godhra Urban Co.Op. Bank Ltd. belonged to the assessee. He demonstrated to the AO that the other bank account was operated by another entity though with the similar sounding name and whose assessment also had been completed for the impugned year, accepting the cash found deposited in the said bank account to the tune of Rs.12 Lakhs. The AO accepted this contention of the assessee and accordingly, noted that the cash deposited during demonetization period pertained to only one bank account, in the Godhra Urban Co.Op. Bank Ltd. and amounted to Rs.30 Lakhs. During the course of assessment proceeding, the assessee had submitted the source of cash deposited as being out of cash sales made by him in the business carried out by him of Nilgiri wood, Sagi wood, cement sheets, Panchrau wood (wood use for making food and fire at home) and on account of recovery from its debtors. The AO, however, noted that during demonetization period the cash deposited in the bank account was unusually large as compared to the other periods of year and he, therefore, accepted the assessee’s explanation of the source of the cash deposited during the impugned period only to the tune of Rs.1,40,417/-, pertaining to cash sales made in the said period. Thus, out of the cash deposit of Rs.30 Lakhs made in the bank account of the assessee, the source to the tune of Rs.1,44,417/- was accepted by the AO as out of explained sources i.e. from the [Ahmedali Kurbanhusain Piplodwala & Co. vs. ITO] A.Y. 2017-18 - 4 – cash sales made by the assessee during demonetization period and the balance amount of cash amounting to Rs.28,59,583/- was added to the income of the assessee on account of source thereof remaining unexplained.

The Ld. CIT(A)’s order, we have noted, was passed ex parte since the assesse did not respond to any notice of hearing issued by the Ld. CIT(A). However, as rightly pointed out by the Ld. Counsel for the assessee, the ld. CIT(A) has held addition made by the AO to the tune of Rs.42 Lakhs to be confirmed when as noted above, the AO had made addition only to the tune of Rs.28,59,583/-. Further, the Ld. Counsel for the assessee pointed out that the Ld. CIT(A) recorded incorrect finding that the assessee had not provided any submission on merits, no bank statement, no cash book or other financials etc. even during assessment proceedings. She drew our attention to para (xi) of the Ld. CIT(A)’s order noting the said fact and, thereafter, she pointed out that the Ld. CIT(A) held that since the assessee had failed to discharge the onus to prove the source of cash deposited in the bank account, therefore, he confirmed the addition made by the AO. She drew our attention to para (xiv) of the Ld. CIT(A)’s order in this regard:

The Ld. DR was unable to controvert the factual contention of the Ld. Counsel for the assessee as above.

In view of the same, we agree with the Ld. Counsel for the assessee that the Ld. CIT(A) has confirmed the addition of Rs.42 Lakhs on account of cash deposited during the demonetization period remaining unexplained without any application of mind, since the AO had made addition on account of the same only to the tune of Rs.28 Lakhs while he confirmed the addition of Rs.42 Lakhs. We agree with the contention of the Ld. Counsel for the assessee that the Ld. CIT(A) has confirmed the addition by recording incorrect fact of the assessee having not filed any Kurbanhusain Piplodwala & Co. vs. ITO] A.Y. 2017-18 - 7 – details or submissions during the assessment proceedings explaining the source of cash deposit, since, the Ld.Counsel for the assessee has demonstrated before us to the contrary, having filed complete books of accounts and even the details of showing the source of cash deposit in the bank account as being from cash sales made by the assessee. Since, we have noted the Ld. CIT(A) to have passed his appellate order without application of mind at all, we are of the view that the matter needs re-consideration by the Ld. CIT(A). The appeal is, therefore, restored back to the file of the Ld. CIT(A) to be dealt with afresh after giving due opportunity of hearing to the assessee.

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