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Facts
The assessee, a teacher, did not file an income tax return for AY 2016-17. Information revealed cash deposits of Rs.2,16,55,000/-, including Rs.15,05,000/- during demonetization, in his bank account. The AO reopened the assessment and added Rs.15,05,000/- as unexplained money under section 69A, completing the assessment at Rs.18,06,870/-. The NFAC confirmed the AO's order.
Held
The Tribunal condoned a 38-day delay in filing the appeal due to the assessee's medical condition. It admitted additional evidence, including an affidavit and excise challans, to explain the source of cash deposits. The case was restored to the AO to allow the assessee another opportunity to present his case and verify the additional evidence, with a caution for the assessee to fully comply.
Key Issues
Whether the addition of Rs.15,05,000/- under Section 69A as unexplained money was justified, considering the assessee's explanation regarding the source of cash deposits (from father-in-law for liquor license fees, and re-deposited unutilized medical funds) and allegations of violation of natural justice by lower authorities.
Sections Cited
Section 147, Section 148, Chapter VI, Section 142(1), Section 144, Section 69A, Section 143(3), Section 144B, Section 115BBE, Section 271(1)(c), Section 271(1)(b), Section 271F, Rule 29 of I.T.A.T. Rules
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Income Tax Appellate Tribunal, SMC BENCH, LUCKNOW
Before: SHRI. SUDHANSHU SRIVASTAVA
O R D E R This appeal has been preferred by the Assessee against the order dated 06.03.2025, passed by the National Faceless Appeal Centre, Delhi (NFAC) for Assessment Year 2016-17.
2.0 The brief facts of the case are that the assessee was a teacher employed with the Government of U.P. and earned salary income. The assessee had not filed the return of income for the year under consideration. The Income Tax Department was in possession of information that the assessee had made cash deposits to the tune of Rs.2,16,55,000/- in his bank account No.144200101001330 maintained with Corporation Bank during the year under consideration and the cash deposited by the assessee during the demonetization period, i.e. from 01.04.2015 to 31.302.016 was Rs.15,05,000/-. The Assessing Officer (AO) reopened the case of the assessee under section 147 of the Income Tax Act, 1961 (hereinafter called “the Act’) after issuing notice under section 148 of the Act to the assessee. In response to the notice under section 148 of the Act, the assessee filed return of income on 18.11.2023, declaring a total income of Rs.3,01,870/- after claiming deduction under Chapter VI of Rs.1,65,000/-. Subsequently, the AO issued notices under section 142(1) of the Act to the assessee. Since the assessee had not complied with the notices/letter, the AO issued show cause notice under section 144 of the Act, in response to which the assessee filed his replies on 05.11.2023 and 20.11.2023 along with bank account statements maintained with Corporation Bank and Punjab National Bank. After considering the replies filed by the assessee, the AO observed that since the assessee could not furnish any valid explanation/evidence /source for cash deposits of Rs.15,05,000/- in the bank account maintained with Corporation Bank, the same was to be treated as unexplained money of the assessee under section 69A of the Act. The AO completed the assessment under section 143(3) read with 147 and 144B of the Act, assessing the total income of the assessee at Rs.18,06,870/-, after making an addition of Rs.15,05,000/- under section 69A of the Act.
2.1 The AO also invoked the provisions of section 115BBE of the Act and initiated penalty proceedings under sections 271(1)(c), 271(1)(b) and 271F of the Act, separately.
2.2 Aggrieved, the Assessee preferred an appeal before the NFAC, which dismissed the appeal of the assessee and confirmed the order of the AO.
2.3 Now, the assessee has approached this Tribunal challenging the order of the NFAC, by raising the following grounds of appeal:
1) At the outset, the appellant vehemently denies all accusations levied against him in his entirety. The contentions articulated in the show-cause notice and subsequent orders are unfounded and inaccurate, relying solely on assumptions and presumptions without a thorough evaluation of the facts and circumstances from a legal standpoint which contravenes the essence of the law. The appellant asserts that the proceedings initiated through the impugned show-cause notice and subsequent orders are arbitrary and run counter to legislative provisions and principle of natural justice. 2) The dismissal of my appeal by the Learned CIT-(A) NFAC, as evidenced by Order vide DIN and unjust. It is based on presumption rather than a thorough evaluation of the facts and circumstances from a legal standpoint, thereby being arbitrary and contrary to legislative laws and the principles of natural justice. This includes dismissing my appeal without proper consideration of facts ets and documents provided by the Appellant, thereby disregarding the essence of the law. This arbitrary action warrants the decision to be set aside. 3) That the Order vide DIN & Order No: ITBA/NFAC/S/250/2024-25/1074122649(1) dated 06.03.2025 by the Learned CIT-(A) NFAC, is erroneous and unjustly founded on assumptions. It is arbitrary and contrary to legislative laws and the principles of natural justice, thereby warranting to-be set-aside. 4) That the Learned Assessing Officer increased my income without proper justification, a decision which was later upheld by the CIT-(A) NFAC without considering the merits of my response. This contravenes the principles of natural justice and fairness. 5) That the addition made by the Assessing Officer and approved by the CIT-(A) NFAC under Section 69A is inappropriate. 6) That during the appeal hearing proceedings, the CIT-(A) NFAC failed to request any additional documentation beyond what I had already submitted. The decision to summarily reject my appeal, citing a lack of submitted documents, is arbitrary and unjust. This action disregards the principle of natural justice and fairness, as I was not given the opportunity to provide any further evidence or clarification to support my case. LEGAL OBJECTIONS 7) That the CIT-(A) NFAC has erred in law and in fact by confirming the assessment order passed by the Learned
Assessing Officer, assessing the total income at Rs.1,806,470/-as opposed to the returned income filed in response to notice under section 147 of Rs.301,870/- 8) That the CIT-(A) NFAC has erred in deciding the appeal without calling for any further records from the Appellant where he was dissatisfied with the submitted response and documents by the Appellant during assessment proceedings and also during the appeal proceedings and thus the order of CIT(A) NFAC is against the principle of natural justice. 9) That the CIT-(A) NFAC has erred in passing a non- speaking order which is against the law even if the assessed was not represented before it. 10) That the CIT-(A) NFAC has erred in affirming the action of the AO and invoking the provisions of sec. 69A, without examining the documents on record. 11) That the CIT(A) NFAC erred in upholding the action of the AO solely based upon surmises and conjecture, without any evidence contradicting the contentions of the assessee, which were supported by documents submitted to the best of the appellant's knowledge. 12) The CIT-(A) NFAC erred in affirming the addition of Rs.1,505,000/- as cash deposited in personal bank accounts without recognizing that the said cash constituted part of the withdrawal from other bank account held by the appellant and out of opening cash in hand. 13) That the Appellant's Father in Law Shri Ram Prasad residing at Mishrauliya, Sant Kabir Nagar was the holder of valid liquor license issued by Excise Department for which he was required to pay towards the License Fees along with Renewal fees of Rs.968250.00 for renewal of license during the AY 2016-17. 14) That for the purpose the payment of License Fees by Father in Law of the Appellant, his Father in Law paid sum of Rs.846000.00 to the Appellant in cash during the AY 2016-17 and also paid sum of Rs.122250.00 during the AY 2015-16 and further such cash has been deposited by the Appellant is his personal Bank Account bearing Account Number SB/01/001330 held with Corporation Bank (Now Union Bank of India) Khalilabad Branch. Affidavit of the Father in Law is enclosed herewith. 15) Further the Appellant during the FY 2015-16 withdrew cash from his bank account Specifically month of April, 2015 May 2015 and June2015 for the medical treatment of his father i.e. kidney transplant of his father as advised by the doctors. 16) Further due to advances age of his father, his father decided against proceedings with the kidney transplant, hence the withdrawn funds remained unutilized and further re-deposited by the Appellant in the bank account. 17) The CIT(A) NFAC erred in affirming the order of the AO, disregarding the legal principle that provisions of section 69A cannot be applied to non-maintenance of books of accounts by the Appellant. 18) The CIT(A) NFAC erred in confirming the order of the AO, disregarding the legal principle that no addition under section 69A can be made when books of account was not maintained by the Appellant.
3.0 The Ld. Authorized Representative for the assessee (Ld. A.R.) submitted that there is a delay of 38 days in filing the appeal before the Tribunal. He further submitted that the assessee had filed an application dated 03.07.2025 for condonation of delay, duly supported by an Affidavit and Medical Certificate, stating therein that the assessee was undergoing treatment for a critical medical condition from 30.04.2025 to 30.06.2025 and that the assessee was on complete bed rest as advised by the Doctor and, therefore, the appeal could not be filed before the Tribunal within the stipulated period. The prayer of the Ld. A.R. was that the delay caused in filing the appeal was not deliberate and that it was beyond the control of the assessee, which may please be condoned and the appeal be heard on merits.
3.1 The Ld. Sr. D.R. objected to the delay being condoned.
3.2 In view of the prayer made by the Ld. A.R., I condone the delay in filing of the appeal and admit the appeal for hearing.
3.3 The Ld. A.R. submitted that the assessment order passed by the AO was under section 147 read with 144B of the Act and the NFAC had dismissed the appeal of the assessee. However, to explain the source of cash deposits, the Ld. A.R. has filed an Affidavit and Excise Challans in the form of additional evidence. The Affidavit is to the effect that father-in-law of the assessee had given an amount of Rs.8,46,000/- in cash on various dates and had also paid another amount of Rs.1,22,250/- to his son-in-law for deposit in his personal bank account held with the Corporation Bank, Khalilabad and that this amount was for being deposited in the Government Treasury towards payment of Excise Fee/License Fee for dealing in Desi Liquor, which was held in the name of assessee’s father-in-law. The Ld. A.R. prayed that this may be admitted as additional evidence and the matter may be restored to the file of the AO since the lower authorities had no occasion to verify the same.
3.4 The Ld. Sr. D.R. opposed the admission of the additional evidences and, placing reliance on the orders of the authorities below, submitted that the appeal of the assessee may be dismissed.
4.0 I have heard the rival submissions and have also perused the material on record. Looking into the facts of this case, I am of the considered view that the Assessee deserves one more opportunity to present his case and, therefore, in the interest of substantial justice, I restore this file to the Office of the AO with the direction to provide one more opportunity to the Assessee to present his case. I have already admitted the additional evidences filed by the Assessee in the form of Affidavit and Excise challans under Rule 29 of the I.T.A.T. Rules. The Assessee shall produce them before the AO during the course of set aside proceedings. I also caution the Assessee to fully comply with the directions of the AO in the set-aside proceedings when called upon to do so, failing which, the AO would be at complete liberty to pass the order in accordance with law, based on material available on record even if it is ex-parte qua the Assessee.
5.0 In the result, the appeal of the Assessee stands allowed for statistical purposes.
Order pronounced in the open Court on 07/01/2026.