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Facts
The assessee, engaged in trading, deposited Rs. 51.83 lakhs in a bank account during the demonetization period. The Assessing Officer (AO) completed assessment ex-parte u/s 144 due to non-compliance to 143(2) notices, making additions for the SBN deposit and estimated business profits. The CIT(A) partially deleted the profit addition but sustained the SBN addition, prompting the assessee to appeal.
Held
The Tribunal found that the CIT(A) did not issue proper notice of hearing to the assessee's e-mail ID, thereby denying an opportunity to explain the SBN deposit with books of account. The matter was remanded back to the CIT(A) for fresh adjudication, with directions for the assessee to produce all necessary documentary evidence and books of account.
Key Issues
Whether proper notice of hearing was provided to the assessee by the CIT(A); and whether the addition of demonetization-period SBN deposits was justified without allowing the assessee to produce books of account.
Sections Cited
Section 250, Section 144, Section 143(2), Section 282, Rule 34(4) of Income Tax (Appellate Tribunal) Rules, 1963
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Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR
Before: SH. MANOJ KUMAR AGGARWAL & SH. UDAYAN DASGUPTA
This appeal is filed by the assessee against the order of the ld. CIT(A) NFAC, Delhi dated 23.10.2024 passed u/s 250 of the Income Tax Act, 1961 which has emanated from the order of the AO, Ward-1(1), Jammu passed u/s 144 of the Act, 1961 dated 27.12.2019. belatedly by 35 days. The assessee has filed an application for condonation of delay on the ground that the assessee was not keeping good health and on account of various medical issues was advised complete bed rest by the doctors, and in support of his contention, he has filed medical certificates from Jammu & Kashmir Health Department, Govt. Sub-District Hospital dated 26.12.2024 and also a medical certificate from Ayushman Bharat Comprehensive Primary Health Care during the period 2024. Thereafter, after recovering the appeal has been filed on 4th Feb., 2025 belated by 35 days and he has prayed for condonation of delay on medical grounds.
The ld. D. R. has no objection. Considering the medical issues, we condone the delay and admit the appeal for hearing on merits.
The assessee has taken seven grounds of appeal in Form No. 36 and the first three grounds relates to the issue that proper opportunity of hearing has not been allowed by the ld. first appellate authority and there was no proper service of notice and as such he has prayed for an opportunity of hearing so that proper documents can be produced in support of his contentions.
Brief facts emerging from records are that the assessee is engaged in the business of paddy, rice and wheat trading and during the demonetization period, he has deposited an amount of Rs.51.83 lakhs in his bank account and even though the course of scrutiny assessment proceedings. In absence of proper compliance, the assessment was completed on a total income of Rs.86.32 lakhs (with an addition of Rs.51.83 lakhs being the SBN deposits in bank account plus an amount of Rs.27.40 lakhs being profits from business estimated @ 8% on gross turnover).
The matter caried in appeal before the ld. first appellate authority has been disposed of on merits on the basis of the statement of facts and grounds of appeal
contained in Form No.
35. (but without any representation from the assessee), by allowing part relief to the assessee by deleting the addition of Rs.27.40 lakhs on account of estimated profits on turnover, but sustaining the addition of Rs.51.83 lakhs being the SBN deposited in bank during demonetization period.
In course of hearing before the Tribunal, the ld. AR of the assessee submitted that no proper notice has been served on the assessee and even though it is apparent from the appellate order that notice of hearing has been issued on two separate occasions, it is not ascertainable whether notice has been issued in the e-mail id provide in Form No. 35. He further submitted that the assessee maintains regular books of account and no opportunity has been allowed to the assessee to produce his regular books of account by which the cash deposit during the demonetization period can be explained.
CIT(A) for fresh adjudication on the said issue.
We have heard the rival submissions and considered the material on record and we find that the notice of hearing has not been issued in the e-mail id provide in Form No. 35 and as per the ld. AR, no notice of hearing has been received at all and no representation could be made before the ld. CIT(A). We also find that part relief has been allowed by the ld. CIT(A) on the basis of SOF and grounds of appeal contained in Form No. 35, but no adjudication on merits was possible on the grounds relating to the addition of SBN, which can be explained by production of cash book. As such, in the interest of justice, we remand the matter back to the files of the ld. CIT(A) for considering the issue of SBN notes deposited in bank and we also direct the assessee to file all necessary documentary evidences and books of account to establish and explain the source of cash deposited in bank during demonetization period, to the fully satisfaction of the ld. first appellate authority, and necessary report as per provisions of law may be obtained from the AO.
The assessee will be allowed reasonable opportunity of being heard and notices to be issued as per provisions of section 282 of the Act and also to the e-mail id specified in Form No. 35.
We have not expressed any opinion on merits of the case and all legal issues are left open.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in accordance with Rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1963 as on 26.09.2025