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Facts
The assessee, Chetanaya Traders, appealed against additions made under sections 69A (unexplained cash deposit of Rs. 2.23 crores during demonetization) and 40A(3) (cash payments of Rs. 6.80 lakhs exceeding limits) for Assessment Year 2017-18. The CIT(A) sustained these additions ex-parte due to non-compliance, despite the assessee claiming the source of cash deposits was prior bank withdrawals and that software issues prevented cash book production.
Held
Considering the ex-parte order by the CIT(A) and the assessee's prayer for an opportunity to produce the cash book and explain the source of cash deposits, the Tribunal, with no objection from the Departmental Representative, remanded the matter back to the CIT(A). The CIT(A) is directed to decide all grounds on merits after allowing the assessee a proper opportunity of hearing and filing necessary documents.
Key Issues
Whether the additions under section 69A and section 40A(3) were justified; Whether the assessee was denied a proper opportunity of hearing; Whether the matter should be remanded to the CIT(A) for fresh adjudication after providing an opportunity to explain cash deposits and produce books of accounts.
Sections Cited
Income Tax Act, 1961: Section 250, Income Tax Act, 1961: Section 143(3), Income Tax Act, 1961: Section 69A, Income Tax Act, 1961: Section 40A(3), Income Tax (Appellate Tribunal) Rules, 1963: Rule 34(4)
AI-generated summary — verify with the full judgment below
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 04.12.2023 passed u/s 250 of the Income Tax Act, 1961 which has emanated from the order of the ITO, Ward-1(1), Jalandhar passed u/s 143(3) of the Act, dated 29.12.2019. made u/s 69A amounting to Rs.2.23 crores on account of unexplained cash deposited in bank during demonetization period and addition of Rs.6.80 lakhs u/s 40A (3) of the Act 61, for cash payments exceeding limits, both sustained by the first appellate authority, in absence of any compliance to various notices issued by the Ld. CIT (A)
(as evident from para – 4 of appellate order).
In ground no. 2 the assessee has objected to the fact that no proper opportunity of hearing has been provided before confirming the additions.
It also not ascertainable from records whether hearing notice has been issued in email id provided in form 35 (sanjeev31160@rediffmail.com) even though the Ld. first appellate authority has sustained the additions based on the SOF and Grounds contained in the memo of appeal.
Brief facts emerging are that the assessee firm is engaged in the business of trading of raw hides and wet blue leather and during the demonetization period the assessee has deposited SBN amounting to Rs. 2.28 crores in bank accounts (page 3 of assessment order) and even though the assessee has filed submissions and bank documents in course of assessment, the cash book was never produced in spite of repeated requests (as noted by AO para – 7 of order) on account of software issues. income of Rs.2.32 crores (against returned income of Rs.2.57 lakhs) and the matter carried in appeal has been dismissed in absence of proper explanation and inadequate compliance.
In course of hearing the Ld AR filed a short paper book containing number of bank statements of different accounts maintained with PNB, audit report, audited accounts, ITR and computation of income, and submitted that the source of cash deposited in bank accounts during demo period was out of withdrawals from banks on various dates prior to demonetization (and not from regular sale proceeds of the assessee, as per synopsis para – 5 filed before tribunal).
As such he prays that an opportunity be allowed for production of cash book before theLd first appellate authority, because all such periodical withdrawals from banks are duly recorded in regular cash book, through which the said deposits can be satisfactorily explained.
The Ld DR relied on the order of the first appellate authority, but considering the ex-parte order passed without proper representation, he has no objection if the matter is remanded to Ld. CIT(A).
We have considered the materials on record and heard the rival counsels and we are of the opinion that cash deposited in bank during demonetization period by a regularly maintained in normal course of business) along with supporting evidences.
As such in the interest of justice we remand the matter back to the Ld first appellate authority for deciding on all grounds contained in form 35 on merits after allowing an opportunity to the assessee to file necessary documents and submissions in support of its contention and to explain the source of cash deposited in bank during demonetization period.
We have not expressed any opinion on merits of the case and all issues are left open.
The assessee to be allowed opportunity of being heard.
In the result, the appeal filed by the assessee is allowed for statistical purpose.
Order pronounced in accordance with Rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1963 as on 28.08.2025.