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Facts
The assessee, an individual who did not file an income tax return, made cash deposits during the demonetization period. The Assessing Officer (AO) treated a significant portion of these deposits as unexplained income under section 69A read with section 115BBE. The Commissioner of Income-Tax (Appeals) dismissed the assessee's appeal as time-barred without adjudicating the merits.
Held
The Tribunal condoned the delay in filing the first appeal, holding that the assessee had demonstrated sufficient cause. It ruled that the Rs. 15,00,000/- entry in the bank account was a bank error, wrongly credited and immediately reversed, and therefore could not be considered unexplained income. The balance amount of Rs. 1,95,447/- was directed to be assessed as normal income.
Key Issues
Whether the delay in filing the appeal before the CIT(A) was justifiable, and whether the addition made by the AO on account of erroneous bank credit entry was sustainable.
Sections Cited
144, 69A, 115BBE
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आयकर अपीलीय अिधकरण, इंदौर Ɋायपीठ, इंदौर IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE
BEFORE SHRI B.M. BIYANI, ACCOUNTANT MEMBER AND SHRI PARESH M. JOSHI, JUDICIAL MEMBER
ITA No.403/Ind/2025 Assessment Year:2017-18
Tilak Kumar Kalyanpura, Jhabua, Ratlam | बनाम/ Vs. | ITO-2 Ratlam (Assessee/Appellant) | (Revenue/Respondent) PAN: BVLPM5924L Assessee by | Shri Ashish Goyal, AR Revenue by | Shri Ashish Porwal, Sr. DR Date of Hearing | 29.01. 2026 Date of Pronouncement | 06.02.2026
आदेश / O R D E R
Per B.M. Biyani, A.M.:
Feeling aggrieved by order of first appeal dated 28.02.2025 passed by learned Commissioner of Income-Tax (Appeals)-NFAC, Delhi ["CIT(A)"] which in turn arises out of assessment-order dated 20.11.2019 passed by learned ITO-2, Ratlam ["AO"] u/s 144 of Income-tax Act, 1961 ["the Act"] for Assessment-Year ["AY"] 20.11.2019, the assessee has filed this appeal on the grounds mentioned in Form No. 36 (Appeal Memo).
The background facts leading to present appeal are such that the assessee-individual is not an income-tax return filer. The AO, on the basis of information in his possession from AIMS Module of ITBA revealing that the assessee made cash deposits of Rs. 16,64,000/- in bank a/c during demonetization period (09.11.2016 to 30.12.2016), issued notice u/s 142(1) dated 13.03.2018 calling the assessee to file return of AY 2017-18 relevant to previous year 2016-17. The AO also issued follow up notices u/s 142(1) and a show-cause notice u/s 144. However, all notices issued by AO remained un-complied by assessee. Ultimately, the AO completed ex-parte assessment u/s 144 after deeming the cash deposits of Rs. 16,95,447/ made by assessee in bank a/c during entire previous year 2016-17 as unexplained money u/s 69A r.w.s. 115BBE. Aggrieved, the assessee carried matter in first-appeal before CIT(A). During proceeding of first-appeal, the CIT(A) found that the assessee's appeal was time-barred having been filed after inordinate delay. The CIT(A) further observed, in para 3.4 of impugned order, that the assessee has failed to explain such inordinate delay. Ultimately, the CIT(A) dismissed assessee's appeal in limine without adjudicating on merit. Now, the assessee has come in next appeal before us.
- 3. The assessee in present appeal is aggrieved by the addition of Rs. 16,95,447/- made by AO u/s 69A r.w.s. 115BBE on account of unexplained cash deposits made in bank a/c. - 4. Ld. AR for assessee at first submitted that the assessee is residing in a small town called "Kalyanppura" and running a small activity of photo studio. He submitted that the AO has made addition of Rs. 16,95,447/- on account of unexplained cash deposits in bank a/c during the entire previous
year 2016-17, which includes two entries of cash deposits of Rs. 1,50,000/- (+) Rs. 15,00,000/- on 10.11.2016 during demonetization period. However, the correct fact is such that the assessee made a cash deposit of Rs. 1,50,000/- only on 10.11.2016 for which the bank made a credit entry in assessee's a/c. However, the bank also made a wrong credit entry of Rs. 15,00,000/- in assessee's a/c which was immediately reversed by bank on the very same day. The entries of wrong credit as well as reversal of Rs. 15,00,000/- are clearly appearing in bank a/c. The assessee has filed copies of various documents, viz. (i) the letter dated 15.02.2020 filed to AO explaining this state of affairs, (ii) the letter dated 17.09.2021 directly sent by bank to AO confirming this state of affairs, (iii) the complaint dated 28.09.2021 filed by assessee to District Collector, Jhabua against bank, (iv) the Support granted by C.M. Helpline to assessee. These documents are scanned and re-produced below for an immediate reference:
दिनांक -08/02/2022 प्रति , श्री तिलक कुमार मालवीय 277/2 कल्याणपुरा जिला झाबुआ ,मध्य प्रदेश
विषय : सीएम हेल्पलाइन से प्राप्त शिकायत क्रमांक 16163598 दिनांक 20/12/2021
उपरोक्त शिकायत क्रमांक 16163598 दिनांक 20/12/2021 जिसमें आपके द्वारा बताया गया है कि शिकायतकर्ता तिलक कुमार मालवीय जी द्वारा बताया गया कि आवेदक का नाम तिलक कुमार मालवीय जी द्वारा बताया गया कि आवेदक का नाम तिलक कुमार मालवीय जी दैंक का नाम आई डी वी आई बैंक ,वैंक शाखा का नाम आंबुआ बैंक का खाता नम्बर 1631104000007085 आबेदक का कहना है की नोट बंदी के समय आवेदक ने बैंक में 150000 रूपय जमा किए थे किन्तु बैंक के मेनिजार की गलती के कारण 1500000 रूपय बैंक में जाम किए है जिससे आवेदक को आकार वाले आधिकारी आवेदक को परेशान कर रहे है और आवेदक बैंक का खाता बैंक कर दिया है जिससे आवेदक सामान्य बैंकिंग प्रणाली से काफी समस्या हो रही ही है आवेदक ने विभाग में सूचना दी थी किन्तु विभाग द्वारा आज दिनांक तक कोई कारवाही नहीं की गई है।
जैसा कि आपको ज्ञात है कि दिनांक 10/11/2016 नोटबंदी के वक्त बैंक के द्वारा रु 150000 की जमा राशि को त्रुटिवस रु 1500000 कर दिया था जो की उसी समय दिनांक 10/11/2016 मे त्रुटि का सुधार कर लिया गया था ।
उसके पश्चात आयकर विभाग द्वारा आपके खाते की जानकारी तथा उचित कार्यवाही के लिये नीचे दी गयी दिनांक को भिन्न भिन्न नोटिस प्राप्त हुये जो इस प्रकार है –
क्रा | दिनांक | लेटर क्रं | संदर्भ 1 | 25/02/2020 | ITBA/COM/F/17/2019-20/1025034296(1) | NOTICE 2 | 25/09/2019 | ORDER U/S 281B | ORDER 3 | 16/05/2019 | ITO/JBU/133(6)/2019-20/358 | INFORMATION 4 | 17/09/2019 | ITBA/AST/F/144(SCN)2019-20/1018020850(1) | SHOW CAUSE NOTICE
बैंक को आपके खाते के संबंध में ऊपर दिये अनुसार पत्र संख्या से नोटिस प्राप्त हुये और बैंक ने हर नोटिस मे दिनांक 10/11/2016 को हुयी तुटि का जवाब दिया जो सलग्न किया है।जो बैंक ने 29/05/2019 को दिया था जिसकी आयकर विभाग द्वारा पत्र पर स्वीकृति मोहर भी प्राप्त की थी।इन सबकी जानकारी भी आपको जात है।
इसके अलाबा हम आपको यह भी अवगत कराना चाहते है की आपका खाता फ्रीज़ भी वैंक द्वारा आयकर विभाग से प्राप्त पत्र के आधार पर किया गया है जो की उनके ऑर्डर के बाद ही पुनः संचालन के लिये आपको स्वीकृति दी जायेगी।
and the second of the second
आई ही बी आई वैंक
झाबुआ
The AO has considered the wrong deposit entry of Rs. 15,00,000/- made by bank as part of impugned addition without considering correct facts.
Ld. AR next submitted that the assessee has filed a copy of application filed to CIT(A) for condonation of delay, the same is scanned and reproduced below:
REPLY WITH RESPECT TO APPEAL DELAY
Comprehensive explanation with respect to inordinate delay in filing of appeal of more than 4 years have been explained in detail below:
Date of Passing of order - 20.11.2019
Date of receipt of order - 20.12.2019
Manual application made to income tax department on 15.02.2020 explaining the mistake done by bank in our account where wrong entry was made in the bank which was Suo motto reversed by themselves and assessee has nothing to do with that amount. (copy of letter attached)
Due date to file appeal -20.03.2020, but the appeal could not be filed due to Covid-19. All the family members were quarantined during the first and second wave of covid due to locals being infected. Even Honourable Supreme Court of India directed that the period from 15.03.2020 till 28.02.2022 be excluded for the period of limitation for filing of appeal due to Covid 19 hardship. (441 ITR 0722 (SC), 2022)
Letter received from IDBI bank on 17.09.2021 where the mistake was acknowledged by the bank and the same was sent to income tax department as well (copy of letter attached) explaining the mistake made by the bank themselves.
Complain made to Collector on 28.09.2021 regard mistake of bank (copy of letter attached)
Date of challan of appeal filed on 10.12.2021 but due to technical reason the appeal was never submitted on the portal as there were technical glitches during the start of new income tax website. After receiving of demand order the assessee realised that appeal was never being filed on the portal though challan had been submitted on the portal which when realised appeal was then later submitted on 24.02.2024.
Complain made to CM Helpline on 20.12.2021 resolved on 08.02.2022 (copy of letter attached)- Assessee made complain to CM helpline where assurance was given from bank that the mistake of mentioning 1500000/- in bank account has been corrected after which assessee thought the mistake made by the bank had been corrected and has been informed to the income tax department as well.
As assurance was given by the Collector, CM Helpline and IDBI bank and even income tax department based on manual reply, the assessee never knew the procedure to appeal against the order timely which resulted in unnecessary delay. Mistake of Bank should not cause hardship to the assesse merely due to delay in filing of appeal.
Kindly condone the delay and accept the appeal filed as it would be against principle of natural justice if opportunity of being heard is not provided to the assessee.
- 6. Ld. AR submitted that assessee has explained 'sufficient cause' for occurrence of delay in filing first-appeal in above application. - 7. Finally, Ld. AR made two-fold requests to the bench, namely (i) the delay in filing be condoned and (ii) the wrong credit entry of Rs. 15,00,000/ considered by AO must be excluded from impugned addition of Rs. 16,95,447/-. Ld. AR further agreed that the remaining addition of Rs. 1,95,447/- represents the assessee's regular income from activity of photo shop which deserves to be taxed by AO as normal income taxable at normal rate. - 8. Ld. DR for revenue placed a heavy reliance upon the orders of lower authorities and defended those orders but, however, left the matter to the wisdom of bench. He, however, submitted that the whatever decision the bench takes should not be construed as a precedent in subsequent cases. - 9. We have considered rival contentions of both sides and perused the orders of lower-authorities as well as the material held on record to which our attention has been drawn. We find that the Ld. CIT(A) dismissed the assessee's appeal in limine solely on the ground of delay without adjudicating the issues on merits. On careful consideration of the application for condonation of delay and the explanation furnished therein, we are of the view that the assessee has demonstrated a sufficient cause resulting into delay in filing first-appeal. Further, we are satisfied that the delay is neither intentional nor deliberate. In view of the settled legal
position laid down by the Hon'ble Supreme Court in Collector, Land Acquisition Vs Mst. Katiji and others 1987 AIR 1353, 1987 2 SCC 387, wherein it has been held that the "technical considerations" should not prevail over the cause of "substantial justice", we deem it fit to condone the delay. Accordingly, the delay in filing first-appeal is condoned.
On merit, we find that the impugned addition made of Rs. 16,95,447/- made by AO includes a sum of Rs. 15,00,000/- which represents a wrong credit entry made by the bank on 10.11.2016 and reversed on the very same day. The said factual position stands duly supported by the bank confirmation and other contemporaneous evidences placed on record. In our considered view, such wrongly credited and immediately reversed entry cannot be treated as unexplained money in the hands of the assessee u/s 69A. Accordingly, the addition to the extent of Rs. 15,00,000/- is directed to be deleted. However, in respect of the balance amount of Rs. 1,95,447/-, the Ld. AR for assessee himself has admitted the same to be his regular income from photo studio activity. Therefore, the Ld. AO is directed to assess the said amount as normal income chargeable to tax at the applicable rates and not u/s 115BBE. We agree to Ld. DR's submission and make a specific mention that we have taken a judicious decision having regard to the facts this case and the adjudication made by us shall not be quoted or treated as a precedent in any other matter.
Resultantly, this appeal is partly allowed as mentioned above.
Order pronounced in open court on 06.02.2026.
Sd/- Sd/-
(PARESH M. JOSHI) (B.M. BIYANI)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Indore
िदनांक /Dated : 06.02.2026
Patel/Sr. PS
Copies to: (1) The appellant
(2) The respondent
(3) CIT (4) CIT(A)
(5) Departmental Representative
(6) Guard File
By order E COPYSenior Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore