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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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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI B.M. BIYANI & SHRI PARESH M. JOSHI
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 Page 1 of 12 AY 2017-18 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.
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.
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
Page 2 of 12 AY 2017-18 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:
Page 3 of 12 Tilak Kumar AY 2017-18 Page 4 of 12 Tilak Kumar – AY 2017-18 Page 5 of 12 Tilak Kumar ITA No. 403/Ind/2025 – AY 2017-18 Page 6 of 12 Tilak Kumar ITA No. 403/Ind/2025 – AY 2017-18 Page 7 of 12
Page 8 of 12 AY 2017-18 5. 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 re- produced below:
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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.
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.
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
Page 10 of 12 AY 2017-18 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.
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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
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