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Facts
The assessee appealed against the order of the CIT(A) for AY 2017-18, which sustained additions made by the AO related to cash deposits in bank accounts, introduction of capital, and cash utilized for personal purposes, including during the demonetization period. The assessee contended that both the AO and CIT(A) completed their proceedings without providing sufficient opportunity of being heard, thereby violating principles of natural justice.
Held
The Tribunal observed that the assessment was completed hastily within two months, and the assessee's contention regarding the lack of reasonable opportunity to explain the additions was valid. Given the circumstances, the Tribunal deemed it appropriate to restore the entire matter to the file of the AO for fresh adjudication, ensuring adequate opportunity of being heard is provided to the assessee.
Key Issues
Whether the AO and CIT(A) erred in making/sustaining additions related to cash deposits and other items without providing sufficient opportunity of being heard to the assessee, violating principles of natural justice.
Sections Cited
142(1)
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Income Tax Appellate Tribunal, DELHI BENCH, ‘E’: NEW DELHI
Before: SHRI C.N. PRASAD & SHRI NAVEEN CHANDRA
ORDER PER C.N. PRASAD, JM,
This appeal filed by the assessee is preferred against the order of the Commissioner of Income Tax (Appeals)/NFAC, Delhi [herein after referred as “CIT(A)”] dated 14.01.2025 for the A.Y. 2017-18 in sustaining the additions made by the AO in respect of cash deposits. The assessee has raised following grounds of appeal :-
1. That the Ld.CIT(A), NFAC Delhi has grossly erred in law as well as on facts in sustaining the addition of Rs. 50,45,000/- account of cash deposit in bank account during the year, without appreciating the fact that there was sufficient cash available in the business including the cash withdrawals and cash sales made by assessee Rs. 5410427 2. That the Ld CIT(A), NFAC has grossly erred in law as well as on facts in sustaining the addition against the cash deposit only on the basis of surmises and conjectures without finding any fault in the books of assessee.
3. That Ld. CITEA), NFAC Delhi has grossly erred in law as well as on facts in sustaining the addition on account of cash deposit in the following bank accounts: i. Rs. 36,000/- in Bank of India loan account ending with 0143, ii. Rs. 1,05,500/-in Bank of India loan account ending with 0106. iii. Rs. 63,000/-in Canara Bank account ending with 4132.
4. That the order passed by Ld. CIT(A), NFAC Delhi is bad in law and required to be quashed as no reasonable and sufficient opportunity of being heard was provided and thereby violating the Principles of Natural Justice.
5. That the above grounds of appeal are independent of and without prejudice to each other. That the appellant craves leave to add, alter, amend or withdraw all or any grounds herein or add any further grounds as may be considered necessary either before or during the hearing of these grounds.”
2 The Ld. Counsel for the assessee at the outset submitted that the NFAC, Delhi passed order sustaining the additions without giving sufficient opportunity of being heard to the assessee. The Ld. Counsel for the assessee further stated that the assessment was also completed by the AO without giving proper opportunity to the assessee.
The Ld. Counsel referring to page-69 of the paper book which is the notice u/s.142(1) dated 18.12.2019, submitted that the AO issued notice requiring the assessee to furnish the details and in response to the said notice the assessee had filed detailed reply alongwith necessary documents on 20.12.2019 and thereafter the AO without issuing any further show cause notice completed the assessment on 24.12.2019 making additions in respect of cash deposit without giving sufficient opportunity to the assessee to explain the deposits. Ld. Counsel for the assessee, therefore, submitted that the matter may be restored to the file of the AO for considering the issue afresh.
On the other hand the Ld. DR has no serious objection in restore the appeal to the file of the AO.
Heard rival submissions and perused the orders of the authorities below and the details furnished before us. From the materials placed before us we could observe that the AO required the assessee to furnish details by issue of the notices dated 24.10.2019, 27.11.2019 and 18.12.2019 to which the assessee provided the details called for. We could observe that the AO completed the assessment by making various additions in respect of cash deposits, addition on account of introduction of capital, cash utilized for personal purposes and also cash deposits during demonetization period. The whole exercise of assessment right from calling for the details and completion of assessment was completed within a span of two months. Therefore, it is the contention of the Ld. Counsel for the assessee that the AO should have provided reasonable opportunity to explain the case of the assessee and also stated that the Ld. CIT(A) dismissed the appeal without giving proper opportunities.
Considering the rival submissions we feel it appropriate to restore this appeal to the file of the AO for fresh adjudication of all the issues in accordance with law after providing adequate opportunity of being heard to the assessee.
In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 17.12.2025.