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Facts
The assessee, a proprietor of M/s. SLN Enterprises, had cash deposits in their bank account during the demonetization period. The AO treated these deposits as unexplained income under section 69A of the Act, despite the assessee claiming they were from the sale of cement and steel.
Held
The Tribunal condoned the delay of 111 days in filing the appeal due to the counsel's ill health and delayed services of a new counsel. The Tribunal noted that the CIT(A) dismissed the appeal ex-parte without considering the merits because the assessee did not respond to notices.
Key Issues
Whether cash deposits during demonetization period are unexplained income under section 69A of the Act, and whether the ex-parte order of CIT(A) passed without considering the merits is justified.
Sections Cited
69A
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Income Tax Appellate Tribunal, “B’’ BENCH: BANGALORE
Before: SHRI CHANDRA POOJARI & SHRI SOUNDARARAJAN K.
PER SOUNDARARAJAN K., JUDICIAL MEMBER:
This is an appeal filed by the assessee challenging the order of NFAC dated 2.1.2024 in respect of the assessment year 2017.18.
Brief facts of the case are that the assessee is a Proprietor of M/s. SLN Enterprises and dealing in cement and steel. The AO had treated the cash deposits in the bank account before and after the demonetization period as unexplained money and proposed to tax the same as income u/s 69A of the Act. Even though the assessee had filed their reply by stating that these are all the amounts received from the proceeds of sale of cement and steel, the same was not accepted by the AO and assessment was made. Against which, the assessee filed an appeal before ld. CIT(A)/NFAC and contended that these are all the incomes obtained by way of sale of cement and steel and therefore, the same could not be treated as income u/s 69A of the Act. While filing the appeal in Form 35, the assessee stated that Sri Peddanna Mondyala Narasimha, Bangalore Page 2 of 4 the notices may not be sent through the e-mail. The ld. CIT(A) had dismissed the appeal by observing that the assessee had not responded to the 5 notices issued u/s 250 of the Act and therefore, the assessee was not interested in prosecuting the appeal. Against this ex-parte order, the assessee is in appeal before the Tribunal.
The ld. A.R. at the time of hearing had submitted that the assessee was not able to appear before the ld. CIT(A) for the reason that the hearing notices were sent to the e-mail ID of the auditor’s assistant who has left the job in the year 2022 itself and therefore, the assessee was not able to represent the appeal before the ld. CIT(A). The assessee also submitted that they are having all the details to show that entire deposits are only from known sources and prayed to grant one more opportunity to appear before the ld. CIT(A).
The ld. D.R. supported the order of lower authorities and prayed to dismiss the appeal.
We have heard the rival submissions and perused the materials available on record. As seen from the appeal memorandum, the appeal was filed with a delay of 111 days. The assessee enclosed condonation petition and explained that the delay has been occurred because of the ill health of the counsel and also because of the delay in getting the services of the another counsel. Further he averred in the petition that the earlier counsel not filed the appeal in time because of his health grounds and handed over the papers to the assessee for processing the second appeal through some other counsel. Hence, there is a delay of 111 days and prayed to allow the same since the assessee is having a good case on merits. 5.1 We perused the reasons stated in the condonation petition and satisfied ourselves that there is a good and sufficient reason and the delay has been properly explained and therefore we condone the delay in filing the appeal before this Tribunal 5.2 In so far as the merits of the case, we found that the ld. CIT(A) had issued notices on various dates which is as follows:
Date of Notice u/s 250 of the Act 07.03.2020 06.01.2021 10.11.2021 04.11.2022 (Enablement of communication window) 23.06.2023 23.11.2023 5.3 Therefore, the ld. CIT(A) had decided the appeal ex-parte without going into the merits of the case and dismissed the same for the reason that the assessee had not responded to the various notices issued by him. The ld. CIT(A) had no opportunity to consider the merits of the case since the assessee had not appeared before him. By taking into consideration, the submissions made by the ld. A.R.and the undertaking given by him that the assessee would appear before the CIT if one opportunity is granted, we remit the issue in dispute to the file of ld. CIT(A) for passing orders afresh after hearing the assessee.