JAMUNA SHANKAR SHARMA,GUNA vs. ITO, GUNA

This appeal in ITA No.45/Agr/2023 for the assessment year 2017- 18 has arisen from the appellate order dated 17.01.2023 [DIN & Order No. ITBA/NFAC/S/250/2022-23/1048859429(1)](Appeal No. CIT(A) Bhopal-1/10337/2019-20), passed by learned Commissioner of Income- tax (Appeals), NFAC, Delhi, which, in turn, has arisen from the assessment order dated 02.12.2019 passed by the Assessing Officer u/s.

144 of the Income-tax Act, 1961. The appeal was first heard by ITAT, Agra Bench, Agra(SMC) on 09.12.2024, and on the same date was fixed

ITA No.45/Agr/2023

for clarification , as there were two separate proceedings conducted by

the AO u/s 144 as well u/s 154, and two different appeals were filed by

the assessee before ld. CIT(A) against the aforesaid two separate orders

passed by the AO, which were disposed off by ld. CIT(A) vide two

separate appellate orders both dated 17.01.2023. The assessee filed

one appeal before ITAT against both the two separate appellate orders

passed by the ld. CIT(A) , which is against the scheme of appellate

proceedings as prescribed under the Income-tax Act, 1961. The

assessee clarified and filed amended grounds of appeal withdrawing the

earlier grounds of appeal, and stated before the Bench through his legal

counsel that this appeal filed with ITAT was against the appellate order

dated 17.01.2023 passed by ld. CIT(A) which in turn had arisen against

the assessment framed by the AO u/s 144 of the 1961 Act in quantum.

Agra Bench, Agra , reads as under:

“1. That the NFAC has erred on facts and in law while sustaining the addition at Rs. 10 lac made by the AO, treating the deposits with the bank as unexplained. No addition is liable to be made, addition made by the AO, sustained by the NFAC is liable to be deleted. 2. That while sustaining the addition, the NFAC has completely ignored that the assessee has duly furnished all the supporting documents (earning of agriculture income, complete details of agriculture land, sale bills, complete details of agriculture produce and bills of expenses) in support of his submissions and grounds taken (enjoying of agriculture income) which the NFAC has ignored, no addition is liable to be made, addition made by the AO, sustained by the NFAC is liable to be deleted.

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income with Revenue u/s 139, for the impugned assessment year. As per

AIR/OCM Information recieved by the AO, there was cash deposits in the

bank accounts of the assessee. Notice u/s. 142(1) was issued by the

Assessing Officer to the assessee, on 13.03.2018 requiring the

assessee to file return of income, but the assessee did not file return of

income within due date allowed u/s. 142(1) of the Act. Assessee did not

reply to the aforesaid notice u/s 142(1) issued by the Assessing Officer.

The AO issue further notices u/s 142(1) to explain the sources of cash

deposits, but there was no response by the assessee. The case of the

assessee was selected by Revenue for framing scrutiny assessment. No

return of income was filed by the assessee u/s. 139 of the Act nor in

response to notices issued u/s 142(1). The AO proceeded to frame

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assessment u/s 144, as there was failure on the part of the assessee to

respond to notices issued u/s 142(1). The information of cash deposits

were received by the AO is based on AIR/OCM. It was observed by the

Assessing Officer that the assessee has deposited cash to the tune of

Rs.10 lakhs in his bank accounts during demonetization period, out of

which Rs.8 lakhs were deposited in Account No. 410605030391041 of

Union Bank of India, Guna and Rs.2 lakhs in Account No. 53008417172

of State Bank of India Branch ,GBB Guna. The SCN was also issued ,

and the assessee sought time to file reply. The AO observed that the

assessee was provided various opportunities during the course of

assessment proceedings, but the assessee did not reply to various

notices, and the Assessing Officer after seeking directions u/s. 144A

from the learned Joint Commissioner of Income Tax, Range-3, Gwalior,

made additions to the income of the assessee to the tune of

Rs.10,00,000/- in the hands of the assessee being unexplained cash

deposits made by the assessee in his bank accounts, vide assessment

order dated 02.12.2019 passed by the AO u/s 144 of the 1961 Act.

02.12.2019 passed by the AO u/s 144, filed first appeal with the ld.

CIT(Appeals) ,and submitted in the Statement of Facts filed in Form No.

35 before ld. CIT(A) that the assessee and his family have 261 bighas of 4 | P a g e

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agricultural land. Only source of income of assessee is from agriculture,

and the cash deposited during the demonetization period is related to his

agricultural income. The assessee in its grounds of appeal filed before ld.

CIT(A) stated that cash deposited is related to agricultural income not

other taxable income it is exempt income. During the course of appeal

proceedings before learned CIT(Appeals) , the assessee submitted reply

dated 11.01.2023 that the assessee is an illiterate farmer and is engaged

along with his family members in agriculture and allied activities and

owns around 261 bighas of agricultural/irrigated land in his own name

and in the name of his family members. Whole family members are

involved in agricultural and allied activities and this is the only source of

income of the whole family. The assessee claimed that he has earned

income from agricultural income and allied activities, and deposited

Rs.10 lakhs in the bank accounts. Assessee also claimed that the

assessee’s only son, Sh. Mritunjay used to look after the day-to-day

activities of the assessee and used to keep records of the farm

proceeds, but unfortunately, he passed away on 19.12.2020 after a

prolonged illness. He was the only son of the assessee and the lone

caregiver to the aged parents. The assessee was taken aback by the

death of his only son. Due to the death of his only son, assessee has

suffered and the assessee even had no smart phone and did not know 5 | P a g e

ITA No.45/Agr/2023

how to operate email account. Assessee was not having any idea about

the notices being sent and even the address was of his son where his

son used to live temporarily while he was studying in Bhopal. The

assessee enclosed the land holding records before the ld. CIT(Appeals).

The assessee explained that the assessee was only engaged in

agricultural activities and no other business activities. The assessee also

claimed that the assessee has withdrawn money from time to time from

the bank accounts for the agricultural purposes and has deposited the

same back during the demonetization period. Assessee enclosed copy of

bank statement to establish that the cash withdrawals from the banks

were made by the assessee which were used to be deposited in the

bank accounts. Assessee also claimed that the assessee had KCC

account from which money was withdrawn from time to time for

agricultural activities and the same were deposited back in the same

bank account as per his needs. It was also submitted that the assessee

was selling his crops in cash ,wherein the money realized in cash from

sale of crops were deposited in the bank account. Thus, in nutshell,

assessee tried to explain before learned CIT(Appeals) that the assessee

is only engaged in agricultural activities. Assessee had withdrawn money

from bank accounts, which was deposited back during demonetization

period. It was also claimed that the assessee was selling agricultural 6 | P a g e

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cops in cash and the amount was deposited in the bank account.

Amounts withdrawn from KCC account was also deposited back in the

bank account in cash. Ld. CIT(Appeals) recorded the said contentions of

the assessee in his order, but while disposing of the appeal, ld.

CIT(Appeals) has referred to the non-compliance by the assessee to

various statutory notices issued by the Assessing Officer u/s. 142(1) of

the Act during the assessment proceedings as well as to the notices

issued by ld. CIT(Appeals) u/s. 250 of the Act. Ld. CIT(Appeals) also

observed that the assessee has not filed documentary evidence of

agricultural income like 7/12 extract ,incomplete land details as well

incomplete sale bills of agricultural produce, bills of expenses etc. during

the assessment proceedings as well as appellate proceedings. The ld.

CIT(Appeals) also observed that the assessee is not able to prove that

the cash withdrawals made by the assessee from the bank accounts

were deposited back during the demonetization period and hence, in

nutshell, ld. CIT(Appeals) dismissed the appeal of the assessee.

This appeal was heard on 05.12.2024 and while studying the file, it was

observed that the Assessing Officer has passed an ex-parte assessment

order dated 02.12.2019 u/s. 144 of the Act and later, same was rectified

u/s. 154 of the Act vide order dated 17.08.2021. The assessee filed two 7 | P a g e

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different appeals before the ld. CIT(Appeals), firstly against the order u/s.

144 and secondly against rectification order u/s. 154 of the Act. The ld.

CIT(A) disposed off both the aforesaid appeal vide separate appellate

orders both dated 17.01.2023. However, while filing appeal with the

Income-tax Appellate Tribunal, Agra Bench, Agra, the assessee had filed

only one appeal although learned CIT(Appeals) has disposed of both the

appeals filed by the assessee against the assessment order u/s. 144 and

rectification order u/s. 154 by separate orders both dated 17.01.2023.

This is against the scheme of the Act governing filing of appeals before

ITAT, as separate appeal ought to have been filed , as separate cause of

action has arisen from these two proceedings. On clarification, the

Assessee clarified that assessee’s appeal filed before ITAT should be

treated against the quantum assessment u/s. 144 vide assessment order

dated 02.12.2019, which was disposed of by the CIT(Appeals) vide order

dated 17.01.2023.

for the assessee has, at the outset, submitted that the appellate order

passed by the ld. CIT(Appeals) has not considered the contentions of the

assessee and no enquiry, whatsoever, has been made by ld. CIT(A) who

simply dismissed the appeal of the assessee. It was submitted that the

Assessing Officer has passed an ex-parte assessment order u/s. 144 of 8 | P a g e

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the Act, wherein, deposits made by the assessee in the bank accounts to

the tune of Rs.10 lakhs was brought to tax in the hands of the assessee.

It was submitted that there was no attendance/compliance of notices

issued by the Assessing Officer during the assessment proceedings, as

the assessee’s son, Mrityunjay was seriously ill (who ultimately died )and

hence, there was no compliance before the Assessing Officer as his son

was looking after the necessary record keeping. Further, notices were

issued to the address at Bhopal where the assessee’s son was

temporarily living when he was studying at Bhopal. The assessee was

not aware of the assessment proceedings. It was also submitted that the

assessee is an illiterate farmers and he does not have any smart phone

and does not have access to email etc. Only Son of the assessee who

was looking after the affairs of the assessee died. It was submitted that

before the ld. CIT(Appeals), detailed reply/evidences were submitted,

which were not considered by ld. CIT(A) in proper perspective. The

assessee and his family members are owning around 261 bighas of

agricultural land and assessee’s only income is from agriculture. Thus,

the assessee was having exempt income. Ld. CIT(Appeals) dismissed

the appeal of the assessee without considering the evidences filed

before ld. CIT(A) in proper perspective ,and without making any enquiry

as is contemplated u/s. 250(6) read with section 250(4) of the Act. Even 9 | P a g e

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the AO was not directed to make enquiries and verification as to the

additional evidences submitted for the first time before ld. CIT(A). No

remand report was called by the ld. CIT(Appeals) from the AO. Thus, the

evidences submitted before ld. CIT(A) were not considered by ld. CIT(A)

in proper perspective, nor any verification proceedings were directed by

ld. CIT(A) to the AO to submit remand report after verifying the evidences

and contentions of the assessee. Prayers were made to set aside the

order of the CIT(Appeals) and restore the matter back to the file of

CIT(Appeals) for de novo adjudication of appeal.

6.2 Learned Sr. DR fairly submitted that the matter can be restored

back to the file of ld. CIT(Appeals) for fresh adjudication.

material on record. I have observed that the assessee has not filed return

of income u/s. 139 of the Act. Information was received by the Assessing

Officer under AIR/OCM that there were cash deposits made by the

assesee in his bank accounts during the demonetization period. Notice

u/s. 142(1) was issued by the Assessing Officer on 13.03.2018 for filing

return of income, but the assessee did not file return of income in

response to notice u/s. 142(1) of the Act. Further, notices u/s 142(1) were

issued by the AO to the assessee to explain cash deposits made by the

assessee in its bank account, but there was no response from the 10 | P a g e

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assessee. The case of the assessee was selected by Revenue for

framing scrutiny assessment and despite several opportunities given by

the Assessing Officer to the assessee during the course of assessment

proceedings, the assessee did not comply with the notices issued by the

Assessing Officer nor furnished any information. SCN was also issued by

the AO to the assessee, and the assessee merely sought time to file

reply. The Assessing Officer observed that during the demonetization

period, the assessee has deposited cash to the tune of Rs.10 lakhs in

the bank accounts, out of which Rs.8 lakhs were deposited by assessee

in his bank account No. 410605030391041 with Union Bank of India,

Guna and Rs.2 lakhs in his bankaccount No. 53008417172 with State

Bank of India Branch GBB Guna , and the same remained unexplained

and the Assessing Officer after seeking directions u/s. 144A from the

learned Joint Commissioner of Income Tax, Range-3, Gwalior, framed

the assessment order u/s. 144 of the Act by bringing to tax unexplained

cash credit of Rs.10,00,000/- being cash deposited during

demonetization period , in the hands of the assessee as unexplained

income of the assessee. Assessee being aggrieved, filed first appeal with

ld. CIT(Appeals) and the assessee made contentions in the statement of

facts that the assessee and his family members were owning 261 bighas

of agricultural land. Entire family is engaged in the activities of agriculture 11 | P a g e

ITA No.45/Agr/2023

and the cash has been deposited out of earlier cash withdrawals and /or

sale of cops. During the course of appeal proceedings, the assessee had

filed details of land records before the ld. CIT(Appeals) as well as bank

statements. It was claimed by the assessee before the ld. CIT(Appeals)

that cash deposit to the tune of Rs.10 lakhs was arising either out of cash

withdrawals from the bank accounts and/or withdrawal from KCC(Kisan

Credit Card)and/or from the sale of crops. Assessee had also enclosed

bank statements and land records. The assessee claimed that his only

son Mrityunjay was looking after the record keeping , who was suffering

from prolonged illness( who ultimately died) , and the assessee was not

aware of the assessment proceedings . The assessee being an aged

person and illiterate farmer was not having smart phone and the

assessee was not aware of the proceedings before the Assessing

Officer. The assessee also claimed that the assessee’s only source of

income is from agriculture , which is exempt from tax. Despite all the

information as well evidences furnished by the assessee, the ld.

CIT(Appeals) did not consider the aforesaid evidences in proper

perspective, which were in the nature of additional evidences filed for the

first time before ld. CIT(A) as the ld. CIT(A) did not made any verification

and/or enquiry wrt additional evidences filed by the assessee, nor does

the ld. CIT(A) called for any remand report from the Assessing Officer , 12 | P a g e

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and dismissed the appeal of the assessee. The CIT(Appeals) of his own

even did not deem it necessary to conduct any enquiry/verification as is

required u/s. 250(4) of the Act, despite that land records as well bank

statements were filed by the assessee before ld. CIT(A) as additional

evidences, nor it was considered fit by ld. CIT(A) to direct AO to make

necessary verifications /enquiries as to the claims, contentions and

additional evidences filed by the assessee.The assessee has duly

explained the reason and justification for non furnishing of the reply

before the Assessing Officer as his only son Mrityunjay was suffering

from prolonged illness, who ultimately died and who was looking after the

affairs of record keeping etc. of the assessee. The ld. CIT(A) has

recorded in its appellate order dated 17.01.2023 at page 1/para 1 that

the AO has not filed any objections in respect of the statement of facts

submitted by the assessee before ld. CIT(A).Severe prejudice is caused

to the assessee by the action of the ld. CIT(A) in dismissing the appeal of

the assessee by not considering in proper perspective the additional

evidences, claims and contentions raised by the assessee before ld.

CIT(A) in the first appellate proceedings, as ld. CIT(A) did not made

proper enquiries/verifications nor called for remand report from the AO.

Reference is drawn to Rule 46A of the Income-tax Rules, 1962 and

Section 250(4) of the 1961 Act. Under these facts and circumstances and 13 | P a g e

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in the interest of justice, I am of the view that the claims , contentions and

additional evidences filed by the assessee ought to have been admitted

by the ld. CIT(Appeals) and proper verification/enquiry ought to have

been done by the CIT(Appeals) as is required u/s 250(4) , or the

CIT(Appeals) ought to have directed the Assessing Officer to make

proper enquiry with respect to additional evidence filed by the assessee

such as records of land holding, details of sale of crops, bank statements

etc. and furnish remand report to the ld. CIT(A)(Rule 46A), but rather, ld.

CIT(Appeals) simply dismissed the appeal of the assessee, and such

appellate order is not sustainable in the eyes of law liable to be set aside

for denovo adjudication of the appeal of the assessee. Under these facts

and circumstances and in the interest of justice and fairness to both the

rival parties, appellate order of the CIT(Appeals) is not sustainable in the

eyes of law and the said order is set aside , and the matter is restored

back to the file of ld. CIT(Appeals) for de novo adjudication of the appeal

of the assessee after considering the additional evidences, claims and

contentions of the assessee, which were earlier filed by the assessee

before ld. CIT(A) in the appellate proceedings, or which may be filed by

the assessee during the de novo appellate proceedings conducted by ld.

CIT(A) in set aside remand proceedings, and the first appeal be decided

by ld. CIT(A) on merits in accordance with law.Needless to say that the 14 | P a g e

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ld. CIT(A) shall give proper opportunity of being heard to both the parties

in the set aside appellate proceedings. I clarify that I have not

commented on the merits of the issues arising in the appeal. I order

accordingly.

purposes.

Order pronounced in the open court on 15/01/2025.

Sd/-

(RAMIT KOCHAR) ACCOUNTANT MEMBER Dated: 15/01/2025 *aks/- Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, Agra

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