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Facts
The assessee, an individual trading in textile clothes, deposited Rs. 23,51,000 in cash during the demonetization period. The Assessing Officer added this amount as unexplained money under Section 69A, and the CIT(A) confirmed the addition ex-parte without considering the assessee's submissions.
Held
The Tribunal found the CIT(A)'s ex-parte order arbitrary and in violation of natural justice. It remanded the case back to the CIT(A) to re-adjudicate the issue after providing the assessee a proper opportunity to be heard and considering all submissions.
Key Issues
The key legal issue is the addition of unexplained cash deposits during demonetization under Section 69A and the violation of natural justice due to an ex-parte order by the CIT(A).
Sections Cited
Section 69A, Section 115BBE
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Income Tax Appellate Tribunal, JODHPUR BENCH, JODHPUR
ORDER DR. MITHA LAL MEENA, A.M.: This appeal is filed by assessee against the order of National Faceless Appeal Centre, Delhi [hereinafter referred to as NFAC/ CIT(A)] dated 12.02.2024 with respect to assessment year 2017-18 sustaining the addition of Rs. 23,51,000/- u/s 69 of the Act on account of un-explained money deposited during the demonetization period without appreciation of facts.
We have heard both the sides and perused the material on record, we find that the assessee is an individual engaged in trading of textile clothes during the course of assessment proceedings. The AO being not satisfied with the reply of the assessee made an addition of Rs. 23,51,000/- u/s 69A of the Asst. Year: 2017-18 Act on account of un-explained money deposited during demonetization period and levied tax at high rates by applying provisions of Section 115BBE of the Act. Thereafter, in the faceless appeal scheme, the appeal of the assessee was decided ex-parte qua the assessee by endorsing the observations of the AO in confirming the aforesaid additions made by the AO.
The Ld. Counsel for the assessee has submitted the details regarding source of cash deposit in the bank during demonetization period as by way of debtors realization before the Assessing Officer (Para 7 of Assessment Order). However the Ld. DR argued that the claim of the assessee that he received SBN from third party during demonetization period needs to verified firstly an identity of the debtors by way of complete address, PAN, contact number of the depositor and secondly confirmation (duly signed ledger account of the assessee in books of buyer) in order to prove that cash in SBN was deposited by the debtors in the account of the assessee.
The Ld. CIT(A)/NFAC while passing the ex-parte order has observed that during the course of appellate proceedings, notices were issued to the appellant to explain the cash deposit during the demonetization period but there was no reply received from the assessee. Accordingly, the CIT(A) has observed that the behaviour of the assessee shows that appellant assessee
Asst. Year: 2017-18 was not interested to pursue this appeal. In absence of any reply from the appellant assessee, the matter was being decided ex-parte based on material on record. It is seen that the Ld. CIT(A) has not discussed any facts of the case even not referred to the replies filed by the assessee before the Assessing Officer. In our view, such an order passed by the Ld. CIT(A) in arbitrary and mechanical manner ex-parte qua the assessee in violation of principles of natural justice is not justified.
In view of the principles of natural justice, we consider it deem fit that the appellant assessee may be given one more opportunity of being heard before the Ld. CIT(A) to present his case since he has good arguable case on merits. Accordingly, the matter is remanded back to the file of the Ld. CIT(A) to adjudicate the issue of cash deposits of Rs. 23,51,000/- in the bank account of assessee made during the period of demonetization after granting sufficient opportunity of being heard and considering the written submissions filed on record before the AO as per Paper Book Pg. No. 1 to 58 and may be filed in the fresh appellate proceedings. At the same time, the assessee is also instructed to cooperate with the fresh proceedings before the Ld. CIT(A).
Thus, the matter is restored to the file of the Ld. CIT(A) to adjudicate the appeal in accordance with law.
Order pronounced in the open court on 25/02/2026.