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Facts
The legal heir of a deceased assessee filed an appeal against an ex-parte order by the CIT(A) with a delay of 164 days, which was condoned. The original assessment was for limited scrutiny regarding cash deposits, but the AO treated all bank credits as business turnover and estimated income, also adding cash deposits under Section 69.
Held
The tribunal held that the AO exceeded jurisdiction by treating all bank credits as business income and estimating it. The case was remitted back to the AO to verify only the cash deposits as per the limited scrutiny criteria, ensuring the assessee is given a proper opportunity to be heard.
Key Issues
The key legal issues were the condonation of delay in filing the appeal and whether the Assessing Officer exceeded the scope of limited scrutiny by treating all bank credits as business income and estimating it, instead of focusing solely on cash deposits.
Sections Cited
Section 69
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Income Tax Appellate Tribunal, AGRA (SMC
Before: SHRI S. RIFAUR RAHMAN
The legal heir of deceased assessee has filed this appeal against the order of the learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 29.11.2024 for the Assessment Year 2017-18.
This appeal has been filed beyond the period of limitation, i.e., with a delay of 164 days. In the delay condonation application, the legal heir of deceased assessee submitted that he was not aware of the impugned order, as the assessee had passed away and the mail ID of earlier counsel was updated on the portal. It was only when the notice for recovery of demand was received, the appellant came to know of the impugned order passed ex parte by ld. CIT(Appeals). This led him to file the appeal with a delay. In support, the legal heir has filed an affidavit, which stands uncontroverted by the Revenue. To meet the ends of justice, the delay, not being conscious or deliberate one, is hereby condoned.
At the time of hearing, learned AR of the assessee brought to my notice that the case of assessee was selected for limited scrutiny for the reason of cash deposit during the year. He brought to my notice that the Assessing Officer has treated all the credits in the bank account as the turnover of the assessee and proceeded to estimate the income @ 10%.
He also proceeded to make the addition of cash deposits made by the assessee during the demonetization period to the extent of Rs.5,00,000/- u/s. 69 of the Income-tax Act, 1961 (“the Act” for short).
He further submitted that due to non-compliance before the CIT(Appeals), learned CIT(Appeals) has dismissed the appeal preferred by the assessee.
He submitted that the Assessing Officer has exceeded the jurisdiction by proceeding to treat the total credits in the bank account as business income of the assessee and also estimated the same. He submitted that the case of assessee was selected only to verify the cash
2 | P a g e deposits made by the assessee and it is also a mandate of limited scrutiny. Accordingly, he prayed that the case of the assessee may be remitted back to the file of Assessing Officer to verify the cash deposits and complete the assessment as per the mandate of selection process.
On the other hand, learned DR submitted that it is ex parte case before the learned CIT(Appeals) and that the case was selected for limited scrutiny to verify the cash deposits made by the assessee for the whole year. Therefore, he has no objection to remit this issue back to the Assessing Officer to verify the cash deposits made by the assessee during the year under consideration.
Considered the rival submissions and material placed on record. I observe that the Assessing Officer has treated whole credits in the bank account as the business receipts of the assessee, overlooking the fact that there are inter-transfers and estimated the income without having any jurisdiction. Therefore, I direct the Assessing Officer to verify the cash deposits made by the assessee during the year as per the CASS criteria and complete the assessment by restricting himself to verify the cash deposits made by the assessee during the year. With the above direction, I remit the issue back to the Assessing Officer to redo the 3 | P a g e assessee as per my above directions. It is needless to say that the assessee be given proper opportunity of being heard.
In the result, appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on 18.12.2025.