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Income Tax Appellate Tribunal, “ SMC ” BENCH, AHMEDABAD
Before: SHRI T.R. SENTHIL KUMAR & SHRI MAKARAND V. MAHADEOKAR
आयकर अपील सं / Year : 2017-18 Kaushik Purshottamdas Sakaria The ITO बनाम/ 5,6 Devbhumi Shopping Centre Ward-1(2)(3), v/s. Vijay Char Rasta Ahmedabad Navrangpura Ahmedabad – 380 009 (Gujarat) "थायी लेखा सं./PAN: ACAPS 4376 A (अपीलाथ$/ Appellant) (%& यथ$/ Respondent) Assessee by : Shri Kushal Fofaria, AR Revenue by : Smt. Bhavna Gupta Singh, Sr.DR सुनवाई की तारीख/Date of Hearing : 24/09/2024 घोषणा की तारीख /Date of Pronouncement: 08/10/2024 आदेश/O R D E R PER MAKARAND V. MAHADEOKAR, AM:
This appeal by the assessee is directed against the order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, [hereinafter referred to as “CIT(A)”] under section 250 of the Income Tax Act, 1961 1961 [hereinafter referred to as “the Act”], dated 16/01/2024, pertaining to Assessment Year (AY) 2017-18. The order confirmed the assessment passed by the Assessing Officer (AO) under section Kaushik Purshottamdas Sakaria vs. ITO Asst. Year : 2017-18 143(3) of the Income Tax Act, dated 18/12/2019, dismissing the assessee’s appeal ex-parte. The AO had made an addition of Rs.39,68,500/- under section 69A of the Act and disallowed expenses amounting to Rs.4,65,637/-.
Facts of the case:
The brief facts of the case are that the assessee is engaged in the jewellery business under the name and style of Godavari Jewellers, filed his return of income on 04/11/2017, declaring a total income of Rs. 3,76,400/-. The case was selected for scrutiny, and the AO, vide his assessment order dated 18/12/2019, assessed the total income of the assessee at Rs. 48,10,540/- . This included an addition of Rs.39,68,500/- as unexplained cash deposits under section 69A of the Income Tax Act, 1961, and a disallowance of Rs.4,65,637/- on account of unsupported expenses.
2.1. The addition made by the AO related to the cash deposits of Rs.39,68,500/- during the demonetization period, which were made in the assessee’s bank account. The AO had treated the cash deposits as unexplained money under section 69A, as the assessee failed to provide a satisfactory explanation or documentary evidence regarding the source of the deposits. Additionally, the AO disallowed salary and other business expenses totaling Rs.4,65,637/- for want of proper documentary evidence.
The assessee challenged the additions before the CIT(A), who dismissed the appeal ex-parte, confirming the assessment on the basis of the material available on record, as the assessee did not respond to the notices Kaushik Purshottamdas Sakaria vs. ITO Asst. Year : 2017-18 issued. The CIT(A) passed the order solely based on the material available before him, and the assessee’s appeal was dismissed without hearing.
During the course of proceedings before us, the Authorised Representative (AR) of the assessee submitted an application for admission of additional evidence, explaining that the failure to respond to the show cause notice and non-appearance before the CIT(A) were due to the ill health of the assessee’s Chartered Accountant (CA), who was handling the tax matters. The AR further stated that the assessee has now submitted 357 pages of documentary evidence, including ledgers, customer details, sales and purchase records, invoices, and medical certificates of the CA. These documents substantiate that the cash deposits were the result of genuine business activities during the relevant period.
The Departmental Representative (DR) submitted that the assessee had deposited significant amounts of cash in his bank account during the demonetization period, which was not a regular feature in the preceding or succeeding financial years. The DR also emphasized that the AO had not accepted the assessee's explanation that the deposits were the proceeds from sales, and that the assessee had failed to respond to the show cause notices during the assessment proceedings. However, the DR has not objected to admission of the additional evidence.
After considering the submissions made by both parties and the facts on record, we find that the ex-parte order passed by the CIT(A) was based solely on the material available on record. The assessee’s failure to present his case at both the assessment and appellate stages was due to the medical Kaushik Purshottamdas Sakaria vs. ITO Asst. Year : 2017-18 condition of his CA, which is a reasonable cause for the non-submission of evidence at the earlier stages.
6.1. We are also of the view that the principles of natural justice require that the assessee be given a fair opportunity to substantiate his claims with the additional evidence now being presented.
6.2. In the interest of justice and considering that the assessee has now furnished relevant additional evidence that goes to the root of the matter, we deem it appropriate to admit the additional evidence and restore the matter to the file of the AO for fresh adjudication. The AO is directed to consider the additional evidence submitted by the assessee and pass a fresh order in accordance with the law after affording a reasonable opportunity of being heard to the assessee.
6.3. The assessee is directed to fully co-operate in the reassessment proceedings and ensure that all necessary documents and submissions are furnished within the time frame prescribed by the AO. It is emphasized that the assessee must adhere to the time limits set by the AO to avoid any further delays in the adjudication of the matter. The AO is also directed to expedite the proceedings and pass the order within a reasonable time.
6.4. In view of the above, without going into the merit of the case, we set aside the order of the CIT(A) and restore the matter back to the AO to reconsider the issues afresh in light of the additional evidence. Kaushik Purshottamdas Sakaria vs. ITO Asst. Year : 2017-18