AMIT, PROP MS SHREE RAM TEXTILE ,AMBALA CITY V. INCOME TAX OFFICER, WARD-1, AMBALA, AMBALA

ITA 616/CHANDI/2024

AI Insights

The case involves an appeal by the assessee, Amit, proprietor of M/s Shree Ram Textile, against the order of the CIT(A) which upheld the assessment made by the Assessing Officer (AO) treating Rs. 10,00,000 as unexplained money under section 69A read with section 115BBE of the Income Tax Act. The AO had reopened the assessment for the year 2017-18 and found that the cash deposits made during the demonetization period were unexplained. The CIT(A) dismissed the assessee's appeal, leading to the current appeal before the Tribunal. The Tribunal found that the principles of natural justice were violated as the assessee was not given a proper opportunity of hearing, and thus remanded the case back to the CIT(A) for a fresh decision.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 107750 (ITAT-CHANDIGARH)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIVEK VARDHAN
• Assessee Lawyers: TEJMOHAN SINGH
• Keywords: Set aside; Business income; Corroborative evidences; Income from undisclosed sources; Principle of natural justice
• Section: 148; 142(1); 143(2); 250; 143(1); 44AD; 69A; 10

Judgement Text

"आयकर अपीलीय अिधकरण,चǷीगढ़ Ɋायपीठ “बी” , चǷीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “B”, CHANDIGARH HEARING THROUGH: PHYSICAL MODE ŵी िवŢम िसंह यादव,लेखा सद˟ एवं ŵी परेश म. जोशी, Ɋाियक सद˟ BEFORE: SHRI. VIKRAM SINGH YADAV, AM &SHRI. PARESH M. JOSHI, JM आयकरअपील सं./ ITA NO. 616/Chd/2024 िनधाŊरण वषŊ / Assessment Year : 2017-18 Amit Prop: M/s Shree Ram Textile C/o Tejmohan Singh, Advocate # 527, Sector 10 D, Chandigarh- 160011 बनाम The ITO, Ward-1, Ambala ˕ायीलेखासं./PAN NO: ATWPA4708J अपीलाथŎ/Appellant ŮȑथŎ/Respondent िनधाŊįरती की ओर से/Assessee by : Shri Tejmohan Singh, Advocate राजˢ की ओर से/ Revenue by : Shri VivekVardhan, Addl. CIT, Sr. DR सुनवाई की तारीख/Date of Hearing : 20/02/2025 उदघोषणा की तारीख/Date of Pronouncement : 25/02/2025 आदेश/Order PER PARESH M. JOSHI, J.M. : This is an appeal filled by the Assessee under section 254 of the Income Tax Act (hereinafter referred to as the Act) before this Tribunal. The assesssee is aggrieved by the order bearing number :ITBA/NFAC/S/250/2023-24/1062946490(1) dated 19/03/2024 of CIT(A) passed under section 250 of the Act, which is hereinafter referred to as the “impugned order”. The relevant assessment year is 2017-18 and the corresponding previous year period is from 01/04/2016 to 31/03/2017. 2. Factual Matrix 2.1 The Assessee is engaged in the business “retail business of cloth” in and around village in District Ambala, Haryana. 2 2.2 That the Assessee had e filed original return of income on 05/11/2017 declaring total income at Rs. 4,29,700/-. The return was processed u/s 143(1) of the Act. 2.3 Subsequently, the case was reopened by way of issue of notice under section 148 dt. 30/03/2021 and that the same was duly served on the assessee. That in response there to the assessee filed the return of income on 24/12/2021 declaring therein a total income of Rs. 4,29,100/-. 2.4 Accordingly statutory notice under section 143(2) and 142(1) of the Act alongwith the questionnaire calling for various details were issued and duly served on the assessee. 2.5 That in response to the notice the assessee has submitted that he has deposited the cash of Rs. 15,41,000/- in the bank account instead of Rs. 10,00,000/-. It was stated that he deposited cash in the course of his business in order to make further payments. It was further stated by the assesee that he had deposited Rs. 2,00,000/- on 10/11/2016 and Rs. 8,00,000/- on 11/11/2016 due to following reasons: “ Demonetization period- has been started w.e.f. 08/11/2010 lo 31/12/2016. We have tried our best to deposit all the previous monthly cash sales, old debtors receipts, personal saving. Secondly during the Demonetization period 08/11/2016 to 31/12/2016 we have purchased the good for the business and make payments with new currency.” 2.6 That the explanation filed and offered by the assesee was not found to be satisfactory. 3 2.7 That the Ld. AO held that the explanation filed by the assesse is considered but not acceptable. The assessee has generated huge cash just before demonetization period. The assessee is dealing in the cloth and that the assesse has filed the return u/s 44AD of the Act and turnover of assesse is only Rs.42.25 lakhs through out the year and suddenly the huge cash generated just before the demonetization period. On verification of bank statements, it is seen that there are very few cash transactions in bank statements through out the year from assessee's business and just before demonetization cash amounts are generated and deposited during demonetization period. Therefore, Ld. AO held that the amount of Rs. 10,00,000/- is unexplained money possessed by the assessee and that the same is deposited in bank account during demonetization period. As the assessee failed to justify the sources of above cash deposits, which, clearly indicates that the assessee is not having any supporting evidence to prove the sources thereon. Hence, the assessee has actually incorrect explanation to offer in respect of his source of above said cash deposited in Bank Account. 2.8 That the Ld. AO to by an assessment order bearing number ITBA/AST/S/147/2021-22/1040167752(1) dt. 28/02/2022 treated the aforesaid amount of Rs. 10,00,000/- as unexplained money u/s 69Ar.w.s 115BBE and quantified total income of assessee as Rs. 14,29,100/-. The aforesaid assessment order is hereinafter referred to as the “impugned assessment order”. 4 2.9 That the assessee being aggrieved by the aforesaid “impugned assessment order” preferred first appeal under section 246A of the Act before Ld. CIT(A) who by the impugned order has dismissed the same. 2.10 That the assessee being aggrieved by the impugned order has preferred an appeal before this Tribunal and has raised following grounds of appeal in Form 36 against the impugned order which are as follows: 1. That the Ld. Commissioner of Income Tax (Appeals) has erred in passing an ex-parte order without affording a proper opportunity of hearing which is against the Principles of Natural Justice and as such the order passed is arbitrary and unjustified. 2. The Ld. Commissioner of Income Tax (Appeals) has erred in law in upholding the re-opening of the assessment applying the provisions of section 148 of the Act in as much as there was no escarpment of income warranting action under section 148 of the Act and as such the order passed is illegal, arbitrary and unjustified. 3. Without prejudice to the above, the Ld. Commissioner of Income Tax (Appeals) has erred in upholding the addition of Rs. 10,00,000/- made on account of alleged unexplained cash deposit inthe bank account treating the same to be unaccounted income of the assessee applying the provisions of Section 69A which is arbitrary and unjustified. 4. That the provisions of Section 69A are not attracted in as much as the entire business receipt including cash deposit of Rs. 10,00,000/- which was deposited on account of earlier withdrawals already stands declared in the return filed u/s 44AD and as such treating Rs. 10,00,000/- to be unexplained is illegal, arbitrary and unjustified. 5. That the Ld. Commissioner of Income Tax (Appeals) has further erred in upholding the charging of tax at 60% applying the provisions of Section 115BBE which are not applicable in the instant case. 6. That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off. 7. That the order of Ld. Commissioner of Income Tax(Appeals) Officer is arbitrary, opposed to the facts of the case and thus untenable. 5 3. Record of Hearing 3.1 The hearing in the matter took place before this Tribunal on 20/02/2025 when Ld. AR appeared for and on behalf of the assessee and interalia contended that the impugned order is illegal, bad in law and not proper. It is also in violation of the principle of natural justice as no proper opportunity was afforded to assessee before passing the impugned order. The Ld. DR appearing for Revenue has stated before us that Revenue would have no objection if the matter is remitted back for denovo adjudication back to the file of CIT(A) for passing a fresh order on denovo basis. The Ld. DR finally left it to this Tribunal to pass appropriate order in accordance with law. 4. Observations, Findings and Conclusions 4.1 We have perused the papers and records of the case. We notice that from 05/05/2022 to 06/03/2024 total five opportunities were afforded to the assessee to represent his case in the hearings so fixed but not a single opportunity was availed by the assessee. However before this Tribunal total 3 paper books have been filed but since violation of the principles of natural justice is taken up as an ground whereby exparte nature of impugned order is pointed out to us at the threshold we deem it fit and appropriate that ends of justice would be met if one more opportunity as and by way of final opportunity is afforded to the assessee herein. Accordingly we set aside the impugned order and remand the case back to the file of CIT(A) with a direction to give only one more opportunity to the 6 assessee to participate in the hearing as and by way of last chance. The Ld. CIT(A) to pass a fresh order which should be speaking and reasoned one after taking into consideration all submission of the assessee, on denovo basis. 5. Order 5.1 The impugned order is set aside as and by way of remand on denovo basis. 5.2 In the result, appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on 25/02/2025 Sd/- Sd/- िवŢम िसंह यादव परेश म. जोशी ( VIKRAM SINGH YADAV) (PARESH M. JOSHI) लेखा सद˟/ ACCOUNTANT MEMBER Ɋाियक सद˟ / JUDICIAL MEMBER AG आदेश की Ůितिलिप अŤेिषत/ Copy of the order forwarded to : 1. अपीलाथŎ/ The Appellant 2. ŮȑथŎ/ The Respondent 3. आयकरआयुƅ/ CIT 4. आयकरआयुƅ (अपील)/ The CIT(A) 5. िवभागीय Ůितिनिध, आयकर अपीलीय आिधकरण, चǷीगढ़/ DR, ITAT, CHANDIGARH 6. गाडŊ फाईल/ Guard File आदेशानुसार/ By order, सहायकपंजीकार/ Assistant Registrar "