AVUTI BHANUPRASAD,MAHABUBNAGAR V. ITO., WARD-1, MAHABUBNAGAR

ITA 69/HYD/2025

AI Insights

The case involves Avuti Bhanuprasad, the appellant, who contested the orders of the Commissioner of Income Tax (Appeals) and the Assessing Officer regarding the assessment for the year 2017-18. The primary issues revolved around the non-compliance of the appellant in responding to notices and the subsequent ex-parte assessment which included unexplained money and estimated business income. The Tribunal noted the appellant's failure to participate in the proceedings but decided to remand the case for a fresh assessment to uphold the principles of natural justice.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 29154 (ITAT-HYDERABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SM-A
• Assessment Year: 2017-2018
• Other Referred Cases: Moddus Media Pvt. Ltd. vs. M/s Scone Exhibition Pvt. Ltd. (RFA 497/201 dated 18 May, 2017)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KARTHIK MANICKAM
• Assessee Lawyers: T. CHAITANYA KUMAR; . DECISION
• Keywords: Condonation of delay; Business income; Principle of natural justice; Tangible material
• Section: 144; 142(1); 250; 139(1); 69A

Judgement Text

" आयकर अपीलीय अधिकरण, हैदराबाद पीठ में IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES “SM-A” , HYDERABAD BEFORE SHRI LALIET KUMAR, HON’BLE JUDICIAL MEMBER AND SHRI G. MANJUNATHA, HON’BLE ACCOUNTANT MEMBER ITA No.69/Hyd/2025 Assessment Year: 2017-18 Avuti Bhanuprasad, Mahabubnagar. PAN : BQSPB5604A Vs. The Income Tax Officer, Ward – 1, Mahabubnagar. (Appellant) (Respondent) Assessee by: Shri T. Chaitanya Kumar, Advocate. Revenue by: Shri Karthik Manickam, Sr.DR Date of hearing: 10.02.2025 Date of pronouncement: 11.02.2025 O R D E R PER LALIET KUMAR, J.M. This appeal is filed by the assessee, feeling aggrieved by the order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC) Delhi, dated 24.09.2023 for the AY 2017-18 on the following grounds : 2 ITA No.69/Hyd/2025 “1. The order of the learned Commissioner of Income Tax (Appeals) is erroneous on facts and in law. 2. The learned CIT (Appeals) erred in confirming the action of the Assessing Officer without providing adequate opportunity to the appellant to present their case. The ex-parte confirmation of the assessment order is arbitrary and violates the principles of natural justice. 3. The CIT (Appeals) erred in dismissing the appeal as non-maintainable without providing an opportunity to file a condonation of delay application. This action is illegal, arbitrary, and contrary to the principles of natural justice. 4. The learned CIT (Appeals) erred in confirming the assessment order without properly examining the facts and circumstances of the case. The ex-parte order violates the principles of natural justice. 5. The learned CIT (Appeals) erred in upholding the addition of 13,09,000 as unexplained money under Section 69A of the Income Tax Act, despite the lack of proper evaluation of the appellant's submissions. 6. The CIT (Appeals) erred in upholding the estimation of income at 8% only on 25,07,103, instead of considering 8% on the total deposits of ₹38,16,103. 7. The learned CIT (Appeals) erred in confirming the total income determined by the Assessing Officer at 15,09,570, contrary to the returned income of ₹4,25,000, without providing sufficient justification. 8. The learned CIT (Appeals) erred in confirming the levy of Interest under Sections 234A, 234B, and 234C of the Income Tax Act, which is not justified under the circumstances of the case. 9. The order passed by the learned CIT (Appeals) under Section 250 of the Income Tax Act is arbitrary, illegal, and contrary to the law, as it was passed without giving the appellant a reasonable opportunity to present their submissions. 3 ITA No.69/Hyd/2025 2. Facts of the case, in brief, are that assessee, an individual, did not file the return of income for the Assessment Year 2017-18 within the due date under Section 139(1) of the Income Tax Act, 1961. The Assessing Officer received information regarding certain bank transactions and issued a notice under Section 142(1) on 12.03.2018, requiring the assessee to file the return by 31.03.2018. Despite proper service of the notice, there was no compliance from the assessee. During the course of assessment proceedings, the AO obtained the assessee’s HDFC Bank, Narayanpet Branch, account statement under Section 133(6). The statement revealed total deposits of ₹38,16,103, including ₹13,09,000 deposited during the demonetization period. Another notice under Section 142(1), along with a detailed show cause letter dated 28.08.2019, was issued, calling for an explanation regarding the nature and sources of deposits. However, the assessee again failed to comply. In view of the non-compliance, the AO proceeded to complete the assessment under Section 144 of the Act. Business income was estimated at 8% on deposits of ₹25,07,103, leading to an assessed income of ₹2,00,570. Since the assessee failed to explain the source of ₹13,09,000 deposited during demonetization, the amount was treated as unexplained money under Section 69A and taxed under Section 115BBE of the Act. Accordingly, Assessing Officer completed the assessment u/s 144 of the Act and passed assessment order on 09.10.2019. 4 ITA No.69/Hyd/2025 3. Feeling aggrieved by the order passed by the assessing officer, assessee filed appeal before the Ld. CIT(A), who dismissed the appeal of assessee by observing as under : “6. Decision As mentioned above, in spite of being given a number of opportunities, the appellant did not file any submissions in support of his contentions. As such, the appeal is being decided based on the material available on record. GROUNDS of Appeal No. 1 and 6 6.1. Grounds of appeal No. 1 and 6 are general in nature and do not require separate adjudication. Same are treated as dismissed for statistical purposes. GROUNDS of Appeal No. 2, 3, 4 & 5 6.2 These grounds are directed against AO passing an ex-parte order and making additions of Rs. 200,570/- as estimated profit from trading of cement and of Rs. 13,09,000/- as unexplained money u/s 69A of the Act. I have perused the AO’s order, grounds of appeal and other details available on record. It is noted that the appellant did not comply with any of the notices of the AO during the impugned assessment proceedings. In the appellate proceedings as well, he did not respond to any of the notices. 6.3 The AO made following observations in the assessment order while making the addition: AOs Order “…..2. During the course of assessment proceedings, a copy of the Bank Account Statement of the assessee held with HDFC Bank, Narayanpet Branch, Mahabubnagar District Vide Account Bearing No.50200000793718 for the previous year relevant to the assessment year under consideration has been obtained U/s 133(6) of the I.T.Act,1961. On perusal it is noticed that during the year under consideration the assessee made huge deposits in the said bank account. In view of the non-compliance to the Notice issued U/s 142(1) of the I.T.Act,1961, and since there is a change in the incumbent, a detailed show cause letter dated 28.08.2019 along with a Notice U/s 142(1) of the I.T.Act,1961, calling for 5 ITA No.69/Hyd/2025 certain information such as, Nature of Cash Deposits & Other Deposits reflected in the bank accounts, sources for the same and Sources for the Cash Deposits made during Demonetization period i.e., 09.11.2016 to 31.12.2016 has been issued and the same has been duly served on the assessee. However, there is no compliance to the said notice also. 3. Vide the said show cause letter, dated 28.08.2019,the assessee has been informed that in the case of non-compliance the assessment will be completed as per the Best Judgement as per the Provisions of Section 144 of the I.T.Act,1961, considering the material available on record. The case is posted for hearing on05.09.2019 and there is no compliance till date. In view of the non-compliance it is construed that the assessee has no explanation to offer and no objections to file for the proposed completion of the assessment as per the Provisions of Section 144 of the I.T.Act,1961. As the assessee failed to furnish valid return of income in response to the Notice issued U/s 142(1) of the I.T.Act,1961, there is no other option except to complete the assessment as per my Best Judgement as per the Provisions of Section 144 of the I.T.Act,1961. 4. During the year under consideration the assessee maintained a Bank Account with HDFC Bank, Narayanpet Branch, Mahabubnagar District Vide Account Bearing No. 50200000793718 and made deposits to the tune of Rs. 38,16,103/-. The assessee has deposited an amount of Rs.13,09,000/- during the period 09.11.2016 to 31.12.2016. On perusal of the bank account statement it is noticed that there are certain cash deposits and withdrawals at several intervals. It is also noticed that the account has been maintained in the name of M/s Shiva and Shiva Engineering Works, which is the proprietary concern of the assessee. In view of the assessee’s failure in furnishing the any explanation with regard to the nature of transactions and sources for the deposits made during the year and sources for the deposits made during the demonetization period, there is no other option except to estimate the business profits of the assessee for the deposits made from 01.04.2016 to 08.11.2016 & 01.01.2017 to 31.03.2017, amounting to Rs.25,07,103/-. The business profits of the assessee is estimated @8% of the total deposits which works out to Rs.2,00,570-. 5. On perusal of the statement of bank account it is noticed that the assessee deposited an amount of Rs.13,09,000/- during the period 09.11.2016 to 31.12.2016. In view of the assessee’s failure in furnishing any explanation with regard to the sources of funds for the deposits made, the entire amount of Rs.13,09,000, 6 ITA No.69/Hyd/2025 deposited by the assessee during the demonetization period is treated as Unexplained Money as per the Provisions of Section 69A of the I.T.Act,1961, which attracts the tax rates as per the Provisions of Section 115BBE of the I.T.Act,1961…..” 6.4 As can be seen from the above, the AO has passed a detailed order outlining the reasons for his action. On the other hand, the appellant has not brought any tangible material or evidence on record which could have satisfactorily explained the nature and source of deposits in his bank account. The AO issued multiple notices to the appellant seeking his response as regards the source of the credits/cash deposits. However, the appellant chose not to respond to those notices. Details of these notices have been listed by the AO in para 2 of the assessment order. Further, during the instant appeal proceedings as well, a number of notices u/s 250 of the Act were issued to the appellant asking him to file his reply/submission in support of the grounds of appeal raised by him. However, the appellant did not file any reply in response of the notices issued. The appellant has failed to provide any material which could have contradicted the findings reached by the AO. 6.5 The appellant has challenged the additions made in the assessment. However, he has not brought any material on record to rebut the specific observations of the AO as regards the transactions. No attempt has been made to explain as to the source cash deposits/ credits in the bank account. No documents were furnished. Even if it is presumed that the appellant was prevented from joining the assessment proceedings due to some compelling reasons, it is not clear as to what prevented him from completely ignoring the multiple notices issued during the current appellate proceedings. Given the circumstances, it is held that AO was left with no choice other than completing the assessment u/s 144 of the Act. 6.6 In the appellate proceedings as well, no reply as regards the source of cash was submitted. In one of the grounds of appeal, the appellant has it filed a Return of Income on 14.10.2019 declaring income of Rs. 425,000/- which was not taken in to account by the AO. It is noted here that the assessment order was already passed on 09.10.2019, - 5 days before the claimed filing of Return by the appellant. No explanation whatsoever has been submitted by the appellant as to why he could not file his Return on time, or even while the assessment proceedings were pending. As such, the AO could not have taken into consideration a Return of Income which was filed after the assessment proceedings were over. Such a Return is non-est, and has no legal status. 6.7 It has been held by several courts that the law assists those who are vigilant and not those who sleep over their rights as found in the Maxim 7 ITA No.69/Hyd/2025 “Vigilantibus Non Dormientibus Jura Subveniunt”. The maxim refers to the obligation of individuals to not only be aware of their rights under the law, but also to be vigilant while exercising or using the same. Hence, as an aware citizen, it was incumbent upon the appellant to be aware of the statutory provisions, to simultaneously comply with the requirements of law, and that it should pursue the legal remedies available diligently. 6.8 The Hon’ble High Court of Delhi, in the case of Moddus Media Pvt. Ltd. vs. M/s Scone Exhibition Pvt. Ltd. (RFA 497/201dated 18 May, 2017), while holding that the appellant ought to be vigilant and pursue the appeal filed by it, had observed as under: “11. The litigant owes a duty to be vigilant of his rights and is also expected to be equally vigilant about the judicial proceedings pending in the court of law against him or initiated at his instance......After filing the civil suit or written statement, the litigant cannot go off to sleep and wake up from a deep slumber after passing a long time as if the court is storage of the suits filed by such negligent litigants……” 6.9 By his own act, the appellant has failed to remain vigilant and did not avail the opportunity to submit his point of view/contention, as he did not respond to various notices issued. The fact that the appellant did receive the order and filed the present appeal, but chose not to respond to any notices issued by this office clearly establish total disregard to the due process of law. Therefore, the conclusion that the appellant could not controvert the findings given by the AO on merits of the issue either is inescapable. 6.10 In view of the above, I am of the considered view that the Assessing Officer was justified in completing the assessment u/s 144 of the Act, and making additions of (i) Rs. 200,570/- on account of estimated profit, and (ii) Rs. 13,09,900/- u/s 69A of the Act.” 4. Feeling aggrieved with the order of ld.CIT(A), assessee is now in appeal before us. 8 ITA No.69/Hyd/2025 5. Before us, the ld. AR submitted that the assessee was unable to provide the necessary information and appear before the lower authorities due to genuine reasons. He contended that since the assessee has valid grounds to present his case, the matter may kindly be remanded to the Assessing Officer for fresh adjudication. The ld. AR further assured that the assessee is willing to cooperate and provide the required details before the AO. 6. On the other hand, the ld. Ld.DR relied upon the orders of lower authorities and submitted that despite grant of multiple opportunities, including final show-cause notices, the assessee failed to respond or seek an adjournment. The ld. DR submitted that the assessee’s repeated non-compliance indicates a negligent approach, and therefore, the order of the lower authorities should be sustained. 7. We have heard the rival submissions and perused the material available on record. On perusal of the impugned order passed by the ld. CIT(A), it is observed that the ld. CIT(A) confirmed the action of the Assessing Officer based on the available records, as the assessee did not participate in the proceedings. The order of the ld. CIT(A), particularly from paragraph 4.2 reflects that multiple notices were issued, but the assessee failed to provide any documentary evidence or submissions in support of his claims. The ld. DR submitted that despite several opportunities, the 9 ITA No.69/Hyd/2025 assessee neither appeared nor furnished any supporting documents, indicating a negligent approach. However, considering the principles of natural justice and to afford the assessee one more opportunity, we deem it appropriate to remand the matter back to the file of the Assessing Officer for fresh adjudication. 8. The assessee shall be at liberty to file documents, if any, as required to substantiate his claims, and the Assessing Officer shall duly examine such documents and other evidence available on record. The AO is directed to afford a reasonable opportunity of hearing to the assessee and decide the matter afresh in accordance with the law. It is made clear that the assessee shall cooperate in the proceedings and furnish the necessary details as required. The AO shall pass a reasoned order after considering all the facts and submissions. 9. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the Open Court on 11th February, 2025. Sd/- Sd/- Sd/- Sd/- (G. MANJUNATHA) ACCOUNTANT MEMBER (LALIET KUMAR) JUDICIAL MEMBER Hyderabad, dated 11.02.2025. TYNM/sps 10 ITA No.69/Hyd/2025 Sd/- Sd/- Sd/- Copy to: S.No Addresses 1 Avuti Bhanuprasad, R/o. E-Block, Flat No.101, Aditya Empress Towers, Shaikpet Nala, Tolichowki, Golconda Post – 500008, Hyderabad, Telangana. 2 The Income Tax Officer, Ward – 1, Mahabubnagar. 3 Pr.CIT, Hyderabad. 4 DR, ITAT Hyderabad Benches 5 Guard File By Order "