DHRUV ASHOKBHAI JAGANI,SURAT V. INCOME TAX OFFICE, WARD 1(1)(1), SURAT

ITA 600/SRT/2024

AI Insights

The case involves Dhruv Ashokbhai Jagani, who appealed against the order of the Commissioner of Income-tax (Appeals), which confirmed the addition of Rs. 25,22,29,475 to his income for the assessment year 2017-18. This addition was initially made by the Assessing Officer under section 69A of the Income-tax Act, 1961, due to unexplained cash deposits and bank credits in the assessee's accounts. The Tribunal noted that both the Assessing Officer and the CIT(A) had passed ex parte orders as the assessee failed to provide adequate explanations or documents to substantiate the source of these funds. The Tribunal, considering the principles of natural justice, decided to set aside the CIT(A)'s order and remit the matter back to the Assessing Officer, allowing the assessee another opportunity to present his case, provided he pays a specified cost.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 360955 (ITAT-SURAT)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2017-2018
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RITESH MISHRA
• Assessee Lawyers: SURESH K. KABRA
• Keywords: Set aside; Corroborative evidences; Principle of natural justice
• Section: 144; 142(1); 131

Judgement Text

" IN THE INCOME-TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER & SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.600/SRT/2024 Assessment Year: (2017-18) (Physical Hearing) Dhruv Ashokbhai Jagani, S/99, Someshwara Enclave, Ratna Prabha Co-Op. Housing Society, Vesu, Surat-395007 Vs. ITO, Ward - 1(1)(1), Surat èथायीलेखासं./जीआइआरसं./PAN/GIR No: ALKPJ5116B (Appellant) (Respondent) Appellant by Shri Suresh K. Kabra, CA Respondent by Shri Ritesh Mishra, CIT-DR Date of Hearing 12/03/2025 Date of Pronouncement 20/05/2025 आदेश / O R D E R PER BIJAYANANDA PRUSETH, AM: This appeal by the assessee emanates from the order passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’) dated 15.03.2024 by the Commissioner of Income-tax(Appeals), National Faceless Appeal Centre, Delhi [in short ‘CIT(A)’] for the assessment year (AY) 2017-18. 2. Grounds of appeal raised by the assessee are as under: “1. The Ld. CIT(A), NFAC has erred and was not just and proper on the facts of the case and in law in confirming the addition of Rs.25,22,29,475/- being deposits in bank. 2. PRAYER 2.1 The addition may kindly be deleted. 2.2 Personal hearing maybe granted. 2.3 Any other relief that your honours may deem fit may be granted. 2 ITA No.600/SRT/2024/AY.2017-18 Dhruv Ashokbhai Jagani 3. The assessee craves leave to add, amend, modify alter or delete any of the grounds at the time of hearing.” 3. The appeal filed by assessee is barred by 2 day in terms of provisions of section 253(3) of the Act. The learned Authorized Representative (ld. AR) submitted that the CIT(A) has passed order u/s 250 of the Act on 15.03.2024. The appeal before this Tribunal was required to be filed on 19.05.2024. However, the assessee filed the appeal on 21.05.2025. Therefore, the ld. AR requested to condone the delay in the interest of justice. We find that assessee was neither negligent nor deliberate. Considering the reason given by the applicant, we condone the delay and admit the appeal for hearing. 4. The facts of the case in brief that the assessee did not file return of income for AY.2017-18. As per information available in AIIMS module on ITBA, the assessee had deposited cash in various bank accounts. The Assessing Officer (in short, ‘AO’) verified the bank accounts and found that the assessee had deposited cash of Rs.75,77,500/- including Rs.19,99,000/- during demonetization period. However, the assessee had also received fund through transfer/RTGS amounting to Rs.25,54,07,541/-. The said credits were in 10 different bank accounts maintained by the assessee in his name. Since assessee had not file return of income, AO issued notice u/s 142(1) of the Act, but assessee did not file his return of income in response to the said notice. Therefore, proceedings u/s 144 of the Act were initiated. Again, notice u/s 142(1) was issued but no explanation regarding source of the credit entries in the bank account was filed. Thereafter, AO issued summons u/s 131 of the Act 3 ITA No.600/SRT/2024/AY.2017-18 Dhruv Ashokbhai Jagani twice but assessee failed to produce any bank accounts or any other relevant documents except the bank statements where credits of cash and transfers through banking channel are reflected. No useful information or explanation was submitted in response to the show cause notice and the summons. Therefore, the AO passed order u/s 144 of the Act by adding Rs.25,22,29,475/- u/s 69A of the Act. He also initiated penalty proceedings u/s 271AAC, 272(1)(d) and 271F of the Act. The total income was determined at Rs.25,22,29,475/- against the return income of Rs. Nil. 5. Aggrieved by the order of AO, the assessee filed appeal before the CIT(A), who issued 11 notices including two opportunities through video conference, which is mentioned at para 5 of the appellate order. However, the assessee did not comply to the said notices. Thereafter, the CIT(A) has reproduced relevant part of the assessment order and observed that assessee was engaged in the business of trading of yarn and fabric in the name and style of Flash Enterprises and he was also a Director and partner in many companies and firms. However, assessee did not file return of income. He observed that the assessee did not explain the nature and source of cash deposited made during the year. The AO had also issued summons twice but no books of account or explanation along with relevant documents were produced by the assessee. The CIT(A) was therefore of the opinion that the assessee failed to rebut the findings of the AO. In absence of proof of existence of any business claim of the assessee that credit entries in the bank account pertain to 4 ITA No.600/SRT/2024/AY.2017-18 Dhruv Ashokbhai Jagani business activity, and are not having characteristic of income, was not accepted. The CIT(A) upheld the addition made by the AO u/s 69A of the Act which was taxed u/s 115BBE of the Act. He further observed that his office also provided two opportunities for personal hearing which was not availed by the assessee; hence, appeal was dismissed. 6. Aggrieved by the order of CIT(A), the assessee filed appeal before the Tribunal. The learned Authorized Representative (ld. AR) of the assessee submitted that the CIT(A) passed an ex parte order. The appellant could not respond to the notices of the CIT(A) because they were not received by the appellant. The reasons for non-receipt of the notices are that e-mail id provided in Form 35 was not seen because the business of the assessee was disrupted and closed during the said period. Hence, the e-mail id sent on the id of the company could not be seen by the assessee. He further submitted that the correct e-mail id of the assessee is [e-mail] and not [e-mail]. He requested that the non-compliance was not deliberate but due to genuine reason that notices were not received by the appellant. He requested that one more opportunity may be given to the assessee to argue its case on merit in the interests of justice. He undertakes that the appellant will make all the compliances and help to get the appeal disposed of expeditiously. 7. We have heard both the parties and perused the materials available on record. We find that the assessee made part compliance before the AO and did 5 ITA No.600/SRT/2024/AY.2017-18 Dhruv Ashokbhai Jagani not produce books of account or any documents in support of the cash deposits and credit entries in his bank accounts. This factual issue has to be considered against the factum of non-filling of the return of income by the assessee. Due to absence of any proper explanation and supporting evidence regarding the nature and source of cash deposit and credit entries of Rs.25,22,29,475/-, the AO was constrained to make addition of the aforesaid amount u/s 69A of the Act. Before CIT(A) also, the assessee did not file any evidence or details in support of the grounds of appeal raised by him. The ld. AR submitted that the business of the assessee was closed during year and, therefore, the notices issued by the CIT(A) in the companies e-mail id could not be viewed by the appellant. As a result of which, assessee could not file reply before CIT(A). Considering all these facts, we are of the view that the assessee was not diligent and was rather negligent and non-cooperative before the lower authorities. The ld. AR submitted that the non-compliance was neither deliberate nor intentional. He requested that another opportunity may be granted to the assessee to submit all the required explanations and details and plead his case on merit. We are of the view that the principles of natural justice would call for giving another opportunity of hearing to the assessee because orders of both AO and CIT(A) were ex parte orders. Accordingly, we hold that the interests of justice would be met in case the matters is set aside to the file of AO subject to the payment of cost of Rs.15,000/- (Rupees fifteen thousand only) by the assessee to the credit of the “Income Tax Appellate 6 ITA No.600/SRT/2024/AY.2017-18 Dhruv Ashokbhai Jagani Tribunal Bar Association, Surat” within two weeks from receipt of this order. Subject to payment of above cost, we set aside the order of CIT(A) and remit the matter back to the file of AO with a direction to pass fresh assessment order in accordance with law after granting adequate opportunity of hearing. The assessee is directed to be more vigilant and diligent and to furnish all the details and explanation as needed by the AO by not seeking adjournment without valid reasons. With these directions, the grounds of appeal raised by the assessee are allowed for statistical purposes. 10. In the result, appeal of the assessee allowed for statistical purposes. Order is pronounced under provision of Rule 34 of ITAT Rules, 1963 on 20/05/2025. Sd/- Sd/- (PAWAN SINGH) (BIJAYANANDA PRUSETH) JUDICIAL MEMBER ACCOUNTANT MEMBER Surat Ǒदनांक/ Date: 20/05/2025 SAMANTA Copy of the Order forwarded to: 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // TRUE COPY // Assistant Registrar/Sr. PS/PS ITAT, Surat "