KANUBHAI RAHABHAI BHARVAD,VADODARA V. THE DY.CIT, CIRCLE-2(1)(1), VADODARA

ITA 171/AHD/2025

AI Insights

The case involves Kanubhai Rahabhai Bharvad, the appellant, who contested the order of the National Faceless Appeal Centre (CIT(A)), which confirmed the Assessing Officer's (AO) decision treating substantial bank deposits as unexplained income under section 69A of the Income Tax Act. The appellant argued that the deposits were part of his business turnover and had been included in his sales. The ITAT noted the procedural lapses in communication and the assessee's non-compliance at earlier stages but decided to allow a re-examination of the merits of the case rather than dismiss it on technical grounds.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 361342 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2017-2018
• Other Referred Cases: Vareli Textile Industries (154 Taxman 33) (Gujarat)
• Laws Referred To: Income-tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RIGNESH DAS
• Assessee Lawyers: HEMANT SUTHAR
• Keywords: Condonation of delay; Set aside; Opportunity of being heard; Unexplained cash credit
• Section: 143(3); 133(6)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, AHMEDABAD BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER & SHRI NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER आयकर अपील सं./I.T.A. No. 171/Ahd/2025 (िनधा\u0005रण वष\u0005 / Assessment Year : 2017-18) Kanubhai Rahabhai Bharvad Laxmi Duplex, Behind Vraj Bungalows, Harni Airport Road, Karelibaug, Vadodara, Gujarat - 390022 बनाम/ Vs. DCIT, Circle 2(1)(1) Vadodara थायी लेखा सं./जीआइआर सं./PAN/GIR No. : AGKPB9677N (Appellant) .. (Respondent) अपीलाथ\u0012 ओर से /Appellant by : Shri Hemant Suthar, AR. \u0014\u0015थ\u0012 की ओर से/Respondent by : Shri Rignesh Das, CIT-DR Date of Hearing 15/05/2025 Date of Pronouncement 22/05/2025 O R D E R PER SHRI NARENDRA PRASAD SINHA, AM: This appeal is filed by the assessee against the order of the National Faceless Appeal Centre, Delhi, (in short ‘the CIT(A)’), dated 28.11.2023 for the Assessment Year (A.Y.) 2017-18. 2. There was a delay of 359 days in filing of this appeal. The assessee has filed an affidavit explaining the reason of delay. It has been submitted that the assessee is a semi-literate person with no knowledge of Income-tax laws and no computer knowledge to ITA No.171/Ahd/2025 [Kanubhai Rahabhai Bharvad vs.DCIT] - 2 – log in to Income-tax portal. The notices of CIT(A) were received on the email-id of one Shri Sonu Prajapati, in whose name license of petrol pump was being run by the assessee. That the notices received on this email was never communicated to the assessee, as a result no compliance could be made before the CIT(A). Further, the order of CIT(A) received on same email was also not communicated to him. When the assessee had enquired with his chartered accountant about the fate of the appeal filed with CIT(A), he had logged in to Income tax portal and informed that the order was already passed. Thereafter, the present appeal was filed as per advice of the chartered accountant and in the process there was delay of 359 days. It was submitted that the delay in the filing of the present appeal was not intentional but due to lack of communication with Shri Sonu Prajapati whose email id was mentioned in Form 35 and that there was no mala-fide intention on the part of the assessee. The ld. CIT-DR, on the other hand, objected to the condonation of delay on the ground that the assessee has not neither complied before the lower authorities nor properly explained the delay. 2.1 We have considered the explanation of the assessee. It is found from Form 35 that email address mentioned therein was [e-mail] and an option was given to receive communication on this email-id. As explained, the delay was due to fault of Shri Sonu Prajapati who didn’t inform the assessee about the notices and about the final order of the CIT(A). Though the assessee should have remained vigilant for the timely action on his part, the fact remains that the AO had treated the entire ITA No.171/Ahd/2025 [Kanubhai Rahabhai Bharvad vs.DCIT] - 3 – cash deposit/credits in the bank account as income of the assessee. If the delay is not condoned and the matter is not examined on merits, it will cause injustice to the assessee, as only the profit element arising out of the bank transactions was required to be taxed. It has been held by Hon’ble Gujarat High Court in the case of Vareli Textile Industries (154 Taxman 33) (Gujarat) that while rejecting application for condonation of delay in filing appeal/cross-objections, meritorious case should not be thrown out on ground of limitation. Considering the fact that all the entire credit entries in the bank account was treated as income of the assessee and the matter was not examined on merits, the delay in filing the present appeal is condoned. 3. The brief facts of the case are that the assessee had filed his return of income for the A.Y. 2017-18 on 31.03.2018 declaring income of Rs.32,78,060/-. The case of the assessee was selected for complete scrutiny under CASS. In the course of assessment, no compliance was made by the assessee. From SFT data available in ITBA portal, AO had the information that huge cash deposits were made in the bank accounts of the assessee during demonetization period. During assessment, the AO had made enquiries u/s 133(6) of the Act from the bank and found that total deposit of Rs.11,07,13,730/- was appearing in the two bank accounts of the assessee. In the absence of any explanation on the part of the assessee, the Assessing Officer treated the entire deposits/credit entries in the bank accounts as unexplained money of the assessee under section 69A of the Act. The assessment was completed under Section 143(3) of the Act on 16.12.2019 at total income of Rs.11,39,91,790/-. ITA No.171/Ahd/2025 [Kanubhai Rahabhai Bharvad vs.DCIT] - 4 – 4. Aggrieved with the order of the Assessing Officer, the assessee had filed an appeal before the First Appellate Authority which was decided vide the impugned order and the appeal of the assessee was dismissed. 5. The assessee is now in second appeal before us. The following grounds have been taken in this appeal: - “1 The Ld. CIT (Appeals), National Faceless Appeal Centre (NFAC), Delhi has erred in law and in facts in passing the order without giving proper opportunity of being heard and thus, the order so passed is prayed to be set aside. 2. The Ld. CIT (Appeals), NFAC has erred in law and in facts in confirming the action of the Ld. A.O. in holding that the amount of Rs.11,07,13,730/- deposited in the bank account during the year under consideration represents unexplained credit uls. 69A of the I.T. Act r.w.s. 115BBE. The addition of Rs.11,07,13,730/-being in complete disregard of the fact and the law is prayed to be deleted. 3. Without prejudice to Ground No.3 above, the Ld. CIT (Appeals), NFAC has further erred in law and in facts in confirming the action of the Ld. A.O. in the addition of Rs.11,07,13,730/- twice, one when such amount is included by the appellant in the sales and secondly, as unexplained deposit. The addition of Rs.11,07,13,730/- having resulted into double addition of the same income is prayed to be restricted to either of the one. 4. Your appellant craves liberty to add, alter, amend substitute or withdraw any of the ground(s) of appeal hereinabove contained.” 6. Shri Hemant Suthar, Ld. AR of the assessee submitted that the Ld. CIT(A) has dismissed the appeal of the assessee without examining the merits of the addition. He explained that no compliance could be made by the assessee before the Ld. CIT(A) and for this reason the appeal was dismissed. He, therefore, requested that the assessee may be allowed another opportunity to explain the deposits in the bank account and the matter may ITA No.171/Ahd/2025 [Kanubhai Rahabhai Bharvad vs.DCIT] - 5 – be set aside to the file of the Assessing Officer. The ld. AR submitted that the entire deposits in the bank accounts were included in the sales of the assessee and, therefore, the AO was not correct in treating the total deposits as unexplained money and making the addition. 7. Per contra, Shri Rignesh Das, Ld. CIT-DR submitted that the assessee neither made compliance before the Assessing Officer nor before the ld. CIT(A). He further submitted that the ld. CIT(A) had allowed as many as nine opportunities to the assesses but no compliance was made by the assessee on any of these occasions. The ld. CIT-DR, therefore, strongly supported the orders of the lower authorities. 8. We have considered the rival submissions. The undisputed fact is that the assessee neither complied before the Assessing Officer nor before the Ld. CIT(A) and the source of the credits appearing in the bank account was not explained. We, therefore, deem it proper to impose a cost of Rs.10,000/- on the assessee which should be paid to the Prime Minister National Relief Fund within 15 days of the receipt of this order. We are also of the opinion that the Assessing Officer was not correct in treating the entire deposits/credit entries in the bank account as income of the assessee without taking into account the debit transactions. The ld. AR of the assessee has submitted that deposits in the bank accounts were included in the sales of the assessee but no evidence in this regard had been brought on record. The assessee had filed a copy of ITR for A.Y. 2017-18 as per which sales of Rs.15,70,96,009/- was disclosed therein. However, the books of the assessee were not audited in spite of this huge turnover. Be that as it may, the contention of the assessee that the deposits/credit entries in the bank account represented his turnover, requires to be verified. We, therefore, deem it ITA No.171/Ahd/2025 [Kanubhai Rahabhai Bharvad vs.DCIT] - 6 – proper to set aside the matter to the file of the Jurisdictional Assessing Officer with a direction to allow another opportunity to the assessee to explain the source of cash deposits and the credit entries appearing in the bank accounts. The assessee will be free to bring on record the evidences before the Assessing Officer, to explain the cash & credit entries as appearing in the bank accounts. The assessee is also directed to appear before the Assessing Officer and not to seek any adjournment. The AO will proceed in the matter after verifying that the cost as imposed on the assessee is paid by him. The grounds taken by the assessee are allowed for statistical purpose. 9. In the result, the appeal of the assessee is allowed for statistical purpose. This Order pronounced on 22/05/2025 Sd/- Sd/- (SANJAY GARG) (NARENDRA PRASAD SINHA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 22/05/2025 आदेश की \u0012ितिलिप अ\u0017ेिषत/Copy of the Order forwarded to : 1. अपीलाथ\u0012 / The Appellant 2. \u0014\u0015थ\u0012 / The Respondent. 3. संबंिधत आयकर आयु\u001b / Concerned CIT 4. आयकर आयु\u001b(अपील) / The CIT(A)- 5. िवभागीय \u0014ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड% फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad "