LADULAL HARAKCAND KANTHER,MUMBAI V. ITO WARD 28(2)(1), MUMBAI

ITA 572/MUM/2025

AI Insights

This case involves an appeal by Ladulal Harakcand Kanther against the order of the Commissioner of Income Tax (Appeals), which upheld the best judgment assessment made by the Assessing Officer under Section 144 of the Income Tax Act, 1961. The assessment was based on unexplained cash deposits totaling Rs. 81,28,815 in the assessee's bank accounts during the demonetization period. The Tribunal noted the assessee's non-compliance and failure to provide necessary explanations or documents at earlier stages but decided to remand the case for a fresh assessment in the interest of justice.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 25086 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAM KRISHN KEDIA
• Assessee Lawyers: BHAVESH P. RAKHOLIYA
• Keywords: Business income; Principle of natural justice
• Section: 144; 142(1); 250; 44AD; 69A

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, MUMBAI BEFORE SHRI. OM PRAKASH KANT, AM AND MS. KAVITHA RAJAGOPAL, JM ITA No. 572/Mum/2025 (Assessment Year: 2017-18) Ladulal Harakcand Kanther Flat No. 304, Plot No. 53, Mangal Tower, Sector-17, Vashi Navi Mumbai – 400703. Vs. ITO Ward 28(2)(1) Aayakar Bhavan, M. K. Road, Church Gate, Mumbai – 400020. PAN/GIR No. AFAPK2122G (Assessee) : (Respondent) Assessee by : Shri. Bhavesh P. Rakholiya Respondent by : Shri. Ram Krishn Kedia, (Sr. DR.) Date of Hearing : 12.03.2025 Date of Pronouncement : 17.03.2025 O R D E R Per Kavitha Rajagopal, J M: This appeal has been filed by the assessee, challenging the order of the learned Commissioner of Income Tax (Appeals) Delhi (‘ld. CIT(A)’ for short), National Faceless Appeal Centre (‘NFAC’ for short) passed u/s. 250 of the Income Tax Act, 1961 (‘the Act'), pertaining to the Assessment Year (‘A.Y.’ for short) 2017-18. 2. The assessee has raised the following grounds of appeal: “1. On facts and circumstances of the case, and in law, learned Assessing Officer erred in passing order under Section 144 of the Income Tax Act. 1961 and assessing income at Rs. 81,28,815/-. 2. On facts and circumstances of the case and in law Ld. AO erred in making addition of cash deposits in bank accounts aggregating to Rs 81,28,815/-u/s 69A of the IT Act 1961. 3. On facts and circumstances of the case and in-laws Ld. AO erred in making addition of cash deposits in bank account of Rs 81,28,815/- u/s 69A without appreciating the fact that same or part of that (after adjustment) represents turnover of business of assessee. So only ITA No. 572/Mum/2025 (A.Y. 2017-18) Ladulal Harakcand Kanther 2 profit embedded in such adjusted turnover after reducing amount of cash re-deposited out of cash withdrawn in earlier dates or out of opening cash on hand, needs to be considered. Such profits need to be computed by applying provisions of section 44AD i.e. profits at the rate 8 percentage of adjusted turn over. 4. Without prejudice to the above- (i) On facts and circumstances of the case and in law Ld. AO erred in making addition of cash deposits in bank accounts aggregating to Rs 81,28,815/- u/s 68 of the IT Act 1961. 5. (ii) On facts and circumstances of the case and in law Ld. AO erred in making addition of cash deposits in bank account of Rs 81,28,815/- u/s 68 without appreciating the fact that same or part of that (after adjustment) represents turnover of business of assessee. So only profit embedded in such adjusted turnover after reducing amount of cash re-deposited out of cash withdrawn in earlier dates or out of opening cash on hand, needs to be considered. Such profits need to be computed by applying provisions of section 44AD i.e. profits at the rate 8 percent of adjusted turn over.” 3. Brief facts of the case are that the assessee is a Hindu Undivided Family (HUF) and had not filed his return of income for the year under consideration. The assessee’s case was selected for scrutiny based on the information available on ITBA module of Actionable Information Monitoring System (AIMS), where it was found that the assessee has deposited cash in the bank accounts during the period of demonetization i.e., from 09.11.2016 to 31.12.2016. The assessee has also not filed his return of income in response to notice u/s. 142(1) of the Act. The ld. Assessing Officer (ld. A.O. for short) passed the assessment order u/s. 144 of the Act, vide order dated 26.11.2019 being the best judgment assessment, for the reason that the assessee was non-compliant during the assessment proceedings and determined the total income at Rs. 81,28,815/- after making an addition u/s. 69A of the Act, being unexplained money. 4. Aggrieved the assessee was in appeal before the first appellate authority, challenging the assessment order. ITA No. 572/Mum/2025 (A.Y. 2017-18) Ladulal Harakcand Kanther 3 5. The ld. CIT(A) vide an ex parte order dated 12.11.2024, upheld the order of the ld. A.O. on the ground that the assessee has failed to furnish any explanation or supporting documents to substantiate his claim. 6. The assessee is in appeal before us, challenging the impugned order of the ld. CIT(A). 7. We have heard the rival submissions and perused the materials available on record. It is observed that the assessee has been non-compliant throughout the proceeding before the first appellate authority and had failed to furnish any explanation along with any supporting documentary evidence in support of his claim. The ld. CIT(A) has also not decided the issue on the merits of the case for the above mentioned reason. 8. The learned Authorised Representative (ld. AR for short) for the assessee contended that the assessee has got a good case on the merits and prayed that the assessee may be given one more opportunity to present his case before the lower authorities. 9. The learned Departmental Representative (ld. DR for short) vehemently opposed to setting aside the issue to the lower authorities for the reason that the assessee was given sufficient opportunity before the ld. AO as well as before the ld. CIT(A) but has not availed of the same. The ld. DR relied on the order of the lower authorities. 10. In the above facts of the case, it is observed that the assessee has been non-compliant before the lower authorities and has not furnished any documentary evidence to substantiate the source of the cash deposits made in his bank account during demonetization period. In the interest of justice, we are inclined to extend the assessee one more opportunity to present his case before the ld. AO by adhering to the principles of natural justice. The assessee is directed to cooperate in the proceeding before the ld. ITA No. 572/Mum/2025 (A.Y. 2017-18) Ladulal Harakcand Kanther 4 AO without any undue delay from his side and the ld. AO is to decide the issue on the merits of the case as per the submission of the assessee. We therefore remand all these issues back to the file of ld. AO for de novo assessment. 11. In the result, the appeal filed by the assessee is allowed for statistical purpose. Order pronounced in the open court on 17.03.2025 Sd/- Sd/- (OM PRAKASH KANT) (KAVITHA RAJAGOPAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated: 17.03.2025 Karishma J. Pawar (Stenographer) Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT- concerned 4. DR, ITAT, Mumbai 5. Guard File BY ORDER, (Dy./Asstt.Registrar) ITAT, Mumbai "