MANUBHAI BABALBHAI PATEL,VADODARA V. THE ITO, WARD-1(2)(1), VADODARA

ITA 605/AHD/2024

AI Insights

The case involves Manubhai Babalbhai Patel, who appealed against the order of the Commissioner of Income Tax (Appeals) at the National Faceless Appeal Centre, which confirmed the addition of Rs. 3,32,62,000 as unexplained cash deposits under Section 69A of the Income Tax Act. The Assessing Officer had reopened the assessment for A.Y. 2016-17 based on information regarding unaccounted investments. The assessee, engaged in the Aangadia business, claimed the deposits were not his but belonged to various clients. The CIT(Appeals) dismissed the appeal due to non-compliance and non-appearance of the assessee. The ITAT, referencing similar cases, decided to remand the matter back to the Assessing Officer for a fresh examination, emphasizing the need for a fair hearing.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 774942 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 4 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-09-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2016-2017
• Appeal Filed On: 03-04-2024
• Other Referred Cases: Naravatsinh Jagatsinh Chauhan vs. ITO, Bhavin Manoharbhai Parmar vs. ITO
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R P RASTOGI
• Assessee Lawyers: CHIRAG SHAH
• Keywords: Condonation of delay; Set aside; Corroborative evidences; Unexplained investment; Peak credit; Right to appeal; Non compliance; Co-operative Credit Society
• Section: 147; 271(1)(c); 69

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, AHMEDABAD BEFORE DR. BRR KUMAR, VICE PRESIDENT & SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER I.T.A. No.605/Ahd/2024 (Assessment Year: 2016-17) Manubhai Babalbhai Patel, C-48, Karmajayot Society, Nr. Rameswer, Vidhyalay, Gotri, Vadodara-390021 Vs. Income Tax Officer, Ward-1(2)(1), Baroda [PAN No.ATFPP5415J] (Appellant) .. (Respondent) Appellant by : Shri Chirag Shah, AR Respondent by: Shri R P Rastogi, CIT-DR Date of Hearing 14.08.2025 Date of Pronouncement 02.09.2025 O R D E R PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER: This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals), (in short “Ld. CIT(A)”), National Faceless Appeal Centre (in short “NFAC”), Delhi vide order dated 23.08.2023 passed for A.Y. 2016-17. 2. The assessee has raised the following grounds of appeal: “1. The assessment order passed u/s 147 read with section 144B of Income Tax Act by the Assessing Officer and confirmed by the first appellate authority u/s 250 is bad in law and deserved to be uncalled for. 2. The assessing officer as well as first appellate authority has erred in law and on facts in making and confirming respectively the cash deposits of Rs. 3,32,62,000/-. The same deserves to be deleted without prejudice to above if addition is confirmed in benefit of peak credit should be given. 3. The appellant craves to reserve his right to add, alter, amend, or delete any ground of appeal during the course of hearing.” Printed from counselvise.com ITA No. 605/Ahd/2024 Manubhai Babalbhai Patel vs. ITO Asst.Year –2016-17 - 2– 3. The assessee has filed application for condonation of delay of 133 days in filing of the present appeal. The assessee submitted that the delay was due to bona fide and unavoidable circumstances, due to lack of proper legal guidance and unawareness of legal procedure, which led to the omissiom in filing the appeal within the prescribed time. Upon perusal of the application and the accompanying Affidavit, we find that the reasons stated are neither deliberate nor indicative of negligence or inaction. It is settled law that the right to appeal is a substantive right and should not be defeated on technicalities, particularly when the delay is satisfactorily explained. Further, we are of the considered view that no perceptible prejudice would be caused to the Revenue by condoning the delay, whereas the assessee would suffer irreparable loss if the appeal is rejected without examination on merits, since substantial additions have been made in the hands of the assessee. Accordingly, in the interests of justice and keeping in view the judicial principle that technical lapses should not override adjudication on merits, we are inclined to condone the delay. Accordingly, the delay of 133 days in filing the appeal is condoned, and the appeal is admitted for hearing on merits. 4. The brief facts of the case are that the assessee is an individual and he did not file his income tax return for the Assessment Year 2016–17. Based on information from the Investigation Wing regarding unaccounted investments of ₹3,32,62,000/- during the year, the Assessing Officer reopened the assessment under Section 147 of the Income-tax Act (Act) In response, the assessee filed a belated return on 23.04.2021 declaring an income of only ₹2,65,000/- as “income from other sources”. During the course of re-assessment proceedings, the assessee submitted that he was Printed from counselvise.com ITA No. 605/Ahd/2024 Manubhai Babalbhai Patel vs. ITO Asst.Year –2016-17 - 3– engaged in the Aangadia (courier and informal money transfer) business, earning about 0.1% commission on funds transferred on behalf of clients. The assessee submitted that the cash deposits in his Co-operative Bank account were not his own money but belonged to various clients, and that records were not maintained since such transactions were carried out informally and details were destroyed once completed. He also claimed that due to the pandemic, it was difficult to gather records or client details. The Assessing Officer, however, noted that cash deposits amounting to ₹3,32,62,000/- had been made in the assessee’s account with Shri Renuka Mata Multi State Urban Co-operative Credit Society Ltd., and the assessee had failed to provide any details or documents explaining the source or genuineness of these credits. Although multiple opportunities were given, the assessee could not substantiate his explanation or provide credible evidence. Accordingly, the Assessing Officer treated the entire amount of ₹3,32,62,000/- as unexplained money under Section 69A of the Act and added the same to the total income of the assessee. 5. In appeal before CIT(Appeals), he dismissed the appeal of the assessee on account of non-appearance, with the following observations: “I have carefully perused the assessment order and the grounds of appeal submitted by the appellant. During the appellate proceedings, the following opportunities of being heard were granted to the appellant vide notices u/s 250 of the Act issued through the ITBA portal which are summarized below: Sr. No. Date of notice Date of compliance Remark 1. 06.09.2022 12.09.2022 Non compliance 2. 31.07.2023 07.08.2023 Non compliance 3. 09.08.2023 16.08.2023 Non compliance The above table clearly demonstrates that the appellant has been allowed several opportunities to explain the contentions of this appeal but to no avail as the appellant has remained not- forthcoming and has not responded on the ITBA portal. Printed from counselvise.com ITA No. 605/Ahd/2024 Manubhai Babalbhai Patel vs. ITO Asst.Year –2016-17 - 4– 3.2 The aforesaid mentioned circumstances show that the appellant is not interested in pursuing its appeal and has no documentary evidence in support of the grounds of appeal filed by the appellant. The maxim ‘vigilantibus non-dormientibus jura subvenunt’ i.e. the law assists those who are vigilant and not those who sleep over their right, is applicable in this case. 3.3 The Hon'ble ITAT in ITA No. 1025-1027/CHD/2005 for the AY 2002-03 in the case of M/s Chhabra Land & Housing Ltd. after following the decision of Hon'ble Supreme Court in the case of B.N. Bhattacharjee& other 118 ITR 461 [SC] held that the appeal does not mean merely filing of the appeal but effectively pursuing the same. 3.4 Considering the above facts and the records available, it is established that the appellant was provided many opportunities of being heard. However, the appellant has remained noncompliant. No material fact has been brought on record in support of the grounds of appeal or to rebut the findings of the Assessing Officer (AO). The appellant inspite of being given ample opportunities during appellate proceedings, failed to offer any explanation/supporting documents in respect of grounds of appeal raised by the appellant. I have carefully considered the assessment order and since the appellant has not furnished any documentary evidence in support of the grounds of appeal filed by the appellant, I do not find any reason to interfere with the order of the AO. Hence, the assessment order passed by the AO stands confirmed. Accordingly, all the grounds of appeal taken by the appellant are dismissed. 4. In result, the appeal is dismissed.” 6. The assessee is in appeal before us against the order passed by CIT(Appeals) dismissing the appeal of the assessee. The Counsel for the assessee has placed reliance on decisions of Ahmedabad ITAT, wherein on identical set of facts, the matter was restored to the file of the Assessing Officer for de-novo consideration, in the interests of justice. In response, the Ld. DR placed reliance on the observations made by the Assessing Officer and Ld. CIT(Appeals) in their respective orders. 7. We have heard the rival contentions and perused the material on record. We observe that in the instant case, order was passed by CIT(Appeals) on ex-parte basis without giving an opportunity of hearing to the assessee to present the case on merits. We note that on similar facts, Ahmedabad ITAT in the case of Naravatsinh Jagatsinh Chauhan in ITA No.1253, 1254 and 1255/Ahd/2024 vide orders dated 09/05/2025, restored the matter to the file of the Assessing Officer foe de-novo consideration. In this case the ITAT Printed from counselvise.com ITA No. 605/Ahd/2024 Manubhai Babalbhai Patel vs. ITO Asst.Year –2016-17 - 5– considered appeals against ex parte assessment and penalty orders passed under sections 147 r.w.s. 144 and 271(1)(c) of the Act. The assessee in that case was an uneducated individual engaged in Angadia business and had not filed return of income and accordingly, the assessments were made based on cash deposits of over ₹14 crores and ₹2.32 crores found in his bank accounts, allegedly operated by third parties. The CIT(A) had dismissed his appeals ex parte due to non-compliance. The assessee explained that he was misled by an accountant and unaware of the proceedings due to his limited education and background. The Tribunal found merit in the assessee's explanation, particularly since no opportunity was provided to rebut evidence, and no proper inquiry was conducted into his claim that he had no ownership over the funds. The ITAT set aside the orders of the AO and CIT(A), restored the matters to the AO for fresh adjudication after providing relevant materials and an opportunity of hearing. Again, in the case of Bhavin Manoharbhai Parmar vs. Income Tax Officer, Ward-5, Mehsana [ITA No.1826/Ahd/2024, A.Y. 2016-17 vide order dated 06.05.2025], the Ahmedabad Bench of the ITAT considered an appeal against the order passed by the CIT(A), NFAC, confirming an addition of ₹1,38,32,749/- made under section 69 of the Act. The addition was based on unexplained cash deposits found in the assessee’s account with Sri Renuka Mata Multi-State Co-op Credit Society Ltd. The ITAT noted that the assessee had failed to provide any supporting evidence during the assessment proceedings or before the CIT(A). During the hearing before the Tribunal, the assessee filed an adjournment application. However, considering that no prejudice would be caused to the Revenue, the Tribunal remanded the matter back to the Assessing Officer with a direction to examine any explanations or documents Printed from counselvise.com ITA No. 605/Ahd/2024 Manubhai Babalbhai Patel vs. ITO Asst.Year –2016-17 - 6– the assessee may submit and to decide the issue afresh in accordance with law. The assessee was also directed to cooperate fully and avoid unnecessary adjournments. The appeal was allowed for statistical purposes. Accordingly, we note that since the facts of the assessee’s case are on an identical footing wherein no substantive evidence was furnished by the assessee during the course of assessment proceedings before the Assessing Officer and CIT(Appeals) also later dismissed the appeal of the assessee on ex-parte basis on account of non-appearance during the course of proceedings, we hereby restore the matter to the file of the Assessing Officer for de-novo consideration with an opportunity of hearing to the assessee to present his case on merits. 8. In the result, the appeal of the assessee is allowed for statistical purposes. This Order pronounced in Open Court on 02/09/2025 Sd/- Sd/- (DR. BRR KUMAR) (SIDDHARTHA NAUTIYAL) VICE PRESIDENT JUDICIAL MEMBER Ahmedabad; Dated 02/09/2025 TANMAY, Sr. PS TRUE COPY आदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to : 1. अपीलाथŎ / The Appellant 2. ŮȑथŎ / The Respondent. 3. संबंिधत आयकर आयुƅ / Concerned CIT 4. आयकर आयुƅ(अपील) / The CIT(A)- 5. िवभागीय Ůितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाडŊ फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad Printed from counselvise.com "