MOHAMMAD AHATEHSHAM,RAEBARELI V. NATIONAL FACELESS ASSESSMENT CENTRE, DELHI

ITA 438/LKW/2024

AI Insights

This case involves an appeal by Mohammad Ahatehsham against the order of the Commissioner of Income Tax (Appeals), which had dismissed his appeal ex-parte. The primary issue was the treatment of cash deposits amounting to Rs.2,65,51,250 as unexplained money under section 69A of the Income Tax Act, 1961. The AO had initially issued a notice under section 148, leading to an assessment order that included these deposits as unexplained money. The CIT(A) upheld this decision, noting the assessee's failure to provide necessary evidence or explanations during the appeal process. The Tribunal's decision to allow the appeal for statistical purposes was based on the need for a thorough examination of the nature of the deposits, given the assessee's claim that they were from recorded cash sales.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 313132 (ITAT-LUCKNOW)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2018-2019
• Other Referred Cases: Dev Dutt vs. Union of India and Others (2008) 8 SCC 725 (SC)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJEEV KRISHNA SHARMA; ADDL
• Assessee Lawyers: B. P. YADAV
• Keywords: Reopening of assessment; Borrowed satisfaction
• Section: 147; 148; 133(6)

Judgement Text

"1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW ‘A’BENCH, LUCKNOW BEFORE SH. KUL BHARAT, VICE PRESIDENT AND SH. NIKHIL CHOUDHARY, ACCOUNTANT MEMBER ITA No.438/Lkw/2024 A.Y. 2018-19 Mohammad Ahatehsham, 108/25 Shekhan Tola, Raebareli H.O. Raebareli, U.P. vs. Income Tax Officer, Range-3(4), Lakhimpur Kheri, U.P. PAN:AQNPA0310N (Appellant) (Respondent) Assessee by: Sh. B.P. Yadav, Advocate Revenue by: Sh. Sanjeev Krishna Sharma, Addl CIT DR Date of hearing: 20.03.2025 Date of pronouncement: 30.04.2025 O R D E R PER NIKHIL CHOUDHARY, A.M.: This is an appeal filed by the assessee against the order of the ld. CIT(A), NFAC on 21.03.2024 under section 250 of the Income Tax Act, 1961, dismissing the appeal of the assessee. The grounds of appeal are as under:- “1. The Learned Commissioner of Income Tax (Appeals), NFAC, Delhi [hereinafter referred to as the \"Ld. CIT(A)\"] has erred on facts and in law in dismissing the appeal of the assessee ex-parte on account of non-prosecution of the case by the assessee without providing reasonable opportunity to have his say on the merit of the additions as well as on the merit of the assessment order passed by the Assessing Authority. 2. The Ld. CIT(A) has erred on facts and in law by not appreciating the fact that the impugned assessment order was passed by the Assessing Authority by relying upon the notice dated 29.03.2022 issued u/s 148 of the Act, which in itself is bad in law and illegal on the ground that the details of cash deposits available on the Insight Portal of the Income Tax Department cannot be construed as information for the purposes of the provisions of section 148 of the Act till the nature and the source of cash deposits made into the bank account are verified by providing reasonable opportunity to the assessee. 3. The Ld. CIT(A) has erred on facts and in law by not appreciating the fact that the impugned assessment order was framed in consequence of notice issued u/s 148 of the ITA No.438/LKW/2024 Mohammad Ahatehsham 2 Act, which in itself is bad in law and illegal on the ground that the reasons recorded for the issuance of such notice was made on borrowed satisfaction and without application of own and independent mind on the part of the Assessing Officer. 4. The Ld. CIT(A) has erred on facts and in law in dismissing the appeal of the assessee ex-parte without looking into the merit of the additions of Rs.2,65,51,250/-made by the Assessing Authority in the hands of the assessee by treating the entire cash deposits of Rs.2,65,51,250/- made in bank account maintained with Allahabad Bank as unexplained money u/s 69A of the Act by not appreciating the fact that the entire cash deposits were made out of cash sales which stood duly recorded in the books of accounts and offered to tax by disclosing the same in the return of income filed u/s 148 of the Act forming part of turnover of Rs.3,48,02,510/-. 5. The appellant reserves his right to advance such other grounds before or at the time of hearing which he may consider fit and appropriate, for which he craves leaves to amend, alter or otherwise modify the grounds appearing hereinabove with kind permission of the office of CIT-Appeal.” 2. The appeal is late by 55 days. The assessee has filed a condonation petition in which it has been submitted that the appellate order against which this appeal was being filed was passed on 21.03.2024 and as per the provisions of the Act, the present appeal was required to be filed by 20.05.2024. However, the assessee could not file the appeal because he was suffering from acute spondylitis due to which he could not view his email for long and therefore, he was not aware that any such order had been passed by the office of the ld. CIT(A). After treatment of around four months and obtaining some relief from his illness, the assessee got email ID viewed at the end of June, 2024 and it was then that he discovered that an adverse order had been passed before him. Thereafter, he immediately contacted his counsel and filed the appeal. Assessee submitted a copy of affidavit and medical certificate in support of the petition. After duly considering the facts of the case, in the interest of justice, we deem it fit to condone the delay and admit the case for hearing. 3. The facts of the case are that the assessee did not file his return of income for the assessment year 2018-19. The ld. AO obtained information from the Insight Portal, that the assessee had made the cash deposits of Rs.2,65,51,250/- with Allahabad Bank (now Indian Bank) in his A/c No.50047224481. Since the assessee had not filed a return of income disclosing the above cash deposits, therefore, the ld. ITA No.438/LKW/2024 Mohammad Ahatehsham 3 AO issued a show cause notice under section 148A(b)of the Income Tax Act requesting the assessee to explain the transaction and furnish his reply. However, the assessee did not furnish any reply and did not file a return of income. Therefore, an order under section 148A(d) was passed on 29.03.2022 concluding that this was a fit case for reopening of assessment under section 147 and accordingly, a notice under section 148 was issued on 29.03.2022. In response to the notice issued under section 148, the assessee filed a return of income on 16.05.2022, admitting taxable income of Rs.2,98,560/-. Notice under section 143(2) was generated and issued to the assessee on 17.10.2022. Thereafter, the ld. AO records that he issued as many as three notices under section 142(1), three notices under section 133(6) and a show cause notice on 6.02.2023 and 7.03.2023 asking the assessee to make a submission and explain the deposit. He reproduced a copy of the notice dated 7.03.2023 in his assessment order. Since, the assessee did not comply with the aforesaid notices, the ld. AO concluded that he had no explanation to make in this regard and therefore, he considered the deposits as unexplained money under section 69A of the Income Tax Act, 1961 and brought them to tax under the provisions of section 115BBE of the Income Tax Act, 1961. Penalty proceedings were also initiated. 4. Aggrieved by the said assessment order, the assessee went in appeal before the ld. CIT(A). In the grounds of appeal, it was submitted that the ld. AO had erred in treating the deposits in the bank account as unexplained money under section 69A because the entire cash deposits had been made out of cash sales which were duly recorded in the books of the assessee and offered to tax by showing the same in the return of income filed under section 148 of the Act, forming part of the turnover of Rs.3,48,02,510/-. However, the ld. CIT(A) records that he issued as many as five notices to the assessee to make submissions between 6.02.2024 and 11.03.2024. However, despite the fact that all the notices were delivered, the assessee did not file any submissions during the appeal proceedings. Since, the assessee did not give any documentary evidence in support of his contention that the deposits in the bank ITA No.438/LKW/2024 Mohammad Ahatehsham 4 account pertained to his turnover, the ld. CIT(A) refused to accept the contention of the assessee. In doing so, he pointed out that the assessee had not filed the return voluntarily, but only in response to notice under section 148. Since, the assessee had not produced any evidence, relying upon the judgment of the Hon’ble Supreme Court in the case of Dev Dutt vs. Union of India and Others (2008) 8 SCC 725 (SC), the ld. CIT(A) refused to consider the submission of the assessee without the necessary evidence in their support. Relying upon the decisions of the Hon’ble Courts in various cases, which pointed out that in the absence of effective pursuance of an appeal, the Courts would be justified in dismissing it, he dismissed the appeal of the assessee. 5. The assessee is aggrieved at the ex parte dismissal of his appeal. Sh. B.P. Yadav, Advocate (hereinafter referred to as the ld. AR) appearing on behalf of the assessee submitted that the assessee not being well versed in matters relating to the income tax portal was not able to make compliance or was not able to track his case before the lower authorities. He submitted that the cash deposits in the bank account were explained by the business transactions of the assessee and he prayed that an opportunity may kindly be given for the assessee to demonstrate this before the ld. AO. 6. On the other hand, Sh. Sanjeev Krishna Sharma, Addl CIT DR (hereinafter referred to as the ld. DR) pointed out that the non-compliance by the assessee was deliberate and continuous and only demonstrated that he had no explanation to offer with regard to the cash deposits. Hence, the lower authorities were justified in making addition and confirming the amounts under section 69A. 7. We have duly considered the facts and circumstances of the case. It is self - evident that the reason for the addition is that the assessee has not furnished any explanation or made any compliance before the lower authorities. However, considering the fact that he has filed his return in which he has claimed taxable income of Rs.2,98,560/- on a turnover of Rs.3,48,02,510/-, in the interest of justice ITA No.438/LKW/2024 Mohammad Ahatehsham 5 and since no finding of fact has taken place with regard to the nature of the deposit till date, we deem it fit to restore the matter back to the file of the ld. AO for a de novo assessment. We would, however, caution the assessee that in view of the deposits made to his bank account, the primary onus to explain the same is upon him and in the event of his failure to make proper compliance before the ld. AO and satisfactorily explain the cash deposits before him, the authorities below may be justified in taking an adverse view with regard to the same. 8. Accordingly, in view of the above, the appeal of the assessee is allowed for statistical purposes. 9. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced on 30.04.2025. Sd/- Sd/- [KUL BHARAT] [NIKHIL CHOUDHARY] VICE PRESIDENT ACCOUNTANT MEMBER DATED: 30/04/2025 Sh Copy forwarded to: 1. Appellant – 2. Respondent – 3. CIT DR , ITAT, 4. CIT, 5. The CIT(A) By order Sr. P.S. "