NARAYANAPPA VENKATESH,BENGALURU V. INCOME TAX OFFICER, WARD-7(2)(5), BENGALURU

ITA 268/BANG/2025

AI Insights

The case involves Shri Narayanappa Venkatesh, who appealed against the ex-parte order passed by the CIT(A) and the AO under section 144 of the Income Tax Act. The AO had treated substantial cash deposits during the demonetization period as income under section 69A of the Act due to the assessee's non-response to multiple notices. The CIT(A) dismissed the appeal based on the available documents as the assessee failed to respond during the appellate proceedings. The ITAT, considering the circumstances and the substantial amount involved, remitted the case back to the AO for a detailed examination and directed the assessee to comply with the procedural requirements and not seek unnecessary adjournments.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 633263 (ITAT-BANGALORE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PRANAV KRISHNA
• Keywords: Business income
• Section: 144

Judgement Text

"IN INCOME TAX APPELLATE TRIBUNAL “B” BENCH : BANGALORE BEFORE SHRI. LAXMI PRASAD SAHU, ACCOUNTANT MEMBER AND SHRI. SOUNDARARAJAN K, JUDICIAL MEMBER ITA No.268/Bang/2025 Assessment Year : 2017-18 Shri. Narayanappa Venkatesh, No.41, 1st ‘F’ Main, 8th Cross, Girinagar, Bengaluru – 560 085. PAN :ABPPV 7448 F Vs. ITO, Ward – 7(2)(5). Bengaluru. APPELLANT RESPONDENT Assessee by : Shri. Pranav Krishna, Advocate Revenue by : Shri. Subramanian S, JCIT(DR)(ITAT), Bangalore. Date of hearing : 03.06.2025 Date of Pronouncement : 10.06.2025 ORDER Per Laxmi Prasad Sahu, Accountant Member : This appeal filed by the assessee against the ex-parte Order passed by the learned CIT(A) as well as AO under section 144 of the Act. 2. Briefly stated, the facts of the case are that assessee filed return of income on 01.04.2018 declaring total income of Rs.6,25,000/-. The case was selected for scrutiny and statutory notices were issued to the assessee. But there was no response from the assessee’s side. Further, opportunities were also granted. The AO, before completing the assessment under section 144 of the Act, gave opportunity and final show cause notice was issued to the assessee on 14.12.2019. In spite of that there was no response. From the records available, the AO noted ITA No.268/Bang/2025 Page 2 of 4 that the assessee has deposited cash of Rs.4,50,28,652/- during the year under consideration out of Rs.49,29,000/- during the demonetization period. Though opportunities were granted to the assessee, there was no response from the assessee’s side. Therefore, for want of proper explanation from the assessee’s side, the AO treated the cash deposited into the bank account during demonetization period as income under section 69A of the Act. Further, the AO noted that there is cash deposits in 3 bank accounts of Rs.4,50,28,652/- out of which Rs.49,20,000/- was reduced because it was deposited during demonetization period and it has been separately considered as income under section 69A of the Act. Therefore, on the balance amount of Rs.4,01,08,652/- the AO calculated 8% income (Rs.4,50,28,652 – Rs.49,20,000) as business income which comes to Rs.32,08,692.16/- since the assesse has already declared business income of Rs.2,56,165/-. Accordingly, he assessed the total income at Rs.84,98,130/- and passed Order under section 144 of the Act. 3. Aggrieved from the above Order, assessee filed appeal before the learned CIT(A) on 20.01.2020. During the appellate proceedings, the learned CIT(A) issued various notices on different dates. Assessee sought adjournments for collecting requisite details and he sought time upto 05.12.2024 but there was no response upto the date of passing of Order. Accordingly, he decided the issue on the basis of documents available with him and dismissed the appeal of the assessee. The learned Counsel reiterated the grounds of appeal and submitted that because of change of Counsels, the assessee could not represent on the scheduled date and requested and undertook that if a chance is given to the assessee, assessee shall comply with the notices for substantiating his case. 4. On the other hand, the learned DR relied on the Order of the lower authorities and submitted that during the course of assessment proceedings, various opportunities were granted by the AO. However, there was no response and in the First Appellate proceedings, the notice was served to the assessee and ITA No.268/Bang/2025 Page 3 of 4 assessee sought time which was granted but on the scheduled date, assessee did not comply. Therefore, CIT(A) was bound to dispose off the appeal ex-parte and objected for giving further chance to the assessee. 5. Considering the rival submissions, we noted that the assessee has deposited huge cash in his bank account and during the demonetization period, the assessee has deposited cash of Rs.49,20,000/- in his three bank accounts as observed by the AO. We further noted that there is a cash deposit of Rs.4,01,08,652/- excluding the cash deposited during the demonetization period. Assessee has offered only income of Rs.2,56,165/- under the head Proft/Gains from Business/Profession and the AO has applied 8% profit on the balance cash deposits during the year. Before the CIT(A), there was no response from the assessee’s side even during the proceedings before the CIT(A). Considering the facts of the case and in the interest of justice, we are remitting this issue back to the file of jurisdictional AO (JAO) with a direction to examine the cash deposits made during the demonetization period as per the instructions / notifications issued by the CBDT time to time and he has to examine the balance cash deposits of Rs.4,01,08,652/- and decide the issue s per law with cost of Rs.10,000/-. Assessee has to show proof of payment of cost to the AO before taking up for the examination of cash depoists into the bank accounts. Assessee is directed to produce necessary details for substantiating his case and not to seek unnecessary adjournments, for early disposal of the case. In case of failure , no further leniency shall be granted to the assessee. ITA No.268/Bang/2025 Page 4 of 4 6. In the result, appeal of the assessee is allowed for statistical purposes. Pronounced in the court on the date mentioned on the caption page. Sd/- Sd/- (SOUNDARARAJAN K) (LAXMI PRASAD SAHU) Judicial Member Accountant Member Bangalore, Dated : 10.06.2025. /NS/* Copy to: 1. Appellant 2. Respondent 3. Pr.CIT4.CIT(A) 5. DR, ITAT, Bangalore. By order Assistant Registrar ITAT, Bangalore. "