NITESH BARKU PATIL ,MUMBAI V. INCOME TAX OFFICER WARD 3(3), MUMBAI

ITA 1911/MUM/2025

AI Insights

The case involves Nitesh Barku Patil, the appellant, who deposited a substantial amount of cash (Rs. 67,52,400) into his bank account during the demonetization period. The Income Tax Officer (ITO) added this amount under section 69A of the Income Tax Act due to unexplained sources. The appellant's initial appeal to the CIT(A) was dismissed for non-prosecution as he failed to respond to notices. Subsequently, the appellant appealed to the ITAT, claiming the deposits were due to fraudulent transactions by M/s. Mohta Constructions, a point not considered by the CIT(A). The ITAT found procedural improprieties in the CIT(A)'s dismissal and remitted the case back for a decision on merits, emphasizing the need for the appellant to provide consistent and substantiated explanations for the cash deposits.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 361281 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act
• Result in Favour of: Matter Remanded
• Court: TRIBUNAL
• Department Lawyers: LEYAQAT ALI AAFAQUI
• Assessee Lawyers: SAIYAMI SHAH
• Section: 142(1)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL Mumbai “B” Bench, Mumbai. Before Smt. Beena Pillai (JM) & Shri Omkareshwar Chidara(AM) ITA No. 1911/MUM/2025 (Assessment Year : 20 17-18) Nitesh Barku Patil 01, Nitesh Niwas, Umbard Road, Kalyan, Thane 421 301. Vs. ITO Ward 3(3) Rani Mansion Murbad, Thane Kalyan-421 301. PAN : AYVPP9196M Appellant Respondent Assessee by : Ms. Saiyami Shah Revenue by : Shri Leyaqat Ali Aafaqui Date of Hearing : 08/05/2025 Date of pronouncement : 23/05/2025 O R D E R Per Omkareshwar Chidara (AM) :- In this above cited appeal, the appellant has deposited cash of Rs. 67,52,400/- into its bank account during demonetization period and as the sources of the same were not explained properly with necessary evidences, the Ld. AO made an addition under section 69A of the I.T. Act while completing the assessment. 2. Aggrieved by the order of Ld. AO, an appeal was filed by the appellant. The Ld. CIT(A) gave three opportunities and the appellant neither responded to the notices nor filed any adjournment letter and hence Ld. CIT(A) dismissed the appeal for want of prosecution of appeal. 3. The appellant filed an appeal to ITAT, aggrieved by the order of Ld. CIT(A). Before the ITAT, the main ground taken by the appellant is that these cash deposits were the result of a fraudulent transactions conducted by M/s. Mohta Constructions 2 M/s. Mohta Constructions and Ld. CIT(A) NFAC did not consider this ground before dismissing the appeal. 4. The Ld. DR relied on the detailed assessment order passed by the Ld. AO and the order of Ld. CIT(A). The Ld. DR argued that the appellant did not appear before the AO nor filed any explanation about the sources of cash deposited into his bank accounts despite the notices under section 143(2) and 142(1) were issued to him and hence Ld. AO, correctly added the amounts under section 69A of the I.T. Act. The Ld. DR argued that since the appellant did not appear and filed details of cash deposits into his bank accounts either before Ld. AO or before Ld. CIT(A) despite issuances of notices, the addition should be confirmed. 6. The appellant, during appeal proceedings has mentioned that (in Grounds of Appeal before ITAT) the transaction of cash deposits was the result of fraudulent transaction conducted by M/s. Mohta Constructions, whereas before Ld. CIT(A), it was mentioned that the appellant is a small grocery businessman and does small contracts and he sold ancestral gold and got cash while selling the ancestral gold and the same cash deposited in bank account. For none of these explanations, there was any evidence. The appellant had been giving different reasons before the Ld. CIT(A) and before this ITAT about the sources of cash deposit. The Ld. CIT(A) has dismissed the appeal of appellant because there is no response to the notices issued by him. M/s. Mohta Constructions 3 7. During the course of hearing before the ITAT, it was observed that there is a delay of 503 days in filing appeal and the Ld. AR of appellant has stated that the counsel who represented him before Ld. CIT(A) did not attend the hearing and he does not know why his AR did not respond to the notices of hearing. It was mentioned that he came to know about the ex-parte order passed by Ld. CIT(A) very late and immediately he appointed a different counsel to be argued before the ITAT and hence there is delay. It was submitted that the appellant does gain anything by filing an appeal with delay and no malafides can be attributed to him as he genuinely trusted his AR to whom power of attorney was given. Hence, it was submitted that one more opportunity may be provided to him to explain the sources of cash deposited in his bank account and the file may be remitted back to the Department. 8. The Ld. DR relied on the orders of Ld. AO/Ld. CIT(A) and argued that since the appellant is shifting stands while explaining the sources of cash deposit, the circumstantial evidence shows that these cash deposits were not accounted nor due taxes were paid. Hence, it was argued that no further opportunity should be given to appellant and the addition made by Ld. AO should be confirmed. 9. Heard both sides. It is a fact that the appellant did not appear before the Ld. AO to explain the sources of cash deposits. Before Ld. CIT(A) it was mentioned that ancestral gold was sold and the sale proceeds were deposited in the bank account. Before the ITAT, it was mentioned that these cash transactions represent the fraudulent activities of M/s. M/s. Mohta Constructions 4 Mohta Constructions. But, Ld. CIT(A) dismissed the appeal for non- prosecution of appeal and nothing was discussed about merits and the arguments taken by appellant, which is not proper. Considering the fact that there is no decision on merits, the issues are remitted back to the file of Ld. CIT(A) as the Bench is satisfied with the explanation filed by the appellant regarding delay and the delay is condoned. The appellant is directed to cooperate with the Department proceedings and he should not seek further adjournment before Ld. CIT(A). In view of non-compliance before the lower authorities, in the first round, if the appellant does not respond properly, the Ld. CIT(A) may take an adverse view. 10. The appeal is remitted back to the file of Ld. CIT(A) with a direction that he should adjudicate the matter on merits. With the above findings, the appeal is remitted back to Ld. CIT(A). 11. The appeal is allowed for statistical purposes. Order pronounced in the open Court on 23/05/2025. Sd/- Sd/- (BEENA PILLAI) (OMKARESHWAR CHIDARA) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 23/05/2025 Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. BY ORDER, //True Copy// (Assistant Registrar) ITAT, Mumbai PS "