SALIM MADARSAB SHAIKH,PUNE, MAHARASHTRA V. THE ITO, WARD 12(3), PUNE, PUNE, MAHARASHTRA

ITA 3314/PUN/2025

AI Insights

The case involves Salim Madarsab Shaikh, who did not file his income tax return for the Assessment Year 2017-18 but was found to have deposited a significant amount of cash during the demonetization period. The Assessing Officer (AO) made an ex-parte assessment under section 144 of the Income Tax Act, 1961, adding the entire amount of Rs. 40,46,350 as unexplained money under section 69A read with section 115BBE. The CIT(A)/NFAC dismissed the appeal in limine due to non-payment of advance tax, without addressing the merits of the case. The Tribunal found that the CIT(A)/NFAC should have adjudicated the appeal on its merits, considering the circumstances presented by the assessee, including his lack of formal education and the death of his mother during the proceedings.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 840385 (ITAT-PUNE)
• Duration Of Justice: 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-02-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Appeal Filed On: 29-12-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SADANANDA
• Assessee Lawyers: C. H. NANIWADEKAR
• Keywords: Set aside; Opportunity of being heard; Additional evidence; Reasonable cause
• Section: 144; 142(1); 133(6)

Judgement Text

" आयकर अपीलीय अधिकरण “एक सदस्य मामला” न्यायपीठ पुणे में । IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, PUNE BEFORE MS. ASTHA CHANDRA, JUDICIAL MEMBER AND SHRI DR. DIPAK P. RIPOTE, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No.3314/PUN/2025 निर्धारण वर्ा / Assessment Year : 2017-18 Salim Madarsab Shaikh, Sr. No. 132 Rajeev Gandhi N Parvati Paytha, Sinhgad Road, Opp. Shivai Apartment, Pune-411030 PAN : BJAPS1321Q Vs. ITO, Ward – 12(3), Pune अपीलधर्थी / Appellant प्रत्यर्थी / Respondent Assessee by : Shri C.H. Naniwadekar Department by : Shri Sadananda Date of hearing : 11-02-2026 Date of Pronouncement : 23-02-2026 आदेश / ORDER PER ASTHA CHANDRA, JM : The appeal filed by the assessee is directed against the order dated 11.10.2025 of the Ld. Commissioner of Income Tax (Appeals)/NFAC, Delhi [“CIT(A)/NFAC”] pertaining to Assessment Year (“AY) 2017-18. 2. It is a case of assessment framed u/s 144 of the Income Tax Act, 1961 (the “Act”). Briefly stated, the facts of the case are that the assessee is an individual. For the AY 2017-18, the assessee did not file his return of income. As per information available in AIMS module, it was found that the assessee has deposited cash aggregating to Rs.10,06,160/- during demonetization period in his bank account of Bank of Maharashtra, Pune. Since, the assessee had not filed his return of income for AY 2017-18, notice(s) u/s 142(1) along with questionnaire were issued to the assessee from time to time. However, the assessee failed to comply with any of the notices issued u/s 142(1) of the Act. Further, for lack of compliance in response to the show cause notice(s) and after obtaining information u/s 133(6) of the Act from the said bank that the assessee had deposited Printed from counselvise.com 2 ITA No.3314/PUN/2025, AY 2017-18 Rs.40,46,350/- in his bank account during the relevant AY under consideration, the Ld. Assessing Officer (“AO”) added the same to the income of the asseessee u/s 69A r.w.s. 115BBE of the Act and completed the assessment ex-parte at assessed income of Rs.40,46,350/- u/s 144 of the Act vide his order dated 02.11.2019. 3. The assessee challenged the ex-parte order of the Ld. AO before the Ld. CIT(E)/NFAC. The Ld. CIT(A/NFAC dismissed the appeal of the assessee in limine without dealing with the merits of the case for non- deposit of advance tax under the provisions of section 249(4)(b) of the Act. 4. Dissatisfied, the assessee is in appeal before the Tribunal raising the following grounds of appeal : “1. The learned CIT(A) erred on facts and in law in dismissing the appeal by invoking the provisions of section 249( 4 )(b) of the Act holding that appellant failed to make payment of amount equal to advance tax, without appreciating the facts of the case properly and judiciously. He failed to appreciate the fact that the 1 provisions of section 249( 4 )(b) are not applicable in the present ase as the assessee is not liable for the payment of advance tax u/s 208 of the Act owing to the fact that his income does not even exceed the basic threshold limit. He ought to have considered the matter on merits. Therefore, the order impugned in appeal is void-ab-initio and bad in law. 2. The learned CIT(A) erred on facts and in iaw in dismissing the 2 appeal without affording the appellant a real, effective and meaningful opportunity of being heard on merits of the case. 3. The learned CIT(A) erred on facts and in law in not admitting and adjudicating additional evidences filed/sought to be filed Grounds of Appeal 3 under Rule 46A of the Income-tax Rules, 1962, despite the appellant demonstrating sufficient and reasonable cause for nonproduction of the same during the assessment proceedings. 4. The learned CIT(A) erred on facts and in law in upholding the assessment order passed u/s 144 of the Act, without appreciating the facts, circumstances and legal position applicable to the assessees case. The order is therefore bad in law, arbitrary and 4 liable to be quashed. He also failed to appreciate the fact that, the assessee was prevented by sufficient and reasonable cause from complying with the notices. The impugned assessment order is excessive, arbitrary and unsustainable both on facts and in law. 5. The learned CIT(A) erred on facts and in law, in upholding the addition of entire amount of cash deposit of Rs.40,46,350 as unexplained money u/s 69A of the Act without establishing that 5 the alleged cash deposit was made out of undisclosed sources and also failed to appreciate that, mere non-filing of explanations cannot automatically lead to addition under section 69A of the Act. He failed to appreciate the facts as well as the law in this regard in its proper perspective. 6. Without prejudice to the other grounds of appeal, the Learned CIT(A) erred on facts and in law in making addition of the entire amount of Printed from counselvise.com 3 ITA No.3314/PUN/2025, AY 2017-18 Rs. 40,46,350 of cash deposits without appreciating 6 the fact that the entire cash deposits represent the daily business collection from retail customers and therefore even if any addition was to be made on this account should be restricted to the real income embedded therein. 7. The appellant craves leave to add, alter, DLEETE OR substitute all OR any of the above grounds of appeal.” 5. We have heard the Ld. Representative of the parties and perused the material available on record. The Ld. AR submitted that it was brought to the notice of the Ld. CIT(A)/NFAC that the assessee is a Tempo deriver and started milk supply business on retail basis during the year under consideration. The assessee deposited the daily cash collection from the sale of milk into his bank account and in turn made payment to supplier of milk Shivsantosh Dugdhalaya – Chitale brand. All the payments were made through banking channels which were supported by the bank statements of the assessee filed before the Ld. CIT(A)/NFAC. He also submitted that the assessee has completed his education only up to 8th standard and belongs to a poor class. He is living in a slum area and thus was completely unaware about the Income Tax proceedings initiated by the Ld. AO. Also, his mother was suffering from cancer and thereafter expired at the time of proceedings before the Ld. AO. As the assessee is having very meager income, he is not even required to file his return of income. Therefore, no question of paying any advance tax arises in the present case of the assessee. 6. We observe that the Ld. AO completed the assessment ex-parte qua the assessee, however, non-compliance before the Ld. AO was not intentional but resulted due to the reasons stated above by the Ld. AR. The Ld. CIT(A)/NFAC has not admitted the appeal of the assessee and dismissed the same as infructuous by observing as under : “4.5. The appellant has offered 'Not applicable' comments at sl. No. 9 of Form-35 and the appellant failed to made payment of amount equal to the advance tax which was due on its income. It is, therefore, clear that information, given at sl. no. 9 of Form-35 is not correct and the appellant has not made payment of amount equal to the advance tax which was due on its income. The appellant has also not requested for exemption from operation of the provisions of clause (b) of sub section (4) section 249 of the Act. 5. Since the appellant had not filed return of income as well as not paid an amount equal to the amount of advance tax which was payable by it, present appeal is not liable to be admitted. The appeal is infructuous and is, therefore, dismissed.” Printed from counselvise.com 4 ITA No.3314/PUN/2025, AY 2017-18 7. In view of the above submissions of the Ld. AR and in the absence of details of the income of the preceding AY 2016-17, in our view there cannot be any quantification of any advance tax of liability and the Ld. CIT(A)/NFAC ought to have adjudicated the appeal of the assessee on merits of the case. Under these facts and circumstances of the case, we deem it fit and proper in the interest of justice to set aside the impugned order of the Ld. CIT(A)/NFAC and restore the issues raised in the instant appeal to the file of the Ld. CIT(A)/NFAC for necessary adjudication on merits as contemplated u/s 250(6) of the Act as per fact and law after giving reasonable opportunity of hearing to the parties. The assessee is also hereby directed to remain vigilant and make necessary compliance to the notices of hearing issued by the Ld. CIT(A)/NFAC without seeking any adjournment under any pretext, unless required for the sufficient cause, failing which the Ld. CIT(A)/NFAC shall be at liberty to pass appropriate order as per law. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes. 8. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 23rd February, 2026. Sd/- Sd/- (Dr. Dipak P. Ripote) (Astha Chandra) ACCOUNTANT MEMBER JUDICIAL MEMBER पुणे / Pune; ददन ांक / Dated : 23rd February, 2026. रदि आदेश की प्रनिनलनप अग्रेनर्ि / Copy of the Order forwarded to : 1. अपील थी / The Appellant. 2. प्रत्यथी / The Respondent. 3. The Pr. CIT concerned. 4. धिभागीय प्रधिधिधि, आयकर अपीलीय अधिकरण, “एक सदस्य मामला” बेंच, पुणे / DR, ITAT, “SMC” Bench, Pune. 5. ग र्ड फ़ इल / Guard File. //सत्य दपत प्रदत// True Copy// आदेश नुस र / BY ORDER, सहायक पंजीकार/ Assistant Registrar आयकर अपीलीय अदधकरण ,पुणे / ITAT, Pune Printed from counselvise.com "