SIMA DHARA,KISMAT APURBAPUR V. INCOME TAX OFFICER, AAYAKAR BHAWAN, CHINSURAH

ITA 1225/KOL/2023

AI Insights

The case involves Sima Dhara, who operates a petrol pump and filed her income tax return for the assessment year 2017-18 declaring an income of Rs.34,09,050. The Income Tax Officer (ITO) assessed her income at Rs.1,38,98,360 after making several additions, including Rs.94,86,000 for unexplained cash deposits during the demonetization period. The assessee appealed to the CIT(A), who changed the basis of addition from section 68 to section 69A of the Income Tax Act without notice, leading to the current appeal. The Tribunal found this change violated the principles of natural justice and remanded the case back to the ITO for a detailed examination.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 312746 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Unexplained cash credit; Principle of natural justice
• Section: 143(3); 142(1); 68; 40A(3)

Judgement Text

" आयकर अपीलȣय अͬधकरण, कोलकाता पीठ, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH KOLKATA Before Shri Sonjoy Sarma, Judicial Member and Shri Rakesh Mishra, Accountant Member I.T.A. No.1225/Kol/2023 Assessment Year: 2017-18 Sima Dhara………………………...……………………………..….……….Appellant Kismat Apurbapur, Natun Bazar, Singur, Hooghly, W.B. – 712409. [PAN: ADMPD1772F] vs. ITO, Chinsurah……….....……..............................……........……...…..…..Respondent Appearances by: Shri Susanta Kr. Mukherjee, AR, appeared on behalf of the assessee. Shri Lovish Shelly, Sr. DR, appeared on behalf of the Revenue. Date of concluding the hearing : April 28, 2025 Date of pronouncing the order : April 29, 2025 ORDER Per Sonjoy Sarma, Judicial Member: The present appeal has been preferred by the assessee against an order dated 22.09.2023 of the National Faceless Appeal Centre [hereinafter referred to as ‘CIT(A)’] passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’). 2. Brief facts of the case are that the assessee is an individual and running a petrol pump under the proprietorship concern of M/s Freedom Fighter Service Station. The assessee filed her return of income for the assessment year 2017-18 by declaring a total income of Rs.34,09,050/-. The case of the assessee was selected for scrutiny under CASS followed by notices issued u/s 143(2) and 142(1) of the Act. The assessment was completed u/s 143(3) of the Act on 15.10.2019 by I.T.A. No.1225/Kol/2023 Assessment Year: 2017-18 Sima Dhara 2 assessing a total income of Rs.1,38,98,360/-. This was done after making the following additions: i. Rs.94,86,000/- on account of unexplained cash deposits made in the bank account during the demonetization period u/s 68 of the Act. ii. Rs.3,82,188/- claimed under the head ‘repair and maintenance of pump building’. iii. Rs.2,54,745/- claimed under the head ‘earth filling expenses’ u/s 40A(3) of the Act. iv. Rs.91,879/- claimed under the heads ‘festival expenses, festival lighting expenses and puja expenses’. v. Rs.2,74,500/- claimed as tank lorry expenses. Thus the total addition of Rs.1,04,89,312/- was made leading to an assessed income of Rs.1,38,98,360/-. 3. Aggrieved by the above order, the assessee filed an appeal before the ld. CIT(A). However, the ld. CIT(A) while passing the appellate order has notably converted the basis of addition of Rs.94,86,000/- from section 68 (unexplained cash credit) to section 69A (unexplained money) without issuing any notice and without giving any opportunity to the assessee to respond in this respect. 4. Dissatisfied with the above order, the assessee is in appeal before this Tribunal raising various grounds. However, the main contention of the ld. AR is that the ld. CIT(A) erred in changing the basis of the addition from section 68 to section 69A of the Act without issuing any notice in this behalf thereby violating the principles of natural justice. Furthermore, the ld. AR submitted that the addition of 25% of the demonetized cash deposits as assessed by the Assessing Officer was purely hypothetical or without any cogent basis or evidence. Moreover, I.T.A. No.1225/Kol/2023 Assessment Year: 2017-18 Sima Dhara 3 he submitted that while passing the impugned order, the books of account of the assessee were not rejected as and when the assessee had submitted all necessary documents such as cash book in order to substantiate the claim of cash deposits. However, these facts have never been considered by the Assessing Officer nor by the ld. CIT(A) at the time of passing of the orders. Therefore, the ld. AR prayed that the additions made/confirmed by the authorities below are not correct and he fairly submitted that the matter may be remanded back to the file of the Assessing Officer for fresh consideration after affording reasonable opportunity of being heard to the assessee. 5. On the other hand, the ld. DR supported the decisions of the Assessing Officer as well as ld. CIT(A). 6. We, after hearing the rival submissions and perusing the materials available on record, find that in the present case, the Assessing Officer made an addition of Rs.94,86,000/- out of total cash deposits of Rs.2,56,97,300/- made during the demonetization period without any detailed examination or reasoning and even books of account were not rejected. Moreover, while passing the impugned order by the ld. CIT(A), the ld. CIT(A) changed the section of addition from section 68 to section 69A without issuing any notice to the assessee and without providing any opportunity to rebut or explain. We note that the action of the ld. CIT(A) is totally contrary to the principles of natural justice. In such circumstances, we deem it necessary that the entire matter needs to be remanded back to the file of the Assessing Officer. Accordingly, we direct the Assessing Officer to reexamine the entire issue afresh after considering the documentary evidences already filed by the assessee and provide reasonable opportunity of being heard to the assessee and decide the issue in accordance with law by passing speaking order. I.T.A. No.1225/Kol/2023 Assessment Year: 2017-18 Sima Dhara 4 7. In terms of the above, the appeal of the assessee is allowed for statistical purposes. Kolkata, the 29th April, 2025. Sd/- Sd/- [Rakesh Mishra] [Sonjoy Sarma] लेखा सदèय/Accountant Member ÛयाǓयक सदèय/Judicial Member Dated: 29.04.2025. RS Copy of the order forwarded to: 1. Sima Dhara 2. ITO, Chinsurah 3. CIT(A)- 4. CIT- , 5. CIT(DR), //True copy// By order Assistant Registrar, Kolkata Benches "