SUKHMINDER SINGH,CHANDIGARH V. INCOME TAX OFFICER, WARD 2(1), CHANDIGARH

ITA 278/CHANDI/2025

AI Insights

The case involves an appeal by Shri Sukhminder Singh Kansal Singla and Associates against the order of the Ld. CIT(A), which upheld the addition of Rs 20,86,100 as unexplained cash deposits in the assessee's bank accounts and further enhanced it to Rs 25,45,900. The assessee contested the validity of the notices under sections 143, 147, and 148, and argued that the additions were made without proper application of mind and were based on vague information. The Tribunal found that the CIT(A) had not provided adequate opportunity for the assessee to present his case, particularly regarding the enhancement of the addition, which was done without specific notice. The Tribunal's decision to remand the case back to the CIT(A) for fresh adjudication underscores the importance of adhering to the principles of natural justice and providing a fair hearing.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 772970 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-09-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 24-02-2025
• Other Referred Cases: CIT vs. B.N. Bhattacharjee & Another (118 ITR 461) (SC), CIT vs. Multiplan India (P) Ltd. (38 ITD 320) (Del)
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RANJIT KAUR; VIRTUAL
• Assessee Lawyers: T.N. SINGHLA; C.A
• Keywords: Set aside; Opportunity of being heard; Reasonable cause; Corroborative evidences; Peak credit; Principle of natural justice; Initiation of penalty proceedings
• Section: 148; 143(3); 271(1)(c)

Judgement Text

"आयकर अपीलीय अिधकरण,चǷीगढ़ Ɋायपीठ “ए” , चǷीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “A”, CHANDIGARH HEARING THROUGH: HYBRID MODE ŵी लिलत क ुमार, Ɋाियक सद˟ एवं ŵी मनोज क ुमार अŤवाल, लेखा सद˟ BEFORE: SHRI. LALIET KUMAR, JM & SHRI. MANOJ KUMAR AGGARWAL, AM आयकर अपील सं./ ITA No. 278/Chd/ 2025 िनधाŊरण वषŊ / Assessment Year : 2011-12 Shri Sukhminder Singh Kansal Singla and Associates SCO 80-81, 3rd Floor, Sector 17, Chandigarh बनाम The ITO Ward 2(1) ˕ायी लेखा सं./PAN NO: ALHPS5879F अपीलाथŎ/Appellant ŮȑथŎ/Respondent िनधाŊįरती की ओर से/Assessee by : Shri T.N. Singhla, C.A राजˢ की ओर से/ Revenue by : Dr. Ranjit Kaur, Addl. CIT, Sr. DR (Virtual) सुनवाई की तारीख/Date of Hearing : 22/09/2025 उदघोषणा की तारीख/Date of Pronouncement : 22/09/2025 आदेश/Order PER LALIET KUMAR, J.M: This appeal by the assessee is directed against the order passed by the Ld. CIT(A), NFAC, Delhi dated 24.05.2024 for the assessment year 2011-12. 2. In the present appeal Assessee has raised the following grounds: 1 That the Ld CIT(A) has wrongly upheld impugned order passed u/s 143 r ws. 147. which is bad and against the provisions of law and facts. 2. That the Ld. CIT(A) has wrongly passed impugned order u/s 250 without properly serving the notices to the assessee. 3. That the notice u/s 148 was issued on the basis of reasons recorded on vague information and without application of mind. 4. That the Ld. CIT(A) has wrongly upheld addition of Rs 20,86,100/- (after calculating the peak credit during the year) by treating the deposits in bank accounts as unexplained cash deposits, whereas as per the assessee all the entries of the bank accounts are duly recorded in regular books of accounts of the assessee, the same has already been included in his return of income, therefore, any addition on this account will result in double taxation, which is not permitted in law. 5. That the Ld. CII(A) has wrongly enhanced addition made by the Ld. Assessing Officer by Rs 4,59,800/ on account of peak credit during the year. 6. That the Ld. CIT(A) has wrongly enhanced addition made by the Ld Assessing Officer by Rs 4,59,800/- without issuing any notice on account of the same. Printed from counselvise.com 2 7. That the Ld. CIT(A) has wrongly upheld approval for issue of notice u/s 148 that was given in a mechanical way by PCIT without application of mind. 8. That the Ld. CIT(A) has wrongly upheld reopening of completed assessment on suspicion and vague information which against the law. 9. That the Ld. CIT(A) has wrongly upheld order of Ld learned assessing officer which does not mentions section under which the addition is made. 10. That the Ld. CIT(A) has wrongly upheld addition of peak of cash deposit in bank account amounting to Rs 20,86,100/-without considering the explainable sources of cash with the assessee. 11. That the Ld CIT(A) has wrongly upheld initiation of penalty proceedings u/s 271(1)(c) of the Act. 12. That the Ld CIT(A) has wrongly upheld initiation of penalty proceedings u/s 271(1)(b) of the Act. 13. That the Ld. CIT(A) has wrongly upheld initiation of penalty proceedings u/s 271A of the Act. 14. That the learned assessing officer has wrongly initiated penalty proceedings u/s 234A,234B and 234C of the Act. 15. That the assessee prays for any addition, deletion, amendment and modification in the grounds of appeal before the disposal of the same in the interest of substantial justice of the assessee. 3. The assessee filed his return of income declaring total income of Rs.16,38,250/-. The assessment was framed under section 143(3) of the Act by the Assessing Officer, Ward-2(1), Chandigarh, wherein an addition of Rs.20,86,100/- was made on account of unexplained cash deposits in the assessee’s bank accounts by applying the principle of peak credit. 4. Against the order of the Ld. Assessing Officer the Assessee went in appeal before the Ld. CIT(A). The Ld. CIT(A), however, noted that despite several statutory notices issued through the NFAC portal, the assessee failed to appear or furnish submissions. On account of such non-compliance, the Ld. CIT(A) proceeded ex parte and, while disposing of the appeal, not only confirmed the action of the Assessing Officer but also enhanced the addition to Rs.25,45,900/- on the basis of his own working of peak credit. 5. Aggrieved by the order of the Ld. CIT(A) the assessee preferred an appeal before the Tribunal. 6. At the time of hearing before us, the Ld. AR submitted that the assessee was prevented by reasonable cause from making timely compliance before the NFAC, since the notices were not effectively attended due to circumstances beyond the Printed from counselvise.com 3 assessee’s control. It was argued that the assessee had a bona fide explanation inasmuch as the deposits were out of cash withdrawals and sale proceeds of vehicles and that supporting evidence could not be furnished before the lower authorities. It was further pointed out that enhancement of income by the Ld. CIT(A) without affording a specific opportunity violated the principles of natural justice, and the matter therefore deserved to be restored for fresh adjudication. 7. The Ld. DR, on the other hand, placed reliance on the impugned order and supported the enhancement made by the Ld. CIT(A). 8. We have heard the rival contention and perused the material available on the record. A perusal of the appellate order clearly shows that though the appeal was admitted after condonation of delay, the assessee thereafter failed to file any written submissions despite repeated notices. The Ld. CIT(A) has recorded that as many as six opportunities were granted but no compliance was made. Thereafter, relying on decisions such as CIT vs. B.N. Bhattacharjee & Another (118 ITR 461) (SC), CIT vs. Multiplan India (P) Ltd. (38 ITD 320) (Del) and other judgments, the appeal was dismissed in limine on the ground of non-prosecution. Not only that, the Ld. CIT(A) has further gone into the merits of the addition and, on the basis of the working of bank balances, enhanced the addition from Rs.20,86,100/- to Rs.25,45,900/-. 8.1 In our considered view, such disposal of the appeal cannot be upheld. The settled legal position is that the first appellate authority is vested with quasi-judicial powers and is duty-bound to dispose of the appeal on merits after affording proper and adequate opportunity of hearing to the assessee. It is equally well settled that dismissal of appeal for want of prosecution is not envisaged under the scheme of the Act. The Hon’ble jurisdictional as well as other High Courts have time and again emphasized that even in the case of non-appearance, the CIT(A) must decide the matter on merits by dealing with the grounds raised. Further, where enhancement is contemplated, section 251(2) of the Act mandates that a reasonable opportunity of showing cause must be given to the assessee. 8.2 In the present case, though the Ld. CIT(A) has referred to repeated non- compliances, there is nothing on record to show that a specific notice of enhancement was issued before directing the Assessing Officer to adopt a higher peak balance. Thus, the principles of natural justice stand violated. Printed from counselvise.com 4 8.3 Having regard to the totality of facts and circumstances, we are of the view that the ends of justice would be met if the matter is restored back to the file of the Ld. CIT(A) for fresh adjudication. The assessee shall be at liberty to place on record all supporting evidence to substantiate the explanation for the bank deposits, and the Ld. CIT(A) shall examine the same in accordance with law after affording an adequate opportunity to be heard. Needless to say, the assessee is also directed to extend full cooperation and refrain from seeking unnecessary adjournments. 9. In the result, the order of the Ld. CIT(A) is set aside and the matter is remanded back for de novo consideration. The appeal of the assessee is treated as allowed for statistical purposes. Order pronounced in the open Court on 22/09/2025. Sd/- Sd/- मनोज क ुमार अŤवाल लिलत क ुमार (MANOJ KUMAR AGGARWAL) (LALIET KUMAR) लेखा सद˟/ ACCOUNTANT MEMBER Ɋाियक सद˟ /JUDICIAL MEMBER AG आदेश की Ůितिलिप अŤेिषत/ Copy of the order forwarded to : 1. अपीलाथŎ/ The Appellant 2. ŮȑथŎ/ The Respondent 3. आयकर आयुƅ/ CIT 4. आयकर आयुƅ (अपील)/ The CIT(A) 5. िवभागीय Ůितिनिध, आयकर अपीलीय आिधकरण, चǷीगढ़/ DR, ITAT, CHANDIGARH 6. गाडŊ फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar Printed from counselvise.com "