VDC FOOD TRADING,VELLORE V. ITO,WARD-1, VELLORE

ITA 934/CHNY/2025

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The case involves VDC Food Trading, a firm engaged in wholesale trading, which faced scrutiny over unexplained cash deposits and withdrawals during the financial year 2017-18 relevant to the assessment year 2018-19. The Assessing Officer re-opened the case under section 147 of the Income Tax Act due to substantial cash transactions that were not explained by the assessee. Despite multiple notices, the assessee failed to respond, leading to an ex parte assessment adding the unexplained cash deposits to the income. The CIT(A) upheld this decision due to non-participation of the assessee. The Tribunal, considering the principles of natural justice and the assessee's non-receipt of notices, remitted the case back to the Assessing Officer for a fresh assessment.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 708569 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2018-2019
• Other Referred Cases: Tin Box Company vs CIT, [2001] 249 ITR 216 (SC)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: E.PAVUNA SUNDARI; C.I.T
• Assessee Lawyers: ABHISHEK MURALI
• Keywords: Set aside; Reasonable cause; Principle of natural justice
• Section: 144

Judgement Text

"आयकर अपीलीय अिधकरण, ‘ए’ Ɋायपीठ, चेɄई IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH, CHENNAI ŵी जॉजŊ जॉजŊ क े, उपाȯƗ एवं ŵी एस.आर.रघुनाथा, लेखा सद˟ क े समƗ BEFORE SHRI GEORGE GEORGE K, VICE PRESIDENT AND SHRI S.R. RAGHUNATHA, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.:934/Chny/2025 िनधाŊरण वषŊ / Assessment Year: 2018-19 VDC Food Trading, No.7/1. Beri Bakkali Street, Vellore – 632 004. vs. ITO, Ward -1, Vellore. [PAN:AAQFS-4019-K] (अपीलाथŎ/Appellant) (ŮȑथŎ/Respondent) अपीलाथŎ की ओर से/Appellant by : Shri. Abhishek Murali, C.A. ŮȑथŎ की ओर से/Respondent by : Ms. E. Pavuna Sundari, C.I.T. सुनवाई की तारीख/Date of Hearing : 17.06.2025 घोषणा की तारीख/Date of Pronouncement : 15.07.2025 आदेश /O R D E R PER S. R. RAGHUNATHA, AM : This appeal by the assessee is filed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, for the assessment year 2018-19, vide order dated 03.12.2024. 2. At the outset, we find that there is a delay of 32 days in appeal filed by the assessee, for which the assessee has filed affidavit stating the reasons for delay, wherein, it is submitted that the assessee was unwell and suffering from severe fever and dehydration and therefore there was a slight delay in signing the documents and handing it over to his advisor and the assessee also stated that the delay was only due to unavoidable health situation. After considering the Affidavit filed by the assessee :-2-: ITA. No:934/Chny/2025 and also hearing both the parties, we find that there is a reasonable cause for the assessee in not filing appeal on or before the due date prescribed under the law and thus, in the interests of justice, we condone delay in filing of appeal and admit the appeal filed by the assessee for adjudication. 3. Brief facts are that the assessee is a firm engaged in the business of wholesale dealer of Hindustan Unilever products, Maida and Vanaspathi and is earning income from commission and brokerage. The case of the assessee-firm was re-opened u/s.147 of the Act as it was seen that the assessee-firm had deposited cash of Rs.9,93,41,455/-in bank account maintained with Central Bank of India and deposited cash of Rs.77,74,527/- in his bank account maintained with Indusind Bank Limited totaling Rs. 10,71,15,982/-. Further, it was seen that the assessee had made cash withdrawals of Rs.19,03,790/- from bank account maintained with Central Bank of India and cash withdrawals of Rs.24,85,000/- from his bank account maintained with Indusind Bank Limited totaling Rs.43,88,790/- and Interest other than interest on securities (Section 194A) of Rs.24,842/- during the F.Y. 2017-18 relevant to A.Y. 2018-19. 3.1. However, it was seen that the assessee failed to file return of income u/s 139(1) of the I.T. Act, 1961 for the year under consideration. In view of this fact, notice u/s.148 of the Act was issued upon the assessee on 31.03.2022. However, no response was received from the assessee to the statutory notice issued. In view of this fact, notice u/s.142(1) of the Act was issued upon the assessee on 07.10.2022, 21.10.2022. However, the assessee failed to comply with the aforesaid notices. Therefore, show-cause notices dated 27.01.2023 and 22.02.2023 were issued upon the assessee from time to time. However, the assessee again failed to respond to the :-3-: ITA. No:934/Chny/2025 show-cause notices. In view of this fact, the assessee was asked to furnish the source of the cash deposits made during the year under consideration. However, as the assessee failed to comply to the aforesaid notices issued from time to time the AO concluded the assessment thereby adding the amount of Rs.10,71,15,982/- of cash deposits maintained with Central Bank of India and Indusind Bank to the total income for the year under consideration u/s.69A of the Act as unexplained money. 3.2. Further, the assessee had made cash withdrawals of Rs.19,03,790/- from the bank account maintained with Central Bank of India and Rs.24,85,000/- from bank account maintained with Indusind Bank totaling to Rs.43,88,790/-. In view of this fact, the assessee was requested to furnish the purpose for which the cash withdrawals were being made and where such huge cash was being spent. However, inspite of providing a number of opportunities the assessee failed to furnish the documentary evidences in respect of the same. Therefore, the Assessing Officer completed the assessment under Section 144/147 r.w.s. 144B of the Act dated 15.03.2023 on best judgment basis by making an addition of Rs.5,26,654/- due to variation in respect of unexplained cash withdrawals along with Rs.24,842/- towards variation in respect of interest received. Aggrieved by the order of the Assessing Officer, the assessee filed an appeal before the ld. CIT (A). 4. Before the ld.CIT(A) also, the assessee has neither filed written submissions nor filed any documentary evidence in support of his claim. Therefore, the CIT(A) dismissed the appeal by confirming the order of the ld. Assessing Officer. Aggrieved by the order of CIT (A), the assessee has filed appeal before us. 5. The ld.AR submitted that the assessee has not received notices issued by the ld.CIT(A). Hence, the appeal was not prosecuted before the CIT(A) even the :-4-: ITA. No:934/Chny/2025 assessment order was passed under Section 144 by the Assessing Officer. Therefore, he prayed that one more opportunity may be provided to the assessee to represent his case before the Assessing Officer in the interest of natural justice. 6. Per contra, the ld.DR submitted that both the Assessing Officer and the ld.CIT(A) provided sufficient opportunity to appear before them. However, the assessee has been negligent in responding to the statutory notices and hence, prayed for confirming the order of the ld.CIT(A). 7. We have heard the rival parties and perused the material available on record and gone through the orders of the lower authorities. We note that the Assessing Officer has passed an exparte order by considering the information available with the department and the same has been dismissed by the ld.CIT(A) - NFAC due to non- participation of the assessee before the first appellate authority. Since, the assessee has failed to participate both before the Assessing Officer as well as the appellate authority, we levy the cost of Rs.10,000/- to be paid to State Legal Aid Authority, Hon’ble High Court of Madras and produce proof of payment of cost to the Registry within 30 days from the date of receipt of this order. 8. In view of the above and to meet the ends of justice we set aside the order of ld.CIT(A) and remit the matter back to the file of Assessing Officer by relying on the decision of the Hon’ble Supreme Court in the case of Tin Box Company vs CIT, [2001] 249 ITR 216 (SC) and direct AO to denovo frame the assessment order in accordance to law, after providing reasonable opportunity to the assessee. Needless to say, the assessee to be diligent and file written submissions and relevant documents if advised so. :-5-: ITA. No:934/Chny/2025 9. In the result, appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the court on 15th July, 2025 at Chennai. Sd/- Sd/- (जॉजŊ जॉजŊ क े) (GEORGE GEORGE K) उपाȯƗ /VICE PRESIDENT (एस. आर. रघुनाथा) (S. R. RAGHUNATHA) लेखा सद˟/ACCOUNTANT MEMBER चेɄई/Chennai, िदनांक/Dated, the 15th July, 2025 SP आदेश की Ůितिलिप अŤेिषत/Copy to: 1. अपीलाथŎ/Appellant 2. ŮȑथŎ/Respondent 3.आयकर आयुƅ/CIT– Chennai/Coimbatore/Madurai/Salem 4. िवभागीय Ůितिनिध/DR 5. गाडŊ फाईल/GF "