Pareshbhai Khodabhai Godhani Vs ITO (ITAT Surat)
Surat ITAT Restores Case of Unexplained Demonetization Deposit to Assessing Officer (AO) for Fresh Review
The Income Tax Appellate Tribunal (ITAT), Surat Bench, has allowed the appeal of Pareshbhai Khodabhai Godhani for statistical purposes, setting aside the order of the National Faceless Appeal Centre (NFAC) and restoring the matter back to the Assessing Officer (AO) for a fresh assessment. The appeal challenged the NFAC’s order dated November 28, 2023, which had upheld the AO’s addition of ₹15,05,680 under Section 69A of the Income Tax Act, 1961, treating cash deposits made during the demonetization period as unexplained money and taxing it at a higher rate under Section 115BBE of the Act.
At the outset, the assessee’s representative acknowledged a delay of 17 days in filing the appeal before the Tribunal. An application for condonation of this delay, supported by an affidavit, was submitted. The representative explained that the impugned order was not served on the assessee’s registered email address provided in Form-35. The assessee’s consultant discovered the dismissal order on February 5, 2024, while checking the ITBA Portal. Subsequently, the appeal was immediately filed. While arguing that there was no actual delay from the date of knowledge, the assessee sought condonation as a precautionary measure, emphasizing that the delay was neither intentional nor inordinate and that the case had merit.
On the merits of the case, the assessee’s representative argued that the AO made the addition solely based on the failure to explain the source of cash deposits during demonetization. It was contended that detailed submissions and evidence were filed before the CIT(A) through the ITBA Portal but were not considered. The representative asserted that the assessee had sufficient cash on hand, totaling ₹15,13,990 (including an opening cash balance of ₹2,13,101 and withdrawals of ₹12,35,400 from various bank accounts), to explain the deposits. Furthermore, the application of the enhanced tax rate under Section 115BBE was challenged as being retrospectively applied, contrary to several Tribunal decisions.
The Senior Departmental Representative (DR) for the revenue left the decision on the condonation of delay to the Bench’s discretion. Regarding the addition, the DR highlighted that the assessment was made ex parte under Section 144 due to the assessee’s non-compliance before the AO and, as per the CIT(A)’s order, no submissions were made at the appellate level either. The DR argued that without any explanation for the non-appearance and lack of evidence of submissions before the CIT(A), the assessee was not entitled to relief. Alternatively, the DR suggested restoring the matter to the CIT(A) with specific directions and costs if the Bench considered any leniency appropriate.
The Tribunal, after considering the submissions, condoned the 17-day delay, noting that it was not inordinate and appeared unintentional, especially given the claim of non-service of the order via email and the subsequent immediate filing upon discovery on the portal. On the substantive issue, the Tribunal observed that both the AO and the CIT(A) had passed ex parte orders due to the lack of proper response from the assessee. Instead of directly considering the submissions and evidence presented before the ITAT, the Tribunal deemed it appropriate to restore the matter back to the AO for a fresh decision in accordance with the law. The AO was directed to grant a reasonable opportunity of hearing to the assessee before passing a fresh order on merit. The assessee was also cautioned to be more diligent in future compliance with notices. With these directions, the grounds of appeal were allowed for statistical purposes. The order was pronounced in open court on January 21, 2025.
FULL TEXT OF THE ORDER OF ITAT SURAT
