Case Law Details
Tiptur Rudramurthy Manjunatha Vs ITO (ITAT Bangalore)
The assessee appealed against the order of the National Faceless Appeal Centre dated 03.01.2025 for Assessment Year 2016-17, which had dismissed the appeal against a reassessment order passed under Section 147 read with Section 144B of the Income-tax Act.
The appeal before the Tribunal was delayed by 121 days. The assessee submitted that the appellate order had not been served on the email addresses provided in Form No. 35 or on the authorised representative’s email address. According to the assessee, the order came to his knowledge only upon receipt of a recovery notice dated 18.07.2025, after which the appeal was filed on 30.07.2025. The Revenue could not produce evidence of service of the appellate order before 18.07.2025. The Tribunal held that sufficient cause existed and condoned the delay.
On merits, the Tribunal noted that the assessee, a vegetable vendor, had not filed a return under Section 139. Based on risk management information regarding cash deposits of ₹64,61,900 in an Axis Bank account, reassessment proceedings were initiated. In response, the assessee filed a return declaring income of ₹2,68,890 and explained that the deposits represented sale proceeds from his vegetable business and utilisation of the opening cash balance.
The Assessing Officer found the explanation unsupported by documentary evidence. Although the assessee sought additional time to produce supporting documents, the Assessing Officer proceeded to complete the assessment on 05.03.2024, treating ₹64,61,900 as unexplained money under Section 69A and assessing total income at ₹67,30,790.
The CIT(A) dismissed the appeal after noting that five notices had been issued and remained unanswered. Before the Tribunal, the assessee submitted that the notices had not been sent to the email addresses mentioned in Form No. 35 and that no opportunity had been effectively provided either before the Assessing Officer or the CIT(A). The Departmental Representative supported the orders of the lower authorities.
The Tribunal observed that the assessee had sought time before the Assessing Officer to substantiate the source of the cash deposits but the assessment was completed without waiting for the details. It further noted the assessee’s contention that the CIT(A)’s notices were sent to a different email address and not to the addresses furnished in Form No. 35. Holding that the assessee had been prevented by sufficient cause from presenting his case before the lower authorities, and as no further evidence had been produced before the Tribunal to decide the issue finally, it restored the entire matter to the Assessing Officer.
The Tribunal directed the assessee to substantiate the source and nature of the cash deposits of ₹64,61,900 afresh. The Assessing Officer was directed to verify the explanation and decide the matter afresh after granting the assessee an opportunity of hearing. The appeal was allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
This appeal is filed by TIPTUR RUDRAMURTHY MANJUNATHA [the Assessee] for assessment year 2016 – 17 against the appellate order passed by the National Faceless Appeal Centre, Delhi [ld. CIT(A)] dated 3 January 2025 wherein the appeal filed by the assessee against the reassessment order dated 5 March 2024 passed under section 147 read with section 144B of the Income Tax Act, 1961 [the Act] by the Assessment Unit of Income Tax Department [ld. AO] was dismissed.
2. The assessee aggrieved with the appellate order has preferred this appeal which is late by 121 days. The order of the CIT(A) was passed on 3 January 2025 and date of service or communication of the order was stated to be 3 January 2025 assuming that the date of receipt in the absence of proof of service. The assessee filed appeal on 30 July 2025 and therefore there is a delay of 121 days.
3. The assessee has filed an application for condonation of delay and also affidavit supporting the same. The main reason given by the assessee is that assessee had provided an email address in form No. 35 while filing the appeal before the CIT(A) and has also disclosed the authorised representative’s email ID in the return of income. However none of these email addresses either of the appellant or of the authorised representative have been utilised by the appellate authorities for service of communication or order. No records available with the appellant indicating that the order passed by the learned first appellate authority was served on the registered communication channels provided. Therefore it was apprehended by the assessee that the said order might have been served on an unintended or an unverified email address which neither belongs to the assessee nor it was opted for service of notice. The assessee came to know about the first appellate authority’s order only on receipt of recovery notice dated 18 July 2025 which was served on the assessee’s correct email ID. Thus the assessee became aware of the order of the learned first appellate authority only on 18 July 2025 and immediately on 30 July 2025 the appeal was filed. Therefore it is the claim of the assessee that assessee became aware of the appellate order only on 18 July 2025 and therefore there is no delay. Assuming while denying it was stated that even if there is a delay it was for the sufficient cause.
4. The Ld. AR reiterating the facts stated in the affidavit and petition for condonation of delay submitted that assessee is a small scale trader engaged in the business of selling vegetables. Given the nature and scale of operation the assessee does not have access to real-time update on proceedings and is heavily reliant on proper and timely service of communication from the tax authorities to take necessary legal action. Due to the aforesaid reason the appeal could not be filed within two months from the end of the month in which the order sought to be appealed against is communicated to the assessee. Even otherwise it was stated that the real date of communication of the order dated 18 July 2025. Therefore it was stated that the reason for the delay in filing of the appeal is bona fide, without any negligent approach and therefore the delay should be condoned. Thus it was submitted that the delay is because of the sufficient cause and hence appeal deserves to be admitted.
5. The ld. DR vehemently objected to the above fact and stated that the delay is not caused due to sufficient cause shown by the assessee and therefore appeal of the assessee should not be admitted.
6. We have carefully considered the rival contention. The first claim of the assessee is that the appellate orders were not served on the assessee. It was submitted that the appellate orders was not sent to the address which was mentioned in form No. 35 and further it was also not communicated to the other email address which was stated in paragraph No. 17 to which the notices may be sent to the appellant. The revenue could not also show us any evidence of service of order to the assessee prior to 18 July 2025. In the form No. 36 also the assessee has assumed the date of receipt of the order of the learned first appellate authority as the date of order itself. It was further stated that the order is neither served on the assessee nor to the authorised representative. The assessee came to know about the passing of the appellate order only on 18 July 2025 when the recovery notice was issued to the assessee. In view of the above fact we find that the delay caused of 121 days even if we consider the date of the passing of the order of the learned first appellate authority as the date of receipt of the order, is for sufficient cause and therefore we condone the delay and admit the appeal of the assessee.
7. Coming to the merits of the case we find that the assessee is an individual carrying on the business as a vegetable vendor. The information as risk management strategy shows that assessee has deposited a sum of ₹ 6,461,900 in his Axis bank account. Assessee did not file any return of income under section 139 of the Act and therefore the notice of reopening of the assessment was issued. In response to that notice the assessee filed return of income declaring total income of ₹ 268,890. Assessee was asked the source of the above cash deposited in the bank account. The assessee submitted that he is engaged in the business of sale of vegetable. During the year 2015 – 16, he was in the business of buying the vegetable for farmers and selling the vegetables to different customers and the cash has been deposited in the bank account on account of the sale consideration realised thereon. The assessee also stated that opening cash balance also available with the assessee was utilised for depositing in the bank account.
8. The ld. AO found that the explanation given by the assessee is unsubstantiated in absence of any documentary evidences in support of the claim. Assessee has specifically sought further time to support the evidences with the amount of cash deposited in the bank account which was not given by the ld. AO which resulted into an assessment order passed on 5 March 2024 wherein the addition of ₹ 6,461,900 was made under section 69A of the Act to the returned income of Rs.2,68,890 resulting into the total assessed income of ₹ 6,730,790.
9. The assessee aggrieved with the same preferred an appeal before the learned CIT – A. The learned CIT – A noted that he issued 5 notices to the assessee but the assessee did not respond to any of the notices and therefore on the basis of the statement of facts filed along with form No. 35, he found that no other evidences were submitted and accordingly the ld. AO’s order was confirmed.
10. The assessee is in appeal before us submitted that that no notices were served by the learned CIT – A on the address given on the form No. 35. It was further stated that in paragraph No. 17 the address to which the notices may be sent to the appellant is also mentioned. However no notices were served by the learned CIT – A on that address also. Thus his claim was that that the learned CIT – A has dismissed the appeal of the assessee without discussing the issue on merit. It was stated by the learned CIT – A that he issued 5 notices however none of them were replied to. He submits that when none of the notices issued by the learned CIT – A reached the assessee, there is no question of filing any reply. It was further submitted that even before the ld. AO the assessee requested to give the time to substantiate the cash deposits in the bank during the year 2015 – 16 which was not given which has resulted into the addition. Therefore it was his claim that before both the lower authorities, no opportunity of hearing was provided to the assessee or to give and substantiate the evidences with respect to the source of cash deposited in the bank account.
11. The ld. DR vehemently supported the orders of the learned lower authorities. He submits that the ld. AO was not submitted any information about the sources of the cash deposited. Merely seeking a time and not substantiating the cash deposit with documentary evidences, the learned assessing officer did not have any other option but to make an addition. With respect to the appellate proceedings before the learned CIT – A, he submitted that assessee was given five opportunities of hearing which was not availed by the assessee and therefore the learned CIT – A is correct in dismissing the appeal of the assessee for non-prosecution. He submitted that in absence of any further information given by the assessee, there is no point in not dismissing the appeal of the assessee.
12. We have carefully considered the rival contention and perused the orders of the learned lower authorities. The simple issue involved in this appeal is that the assessee is a vegetable vendor, who deposited cash in his bank account, failed to explain before the ld. AO the sources of such cash deposit with documentary evidence. We find that when the assessee is a vegetable seller, was questioned by the ld. AO to substantiate the sources of the funds used for depositing into the Axis bank account in cash, the ld. AR submitted that, before the assessing officer the assessee sought time for submission of the necessary details. Therefore the assessee was not given a proper opportunity of hearing when he requested for adjournment and further time to substantiate, the ld. AO without waiting for such submission, made the addition and passed the assessment order. Further before the learned CIT – A assessee was issued several notices and it was submitted that none of them were responded to. Thus before the learned CIT – A also assessee was not represented. The reason given by the assessee was that the email ids on which the notices were sent by the learned CIT – A was on the different email address and not on the email address mentioned in form No. 35. Further the learned CIT – A did not submit any formal notice to the addresses which is mentioned in paragraph No. 17 of form No. 36. In view of this we hold that the assessee was prevented from availing a proper opportunity of hearing first before the learned assessing officer for submission of the sources of fund which was deposited in cash in the Axis bank account of the assessee. The second issue was with respect to the addition of investment of the above sum, the learned CIT – A issued the notices to the different email address which was not available in form No. 35. In view of the above facts it is apparent that assessee was prevented by sufficient cause in presenting its case before the learned lower authorities.
13. The assessee did not submit any further information before us to facilitate the decision of the case before us itself. In absence of such detail, the issue of taxation of the amount of cash deposited in the Axis bank account could not be decided here.
14. In view of the above facts we restore the whole appeal back to the file of the learned Assessing Officer with a direction to the assessee to substantiate the source and nature of the amount of cash deposited in the Axis bank account of ₹ 6,461,900 afresh. The learned Assessing Officer is directed to verify the explanation given by the assessee and then decide the issue afresh after granting an assessee opportunity of hearing.
15. In the result appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 04thJune, 2026.
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