2025 (7) TMI 1675 - AT - Income Tax

Cash deposit as unexplained investment u/s 69 - main objection of the assessee is that proper opportunity of hearing has not been granted and the facts of the case has not been appreciated by the ld. first appellate authority - HELD THAT - Appeal has not been adjudicated on merits and there might have been a possibility that the notice of hearing from the office of the ld. first appellate authority issued through ITBA portal might not have been tracked by the assessee we deem it fit and proper to remand the matter back to the file of the CIT(A) for fresh adjudication and for deciding the grounds of appeal contained in form no. 35 on merits of the case. The assessee is also directed to file all documentary evidences and submissions in support of his contention before the ld. first appellate authority and to fully cooperate in appeal proceedings for proper disposal of the case. The assessee to be allowed proper opportunity of hearing.

Summary

ISSUES:

Whether delay in filing the appeal can be condoned based on reasons of personal hardship.Whether the first appellate authority erred in refusing to decide on a ground of appeal regarding opportunity of hearing.Whether the addition of unexplained cash deposits under section 69 was justified without proper evaluation of records and submissions.Whether differential treatment of cash deposits within the same bank account was correctly upheld by the first appellate authority.Whether the assessee was given adequate opportunity to submit additional evidence and documents before the appellate authority and the Tribunal.Whether the appeal should be remanded for fresh adjudication on merits due to non-adjudication by the first appellate authority.

RULINGS / HOLDINGS:

The delay of 41 days in filing the appeal was condoned considering the affidavit stating that the delay was due to the serious illness and subsequent death of the assessee's mother, and the appeal was admitted for hearing on merits.The first appellate authority was not justified in refusing to decide on the ground of insufficient opportunity of hearing, as the notices were issued in quick succession and the assessee alleged that the "window was closed" before he could respond.The addition made under section 69 of the Act, treating the cash deposits as unexplained investment, was upheld by the first appellate authority without evaluating the information or records submitted by the assessee, which was held to be erroneous.The first appellate authority erred in upholding the addition without appreciating the nature of transactions and the differential treatment given to cash deposits in the same bank account.The assessee was entitled to submit additional information and documents before the appellate authority and the Tribunal as he was not given a proper opportunity to present his case, compounded by his consultant not perusing the case adequately.The appeal was remanded to the first appellate authority for fresh adjudication on merits with directions to provide the assessee proper opportunity of hearing and to consider all grounds and documentary evidence submitted.

RATIONALE:

The legal framework applied includes provisions of the Income Tax Act, specifically sections 147, 148, 144, and 69, and procedural rules under the Income Tax Appellate Tribunal Rules 1963.The Tribunal relied on principles of natural justice requiring adequate opportunity of hearing before adverse orders are passed, especially when notices are issued electronically through ITBA portal.The Tribunal recognized that non-response to multiple notices through the ITBA portal may be due to lack of awareness or tracking by the assessee, warranting remand for fresh consideration.The decision reflects adherence to the requirement that additions under section 69 must be supported by proper evaluation of evidence and submissions, and not merely upheld on presumption of unexplained investment.No opinion was expressed on the merits of the addition; all substantive legal issues were left open for fresh adjudication by the first appellate authority.