Shekhar Mehta vs. ITO Ward-2, Fatehabad – Assessment Year 2009-10 – Dispute Over Cash Deposit Addition

Case Overview: Shekhar Mehta vs. ITO Ward-2, Fatehabad – ITA No. 6510/DEL/2019

Case Number: ITA 6510/DEL/2019

Appellant: Shekhar Mehta, Fatehabad

Respondent: ITO Ward-2, Fatehabad

Assessment Year: 2009-10

Date of Filing: 2019-08-02

Order Type: Final Tribunal Order

Date of Order: 2021-11-02

Date Pronounced: 2021-11-02

Introduction

This case pertains to the assessment year 2009-10, where the appellant, Shekhar Mehta, challenged the ex parte order passed by the Commissioner of Income Tax (Appeals) [CIT(A)] Hisar. The CIT(A) had confirmed an addition of Rs. 11,89,000/- made by the Assessing Officer (AO) under Section 144/147 of the Income Tax Act, 1961, for unexplained cash deposits in the appellant’s bank account.

Background of the Case

Shekhar Mehta, an individual residing in Fatehabad, Haryana, filed his income tax return for the assessment year 2009-10 on July 3, 2009. In his return, he declared a total income of Rs. 2,97,709/- and agricultural income of Rs. 1,28,500/-. During the assessment proceedings, it came to the notice of the AO that Shekhar Mehta had made certain cash deposits in his Axis Bank account in Fatehabad. Suspecting these deposits to be unaccounted income, the AO reopened the assessment by issuing a notice under Section 148 after recording the reasons for the same.

The appellant failed to respond to the various statutory notices issued by the AO under Sections 148 and 142(1) of the Income Tax Act. Consequently, the AO completed the assessment ex parte under Section 144/147, determining the total income of Shekhar Mehta at Rs. 11,89,000/-, which represented the cash deposits made in the bank account.

Proceedings Before the CIT(A)

Shekhar Mehta appealed against the AO’s order before the CIT(A), Hisar. However, due to his non-appearance during the appellate proceedings, the CIT(A) passed an ex parte order on May 31, 2019, confirming the addition made by the AO. The CIT(A) relied on the fact that the appellant did not provide any evidence to explain the source of the cash deposits.

Appeal Before the ITAT

Aggrieved by the ex parte order of the CIT(A), Shekhar Mehta filed an appeal before the Income Tax Appellate Tribunal (ITAT), Delhi Bench SMC-1. The appeal was heard by Shri R.K. Panda, Accountant Member, on November 2, 2021.

During the proceedings before the ITAT, none appeared on behalf of the appellant, despite the service of notice. The Tribunal, therefore, decided the issue based on the material available on record and after hearing the submissions of the Departmental Representative (DR), Shri Om Prakash.

Tribunal’s Observations and Conclusion

The ITAT noted that the assessment was completed ex parte by the AO due to the appellant’s non-compliance with the statutory notices. Similarly, the CIT(A) also passed an ex parte order, confirming the addition made by the AO, as the appellant did not appear before the CIT(A) to substantiate his case.

Considering the totality of the facts and circumstances, the Tribunal opined that the appellant should be given one final opportunity to present his case before the CIT(A). In the interest of justice, the ITAT deemed it proper to restore the issue to the file of the CIT(A) with a direction to grant the appellant a final opportunity to substantiate his claim regarding the source of the cash deposits.

The Tribunal further directed Shekhar Mehta to appear before the CIT(A) and present his case without seeking any adjournments under any pretext. The CIT(A) was also directed to decide the issue as per the facts and law after granting the appellant a reasonable opportunity of being heard. The Tribunal cautioned that if the appellant failed to appear before the CIT(A) and substantiate his case, the CIT(A) would be at liberty to pass an appropriate order as per law.

Final Decision

The ITAT allowed the appeal filed by Shekhar Mehta for statistical purposes, restoring the issue to the CIT(A) for fresh adjudication. The order was pronounced in the open court on the date of the hearing, i.e., November 2, 2021.

This case highlights the importance of appearing before the tax authorities during assessment and appellate proceedings to substantiate claims and avoid ex parte decisions. The Tribunal’s decision to provide the appellant with another opportunity emphasizes the principle of natural justice.

Keywords: ITAT, Income Tax Appellate Tribunal, Shekhar Mehta, Fatehabad, Cash Deposit, Ex Parte Order, CIT(A), Assessment Year 2009-10, Section 144, Section 147, Section 148, Income Tax Act, Tribunal Order

Shekhar Mehta vs. ITO Ward-2, Fatehabad – Assessment Year 2009-10 – Dispute Over Cash Deposit Addition