Baba Sri Chand Majik Enterprises India Pvt Ltd vs ITO Ward 4(1), New Delhi: Appeal Restored for Unexplained Cash Deposit for Assessment Year 2015-16

Baba Sri Chand Majik Enterprises India Pvt Ltd vs ITO Ward 4(1), New Delhi: Appeal Restored for Unexplained Cash Deposit for Assessment Year 2015-16

Case Number: ITA 6109/DEL/2019

Appellant: Baba Sri Chand Majik Enterprises India Pvt Ltd, New Delhi

Respondent: ITO Ward 4(1), New Delhi

Assessment Year: 2015-16

Order Type: Final Tribunal Order

Date of Order: 16th June 2021

Case Filed On: 18th July 2019

Pronounced On: 16th June 2021

Background of the Case

Baba Sri Chand Majik Enterprises India Pvt Ltd, a company based in New Delhi, filed an appeal against the Income Tax Officer (ITO), Ward 4(1), New Delhi, for the assessment year 2015-16. The appeal was filed under case number ITA 6109/DEL/2019, challenging an ex-parte order passed by the Commissioner of Income Tax (Appeals)-2 [CIT(A)], New Delhi, on 31st May 2019. The CIT(A) had confirmed the addition of Rs. 20 lakhs made by the Assessing Officer (AO) on account of unexplained cash deposits.

The appellant, a private limited company engaged in the business of running food restaurants under the brand name “Diggin,” filed its income tax return on 30th September 2015, declaring a total income of Rs. 5,09,900/-. However, during the assessment, the AO noticed a cash deposit of Rs. 20 lakhs in the company’s savings bank account, which was not satisfactorily explained by the appellant. As a result, the AO added this amount to the appellant’s income as unexplained cash under Section 68 of the Income Tax Act.

The appellant challenged this addition before the CIT(A). However, due to repeated adjournment requests and non-appearance, the CIT(A) dismissed the appeal ex-parte, upholding the addition made by the AO.

Grounds for Filing the Appeal

The appellant filed the appeal before the Income Tax Appellate Tribunal (ITAT) on the following grounds:

• The CIT(A) erred in dismissing the appeal ex-parte without providing a sufficient opportunity for the appellant to present its case. The appellant argued that an adjournment request had been submitted on the date of the hearing, which was unjustly rejected by the CIT(A).
• The appellant contended that the addition of Rs. 20 lakhs as unexplained cash deposits was made without proper consideration of the evidence and explanations provided.
• The appellant sought the restoration of the appeal, arguing that in the interest of justice, it should be allowed another opportunity to substantiate its case before the CIT(A).

Tribunal Proceedings

The case was heard by the Delhi Bench ‘SMC-1’ of the Income Tax Appellate Tribunal (ITAT) on 16th June 2021, through video conferencing. The bench was presided over by Accountant Member Shri R.K. Panda. The appellant was represented by Shri Shashank Burman, Chartered Accountant (CA), while the respondent was represented by Senior Departmental Representative (DR) Shri R.K. Gupta.

The appellant’s counsel argued that the ex-parte order passed by the CIT(A) was unjust as it did not consider the genuine reasons for seeking adjournments. The counsel emphasized that the appellant was committed to substantiating its case if given another opportunity. On the other hand, the respondent’s counsel argued that the CIT(A) had granted sufficient opportunities, and the appellant’s repeated failure to appear justified the ex-parte decision.

Final Tribunal Order

After considering the arguments from both sides, the tribunal found merit in the appellant’s plea for restoration of the appeal. The tribunal noted that while the CIT(A) had provided multiple opportunities, the interest of justice warranted giving the appellant one final chance to present its case.

Accordingly, the tribunal set aside the ex-parte order of the CIT(A) and restored the appeal to the CIT(A) for fresh adjudication. The tribunal directed the CIT(A) to grant one final opportunity to the appellant to substantiate its claims and provide evidence supporting the explanation for the cash deposits. The tribunal also directed the appellant to cooperate fully with the CIT(A) and avoid any further adjournment requests, warning that failure to do so could result in a similar outcome.

The grounds raised by the appellant were allowed for statistical purposes, and the appeal was restored to the CIT(A) for a fresh decision based on the facts and law.

Conclusion

The case of Baba Sri Chand Majik Enterprises India Pvt Ltd vs ITO Ward 4(1), New Delhi, highlights the importance of procedural fairness and the need to provide parties with a reasonable opportunity to present their case. The tribunal’s decision to restore the appeal emphasizes the principle that justice should not only be done but should also be seen to be done, particularly in cases where ex-parte orders are passed due to non-appearance.

This judgment serves as a reminder to both taxpayers and tax authorities that the appeal process must be conducted in a manner that ensures all parties are given a fair chance to present their arguments and evidence. It also underscores the responsibility of appellants to engage actively in the proceedings and avoid unnecessary delays.

Note: The above summary provides an overview of the tribunal proceedings and the final order in the case of Baba Sri Chand Majik Enterprises India Pvt Ltd. For a more detailed understanding, interested parties are encouraged to refer to the full text of the tribunal’s order dated 16th June 2021.

Sd/-
(R.K. PANDA)
ACCOUNTANT MEMBER

Assistant Registrar

Baba Sri Chand Majik Enterprises India Pvt Ltd vs ITO Ward 4(1), New Delhi: Appeal Restored for Unexplained Cash Deposit for Assessment Year 2015-16