Manish Jain vs ACIT

PER MANISH AGARWAL, AM :

The present appeal is filed by assessee against the order dated 25.09.2025 passed by Ld. Commissioner of Income Tax (Appeals)-24, New Delhi [“Ld. CIT(A)”] in Appeal No. CIT(A), Delhi-16/10478/2019-20 u/s 250 of the Income Tax Act, 1961 [“the Act”] arising out of assessment order dated 30.12.2019 passed u/s 143(3) of the Act pertaining to Assessment Year 2017-18.

Brief facts of the case are that the assessee is an individual and proprietor of M/s Shree Vimal Sagar Jewellers, engaged in the business of trading of gold and silver bullion and its jewellery. The return of income was filed on 31.08.2017, declaring total income of INR 34,44,160/-. The case of the assessee was selected for scrutiny under CASS for the reason that assessee has deposited cash during demonetization period of INR 6,21,00,000/- into bank in Specified Bank Notes (“SBN”). The AO examined the source of cash deposits in SBN during the demonetization period and it was the claim of the assessee that said cash was accumulated out of the sales made during the year. The assessee also filed corresponding details of cash sales made during the year under appeal as well as in subsequent and preceding assessment years in support of the claim. However, AO has not accepted the contention of the assessee and by invoking the provisions of section 145(3) of the Act, made the addition of INR 1,24,59,228/- being 15% of the total sales of INR 6,22,96,142/-recorded during the period from 22.10.2016 to 29.10.2016 as suppressed sales. As the assessee has already declared the income of INR 34,44,160/- on such sales, therefore, the differential amount of INR 93,44,421/- was added back to the total income of the assessee.

Against the said order, assessee filed an appeal before Ld. CIT(A) who vide order dated 25.09.2025, enhanced the addition made by the AO at INR 93,44,421/- to the total cash deposited of INR 6,21,49,000/- in SBN during the demonetization period as unexplained and non-genuine and, thus dismissed the appeal of the assessee by making enhancement.

Aggrieved by the order of Ld. CIT(A), assessee is in appeal before the Tribunal by taking various Grounds of appeal mentioned in the appeal memo wherein all the Grounds of appeal are with respect to the application of provision of section 145(3) and enhancement of the income by making addition of INR 6,21,49,000/- u/s 68 of the Act and further confirming the application of the provision of section 115BBE of the Act for charging higher rate of tax.

Before us, Ld.AR for the assessee submits that Ld. CIT(A) in terms of the notice issued u/s 251(1) of the Act, issued show-cause notice for enhancement of income dated 22.08.2025 however, the assessee had requested for the adjournment as the Counsel for the assessee was pre-occupied in income tax return filing. The necessary copy of the adjournment request made is placed at page 613 of the Paper Book. It is submitted by Ld. AR that despite of adjournment request, Ld. CIT(A) in the appellate order observed that assessee has not filed any response and dismissed the appeal of the assessee by making enhancement to the addition made by AO without providing sufficient and reasonable opportunity of being heard. It is thus, requested that the matter be sent back to the file of Ld. CIT(A) for adjudication the matter after providing a reasonable opportunity of being heard.

On the other hand, Ld. Sr. Dr for the Revenue vehemently supported the orders of the lower authorities and submits that sufficient opportunities were provided to the assessee therefore, the order of Ld. CIT(A) be upheld.

Heard the contentions of both parties at and perused the material available on record. From the perusal of the order of Ld. CIT(A), it is observed that Ld. CIT(A) in terms of notice issued u/s 251(1) of the Act dated 22.08.2025 show-caused the assessee as to why not the income be enhanced from the estimation of income by applying profit rate to the total amount of cash deposited in SBN during the demonetization period. Ld. CIT(A) further show caused the assessee as to why the penalty proceedings be not invoked and the date of hearing was fixed on 27.08.2025. It is further observed that the assessee in terms of the request letter dated 11.09.2025 filed online through ITBA portal, had requested for an adjournment as the Counsel was pre-occupied in filing the returns. However, Ld. CIT(A) without taking into consideration the adjournment request of the assessee, in para 5.1.4 of the appellate order has observed that no response has been received from the appellant till date and decided the appeal of the assessee on the basis of material available before her and enhanced the income wherein as against the addition of INR 93,44,421/- made by AO, ld. CIT(A) confirmed the addition of INR 6,21,49,000/- being the amount of cash deposited in SBN during the demonetization period. From these facts, it appears that Ld. CIT(A) has not provided fair, reasonable and sufficient opportunity of hearing to the assessee after the issue of show cause notice for enhancement of income. Therefore, in the larger interest of justice, we set aside the order of Ld. CIT(A) and restore the matter back to the file of Ld. CIT(A) with the directions to provide reasonable and sufficient opportunity of hearing to the assessee and decide the appeal in accordance with law. The assessee is also directed to participate in the appellate proceedings and file the necessary reply of the show cause notice of enhancement of income issued. With these directions, ground of appeal No.2 taken by the assessee is allowed for statistical purposes.

Since we have already allowed the ground of appeal No.2 of the assessee and set aside the matter back to the file of ld. CIT(A) to decide the issue after taking reply from the assessee on the notice of enhancement issued, therefore, other grounds of appeal challenging the addition/enhancement become academic and thus not adjudicated.

In the result, the appeal of the assessee is allowed for statistical purposes.