Ranbir Singh vs Income Tax Officer

PER RAMIT KOCHAR, AM:

This appeal in ITA No. 2324/Del/2026 for Assessment Year: 2017-18 has arisen form the learned CIT(A) appellate order dated 09.02.2026 u/s 250 of the Income-tax Act, 1961 in DIN & Order No: ITBA/NFAC/S/250/2025-26/1085759203(1), which appeal in turn has arisen from the assessment order dated 31.12.2019 passed by the ITO, Ward-34(6), Delhi u/s 143(3) of the 1961 Act.

Brief facts of the case are that the assessee filed return of income declaring total income of Rs. 2,97,280/-. The case was selected for scrutiny under CASS for the reason that assessee has made “Cash deposit during demonetization.” Statutory notices u/s 143(2) and 142(1) of the 1961 Act were issued by the AO to the assessee from time to time during assessment proceedings as are recorded in the assessment order. The assessee participated in the assessment proceedings. During assessment proceedings, the assessee submitted before the AO that he is doing agricultural activities, and in addition the asessee is also carrying out business of manufacturing of Pet Performs (plastic products) for manufacturing plastic bottles under the name and style of Raman Plastic Industries. The assessee submitted before the AO copy of Tax Audit Report, VAT Report, copy of bank statement . The assessee submitted before the AO correction letter stating therein that actual agricultural income was Rs.24,05,900/- (corrected figure as per assessee). It is claimed by the assessee that during the financial year 2015-16, the assessee was owner of 10 hectares out of a jointly held land of 25.90 hectares purchased by 3 owners in the financial year 2015-16, out of which the assessee was one of them. It was also submitted by the assessee before the AO that the assessee has earned an agricultural income in cash, and major portion approx. 15 lakh of that sale is made at Adadpur Mandi to M/s Chauhan and Company, Add: D-1415, New Sabji Mandi Azadpur Delhi-110033. Rest of the sale is made at Azadpur Sabji Mandi and at Shivpur Mandi. On perusal of the submissions made by the assessee, the AO observed that the assessee has sold crop and vegetables to M/s Chauhan and company , and to verify its genuineness , the AO issued notice u/s 133(6) to M/s Chauhan & Company . The said M/s Chauhan & Company vide its reply to the AO denied having made any transactions with the assessee of sale and purchase during the entire financial year 2016-17. The AO observed that the assessee has submitted its reply at fag end when the assessment was getting time barred. The AO issued SCN to the assessee seeking further information as is detailed in page No.3 of the assessment order with respect to his claim of earning of agricultural income and large cash deposits during demonetization period and also otherwise during the year under consideration. The assessee in response submitted that the agricultural land was purchased on 10.03.2016. The AO observed that the assessee has claimed to have earned Rs. 24,05,900/- as agricultural income in the first six months of financial year 2016-17, which is not possible to earn on 10 hectares of land. The AO observed that the assessee has submitted bogus bills of Chauhan and Company , and that the assessee has not made any transactions with Chauhan and Company during the year under consideration. The AO brought to tax entire cash deposits in the bank made by the assessee during the period under consideration to the tune of Rs.28,22,000/- ( Rs. 18,00,000/- during demonetization period and Rs. 10,22,000/- during period other than period covered by demonetization-These cash deposits being made with Allahabad Bank account number 50358892207 and 20439523988) u/s 69A r.w.s. 115BBE of the 1961 Act as income from undisclosed sources being unexplained money.

Assessee being aggrieved, filed first appeal with Ld. CIT(A). During Appellate Proceedings, the ld. CIT(A) issued two notices of hearings , firstly dated 19.01.2021 wherein the assessee requested for adjournment . There was one intimation dated 4.11.2022 issued by ld. CIT(A), to which the assessee submitted Form No. 35, Statement of fact and grounds of appeal. The assessee also submitted in response to the aforesaid intimation that the assessee is ready for further proceedings. Second Notice of hearing was issued by ld. CIT(A) on 30.01.2026, but there was no response from the assessee. The ld. CIT(A) observed from the statement of fact filed by the assessee that the assessee is contending that Chauhan and Company negated to have entered into any transaction with the assessee as the AO issued notice u/s 133(6) to Shri Vinod Chauhan proprietor of Chauhan and Company wherein the name of the assessee is mentioned as Shri Ranbir Singh proprietor Raman Plastic Industries , H-230 , First Floor, Sector-3, DSIIDC , Bawana, Delhi-110039 , and it is claimed in the statement of fact that the assessee has claimed that he entered into agricultural transactions with Chauhan and Company out of agricultural produce from land located at Shivpuri, Madhya Pradesh and sales receipts also have details of Ranbir Singh of Shivpuri, MP. It was stated in statement of fact that Chauhan and Company gave negative reply because they have not transacted with Ranbir Singh from Delhi. The ld. CIT(A) rejected this contention of assessee mentioned in statement of fact because the letter issued by AO u/s 133(6) duly had the name and PAN of the aassessee, which as per ld. CIT(A) was sufficient for Chauhan and Company to respond . Further ld. CIT(A) observed that now more than six years have passed since proceedings u/s 133(6) was taken by ld. AO, but the assessee is not been able to file fresh reply from Chauhan and Company to controvert the findings of the AO. The ld. CIT(A) dismissed the appeal of the assessee and upheld the assessment order passed by the AO as there was no reasons for ld. CIT(A) to interfere with the findings of the AO.

Still Aggrieved , the assesse has now filed second appeal before the Tribunal. At the outset, Ld. Counsel for the assessee submitted that the assessee owns 10 hectares of agricultural land on which agricultural operations were carried on . The ld. Counsel for the assessee submitted that the assessee has grown crop of tomato on the said land which takes 90 days to ripe , and the assessee has taken two crops of tomato in six months, but the AO erred in holding that it is not possible to earn agricultural income to the tune of Rs. 24,05,900/- during the first half of the financial year 2016-17. It was submitted that ld. CIT(A) passed an ex-parte order . It was submitted that Principles of natural justice are breached. It was submitted that the. Ld. CIT(A) did not made any enquiry and simply dismissed the appeal of the assessee . No fresh enquiry was initiated by ld. CIT(A) with Chauhan and Company despite it was mentioned in Statement of fact that Chauhan and Company responded negatively to notice u/s 133(6) as it did not recognize from the notice that the matter concerned Ranbir Singh of Shivpuri, MP. My attention was drawn by ld. Counsel for the assessee to the bank statements of Raman Plastic, Bank statement of Ranbir Singh , month wise purchase and sale of financial year 2016-17 of Raman Plastic , Name, Address & PAN of suppliers of Raman Plastic . It was submitted that apart from agricultural activities, the assessee is running a manufacturing unit for manufacturing of Pet Performes(plastic product) used to make plastic bottles. My attention was drawn to sale agricultural bill of Chauhan and Company, ledger statement of Chauhan and Company , cash book of the assessee, purchase deed of shivpuri land , photographs of agricultural land , khata and girdawari of agricultural land , sale deed of shivpuri land, tax audit report, VAT return . It was submitted that assessee has filed most of the above documents as additional evidences before the Tribunal.

I have heard both the parties and perused the materials available on record. I have enumerated facts in brief and contentions of both the parties in the preceding para’s of this order, and same are not repeated. The case of the assessee was selected for framing scrutiny assessment as there was large cash deposits in the bank accounts during demonetization period.There was cash deposit of Rs. 18,00,000/- by the assessee in his bank accounts during demonetization period. The assessee participated in assessment proceedings, but submitted part replies and that too at fag end. The AO made additions to the income of the assessee to the tune of Rs. 28,22,000/- on account of unexplained cash deposits in the bank account’s of the assessee during the year under consideration by invoking provisions of Section 69A read with Section 115BBE. The ld. CIT(A) dismissed the appeal of the assessee ex-parte. The assessee has submitted that the assessee owned agricultural land of 10 hectare on which crop of tomato are grown. The said land is situated in Shivpuri,M P. . It is claimed that the said crop of tomato takes 90 days to ripe and multiple crops can be taken in the year. The AO had observed that the assessee purchased 10 hectare of agricultural land on 10.03.2016 and it is not possible to generate agricultural income of Rs. 24,05,900/- during first half of financial year 2015-16, to which assessee has now contended that two tomato crops can be taken in six months. The AO also made enquiry u/s 133(6) with one M/s Chauhan and Company, Azadpur Mandi , Delhi with whom the assessee claimed that he sold tomato to Chauhan and Company, and in response to notice u/s 133(6) , the Chauhan and Company denied to have transacted with the assessee. It is claimed that additionally assessee is manufacturing Pet Performs (plastic products) for manufacturing plastic bottles under the name and style of Raman Plastic Industries Raman Plastic . It is claimed that the cash was deposited in the bank which is partly from sale of agricultural produce as well as its activities of manufacturing. The assessee has submitted that he has grown tomatoes in the said agricultural land , and he is selling tomatos to Chauhan and Company at Azadpur Mandi , Delhi as well to other buyers both at Azadpur Mandi , Delhi and also at Shivpuri, MP. The assessee has claimed that the AO made enquiries u/s 133(6) with Chauhan and Company, Azadpur Mandi in which the enquiries were made with Respect to Ranbir Singh of Raman Plastic Industries , while he is known in the Azadpur Mandi as Ranbir Singh of Shivpuri, MP . Since Chauhan and Company could not recognize Ranbir Singh, Raman Plastic Industries, they stated that they have no business transactions during financial year 2015-16 with Ranbir Singh of Raman Plastic Industries. The ld. CIT(A) did not gave proper opportunity as only two notices were issued and one intimation was issued , and the appeal was decided ex-parte. The ld. CIT(A) did not made fresh enquiry with Chauhan and Company despite the assessee raising a plea in statement of fact that Chauhan and Company could not recognize Ranbir Singh of Raman Plastic Industries as the dealings were with Ranbir Singh of Shivpuri, M.P.. In my view , the ld. CIT(A) breached principles of natural justice , and hastened to dismiss the appeal of the assessee ex-parte. On its part, the assessee has tried to explain the reasons for submissions of part replies during assessment proceedings at the fag end of the assessment proceedings which are mentioned in statement of fact. The assessee is also equally responsible for his woes. However, the prejudice has been caused to the assessee. The assessee has also now filed additional evidences before the Tribunal. These evidences are cardinal for adjudicating the issue arising in this appeal. These evidences require examination , investigation and verifications . Keeping in view entire facts and circumstances of the case and in the interest of justice and fairness to both the parties, I restore the matter back to the file of the AO for denovo assessment.The AO shall admit evidences filed by the assessee in his support. The AO shall provide proper and adequate opportunity of being heard to the assessee. The assessee on has part shall co-operate in the set aside proceedings for denovo assessment by the AO, otherwise the AO shall be free to complete denovo assessment on merits in accordance with law. I clarify that I have not commented on the merits of the issue in this appeal. Thus, the appeal of the assessee is allowed for statistical purposes. I order accordingly.

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