Facts of the Case

The assessee, Ahmedali Kurbanhusain Piplodwala & Co., filed an appeal for Assessment Year 2017-18 against the order dated 30.07.2025 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi under Section 250 of the Income-tax Act, 1961.

The assessment was reopened on the ground that cash of ₹42 lakh was deposited during the demonetisation period in two bank accounts maintained with The Godhra Urban Co-operative Bank Ltd., which allegedly belonged to the assessee. During assessment proceedings, the assessee demonstrated that only one bank account belonged to it and that the other account, though similarly named, pertained to a different entity whose assessment had already been completed accepting cash deposits of ₹12 lakh. The Assessing Officer accepted this explanation and restricted the cash deposit attributable to the assessee to ₹30 lakh.

The assessee explained that the cash deposits were sourced from cash sales of Nilgiri wood, Sagi wood, Panchrau wood, cement sheets and recovery from debtors. The Assessing Officer accepted cash sales during the demonetisation period to the extent of ₹1,40,417 and treated the balance cash deposit of ₹28,59,583 as unexplained, making addition to that extent.

The CIT(A), however, passed an ex parte order confirming addition of ₹42 lakh, recording that the assessee had failed to furnish any evidence or submissions on merits. Aggrieved, the assessee preferred an appeal before the Tribunal.

Issues Involved

Whether the CIT(A) erred in confirming an addition of ₹42 lakh when the Assessing Officer had made addition of only ₹28,59,583, whether the appellate order suffered from non-application of mind and incorrect recording of facts, and whether the matter required restoration for fresh adjudication.

Petitioner’s Arguments

The assessee contended that the CIT(A) passed the order ex parte and without application of mind. It was argued that the CIT(A) confirmed an incorrect amount of addition and wrongly recorded that the assessee had not filed any evidence during assessment proceedings. The assessee demonstrated that complete books of account, cash register, bank statements, sales register, details of debtors and even copies of sales bills were furnished before the Assessing Officer, who partly accepted the explanation.

Respondent’s Arguments

The Revenue relied on the order of the CIT(A) but was unable to controvert the factual submissions made by the assessee regarding the evidence placed on record during assessment proceedings.

Court Order / Findings

The ITAT Ahmedabad observed that the CIT(A) confirmed addition of ₹42 lakh without appreciating that the Assessing Officer had restricted the addition to ₹28,59,583 after accepting part of the assessee’s explanation. The Tribunal further noted that the CIT(A) incorrectly recorded that the assessee had not filed any submissions or evidence, whereas the assessment order itself demonstrated that detailed books of account and explanations were furnished and examined.

The Tribunal held that the appellate order was passed without application of mind and on incorrect appreciation of facts. Accordingly, the Tribunal set aside the order of the CIT(A) and restored the matter to his file for fresh adjudication after granting due opportunity of hearing to the assessee.

Important Clarification

The Tribunal clarified that appellate authorities must apply independent mind to the assessment record and cannot confirm additions mechanically, especially where the Assessing Officer himself has accepted part of the explanation and restricted the addition accordingly.

Final Outcome

The appeal filed by the assessee was allowed for statistical purposes. The ex parte order of the CIT(A) was set aside, and the matter was restored to the file of the CIT(A) for fresh adjudication on merits after granting proper opportunity of hearing to the assessee.

Source Link - https://www.mytaxexpert.co.in/uploads/1769060608_AHMEDALIKURBANHUSAINPIPLODWALACO.DAHODVS.THEITOWARD1DAHOD.pdf

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