2025 (9) TMI 938 - AT - Income Tax

Assessee's unexplained bank cash deposits lead to s.69A addition upheld after appeal dismissed for non-prosecution

ITAT, Surat (AT) dismissed the assessee's appeal and sustained an addition under s.69A where the assessee failed to explain the nature and source of cash ... Addition u/s 69A - assessee has failed to explain the nature and source of the cash deposited in his bank account - HELD THAT:- In New India Assurance vs. Srinivasan [2000 (2) TMI 838 - SUPREME COURT] it was held that every Court or judicial body or authority which has a duty to decide a lis between two parties, inherently possesses the power to dismiss a case in default. Where a case is called up for hearing and the party is not present, the Court or the judicial or quasi-judicial body is under no obligation to keep the matter pending before it or to pursue the matter on behalf of the complainant who had instituted the proceedings. The Hon’ble Supreme Court in case of CIT vs. B. N. Bhattacharjee & Ors. [1979 (5) TMI 4 - SUPREME COURT] observed that preferring an appeal means effectively pursuing it. Appeal of the assessee is dismissed. ISSUES PRESENTED AND CONSIDERED 1. Whether cash deposits of Rs. 11,12,000 made during demonetisation, found in the assessee's bank account, could be treated as unexplained cash and added to income under section 69A when the assessee failed to substantiate the source. 2. What is the legal burden of proof where money is found in possession (bank account) of a taxpayer and the taxpayer does not produce corroborative evidence (confirmations, books of account, complete bank statements)? 3. Whether the Tribunal may dismiss an appeal where the appellant repeatedly fails to attend hearings, file written submissions, or seek adjournment, and what is the scope of the Tribunal's inherent power to dismiss for default. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Addition under section 69A for unexplained cash deposits Legal framework: Section 69A permits addition to income where money found to be in possession of the assessee is unexplained, treating it as income of the assessee unless the assessee explains nature and source. Precedent Treatment: The Court relied on established authority that once money is found in the possession of a person, the burden shifts to that person to show he is not the owner or to explain the source; where he fails to discharge that burden, revenue is not required to prove anything further. Interpretation and reasoning: The Tribunal examined the material: cash deposits during demonetisation, claimed explanations (sales and loans/advances), and absence of corroboration (no confirmations from parties, incomplete bank statements, no books of account). Given the lack of documentary evidence demonstrating the source or nature of the deposits, the Tribunal held the deposits remained unexplained within the meaning of the statutory provision. The Tribunal applied the principle that possession of money gives rise to a prima facie burden on the possessor to explain the source. Ratio vs. Obiter: Ratio - where cash is deposited in the assessee's bank account and the assessee fails to produce corroborative evidence or explanations, addition under section 69A is sustainable. Obiter - none on this point beyond application of well-settled principle. Conclusions: The addition of Rs. 11,12,000 under section 69A was correctly made by the assessing authority and rightly confirmed by the first appellate authority; no interference was warranted. Issue 2 - Burden of proof and evidentiary sufficiency (confirmations, bank statements, books) Legal framework: The legal position places on the person in possession of money the onus to prove that such money is not income or to explain its nature and source by admissible evidence. Documentary proof may include confirmations, complete bank statements showing withdrawals/deposits, books of account, and other corroborative records. Precedent Treatment: The Tribunal followed precedents that consistently assert the burden on the assessee to explain the source once money is found with him; failure to produce independent corroboration results in the addition standing. Interpretation and reasoning: The assessee asserted the deposits were from sales and advances/loans but failed to produce confirmation letters, complete bank statements evidencing source and movement, or books of account. The Tribunal found the bare assertions insufficient to discharge the evidentiary burden. The Tribunal emphasised that in the absence of such material, the AO and appellate authority were justified in treating the deposits as unexplained and adding them to income. Ratio vs. Obiter: Ratio - absence of corroborative documentary evidence by the assessee when money is in his possession justifies sustaining additions under section 69A. Obiter - procedural expectation that complete bank statements and confirmations are the typical means to discharge the burden. Conclusions: The assessee failed to discharge the burden of proof; hence the addition under section 69A was rightly sustained. Issue 3 - Power to dismiss appeal for non-appearance and procedural consequences Legal framework: Quasi-judicial bodies and tribunals inherently possess the power to dismiss proceedings in default where a party who initiated the proceeding fails to appear and pursue the appeal; there is no duty to keep a matter pending indefinitely for an absent appellant. Precedent Treatment: The Tribunal applied established judicial pronouncements recognising the inherent power to dismiss for default and the principle that preferring an appeal requires active pursuit by the appellant. Interpretation and reasoning: The appellant was provided multiple hearing opportunities and personal contact was made with the appellant's representative; despite this, the appellant neither attended, filed written submissions, nor sought adjournment. The Tribunal found no justification to prolong proceedings in light of the appellant's continuous silence and absence of material to support grounds of appeal. The Tribunal further concluded that dismissal in default is appropriate where an appellant does not pursue the appeal. Ratio vs. Obiter: Ratio - where an appellant repeatedly fails to attend hearings, file submissions, or seek adjournment, the Tribunal may dismiss the appeal in default under its inherent power. Obiter - none beyond reiteration of procedural principles. Conclusions: Dismissal of the appeal was appropriate and within the Tribunal's powers given the appellant's non-appearance and failure to prosecute the appeal. Cross-references and Interplay between Issues The findings on issues 1 and 2 (substantive sustainment of the section 69A addition due to unexplained deposits and failure to discharge burden of proof) were considered together with issue 3 (procedural dismissal) - the Tribunal proceeded to dispose of the appeal on merits because the appellant had ample opportunity to present relevant material but did not; consequently, both the substantive addition and the procedural dismissal rationale supported the final outcome.