The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) set aside the order made income tax addition on unexplained income due to non compliance considering the assessee being an illiterate running a small mobile recharging shop. The bench also imposed a cost of Rs.5,000 as fine.
Krintesh Rameshbhai Patel, the appellant-assessee, carrying on a small business of mobile recharging, failed to comply with notices, prompting the Assessing Officer to treat cash deposits of Rs.54,94,100 as unexplained income for A.Y. 2017-18.
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The assessee filed an appeal late, with a delay of 48 days. He explained in an affidavit that the email address of his tax consultant, Malay Shah, was provided in the appeal form, and all notices and the appeal order were sent to his tax consultant’s email. However, due to the tax consultant’s non-compliance, the notices and order were not communicated to the assessee. The assessee, who is illiterate and runs a small mobile recharging business, stated that he was unaware of the income tax provisions and that this caused the delay in filing the appeal. The email address mentioned in the appeal form did not request communication to be sent there, and based on the assessee’s explanation, the delay was condoned.
The case involves the assessee, who filed a return for AY 2017-18 declaring an income of Rs.2,96,350. The return was selected for scrutiny, and the AO found cash deposits totaling Rs.54,94,100 in two bank accounts. Since the assessee did not provide an explanation, the AO treated the entire amount as unexplained income and added it to the total income under Section 69A, completing the assessment under Section 144 with a total income of Rs.57,90,450.
The assessee appealed, but the CIT(A) dismissed the appeal ex-parte, as the assessee did not comply with notices. The matter is now before the Tribunal, where the assessee contends that the cash deposits were business-related, as he runs a small recharging business and earns commission. He claims that the deposits were daily amounts from customers, transferred immediately to telecom companies after retaining his commission.
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B T Thakkar,counsel representing the assessee requested that the case be sent back to the AO for further examination.
The DR argued that the assessee failed to comply with the AO or CIT(A), so the addition was justified. However, the DR did not object to sending the matter back to the AO for re-examination.
The two member Bench comprised of Suchitra Kamble(Judicial Member) and Narendra Prasad Sinha(Accountant Member) noted that the AO did not fully consider the bank transactions, and it was important to assess the deposits and transfers as part of the same business activity. Therefore, the Tribunal decided to send the matter back to the AO with directions to give the assessee another opportunity to explain the deposits and produce the necessary evidence.
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Additionally, the Tribunal imposed a fine of Rs.5,000 on the assessee for failing to comply with the CIT(A) despite multiple opportunities. The cost needs to be paid to the Income Tax Department within two weeks, and a copy of the payment challan should be submitted to the Registry before the AO proceeds further.
In Conclusion,the appeal was allowed for Statistical Purposes.
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