In a significant ruling, the Income Tax Appellate Tribunal ( ITAT ), Agra Bench, has intervened and directed the Commissioner of Income-tax (Appeals) [CIT(A)] to admit her appeal. This order comes in the backdrop of a contentious issue regarding the taxability of cash deposits made in her bank account during the demonetization period.
The case relates to the assessment year 2017-18, where Ritika Jain,the appellant-assessee who had migrated to the USA in 2014, did not file her income tax return, claiming that her income during the year was below the taxable threshold. The Assessing Officer ( AO ) had initiated proceedings and levied an addition of Rs. 16,24,600 under Section 69A of the Income Tax Act, citing unexplained cash deposits during demonetization. These deposits, notably Rs. 14,14,600, were made in a single day on November 11, 2016. The AO rejected the explanation provided by the assessee, which claimed the deposits were recoveries from outstanding dues from farmers dating back to 2014, and added the amount to her income.
Comprehensive Guide of Law and Procedure for Filing of Income Tax Appeals, Click Here
Dissatisfied with the assessment, the assessee appealed to the CIT(A), arguing that as she was not in India and had minimal income, there was no obligation to file a return. However, the CIT(A) dismissed the appeal as “unadmitted,” citing non-compliance with Section 249(4)(b) of the Income Tax Act. This section mandates that if no return is filed, the assessee must pay an amount equal to the advance tax due before filing an appeal.
Aggrieved by the dismissal, Ritika Jain approached the ITAT. During the proceedings, her counsel contended that she was not liable to file a return due to her income being below the taxable limit. It was also argued that the addition made by the AO was disputed, and the tax liability was not admitted by the assessee. The Senior Departmental Representative (Sr. DR) conceded that there was no admitted liability but acknowledged that the matter was still subject to appeal.
After hearing both sides, the Single Bench of Ramit Kochar ( Accountant Member ) ruled in favor of the assessee, stating that the provisions of Section 249(4)(b) should not apply in this case. The Tribunal observed that the addition of Rs. 16,24,600 was a disputed liability, and the CIT(A) had not considered the circumstances adequately when dismissing the appeal. Citing the provisions of Section 249(4)(b) and its proviso, the ITAT emphasized that the appeal could be admitted if “good and sufficient reasons” were recorded.
Comprehensive Guide of Law and Procedure for Filing of Income Tax Appeals, Click Here
The Tribunal, therefore, directed the CIT(A) to admit the appeal and adjudicate it on merits. The case was remanded for fresh adjudication, with the CIT(A) instructed to provide a fair opportunity for both parties to present their case.
The assessee’s appeal has been partly allowed for statistical purposes, with the CIT(A) required to consider the matter in accordance with the law.
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