Rs. 42.72 Lacs Addition for Cash Deposits during Demonetization: ITAT Remands Case to AO [Read Order]

The Chennai Bench of Income Tax Appellate Tribunal ( ITAT )  remanded the matter to the Assessing Officer (AO) for review, following an appeal against the confirmation of a Rs. 42.72 lakh addition for cash deposits during the demonetization period.

Gangalam Oil and Foods Pvt. Ltd.,appellant-assessee,appealed against the order dated  22-07-2024, passed by Commissioner of Income Tax(Appeals)[CIT(A)] for the assessment year(AY) 2017-18.The assessment, made by the AO under section 147 read with section 144 read with section 144B, was completed on 10-03-2022.

Section 147 allows the Income Tax Department to reassess income if it finds that some income was not reported. A notice under Section 148 is issued before reassessment. The time limit is 3 years, extendable to 10 years if the unreported income exceeds ₹50 lakh.

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Section 144 applies when a taxpayer fails to file a return, does not respond to notices, or provides incomplete details. In such cases, the officer assesses income based on available information.

The assessee’s main issue was the confirmation of an addition of Rs.42.72 Lacs for cash deposits during the demonetization period. The CIT(A) upheld the addition because the appellant-assessee did not respond, despite being given several chances for a hearing.

The assessee aggrieved by the order of CIT(A) appealed before the tribunal.

Read More: Addition on Cash Deposit during Demonetisation is not permissible when opportunity to adduce evidence to prove the Source was given: ITAT

The two member bench comprising Manu Kumar Giri(Judicial Member) and Manoj Kumar Aggarwal(Accountant Member) while noting the assessee’s failure to explain the source of the cash deposit, agreed with the plea of the assessee counsel.

Following the principle of natural justice, the tribunal gave the assessee another chance to present its case before the lower authorities. The assessment was sent back to the AO for a fresh review, with instructions for the assessee to substantiate its case.

In short,the appeal filed by the assessee was allowed for statistical purposes.

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