The Agra Bench of Income Tax Appellate Tribunal ( ITAT ) restored the matter back to the Commissioner of Income Tax ( Appeals ) [CIT(A)] due to the lack of proper inquiry regarding unexplained cash deposits made during the demonetization period.
Jamuna Shankar Sharma, (assessee), failed to file a return of income for the assessment year in question. The Assessing Officer (AO) received information through the Annual Information Return (AIR) and the Online Compliance Management (OCM) system and observed cash deposits totaling Rs. 10 lakhs in the assessee’s bank accounts during the demonetization period.
The AO issued multiple notices under Section 142(1) of the Income Tax Act, requiring the assessee to explain the source of these deposits. However, the assessee failed to file a response to the notice.
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Therefore, the AO completed the assessment under Section 144 of the Act in an ex-parte manner. The AO treated the entire cash deposit amounting to Rs. 10 lakhs as unexplained income.
Aggrieved by the AO’s order, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)], contending that the deposits represented agricultural income. The assessee submitted that he and his family owned approximately 261 bighas of agricultural land.
The assessee contended that the cash deposits were sourced from the proceeds of agricultural produce, withdrawals from Kisan Credit Card ( KCC ) accounts, and prior bank withdrawals. The assessee further explained that he was an illiterate farmer and was unaware of the proceedings.
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Despite these submissions, CIT(A) dismissed the appeal without conducting any inquiries or verifying the agricultural land records, bank statements, or sale bills submitted by the assessee. Aggrieved by the order, the assessee filed an appeal before ITAT.
The counsel for the assessee contended that the CIT(A) did not consider the submissions of the assessee. The counsel further contended that CIT(A) failed to conduct an inquiry nor verified the documents submitted by the assessee.
The tribunal comprising Ramit Kochar (Accountant Member) observed that the CIT(A) did not properly consider the additional evidence submitted by the assessee, including land ownership records and bank statements. The tribunal also observed that the mere dismissal of the appeal by the CIT(A) was not sustainable in the eyes of the law.
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Therefore, the tribunal set aside the CIT(A)’s order and restored the matter for de novo adjudication. The Tribunal directed the CIT(A) to examine the additional evidence, conduct necessary inquiries, and allow the AO to verify the claims made by the assessee.
The tribunal also directed the CIT(A) to pass a fresh order in accordance with the law after giving the assessee an opportunity to present his case. The appeal was allowed for statistical purposes.
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