The Agra Bench of Income Tax Appellate Tribunal(ITAT) set aside the Commissioner of Income Tax(Appeals)[CIT(A)] order and directed for fresh adjudication regarding the addition of ₹20.44 lakh as unexplained cash deposits during the demonetization period.
Shuchi Varshney,appellant-assessee, filed a return of income showing Rs.3,31,900/- on 27.03.2018. The case was selected for limited scrutiny due to cash deposits during the demonetization period, as reported under Specified Financial Transactions(SFT). The assessee deposited Rs.20,44,000/- in demonetized currency in her bank account with Oriental Bank of Commerce, Aligarh. The assessee claimed the cash came from her earnings, marriage gifts, and an advance for land purchase.
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The Assessing Officer (AO) rejected the explanation, as the assessee provided no supporting documents except for an e-filing receipt of her Wealth Tax Return from 2016. The AO also noted that the Wealth Tax Act had been abolished from FY 2015-16, and asset details should now be included in Income Tax Returns.
The AO reviewed her ITRs for 2014-15 to 2016-17 and found minimal cash balances. After considering her explanations, the AO granted relief of Rs.1,00,000/- for savings in specified bank notes. However, the AO added Rs.19,44,000/- as unexplained income under section 69A of the Act and taxed it under section 115BBE of the Act.
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The assessee filed an appeal with the CIT(A), but did not respond to four notices issued during the proceedings. The notices were sent on 28.01.2021, 08.10.2021, 15.12.2021, and 12.07.2022. The CIT(A) dismissed the appeal on 25.07.2022, confirming the assessment order.
A single member bench of Ramit Kochar(Accountant Member) considered the rival contentions and reviewed the material on record. It noted that the CIT(A) had dismissed the appeal ex parte, without deciding the issues on merits. The CIT(A) upheld the assessment order without applying independent reasoning or addressing the assessee’s claims, including the cash deposits during the demonetization period. No inquiry or verification was conducted by the CIT(A), and assessment records were not called for.
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The appellate tribunal pointed out that the CIT(A) has the power to pass a reasoned order under Section 250(6), which was not done in this case. The order was deemed insufficient, as it lacked the necessary reasoning to support the decision. It stated that the CIT(A) should have conducted an independent inquiry and considered the evidence submitted by the assessee.
Since the CIT(A) did not comply with the requirements of the law, the tribunal found the order to be unsustainable. In the interest of fairness and justice, it set aside the CIT(A)’s order and remitted the matter back to him for fresh adjudication on merits, allowing both parties to present their case.
In short,the appeal filed by the assessee was allowed for statistical purposes.
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