An Addition on Unexplained Deposit deleted without Valid Document is not allowable: ITAT [Read Order]

The Hyderabad Bench of the Income Tax Appellate Tribunal (ITAT) has held that addition on unexplained deposits deleted without valid documents is not allowable.

Based on information about Sadhanakari Khaja Rahmathulla, the assessee that the department has in its possession information to the effect that the assessee deposited Rs.2,53,18,080 in cash in the Andhra Pragathi Grameena Bank, Porumamilla, which was replied by the assessee that he was a farmer looking after the agricultural lands of his father and all the amounts found deposited are either out of agriculture or belonging to some other agriculturists.

 In response to the notice issued u/s. 148, the assessee filed his return of income on 02.08.2013 disclosing a total income of Rs.1,66,000/-. The AO issued statutory notices u/s. 143(2) & 142(1). However, there was no compliance with the statutory notices issued by the AO for which the AO proceeded to complete the assessment under section 144 of the Income Tax Act,1961.

The Inspector reported that 11 farmers had furnished written confirmations that they have utilized the bank account of the assessee for securing their money and such total amount comes to Rs.11,00,000/-

The AO made the addition of Rs. 2,41,18,080/- to the total income of the assessee and completed the assessment determining the total income at Rs. 2,42,84,080/-. The CIT(A) after obtaining a remand report from the AO deleted the addition to the extent of Rs.2,16,54,600/- and sustained the addition of Rs.24,63,480/-

Merely because certain persons have stated that the deposits appearing in the bank account of the assessee belong to them and confirmed the same through affidavits, but the same is merely self-serving documents which cannot be relied upon especially when the assessee himself was a licensed holder of retail sale of IMFL and this fact has not been verified by the CIT(A), observed Shri Rama Kanta Panda, Accountant Member and Shri K. Narasimha Chary, Judicial Member.

The Tribunal restored the issue to the file of the AO with a direction to adjudicate the issue afresh by giving due opportunity to be heard to the assessee. The assessee was directed to appear before the AO and file necessary details including the transactions carried out by him, if any, in his retail trade of IMFL business. The cross-appeals raised by the revenue as well as the assessee are allowed for statistical purposes.

The assessee was represented by Shri K.C. Dev das, CA  and the revenue was represented by Shri P.V. Subba Raju.

To Read the full text of the Order CLICK HERE

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