In a recent ruling the Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ) deleted unexplained cash under Section 69 of Income Tax Act, 1961 as the individual deposited mobile recharge sale proceeds into their Dena Bank account and subsequently paid mobile companies.
The assessee was an individual. For the Assessment Year 2017-18, the assessee filed his Return of Income on 05.08.2017 declaring total income of Rs.2,05,970/-. The return was selected for limited scrutiny since large cash deposits were made during the demonetization period and the Business return filed for the first time.
Accordingly notice under Section 143(2) of the Income Tax Act was issued through an e-mail address available with the ITBA system. However the assessee has not responded to the other six notices issued from 07.08.2018 to 27.08.2019. Therefore the cash deposits made in Dena Bank of Rs.2,11,95,770/- was treated as the unexplained investment and added to the income of the assessee and demanded tax thereon.
The Counsel for the assessee Mr. Suchit Patel submitted that the assessee had carried out sale of mobile recharge vouchers on a wholesale basis and earned commission income. The assessee purchased recharge vouchers from M/s. Telenor India Communication Pvt. Ltd. and M/s. Vodafone Mobile Service Ltd. and he made payments to the said concerns through NEFT/RTGS from his Dena Bank account.
In addition, the Chartered Accountant also not informed the appellate hearing details to the assessee. The assessee also produced a Notarized Affidavit from the then Chartered Accountant that due to his mistake, the appellate hearing could not be communicated to the assessee, which has resulted in passing the exparte appellate order.
However, Suchit Patel submitted that he has got all the details about the sale of recharge vouchers, ledger account of M/s. Vodafone Mobile Service Ltd. and M/s. Telenor India Communication Pvt. Ltd. with invoice copies, bank statement details, cash book, bank book, etc. and filed two sets of Paper Book running to 491 pages. Thus pleaded, the case may be set aside to the file of Assessing Officer for passing orders on merits.
The two member bench of the tribunal comprising Annapurna Gupta ( Accountant member ) and T.R. Senthil Kumar ( Judicial member ) observed that there cannot be an entire addition of cash deposit made in the bank account of the assessee as his income. In order to meet the ends of Natural Justice, we deem it fit to set aside the matter back to the file of the Jurisdictional Assessing Officer with a condition to impose a cost of Rs.5000/- payable to the Prime Minister National Relief Fund.
The Assessing Officer was directed to hear the assessee with necessary documents and pass a fresh assessment order by giving proper opportunity to the assessee and in accordance with law. Accordingly, the appeal filed by the Assessee was allowed.
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