Calcutta HC upholds ITAT Order Confirming Deletion of Addition made on Unexplained Cash Deposits during Demonetization Period [Read Order]

In a recent case, the Calcutta High Court while dismissing the revenue’s appeal upheld the Income Tax Appellate Tribunal’s (ITAT’s) order confirming the deletion of addition made on account of unexplained cash deposits during demonetization period. 

This appeal filed by the revenue under Section 260A of the Income Tax Act, 1961 (the Act) is directed against the order dated 21.06.2024 passed by the Income Tax Appellate Tribunal “C” Bench, Kolkata (the Tribunal) for the assessment year 2017-18 which was in favour of assessee,the Rifle Factory Co Operative Society Ltd.

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The  main allegation was that whether the ITAT has erred in law in upholding the decision of the CIT(Appeals), NFAC deleting the  addition  of  Rs.  3,77,62,052/-  made on account of  unexplained cash deposits in all bank accounts during the demonetization period without because no communication calling Remand Report was received by the Assessing Officer from NFAC(Appeal) and the CIT(Appeal) accepted new evidences in the form of bank statements in contravention to the provisions of Section 46A?

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Further it was questioned that whether on the facts and in the circumstances of the case, the ITAT has erred in failing to recognize that the addition on account of unexplained cash deposits during the demonetization period was made on account of deposits in all the declared/undeclared bank accounts including the accounts held with Axis Bank and West Bengal State Cooperative Bank by the assessee and not only in the account maintained with State Bank of India?

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The revenue was unsuccessful in their attempt in challenging the order passed by the first appellate authority dated 11.5.2023 before the Tribunal which dismissed the revenue’s appeal by the impugned order. The question which fell for consideration before the first appellate authority was whether the high pitched assessment made by the assessing officer vide assessment order dated 18.12.2019 in respect of the respondent Co-operative Society was justified.

The first appellate authority while allowing the assessee’s appeal by order dated 11.05.2023 has elaborately

considered the factual situation and perused the voluminous documents which the assessee placed before the CIT(A). The Tribunal noted that despite a direction issued by the CIT(A) to the Assessing Officer to file a remand report on the documents and details furnished by the assessee, the assessing officer failed to furnish any remand report.

Therefore, the assessee was granted an opportunity by the CIT(A) took place documents before it which was considered and a decision was taken. Once again, before the Tribunal the revenue has given an opportunity to rebut the contention raised by the assessee and to demonstrate as to how the CIT(A) committed an error.

The bench of Chief Justice T.S Sivagnanam and Justice Chaitali Chatterjee (Das) found that from the reasoning given by the Tribunal, the revenue miserably failed to do so and dismissed the petition.

To Read the full text of the Order CLICK HERE

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