The Chhattisgarh High Court recently upheld an ex-parte assessment under Section 144 of the Income Tax Act, 1961, against an assessee who failed to participate in assessment proceedings or explain the source of a cash deposit of ₹11,44,070 in his bank account.
Shri Dinesh Singh Chouhan, the appellant challenged the ITAT’s decision, arguing that he was not obligated to maintain books of account as per Section 44AA of the IT Act and provided some explanations related to recoveries made from clients of a third party. The Assessing Officer, Commissioner of Income Tax (Appeals), and Income Tax Appellate Tribunal (ITAT) ruled against the appellant, stating that he failed to substantiate his claims with credible documentary evidence.
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The court affirmed the ITAT’s ruling, emphasizing that the appellant’s inability to explain the source of the cash deposit warranted a presumption of it being income.
The court dismissed the appellant’s claim that a cash deposit in his bank account belonged to a third party for whom he acted as a collection agent. It was noted that the appellant should have called the third party to explain the deposit.
The division bench comprising Justices Sanjay K Agrawal and Amitendra Kishore Prasad noted that under Sections 68 and 69A if an assessee does not provide a satisfactory explanation for unexplained credits, those amounts can be treated as taxable income. Despite multiple notices from the Assessing Officer, the appellant did not respond or appear before the authorities, leading to an ex-parte assessment order being issued.
The bench observed that Assessing Officer; the CIT (Appeals), NFAC; and the ITAT, all, have concurrently and correctly concluded that the assessee did not produce any evidence to rebut the presumption drawn under Section 68 read with Section 69A of the IT Act.
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In light of the decision of the Supreme Court in Vijay Kumar Talwar , by allowing the appeal, the court held that the finding of the ITAT is the correct finding of fact based on record and the appellant has failed to demonstrate any substantial question of law in this appeal and as such, no substantial question of law arises from the order of the ITAT requiring formulation for consideration.
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