The Visakhapatnam Bench of Income Tax Appellate Tribunal(ITAT) remitted the matter back to the Commissioner of Income Tax(Appeals)[CIT(A)] for reassessment of cash deposits made by the assessee, after recognizing the necessity to consider additional evidence that had been previously rejected.
Janaki Ram Babji Rao Annam,the appellant-assessee,electronically filed his income tax return on December 9, 2017, declaring an income of Rs. 3,49,950 for the assessment year 2017-18. The return was processed by the Centralized Processing Centre(CPC) on December 24, 2017, and the case was later selected for limited scrutiny due to cash deposits made during the demonetization period.
The assessing officer (AO) issued notices under Sections 143(2) and 142(1) requesting additional information, but the assessee did not respond. The AO then obtained bank information and found cash deposits totaling Rs. 24,31,000. Despite issuing another notice, the assessee failed to comply.
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As a result, the AO finalized the assessment under Section 144, treating the cash deposits as unexplained income under Section 69A of the Act. The assessed income was determined to be Rs. 27,80,950, and the assessment order was issued on December 19, 2019. The assessee subsequently appealed the decision to the CIT(A).
On appeal, the CIT(A) dismissed the assessee’s appeal and upheld the AO’s additions. He observed that the additional evidence submitted was not accompanied by a formal request or mentioned in Form 35, which led to its rejection under Rule 46A. The assessee then appealed the decision to the Tribunal.
The tribunal reviewed the case and noted that the assessee made cash deposits of Rs. 24,31,000 during the assessment year without providing sufficient evidence or explanation, leading the AO to classify it as unexplained income under Section 69A of the Act.
On appeal, the assessee presented documents claiming the deposits came from debtor collections and cash on hand during demonetization. However, the CIT(A) rejected this additional evidence, stating no request for its admission was made in Form 35 or separately.
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The Division Bench of Duvvuru RL Reddy(Judicial Member) and S.Balakrishnan(Accountant Member)determined that the CIT(A) should have accepted the additional evidence to evaluate the case properly.
Therefore, it remitted the matter back to the CIT(A) to admit the additional evidence under Rule 46A and decide the case on its merits, ensuring the assessee had a fair chance to be heard.
In conclusion,the appeal was allowed for statistical purposes.
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