ITAT Rules in favor of Assessee, Citing benefit of Doubt in Fraudulent Activity Case [Read Order]

In a recent ruling, the Income Tax Appellate Tribunal ( ITAT ) has given a significant reprieve to an assessee who had been accused of making unexplained cash deposits. The ITAT has remanded the case back to the Assessing Officer ( AO ) for fresh adjudication, citing the benefit of doubt in favor of the assessee.

The case pertains to the assessment year 2011-12, where the assessee, Nitrangan Singh Gwal, was accused of making a cash deposit of Rs. 45,42,005 in his savings bank account with ICICI Bank Limited, Mirzapur. The AO had initiated proceedings under section 147 of the Income Tax Act, 1961, and had issued a notice under section 148 of the Act.

However, the assessee did not comply with the notices issued by the AO, and the proceedings were conducted in an ex-parte manner. The AO had made an addition of Rs. 45,42,005 to the assessee’s income, which was later upheld by the Commissioner of Income Tax (Appeals) [CIT(A)].

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Before the ITAT, the assessee filed an affidavit stating that he was unaware of the source of the said deposit. He also filed letters written to the Branch Manager, ICICI Bank, Laxa Branch, Varanasi, alleging fraudulent activity in his bank account.

The ITAT observed that the assessee deserved a chance to prove the bona fides of his claim of fraudulent activity in his bank account. The tribunal noted that the assessee had not been given a proper opportunity to present his case before the AO.

Therefore, the ITAT remanded the case back to the AO for fresh adjudication, directing the AO to afford the assessee an opportunity of being heard. The tribunal also observed that the assessee should present the facts of his case and enable the AO to assess his correct income.

Two Member Bench Comprised of Subash Malguria ( Judicial Member ) and Sanjay Aswathi ( Accountant Member ) Heard the Arguments through Virtual Mode and Allowed the Appeal for Statistical Purposes.

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