The Chandigarh Bench of the Income Tax Appellate Tribunal ( ITAT ) ruled that not all bank deposits could be presumed as taxable income and remanded two appeals concerning additions of unexplained cash deposits made by agriculturists.
The appeals related to Rajwinder Singh for Assessment Year 2011-12 and Amarjeet Singh for Assessment Year 2012-13, challenging the orders of the Commissioner of Income Tax (CIT(A)) which upheld additions made by the Assessing Officer ( AO ) without addressing the appellants’ submissions.
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The AO initiated proceedings under Section 147 read with Section 148 of the Income Tax Act, 1961, based on information about substantial cash deposits in the appellants’ bank accounts of Rs. 6,55,694 for Rajwinder Singh and Rs. 30 lakhs for Amarjeet Singh. In the absence of responses from the appellants, the AO treated the amounts as unexplained income and passed ex-parte orders under Section 144.
Rajwinder Singh contended before the CIT(A) that his income was below the taxable limit, asserting that he was an illiterate agriculturist unfamiliar with tax procedures. Amarjeet Singh raised similar arguments in his case. The CIT(A) dismissed the appeals on procedural grounds, stating that the appellants had failed to pay advance tax.
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On appeal before the ITAT, the appellants argued that the CIT(A) failed to consider their claims regarding the non-taxability of their incomes and the contextual nature of the bank deposits. They requested a reassessment with a fair opportunity to present their cases.
The single-member bench comprising Sanjay Garg (Judicial Member) observed that the CIT(A) erred in not addressing the substantive arguments of the appellants and treating every bank deposit as taxable income without proper examination. The tribunal explained the need to provide the appellants a reasonable opportunity to explain their cases, particularly as the assessment orders were ex-parte.
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The tribunal set aside the orders of the CIT(A) and remanded the matters to the AO for fresh adjudication directing the AO to provide the appellants with sufficient opportunity to furnish evidence and participate in the proceedings. The appeal was allowed for statistical purposes.
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