The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) remanded the matter to the Assessing Officer (AO) for proper verification and adjudication under Section 68 of Income Tax Act, 1961 after finding insufficient consideration of unexplained cash credits and investments.
Bhavanji Jugaji Thakor,the appellant-assessee had filed Return of Income (ROI) dated 28.12.2016 declaring total income of Rs 1,80,270. The return was processed under Section 143(1) of the act and the case was selected for limited scrutiny.
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A notice under Section 143(2) was issued on 18.09.2017, and notices under Section 142(1) with a questionnaire were issued on 26.07.2018, 10.10.2018, and 14.11.2018. The assessee had purchased immovable property for Rs.49,50,000, sold property for Rs 1,80,00,000, and deposited Rs 34,30,000 in cash into the Bank of Baroda.
Due to no response from the assessee, the AO added Rs 49,50,000 as unexplained investment, Rs 34,30,000 as unexplained cash credit, and Rs 1,80,00,000 as Short Term Capital Gain (STCG), assessing the total income at Rs 2,65,60,270.
The assessee dissatisfied with the order of the AO appealed before the Commissioner of Income Tax (Appeals) [CIT(A)], where the CIT(A) partly allowed the assessee appeal.
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The Tribunal noted that the assessee’s counsel argued against invoking Section 68 due to the lack of formal books of account. However, the Tribunal found that the cash deposits were clearly recorded in the assessee’s Bank of Baroda savings account, which was treated as the books of account for this purpose. Therefore, the argument against invoking Section 68 did not hold.
Additionally, the bench noted that the assessee had stated before the CIT(A) that the sale proceeds from the property were received by cheque, and this explanation was accepted. The assessee contended that the cash deposits of Rs 34,30,000 could not be correlated with the sale receipts, as they were related to the assessee’s savings account and had also explained that these cash deposits were from known sources of income, including income from house property, other sources, and agricultural activities.
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The two-member bench comprising Suchithra Kamble (Judicial Member) and Narendra Prasad Sinha (Accountant Member) found that the AO had not properly considered or verified the aspects under Income Tax provisions. The case was remanded for proper adjudication and verification, ensuring the assessee was given a chance to be heard as per natural justice.
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