Addition of ₹99.2L Cash Deposit due to non compliance of Notice to prove source of cash: ITAT Allows One Final Opportunity to Assessee [Read Order]

The Cuttack Bench of the Income Tax Appellate Tribunal (ITAT) restored the appeal filed by the assessee as he had failed to appear during proceedings regarding the alleged substantiated cash deposits in the assessee’s bank and had not responded to the notices or show cause notices.

Therefore AO treated the total credit in the bank of Rs.99,27,624 as turnover and estimated the profit @8% which was Rs.7,94,210, this profit was treated as income under the head profits and gain of business profession and deductions claimed were not allowed.

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In this case Saroj Kumar Senapati , the assessee filed an appeal against the order of CIT(A). The appeal was time barred by 448 days. The assessee had filed a condonation petition supported by an affidavit explaining the frequent health problems he suffered due to which he could not consult the advocate about the order passed by the CIT(A). The assessee was also not aware of the ex parte order.

The assessee who carried rice business on a wholesale basis, filed his return of income for the assessment year 2017-18 on 21st March 2018 where the net income was Rs.2,98,520. The case was selected for scrutiny because of alleged substantiated cash deposits in the bank. The Assessing Officer noticed that the total cash deposit in two banks was Rs.99,27,624. The Assessing Officer(AO) issued notices to furnish the source of cash deposited in the bank under section 143(2) and 142(1) of the Income Tax Act. However the assessee did not respond to the notices and the show cause notice received no response.

This led to the failure to produce all books of accounts , bills and vouchers in support of the expenditure. The case was selected for scrutiny because of the alleged substantial cash deposit in the bank. The AO also doubted the genuineness of the cash deposit in the bank. Therefore AO treated the total credit in the bank of Rs.99,27,624 as turnover and estimated the profit @8% which was Rs.7,94,210 this profit was treated as income under the head profits and gain of business profession and deductions claimed were not allowed.

The CIT(A) dismissed the appeal of the assessee due to non compliance of the notice was issued The assessee submitted that the CIT(A) has passed the order ex parte without providing reasonable opportunity and the profit rate estimated by the AO under section 44D @ 8% was excessive.

The tribunal after considering both the sides observed that the CIT(A) had decided the appeal as ex parte and dismissed it due to the non appearance of the assessee.The bench composed of Duvvuru RL Reddy (Vice President) restored the issue to the file of the CIT(A). It was held that the assessee would get a reasonable opportunity of hearing. The assessee was directed to appear before CIT(A) without seeking any adjournment under any pretext. The CIT(A) has the liberty to pass an appropriate order if the assessee failed to comply.

The tribunal allowed the appeal for statistical purposes.

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