Cash Deposits Claimed from Building Material Business: ITAT Directs AO to Verify as Assessee Could Not Substantiate Turnover Beyond Returns [Read Order]

The Income Tax Appellate Tribunal ( ITAT ), Ranchi Bench, has directed the Assessing Officer (AO) to re-examine the case of assessee, who had deposited ₹26.60 lakh during the demonetization period, claimed to be sourced from her business of purchase and sale of building materials.

The assessee, Prem Lata Sharma had filed her returns under Section 44AD of the Income Tax Act, declaring presumptive income from the said business. She argued that the cash deposits in her Central Bank and IDBI Bank accounts were proceeds from her building material business, with turnovers of ₹40 lakh (AY 2015-16), ₹50 lakh (AY 2016-17), and ₹50 lakh (AY 2017-18).

However, the Assessing Officer rejected her explanation for lack of supporting evidence and treated the deposits as unexplained income. The CIT(A), NFAC, Delhi, upheld the addition without accepting her claim.

On appeal, the ITAT observed that although the assessee claimed business activity, she had not produced supporting documents such as GST returns, invoices, or other verifiable records to substantiate turnover beyond what was disclosed in her returns. While acknowledging the deficiencies in her evidence, the Tribunal held that in the interest of justice, the matter required a fresh factual examination.

Accordingly, the bench of Ratnesh Nandan Sahay (AM) and George Mathan (JM) set aside the orders of the lower authorities and restored the matter to the AO, directing him to depute an Inspector to verify the assessee’s claim of carrying on business in building materials and to re-adjudicate the issue after granting her a proper opportunity of being heard.

The appeal was thus partly allowed for statistical purposes.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates