Cash Deposits Treated as Unexplained u/s 69A: ITAT Restores Matter to AO Noting Failure to Examine Debit Entries and Additional Evidence [Read Order]

The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) restored the matter to the Assessing Officer (AO) after noting that cash deposits of ₹18.32 lakh were treated as unexplained under Section 69A of Income Tax Act,1961,without examining debit entries or considering additional evidence submitted by the assessee.

Umeshbhai Ramanlal Shah,appellant-assessee, had not filed a return of income for the assessment year 2011-12. The AO received information about a cash deposit of ₹18.32 lakh in his Bank of Baroda account during FY 2010-11 and reopened the case under Section 148 after recording reasons. Since there was no response during the assessment proceedings, the assessment was completed ex parte under Section 144 read with Section 147, treating the entire deposit as income.

The appeal filed before the Commissioner of Income Tax(Appeals)[CIT(A)] was dismissed, leading to the present second appeal before the tribunal.

A delay of 323 days occurred in filing the appeal. The assessee explained that he was a non-resident and unaware of the assessment proceedings. The appeal before the CIT(A) was handled by a Tax Practitioner in Nadiad, and the CIT(A)’s order was sent to an email ID that the assessee could not access.

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The two member bench comprising T.R.Senthil Kumar (Judicial Member) and Narendra Prasad Sinha (Accountant Member) noted that the AO treated the entire cash deposit of ₹18.32 lakh as unexplained without verifying the bank statement or checking debit entries.

The appellate tribunal also observed that the AO could have collected the bank statement directly from the bank but did not do so. The assessee’s explanation and additional evidence were not fairly examined.

The ITAT set aside the matter to the AO with directions to give the assessee another chance to explain the deposits and submit any supporting evidence. The assessee was told to cooperate, or the assessment would be completed based on available records.

Accordingly,the appeal was allowed for statistical purposes.

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