Cash Sales from Ready-made Garments not supported with relevant Documents: ITAT Restores Ex-Parte matter to CIT(A) [Read Order]

The Income Tax Appellate Tribunal (ITAT), New Delhi Bench, restored an ex-parte matter to the Commissioner of Income Tax (Appeals) [CIT(A)] due to non-production of relevant documents supporting the cash sales from ready-made garments.

The facts are that the assessee, Pret Study by Janak Fashions Private Limited, revised return of income and the case was selected for scrutiny assessment. The Assessing Officer (AO) asked the assessee to explain the deposited cash amounting to INR 8,39,28,129/- in the demonetization period.

The AO rejected the books of account of the assessee and made an addition of INR 2,07,27,908/- to the income under Section 68 of the Income Tax Act, 1961. The CIT(A), on appeal, upheld the additions in an ex-parte order.

The counsel for the assessee-appellant, then approached the ITAT and submitted that there was no independent reasoning given by the CIT(A) to uphold the unsustainable order; they prayed that the issue be restored back to the CIT(A) for fresh adjudication. The ITAT observed that the CIT(A) had issued six notices before deciding the matter ex-parte.

However, it was also observed that the CIT(A) did not even call for the assessment records before dismissing the appeal and is obligated to do so as per Section 250(6). The bench of Madhumita Roy (Judicial Member) and Ramit Kochar (Accountant Member) thus restored the matter back to the file of the CIT(A) for fresh adjudication and allowed the appeal filed by the assessee.

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