Error in Reading Jewellery Sale as Purchase Costs CIT(A); ITAT Orders Fresh Look at Cash Deposit Addition [Read Order]
The tribunal also held that not supplying the remand report constituted a violation of the principles of natural justice. It noted that once documentary evidence is filed by a taxpayer, the revenue authorities must either accept it or objectively disprove it with cogent reasons, not dismiss it summarily.
The Ahmedabad bench of the Income Tax Appellate Tribunal has set aside an order of the Commissioner of Income Tax (Appeals) after finding that a factual error had crept into the reading of evidence relating to jewellery transactions. The Tribunal directed the matter back to the CIT(A) for fresh adjudication on the addition of cash deposits amounting to Rs. 10,00,100 under section 69A of the Income Tax Act. Nidhiben Mrugeshkumar Shah, a homemaker from Anand, for the Assessment Year 2011-12. The tax department had initiated reassessment proceedings after discovering that she had deposited Rs. 10,00,100 in cash into her savings account but had not filed an income tax return. As Shah did not respond to multiple notices, the Assessing Officer completed the assessment ex-parte, treating the entire deposit as unexplained money under section 69A of theIncome Tax Act.
Shah appealed to the Commissioner of Income Tax (Appeals), where she contended that the cash came from the sale of agricultural produce belonging to her father and the sale of jewellery belonging to her mother. She submitted various documents, including land records, sale invoices from agricultural traders, and jewellers' bills to support her claim. However, the CIT(A) dismissed the appeal, labelling the agricultural income claim as unsubstantiated and, crucially, referring to the jewellery sale invoices as evidence of a "purchase," thereby concluding the transactions were "bogus."
Aggrieved by this order, Shah approached the ITAT. Her representative argued that the CIT(A) had not only committed a clear factual error by misstating the nature of the jewellery transaction but had also failed to provide her with a copy of the 'remand report' obtained from the Assessing Officer, denying her a chance to rebut it.
The ITAT bench carefully examined the case records. It agreed with the assessee’s contentions, observing that the CIT(A)'s misreading of the jewellery sale as a purchase was a fundamental flaw that went to the root of the matter. The tribunal also held that not supplying the remand report constituted a violation of the principles of natural justice. It noted that once documentary evidence is filed by a taxpayer, the revenue authorities must either accept it or objectively disprove it with cogent reasons, not dismiss it summarily.
The bench, comprising Siddhartha Nautiyal (Judicial Member) and Makarand V. Mahadeokar (Accountant Member), set aside the CIT(A)'s order. It directed the authority to re-adjudicate the matter afresh. The ITAT instructed the CIT(A) to properly consider all the evidence, supply the remand report to Shah for her comments, and then pass a detailed, reasoned order after giving her a fair opportunity to be heard. The tribunal also admitted additional confirmation letters from traders as new evidence for the fresh proceedings. In conclusion, the appeal was allowed for statistical purposes.
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