ITAT Grants Assessee One More Opportunity to Substantiate Claims regarding S.69A in interest of Justice [Read Order]

The Income Tax Appellate Tribunal (ITAT), Chennai, has allowed the appeal of S.S.S. Exports and remanded the case back to the Commissioner of Income Tax (Appeals) for a fresh hearing. The dispute centred around cash deposits totaling Rs. 17.05 lakh made during the 2016 demonetisation period, which the Assessing Officer (AO) had treated as unexplained income under Section 69A of the Income Tax Act, 1961.

Coming to the facts of the case, the assessing officer (AO) noted that S.S.S. Exports, a business entity based in Erode, Tamil Nadu, had deposited Rs. 2 lakh on 11-11-2016, Rs. 10 lakh on 18-11-2016, and Rs. 5 lakh on 21-11-2016 during the demonetisation window.

While the assessee had an opening book balance of Rs. 5.84 lakh as of 8-11-2016, the AO accepted only the initial Rs. 2 lakh deposit as legitimate, adding the remaining Rs. 15 lakh to the assessee’s income as unexplained money. The assessee, who had filed a belated return for Assessment Year 2017-18 declaring an income of Rs. 19,510, contested the addition, but the CIT(A) dismissed the appeal for non-compliance with hearing notices, without examining the case on merits.

The assessee who was aggrieved by the order of CIT(A), appealed before the ITAT for relief.

Get a Handbook on TDS Including TCS as Amended up to Finance Act 2024, Click Here

The assessee’s counsel argued that the appeal fee of Rs. 500 paid was correct since the CIT(A) had dismissed the appeal on procedural grounds rather than on merits. The counsel also relied on the case of Aasife Biriyani Private Limited v. ITO in ITA No. 2460/Chny/2024 dated 10.12.2024 to strengthen its claim.

The bench noted that the assessee’s non-appearance before the CIT(A) was not deliberate and granted a final opportunity to substantiate its claims. The bench remanded the matter to the file of the CIT(A) to consider the explanations and documentary evidence that would be submitted by the assessee.

The ITAT, comprising S.S. Viswanethra Ravi (Judicial Member) and Accountant Member Shri Jagadish, by relying on the principles of natural justice, directed the CIT(A) to reconsider the case afresh after evaluating the assessee’s evidence. The appeal was allowed for statistical purposes.

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