ITAT Remands Case to AO Citing Lack of Opportunity, Orders Fresh Scrutiny of ₹2.15 Cr Demonetization Deposits [Read Order]

The Income Tax Appellate Tribunal (ITAT) Patna Bench has sent back a case involving cash deposits of ₹2.15 crore during the demonetization period for fresh examination, highlighting that the assessee was not given a proper opportunity to explain his case.

The order pertains to Ranjay Kumar Diwakar, proprietor of Nidhi Pharma, who had appealed against the assessment order passed by the Income Tax Officer, Ward-2(5), Bihar Sharif for the Assessment Year 2017-18.

In this matter, the Assessing Officer had found, through data analytics and information gathered during ‘operation clean money’, that Ranjay Kumar Diwakar had deposited a total of ₹2,15,03,053 in his bank accounts with the State Bank of India and the Post Office during the demonetization period. Since the assessee did not file his income tax return in response to the notice issued under section 142(1), and failed to provide any explanation for the cashde posits, the Assessing Officer treated the entire amount as unexplained money and added it to the total income under section 144 of the Income Tax Act.

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Dissatisfied with the assessment, Diwakar appealed before the Commissioner of Income Tax (Appeals) CIT(A). However, he again failed to appear or submit evidence to support his case, leading the CIT(A) to uphold the order of the Assessing Officer and dismiss the appeal.

The matter then came before the ITAT, where the authorized representative for Diwakar argued that both the assessment and appellate orders were passed without giving the assessee a fair chance to present his case. It was submitted that the assessee was suffering from illness and could not attend the proceedings, and that he now had relevant documents to substantiate his claim regarding the cash deposits. These documents included trading accounts, profit and loss statements, and comparative financial data for multiple years.

After considering the submissions and examining the documents, the ITAT, consisting of Sonjoy Sarma (Judicial Member) and Rakesh Mishra (Accountant Member), noted that the interests of justice would be best served by remanding the case to the Assessing Officer.

The Tribunal directed the Assessing Officer to re-examine the matter afresh, after providing reasonable opportunity to the assessee to present his case and submit all necessary documents for verification. The assessee was also instructed to fully cooperate and respond to all notices during the remand proceedings.

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