ITAT Slams CIT(A) for Skipping Remand Report, Orders Re-Hearing in Rs. 99.5 Lakh Cash Deposit Case
The ITAT noted that the CIT(A) should have awaited the bank’s response and called for a remand report from the AO before passing the order.
The Income Tax Appellate Tribunal (ITAT) Ahmedabad bench has set aside an order by the Commissioner of Income Tax (Appeals) for failing to call for a remand report in a case involving unexplained cash deposits of Rs. 99.5 lakh during the demonetisation period. The tribunal directed a fresh hearing, emphasizing the need for a proper fact-finding process. S3 Tradecom Pvt. Ltd., a...
The Income Tax Appellate Tribunal (ITAT) Ahmedabad bench has set aside an order by the Commissioner of Income Tax (Appeals) for failing to call for a remand report in a case involving unexplained cash deposits of Rs. 99.5 lakh during the demonetisation period. The tribunal directed a fresh hearing, emphasizing the need for a proper fact-finding process.
S3 Tradecom Pvt. Ltd., a company based in Ahmedabad, which faced scrutiny over cash deposits totaling Rs. 1.42 crore during the financial year2016-17, including Rs. 1.14 crore deposited post-demonetisation. The Assessing Officer (AO) had treated Rs. 99.5 lakh as unexplained money under Section 69A of the Income Tax Act, citing the company’s failure to provide satisfactory evidence for the source of these deposits.
The CIT(A) had earlier deleted the addition, noting that the AO failed to point out specific defects in the company’s books or establish a clear violation under Section 145(3) of the Act. However, the ITAT found this decision flawed, observing that the CIT(A) overlooked the fact that crucial information from IndusInd Bank, sought under Section 133(6), was still pending when the appeal was decided.
The tribunal highlighted that the first appellate authority must ensure a proper fact-finding process, especially in cases involving disputed facts like unexplained cash deposits. It cited the well-settled principle that such matters require verification of bank records and other relevant evidence. The ITAT noted that the CIT(A) should have awaited the bank’s response and called for a remand report from the AO before passing the order.
Judicial Member Siddhartha Nautiyal and Accountant Member Annapurna Gupta presided over the case. They ruled that the CIT(A)’s order could not be sustained and restored the matter for a fresh hearing. The tribunal directed the CIT(A) to reconsider the case after examining the remand report and the pending bank information.
The ITAT’s decision underscores the importance of procedural diligence in tax appeals, particularly when dealing with disputed transactions during demonetisation. The case will now be reheard by the CIT(A) with the additional evidence taken into account.
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