Rs. 6.37 Crore Cash Deposits in Buffalo Mandi Commission Agent Business Treated as Unexplained: ITAT Restores Matter to AO for De Novo Adjudication [Read Order]
The assessee submitted additional evidence, including confirmation letters from buyers, ledger copies, and affidavits, explaining that the omission in the return was inadvertent
Cash Deposit
Cash Deposit
The Visakhapatnam Bench of Income Tax Appellate Tribunal ( ITAT ) restored the matter to the Assessing Officer (AO) for de novo adjudication in a case where Rs. 6.37 crore cash deposits in a Buffalo Mandi Commission Agent business were treated as unexplained under section 69 of Income Tax Act,1961.
Subbarao Jaladi, appellant-assessee, was engaged in the “Buffalo Mandi Commission Agent” business, earning income from mediation between farmers and traders. He filed his return for the year on 28.09.2018, declaring total income of Rs. 5,04,980/-. The return was selected for limited scrutiny under CASS due to substantial cash deposits.
During assessment, it was found that the assessee deposited Rs. 6,37,16,100/- in his Union Bank of India account, whereas Form 61A and cash-in-hand records showed much lower amounts. He was asked to explain the source and substantiate the deposits. The assessee stated that all deposits related to business transactions, but admitted that some credits were not accounted for in the filed return.
Since he could not provide adequate documentary proof or details of the buffalo sellers and purchasers, the AO treated the entire sum as an unexplained investment under Section 69 and added it to his income. The Commissioner of Income Tax (Appeals) [CIT(A)] upheld this addition, leading the assessee to file the present appeal.
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The assessee counsel stated that the cash deposits in the Union Bank of India account were not disclosed in the return due to an oversight by the income tax practitioner. He submitted that the assessee had now obtained confirmation letters from buyers and ledger copies to support the bank credits and requested that the matter be sent back to the AO for fresh consideration.
He also filed affidavits, along with his Chartered Accountant’s affidavit, to show the omission was inadvertent, and submitted the death certificate of the assessee’s wife, who had serious medical conditions and passed away on 24.07.2019.
The Departmental Representative argued that the new confirmation letters were not examined earlier and the department should be given a chance to verify them.
The two member bench comprising Sandeep Singh Karhail (Judicial Member) and S.Balakrishnan (Accountant Member) noted that the addition of Rs. 6,37,16,100/- under section 69 was based on cash deposits in the Union Bank of India account, which the assessee had not substantiated before the lower authorities.
As the assessee had now submitted additional evidence, including confirmation letters from buyers and supporting documents, the tribunal directed that the issue be restored to the AO for de novo adjudication after examining the new details.
The appellate tribunal set aside the impugned order on this issue and allowed the assessee’s grounds for statistical purposes, emphasizing that the AO must provide a reasonable opportunity of hearing and could seek any further information necessary for complete adjudication.
Accordingly the appeal was allowed for statistical purposes.
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