The Kolkata Bench of Income Tax Appellate Tribunal ( ITAT ) remanded a case for fresh assessment where cash deposits of about ₹10 crore in the assessee’s bank account were treated as unexplained.

Sapna Sameer,appellant-assessee,had filed the return of income declaring ₹30,50,140. The case was selected for limited scrutiny for “Large cash deposits in bank account(s).” As there was no response to the notices issued, the Assessing Officer (AO) added 8% of total receipts of ₹16,88,93,079, amounting to ₹1,35,11,446.

Since ₹30,50,140 was already declared, the difference of ₹1,03,70,391 was added to the total income. The Commissioner of Income Tax (Appeals) [CIT(A)], vide order dated 05/04/2024, confirmed the addition due to non-compliance. Aggrieved, the assessee appealed before the Tribunal.

The assessee counsel stated that books of account were maintained and audited, but while filing the return, the column for audit status was wrongly marked as ‘Not Audited.’ Non-compliance before the CIT(A) was explained to be due to the death of the earlier counsel in June 2020, during which the relevant papers remained in his office and could not be collected because of the COVID-19 pandemic.

The assessee, a regular taxpayer, had filed the AY 2018-19 return on 31.10.2018 along with the tax audit report, declaring ₹30,50,140 and paying self-assessment tax.

Understanding Common Mode of Tax Evasion with Practical Scenarios, Click Here

The proprietorship firms were engaged in petroleum products and trading of grocery and clothes. The case was selected for limited scrutiny based on cash deposits. Although the assessee personally appeared before the AO and submitted the audit report, account confirmations, and bank statements, the AO, relying on ITBA data, treated bank deposits of ₹10,60,92,841 as unexplained and applied 8% on them as turnover, despite the audit report showing a turnover of ₹16,88,93,079.

The CIT(A) noted that the assessee had not provided a signed audited balance sheet, cash book, sale invoices, VAT returns, or specific cash details. The assessee counsel requested another opportunity to file the documents, but the departmental representative argued that no submissions were made earlier, and the CIT(A)’s order should be upheld.

The two member bench comprising Sonjoy Sarma (Judicial Member) and Rakesh Mishra (Accountant Member) noted that the assessee was not properly represented before both the AO and the CIT(A). The assessee counsel sought a remand, while the departmental representative supported the CIT(A)’s order.

Considering that sufficient evidence and an audit report were available, the tribunal set aside both orders and sent the matter back to the AO for fresh assessment after giving the assessee an opportunity to be heard.

The assessee was directed to avoid unnecessary adjournments and could submit all supporting evidence. The appeal was allowed for statistical purposes.

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