Unexplained Cash Credit: ITAT Restores Matter to CIT(A), allows to Rebut Remand Report [Read Order]

The Chennai Bench of the Income Tax Appellate Tribunal (ITAT) restored the appeal to the file of the Commissioner of Income Tax (Appeals) [CIT(A)] due to the failure to grant the assessee an opportunity to counter the findings of the Assessing Officer (AO) in a remand report.

Pachaiyappam Senthamarai (assessee), an individual who did not file a return of income for the Assessment Year (AY) 2012-13. The AO reopened the case after noting cash transactions totaling ₹15,01,000/- in the assessee's savings bank account.

In the subsequent assessment order, the entire amount was treated as unexplained cash credit under Section 68 of the Income Tax Act, 1961. Aggrieved by the AO’s order, the assessee filed an appeal before the CIT(A).

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The assessee contended that the cash deposit was derived from the sale of a property plot executed through a registered Power of Attorney (PoA), and the consideration was received close to the date of execution. The CIT(A) forwarded this submission to the AO, who submitted a Remand Report.

The AO through remand report rejected the assessee’s explanation on multiple grounds, including the PoA did not mention the receipt of consideration or the power to enter into a sale transaction.

The AO noted that the receipt submitted for the cash was an unstamped plain paper and the assessee failed to furnish an English translation of the local language Power Deed, despite being asked to do so. The CIT(A) dismissed the assessee's appeal entirely, relying on the AO’s adverse Remand Report. Aggrieved by the CIT(A)’s order, the assessee appealed to the ITAT.

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The assessee argued that the CIT(A) passed the order solely based on the Remand Report without reckoning the submission made and, crucially, without providing a chance to rebut the report’s findings.

The two-member bench comprising S.S. Viswanethra Ravi (Judicial Member) and Ratnesh Nandan Sahay (Accountant Member) noted that while the CIT(A) had confirmed the assessment order based on the Remand Report, no opportunity was given to the assessee for rebuttal of the findings of the AO given in that report.

The Tribunal in the interest of justice restored the matter back to the file of the CIT(A). The tribunal directed the CIT(A) to provide the assessee with an adequate opportunity of being heard.

The tribunal directed the assessee to produce all necessary documents, such as the translated copy of the Power Deed, before arriving at a considered view. In the result, the appeal filed by the assessee was allowed for statistical purposes.

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