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Facts
The assessee, an exporter of garments, made cash deposits totaling Rs. 46,24,000 during the demonetization period. The Assessing Officer treated Rs. 41,74,000 as unexplained income under Section 69A of the Act.
Held
The Tribunal held that the additional evidences submitted by the assessee were relevant and crucial for adjudicating the dispute. The matter was restored to the NFAC for a de novo adjudication.
Key Issues
Whether the NFAC was justified in confirming the addition of unexplained cash deposits without admitting crucial additional evidences filed by the assessee.
Sections Cited
143(3), 69A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH “B”: NEW DELHI
O R D E R PER M. BALAGANESH, A. M.: 1. The appeal in AY 2017-18, arises out of the order of the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘ld. NFAC’, in short] in Appeal No. ITBA/NFAC/S/250/2024- 25/1070867387(1) dated 04.12.2024 against the order of assessment passed u/s 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 31.12.2019 by the Assessing Officer, Asst. Commissioner of Income-tax, Circle25(2), Delhi (hereinafter referred to as ‘ld. AO’).
The only effective issue to be decided in this appeal is as to whether the Learned NFAC was justified in confirming the addition made in the sum of Rs 41,74,000/- on account of cash deposits made during the demonetization period in the facts and circumstances of the instant case.
We have heard the rival submissions and perused the materials available on record. The assessee was an exporter of garments and due to Page | 1 health issue, he had stopped the business activity and whatever movable and immovable assets were there, the same was sought to be maintained as it is. The original return of income for the Assessment Year 2017-18 was filed on 5-8-2017 declaring total income of Rs 2,97,939/- which was later revised to Rs 12,05,000/-. The Learned AO observed that the assessee had made certain cash deposits during the demonetization period in the sum of Rs 46,24,000/-. The Learned AO sought details of sources for the same. The assessee submitted that he had opening cash balance as on 1-4-2016 of Rs 32,30,779/- and had withdrawn cash of Rs 10,06,000/- during the period April to Aug 2016. In the absence of satisfactory explanation, the Learned AO proceeded to treat a sum of Rs 41,74,000/- as unexplained cash deposits under section 69A of the Act and completed the assessment.
Before the Learned CITA, the assessee furnished additional evidences in support of his arguments and a remand report was also called for from the Learned AO. The Learned AO in the remand report objected to the admission of additional evidences filed by the assessee. Accordingly, the Learned NFAC did not admit the additional evidences filed by the assessee and confirmed the addition made by the Learned AO. Aggrieved, the assessee is in appeal before us.
The learned AR before us vehemently pleaded that one more effective opportunity be granted to the assessee before the Learned NFAC with a prayer to admit the additional evidences submitted by the assessee which would be relevant and crucial for the purpose of adjudication of the dispute. The Learned AR submitted that assessee has got sufficient cash balance in his kitty to explain the source for cash deposits made in the bank account. We find that the assessee had sought to give preliminary explanation during the course of assessment proceedings for explaining the source of cash deposits made during the demonetization period. However, it is a fact that additional evidences were indeed filed by the assessee which were not admitted by the Learned NFAC in the first appellate proceedings. We find that these additional evidences are indeed relevant and crucial for the purpose of adjudication of the dispute before the Learned NFAC. Hence, we deem it fit and appropriate, in the interest of justice and fair play, to restore this issue to the file of Learned NFAC for de novo adjudication in accordance with law. Needless to mention that the assessee be given reasonable opportunity of being heard. The assessee is also at liberty to furnish further evidences and further additional grounds, if any, in support of his contentions. The Learned NFAC is directed to admit the additional evidences filed by the assessee (both earlier evidences and fresh evidences, if any) and adjudicate the issue de novo in accordance with law uninfluenced by earlier observations made by it. With these directions, the grounds raised by the assessee are allowed for statistical purposes.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 14/05/2025.