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Facts
The assessee firm, engaged in timber trading, filed its return of income. The AO made additions for cash deposits and customs duty paid, citing lack of substantiation. The assessee argued that opportunity was not provided due to a cyclone.
Held
The Tribunal held that the assessee was not granted sufficient opportunity to present supporting evidence for the cash deposits and customs duty additions. Therefore, the matter was remitted back to the AO for fresh adjudication.
Key Issues
Whether sufficient opportunity was provided to the assessee to substantiate the cash deposits and customs duty additions, and if not, whether the matter should be remanded for fresh adjudication.
Sections Cited
144, 69, 69C
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI
Before: SHRI GEORGE GEORGE K & SHRI JAGADISH
आदेश / O R D E R
PER JAGADISH, A.M : Aforesaid appeal filed by the assessee for Assessment Year (AY) 2017-18 arises out of the order of Learned Commissioner of Income Tax (NFAC), Delhi [hereinafter “CIT(A)”] dated 10.10.2024 in the matter of assessment framed by the Assessing Officer [AO] u/s. 144 of the Income-tax Act, 1961 (hereinafter “the Act”) dated 21.12.2019.
The effective grounds of appeal is against confirming the cash deposit of Rs. 1,23,50,000/- on the basis of remand report without providing adequate opportunity and also confirming the addition to the extent of Rs. 21,99,307/- of custom duty paid.
1. 3. The assessee firm is in the business of timber trading and filed its return of income declaring total income of Rs. 3,60,040/- on 28.03.2018. The A.O in the ex-parte order passed has made addition of cash deposit in the bank account of Rs. 1,23,50,000/- u/s. 69 of the Act and has also made addition on custom duty paid of Rs. 93,56,207/- u/s. 69C of the Act as the source of payment has not been substantiated. The assessee, in appeal before Ld CIT(A) has submitted that the details of cash book etc. could not be produced before the A.O as there was a cyclone in Chennai and the assessee was unable to access to the cash books from the office. The Ld. CIT(A) called for remand report and the assessee has submitted cash book in support of the contention of deposit of Rs.1,23,20,000/-.
However, the A.O in the remand report did not accept the explanation of the assessee as the assessee has not provided any bills invoices or bills or details of debtors with name, address etc. to support its claim of cash receipts from the customers. The Ld. CIT(A), therefore accepting the remand report, confirmed the addition.
The Ld. Authorized Representative (A.R) of the assessee has submitted that the A.O has called for only earlier years bank account on 25.05.2024 and had provided only three days left time, therefore, sufficient opportunity was not given. The Ld. A.R also submitted that the A.O did not call for copy of invoices / bills or details of debtors etc. , and held that assessee did not produce these documents and the nature of cash deposit remained unsubstantiated while admitting the cash book was produced.
We have heard the rival submissions, and perused the materials available on record. The A.O has made the addition of cash deposits in bank account in ex- parte order passed u/s 144 of the Act. The A.O during remand proceeding has accepted that assessee has produced the cash book, but has not accepted the explanation that cash deposits were of sales proceeds. The assessee has submitted that sales invoices etc were never called for and only three days time was given. Considering the fact that the assessee was not granted sufficient opportunity to furnish supporting evidence we are of the view that the matter requires reconsideration. Therefore, in the interest of justice, we deem it appropriate to remit the matter back to the file of the A.O for fresh adjudication, after providing due opportunity to the assessee to present all necessary supporting documents including invoices, bills, and debtor details. The assessee is also directed to cooperate with the proceedings and appear before the A.O. on the date of hearing without fail and furnish all relevant evidence to substantiate its claims.
The next issue involved in this appeal pertains to the confirmation of the addition on account of customs duty to the extent of Rs. 21,99,307/-. The A.O had made addition of custom duty paid of Rs.93,56,207/- u/s 69C of the Act in the ex-parte order. During the remand proceedings, the A.O called for report from the Deputy Commissioner of Customs, Chennai, who provided details of import transactions amounting to Rs.4,47,35,111/- and corresponding customs duty paid of Rs.21,99,307/-. The A.O in the remand report submitted that additional information was sought from assessee, but same was not provided by the assessee. The Ld. CIT(A), based on remand report accepted the customs duty payment of Rs. 21,99,307/- as substantiated. However, he confirmed addition to the extent of Rs.21,99,307/-.
We have heard rival submissions. The Ld CIT(A) has confirmed the addition on the basis of remand report, where the A.O has noted that assessee has not submitted the details. The Ld AR has submitted that proper opportunity was not provided. We, therefore remit this matter also to the file of the A.O for fresh adjudication. The A.O is directed to pass reasoned order after affording due opportunity to the assessee.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced on 27th May, 2025.