ACIT-1(1), INDORE, INDORE vs. ASHOK KUMAR JAIN, INDORE

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ITA 390/IND/2023Status: DisposedITAT Indore25 February 2025AY 2017-184 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal, acknowledging the submissions of both parties, decided to remand the case back to the Assessing Officer (AO). The Revenue's primary contention was that the CIT(A) had allowed the appeal based on additional evidences without providing the AO an opportunity to examine them, which violated Rule 46A(3) of the Income-tax Rules, 1962. The assessee's representative, while supporting the CIT(A)'s order, could not effectively counter this procedural argument. The Tribunal found merit in the Revenue's proposal to restore the case to the AO for a detailed examination of the assessee's evidences. The AO is directed to provide necessary opportunities to the assessee for compliance and verification, ensuring that the assessee avails these opportunities without seeking unnecessary adjournments. The appeal is allowed for statistical purposes, with the operative direction being a remand to the AO.

What were the facts?

The assessee, Ashok Kumar Jain, filed his return of income for Assessment Year 2017-18 declaring Rs. 21,21,390. The case was selected for limited scrutiny concerning cash deposits, withdrawals, and deductions. The Assessing Officer (AO) issued notices under sections 143(2)/142(1) which the assessee failed to comply with. Despite further opportunities, including a notice under section 133(6) to explain cash deposits, the assessee remained non-responsive. Based on bank statements, the AO found cash deposits totaling Rs. 1,13,11,000. After crediting cash withdrawals of Rs. 12,00,000, the AO treated Rs. 1,01,11,000 as unexplained income under section 69A and made an addition. The Commissioner of Income-Tax (Appeals) [CIT(A)] deleted this addition, allowing the assessee's appeal. The Revenue is aggrieved by the CIT(A)'s order and has filed this appeal before the Income Tax Appellate Tribunal (ITAT).

What were the issues?

1. Whether the CIT(A) erred in deleting the addition of Rs. 1,01,11,000 made by the AO under section 69A as unexplained cash deposits, when the assessee failed to provide satisfactory explanations and compliance during assessment proceedings? (Question of law and fact, concerning Section 69A). Assessee's Contention: The assessee supported the order of the CIT(A) but could not controvert the Revenue's submissions regarding procedural violations. The assessee also filed additional evidence before the ITAT. Revenue's Contention: The Revenue argued that the assessee was non-responsive to notices issued by the AO. The CIT(A) reversed the AO's addition based on additional evidences filed under Rule 46A without giving the AO an opportunity to examine them, violating Rule 46A(3). The Revenue proposed remanding the case back to the AO for proper adjudication and verification of evidences.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 142(1),Section 133(6),Section 69A,Section 46A(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, INDORE BENCH, INDORE

Before: SHRI B.M. BIYANI

For Appellant: Shri Ranjan Agrawal, AR
For Respondent: Shri Ashish Porwal, Sr. DR
Hearing: 10.02.2025Pronounced: 25.02.2025

आदेश/ O R D E R

Per B.M. Biyani, A.M.:

1.

Feeling aggrieved by order of first appeal dated 28.08.2023 passed by learned Commissioner of Income-Tax (Appeals)-NFAC, Delhi [“CIT(A)”] which in turn arises out of assessment-order dated 26.12.2019 passed by learned DCIT/ACIT-2(1), Indore [“AO”] u/s 143(3) of Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2017-18, the revenue has filed this appeal.

2.

The background facts leading to present appeal are such that the assessee-individual filed return of income of AY 2017-18 declaring a total

Page 1 of 4 examine (i) cash deposits during the year, (ii) cash withdrawals, and (iii) deduction against income from other sources. The AO issued notices u/s 143(2)/142(1) which remained uncompiled by assessee. The AO also made it clear to assessee that failure to comply with notices would invite best judgement assessment even then there was no response from assessee.

Ultimately, the AO gave one more chance to assessee to which the assessee filed part reply on 20.11.2019. Thereafter, vide notice dated 04.12.2019, the AO again asked assessee to explain as to why the cash deposited in Bank A/c be not considered as unexplained money u/s 69A if no compliance is made to establish source of cash deposits but still the assessee failed to comply with this notice also. Ultimately, from the Bank Statements called from different banks u/s 133(6), the AO found that a total of Rs. 1,13,11,000/- was deposited in different banks during the previous year 2016-17. Accordingly, the AO treated deposit of Rs. 1,01,11,000/- as unexplained after giving credit of cash withdrawal of Rs. 12,00,000/- made by assessee from bank on 08.11.2016 and made addition of Rs. 1,01,11,000/- u/s 69A. Aggrieved, the assessee carried matter in first- appeal.

3.

During first-appeal, the assessee filed submission which is re- produced by CIT(A) in Para 4 of impugned order. The assessee also filed additional evidences in terms of Rule 46A of Income-tax Rules, 1962. The Page 2 of 4 CIT(A), the revenue has filed this appeal before us.

4.

We have heard learned Representatives of both sides and carefully perused the orders of lower-authorities. Ld. DR for revenue submitted that the case of assessee was selected for limited scrutiny to examine three points one of which was “Cash deposit during the year”. During scrutiny proceeding, the assessee has not responded to the notices of AO. Only at last the assessee filed one reply which was also found by AO as part reply.

In the interest of justice, the AO again provided an opportunity to assessee vide notice dated 04.12.2019 to explain the source of cash deposit with a clear indication that the cash deposited would be treated as unexplained money u/s 69A in case of non-compliance but the assessee still remained non-response. In these circumstances, the AO treated the cash deposited in Bank A/c as unexplained and made addition. During first-appeal, the CIT(A) has reversed AO’s action and given relief to assessee on the basis of additional evidences without giving any opportunity to the AO to examine those evidences which is a violation of Rule 46A(3) of Income-tax Rules, 1962. That apart, the Ld. AR has also filed some more additional evidences before ITAT also in a separate “Paper-Book-B”. Ld. DR submitted that the only course available to this Tribunal in these facts, is to remand this case back to the lower-authorities for an apt adjudication. Ld. DR also proposed that it would be better to restore this case at the level of AO so that the AO can adequately verify the evidences of assessee and take a proper decision.

Page 3 of 4 controvert the submission as well as proposal of Ld. DR. Faced with this situation and taking into account the submissions of Ld. DR, we are inclined to remand this case back to the file of AO for a detailed examination of assessee’s evidences and thereafter passing an apt order. Needless to mention that the AO shall give necessary opportunities to assessee which the assessee shall avail without seeking unnecessary adjournments.

Ordered accordingly.

5.

Resultantly, this appeal is allowed for statistical purpose.

Order pronounced by putting on notice board as per Rule 34 of ITAT Rules, 1963 on 25/02/2025

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