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Facts
The appellant, a small trader, filed a return for AY 2018-19 declaring an income of Rs. 4,58,860. During reassessment, the AO noted cash deposits in bank accounts exceeding reported sales by Rs. 20,01,166, which were treated as unexplained money under Section 69A. Further disallowances were made for sundry creditors and depreciation, leading to significant additions to income.
Held
The Tribunal considered the rival submissions and perused the orders of the CIT(A) and AO. In the interest of justice, the Tribunal decided to grant the assessee a final opportunity to present evidence and submissions before the CIT(A).
Key Issues
Whether the addition of cash deposits as unexplained income under Section 69A and disallowances for sundry creditors and depreciation were justified. Whether the assessee was given adequate opportunity of hearing before the CIT(A).
Sections Cited
147, 144, 144B, 148, 69A, 32
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Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI
Before: SHRI INTURI RAMA RAO & SHRI MANU KUMAR GIRI
आदेश / O R D E R
PER MANU KUMAR GIRI, JM:
This captioned Appeal filed by the Assessee is directed against the orders of the Ld. Commissioner of Income Tax (Appeals), NFAC, Delhi, [CIT(A)] dated 06.12.2024 for Assessment Year 2018-19.
The appellant is an individual and a small trader engaged in the pharmaceutical business. The impugned assessment order dated 21.03.2023 was passed u/s. 147 read with 144 and 144B of the Income-tax Act, 1961 by the Assessment Unit of the Income Tax Department.
In response to the notice issued under Section 148, the appellant filed his return of income for A.Y. 2018–19 on 13.06.2022 (Acknowledgement No. 666449890130622), declaring a total income of Rs.4,58,860/- and paid tax of Rs.15,126/-, including TDS of Rs.1,236/-.
During the reassessment proceedings, the Assessment Unit observed that the appellant had deposited cash amounting to Rs.17,85,380/- in his account with Karur Vysya Bank Ltd. and Rs.34,85,872/- in his account with South Indian Bank Limited.
According to the Assessing Officer (AO), the cash deposits exceeded the sales reported in the ITR by Rs.20,01,166/-, which was treated as unexplained money under Section 69A of the Act and added to the income.
Further, the AO made disallowances of Rs.3,39,012/- (being 20% of sundry creditors amounting to Rs.16,95,060/-) and Rs.4,12,593/- towards depreciation. Thus, total additions of Rs.7,51,605/- were made apart from the addition under Section 69A. The aggregate
The appellant contends that the addition under Section 69A is unsustainable and beyond jurisdiction, and that it violates principles of natural justice. Without prejudice, it is submitted that the bank statements obtained by the department indicate that sales through bank transactions amounted only to Rs.5,85,791/-, and the remaining turnover of Rs.52,70,086/- represented cash sales. It is claimed that any discrepancy arose due to a typographical error by the representative who filed the return.
It is further submitted that the outstanding balance of Rs.68,81,397/- in the bank cash credit account formed part of the sundry creditors totaling Rs.84,75,300/-, and the remaining Rs.15,93,903/- pertained to business loan creditors. The appellant also states that the depreciation statement had already been filed along with the return under Section 32 of the Act. Therefore, according to the appellant, Section 69A is not applicable, and the creditors’ balances and depreciation claims are duly explained in the return of income.
Aggrieved by the assessment order, the assessee preferred an appeal before the ld. CIT(A). The ld. CIT(A) passed an ex parte order, allegedly without providing adequate opportunity of hearing, and confirmed the additions made by the AO on account of non- compliance with notices. The assessee contends that he did not receive the notice of hearing.
The assessee has now filed an appeal before this Tribunal, seeking one more opportunity to substantiate the turnover, creditors’ balances, and other claims made in the return of income.
The ld. Departmental Representative (DR), on the other hand, supported the order of the ld. CIT (A) and prayed for dismissal of the appeal.
We have considered the rival submissions and perused the orders of the ld. CIT(A) and the AO. In the interest of justice, we are of the view that the assessee should be granted a final opportunity to present the necessary evidence and submissions before the ld. CIT(A). Accordingly, the impugned order is set aside and the matter is restored to the file of the ld. CIT(A) for fresh adjudication on merits. The ld. CIT(A) shall afford the assessee a reasonable opportunity of being heard. The assessee is directed to diligently
In the result, appeal filed by the assessee is allowed for statistical.