The Income Tax Appellate Tribunal, Delhi ruled that sales in stock on cash basis would hold true as they appear on the recording sheets; so no legitimacy for additional charge under section 69A for the unexplained cash deposits by the assessing officer.
The Tribunal found that the ex-parte order issued by the AO and upheld by the CIT(A) was not comprehensive enough inasmuch as it did not address all documentary proofs submitted by the assessee.
The Tribunal noted that cash sales of milk were not verified by the AO while he or she also did not appreciate what was presented before him/her on such information.
The Tribunal emphasized that all evidence needs to be examined carefully because according to the assessee, cash deposits arise from documented sales recorded in book accounts.
Facts
According to his e-filed original income tax return for the Assessment Year 2017-18 dated 31st October, 2017, Brijendra Kumar Yadav declared a total income of ₹12,25,280. Due to substantial cash deposits, which totaled ₹2,08,13,500 during the demonetization period on the assessee’s bank accounts, it was selected for scrutiny using Centralized Automated Scrutiny Selection (CASS) system.
The Assessing Officer (AO) issued notices under Sections 142(1) and 143(2) of the Income-tax Act, 1961 seeking an explanation regarding the cash deposits but the assessee did not reply.
Therefore, he issued a show-cause notice that too remained unanswered. Subsequently he made an ex-parte order under Section 144 of the Act treating these cash deposits as unexplained within the limits of section 69A and thus taxing them at a higher rate according to section 115BBE.
Submissions
The appellant contended that the CIT(A) erred in upholding the addition made under Section 69A arguing that the cash deposits were from sale of milk which had been recorded in books of accounts.
The appellant argued that since AO accepted sales and taxed income accordingly these deposits could not be treated as unexplained income.
Conclusion
The tribunal commanded AO to reassess only after comprehensive verification of the documentary evidence submitted by the assessee, and provide him a reasonable chance to state his case.
The bench instructed the taxpayer to help out completely with the taxman in the reassessment process. As a result therefore, the appeal was approved for statistical purposes directing that it be resolved depending on its merits in accordance with sections 69A, 115BBE and 144 of Income Tax Act 1961.
Case Details
Case Title – Brijendra Kumar Yadav vs ITO Ward 44 (4) Delhi
Appeal No – ITA No 766/DEL/2024
Assessment year – 2017- 18
Courts Jurisdiction – ITAT Delhi
Judges – Shri Saktijit Dey, Vice President and Shri S Rifaur Rahman, Accountant member
Date of Pronouncement – 23-08-2024
