2016 (8) TMI 407 - AT - Income Tax

Additions on account of cash and credit deposits into the Bank account - Held that - The assessee has regularly deposited the amounts into these two bank account and simultaneously making withdrawals on regular basis. In view of the submissions of the ld.AR and bank statements of the assessee, we find that the assessee is a small entrepreneur who deposited the cash and cheques into his bank account and also made withdrawals regularly for the purpose of business. We further find from the records that the AO made assessment u/s 144 of the Act also and assessee could not appear before the AO to explain the deposits made therein and cash withdrawn from the bank accounts. We, therefore, are of the considered view that ends of justice would meet if the case of the assessee is restored back to the file of the AO to decide afresh after allowing the opportunity of being heard to the assessee, and no prejudice would be caused to the revenue thereby. Accordingly, we set aside the order of ld CIT(A) and restore the case back to the file of the AO. The assessee is also directed to produce relevant supporting documents before the AO and co-operate with the AO for speedy disposal of the issue. - Decided in favour of assessee for statistical purposes.

Summary

Issues:
Challenge to addition of unexplained cash deposits in bank account during assessment year 2009-10.

Analysis:
1. The appellant contested the addition of cash and credit deposits in the bank account totaling &8377; 18,67,120/- as unexplained. The AO based the addition on the Annual Information Return filed by ICICI Bank Ltd, noting discrepancies in the disclosed income. The appellant failed to provide satisfactory explanations despite multiple opportunities.

2. The appellant argued before the ld.CIT(A) that the bank account was disclosed in the income tax return and the deposits were business receipts from garment cutting work. However, the ld.CIT(A) dismissed the appeal, emphasizing the lack of corroborative evidence for the job work receipts and payments, sustaining the AO's decision.

3. The appellant further contended that the ld.CIT(A) ignored crucial submissions and failed to address the disclosure of the bank account in the return. The appellant explained the deposits as business receipts and withdrawals for labor charges. The total receipts were &8377; 20,98,720/-, with job work charges of &8377; 14,68,340/-, including expenses for the appellant's industrial unit.

4. The ld.DR objected to the appellant's arguments, highlighting the appellant's non-appearance before the AO despite opportunities. The ld.DR supported the ld.CIT(A)'s decision and urged to dismiss the appeal.

5. The ITAT, after considering submissions, bank statements, and the appellant's business nature, observed regular deposits and withdrawals for business purposes. Given the lack of explanation due to non-appearance before the AO, the ITAT set aside the ld.CIT(A)'s order, directing the case back to the AO for a fresh assessment with the appellant's cooperation and relevant documents.

6. Consequently, the ITAT allowed the appeal for statistical purposes, emphasizing the need for the AO to reevaluate the case with the appellant's participation and supporting documentation to ensure a just decision without prejudicing the revenue.