2021 (7) TMI 1228 - AT - Income Tax

Assessment u/s. 144 - Cash deposits into Citizen Co-operative bank account as income of the assessee under the head 'income from other sources' - HELD THAT - AO has proceeded on the assumption that the cash deposits are after the death of assessee's father, and the assessee could not file all the details before the AO and the CIT(A), we deem it fit and proper to remit the issue to the file of the AO with a direction that AO shall reconsider the issue afresh in light of material filed by the assessee in accordance with law. The assessee is directed to cooperate with the AO by giving all details, failing which, AO can take necessary decision as per law.

Summary

Issues:
Assessment of unexplained cash deposits as income from other sources under section 144 of the Income Tax Act, 1961 for A.Y. 2014-15.

Detailed Analysis:

1. Assessment Proceedings and CIT(A) Order:
The assessee's return of income for A.Y. 2014-15 declared a total income of ?2,28,400 and was selected for limited scrutiny to verify cash deposits exceeding turnover. The AO completed assessment under section 144, treating cash deposits of ?58,80,000 into Citizen Co-operative bank account as income from other sources. The CIT(A) confirmed this addition, leading to the appeal before the ITAT.

2. Grounds of Appeal:
The grounds of appeal raised various contentions, including challenging the addition of ?58,80,000 as unexplained cash deposits, arguing that the deposits were not chargeable to tax, and highlighting the failure to consider explanations regarding the source of deposits, such as agricultural income used for medical treatment. The appellant also contested the interest levied under sections 234A and 234B of the Act.

3. Arguments and Remittance to AO:
The appellant, engaged in coconut business, explained that cash deposits originated from crop sales for the treatment of the father, who passed away in May 2014, contrary to the AO's assumption. The appellant requested a reconsideration of the issue, proposing that if treated as belonging to the assessee, the deposits should be considered part of turnover and taxed as business income. The ITAT deemed it appropriate to remit the issue to the AO for fresh consideration based on the material provided by the assessee.

4. Decision and Conclusion:
Given the discrepancies in the timing of cash deposits concerning the father's demise and the incomplete information submitted, the ITAT directed the AO to reevaluate the issue with the additional details. The appellant was instructed to cooperate with the AO for a fair assessment. Consequently, the appeal was treated as allowed for statistical purposes, emphasizing the need for a thorough reconsideration by the AO in accordance with the law.

In conclusion, the judgment highlights the importance of substantiating claims and providing comprehensive information during assessment proceedings to ensure a fair and accurate determination of tax liabilities, underscoring the significance of cooperation between the taxpayer and tax authorities for a just resolution of disputes.