ITAT upholds CIT(A)'s decision on share trading profit, remands cash deposit addition for fresh consideration

The ITAT upheld the deletion of the addition of share trading profit by the CIT(A), citing lack of opportunity for explanation by the AO. The Revenue's appeal was dismissed as the deletion was deemed lawful. Regarding the addition of cash deposited in the bank account, the ITAT found the CIT(A) at fault for not providing reasons for deletion as required by law. The matter was remanded to the AO for fresh consideration with directions to provide the appellant with relevant books and a hearing. The Revenue's appeal was partially allowed.

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Issues:
1. Addition made on account of share trading profit.
2. Addition made on account of cash deposited in the bank account.

Issue 1: Addition made on account of share trading profit
The appeal was filed by the Revenue against the order of CIT(A)-II, Indore, for the assessment year 2003-04. The addition of share trading profit amounting to Rs. 5,72,478/- was deleted by the CIT(A) based on the argument that the appellant had been investing in shares for many years, and the shares sold were explainable. The CIT(A) observed that the AO did not confront the information collected behind the appellant's back and did not provide an opportunity for explanation, violating principles of natural justice. The deletion was upheld, allowing the AO to take further action if any capital gain income was involved. The Revenue appealed this deletion, but the ITAT found no infirmity in the CIT(A)'s decision, stating that the deletion was as per law, and dismissed the Revenue's appeal.

Issue 2: Addition made on account of cash deposited in the bank account
The CIT(A) deleted the addition of Rs. 4,00,000/- as income from other activities related to bank deposits and withdrawals in bank accounts by family members. The AO had made the addition without providing any details or reasons, which was contested by the appellant. The AO did not consider the appellant's request to gather details from the department's possession of books and made the addition arbitrarily. Since the AO did not provide any specifics regarding the alleged deposits, the ITAT held the addition to be baseless and directed its deletion. However, the ITAT found fault with the CIT(A) for not providing reasons for the deletion, as required by Section 250(6). The order of the CIT(A) was set aside, and the matter was restored to the AO for fresh consideration, with directions to provide the appellant with a copy of the books for substantiating the cash deposits and to allow a hearing before deciding the issue. Ultimately, the appeal of the Revenue was allowed in part.

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