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of <h1>Tax Appeal: ITAT modifies addition to income under Income Tax Act, emphasizes fair opportunity for assessee</h1> <h3>Liyakat Ibrahim Shaikh Versus ITO-24 (3) (3), Mumbai</h3> The Assessing Officer added unexplained cash deposits to the assessee's income under section 68 of the Income Tax Act. The Commissioner of Income Tax ... Unexplained cash credits - Held that:- AO has made the addition under section 68 of the IT Act. However, learned CIT-A has modified the order and upheld the addition under section 69A. In this scenario it was incumbent upon the CIT-A who give proper notice and opportunity to the assessee regarding the intention to modify the section under which the addition was proposed. The interest of justice will be served if the matter is remitted to the file of the assessing officer. The assessing officer is directed to consider the issue afresh after giving proper opportunity of being heard to the assessee. Assessee stands allowed for statistical purposes Issues:1. Addition of unexplained cash deposits by the Assessing Officer.2. Confirmation of the addition by the Commissioner of Income Tax (Appeals).3. Verification of claims regarding contra cash deposits, unsecured loans, and dishonored cheques.4. Modification of the order from section 68 to section 69A of the Income Tax Act.5. Appeal before the ITAT challenging the Commissioner's order.Analysis:Issue 1: Addition of unexplained cash depositsThe Assessing Officer added &8377; 23,95,265 as unexplained cash credits due to discrepancies in the assessee's bank account. The assessee failed to provide satisfactory explanations for the cash deposits, leading to the addition under section 68 of the Act.Issue 2: Confirmation of the additionThe Commissioner of Income Tax (Appeals) upheld the addition after noting the lack of proper documentation and explanations from the assessee. The Commissioner found the explanations provided by the assessee to be insufficient and confirmed the addition of &8377; 23,95,265.Issue 3: Verification of claimsThe assessee's claims regarding contra cash deposits, unsecured loans, and dishonored cheques were scrutinized. The Commissioner found discrepancies in the explanations provided by the assessee, especially regarding unsecured loans from family members and dishonored cheques, leading to the confirmation of the majority of the addition.Issue 4: Modification of the orderThe Commissioner modified the order, changing the section under which the addition was confirmed from section 68 to section 69A of the Income Tax Act. The ITAT noted this modification and highlighted the necessity for proper notice and opportunity to the assessee before such changes are made.Issue 5: Appeal before the ITATThe ITAT allowed the appeal for statistical purposes, remitting the matter back to the assessing officer for reconsideration. The ITAT emphasized the importance of providing the assessee with a fair opportunity to present their case and be heard before final decisions are made.This comprehensive analysis outlines the key issues raised in the judgment, detailing the sequence of events, assessments made by different authorities, and the final decision by the ITAT, ensuring a thorough understanding of the legal complexities involved in the case.
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