2022 (6) TMI 1275 - AT - Income Tax

Appeal allowed for statistical purposes, stressing evidence & cooperation in tax proceedings. Compliance & engagement key. Remanded for fresh decision.

The ITAT allowed the appeal for statistical purposes, emphasizing the importance of providing adequate evidence and cooperation in tax proceedings to ... Addition u/s 69A - unexplained cash deposits - as submitted deposits made in to the bank out of collections from various members of Co-operative Credit Society - HELD THAT:- We find that before both the AO as well as before the Ld. CIT(A), the explanation of the assessee in respect of cash deposits is not on record due to non-compliance on the part of the assessee. Before us, the Ld. counsel of the assessee has given an undertaking that assessee is willing to submit necessary evidence in support of source of cash deposits and co-operate in appellate proceedings before the Ld. CIT(A). Thus in the interest of substantial justice, we restore this matter back to the file of the Ld. CIT(A) for deciding afresh in accordance with law after providing adequate opportunity of being heard to both the assessee as well as the Assessing Officer. The grounds raised by the assessee are accordingly, allowed for statistical purposes. Issues:1. Delay in filing the appeal2. Addition of cash deposits under section 69A of the Income Tax Act, 19613. Failure to prove the genuineness of transactions and source of cash depositsAnalysis:Issue 1: Delay in filing the appealThe appeal was filed by the assessee against the order passed by the National Faceless Appeal Centre (NFAC) for assessment year 2017-18. The assessee claimed a delay in filing the appeal due to the pandemic environment in Mumbai. The Assessing Officer erred in making an addition of Rs. 33,33,677/- on account of cash deposits. The delay in filing the appeal was condoned by the ITAT as the assessee provided a reasonable explanation for the delay, which fell within the Covid-19 Pandemic period. The appeal was admitted for adjudication after considering the circumstances of the delay.Issue 2: Addition of cash deposits under section 69AThe Assessing Officer observed that the assessee, a Credit Co-operative Society, deposited cash of Rs. 33,33,677/- during the demonetization period but did not file an Income Tax Return for the assessment year. Consequently, the Assessing Officer made an addition for the cash deposits and interest credited by the bank. The Ld. CIT(A) upheld the additions as the assessee failed to file a return of income and provide necessary evidence to support the source of cash deposits. The ITAT noted that the explanation of the assessee was not on record due to non-compliance, and the Ld. counsel assured that the assessee was willing to submit evidence and cooperate in the appellate proceedings. The matter was restored back to the file of the Ld. CIT(A) for fresh consideration, providing an opportunity for both parties to be heard.Issue 3: Failure to prove the genuineness of transactions and source of cash depositsThe Ld. CIT(A) dismissed the grounds of appeal related to interest income and cash deposits, citing the failure of the assessee to prove the genuineness of transactions and the source of cash deposits. The Ld. counsel of the assessee requested another opportunity to explain the source of cash deposits before the Ld. CIT(A). The ITAT allowed the appeal for statistical purposes, emphasizing the need for the assessee to provide necessary evidence and cooperate in the proceedings. The matter was remanded back to the Ld. CIT(A) for a fresh decision in accordance with the law, ensuring a fair opportunity for both parties to present their case.In conclusion, the ITAT allowed the appeal for statistical purposes, highlighting the importance of providing adequate evidence and cooperation in tax proceedings to establish the genuineness of transactions and sources of income. The judgment emphasized the need for parties to comply with procedural requirements and engage actively in the appellate process to ensure a fair and just resolution.