ITAT deletes section 69A addition on unexplained cash deposits after AO accepted similar explanation in previous year

The ITAT Ahmedabad allowed the assessee's appeal against an addition under section 69A made in an exparte assessment order. The AO had added unexplained cash deposits, claiming scrap sales vouchers were fabricated as they were in similar handwriting and not correlated with bank statements. However, the tribunal noted that for assessment year 2017-18, the AO had accepted the assessee's explanation for similar deposits and passed a nil demand order. The assessee had offered 8.35% profit on sales turnover, exceeding the 8% prescribed under section 44AD. The tribunal deleted the addition, ruling in favor of the assessee.

---

---

Issues Involved:
The appeal against the appellate order confirming addition under section 69 of the Income Tax Act, 1961 for the Assessment Year 2011-12.

Summary:
The appeal was filed due to a delay of 8 days, which was condoned upon explanation by the Assessee. The case involved cash deposits made by the Assessee in the business of buying and selling scraps. The Assessing Officer treated the cash deposits as unexplained income under section 69 of the Act, leading to an exparte assessment order.

The Assessee filed an appeal before the Commissioner of Income Tax (Appeals) providing detailed explanations, but the addition was confirmed based on discrepancies in the sales records. The Assessee then appealed to the Appellate Tribunal raising multiple grounds challenging the addition made under section 69 of the Act.

During the proceedings, the Assessee presented documents and assessment orders from previous years to support their case. The Tribunal observed that the assessment order was exparte, notices were served after the hearing dates, and discrepancies in the sales records were not substantial. The Tribunal also noted that the Assessee had complied with other tax provisions in subsequent years, offering a higher profit percentage than required under section 44AD.

As a result, the Tribunal allowed the appeal, concluding that the addition made by the Assessing Officer under section 69 was not justified and should be deleted.

Judgment Highlights:
- Delay of 8 days in filing the appeal was condoned.
- Cash deposits by the Assessee were treated as unexplained income under section 69 of the Act.
- Discrepancies in sales records led to the addition being confirmed by the Commissioner of Income Tax (Appeals).
- Tribunal found the assessment order to be exparte and discrepancies not substantial, leading to deletion of the addition under section 69.

This judgment highlights the importance of proper assessment procedures and the need for substantial evidence before confirming additions under relevant sections of the Income Tax Act.

---