ITAT Overturns Unexplained Money Addition; Remands Case for Further Review on Demonetization Deposits.

The ITAT set aside the Assessing Officer's addition of Rs. 14,09,000/- as unexplained money under section 69A, deposited during the demonetization period. The Tribunal emphasized the necessity for the assessee to be given an opportunity to explain the receipts. The matter was remanded to the Assessing Officer for further verification, allowing the appeal for statistical purposes.

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Issues:
The judgment involves issues related to non-filing of income tax return, assessment under section 144 of the Income Tax Act, 1961, addition of unexplained money under section 69A, and the authority's justification for making and sustaining the addition.

Non-filing of Income Tax Return:
The individual assessee did not file the return of income for the assessment year 2017-18 within the due date, prompting the Assessing Officer to issue a notice under section 142(1) of the Act. Subsequently, the assessment was completed under section 144, determining the total income and making additions based on estimated business income and unexplained money under section 69A.

Assessment under Section 144:
The Assessing Officer completed the assessment under section 144 of the Act, determining the total income of the assessee by making additions for estimated business income and unexplained money deposited during the demonetization period. The Assessing Officer added Rs. 8,94,076/- as business income and Rs. 14,09,000/- as unexplained money under section 69A.

Addition of Unexplained Money under Section 69A:
The Assessing Officer added Rs. 14,09,000/- under section 69A of the Act, citing that the amount was deposited during the demonetization period and remained unexplained by the assessee. The Tribunal found that there was no allegation of deposit in specified bank notes and that the addition was not sustainable based on the notification allowing specified bank notes to be deposited during demonetization.

Justification for Addition by Authorities:
The authorities justified the addition of unexplained money by stating that the assessee failed to appear and explain his case despite notices issued to him. The Tribunal, however, set aside the order and restored the issue of the addition of Rs. 14.09 lakhs to the file of the Assessing Officer for verification, emphasizing the need to afford the assessee an opportunity to explain the receipts during the demonetization period.

In conclusion, the Tribunal allowed the appeal of the assessee for statistical purposes, highlighting the importance of providing the assessee with an opportunity to address the issues raised regarding the addition of unexplained money under section 69A.

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