ITAT Mumbai remands Section 68 addition case after CIT(A) fails to consider assessee's submissions properly

ITAT Mumbai allowed the assessee's appeal regarding Section 68 addition of Rs. 1.80 crores received from UAE party in HSBC account. The assessee failed to establish identity, creditworthiness, and genuineness of the loan to AO's satisfaction during reassessment proceedings. However, CIT(A) passed appellate order without considering assessee's submissions, written statements, and judicial pronouncements. ITAT held CIT(A)'s non-consideration of submissions rendered the order unsustainable in law. Matter remanded to CIT(A) to consider all submissions, grant hearing opportunities, and decide on reassessment legalities and addition merits.

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Issues:
1. Failure to consider submissions by the Appellant by the CIT(A).
2. Addition to total income under Section 68 of the Act.
3. Refundable deposit wrongly treated as income.

Analysis:

Issue 1: Failure to consider submissions by the Appellant by the CIT(A)
The Appellant contended that the CIT(A) did not properly consider the submissions made by the Appellant before passing the order. The Appellant had submitted responses on the e-portal on 7th June 2023, which were not acknowledged by the CIT(A) in the order. The Appellant argued that the CIT(A) erred in dismissing the appeal without taking cognizance of the submissions made. The ITAT found merit in the Appellant's argument and held that the CIT(A) should have considered all submissions before passing the order. Consequently, the ITAT set aside the issue back to the CIT(A) for reconsideration, directing the CIT(A) to take into account all submissions made by the Appellant and provide further opportunities for a fair hearing.

Issue 2: Addition to total income under Section 68 of the Act
The Assessing Officer and the CIT(A) had added Rs. 1.80 Crores to the total income of the Appellant under Section 68 of the Income Tax Act. The Appellant argued that the statement of the bank account should not be considered as books of account and hence does not fall within the scope of Section 68. The ITAT observed that the Assessing Officer and the CIT(A) erred in treating the bank statement as books of account. The ITAT agreed with the Appellant's contention and held that the addition made by the authorities was not in compliance with the provisions of the Act. Therefore, the ITAT directed that the addition to the total income should be set aside.

Issue 3: Refundable deposit wrongly treated as income
The Assessing Officer and the CIT(A) considered a refundable deposit of Rs. 1.80 Crores received by the Appellant as income. The Appellant argued that the amount received was a refundable deposit and should not be treated as income. The ITAT noted that the authorities failed to properly examine the facts and circumstances of the case before considering the deposit as income. The ITAT agreed with the Appellant that the order passed by the authorities was bad in law. Consequently, the ITAT directed that the order treating the refundable deposit as income should be set aside.

In conclusion, the ITAT allowed the appeal of the Appellant on all grounds, directing the CIT(A) to reconsider the case, consider all submissions made by the Appellant, and provide further opportunities for a fair hearing.

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