2024 (10) TMI 536 - AT - Income Tax

Tribunal Orders Fresh Assessment in Tax Case, Stresses Fairness & Evidence Review for Unexplained Deposits in Demonetization.

Habibbhai Adambhai Maniya Versus Income Tax Officer, Ward-1, Nadiad

The Tribunal ruled in favor of the assessee, highlighting procedural fairness and the necessity of considering all evidence in tax assessments. It ... Unexplained cash found deposited in his bank account during demonetization period - HELD THAT:- Assessee has made out a fairly good case before us that the ld. CIT(A) has reiterated the order of the AO without considering all the facts and material before him. As rightly pointed out by assessee, CIT(A) ought to have considered the audited financial results of the assessee, the Tax Audit Report of the assessee and the copy of bank statements collected by the AO during assessment proceedings for adjudicating the issue of cash found deposited in the bank account of the assessee, even if none appeared on behalf of the assessee. Having failed to do so and the assessee having now filed before us all evidences in support of his claim of the cash deposited in the bank account being from explained sources, it is in the interest of justice that the issue be reconsidered by the Revenue Authorities after due verification of all the claims made by the assessee. We, therefore, restore the issue back to the AO to decide the issue of cash deposited in the bank account of the assessee afresh after giving due opportunity of hearing to the assessee and after considering all explanation and evidences filed by the assessee in this regard. The grounds raised by the assessee are accordingly allowed for statistical purposes. Issues:Appeal against CIT(A)'s order under Section 250 of the Income-tax Act, 1961 for AY 2017-18 - Addition made to income on account of unexplained cash deposits during demonetization period.Analysis:The appeal was filed against the CIT(A)'s order confirming the addition to the income of the assessee due to unexplained cash deposits during the demonetization period. The assessee contended that the CIT(A) had passed the order ex parte without following the principles of natural justice. The assessee argued that the cash deposits were from genuine sources related to the business activities and had been properly explained. The Assessing Officer had made the addition without satisfactory explanations regarding the source of the cash. The assessee provided evidence, including audited financial results, tax audit report, and bank statements, to support the claim that the cash deposits were from legitimate business transactions. The CIT(A) upheld the Assessing Officer's decision without considering the evidence presented. The Tribunal agreed with the assessee's contention that the issue needed reconsideration. The Tribunal emphasized that the CIT(A) should have evaluated all the evidence before making a decision. As the assessee had now submitted additional evidence supporting the source of cash deposits, the Tribunal decided to send the issue back to the Assessing Officer for a fresh assessment. The Tribunal instructed the Assessing Officer to review the evidence provided by the assessee and give a fair opportunity for explanation before making a decision. The grounds raised by the assessee were allowed for statistical purposes, and the appeal was allowed accordingly.In conclusion, the Tribunal found in favor of the assessee, emphasizing the importance of considering all evidence before making decisions in tax matters. The case highlighted the need for fair assessment procedures and adherence to principles of natural justice. The decision to send the issue back for reconsideration aimed to ensure a thorough examination of the facts and evidence presented by the assessee.