ITAT Gives Assessee One More Chance on Demonetisation Cash Deposits, But With a Cost

ITAT Gives Assessee One More Chance on Demonetisation Cash Deposits, But With a Cost

The assessee filed his return of income for A.Y. 2017–18, declaring total income of Rs. 8.95 lakh. The case was selected for scrutiny to examine cash deposits made during the demonetization period. The Assessing Officer found that the assessee had deposited Rs. 47.81 lakh in cash across four bank accounts during the relevant period. As the explanation regarding the source of these deposits was not found satisfactory, the entire amount was treated as unexplained money under section 69A and added to the assessee’s income, resulting in an assessed income of Rs. 56.76 lakh.

The assessee’s appeal before the CIT(A), NFAC, was dismissed as no compliance was made during appellate proceedings. The assessee then filed a second appeal before the Tribunal with a delay of 551 days, explaining that multiple recovery proceedings before the Debt Recovery Tribunal and other courts had caused mental stress and prevented timely filing.

Main Issue: Whether the assessee deserved another opportunity to explain the source of cash deposits made during the demonetisation period, despite repeated non-compliance before the CIT(A).

ITAT Ruled: The Tribunal condoned the delay of 551 days after noting that the assessee was involved in multiple litigations before various forums, including the Debt Recovery Tribunal and High Court. On merits, the Tribunal observed that the assessee had been negligent and lethargic in not responding to multiple notices issued by the CIT(A) under the faceless appeal scheme. However, in the interest of justice, the Tribunal deemed it appropriate to grant the assessee one final opportunity to explain the cash deposits.

The matter was set aside to the file of the CIT(A) with a direction to allow one more opportunity to the assessee, subject to payment of costs of Rs. 10,000 to the Prime Minister’s National Relief Fund within 15 days. The Tribunal made it clear that if the assessee again failed to comply, the CIT(A) would be free to decide the matter on the basis of available material. The appeal was thus allowed for statistical purposes.

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