This article explores the ITA No. 3685/DEL/2019 case involving Narender Singh Chandila against the Income Tax Officer, Ward 2(1), Faridabad. The key issue revolves around the assessment of unexplained cash deposits amounting to Rs. 42,21,319 for the assessment year 2015-16.
Narender Singh Chandila, the appellant, faced an addition to his income by the tax authorities, which was confirmed by the CIT(A) on the basis of unexplained cash deposits in his bank accounts. The appellant contested these additions, arguing that the deposits were related to his business of plot bookings, and were a mix of received and refunded booking amounts.
The case was selected for scrutiny due to large deposits noted in the appellant’s bank accounts. Despite the appellant’s explanations and supporting documents, the Assessing Officer (AO) added the unexplained sum to the appellant’s income. The CIT(A) upheld this decision, leading to the appeal to the Income Tax Appellate Tribunal (ITAT).
The appellant contended that the cash transactions were business-related, associated with the booking and cancellation of plots. He provided detailed documentation, including names and details of the transactions. However, the AO dismissed these documents as insufficient, and the CIT(A) concurred with the AO’s findings. The appellant argued that this was a misunderstanding of the facts and submitted additional evidence.
The ITAT found merit in the appellant’s arguments and observed procedural lapses in how the lower authorities handled the submitted evidence. Consequently, the ITAT remanded the case back to the CIT(A) for a fresh examination, instructing a thorough review of all evidence and proper verification of the appellant’s claims.
The ITAT’s decision to remand the case underscores the importance of detailed examination and proper consideration of evidence in tax assessments. This case serves as a critical reference for taxpayers and practitioners dealing with similar disputes over the characterization of cash deposits and their linkage to business activities.
Order pronounced by the ITAT on January 7, 2021, sheds light on the procedural and evidential aspects critical in tax litigation.
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