ITO Vs Moti Lal And Sons (ITAT Lucknow)
The Revenue appealed before the ITAT Lucknow against the order of the Commissioner of Income Tax (Appeals) [CIT(A)] for Assessment Year 2017-18, whereby the CIT(A) deleted an addition of ₹1,11,02,500 made under section 69A of the Income-tax Act. The Revenue primarily contended that the CIT(A) had admitted additional evidence without obtaining a remand report under Rule 46A of the Income-tax Rules.
During the appeal, the assessee also filed an application under Rule 27 of the ITAT Rules seeking to raise additional grounds challenging the validity of the reassessment proceedings under section 147. The assessee contended that the reassessment was based on incorrect facts, borrowed satisfaction, and lack of independent application of mind by the Assessing Officer (AO), rendering the proceedings void. It also argued that section 69A was inapplicable because the cash deposits were duly recorded in its books of account.
The reassessment originated after the AO received information regarding cash deposits in a Punjab National Bank account. Initially, information suggested that the account belonged to an individual, who clarified during his own assessment that the account actually belonged to the assessee partnership firm. The AO found that cash deposits amounting to ₹1,11,02,500 had been made during the relevant financial year but were allegedly not reflected in the income tax return. A notice under section 148 was issued, followed by notices under section 142(1). As the assessee did not respond, the AO obtained the bank statement under section 133(6) from the bank and completed the reassessment under sections 147 and 144, treating the entire cash deposits of ₹1,11,02,500 as unexplained money under section 69A.
