Harekrishna Medical Store Vs ITO (ITAT Ahmedabad)
ITAT Ahmedabad held that addition towards entire cash deposits during demonetization period by passing ex-parte order due to non-compliance by assessee without examining on merits unjustified. Accordingly, matter restored back to AO for fresh examination.
Facts- The assessee is a partnership firm running a medical store. In the course of assessment, the AO found that the assessee had made cash deposit of Rs.10,90,000/- during demonetization period. In the course of assessment, no compliance was made by the assessee in response to the notices issued by the AO and the assessment was completed ex-parte u/s.144 of the Act on 23.12.2019 at total income of Rs.59,52,030/.
The First Appellate Authority dismissed the appeal. Being aggrieved, the present appeal is filed by the assessee.
Conclusion- Held that even if there was no compliance on the part of the assess, the AO was not correct in treating the entire credit entries in the bank account as income of the assessee without considering the debit entries. The Ld. CIT(A) too had dismissed the appeal of the assessee without giving any finding on the merit of the case. It is found that the Ld. CIT(A) had allowed three opportunities to the assessee on 29.01.2021, 05.09.2023 & 14.09.2023 in response to which, no compliance was made by the assessee. Since, the matter was not properly examined on merits by the AO and not examined, at all, by the Ld. CIT(A), we deem it proper to set aside the matter to the file of the AO to allow another opportunity to the assessee to explain the cash deposits and credit entries as appearing in the bank statement. The AO is directed to re-examine the matter after allowing a proper opportunity of being heard to the assessee. The assessee is also directed to make compliance before the AO and not to seek unnecessary adjournment. If the assessee fails to comply, the AO will be free to pass the order in the matter as deemed fit after considering the entire transactions of the bank account and the nature of business of the assessee.
