Nagar Panchayat Vs ACIT (ITAT Jabalpur)
Income Tax Appellate Tribunal (ITAT), Jabalpur Bench, has remanded the case of Nagar Panchayat, Banda, back to the Assessing Officer (AO) for a fresh assessment. This decision comes after the Nagar Panchayat challenged an addition of ₹68.21 lakhs to its income under Section 69A of the Income-tax Act, 1961, which was made due to cash deposits in its bank account. The local authority asserted that these deposits stemmed from its statutory municipal functions, such as tax collection and lease rentals, and thus were exempt from income tax under Section 10(20) of the Act.
The dispute originated from reassessment proceedings initiated by the Deputy Commissioner of Income Tax, Circle-Sagar, for the assessment year 2012-13. The AO noted that the Nagar Panchayat had not filed its return of income for the said year. Information gathered indicated that the assessee had deposited ₹68,21,182/- in its savings account with Madhyanchal Gramin Bank during the financial year 2011-12. Consequently, a notice under Section 148 of the Income Tax Act was issued, followed by a notice under Section 133(6) to the bank, which confirmed the cash deposits.
Despite these notices, the Nagar Panchayat reportedly did not file a return of income or respond to subsequent show cause notices under Section 142(1). This non-compliance led the AO to add the entire amount of ₹68,21,182/- to the assessee’s income as unexplained money under Section 69A.
