ITO Vs S3 Tradecom Pvt. Ltd (ITAT Ahmedabad)
The Income Tax Appellate Tribunal (ITAT) in Ahmedabad has allowed an appeal by the Income Tax Department and sent back the case of S3 Tradecom Pvt. Ltd. to the Commissioner of Income Tax (Appeals) for a fresh hearing. The case involves an addition of Rs. 99,50,160 to the company’s income, which the Assessing Officer (AO) had deemed as unexplained cash deposits under Section 69A of the Income Tax Act, 1961. The ITAT’s decision was based on a procedural lapse: the CIT(A) had passed an order in favor of the company without obtaining a remand report from the AO, despite the fact that crucial information from a bank was still pending.
The dispute began during the assessment proceedings for the 2017-18 financial year, a period marked by demonetisation. The AO had sought various details from S3 Tradecom Pvt. Ltd., including an explanation for large cash deposits, particularly a sum of Rs. 1,14,76,410 deposited during the demonetisation period. The AO noted that the company’s responses were vague and lacked supporting documentation. Further examination revealed that a portion of the cash deposits, specifically Rs. 12,57,000 in a YES Bank account, consisted of old demonetised notes, and the company failed to substantiate the source of a total of Rs. 99,50,160. Consequently, the AO added this amount to the company’s taxable income, concluding that the company had not discharged its burden of proof.
