JB Dairy Farms Private Limited Vs ITO (ITAT Bangalore)
Income Tax Appellate Tribunal (ITAT) Bangalore recently allowed an appeal filed by JB Dairy Farms Private Limited, remanding a case concerning cash deposits made during the demonetization period back to the Assessing Officer (AO). The dispute centered on an addition of Rs. 1,06,16,000 under Section 69A of the Income Tax Act, 1961, treated as unexplained money. This amount represented cash deposits made by the dairy farm into its Syndicate Bank account during the financial year 2016-17, with Rs. 89,00,000 deposited during the demonetization period itself.
The AO had made the addition after concluding that the assessee failed to provide a plausible explanation for the source of these cash deposits. This assessment was made ex parte under Section 144 of the Act, as the assessee did not respond to notices issued under Section 142(1). The Commissioner of Income Tax (Appeals) (CIT(A)) upheld the AO’s order, citing the assessee’s continued lack of response and supporting documentation.
However, the ITAT observed that neither the AO nor the CIT(A) had considered relevant Central Board of Direct Taxes (CBDT) circulars issued concerning verification of cash deposits during demonetization. These circulars provided guidelines for dealing with such deposits, and the ITAT deemed their consideration crucial for a fair assessment. Specifically, the ITAT referenced circulars and instructions issued on February 21, 2017 (Instruction No. 03/2017), March 3, 2017 (Instruction No. 4/2017), November 15, 2017 (F.No. 225/363/2017-ITA.II), and August 9, 2019 (F.no.225/145/2019-ITA.II).
The ITAT emphasized the principles of natural justice and equity, stating that the assessee should be given a reasonable opportunity to explain the source of the deposits. Therefore, the tribunal set aside the orders of the lower authorities and remanded the case back to the AO for de novo consideration. The AO was directed to review the case in light of the aforementioned CBDT circulars and afford the assessee a fair hearing. The ITAT also directed the assessee to submit all relevant evidence, documents, records, and information to support their explanation. The tribunal made it clear that any further defaults by the assessee would not be tolerated. The appeal was thus partly allowed for statistical purposes, leaving the substantive assessment to be determined afresh by the AO.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
