Shivalingaiah Gangadhar Vs PCIT (ITAT Bangalore)
Revision Survives, Cash Addition Doesn’t: ITAT Orders a Clean Recount u/s 144 Read With 263
Summary:
In Shivalingaiah Gangadhar v. PCIT, the Bangalore ITAT decided two appeals for AY 2015–16. The assessee, a cement trader, returned income of ₹3,08,854. An ex parte assessment u/s 144 estimated profit at 8% on deposits of ₹1,90,61,760, added ₹5,02,426 as unexplained investment & disallowed Chapter VI-A deduction of ₹1,21,500, determining income at ₹20.27 lakh.
The PCIT found that cash deposits of ₹1,01,38,052 & cheque deposits of ₹34,74,750 in other accounts remained unexamined. Although the assessee produced three bank statements besides the ledger & confirmation of Maruti Traders, necessary enquiry was missing. Invoking section 263, the PCIT directed fresh assessment.
In the consequential proceedings, the assessee did not respond to notices. Maruti Traders also failed to reply to a notice u/s 133(6). The AO treated the deposits as unexplained, made an addition of ₹1,36,82,372 u/s 68 after reducing disclosed income, then added this to income already assessed. The CIT(A), proceeding ex parte after three unanswered notices, largely confirmed the assessment but removed a duplicate addition of ₹10,94,588. The assessee challenged both the section 263 order & consequential assessment.
Issues Before the Tribunal
