Tribunal gives one final opportunity to explain Rs.3.29 crore deposits and business transactions, remands both quantum and penalty issues to AO
Meetu Kumari | Dec 1, 2025 |
ITAT Sends Back Reassessment and Penalty Proceedings After Noting Assessee’s Non-Compliance; Imposes Rs. 10,000 Cost
For AY 2014-15, the assessee, a tea trader operating under the proprietary concern “Krishna Tea Traders,” did not file his return and made no appearance in the reassessment proceedings initiated under section 147. The AO reopened the case when he received information about unusually large cash deposits in the concern’s bank account, followed immediately by transfers to entities such as Navkar Impex and Mahendra M. Chopra. The AO treated the entire deposits of Rs. 3,29,98,210 as unexplained money under section 69 and the withdrawals of Rs. 3,21,38,779 as unexplained expenditure under section 69C, completing the assessment ex-parte under section 147 r.w.s. 144.
Before the CIT(A) too, the assessee did not make any effective appearance despite four opportunities. The appeal was partly allowed, while the CIT(A) confirmed the addition of deposits, he deleted the addition relating to withdrawals.
Core Issue: Whether the assessee, despite earlier non-compliance, should be granted a fresh opportunity to prove the nature of bank transactions, and whether the penalty under section 271(1)(c) should stand when the underlying quantum additions have been remanded.
ITAT’s Verdict: The Tribunal observed that the assessee had been grossly negligent in both the assessment and first appellate stages. It held that one cannot simply shift the blame to counsel, and taxpayers are expected to monitor their own proceedings. The ITAT allowed a final opportunity, but imposed a cost of Rs. 10,000, to be deposited with the Prime Minister’s National Relief Fund within 15 days. Subject to this, the entire matter relating to the unexplained deposits was remanded to the jurisdictional AO for a fresh examination, with liberty to the assessee to file complete supporting documents such as purchase/sale details and evidence relating to transactions with Navkar Impex.
The penalty proceedings were also restored to the AO, to be re-adjudicated after the fresh assessment.
To Read Full Judgment, Download PDF Given Below
In case of any Doubt regarding Membership you can mail us at [email protected]
Join Studycafe's WhatsApp Group or Telegram Channel for Latest Updates on Government Job, Sarkari Naukri, Private Jobs, Income Tax, GST, Companies Act, Judgements and CA, CS, ICWA, and MUCH MORE!"
