ITAT Directs AO to Reconsider Cash Deposits, Loan and Expenses :

The assessee is an individual engaged in dealership business involving tobacco, cigarettes, food items and other products and filed an appeal against the order of the CIT(A), dated 12 November 2025. The original assessment was completed under Section 147 read with Section 143(3) of the Income Tax Act, 1961, on 5 March 2022.

The assessee challenged the reopening of assessment under Section 147 and the notice issued under Section 148 dated 31 March 2021. It was submitted that the notice was invalid for non-compliance with the statutory requirements and that the requisite sanction from higher authorities had not been obtained.

On merits, the assessee disputed the addition of Rs. 24,46,000, contending that the cash deposits represented collections from retailers in the ordinary course of his dealership business. Further, the assessee challenged the disallowance of Rs. 16,513, being 20% of total expenses of Rs. 82,565, made by the AO on an estimated basis. It was submitted that regular books of account were maintained and duly audited, and that the expenses were supported by evidence.

The Tribunal considered the submissions of the assessee and the material available on record. The assessee's counsel submitted that the lower authorities had failed to properly appreciate the evidence furnished in relation to the cash deposits and loan transaction. It was also argued that the expense disallowance had been made on an ad-hoc basis without a reasonable finding.

After considering the rival submissions, the Tribunal held that the order of the CIT(A) was required to be set aside and the matter restored to the file of the AO for fresh assessment on all the issues. Accordingly, the appeal was allowed for statistical purposes.