ITAT Gives Fresh Chance to Liquor Retailer in Rs 10,000 PMNRF Unexplained Deposit Case After She Produces New Evidence:

The Bangalore Bench of the Income Tax Appellate Tribunal (ITAT) has granted one more opportunity to a Bengaluru-based liquor retailer whose cash deposits and payments to the Karnataka State Beverages Corporation were treated as unexplained money and expenditure for Assessment Year (AY) 2018-19. The Tribunal set aside the earlier orders and directed the Assessing Officer (AO) to reconsider the matter after examining the supporting documents.

Ms Susheela (assessee) had not filed any income tax return (ITR) for the year under consideration. The AO reopened the assessment based on the information that during the relevant year, the assessee had made certain cash deposits (the source of them was not explained and also based on the TCS statement). Subsequently, issued notices under Section 142(1). In the absence of any response to the issued notices, the AO treated the cash desposits in question as unexplained under Section 69A, while payments made to the Karnataka State Beverages Corporation were treated as unexplained expenditure under Section 69C. Accordingly, completed the assessment ex parte.

The assessee challenged the assessment before the CIT(A). However, despite six communications, she did not provide the required documents and only sought adjournments on two occasions. The CIT(A) consequently dismissed the appeal due to the absence of supporting evidence.

Before the ITAT, the assessee explained that she operates a retail liquor shop and that the cash deposits represented collections from liquor sales. She submitted that these amounts were subsequently used to make payments to the Karnataka State Beverages Corporation. She also pointed out that she had filed GST returns and submitted additional documents supporting her business activities. The assessee attributed her earlier non-compliance to a change of auditors.

The tribunal held that "the assessee had not produced any documents before the lower authorities, and for the first time, the additional documents were produced before us, therefore the authorities below had no occasion to consider the said documents. In such circumstances and also considering the facts of the case, we are inclined to grant one more opportunity to the assessee to appear before the AO along with the supporting documents."

Consequently, the tribunal quashed the CIT(A)'s order and instructed the lower authorities/AO to reconsider the case afresh after considering the additional evidence and any other relevant documents. The Tribunal allowed the appeal for statistical purposes, subject to the assessee depositing Rs 10,000 with the Prime Minister’s National Relief Fund within four weeks of receiving the order.