Top Stories ITAT upholds Addition of Unexplained Income under Section 69A due to Assessee’s Non-Compliance [Read Order] Despite being issued  multiple  notices and opportunities,the assessee failed to provide any explanation or documentation for the cash deposits and credit entries By Sneha Sukumaran Mullakkal – On November 17, 2024 11:40 am – 2 mins read The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT) upheld the addition of unexplained income under Section 69A of the Income Tax Act, 1961, due to the assessee’s continuous non-compliance. Govindbhai Sanabhai Rathva,appellant-assessee,was subjected to assessment proceedings wherein the Assessing Officer (AO) discovered significant cash deposits and credit entries in his bank accounts with Kotak Mahindra Bank during the Financial Year (FY) 2016-17. The total amount of Rs. 58,41,269, consisting of Rs. 36,48,000 in cash deposits and Rs. 21,93,269 in credit entries, was noted by the AO. Understanding Common Mode of Tax Evasion with Practical Scenarios, Click Here

The AO issued multiple notices, including a formal show-cause notice (SCN) on 04.11.2019, asking the assessee to explain the cash deposits of Rs. 36,48,000 and credit entries of Rs. 21,93,269. Despite repeated reminders, the assessee failed to provide supporting documents or file a return for Assessment Year(AY) 2017-18. After reviewing the available information and conducting inquiries, the AO concluded the cash deposits were unexplained. The assessee was given further opportunities to justify the source of the funds but did not respond. Consequently, the AO invoked Section 69A of the Act, and added Rs. 58,41,269 to the assessee’s income for AY 2017-18 as unexplained income.

In the appeal before the Commissioner of Income Tax(Appeals)[CIT(A)], the assessee failed to appear and did not provide any explanation or supporting evidence regarding the source of the deposits and credit entries.It noted that the assessee had been given multiple opportunities but failed to discharge the burden of proof to explain the source of Rs. 58,41,269. Understanding Common Mode of Tax Evasion with Practical Scenarios, Click Here The CIT(A) referred to relevant case law, including Chuharmal vs. CIT (1988) and Smt. Srilekha Banerjee vs. CIT (1964), which established that the burden of proof lies with the assessee, and if unsatisfactory, the income can be treated as undisclosed. Given the lack of explanation, the CIT(A) upheld the addition under Section 69A and dismissed the appeal. The tribunal noted that the assessee failed to appear or represent the case, despite being given multiple opportunities. Citing judicial precedents, such as Adim Jati Seva Sahkari Samiti Maryadit v. ITO (159 taxmann.com 8),the ITAT highlighted that an assessee cannot raise a new case before the Tribunal if they had been evasive or non-compliant during earlier assessment and appellate proceedings.

It pointed out that such an appeal, based on the assessee’s prior non-participation, was not valid and dismissed it, upholding the lower authorities’ decision. Understanding Common Mode of Tax Evasion with Practical Scenarios, Click Here In a similar case, Chiranji Lal Bairwa v. ITO (ITA No.404/JP/2023), the ITAT observed that the assessee had repeatedly failed to comply with notices or submit the required documents, resulting in the dismissal of the appeal. The two member bench comprising Siddhartha Nautiyal(Judicial Member) and Annapurna Gupta(Accountant Member) reviewed these precedents and the assessee’s continuous non-compliance. It concurred with the CIT(A) in affirming the AO’s decision. As a result, the tribunal found no grounds to intervene with the order and dismissed the appeal.