ITAT Gives Fresh Opportunity to Substantiate Rs 40 Lakh Demonetisation Cash Deposits
The Income Tax Appellate Tribunal (ITAT), Pune Bench, has given Malharmachi Holiday Resort another opportunity to explain cash deposits of Rs 40 lakh made during the demonetisation period in Assessment Year 2017-18.
The case relates to cash deposits made between November 8 and December 31, 2016. During income-tax assessment proceedings, the AO found that the resort had deposited Rs 40 lakh. The AO asked the assessee to explain the source of the cash.
The resort said the cash was from its regular business receipts. It said the cash had been received from customers for hospitality and resort services and also furnished financial statements and other details in support of its claim.
But the AO was not satisfied with the explanation. He considered Rs 40 lakh as unexplained money and included it in the income of the resort under Section 69A of the Income Tax Act. The assessment order dated December 13, 2019, increased the total assessed income to about Rs 1.33 crore.
The resort thereafter filed an appeal in CIT(A). But the assessee failed to appear or respond to the notices issued by the CIT(A). In view of the above, the CIT(A) decided the matter on the basis of the available records and confirmed the addition made by the AO.
The resort subsequently approached the ITAT. Before the Tribunal, its authorised representative argued that the non-compliance before the CIT(A) was not intentional. The assessee also stated that it had a strong case on merits and wanted an opportunity to produce supporting evidence.
The Revenue opposed the request and supported the CIT(A)’s order.
After considering both sides, the Pune ITAT noted that there could be various reasons for the assessee’s failure to appear before the CIT(A). The Tribunal held that in the interest of natural justice the assessee deserves to be given one more opportunity to advance its case.
Accordingly, the ITAT set aside the order of CIT(A) and remanded the matter to CIT(A) for fresh adjudication. The CIT(A) has been directed to give reasonable opportunity of hearing to the assessee. The assessee has been asked to co-operate and provide the necessary information.
The Tribunal allowed the appeal for statistical purposes.
Case citation: Malharmachi Holiday Resort Vs DCIT (ITAT Pune); I.T.A.No. 2021/PUN/2025; 17/08/2026; 2017-18.
