Background of the Case
A search and seizure action was conducted under Section 132 of the Income Tax Act on 14th February 2019, involving the Antariksh Group, a company engaged in construction, warehousing, and commercial retail development for several years. The assessee, who provided contractual services to the Antariksh Group, had its documents seized during the search. Since these documents affected the assessee’s income, the Assessing Officer (AO) initiated proceedings under Section 153A read with Section 153C of the Income Tax Act.
Key Issue: Cash Receipts from Antariksh Group
The main issue at hand was the receipt of Rs. 2,50,40,070/- by the assessee as part of its contractual receipts. The AO asked the assessee how this cash was accounted for in their books. The assessee admitted to receiving cash from Antariksh Group but stated that some of the receipts were recorded in their books, while others pertained to third-party transactions. The assessee agreed to offer 5% of the gross receipts as income.
However, the AO rejected this explanation and assessed the total income at Rs. 53,65,380/- under Section 153C read with Section 143(3) of the Act.
Penalty Proceedings Under Section 271DA
In addition to the assessment, penalty proceedings were initiated under Section 271DA of the Income Tax Act for violating the provisions of Section 269ST. Section 269ST regulates cash transactions above a specified limit. During the penalty proceedings, the assessee revised its earlier statement, claiming the cash receipts amounted to Rs. 1,96,38,351/-. Despite this clarification, the AO imposed a penalty of Rs. 1,96,38,351/- for non-compliance with Section 269ST, arguing that no fresh evidence was provided.
Appeal Before the CIT(A)
The assessee, dissatisfied with the AO’s order, filed an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)]. The CIT(A) noted that the assessee had been given several opportunities to explain its case but failed to respond. As a result, the CIT(A) dismissed the appeal, concluding that the assessee had not provided adequate details to support its grounds.
Appeal to the Income Tax Appellate Tribunal (ITAT)
The assessee then appealed to the Income Tax Appellate Tribunal (ITAT). The appellant argued that the CIT(A) had decided the appeal ex-parte, without giving a reasonable opportunity to be heard. Upon reviewing the case, the ITAT found that the assessee had failed to explain its position before the CIT(A), but also noted that the assessee was not given a fair chance to present its case before the order was passed.
ITAT’s Decision: Remand to CIT(A)
The ITAT decided to remand the case back to the CIT(A) for reconsideration. It directed that the appellant be given a reasonable opportunity to present all necessary details to support its claim that there was no contravention of Section 269ST. The ITAT also instructed the appellant to appear before the CIT(A) and provide the required documentation.
Citation: Sainath Sakharam Tare vs Assistant Commissioner of Income Tax, Central Circle – 2, Thane
Link: https://itat.gov.in/public/files/upload/1733139738-TEfNNf-1-TO.pdf
