2012 (6) TMI 709 - AT - Income Tax

Acceptance of additional evidence by CIT(A) when sufficient opportunities were afforded to the assessee during the assessment proceedings - Held that - As the assessee for the first time before the CIT(A) has stated that she had entered into agreement for purchase of land the same was sent to the AO for his remand report - As per the AO the copy of agreement of sale, cancellation of sale agreement and subsequent cash transaction of Rs. 14 lacs was not reliable and it was only a cooked up story to establish the genuineness of source of cash deposit of Rs. 14 lacs in the bank account. However, the ld. CIT(A) has deleted the addition without controverting these observations of the AO in the remand report nor given any finding with regard to availability of cash of Rs. 14 lacs with the assessee, which was alleged to be given as advances for purchases of land - Merely by pointing out fault in AO s action and without controverting the findings of Assessing Officer and without giving any positive finding, CIT(A) has deleted the addition, which is not justified - set aside this ground also to the file of AO for deciding afresh - in favour of revenue. Addition in respect of unexplained cash credit - Held that - As regard cheque received against cash credit, cheque was issued out of Bank account of HUF and assessee has also furnished PAN numbers and also confirmation of the loan creditor to prove not only identity but the genuineness of transaction as well as creditworthiness of the loan creditor. As the assessee has discharged his primary onus, the Assessing Officer was not justified in making addition - in favour of assessee. Addition being unexplained investment in the purchase of the property - Held that - As the extent of Bank finance to purchase the property has already being accepted by AO and nothing was asked from him in the remand proceedings nor he has given any of the remarks in the remand report. While deleting the addition, CIT(A) has not given any positive finding as to the source of income as added by the AO. The CIT(A) has simply stated regarding amount invested in the property and the loan taken from the Bank, which was already accepted by the AO - set aside this ground also to the file of AO for deciding afresh.

Issues Involved:
1. Admission of additional evidence by CIT(A)
2. Deletion of addition of Rs. 14,00,000/- on account of bank credits
3. Deletion of addition of Rs. 9,50,000/- representing cash credit from a third party
4. Deletion of addition of Rs. 9,41,803/- for unexplained investment in property

Issue-wise Detailed Analysis:

1. Admission of Additional Evidence by CIT(A):
The Revenue contended that the CIT(A) improperly accepted additional evidence without providing adequate reasons and despite objections from the Assessing Officer (AO). The Tribunal noted that CIT(A) has the authority to accept additional evidence if justified, but must provide a clear rationale for doing so. The CIT(A)'s failure to address the AO's objections and lack of detailed reasoning for admitting the additional evidence was highlighted as a procedural lapse.

2. Deletion of Addition of Rs. 14,00,000/- on Account of Bank Credits:
The AO added Rs. 14,00,000/- as unexplained cash deposits in the assessee's bank account. The assessee claimed these funds were advances returned from a cancelled land purchase agreement. The CIT(A) accepted this explanation, but the Tribunal found that the AO's concerns about the authenticity of the agreement and the cash transactions were not adequately addressed by the CIT(A). The Tribunal emphasized that the CIT(A) should have verified the genuineness of the agreement and the cash transactions more thoroughly. Consequently, this issue was remanded back to the AO for a fresh decision, ensuring the assessee is given a fair opportunity to substantiate their claims.

3. Deletion of Addition of Rs. 9,50,000/- Representing Cash Credit from a Third Party:
The AO added Rs. 9,50,000/- as unexplained cash credit from Shri Ratanchand Bohra. The assessee provided a confirmation letter, PAN details, and bank statements to prove the identity, genuineness, and creditworthiness of the creditor. The CIT(A) found these documents satisfactory and deleted the addition. The Tribunal upheld this decision, agreeing that the assessee had discharged their primary onus of proof, and the AO's addition was unjustified.

4. Deletion of Addition of Rs. 9,41,803/- for Unexplained Investment in Property:
The AO added Rs. 9,41,803/- as unexplained investment in property. The assessee argued that the property was purchased jointly with her husband and financed by a loan from ICICI Bank, which was reflected in the firm's balance sheet. The CIT(A) accepted this explanation and deleted the addition. However, the Tribunal noted that the CIT(A) did not provide a positive finding on the source of the remaining funds not covered by the bank loan. The Tribunal remanded this issue back to the AO for a fresh examination, ensuring the assessee is given an opportunity to explain the source of the funds.

Conclusion:
The Tribunal allowed the appeal in part, remanding the issues of the Rs. 14,00,000/- bank credits and the Rs. 9,41,803/- property investment back to the AO for further examination. The deletion of the Rs. 9,50,000/- cash credit was upheld. The Tribunal emphasized the need for thorough verification and adequate reasoning in the assessment and appellate processes.

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