2012 (9) TMI 290 - AT - Income Tax

Addition made on account of unexplained investment in Mutual funds and unexplained cash credits - assessee when confronted with the information received from AIR of investment in mutual funds filed revised Balance Sheet before the AO reflecting the above said investment - estimation of income without rejecting the books of account of the assessee - assessee claims to have filed the explanation before the AO which had not been accepted by latter - Held that - From the perusal of the record we find that though the assessee had furnished various explanations before the AO and the CIT (Appeals), the same have not been considered in the proper perspective. The grievance of the Revenue is that even the CIT (Appeals) has accepted the contention of the assessee in violation of the provisions of Rule 46A of the Income Tax Rules. The plea of the assessee in this regard is that no fresh evidence was furnished before the CIT (Appeals). In view of aforesaid, we deem it fit to restore the matter back to the file of the AO to decide all the issues de-novo.

Summary

Issues involved:
Cross appeals by Revenue and assessee against CIT(A) order for assessment year 2008-09 under ITA No.139/Chd/2012 and ITA No.180/Chd/2012 respectively.

Analysis:

Issue 1: Violation of Rule 46A by CIT(A) in admitting additional evidences
The Revenue raised concerns regarding the CIT(A) violating Rule 46A by admitting additional evidences without allowing the AO to examine them. The Revenue argued that these evidences were not produced during the assessment proceedings. The CIT(A) accepted the assessee's contentions, leading to the Revenue's appeal. The Tribunal noted discrepancies in the consideration of explanations provided by the assessee before the authorities. The matter was remanded to the AO for a fresh adjudication, emphasizing the need for proper consideration of all explanations.

Issue 2: Deletion of additions under sections 69 and 68 by CIT(A)
The CIT(A) deleted the additions made by the AO under sections 69 and 68 of the Act but confirmed other additions. The assessee challenged the CIT(A)'s decision on the confirmed additions. The Tribunal observed that the CIT(A) had not fully considered the explanations provided by the assessee. The matter was remanded to the AO for a comprehensive review, allowing the assessee a fair opportunity to present their case.

Issue 3: Assessment of total income and treatment of expenses by Additional Commissioner
The assessee contested the assessment of total income and the treatment of expenses by the Additional Commissioner. Various discrepancies were highlighted, including the rejection of books of accounts, treating claimed expenses as bogus, and making additions for unexplained investment and cash credits. The Tribunal acknowledged the need for a proper assessment based on all available explanations and directed a fresh adjudication by the AO.

Issue 4: Double addition and imposition of interest and penalty
The Additional Commissioner was criticized for making double additions without a proper understanding of the case. Moreover, the imposition of interest under section 234B and the initiation of penalty proceedings under section 271(l)(c) were contested. The Tribunal emphasized the importance of a correct assessment and directed a reevaluation by the AO to address these issues effectively.

Conclusion:
The Tribunal allowed both the appeals by the Revenue and the assessee for statistical purposes, highlighting the need for a thorough review of the case by the AO to ensure a fair and comprehensive assessment based on all relevant explanations and evidences. The matter was remanded to the AO for de novo adjudication, emphasizing the importance of considering all submissions properly.