2016 (12) TMI 1793 - AT - Income Tax

Addition on account of cash deposit - evidences could not be placed before the AO because of pre-occupation of the assessee with illness of his spouse - HELD THAT - Since in the facts of the present case due to his wife s illness the assessee was prevented by sufficient cause from producing the evidences in support of its claim, it would be appropriate and in the interests of justice that in the peculiar facts and circumstances of the case, the impugned order is set aside and the issue is restored back to the CIT(A) with a direction to permit the assessee to produce the evidences in support of its claim. The CIT(A) after confronting the same to the AO and directing the AO to file a Remand Report shall confront the same to the assessee and thereafter pass a speaking order in accordance with law after giving the assessee a reasonable opportunity of being heard. Appeal of the assessee is allowed for statistical purposes.

Summary

Issues Involved:
1. Addition of ?26,50,000 on account of cash deposits.
2. Non-appreciation of Demand Drafts against cash deposits.
3. Non-examination of persons in whose favor the Demand Drafts were issued.
4. Non-acceptance of additional evidence during appellate proceedings.

Issue-wise Detailed Analysis:

1. Addition of ?26,50,000 on Account of Cash Deposits:
The assessee contested the addition of ?26,50,000 made by the Assessing Officer (AO) due to unexplained cash deposits in the savings account. The assessee argued that the CIT(A) upheld the addition without considering the fact that his wife was suffering from cancer and was hospitalized during the assessment period, which prevented him from properly representing his case.

2. Non-appreciation of Demand Drafts Against Cash Deposits:
The assessee claimed that the AO did not consider the fact that the cash deposits were used to prepare Demand Drafts. The CIT(A) also failed to appreciate this aspect, leading to the wrongful upholding of the addition.

3. Non-examination of Persons in Whose Favor the Demand Drafts Were Issued:
The assessee pointed out that the AO did not examine the individuals in whose favor the Demand Drafts were issued, which could have provided clarity on the nature of the transactions. The CIT(A) did not address this failure, thereby sustaining the addition without proper verification.

4. Non-acceptance of Additional Evidence During Appellate Proceedings:
The assessee submitted that additional evidence was presented during the appellate proceedings to support his case, but the CIT(A) refused to accept these evidences due to procedural technicalities. The assessee argued that his inability to comply with procedural requirements was due to his preoccupation with his wife’s illness.

Tribunal's Decision:
The Tribunal noted that the assessee was unable to represent himself adequately before the AO and CIT(A) due to his wife’s illness. The Tribunal observed that the CIT(A) took a hyper-technical view by rejecting the additional evidence without considering the genuine reasons for non-compliance with procedural requirements. The Tribunal emphasized the need for a humane approach and the duty of tax authorities to assist taxpayers, especially marginal ones, in complying with procedural requirements.

The Tribunal directed that the additional evidence should be admitted and the case should be remanded back to the CIT(A) for a fresh adjudication. The CIT(A) was instructed to confront the AO with the new evidence, obtain a Remand Report, and then pass a speaking order after giving the assessee a reasonable opportunity to be heard. The Tribunal expressed hope that the assessee would fully participate in the proceedings and warned that failure to do so would result in the CIT(A) making a decision based on the available material.

Conclusion:
The appeal was allowed for statistical purposes, with the case being remanded back to the CIT(A) for reconsideration of the additional evidence and a fresh decision in accordance with the law. The Tribunal highlighted the importance of a just and humane approach in tax administration, especially for marginal taxpayers.