2018 (6) TMI 1741 - AT - Income Tax

Admissibility of additional evidences - unexplained cash deposits - CIT(A) refusing admission of additional evidence under Rule 46A of I.T.Rules - case was selected for scrutiny on the basis of AIR Information regarding cash deposits in S.B. account by assessee without quoting PAN numbers in the A.Y. under appeal - HELD THAT - Assessee did not produce these evidences before the A.O. at the assessment stage, therefore, A.O. pleaded that application for admission of additional evidence may be rejected. These facts makes it very clear that whatever evidences were filed by assessee at the appellate stage are relevant and goes to the root of the matter and may explain the source of cash deposits in the bank account of assessee. The same requires consideration and examination at the level of Ld.CIT(A). Once the additional evidences have been examined by the A.O. at the appellate stage and A.O. says that the claim of assessee is verifiable would support the claim of assessee that these documents were essential for just decision in the matter. CIT(A) therefore instead of rejecting these additional evidences should have admitted the additional evidences for deciding the appeal on merits. Hon ble Supreme Court in the case of Tek Ram 2013 (8) TMI 459 - SC ORDER and Hon ble P H High Court in the case of Mukta Metal Works 2011 (2) TMI 250 - PUNJAB AND HARYANA HIGH COURT admitted the additional evidences as being relevant and required to be looked into. Thus Ld.CIT(A) should have admitted these additional evidences and decided the appeal of assessee on merits. Appeal of the assessee is allowed for statistical purposes.

Summary

Issues:
- Addition of unexplained cash deposits in the bank account
- Rejection of application for admission of additional evidence under Rule 46A of I.T. Rules

Analysis:
1. Issue: Addition of unexplained cash deposits
The case involved the assessment of an assessee for the A.Y. 2009-10 based on cash deposits in the bank account without PAN numbers. The AO made an addition of ?13,15,000 on account of unexplained cash deposits as the source was not adequately explained by the assessee. Despite submissions, the AO found the explanation general and lacking evidence, leading to the addition.

2. Issue: Rejection of application for admission of additional evidence
The assessee challenged the addition before the Ld.CIT(A) and submitted new evidence related to the source of cash deposits. However, the A.O. noted that the assessee changed stance and did not provide sufficient documentary evidence. The Ld.CIT(A) rejected the application under Rule 46A for admission of additional evidence and confirmed the addition on merit due to lack of established cause or reasons for admitting the new evidence.

3. The ITAT, after considering the submissions, found that the matter required reconsideration at the level of Ld.CIT(A). The assessee provided additional evidence at the appellate stage, explaining that the cash deposits were from advance money received against an agreement to sell agricultural land and agricultural savings. The A.O. verified these documents and found them verifiable, supporting the claim of the assessee. The ITAT emphasized that the additional evidence was crucial for a just decision and should have been admitted by the Ld.CIT(A) to decide the appeal on merits.

4. Citing precedents, the ITAT directed the Ld.CIT(A) to admit the additional evidence and decide the appeal on merits, providing reasonable opportunity for the assessee to be heard. Consequently, the ITAT allowed the appeal of the assessee for statistical purposes, setting aside the order of Ld.CIT(A) and emphasizing the importance of considering relevant additional evidence in tax matters.