2018 (9) TMI 341 - AT - Income Tax

Disallowance u/s 68 - unexplained cash credit while passing assessment order u/s 144 - assessee has failed to prove the sources of cash deposits, by way of any documentary evidence - assessment was passed u/s 144 in peculiar facts where admittedly the assessee being a Non Resident Indian permanently settled in Canada - Held that - We note that the occasion for the AO to file an appeal did not arise. It is noticed that for filing the present appeal, approval has been granted by Pr. CIT Ludhiana on 28.07.2017. There can be no two opinions to hold that the approval admittedly has also been granted mechanically which leads to the indelible conclusion that the Administrative checks and balances placed by the Department in place for not filing frivolous appeals admittedly are not working. Since the facts and evidences considered in the remand proceedings have not been rebutted by the AO in the present proceedings, the present appeal ought not to have been filed. As once the issues have been given up by the AO in the remand proceedings, the occasion to re-agitate the very same issue by filing an appeal in the absence of any rebuttal on facts and evidences can be easily said to be not only an irresponsible criminal waste of Government time, money and resources but also gives rise to the latent resentment in public consciousness that the tax authorities are callously heedless and uncaring vis- -vis the pain and harassment caused by such obdurate acts to the public whom they are presumed to serve. Once the AO is satisfied in the remand proceeding, he cannot be said to be aggrieved by the order passed by the CIT(A) considering his own remand report. It need not be over emphasized that as far as the world at large is concerned, the Assessing Officer is an authority and is not a specific person. Thus, merely on account of change of the AO, presumably the incumbent cannot be allowed to file appeals willy nilly. - Decided against revenue

Summary

Issues Involved:
1. Deletion of disallowance under Section 68 of the Income Tax Act, 1961.
2. Admission of fresh evidence by CIT(A).
3. Maintainability and frivolous nature of the Revenue's appeal.

Detailed Analysis:

1. Deletion of Disallowance under Section 68:

The primary issue in this case was whether the CIT(A) was correct in deleting the disallowance of ?43,00,000/- under Section 68 of the Income Tax Act, 1961, which pertained to unexplained cash credit. The Assessing Officer (AO) had added this amount to the assessee's income, as the assessee failed to provide documentary evidence to prove the sources of cash deposits in her bank account during the assessment proceedings.

The assessee, a non-resident Indian permanently settled in Canada, claimed that the cash deposits were from the sale proceeds of ancestral rural agricultural land. The sale was conducted during her visit to India, and the proceeds were deposited in her bank account. The CIT(A) accepted this explanation after considering additional evidence and a remand report from the AO, which verified the genuineness of the cash deposits.

2. Admission of Fresh Evidence by CIT(A):

The CIT(A) admitted fresh evidence provided by the assessee, which included the registered sale deed of the agricultural land and a Google map extract showing the land's location outside municipal limits. The AO initially objected to the admission of fresh evidence, citing the assessee's non-cooperation during the assessment proceedings. However, the CIT(A) directed the AO to provide a remand report on the merits of the evidence.

In the remand report dated 07/09/2016, the AO confirmed the genuineness of the cash deposits, stating that the amount was received from the sale of ancestral agricultural land. The CIT(A) found justifiable reasons for admitting the additional evidence and concluded that the source of cash deposits was satisfactorily explained with documentary evidence.

3. Maintainability and Frivolous Nature of the Revenue's Appeal:

The Revenue's appeal was based on the contention that the CIT(A) erred in deleting the disallowance. However, the ITAT noted that the AO had already accepted the genuineness of the cash deposits in the remand report. The Revenue's appeal was deemed frivolous as it contradicted the AO's own findings in the remand proceedings.

The ITAT criticized the Revenue for filing a frivolous appeal, wasting the court's time, and causing unnecessary harassment to the assessee. The procedures in place to prevent such frivolous appeals were found to be ineffective. The ITAT emphasized that the AO's satisfaction in the remand proceedings should have precluded the filing of the appeal.

Conclusion:

The ITAT dismissed the Revenue's appeal, affirming the CIT(A)'s decision to delete the disallowance under Section 68. The ITAT highlighted the need for the Revenue to exercise discretion judiciously and avoid filing frivolous appeals. The order emphasized the importance of administrative checks and balances to prevent unnecessary litigation and ensure fair treatment of taxpayers.