2020 (9) TMI 292 - AT - Income Tax

Assessment of trust - assessee is an educational society registered under section 12AA - unexplained deposits of cash in bank - HELD THAT - Revenue authorities have not analytically examined the material even available before them - three bank accounts viz. account with Unjha Nagarik Sahakari Bank Ltd., Mehsana Urbank Co-op. Bank Ltd. and Market Yard Commercial Co-op. Bank been reconciled analytically, then it would reveal that ₹ 15 lakhs was not deposited in respective cooperative bank in cash, rather, it is a bank transfer from the assessee s bank with Unjha Nagarik Sah. Bank Ltd. Even if it is an ex parte order, then it has been appreciated that the AO is harping upon an AIR information. He should have analytically examined AIR information and should have called for further information from the bank, if some non-bank transaction is reflected, which is to be considered as unexplained credit. Punishment in the shape of tax liability on addition of ₹ 27,15,600/- and ₹ 19,44,000/- is quite disproportionate than the negligence at the end of the assessee before the AO - CIT(A) ought to have taken additional evidence on record for a just decision of appeal. The quasi-judicial authorities are being respected not on account of their power to legalize injustice on technical ground, but because they are capable of removing the injustice, and is expected to so. On the other hand, the conduct of the assessee is not above board. As prosecuted its income-tax litigations negligently and without any diligence. It has unnecessarily dragged the litigation in the second round. Therefore, considering this aspect, we allow the appeal of the assessee for statistical purpose, but subject to payment of cost. This cost is quantified at ₹ 10,000/- which is to be paid by the assessee, and certificate to this effect would be furnished before the AO as well as to the Registry of the Tribunal. Both the orders are set aside, and all the issues are restored to the file of the AO who will adjudicate the case in accordance with law. Appeal of the assessee is allowed for statistical purpose

Summary

Issues:
Appeal against CIT(A) order for Asstt.Year 2013-14; Proper opportunity of hearing and admitting additional evidence; Challenge of addition under section 68 of IT Act; Confirmation of addition of ?27,15,600/- and ?19,44,000/-; Maintaining separate bank accounts; Failure to explain cash deposits; Discrepancies in bank transactions; Analytical examination by Revenue authorities; Disproportionate tax liability; Negligence by the assessee; Appeal allowed subject to cost.

Analysis:
The appellant challenged the CIT(A) order for the assessment year 2013-14 on various grounds. The primary issues raised were the denial of proper opportunity of hearing and non-admittance of additional evidence by the CIT(A). The appellant contested the addition of ?27,15,600/- and ?19,44,000/- under section 68 of the Income Tax Act, 1961. The CIT(A) confirmed these additions, citing the appellant's failure to substantiate the source of cash deposits. The appellant maintained separate bank accounts for specific funds but could not prove that the disputed amounts were corpus receipts, leading to the additions being upheld.

The appellant contended that its books of accounts were audited, but due to the absence of its accountant during the assessment proceedings, it faced challenges in providing necessary details. The appellant sought to submit additional evidence before the Tribunal, including vouchers, receipts, and bank details, for a fair adjudication. However, the Revenue argued that the appellant had sufficient opportunities to present details, which were not provided timely. The Tribunal noted discrepancies in the bank transactions and criticized the Revenue authorities for not analytically examining the available material, especially the AIR information. The Tribunal emphasized the need for a just decision and criticized both the negligence of the appellant and the disproportionate tax liability imposed.

In its final decision, the Tribunal allowed the appeal for statistical purposes, subject to the payment of a cost of ?10,000 by the appellant. The Tribunal set aside both orders and remitted all issues to the Assessing Officer for a fresh adjudication in accordance with the law. The appellant was granted the liberty to submit any evidence or explanations to support its case during the reassessment. The judgment aimed to address the procedural shortcomings, analytical deficiencies, and negligence on both sides to ensure a fair and just resolution of the tax dispute.