2020 (9) TMI 1043 - AT - Income Tax

Best judgment assessment - admission of additional evidence which were not produced before the assessing officer or CIT(A) - DR has objected for admission of evidences as the assessing officer was denied the opportunity of examining the evidences - HELD THAT - We are of the opinion that, the Assessing Officer should be provided an opportunity to verify and examine the evidences filed in the course of hearing. Accordingly, in the interest of justice, we set aside the order of CIT(A) and admit the additional evidences and remit the entire disputed issues along with evidences to the file of assessing officer to verify and examine the claim of the assessee and allow the grounds of appeal of the assessee for statistical purposes.

Issues:
1. Maintainability of the order of the Commissioner of Income Tax (Appeals) for the AY-2011-12.
2. Consideration of cash investment for land purchase without rejection of books of accounts.
3. Confirmation of additions under section 144 of the Income Tax Act.
4. Addition of unexplained cash credit under section 68 of the Income Tax Act.
5. Disallowances made by the assessing authority and interest confirmation.
6. Admission of additional evidence and opportunity for substantiation before lower authorities.

Issue 1:
The assessee appealed against the order of the Commissioner of Income Tax (Appeals) for the AY-2011-12, questioning its maintainability in law. The grounds of appeal highlighted the failure to consider the source of income investment for land purchase without rejecting the books of accounts, leading to a violation of natural justice principles. The order was challenged on the basis of procedural irregularities and lack of proper consideration of evidence.

Issue 2:
The case involved the confirmation of additions under section 144 of the Income Tax Act, where the assessing authority made an addition of unexplained cash credits under section 68 of the Act. The appellant provided details of cash deposits, including advances returned from farmers and self-drawn cash, which were not considered by the Commissioner of Income Tax (Appeals). The issue revolved around the substantiation of sources for cash deposits and the failure to adequately address the appellant's claims.

Issue 3:
Regarding the addition of unexplained cash credit under section 68 of the Income Tax Act, the Commissioner of Income Tax (Appeals) upheld the assessing authority's decision without proper consideration of the additional evidence furnished by the appellant. The failure to address the details provided by the appellant led to a challenge on the correctness of the order and the violation of natural justice principles.

Issue 4:
The judgment also addressed the disallowances made by the assessing authority and the confirmation of interest, which the Commissioner of Income Tax (Appeals) upheld. The appellant argued that the confirmation of disallowances and interest was excessive, arbitrary, and should be deleted. The issue focused on the reasonableness of the disallowances and interest charges imposed by the authorities.

Issue 5:
A significant aspect of the case was the admission of additional evidence by the appellant, which was not presented before the assessing officer or the Commissioner of Income Tax (Appeals). The appellant sought an opportunity to substantiate their case with the additional evidence, while the authorities objected to its admission. The judgment allowed the admission of additional evidence and remitted the disputed issues back to the assessing officer for verification, emphasizing the importance of providing a fair opportunity for examination of evidence.

In conclusion, the judgment allowed the appeal of the assessee for statistical purposes, highlighting the importance of procedural fairness, examination of evidence, and adherence to natural justice principles in income tax assessment proceedings.

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