2021 (6) TMI 625 - AT - Income Tax

Addition u/s 69A - assessment was selected for limited scrutiny for verification of cash deposits made into savings bank - HELD THAT - As assessee has not been given a proper opportunity to explain the source of cash deposit. Before the A.O., the assessment proceedings were getting time barred and only two hearings were given to the assessee to furnish the necessary details. Before the CIT(A), necessary details explaining the source of cash deposits were placed on record. CIT(A) called for a remand report from the A.O. The A.O. furnished the remand report without considering the additional evidence placed before the CIT(A). The A.O. also did not provide an opportunity of hearing to the assessee to substantiate his case. As given the facts and circumstances of the case, the matter needs to be considered afresh by the A.O. The A.O. shall consider the evidence placed by the assessee before the CIT(A) to determine the source of cash deposit, whether it is genuine or not. (The A.O. shall also examine whether assessee has disclosed any income u/s 44AE of the Act for the relevant period). The A.O. shall afford a reasonable opportunity of hearing to the assessee. The assessee shall cooperate with the revenue and shall not seek unnecessary adjournment. Appeal filed by the assessee is allowed for statistical purposes.

Summary

Issues:
- Justification of confirming addition made by the A.O. u/s 69A of the Income-tax Act, 1961

Analysis:

1. Issue: Justification of confirming addition made by the A.O. u/s 69A

- The appeal was against the order of CIT(A) confirming an addition made by the A.O. u/s 69A of the Income-tax Act, 1961 amounting to ?1,69,57,000. The assessee, an individual with income from various sources, explained that the cash deposits were from a transport business. However, the A.O. noted the absence of supporting documents and corresponding bank withdrawals, leading to the addition. The CIT(A) dismissed the appeal, stating lack of evidence on ownership of vehicles and income declaration under section 44AE. The remand report supported the A.O.'s decision, leading to the Tribunal appeal.

- The Tribunal noted that the assessee failed to provide details explaining the source of cash deposits before the A.O. due to limited time. Additional evidence was submitted during appellate proceedings, including transport receipts and trip-wise details. The A.O. did not verify this new evidence in the remand report, violating natural justice. Consequently, the Tribunal remanded the case to the A.O. for fresh consideration, emphasizing proper opportunity for the assessee to explain the source of cash deposits and to cooperate with the revenue. The appeal was allowed for statistical purposes.

This detailed analysis highlights the progression of the case, the arguments presented by both parties, and the ultimate decision of the Tribunal to remand the matter for a fresh assessment by the A.O.