2021 (7) TMI 270 - AT - Income Tax

Assessment ex parte - addition of the amount deposited by the assessee in his saving bank account - HELD THAT - Since the assessment order was passed by the A.O. ex parte, the assessee furnished the additional evidences before the Ld. CIT(A) who admitted the same. CIT(A) sustained the addition by observing that the assessee had not brought any evidence on record to authenticate his claim that the cash deposited in his bank account was out of the withdrawal/adjustment of cash from his father's bank account. On the contrary the claim of the assessee was that the cash was deposited in his bank account out of cash withdrawn by his father from his bank account. In the present case, it is not brought on record as to what were the contents of the bank statement furnished by the assessee and it is not clear as to whether there were sufficient withdrawals to justify the deposit in the bank account of the assessee. We therefore deem it appropriate to set aside this case back to the file of the A.O. to be adjudicated afresh - Appeal of the assessee is allowed for statistical purposes.

Issues:
1. Validity of cash deposit in the bank account.
2. Treatment of information received through AIR transaction as valid evidence.
3. Validity of reasons to believe and treating cash deposit as income under section 2(24) of the Income Tax Act, 1961.
4. Admittance and consideration of additional evidence under Rule 46A of the Income Tax Rules, 1962.

Issue 1: Validity of cash deposit in the bank account:
The case involved an appeal by the Assessee against the order of Ld. CIT(A)-1 Chandigarh regarding the addition of cash deposits in the bank account. The Assessee claimed that the cash was from withdrawals made by the father. The A.O. reopened the assessment based on the cash deposit information. The A.O. made the addition ex parte as the Assessee did not respond to notices. The Ld. CIT(A) admitted additional evidence of the father's bank account statement but sustained the addition, stating lack of evidence to prove the source of cash deposits. The Tribunal set aside the case to the A.O. for fresh adjudication considering the additional evidence and providing reasonable opportunities for the Assessee.

Issue 2: Treatment of information from AIR transaction:
The Assessee argued against the validity of treating information from AIR transaction as evidence without verifying it from the bank. The A.O. had issued notices, but the Assessee did not respond, leading to an ex parte assessment. The Ld. CIT(A) admitted additional evidence, but the A.O. sustained the addition due to lack of proof regarding the source of cash deposits. The Tribunal directed the case back to the A.O. for reevaluation, emphasizing providing the Assessee with proper opportunities for a fair hearing.

Issue 3: Validity of reasons to believe and treatment of cash deposit as income:
The Assessee challenged the validity of reasons to believe and the treatment of cash deposits as income under section 2(24) of the Income Tax Act, 1961. The A.O. initiated proceedings under section 147 r.w.s 148 based on the cash deposit information. The Assessee's argument that the cash was from withdrawals by the father was not adequately substantiated. The Tribunal remanded the case to the A.O. for a fresh assessment, considering the additional evidence and ensuring a fair hearing for the Assessee.

Issue 4: Admittance and consideration of additional evidence under Rule 46A:
The Assessee sought admission of additional evidence under Rule 46A of the Income Tax Rules, 1962, to support the claim that cash deposits were from the father's withdrawals. The A.O. commented on the Assessee's lack of cooperation during the assessment proceedings. The Ld. CIT(A) admitted the additional evidence but upheld the addition due to insufficient proof of the source of cash deposits. The Tribunal directed the case back to the A.O. for a fresh assessment, considering the additional evidence and providing a fair opportunity for the Assessee.

This detailed analysis of the judgment highlights the key issues, arguments presented by the parties, decisions made by the authorities, and the Tribunal's directions for a fresh assessment, ensuring a fair hearing and consideration of all relevant evidence.

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