2021 (9) TMI 809 - AT - Income Tax

Validity of the re-assessment proceedings u/s 147 - assessee is a non-filer of income tax return and has made huge cash deposit in his S B Account - explanation of assessee regarding deposit on account of sale of agricultural land non submitted - HELD THAT - When the assessee has submitted copy of Agreement to Sell of the agricultural land, at least the A.O. could have called the person who had given so much money to the Uncle of the assessee as advance. Further the submission of the assessee before the A.O. that some amount is deposited out of his agricultural income and previous withdrawals from the Bank which were available for deposit in the Bank Account also not considered properly. We deem it proper to restore the issue to the file of A.O. with a direction to grant one more opportunity to the assessee to substantiate his case and decide the issue as per fact and Law - AO may conduct necessary enquiry as he deems proper by directing the assessee to produce the person from whom the advance has been received for sale of land by his Uncle. The assessee is also hereby directed to appear before A.O. and adduce the evidence to the satisfaction of the A.O. regarding source of deposit without seeking any adjournment under any pretext, failing which, the A.O. is at liberty to pass appropriate Order as per Law - Grounds raised by the assessee are accordingly allowed for statistical purposes.

Summary

Issues:
Validity of re-assessment proceedings, Addition of unexplained income, Submission of additional evidence, Challenge to the judgment of Ld. CIT(A)

Validity of re-assessment proceedings:
The case involved the reopening of the assessment due to undisclosed income from cash deposits in the assessee's bank account. The AO issued notices under sections 148 and 142(1) for non-compliance by the assessee. The AR later explained that the cash deposits were from selling agricultural land and advances received. However, the AO was not satisfied and made an addition to the income. The Ld. CIT(A) upheld the re-assessment proceedings and the addition, stating that the assessee failed to provide adequate evidence. The CIT(A) found an alleged Agreement to Sell as an afterthought without genuine proof, leading to the confirmation of the addition.

Addition of unexplained income:
The AO added a specific amount to the assessee's income, considering only part of the cash deposits as explained. The remaining unexplained amount was added to the income, leading to the dispute. The Ld. CIT(A) upheld this addition, citing lack of credible evidence from the assessee to justify the source of the remaining deposit. The Ld. CIT(A) found the alleged Agreement to Sell as forged and not credible, leading to the confirmation of the addition.

Submission of additional evidence:
The assessee submitted additional evidence during the appeal proceedings, including a copy of the Agreement to Sell. However, the Ld. CIT(A) found this evidence lacking credibility and dismissed the arguments presented by the assessee. The Ld. CIT(A) emphasized the importance of genuine and verified evidence to support the claims made by the assessee.

Challenge to the judgment of Ld. CIT(A):
The assessee challenged the judgment of the Ld. CIT(A) before the Tribunal, raising grounds related to the validity of re-assessment proceedings and the addition of unexplained income. The Tribunal considered the arguments presented by both sides, reviewed the orders of the AO and Ld. CIT(A), and analyzed the evidence provided by the assessee. The Tribunal found merit in the arguments presented by the assessee regarding the lack of proper enquiry by the AO and directed a re-examination of the case. The Tribunal allowed the appeal for statistical purposes, emphasizing the need for a thorough investigation and substantiation of the claims made by the assessee.