2022 (6) TMI 1001 - AT - Income Tax

Unexplained cash credits in bank - undisclosed income of the assessee - HELD THAT - CIT(A) held that the credits / deposits in the bank account of the appellant are from 10 different parties transactions which have been duly verified by the AO during the remand proceedings. AO in order to verify the transactions have called for relevant documentary evidences from the parties in the form of confirmed ledger account, ITR and bank statement which have been duly submitted by all the parties. Assessing Officer has not doubted the documentary evidences submitted by the parties and the assessee. The Assessing Officer in order to verify the genuineness of the claim of the assessee has also stated to have recorded statement under oath and field enquiries of some of the parties. In addition these documents, the assessee has also submitted the purchase and sale register of the proprietorship concern along with VAT return as additional evidences. These documentary evidences submitted by the assessee have not been doubted by the Assessing Officer in his remand report neither has he pointed out any discrepancy in the same. Owing to the remand report submitted by the Assessing Officer after conducting due enquiries, the ld. CIT(A) has deleted the addition made by the AO as no discrepancies were found by the AO during the remand proceedings. In a way, the remand report has given a clean chit to the affairs of the assessee. Hence, the decision of the ld. CIT(A) which was wholly based on the remand report cannot be interfered with. Appeal of revenue dismissed.

Summary

Issues:
Appeal against deletion of addition of unexplained cash credits in bank account by CIT(A) - Reliance on additional evidences submitted by assessee - Verification of deposits in bank account and nature of funds - Admission of additional evidences under Rule 46A - Reasonable opportunity of being heard during assessment proceedings.

Analysis:
The Revenue filed an appeal against the CIT(A)'s order deleting the addition of Rs.15,11,85,776 made by the AO on account of unexplained cash credits in the bank account. The bank statement revealed total deposits of Rs.30,71,72,552, with the AO treating Rs.15,11,85,776 as undisclosed income. The assessee contended that the addition was unjustified, highlighting lack of opportunity to submit documentary evidence during assessment. The appellant provided a detailed party-wise breakup of credits in the account, totaling Rs.33,27,61,319, and submitted additional evidences under Rule 46A to substantiate the source of funds.

The appellant argued that no reasonable opportunity of being heard was provided during assessment, as a show cause notice was served with inadequate time for response. The CIT(A) admitted the additional evidences for fair play and justice, sending them to the AO for a remand report. The AO verified the evidences through notices u/s 133(6) and 131, confirming transactions with concerned parties. Statements from parties and field enquiries were conducted, affirming the genuineness of transactions. The CIT(A) noted that the AO did not doubt the documentary evidences submitted, leading to the deletion of the addition based on the clean chit given by the remand report.

The CIT(A) emphasized that the verification done during remand proceedings did not reveal any discrepancies, ultimately dismissing the Revenue's appeal. The decision was based on the thorough verification conducted by the AO, which affirmed the genuineness of the transactions and source of funds. The judgment highlighted the importance of providing a fair opportunity to present evidence during assessment proceedings and the significance of due diligence in verifying financial transactions to ensure a just outcome.