2016 (6) TMI 85 - AT - Income Tax

Addition on unexplained cash credit under section 68 - Held that - additional evidences are admitted at this stage, therefore, the issue on the merits shall have to be decided afresh by the Assessing Officer because Assessing Officer did not have any opportunity to consider these additional evidences on the merits. We, accordingly, set aside the orders of the authorities below and restore this issue of addition of ₹ 35 lakhs under section 68 of the Act to the file of the Assessing Officer with direction to re-decide the issue of addition of ₹ 35 lakhs on account of unexplained credit in the light of the additional evidences admitted above, with direction to the assessee to produce copies of these additional evidences before the Assessing Officer for final determination of the issue on the merits. The Assessing Officer shall give reasonable sufficient opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purposes. Addition of agriculture income - Held that - The assessee filed the original return of income under section 139 of the Act on October 10, 2008, declaring the agriculture income of ₹ 58,384 and shown the total income at ₹ 14,43,163. The same total income was declared in the return filed under section 153A of the Act on September 5, 2012. The assessee failed to explain how the assessee could have substituted the agricultural income in return filed under section 153A of the Act by increasing the agriculture income. It is an afterthought story created by the assessee after search is conducted in the case of the assessee. The agriculture income declared by assessee now have not been supported by any evidence or material on record and no plausible explanation have been filed why additional agriculture income of ₹ 5,50,000 was not shown in the return of income filed under section 139 of the Act. The assessee never filed any revised return to claim higher agriculture income under section 139 of the Act. Therefore, considering totality of the facts and circumstances, we do not find any merit in this ground of appeal of the assessee. The same is accordingly dismissed. - Decided against assessee

Summary

Issues:
1. Admission of additional evidence under rule 46A of the Income-tax Rules and addition of unexplained cash credit under section 68 of the Income-tax Act.
2. Challenge against the addition of agricultural income.

Issue 1: Admission of Additional Evidence and Unexplained Cash Credit:

The appeal involved a challenge against the order of the Commissioner of Income-tax (Appeals) regarding the admission of additional evidence under rule 46A of the Income-tax Rules and the addition of ?35 lakhs on account of unexplained cash credit under section 68 of the Income-tax Act for the assessment year 2008-09. The assessee had taken a loan of ?35 lakhs from two creditors but failed to provide necessary confirmations and documents to prove the genuineness of the transactions. The Assessing Officer made the addition due to lack of evidence. The assessee sought to admit additional evidence before the Commissioner of Income-tax (Appeals) but was rejected on the grounds that the case did not fall within the conditions of rule 46A. The Tribunal, after considering the submissions, held that the additional evidence was crucial for adjudicating the issue and should have been admitted. Citing relevant case laws, the Tribunal set aside the Commissioner's order, admitted the additional evidence, and directed the Assessing Officer to re-decide the issue considering the new evidence.

Issue 2: Addition of Agricultural Income:

The second issue related to the challenge against the addition of ?5,50,000 on account of agricultural income. The assessee had shown a difference in agricultural income between the original return and the return filed under section 153A of the Income-tax Act. The Assessing Officer made the addition due to the unexplained increase in agricultural income. The Commissioner of Income-tax (Appeals) upheld the addition, noting that the assessee failed to reconcile the difference with any supporting evidence. The Tribunal, after reviewing the facts, found that the assessee's explanation for the increase in agricultural income was not substantiated with evidence and appeared to be an afterthought. As the assessee did not provide any plausible explanation or file a revised return to support the increased agricultural income, the Tribunal dismissed the appeal against the addition of agricultural income.

In conclusion, the Tribunal partly allowed the appeal by admitting additional evidence for the unexplained cash credit issue but dismissed the appeal regarding the addition of agricultural income. The Tribunal's decision emphasized the importance of providing necessary evidence to substantiate claims and highlighted the significance of following procedural rules in tax matters.