2017 (10) TMI 540 - AT - Income Tax

Addition u/s 68 - Held that - It is an admitted fact that assessee did not attend at many assessment proceedings despite service of notices. However, some proceedings were attended, but adjournment was sought. No explanation was filed with any documentary evidence to explain the cash deposited by assessee in his bank account maintained with ICICI Bank Ltd., The A.O. therefore, passed ex-parte order under section 144 of the I.T. Act. It is, therefore, the duty of the Ld. CIT(A) before granting relief to the assessee that whatever contention was raised by the assessee before him should be confronted to the A.O. The A.O. should have been given an opportunity of being heard at the appellate stage in such circumstances, before passing the appellate order. Therefore, the order passed without giving opportunity to A.O. to rebut the claim of assessee, the order cannot be sustained in law As assessee did not raise any such plea of peak credit before A.O. and no factual foundation have been laid out for claiming benefit of peak credit either before A.O. or before Ld. CIT(A). The assessee admitted before Ld. CIT(A) that cash flow statement is cooked-up document. In view of the above, we find that the matter requires re-consideration at the level of the Ld. CIT(A). In view of the above discussion, we set aside the impugned order of the Ld. CIT(A) and restore the appeal of the assessee to the file of Ld. CIT(A) with a direction to re-decide the appeal of assessee in accordance with law, by giving reasonable, sufficient opportunity of being heard to the assessee as well as A.O.

Summary

Issues involved:
Challenge to deletion of addition under section 68 of the I.T. Act, 1961.

Analysis:

1. Facts of the case:
The appeal by Revenue challenged the deletion of addition of ?59,98,975 under section 68 of the I.T. Act, 1961 for the A.Y. 2009-2010. The assessee declared total income of ?1,45,350, and the case was selected based on AIR information. Despite notices, the assessee did not attend most proceedings, and the A.O. made the addition of ?66,78,128 on account of undisclosed cash deposits.

2. Contentions before Ld. CIT(A):
The assessee's representative argued that the cash deposits were from business receipts and withdrawals. The AR requested treating the peak negative cash balance as income from undisclosed sources instead of the entire amount added by the A.O. The AR also requested considering two bank accounts as one for peak credit calculation.

3. Ld. CIT(A) findings and decision:
The Ld. CIT(A) applied the concept of peak credit and deleted the addition of ?59,98,974. The Ld. CIT(A) considered the peak credit as ?6,79,154, leading to a relief for the assessee. The order was passed despite the absence of the assessee during the proceedings.

4. Appellate Tribunal's decision:
The Revenue contended that the order passed by Ld. CIT(A) without giving an opportunity to the A.O. was not valid. The Tribunal agreed that the matter required reconsideration at the level of Ld. CIT(A) as the assessee did not provide sufficient explanations or evidence. The Tribunal set aside the Ld. CIT(A)'s order and remitted the appeal to re-decide in accordance with law, ensuring both parties are heard.

5. Legal precedent and conclusion:
The Tribunal emphasized the need for proper opportunity for both parties to present their case. It referred to a judgment highlighting the importance of laying a factual foundation for claiming benefits like peak credit. As the assessee did not raise the plea of peak credit before the A.O. and admitted to submitting a cooked-up document, the matter was sent back for re-consideration.

6. Final decision:
The appeal of the Revenue was allowed for statistical purposes, and the order was pronounced in the open court.

This detailed analysis highlights the procedural lapses, legal principles applied, and the Tribunal's decision to remit the case for re-consideration, ensuring fairness and adherence to legal requirements.