2017 (11) TMI 105 - AT - Income Tax

Unexplained investment made in Mutual Funds and unexplained cash deposits with ICICI Bank - no appearance on behalf of the assessee at the time of hearing fixed in this case earlier on 29.09.2016, 30.11.2016, 11.01.2017 and 23.02.2017 - additions deleted by CIT-A on additional evidence filed by the assessee without giving any opportunity to the Assessing Officer to verify the same - Held that - Keeping in view the non-compliance on the part of the assessee, this appeal of the revenue is being disposed of ex-parte qua the respondent-assessment after hearing the arguments of the ld. D.R. and perusing the relevant material available on record. As rightly submitted by the ld. D.R., relief has been given by the ld. CIT(Appeals) to the assessee by deleting the additions made by the Assessing Officer on account of unexplained investment made in Mutual Funds and unexplained cash deposits with ICICI Bank respectively by relying on the correspondence made with Calcutta Province of the Society of Jesus, who runs St. Lawrance High School without giving any opportunity to the Assessing Officer to verify the same. As pointed out by him in this regard, the said correspondence was not even available when the assessment was framed by the Assessing Officer vide an order dated 30.12.2011 passed under section 144/147. Thus we set aside the impugned order of the ld. CIT(Appeals) on the issues raised by the Revenue in this appeal and restore the matter to the file of the Assessing Officer for deciding the same afresh after verifying the additional evidence filed by the assesesee for the first time before the ld. CIT(Appeals) in the form of correspondence with Calcutta Province of the Society of Jesus. Appeal of the Revenue is treated as allowed for statistical purposes.

Summary

Issues:
Assessment under section 144/147 based on unexplained cash deposits, investments, and expenditure - Deletion of additions by CIT(A) - Admissibility of additional evidence - Verification of the source of funds - Opportunity to Assessing Officer to verify new evidence.

Analysis:
The case involved an appeal by the Revenue against the order of the ld. Commissioner of Income Tax (Appeals) concerning an individual who made cash deposits, investments in Mutual Fund, and expenditure through a credit card without filing a return of income. The Assessing Officer completed the assessment ex-parte under section 144/147, determining the total income of the assessee. The CIT(A) deleted the additions made by the Assessing Officer based on irregularities in the handling of funds at St. Lawrence High School and the involvement of the assessee, stating that the funds ultimately returned to the school. However, a portion of the expenditure was treated as income of the assessee. The Revenue appealed, questioning the admissibility of additional evidence and the justification for deleting certain additions without independent verification of the source of funds.

The Tribunal noted the non-appearance of the assessee during multiple hearings and disposed of the appeal ex-parte. It found merit in the Revenue's contentions regarding the deletion of additions by the CIT(A) without giving the Assessing Officer an opportunity to verify new evidence submitted for the first time. The Tribunal set aside the CIT(A)'s order and remanded the matter to the Assessing Officer for fresh consideration after verifying the additional evidence. The Assessing Officer was directed to provide a proper opportunity for the assessee to be heard.

In conclusion, the Tribunal allowed the appeal of the Revenue for statistical purposes, emphasizing the importance of proper verification of evidence and providing a fair opportunity for the assessee to present their case before the Assessing Officer. The decision highlighted the need for thorough examination of the source of funds and expenditures to ensure a just assessment process.