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2018 (11) TMI 631 - AT - Income TaxAddition on account of capital contributed by the assessee - accumulation of any agricultural income - Held that - No evidence of accumulation of any agricultural income have been filed by assessee. CIT(A) without any basis of dairy business, accepted the explanation of assessee. CIT(A) despite noting the return for preceding assessment year 2008-2009 was filed simultaneously would show that it was filed with purpose to show opening capital balance on the assessment year under appeal. CIT(A) merely on giving benefit of doubt, accepted the explanation of assessee, therefore, the totality of the facts and circumstances would show that the Order of the CIT(A) cannot be sustained in law. The matter requires reconsideration. Set aside the impugned order and restore this issue to the file of CIT(A) with a direction to re-decide this issue strictly on the basis of merits and evidence available on record. CIT(A) shall give reasonable and sufficient opportunity of being heard to the assessee and the A.O. Ground No.1 of appeal of Revenue is allowed for statistical purposes. Cash payment u/s 40A(3) - Held that - No interference is called for in the matter. Though in assessment year under appeal, CIT(A) has no power to set aside the issue to the file of A.O. but it is specific that the A.O. has not dealt with the submissions of the assessee as what was pleaded before him. Therefore, ultimately the matter would require reconsideration at the level of the A.O. Though we do not approve the Order of the CIT(A) in remanding the matter to the file of A.O. however, while setting aside the Order of the CIT(A), we direct the A.O. to examine this issue afresh in the light of material available on record. A.O. shall give reasonable and sufficient opportunity of being heard to the assessee. Accordingly, Ground No.2 of appeal of Revenue is allowed for statistical purposes. Addition on account of unsecured loans - Held that - Bogus transaction and all documents are created and fabricated by assessee to rotate her unaccounted money through the alleged transactions of gift or loans. CIT(A) without verifying the facts and circumstances of the case and evidence on record, without any justification deleted the addition. The findings of the CIT(A) are perverse in nature and are liable to be set aside. Since assessee failed to prove the identity of the creditors, their creditworthiness and genuineness of the transaction in the matter, therefore, there is no reason for the A.O. to make further enquiry into the matter. A.O. has rightly rejected the explanation of assessee. CIT(A) was, therefore, not justified in deleting the entire addition without there being any evidence in support of explanation of assessee. We, accordingly, set aside the Order of the CIT(A) and restore the Order of the A.O. In the result, part of Ground No.3 of the Department is allowed. Unexplained cash credit on account of purchases, application fee and cost of furniture and cash in hand - Held that - Since the issue of opening capital balance, loans etc., have been restored to the file of Ld. CIT(A) and loan of ₹ 12,90,000/- has been confirmed by us above, therefore, this issue requires reconsideration at the level of the Ld. CIT(A). The finding on the other grounds would be relevant for the purpose of disposal of this ground. We, accordingly, set aside the Order of the Ld. CIT(A) and restore this issue to his file with a direction to re-decide this ground of appeal afresh on merits by giving reasonable and sufficient opportunity of being heard to the assessee and A.O. Ground No.4 of appeal of Department is allowed for statistical purposes.
Issues Involved:
1. Deletion of addition on account of capital contributed by the assessee. 2. Setting aside the issue of cash payment under section 40A(3) of the I.T. Act, 1961. 3. Deletion of addition on account of unsecured loans. 4. Deletion of addition on account of unexplained cash credit, application fee, cost of furniture, and cash in hand. Issue-wise Detailed Analysis: 1. Deletion of Addition on Account of Capital Contributed by the Assessee: The Revenue challenged the deletion of an addition of ?3 lakhs on account of the capital contributed by the assessee. The assessee claimed that this amount represented her accumulated savings from agricultural income. However, the AO noted the absence of a bank account and independent evidence of holding ?3 lakhs. The CIT(A) accepted the explanation of the assessee based on her rural background and agricultural activities, despite the lack of concrete evidence. The Tribunal found that the CIT(A) accepted the explanation without proper investigation and thus set aside the order, directing the CIT(A) to reconsider the issue based on merits and available evidence. 2. Setting Aside the Issue of Cash Payment Under Section 40A(3) of the I.T. Act, 1961: The Revenue contested the CIT(A)'s decision to set aside the issue of cash payments for purchases amounting to ?53,06,324/- under section 40A(3). The AO had made this addition due to payments exceeding ?20,000/- being made in cash, which the assessee justified as being done on bank holidays. The CIT(A) directed the AO to re-examine the issue considering the exceptions in Rule 6DD. The Tribunal noted that while the CIT(A) lacked the power to remand, the matter required reconsideration by the AO. Thus, the Tribunal set aside the CIT(A)'s order and directed the AO to re-examine the issue afresh. 3. Deletion of Addition on Account of Unsecured Loans: The Revenue challenged the deletion of additions totaling ?14,71,000/- and ?12,99,000/- on account of unexplained cash credits. The assessee claimed these amounts were loans from various individuals who had participated in liquor auctions but failed to secure contracts. The CIT(A) accepted the explanation based on affidavits and documents provided by the assessee. However, the Tribunal found that the CIT(A) had accepted the explanation without sufficient evidence and proper verification. The Tribunal set aside the CIT(A)'s order and directed a reconsideration of the issue based on merits and available evidence. 4. Deletion of Addition on Account of Unexplained Cash Credit, Application Fee, Cost of Furniture, and Cash in Hand: The Revenue contested the deletion of additions related to purchases of ?35,444/-, an application fee of ?11,000/-, and cash in hand of ?84,786/-. The CIT(A) had deleted these additions based on the favorable view taken on other grounds related to the opening capital balance and loans. The Tribunal noted that since the issues of opening capital balance and loans were being reconsidered, this issue also required reconsideration. The Tribunal set aside the CIT(A)'s order and directed a fresh examination of the issue by the CIT(A). Conclusion: The Tribunal partially allowed the appeal of the Revenue, setting aside several findings of the CIT(A) and directing a reconsideration of the issues based on merits and available evidence. The Tribunal emphasized the need for a thorough investigation and proper verification of the claims made by the assessee.
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