2019 (8) TMI 332 - AT - Income Tax

Addition u/s 68 - HELD THAT - We are of the view that matter requires reconsideration at the level of the A.O. Assessee is in business of trading of waste paper. The entire business is depending upon cash purchase and cash sales. A.O. should have consider the nature of business of assessee and should have consider that there were joint accounts with family members of the assessee and matter should have been enquired into whether the cash deposited in the joint accounts belongs to the other family members as well. Since no detailed enquiry have been done at the assessment stage and addition is made merely in the absence of assessee and that assessee explained that due to his ill-health, the evidences could not be produced before A.O, therefore, one chance could be given to assessee to explain the matter in issue before A.O. supported by documentary evidences. We set aside the Orders of the authorities below and restore the matter in issue to the file of A.O. with a direction to re-decide the grounds of appeal so raised by the assessee above, by giving reasonable, sufficient opportunity of being heard to the assessee. - Appeal of assessee allowed for statistical purposes.

Issues:
1. Addition of ?35,76,900 as per CIT(A)'s order.
2. Addition of ?5,42,000 as unexplained cash deposits.
3. Addition of ?5,12,000 on deposits in brother's bank account.
4. Addition of ?4,90,000 in daughter's bank account.
5. Addition of ?86,598 due to alleged low net profit.
6. Disallowance of deduction under section 80C for life insurance premium.

Analysis:
1. The appeal challenged various additions made by the Assessing Officer (AO) under different heads. The CIT(A) upheld the addition of ?35,76,900, disregarding the appellant's explanation and facts. The appellant contended that the reasons cited by the CIT(A) lacked supporting records.

2. The AO added ?5,42,000 as unexplained cash deposits in the appellant's bank account. The appellant, engaged in waste paper trading, explained the cash deposits as proceeds from sales and receipts from various sources. However, the CIT(A) rejected these explanations and confirmed the addition.

3. Another addition of ?5,12,000 was made on deposits in the appellant's brother's bank account. The appellant's explanations regarding the source of these deposits were not accepted by the CIT(A), leading to the confirmation of this addition.

4. An additional ?4,90,000 was added concerning deposits in the bank account of the appellant's daughter. The CIT(A) upheld this addition, emphasizing the lack of evidence supporting the appellant's explanations.

5. The CIT(A) made an addition of ?86,598 due to the alleged net profit being less than 8% of the gross turnover. The appellant's contentions were not accepted, resulting in the confirmation of this addition.

6. Lastly, the CIT(A) disallowed the appellant's deduction under section 80C for life insurance premium due to insufficient evidence. The appellant's representative argued for a reconsideration of the case based on the appellant's health issues and the need to present additional evidence.

7. The ITAT Delhi, after hearing both parties, concluded that the matter required reconsideration by the AO. Given the nature of the appellant's business and the joint accounts with family members, the ITAT directed a fresh assessment, allowing the appellant an opportunity to present evidence. Consequently, the ITAT set aside the CIT(A)'s orders and remanded the case to the AO for a reevaluation, granting the appellant a chance to explain the issues with supporting documents. The appeal was allowed for statistical purposes.

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