2019 (11) TMI 27 - AT - Income Tax

Unexplained cash deposit in the bank account of the assessee - HELD THAT - A perusal of the order of the CIT(A) shows that Sh. Anil Sachdeva in his statement had clearly stated that he had never signed the affidavit nor has given ₹ 3 lacs for getting the demand draft in favour of M/s. Hundai Motors Ltd. PAN number given by the assessee is also incorrect. Similarly Sh. Sanjay Khattar had also stated that neither he has signed the affidavit nor has given ₹ 2,50,000/- for getting demand draft in favour of the assessee Sh. Suresh and Chakresh. He had never given any amount of ₹ 2,50,000/- to Sh. Padam Lal Dua i.e. assessee. Similarly summon issued to Ms. Bhawna Narula was returned back unserved and the assessee, despite being asked by the AO to produce the said party, never produced Ms. Bhawna Narula who has given an amount of ₹ 13,60,000/- to the assessee as claimed by him. A perusal of the order of the CIT(A) shows that assessee has forged the affidavit of Sh. Anil Sachdeva and Sh. Sanjay Khattar and failed to produce Ms. Bhawna Narula before the AO despite being given opportunity by the AO during remand proceedings. The arguments of the assessee that opportunity to cross-examination was not given falls flat especially when the two persons have stated before the AO on oath that neither they have signed the affidavit nor have given any such amount to the assessee. Similarly Ms. Bhawna Narula was never produced before the Assessing Officer for recording her statement despite being asked by the AO to do so since the summon issued to her was returned unserved. Assessee also failed to justify the source of the balance amount of ₹ 75000/- i.e. (1985000 -19,10,000 i.e. (3,00,000 250000 13,60,000). Appeal filed by the assessee is dismissed.

Summary

Issues Involved:
1. Addition of ?26,65,000/- on account of unexplained cash deposits in the bank account.
2. Admission and consideration of additional evidence under Rule 46A of the IT Rules.
3. Opportunity to cross-examine the individuals who submitted affidavits.
4. Consideration of the rejoinder filed by the assessee against the remand report.
5. Action against individuals who deviated from their original affidavits.

Issue-wise Detailed Analysis:

1. Addition of ?26,65,000/- on account of unexplained cash deposits:
The assessee declared total income of ?1,58,400/- under "salary" and ?31,800/- under "income from other sources." However, the Assessing Officer (AO) noted cash deposits totaling ?26,50,000/- in the assessee's bank account, which were unexplained. Consequently, the AO made an addition of ?26,65,000/- to the total income on account of unexplained cash deposits. The CIT(A) initially sustained this addition, but upon remand by the Tribunal, the CIT(A) deleted ?6,80,000/- and sustained ?19,85,000/-.

2. Admission and consideration of additional evidence under Rule 46A of the IT Rules:
During the remand proceedings, the assessee submitted additional evidence, including affidavits from various individuals claiming to have provided the cash deposits. The CIT(A) admitted these additional evidences and forwarded them to the AO for comments and a remand report. The AO objected to the admission of additional evidence due to non-compliance by the assessee during the initial proceedings but also provided a report on the merits of each addition.

3. Opportunity to cross-examine the individuals who submitted affidavits:
The assessee contended that the CIT(A) upheld the addition without providing an opportunity to cross-examine the individuals who had deviated from their original affidavits. The CIT(A) relied on the statements made during the remand proceedings, where individuals like Sh. Anil Sachdeva and Sh. Sanjay Khattar denied having given the cash amounts or signing the affidavits. The Tribunal found that the assessee's argument about the lack of cross-examination opportunity was invalid, as the individuals had clearly denied the affidavits' authenticity.

4. Consideration of the rejoinder filed by the assessee against the remand report:
The assessee argued that the CIT(A) did not properly consider the rejoinder filed against the AO's remand report. However, the Tribunal noted that the CIT(A) had thoroughly examined the remand report and the rejoinder, and made a reasoned decision based on the evidence and statements obtained during the remand proceedings.

5. Action against individuals who deviated from their original affidavits:
The CIT(A) directed the AO to share the statements of the individuals (Sh. Anil Sachdeva, Sh. Sanjay Khattar, Sh. Prakash Sachdeva, and Ms. Bhawna Narula) with the respective AOs for taking suitable action under the Income Tax Act and other statutory provisions. The Tribunal upheld this directive, emphasizing the need for appropriate action against those who deviated from their original affidavits.

Conclusion:
The Tribunal dismissed the appeal filed by the assessee, upholding the CIT(A)'s decision to sustain the addition of ?19,85,000/- out of the total addition of ?26,65,000/-. The Tribunal found no infirmity in the CIT(A)'s order, which was based on a detailed examination of the remand report, additional evidence, and the statements of the individuals involved. The Tribunal emphasized the importance of proper verification and the need for action against individuals who provided false affidavits.