2020 (12) TMI 553 - AT - Income Tax

Addition on account of credit in bank account of the appellant with Punjab National Bank - unexplained credits in the bank account of the assessee - AO expressed his inability to submit his comments on the ground that the record being very old was not traceable - explanation put forth by the assessee that the credit in the bank account on account of amount received from sale of diamond jewellery was rejected by the AO on the basis of the report of the Investigation Wing - CIT-A upheld the order of the AO only on the ground that the earlier order framed by the AO was based on the report of the Investigation Wing - matter traveled upto the level of the Tribunal and set aside the order of the CIT(A) and restored the issue to the file of the AO for decision afresh on the issue after giving the assessee a reasonable opportunity of being heard - second round of appeal HELD THAT - Admittedly the directions given by the Tribunal have not been complied with by the AO while framing the impugned assessment in this case. Though the ld. CIT(A) tried to comply with the directions by writing letters to the concerned officers related to the investigation and assessment framed in the case of M/s. Tambi Exports, however, no record was furnished by them in this respect to the ld. CIT(A). Even the Assessing Officer also failed to give his comments on the submissions/objections submitted by the assessee before the CIT(A) stating that the record was very old and was not traceable. Tribunal while setting aside the matter to the AO has given a categorical observation that the report of the Investigation Wing in the case of M/s. Tambi Exports was not conclusive to uphold the additions made by the AO, rather the factum of assessment in the case of M/s. Tambi Exports on the basis of the said investigation report was required to be considered/ascertained and further the evidence brought on record by the revenue is required to be confronted to the assessee and the assessee is required to be given reasonable opportunity of being heard on the same. Admittedly neither the record/evidences as directed by the Tribunal, have been brought on record nor the assessee could get the opportunity to confront the same. The additions made by the lower authorities are not sustainable in the eyes of law and the same are ordered to be deleted.- Decided in favour of assessee.

Summary

Issues:
Appeal against addition of credit in bank account - Compliance with Tribunal directions - Assessment based on Investigation Wing report - Failure to provide necessary records - Compliance with Tribunal directions - Sustainability of additions.

Analysis:
The appeal was filed against the addition of a specific amount in the bank account of the assessee, which was initially made by the AO in the assessment. The Tribunal, in a previous order, had set aside the issue to the file of the AO, emphasizing the need for a thorough examination of the evidence and giving the assessee a fair opportunity to be heard. However, in the subsequent assessment, the AO reaffirmed the additions without adhering to the Tribunal's directions. The CIT(A) attempted to follow the Tribunal's directions by seeking necessary records and conducting inquiries related to the case of M/s. Tambi Exports, but faced non-cooperation from the concerned officers and the AO, who claimed the unavailability of old records. Despite efforts, the CIT(A) upheld the additions solely based on the Investigation Wing report, noting the non-compliance with the Tribunal's directions regarding the assessment in the case of M/s. Tambi Exports.

The Tribunal observed that the directions provided were not adhered to by the AO while framing the assessment, and the CIT(A) failed to obtain the required records and evidence for a fair assessment. The Tribunal reiterated that the Investigation Wing report alone was insufficient to support the additions without considering the assessment in the related case and providing the assessee with a chance to respond to the evidence. As the necessary records and evidence were not produced, and the assessee was not given a fair opportunity to confront the same, the Tribunal concluded that the additions made by the lower authorities were not legally sustainable and ordered their deletion. The appeal of the assessee was allowed based on the lack of compliance with the Tribunal's directions and the failure to provide essential records for a proper assessment.

In conclusion, the Tribunal emphasized the importance of complying with its directions for a fair assessment process, including considering all relevant evidence and providing the assessee with a reasonable opportunity to respond. Non-compliance with these directives led to the unsustainable additions being deleted in favor of the assessee.