2021 (10) TMI 1141 - AT - Income Tax

Addition invoking provisions of section 69 and 40A/40a(ia) - CIT- A deleted the addition - HELD THAT - We agree with the Ld. Sr. DR that the orders of Ld. CIT(A) are cryptic and is passed without recording proper reasoning. The Ld. CIT(A) reproduced the submissions filed by assessee and decided the issue without giving reasons. In the interest of justice we remand this issue back to the Ld. AO to verify the claims in both the appeals based on evidences/submissions filed by assessee and in accordance with law. Needless to say that proper opportunity of being heard must be granted to assessee in accordance with law. Revenue appeals stands allowed for statistical purposes.

Issues Involved:
1. Deletion of additions based on written submissions without proper explanation of sources.
2. Admission of fresh submissions without giving opportunity to Assessing Officer.
3. Compliance with provisions of section 40A(3)/40(a)(ia) for cash payments.
4. Reduction of additions without proper adjudication.
5. Consideration of seized documents as true under section 132(4A).
6. Properties purchased by the individuals considered as investments out of undisclosed income.

Analysis:

1. The appeals were filed by the revenue against the orders of the Ld. CIT(A) regarding the deletion of additions made based on written submissions without proper explanation of sources. The revenue contended that the CIT(A) erred in accepting the submissions without supporting evidence or cash flow statements during assessment and appellate proceedings.

2. The revenue raised concerns about the admission of fresh submissions without giving an opportunity to the Assessing Officer, which they argued was in contravention of Rule 46A of the Income Tax Rules. The CIT(A) was criticized for considering new submissions not presented during the assessment proceedings.

3. Regarding compliance with provisions of section 40A(3)/40(a)(ia) for cash payments, the revenue argued that the CIT(A) erred in deleting the additions without adequate explanation of the details of payments and supporting evidence. The CIT(A) was accused of disregarding the lack of proper cash flow statements.

4. The revenue contested the reduction of additions without proper adjudication, claiming that the CIT(A) ordered reductions without thoroughly examining the evidence and issues at hand. The revenue sought a more detailed consideration of the additions made.

5. The revenue also challenged the consideration of seized documents as true under section 132(4A), arguing that the CIT(A) erred in deleting additions made on unexplained cash payments based on the seized material without proper verification or explanation by the assessee.

6. Lastly, the revenue disputed the properties purchased by the individuals as investments out of undisclosed income. The Assessing Officer treated these purchases as investments from undisclosed income, leading to significant additions in the hands of the individuals. The CIT(A) decision to delete these additions was a point of contention for the revenue.

In conclusion, the Appellate Tribunal found the orders of the CIT(A) to be cryptic and lacking proper reasoning. The Tribunal remanded the issues back to the Assessing Officer for verification based on the evidence and submissions provided by the assessee. The Tribunal emphasized the importance of granting the assessee a proper opportunity to be heard in accordance with the law. The appeals filed by the revenue were allowed for statistical purposes, and the orders were pronounced on October 14, 2021.

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