2022 (11) TMI 471 - AT - Income Tax

Unexplained cash deposits - AIR details consist of 107 entries for deposit of amount into the bank and entry for sale of immovable property - HELD THAT - The bank account statement, bank book and cash book of the appellant in respect of each bank account were duly furnished before the CIT(A) which is also appearing before us being part of the paper book alongwith bank statements. The audit report was also placed on record on 30.03.2015 which has been noted by the Ld.AO at Page No.3 of the order passed by him. The individual balance sheet as well as P L Account of the assessee and three referred concerns filed before us, reveal that there is several credit and job entries from time-to-time which has sought to be claimed to be approved of carrying out the business during the year under consideration of the assessee. As further observed by him that the document letter dated 30.03.2015 shows candid confession of the entrepreneur about the tax implications, therefore, intention of the appellant cannot be doubted. We fail to follow as to whether the Ld. CIT(A) can grant relief on the basis of the documents, which has not been verified by the Ld. AO neither been placed before the Ld. CIT(A) as per the statement made by the appellant in their submissions itself against the remand report filed by the Ld.AO. Now, merely because the books of accounts have been subjected to tax audit u/s 44AB of the Act and the Auditor had certified the books of accounts to be in order, the contention made by the assessee cannot be stated to be full proof. In that view of the matter, we do not find the impugned order deleting addition made by the Ld.AO to be justified. For the ends of justice, as we have already discussed above that the issue has not been verified by the Ld.AO properly, the same is required to be verified afresh by the Ld.AO on the basis of the documents as mentioned by him in its remand report dated 05.05.2017. We set aside the order passed by the Ld. CIT(A) and remitting the issue to the file of the Ld.AO to consider the same afresh upon taking into consideration the evidence to be adduced by the assessee as mentioned hereinabove and upon giving an opportunity of being heard to the assessee. The Ld.AO is directed to pass a reasoned order strictly in accordance with law. Revenue s appeal is allowed for statistical purpose.

Summary

Issues Involved:
1. Deletion of addition of Rs.5,10,00,700/- on account of unexplained cash deposits.
2. Verification of the appellant's business receipts and related documents.
3. Compliance with procedural requirements during assessment and remand proceedings.

Issue-wise Detailed Analysis:

1. Deletion of Addition of Rs.5,10,00,700/- on Account of Unexplained Cash Deposits:
The Revenue appealed against the deletion of an addition of Rs.5,10,00,700/- by the Ld. Commissioner of Income Tax (Appeals) [CIT(A)]. The addition was initially made by the Income Tax Officer (ITO) based on AIR information revealing cash deposits in various bank accounts. The assessee claimed these deposits were business receipts from three proprietary firms, which had incurred losses. The Ld. CIT(A) deleted the addition, accepting the assessee's explanation and supporting documents, which included bank statements, bank books, and cash books for the relevant accounts. The Ld. CIT(A) found that the books of accounts had been audited under Section 44AB and certified by a Chartered Accountant.

2. Verification of the Appellant's Business Receipts and Related Documents:
During appellate proceedings, the assessee provided detailed explanations and documents to support the claim that the cash deposits were business receipts. These included statements and books for Axis Bank, Sardar Vallabhbhai Sahkari Bank Ltd., and ICICI Bank, as well as cash books for the three proprietary firms. The Ld. CIT(A) sought a remand report from the AO, who objected on grounds such as the absence of sales/purchase registers, invoices, transportation details, and delivery challans. Despite these objections, the Ld. CIT(A) accepted the assessee's evidence, noting that the books of accounts were audited and the primary documents were verified by the Chartered Accountant.

3. Compliance with Procedural Requirements during Assessment and Remand Proceedings:
The Ld. CIT(A) admitted additional evidence, citing reasons such as the appellant's uncle's death and the voluminous nature of the data, which justified the failure to produce documents earlier. The Ld. CIT(A) relied on various case laws to support the admission of additional evidence. However, the Tribunal noted that the AO had not properly verified the documents during assessment or remand proceedings. The Tribunal found that the Ld. CIT(A) granted relief based on unverified documents and concluded that the matter required fresh verification by the AO.

Conclusion:
The Tribunal set aside the order of the Ld. CIT(A) and remitted the issue back to the AO for fresh consideration. The AO was directed to verify the documents afresh, consider the evidence to be adduced by the assessee, and pass a reasoned order in accordance with the law, providing an opportunity of being heard to the assessee. The appeal by the Revenue was allowed for statistical purposes.