2023 (3) TMI 773 - AT - Income Tax

Unexplained cash credit u/s 68 - submission of assessee that he used to collect commission for sending the cash through his account to the relatives of various persons in Bihar - As per CIT-A there was no exceptional situation in which the resident of India was unable to open a bank account specially for amounts like Rs. 10, 000/- to Rs. 50, 000/- as seen in this case - HELD THAT - We find that the assessee has filed confirmation bank statement and detailed written submissions to substantiate his contention. CIT(A) has not given any finding whether the additional evidence deserves to be admitted or required any consideration or not and straightway concluded that there was no exceptional situation in India for not opening a bank account. CIT(A) neither himself nor through AO made any verification of such facts or evidence produced by assessee. The primary contention of assessee is that the amount deposited in Surat was immediately or next day withdrawn in Bihar. No such verification of fact if the amount deposited in the bank account of the assessee was withdrawn locally or such withdrawal was really made in Bihar or Eastern UP as claimed by the appellant. Such facts of withdrawal could be cross verified from the banker of assessee. Hence additional evidence filed before ld CIT(A) was neither considered nor the application of the assessee under Rule-46A was rejected therefore, admit the additional evidence filed by the assessee and restore the grounds of appeal to the file of assessing officer to decide the issue afresh - grounds of appeal raised by the assessee are allowed for statistical purpose. Validity of penalty levied u/s 271(1)(c) - Since we have restored the quantum appeal of the assessee to the file of Assessing Officer for deciding the issue afresh therefore order Of penalty under section 271(1)(c) will not survive.

Summary

Issues Involved:
1. Validity of addition in quantum assessment.
2. Validity of penalty levied under Section 271(1)(c) of the Income Tax Act.

Summary:

1. Validity of Addition in Quantum Assessment:
The assessee challenged the addition of Rs. 29,91,500/- as income in the quantum assessment. The assessee argued that the cash deposits in his bank account were made on behalf of friends and relatives from Bihar, who did not have their own bank accounts and used the assessee's account to transfer money to their families. The Assessing Officer (AO) reopened the case under Section 147 based on information about the cash deposits and added the entire amount as unexplained cash credit under Section 68, initiating penalty under Section 271(1)(c). The CIT(A) upheld the AO's decision, stating that the explanation provided by the assessee was not satisfactory and dismissed the appeal.

The Tribunal found that the CIT(A) did not adequately consider the additional evidence provided by the assessee, such as bank statements, confirmations from individuals, and Aadhar cards. The Tribunal noted that neither the CIT(A) nor the AO verified whether the cash deposits in Surat were withdrawn in Bihar as claimed. Consequently, the Tribunal admitted the additional evidence and remanded the case to the AO for fresh consideration, instructing the AO to verify the evidence and pass a new order in accordance with the law. The appeal was allowed for statistical purposes.

2. Validity of Penalty under Section 271(1)(c):
Since the quantum appeal was remanded to the AO for fresh consideration, the Tribunal held that the penalty order under Section 271(1)(c) would not survive. However, the AO was given the liberty to pass a new penalty order if deemed necessary, in accordance with the law. The appeal regarding the penalty was allowed.

Conclusion:
The Tribunal allowed both appeals for statistical purposes, remanding the quantum assessment issue to the AO for fresh consideration and setting aside the penalty order with the option for the AO to reissue it if appropriate.