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Income Tax Appellate Tribunal, DELHI BENCH: ‘SMC’ NEW DELHI
Before: SHRI SAKTIJIT DEY
This is an appeal by the assessee against order dated 03.04.2018 of learned Commissioner of Income Tax (Appeals)-11, New Delhi, for the assessment year 2009-10.
In ground no. 1 with its sub-grounds, the assessee has contested the addition of Rs.42,89,500/- made under section 69 of the Act. Briefly the facts are, the assessee is a resident individual.
For the assessment year under dispute, the assessee filed his return of income on 29.03.2010 declaring total income of Rs.3,96,672/-. In course of assessment proceeding, the Assessing Officer noticed that the assessee has deposited cash amounting to Rs.42,89,500/- in his saving bank account maintained with Axis Bank. Therefore, he called upon the assessee to explain the source of such cash deposit. Though, the assessee offered his explanation regarding the source of cash deposit, however, the Assessing Officer was not convinced. Ultimately, he completed the assessment under section 143(3) of the Act by adding back the cash deposits of Rs.42,89,500/- under section 69 of the Act. Contesting the aforesaid addition, the assessee preferred an appeal before learned Commissioner (Appeals).
In course of proceeding before the first appellate authority, the assessee again explained the source of the cash deposits.
Moreover, in respect of cash deposits of Rs.5,62,430/-, the assessee furnished certain additional evidences. Being convinced with the submissions made by the assessee and the evidences furnished, learned Commissioner (Appeals) deleted the addition made by the Assessing Officer. Being aggrieved, the Revenue went in appeal before the Tribunal, inter alia, on the ground that learned Commissioner (Appeals) has deleted the addition by considering additional evidences furnished by the assessee, in violation of Rules 46A of the Income Tax Rules. Accepting the plea of the 2 | P a g e Revenue, the Tribunal restored the issue back to the Assessing Officer for fresh adjudication, after considering the evidences furnished by the assessee.
In pursuance to the direction of the Tribunal, the Assessing Officer considered the issue afresh. However, alleging that in spite of several opportunities being granted, the assessee failed to appear and substantiate the source of cash deposit, the Assessing Officer again added back the amount of Rs.42,89,500/- under section 69 of the act. Though, the assessee contested the aforesaid addition before learned Commissioner (Appeals), however, he was unsuccessful.
I have heard Sh. Mukul Gupta, learned Authorized Representative of the assessee and Sh. Om Prakash, learned Departmental Representative. Undisputedly, this is the second visit of the assessee to the Tribunal in respect of the very same addition made by the Assessing Officer. It is a fact on record that during the year under consideration, the assessee had deposited cash amounting to Rs.42,89,500/- in an account maintained with Axis Bank. Though, in the original assessment proceeding, the Assessing Officer has added back the entire cash deposit under section 69 of the Act, however, while considering the issue in 3 | P a g e appeal, learned Commissioner (Appeals) deleted the additions. On a perusal of material on record, it is observed, while deciding the issue in the first round, learned Commissioner (Appeals) was satisfied with the submissions made and the evidences produced by the assessee, hence, accepted the source of cash deposits. No doubt, while considering Revenue’s appeal against the order of learned Commissioner (Appeals), the Tribunal restored the issue back to the Assessing Officer for fresh adjudication. However, it will be relevant to take note of the observations of the Tribunal while restoring the issue to the Assessing Officer in order dated 10.04.2015 in ITA No.3569/Del/2013. The observations are as under:
“9. We have heard both the parties and perused the relevant records available with us. We find that the Ld. CIT(A) has adjudicated the issue in dispute as under:- “7. I have considered the facts of the case and the submissions of the appellant. I have also perused the relevant bank statements filed by the appellant during the course of appellate proceedings. The Assessing Officer had made the impugned addition on the ground that the appellant did not file any supporting documentary evidence pertaining to the source of these deposits amounting to RS.30,94,500/- and RS.11 ,95,000/-. On perusal of the details furnished by the appellant, I find that the major portion of the cash deposited was out of the cash withdrawals made from the bank account. The AR of the appellant submitted that the cash withdrawals were being made for some purpose and because of their non-utilization, the same were re-deposited in the bank account. The Assessing Officer had not disputed the cash withdrawal made by the appellant. On the other hand, perusing the bank statement, the appellant was able to prove that the source of deposits were 4 | P a g e out of withdrawal. With regard to the source of gift of Rs.5,62,430/-. It has been explained by the AR of the appellant that this amount was from the sale consideration received by him on sale of various items, which was earlier inadvertently and wrongly explained as receipt of gift. The AR of the appellant filed before me the copies of invoices in respect of the sale of certain items on account of which he had received a cash of RS.5,62,430/-, which was deposited in this bank account. Therefore, considering the facts of the case, I hold that the Assessing Officer had not made out any case for making the impugned addition. Accordingly, since the source of cash deposits in the bank account stands explained, the addition of Rs.42,89,500/- made by the Assessing Officer is hereby deleted.”
10. From the above, we find that the essence of the claim of the assessee is that deposits are out of the withdrawals and thus there is a nexus between the said withdrawals and deposits. Apart from the above, the ld CIT(A) has held that sum of Rs.5,62,430/- represented sale of certain items which were stated earlier before the AO inadvertently as gifts. The invoice in support of the sale of the goods on account of which he had received Rs.5,62,430/- was placed before the ld CIT(A) for the first time during the appellate proceedings. We find that this evidence has not been forwarded to the AO for his examination in terms of Rule 46A. As such we find force in Page 4 of 4 the contention of the ld DR that the ld CIT(A) should not have admitted and accepted the additional evidence without following the procedure prescribed in Rule 46A. The action of the ld CIT(A) to admit evidence without the new evidence furnished before him for the first time being not sent to AO, for his remand report, cannot be countenanced ; and before admitting new evidence the first appellate authority ought to have followed the procedure as mandated under Rule 46A of the Rules and we are therefore left with no other alternative but to restore the matter back to the file of AO for fresh adjudication.
11. In the background of the aforesaid discussions, we set-aside the order of the Ld. CIT(A) on the issues in dispute and remit back the issues in dispute to the file of the Assessing Officer, with the direction to consider the same afresh along with the evidence produced before the ld CIT(A). Needless to say that AO before passing the order afresh shall provide adequate opportunity to the assessee.
From the aforesaid observations of the Tribunal, it is quite patent and obvious that the factor which weighed in with the Tribunal for restoring the issue back to the Assessing Officer is the additional evidences furnished by the assessee to explain the source of cash deposit of Rs.5,62,430/-, since, learned Commissioner (Appeals) had accepted the source of the aforesaid amount based on additional evidences furnished by the assessee, without providing any opportunity to the Assessing Officer to examine them. Thus, there is no adverse observation of the Tribunal with regard to the rest of the amount, except, the amount of Rs.5,62,430/-. Even, in respect of the amount of Rs.5,62,430/- the only observation of the Tribunal is regarding violation of Rule 46A. Thus, considering the fact that in the first round of litigation, learned Commissioner (Appeals) has accepted the source of cash deposit of Rs.37,27,070/- (42,89,000 - 5,62,430), based on evidences, which were available not only before the Assessing Officer but before the first appellate authority, therefore, no further addition of this amount can be made in the second round of litigation.
As regards the balance amount of Rs.5,62,430/-, it is a fact on record that in the fresh assessment proceeding, in pursuance to the direction of the Tribunal, the assessee neither appeared, nor 6 | P a g e furnished any supporting evidence to explain the source. Even, before the first appellate authority, the assessee could not furnish any conclusive evidence to substantiate its claim that the amount in question was received on sale of certain items. Thus, in my view, cash deposit to the extent of Rs.5,62,430/- remained unexplained.
Thus, I direct the Assessing Officer to sustain the addition to the extent of Rs.5,62,430/- and delete the balance amount. Grounds are partly allowed.
In ground no. 2, the assessee has claimed set off of brought forward loss under the head income from house property.
I have heard both the parties and perused the materials on record. Undisputedly, this issue was never raised by the assessee in the first round of litigation till the stage of Tribunal. In the fresh proceedings, in pursuance to the direction of Tribunal, the assessee raised this ground before the first appellate authority. Thus, when the assessee had not raised this issue at any point of time in the earlier round of proceedings and the direction of the Tribunal to the Assessing Officer was on a specific issue, the assessee cannot be permitted to raise a fresh issue, at this stage. Therefore, I uphold the decision of learned Commissioner (Appeals) in dismissing assessee’s ground raised on the issue. This ground is dismissed. 7 | P a g e
Ground no. 3, being consequently in nature, is dismissed.
In the result, the appeal is partly allowed.
Order pronounced in the open court on 11th August, 2022