DEPUTY COMMISSIONER OF INCOMETAX, CHENNAI vs. ADIMOOLAM, CHENNAI

The brief facts of the case are that the assessee is an individual, had not filed the return of income for the assessment year 2014-15. Based on the information available with the Department held that the assessee had made a cash deposit of Rs.2,50,000/- in bank account and also has purchased an immovable property valued at Rs.7,57,20,000/- jointly with other person by investing an amount of Rs.3,78,60,000/- by the assessee. Since the assessee had not filed his return of income for the assessment year 2014-15, the case was reopened u/s.147 of the Act by the AO. Accordingly, the AO issued the statutory notices to the assessee calling for the documentary evidences in support of the investments and cash deposits made. However, the assessee chose to be silent and hence, the AO completed the assessment proceedings u/s.147 r.w.s.144 of the Act dated 29.03.2022 by making an addition of Rs.3,78,60,000/- u/s. 69 of the Act and Rs.2,50,000/- of the Act u/s. 69A of the Act.

Aggrieved, the assessee filed an appeal before the ld.CIT(A). During the course of appellate proceedings, the assessee filed written submissions electronically along with the supporting documents in respect of investments made in immovable property and also relied upon the case laws in support of the claim. The assessee explained the source of investment / purchase in immovable property out of loan borrowed from Kotak Mahindra Bank, Sundaram Enterprises and Mrs.Yashoda. Further, the assessee explained that the source for cash deposit was out of the opening cash balance held and the collection of amounts from debtors. On perusal of written submission and documentary evidences furnished by the assessee, the ld.CIT(A) being satisfied the explanation of source for investments and cash deposit, deleted both the

Aggrieved by the order of the ld.CIT(A), the revenue is in appeal before us with the following grounds of appeal: “1. The order of the Id CIT(A) is contrary to law and facts and circumstances of the case. 2 The Id CIT(A) erred in deleting the addition u/s 69 to the tune of Rs.3,78,60,000/- an account of investment in immovable property made by the assessee, being not properly explained. 3. The Id CIT(A), in deleting the addition made by the AO, failed to afford opportunity to AO u/r 46A(3) of Income-tax Rules, 1962, on additional evidences, produced during the appeal proceedings, such as copy of complete joint loan account statement, sale deed, ledger extracts etc., which were not produced before the AO during the assessment proceedings. 4. The Id CIT(A) erred in deleting the. addition u/s 69A to the tune of Rs.2,50,000/- on account of cash deposits unexplained. 5 The Id CIT(A), in deleting the addition made by the AO, failed to afford an opportunity to AO u/s 46A(3) of Income-tax Rules, 1962, on additional evidences produced during the appeal proceedings, such as financial statements along with details of debtors and evidence of receipt, which were not produced before the AO during the assessment proceedings. 6. For these and other grounds that may be adduced at the time of hearing, it is prayed that the order of the Appellate Authority, i.e., NFẠC, Delhi, may be set aside arid that of the Assessing Officer restored.”

Before us, the ld.DR for the revenue submitted that the assessee had furnished the details by explaining the source of investment and cash deposits along with the documentary evidence only before the ld.CIT(A). However, the ld.CIT(A) has erred by allowing the appeal of the assessee without giving an opportunity to file remand repot by the AO in respect of the additional evidences filed before the ld.CIT(A). Therefore, the ld.DR prayed for setting aside the order of the ld.CIT(A) and remit the matter back to the ld.CIT(A) for re-adjudication by affording an opportunity to the AO to submit the remand report.

None appeared for the assessee before us.

We have considered the submissions of the Ld.DR and perused the material available on record. It is an admitted position that the assessee did not file a return of income for the assessment year 2014-15. It is also not in dispute that the assessee had made cash deposits of Rs.2,50,000/- in the bank account and had invested Rs.3,78,60,000/- towards purchase of immovable property held jointly with another person. Since no return of income had been filed and the assessee did not respond to the notices issued during the reassessment proceedings, the AO completed the assessment exparte u/s.147 r.w.s 144 of the Act and made additions u/s.69 and 69A of the Act.

On perusal of the appellate order, it is evident that the assessee, for the first time before the ld.CIT(A), furnished explanations along with supporting documents to establish the source of investment in the immovable property and the source of the cash deposits. The ld.CIT(A), after examining those submissions and documents, accepted the explanation of the assessee and deleted both additions. However, the record indicates that the evidence relied upon before the ld.CIT(A) were not produced before the AO in the course of assessment proceedings.

In our considered view, once additional evidences were entertained at the appellate stage and such evidence formed the very basis for deletion of the additions, the AO ought to have been afforded an opportunity to examine the same and furnish a remand report in terms of Rule 46A(3) of the Income-tax Rules. The failure to provide such opportunity amounts to violation of the principles of natural justice. The appellate relief having been granted on the

Accordingly, in the interest of justice, we set aside the order of the ld.CIT(A) on these issues and restore the matter to his file with a direction to call for a remand report from the AO, consider the evidence furnished by the assessee after due verification, and thereafter pass a fresh speaking order in accordance with law, after providing reasonable opportunity to both sides

In the result, the appeal filed by the revenue is allowed for statistical purposes.