Loading judgment…
Facts
The assessee, engaged in egg trading, deposited a significant amount of cash into his bank account. The Assessing Officer (AO) made additions for unexplained cash deposits and expenses, as the assessee failed to provide adequate evidence for the source of cash and identify the suppliers of eggs.
Held
The Tribunal held that the CIT(A) erred in deleting additions without a proper remand report from the AO and without verifying the evidence furnished by the assessee. The Tribunal restored the issue to the AO for fresh adjudication.
Key Issues
Whether the CIT(A) was justified in admitting additional evidence and deleting additions without a proper remand report, and whether the assessee provided sufficient evidence for cash deposits and supplier identity.
Sections Cited
133(6), 46A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “G” BENCH, MUMBAI
Before: SUNIL KUMAR SINGH, HON’BLE
O R D E R
PER NARENDRA KUMAR BILLAIYA, AM:
This appeal by the revenue is preferred against the order dated 13/08/2024 by NFAC, Delhi [hereinafter ‘the ld. CIT(A)’] pertaining to AY 2017-18.
The grievance of the revenue read as under:- “1. Whether on facts, in circumstances of the case and in law, learned CIT(A) erred in admitting the additional evidences violating Rule 46A without granting proper time for submission of remand report. 2. Whether on facts, in circumstances of the case and in law, learned CIT(A) erred in deleting the addition of Rs. 3,17,40,300/- without appreciating the fact that the assessee failed to provide any evidence w.r.t. source f cash deposits during the course of assessment proceedings. 3. Whether on facts, in circumstances of the case and in law, learned CIT(A) erred in admitting the fact that the assessee failed to prove the identity of the parties namely Karuna Egg Centre and Mohd Naseeruddin during the course of assessment proceedings as well as remand proceedings.
2 4. The appellant craves leave to add, alter, modify or delete any of the above Grounds of appeal
.”
3. Briefly stated the facts of the case are that the assessee filed his return of income electronically on 08/02/2018 declaring total income of Rs. 2,30,620/-. The return was selected for scrutiny assessment and accordingly statutory notices were issued and served upon the assessee.
4. During the course of scrutiny assessment proceedings, the AO noticed that the assessee has made cash deposits of Rs. 3,17,40,300/- in his bank account maintained with Hindustan Co-operative Bank Ltd., Vikroli Branch, Mumbai. Details were directly called from the bank and the bank submitted the bank statement in respect of the bank account of the assessee. The assessee was asked to submit the detailed summary of cash deposits along with the source of funds with documentary evidence. 4.1. The assessee explained that he was in the business of trading in eggs and sales are made in cash and the said cash recovered on sale of eggs have been deposited in the bank. 4.2. The AO found that the total sales recorded during the preceding year was only Rs.60.54 Lakhs whereas during the year the sales suddenly increased to Rs. 4.60 Crores. The AO observed that the assessee had failed to furnish the details of customers and persons to whom sales were made on cash basis. 4.2.1. Notice u/s 133(6) of the Act were issued to two suppliers from whom the assessee has claimed to have made huge purchases of eggs during the year, namely, Karuna Egg Centre and Mohd. Naseeruddin. Notice issued to Karuna Egg Centre, returned unserved and no reply has been received from Mohd. Naseeruddin. The AO proceeded by 3 making addition of Rs. 3,17,40,300/- being unexplained cash deposited and further added Rs. 4,45,465/- on account of expenses. 4.3. The assessee carried the matter before the ld. CIT(A) and furnished ledger confirmations from supplier Karuna Egg Centre and also furnished other details. It was explained that the assessee had started wholesale trade in eggs purchasing from Hyderabad from FY 2015-16 and hence the gross profit has been reduced from 21.92% to 11.41%. The overhead expenses have also increased.
5. The ld. CIT(A) called for a remand report from the AO vide letter dated 03/06/2024, in order to verify the evidence produced by the appellant. However, no remand report was received from the AO and on the basis of the details submitted by the assessee, the ld. CIT(A) deleted the impugned additions.
6. We have given a thoughtful consideration to the orders of the authorities below. It is true that full compliance was not made by the assessee during the assessment proceedings. It is equally true that the ld. CIT(A) called for a remand report from the AO calling for the details of the verification of the evidence furnished by the assessee.
7. We are of the considered view that since the ld. CIT(A) was not burdened by any time bearing pressure, he ought to have waited for the remand report by issuing reminders. Since there is no mention in the body of the order of the ld. CIT(A) that, he himself has examined /verified the documents furnished by the assessee nor is there any whisper of any verification from the two suppliers by the ld. CIT(A), the issue needs to be verified at the assessment stage. Therefore, in the interest of justice and fairplay, we restore the issue to the file of the AO. The assessee is directed to furnish all the necessary documents in I.T.A. No. 5253/Mum/2024 4