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Facts
The assessee, engaged in trading live buffaloes and running a transport business, faced an addition of Rs. 23,80,684/- under Section 68 of the Income Tax Act for unexplained investment in fixed assets. The assessee attempted to provide additional evidence before the CIT(A)/NFAC, but it was not admitted.
Held
The Tribunal held that since the additional evidence was crucial to the issue and the assessee claimed to be illiterate and not knowledgeable about tax laws, it was in the interest of justice to restore the issue to the Assessing Officer.
Key Issues
Whether the CIT(A)/NFAC was justified in not admitting additional evidence and confirming the addition, or if the matter should be remanded to the Assessing Officer for a fresh consideration.
Sections Cited
68, 143(2), 142(1), 143(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCH “SMC”, PUNE
Before: SHRI R. K. PANDA & MS. ASTHA CHANDRA
This appeal filed by the assessee is directed against the order dated 28.11.2024 of the Ld. CIT(A) / NFAC, Delhi relating to assessment year 2017-18.
Although a number of grounds have been raised by the assessee, however, these all relate to the order of the Ld. CIT(A) / NFAC in confirming the addition of Rs.23,80,684/- u/s 68 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) made by the Assessing Officer.
Facts of the case in brief, are that the assessee is an individual engaged in business of trading in live buffaloes wherein he acts as mediator between the breeders / suppliers and the slaughter houses to whom the live stock are eventually supplied in respect of which he earns commission. The assessee also runs a transport business, gross income from which is disclosed at Rs.23,02,870/-. The case was selected for scrutiny under CASS. Accordingly, statutory notices u/s 143(2) and 142(1) of the Act were issued and served on the assessee, in response to which the AR of the assessee appeared before the Assessing Officer and filed certain details. The Assessing Officer completed the assessment u/s 143(3) of the Act on 17.12.2019 determining the total income of the assessee at Rs.39,39,930/- wherein he made addition of Rs.60,200/- out of various expenses being 10% of the various expenses for want of details. Similarly, he made addition of Rs.23,80,684/- u/s 68 of the Act on the ground that the assessee cannot explain the source of the same for investing in the fixed assets.
Before the Ld. CIT(A) / NFAC the assessee filed certain details in the shape of additional evidences which were forwarded to the Assessing Officer. The Assessing Officer objected to the admission of the said additional evidences. The Ld. CIT(A) / NFAC thereafter dismissed the grounds raised by the assessee challenging the addition of Rs.23,80,684/- on account of unexplained credit u/s 68 of the Act by observing as under: “4.3 I have gone through the grounds of appeal, statement of facts, assessment order and written submissions of the appellant. Remand report submitted by the AO has also been perused. It is submitted by the AO in the remand report that the main crux of the addition is unexplained investment in purchase of property. The AO has elaborately studied the balance sheet of the year under consideration as well as the balance sheet for immediately preceding year. The AO has arithmetically worked out how the realization of current assets have been utilized for acquisition of fixed assets and also came to the conclusion that the sundry creditors shown by the assessee might not be existing at all. Even the assessee had not furnished the details of sundry creditors. Hence, the AO concluded that the assessee has introduced assets worth Rs. 23,80,684/- without adequately establishing the sources.
4.3.1 In the appellate proceedings, burden of proof lies on the assessee to prove that facts and findings of the AO are incorrect. Assessee contested in appeal that the assessment order is totally arbitrary and not proper and justified. The appellant has to prove or rebut with cogent evidence against the facts and findings of the AO in the assessment order. The appellant pointed out that the Id AO arbitrarily decided the amount of Rs. 23,80,684/- on account of unexplained credit u/s.
The appellant has neither produced the copy of the sale deed in order to establish that the payments of rs. 26,00,000/- were made through ICICI Bank nor the copy of the bank account highlighting the payments made to the seller. 4.3.2 Since, the appellant could not submit any material evidences/ additional evidences during appeal proceedings substantiating his grounds which could not be produced before the assessing officer, except the documents produced before AO earlier, it clear that the appellant has no strong evidences on his to substantiate his grounds of appeal. Further, it is held by the AO in the Assessment order that the onus is on the assessee to establish the genuineness of the transactions, which in the instant case the assessee has not discharged. 4.3.3 In the remand report, the AO submitted that clause (a) of rule 46A is not applicable because the AO never refused to admit evidences, for the simple reason that no evidences or information was provided by the assessee during the assessment proceedings. Clause (b) and (c) are not applicable because as per the additional evidences submitted by the assessee in appellate proceedings no cause or its sufficiency could be ascertained that prevented him from submitting the evidence during assessment proceedings. Clause (d) is not applicable because the AO did provide adequate opportunities to the assessee during the assessment proceedings to present evidence, which were not utilized by the assessee. Thus, the circumstances mentioned in the above mentioned four clauses of Rule 46A are not applicable to the present situation, and therefore, the additional evidence submitted by assessee during appellate proceedings is not admissible. In view of the foregoing discussion, I am of the considered opinion that the addition of Rs. 23,80,684/- made by the AO is justified and I hereby confirm the addition. Ground No. 2 to 4 are dismissed.”
5. Aggrieved with such order of the Ld. CIT(A) / NFAC, the assessee is in appeal before the Tribunal.
The Ld. Counsel for the assessee submitted that the assessee does not have much knowledge of the Income Tax Act. He submitted that although the assessee could not file certain details before the Assessing Officer, however, certain details were filed before the Ld. CIT(A) / NFAC to substantiate the source of income for investing in various assets which is the basis for making addition u/s 68 of the Act by the Assessing Officer. He submitted that in the interest of justice, the Ld. CIT(A) / NFAC should be directed to admit those additional evidences and decide the issue on merit. In his alternate contention, he submitted that the matter may be restored to the file of the Assessing Officer for deciding the issue afresh.
The Ld. DR on the other hand heavily relied on the orders of the Assessing Officer and the Ld. CIT(A) / NFAC.
We have heard the rival arguments made by both the sides and perused the orders of the Assessing Officer and Ld. CIT(A) / NFAC. It is mentioned by the Assessing Officer himself that the assessee is engaged in business of trading in live buffaloes wherein he acts as mediator between the breeders / suppliers and the slaughter houses to whom the live stock are eventually supplied in respect of which he earns commission. We find although the Assessing Officer made addition u/s 68 of the Act on the ground that the assessee could not explain the source of investment in certain assets such as mobile purchases and cost of land, etc., however, the assessee tried to substantiate his case before the Ld. CIT(A) / NFAC by filing certain items as additional evidences which were forwarded to the Assessing Officer for his comments. Since the Assessing Officer did not comment upon the admission of those additional evidences, the Ld. CIT(A) / NFAC did not admit the same, the reasons of which have already been reproduced in the preceding paragraphs. It is the submission of the Ld. Counsel for the assessee that since these additional evidences go to the root of the issue and the assessee is an illiterate person not having knowledge of the intricacies of the Income Tax Act, therefore, he should be given an opportunity to substantiate his case before the Assessing Officer. Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the Assessing Officer with a direction to grant one final opportunity to the assessee to substantiate his case by filing the requisite details and decide the issue as per fact and law. The assessee is also hereby directed to make his submissions, if any, before the Assessing Officer on the appointed date without seeking any adjournment under any pretext, failing which the Assessing Officer is at liberty to pass appropriate order as per law. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 21st March, 2025.