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Facts
The assessee's appeal was filed against the order of the CIT(A) which dismissed the appeal against the AO's order. The AO had made additions under section 69 of the Income Tax Act for unexplained investments, and also levied interest under sections 234A, 234B, and 234C. The assessee's primary contention was that the CIT(A) passed the order without affording a proper opportunity of hearing and without considering the evidence.
Held
The Tribunal held that the CIT(A) was unjustified in rejecting the additional evidences filed by the assessee. The Tribunal found that the AO had accepted that the investment in immovable property was not made in the impugned year, yet the CIT(A) rejected the evidences without proper consideration. The Tribunal decided to restore the issue back to the CIT(A) for fresh consideration.
Key Issues
Whether the CIT(A) erred in law and facts by confirming additions and rejecting additional evidence without proper opportunity of hearing. Whether the appeal needs to be restored to CIT(A) for reconsideration.
Sections Cited
69, 250, 143(3), 46A, 234A, 234B, 234C
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Income Tax Appellate Tribunal, “D” BENCH, AHMEDABAD
Before: SMT.ANNAPURNA GUPTA & SHRI T.R. SENTHIL KUMAR
आदेश आदेश/O R D E R आदेश आदेश
PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER
The above appeal has been filed by the assessee against order passed by the Ld.Commissioner of Income-Tax(Appeals)-13, Ahmedabad [hereinafter referred to as “ld.CIT(A)] dated 23.8.2024 under section 250 of the Income Tax Act, 1961 ("the Act" for short) dismissing the appeal of the assessee against the order of the Assessing Officer (AO) passed under section 143(3) the Act pertaining to Assessment Year 2016-17.
The grounds raised in the appeal read as under:
2 1. The Hon'ble Commissioner of Income-lax (Appeals) [CIT-A] erred in law and facts of the case by confirming the addition of Rs.2,04,97,450/-u/s.69 of the Income-tax Act, 1961 ('the Act') as unexplained investments by the learned Assessing Officer('the learned AO'). 2. i) The Hon'ble CIT-A erred in law and facts of the case by rejecting additional evidence produced before him in accordance with the Rule 46A of the Income Tax Rules, 1962, thus, denying justice as the said evidence were necessary to deliver substantial justice in the matter. ii) The Hon'ble CIT(A) erred in rejecting additional evidence inspite of the fact that remand reports were called for from the learned AO and thus prima facie the Hon'ble CIT(A) was satisfied about admission of such additional evidence. It is submitted that additional evidence as produced by appellant be admitted as they are necessary for doing substantial justice in the matter and issues be decided on merits of-the case.
The Hon'ble CIT-A has erred in law and facts of the case by confirming charging of interest under section 234A, 234B and 234C amounting to Rs.4,32,498/-, Rs.23,78,739 and Rs.3,101/- respectively by the learned Assessing Officer.”
3. Solitary contention of the ld.counsel for the assessee was that the ld.CIT(A) had passed order confirming the additions made by the AO without giving due opportunity of hearing, and without considering the evidences and explanation furnished by the assessee against the addition made by the AO. His limited prayer therefore before us was, restoration of the appeal back to the file of the ld.CIT(A) for reconsideration.
The ld.counsel for the assessee pointed out that from the orders of the revenue authorities, the assessee was non-resident and had filed original return of income declaring total income at Rs.14,09,610/-. Subsequently, the case of the assessee was taken up for scrutiny assessment and due notice was issued to the assessee. The AO made inquiries with regard to the source of investment made by the assessee in immovable property of Rs.33,70,400/- and Rs.49,30,500/- ,as also the source of investment of Rs.80.00 lakhs in assessee’s SBI bank account and cash deposited in ICICI Bank of the assessee of Rs.41,96,550/-. Thus, the assessee was asked to furnish 3 explanation with regard to the total investment made by it of Rs.2,04,97,450/- in immovable property and various bank accounts. No reply was filed by the assessee explaining the same except for a reply filed on email by somebody named ‘Sunny’ on behalf of the assessee stating that the assessee was out of country till February, 2019 and was 70 years old and unable to check mail and his accountant was working on this notice, and some more time therefore sought to furnish he reply. The AO however, finalized the assessment, which was getting time barred and made addition of entire amount of Rs.2.04 crores found to be invested by the assessee during the year, on account of the same being remained unexplained.
The ld.counsel for the assessee pointed out that before the ld.CIT(A) the assessee furnished explanation with respect to all the investments noted to be made by the AO during the impugned year. He pointed out from the page no.9 to 14 of the CIT(A)’s order that the same contained submissions made by the assessee. Referring to the same, he pointed out that the assessee had contended that the investment in immovable property was not made in the impugned year, but was made in Asst.Year 2014-15. Evidences, in this regard by way of purchase deed of the property, as also copy of the bank statement reflecting the payment made for the impugned property in the preceding year was furnished. Further, he pointed out that the assessee also furnished explanation regarding the source of investment in the immoveable property as being from his SBI, Anand Branch Account. The same was duly evidenced with the copy of the purchase deed, as also copy of the bank statement of the SBI, reflecting the impugned payment. The assessee also pointed out the immediate source of payment was amount received through RTGS
As regards investment in the SBI account of Rs.80 lakhs, the assessee explained the amount to have been transferred from another bank account of the assessee. The source of the amount was explained as received from three persons viz. Bipinchandra S. Patel, Navinbhai Patel and Nishithkumar C. Patel whose confirmations were also filed.
6. As for the cash deposited in ICICI Bank of Rs.41,96,550/-, the assessee explained the same as sale proceeds of jewellery from M.V. Jewellers and copy of the confirmation was also filed. The assessee , he pointed out, accordingly filed additional evidences before the ld.CIT(A) to explain the source of investment made during the impugned year.
The assessee’s submission, he pointed out, were forwarded to the AO for his report. Referring to the report of the AO reproduced in the CIT(A)’s order he pointed out, that the AO accepted the fact of investment in immovable property not being made by the assessee in the impugned year. As for the source of investment in SBI bank account and ICICI Bank account, the AO noted that it was merely a case of round-tripping of unaccounted cash money, and therefore, rejected the explanation of the assessee. With regard to the sale of jewellery being the source of deposits in the ICICI Bank account, he rejected the same also disbelieving the explanation as unsubstantiated.
The assessee thereafter filed rejoinder to the same, pointing out that the AO had incorrectly noted certain facts relating to the 5 explanation of the source of deposits of Rs.80 lakhs in the SBI account of the assessee, and therefore, arrived at an incorrect conclusion of the same being by way of round-tripping. The same explanation was also furnished with regard to the source of deposits in the ICICI Bank. The ld.counsel for the assessee pointed out that despite all this exercise conducted by the assessee, by way of furnishing due explanation about the source of investment made during the year, as noted by the AO, supported with appropriate evidences, and seeking report of the AO on the same, with the AO accepting the fact that the investments were not made in the impugned year, and also rejoinder filed by the assessee to the report of the AO, the ld.CIT(A) ignored the same and went on to reject the application of the assessee seeking admission of additional evidences filed. He drew our attention to para 11.4 of the CIT(A)’s order wherein one of the reasons given by the Commissioner for not admitting the additional evidences was that if the assessee had filed evidences to the AO, more particularly regarding the fact of investment in immovable property being made in preceding year, the AO would accordingly have taken pro-active steps in reopening the case of the assessee for those years, which he was barred by law to do so now. The ld.counsel for the assessee contended that the ld.CIT(A) was grossly unjustified therefore in not admitting the additional evidences filed by the assessee, more particularly, when he had sought report from the AO with regard to the same, and the assessee had also filed a rejoinder to the report filed by the AO.
The ld.DR supported the order of the ld.CIT(A).
We have heard contentions of both the parties and we agree with the ld.counsel for the assessee that the ld.CIT(A) was grossly unjustified in not admitting the additional evidences filed by the assessee, explaining the source of investment made during the 6 impugned year, more particularly, when he had sought report form the AO on the same, and with respect to one of the investments made in immovable property, the AO had noted that the investments were made not in the impugned year. The ld.CIT(A), by rejecting the additional evidences filed by the assessee, has confirmed the addition on account of investment in immovable property remaining unexplained in a grossly unjustified manner, when the fact on record is that the investment not made in the impugned year at all. Also since the report from the AO had been sought on the additional evidences filed by the assessee, and the assessee had also filed the rejoinder to the report explaining inaccuracies in the finding of the AO, the ld.CIT(A) is duty bound to have considered the explanation of the assessee, and accordingly passed the order on merits of the issue.
We are, therefore, of the view that the matter needs reconsideration at the end of the ld.CIT(A) regarding the merits of the issue, the additional evidences need to be admitted, and therefore, we restore the issue back to the ld.CIT(A) to pass an order afresh in accordance with law on the merits of the addition made by the AO after giving due opportunity of hearing to the assessee.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the Court on 7th March, 2025 at Ahmedabad.