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Facts
The assessee filed an appeal against the order of the CIT(A) which upheld an addition made by the AO. The addition was on account of a cash deposit of Rs. 3 lacs in the bank account, for which the assessee claimed the source was receipt from a client for purchase of stamp papers. The assessee also filed additional evidence in the form of an affidavit to support this claim.
Held
The Tribunal held that the additional evidence was crucial and went to the root of the matter. The opportunity provided by the AO to explain the source of the cash deposit was not reasonable or sufficient. Therefore, the Tribunal directed the CIT(A) to admit the additional evidence and decide the appeal on merits.
Key Issues
Whether the CIT(A) was justified in not admitting additional evidence and if the AO provided sufficient opportunity to the assessee to explain the source of cash deposit.
Sections Cited
143(3), 46A
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Income Tax Appellate Tribunal, AGRA BENCH ‘SMC’: AGRA
O R D E R [ PER MANISH AGARWAL, AM: This is an appeal filed by the assessee against the order of the Addl./JCIT Commissioner of Income Tax (Appeals), Gurugram [CIT(A), in short] dated 31.01.2025, in Appeal No. CIT(A), Gwalior/10374/2019-20 for Assessment Year 2017-18 arising out of the order passed u/s 143(3) dated 26.11.2019.
In this case, the assessee has filed certain additional evidences under Rule 46A of the Income Tax Rules, 1962 before Ld. CIT(A)
Anjna Gupta vs. ITO which were not admitted by the Ld. CIT(A) by observing that sufficient opportunities were provided by AO and dismissed the appeal of the assessee as the assessee has failed to explain the source of cash deposit of Rs.3.00 lacs in bank account with Asix Bank.
During the course of hearing, the Ld. AR submitted the details filed as additional evidences were crucial and goes to the root of the matter. The addition was made on account of cash deposit in the bank account for which the source was explained as receipt of cash from Shri Rishikesh Sharan Neboria whose affidavit was submitted as additional evidence. The Ld. AR further submitted that the assessee is an authorized stamp vendor and had received Rs.3 lakhs from Shri Rishikesh Sharan Neboria for purchase of stamps which could not be purchased and, therefore, the cash received on 08.11.2016 was returned on 02.12.2016 through account payee cheque. He further submitted that on 15.11.2019 a show cause was issued to explain the nature and source of deposit of Rs.3.00 lacs by 19.11.2019 and when assessee could not filed any reply the order was passed on 26.11.2019 without providing any further opportunity though the assessee earlier on every occasion had filed all the requisite details. In view of these facts he prayed that the addition be deleted.
On the other hand, the Ld. Sr. DR supports the order of lower authorities and submit that the AO has provided ample opportunities to the assessee to explain the sources of the cash deposit in the bank and, therefore, addition made deserves to be sustained.
Anjna Gupta vs. ITO 5. After perusing the facts of the case, we find that the sole issue in this appeal is with regard to source of the cash deposit in the bank account by the assessee of Rs. 3 lacs for which Explanation was tendered as receipt for purchase of stamp paper from one of the client. In support of the claim, the assessee had filed an affidavit of the person on whose behalf, stamp papers were to be purchased as additional evidence. However, such additional evidence was not admitted by Ld. CIT(A). Since, the said evidence goes to the root of the matter, and further looking to the fact that only one opportunity of four days was provided by AO to assessee to explain the source of cash deposit of Rs.3.00 lacs, the same cannot be said to be a reasonable and sufficient opportunity. Therefore, in the interest of justice, we direct the Ld. CIT(A) to admit the additional evidence as filed by assessee and further direct the Ld. CIT(A) to decide the appeal on merits in accordance with law. In view of these directions, the grounds taken by the assessee is allowed for statistical purposes.
In the result, the appeal of the assessee is partly allowed. Order pronounced in the open court on 29.05.2025.