ACIT, TIRUPPUR vs. SHRI S.N. SARAVANAN, TIRUPPUR

: अपीलाथ" क" ओर से/ Appellant by Mr.Supriyo Pal, JCIT : ""यथ" क" ओर से /Respondent by None : 17.01.2017 सुनवाई क" तार"ख/Date of Hearing : 17.03.2017 घोषणा क" तार"ख /Date of Pronouncement आदेश / O R D E R PER D.S.SUNDER SINGH, ACCOUNTANT MEMBER:

This is an appeal filed by the Revenue against the Order dated 21.09.2016 of Commissioner of Income Tax (Appeals)-3, Chennai, in for the AY 2013-14 and raised the following grounds: i. Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) is justified in deleting the addition made by the Assessing Officer on account of unexplained cash credits u/s. 68? ii. Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) is justified in admitting fresh evidence without calling for Remand Report from Assessing Officer contravening Rule 46A? :-2-: iii. Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) is justified in holding that there is no necessity for addition for peak credit while representative of the assessee agreed for making the addition of peak credits as unexplained credits u/s.68 during the course of assessment proceedings? iv. For these and other grounds that may be adduced at the time of hearing, the order of the Ld. CIT(A) may be cancelled and that of Assessing Officer restored.

2.0 All the grounds of the appeal are related to the addition made u/s.68 of the Income Tax Act. The assessee filed return of income admitting total income of ₹18,20,030/- and during the scrutiny assessment proceedings, the Assessing Officer (hereinafter referred to as ‘AO’) found cash deposits in the bank account to the tune of ₹1.38 Cr.

The AO called for the explanation of the assessee and the assessee explained that the source was rotation of cash withdrawals made from the bank account. The AO examined the explanation offered by the assessee regarding withdrawals from the bank account and consequent deposits and the assessee could not explain the circulation of withdrawals made from the bank account with evidence. Therefore, from the bank statement the AO worked out peak credits which worked out to ₹42,82,500/- and called for explanation from the assessee. At the time of hearing before the AO, the Learned Authorized Representative (hereinafter referred to as ‘Ld.AR’) of the assessee agreed the peak deposits of ₹42,82,500/- not accounted and agreed for the addition as per the Order sheet entry dated 28.03.2016. Accordingly, the AO made the addition of ₹42,82,500/- and completed the assessment on total income of ₹61,05,533/- . :-3-:

3.0 Aggrieved by the order of the AO the assessee went on appeal before the Learned Commissioner of Income Tax(Appeal) (hereinafter referred to as ‘Ld.CIT(A)’) and the Ld.CIT(A) deleted the addition holding that there was adequate cash balances available as per the cash flow statement and no addition is called for. Aggrieved by the order of the CIT(A) the department filed appeal before us.

4.0 Appearing for the Revenue, the Learned Departmental Representative (hereinafter referred to as ‘Ld.DR’) argued that at the time of assessment proceedings, the AO found cash deposits of ₹1.38 Cr. in the bank accounts, though the source was explained as withdrawals from the bank account, the same could not be established by the assessee with relevant evidences. The assessee has not furnished any documentary evidence or proper explanation with respect to source of cash deposits and hence the Ld.AR of the assessee agreed for the addition and signed the Order sheet. This amply clears that no details have been furnished and no explanation has been furnished by the assessee at the time of assessment. Though, the assessee has agreed for the addition before the AO, the assessee went on appeal before the Ld.CIT(A) and furnished the cash book and cash flow and proof of gift from his father and evidences for agricultural income of his father which was an afterthought. All these evidences were never filed before the AO. The Ld.CIT(A) accepted the additional evidence without giving opportunity to the file of the AO under Rule 46A of the Income Tax Act. Therefore, the Ld.DR argued that since :-4-: the assessee has accepted the addition before the AO either the addition should be confirmed or at best the same should be remitted back to the file of the AO for verification of the genuineness of the source and to examine the additional evidences submitted before the Ld.CIT(A). None appeared on behalf of the assessee.

5.0 We heard the argument of the Ld.DR and gone through the orders of the lower authorities.

During the assessment proceedings, it is clear from the Assessment

Order that the assessee could not explain the source of cash deposits made in the bank. Therefore, the AO has arrived at the peak credits and asked for the explanation of the assessee. The assessee did not explain the source of peak credits and agreed for the addition. Therefore, it is evident that the AO has confronted the unexplained deposits with the assessee and the Ld.AR of the assessee accepted the addition by Order sheet noting dated 28.03.2016. Therefore, whatever the additional evidence produced by the assessee before the Ld.CIT(A), constitute an additional evidence and the Ld.CIT(A) required to give an opportunity to the AO by calling for the Remand Report. In the instant case, the assessee has produced the books of accounts, cash flow statement, and confirmation from his father and explained that Appellant’s father has agricultural income. The Ld.CIT(A) without giving an opportunity to the AO, deleted the addition made by the AO. Therefore, we are of the considered opinion that the case should be remitted back to the file of the :-5-: AO for examining the source of cash deposits in the bank account. Accordingly, the case is remitted back to the file of the AO with a direction to examine the source of credits and re-do the assessment afresh on merits. The assessment is set-aside de novo.

6.0 In the result, the appeal of the Revenue is allowed for statistical purposes.

Order pronounced in the Open Court on 17th March, 2017, at Chennai. (एन.आर.एस. गणेशन) ("ड.एस. सु"दर "संह) (N.R.S. GANESAN) (D.S.SUNDER SINGH) "या"यक सद"य/JUDICIAL MEMBER लेखा सद"य/ACCOUNTANT MEMBER