ITAT directs AO to consider any additional evidence regarding the cash deposit
Facts and Issue of the Case
This is an appeal by the assessee against order dated 23.08.2018 of learned Commissioner of Income Tax (Appeals)- Ghaziabad, pertaining to assessment year 2009-10.
At the outset, learned counsel appearing for the assessee did not press ground nos. 1, 4 and 5. Accordingly, these grounds are dismissed. In ground nos. 2 and 3, the basic grievance of the assessee is against the addition of Rs.20,36,000/-, being cash deposits made in the bank account.
The facts are, the assessee is an Association of Persons (AOP). For the assessment year under dispute, assessment in case of the assessee was completed under section 144 read with section 147 of the Income-tax Act, 1961 . In course of assessment proceeding, the Assessing Officer found that the assessee had made cash deposits of Rs.20,36,900/- in the bank account. Alleging that the assessee did not appear and explain the source of such cash deposits, the Assessing Officer added back the amount as income of the assessee. Against the assessment order so passed, the assessee preferred an appeal before learned Commissioner (Appeals). In the proceeding before learned first appellate authority, the assessee submitted that the cash deposited in the bank account were out of cash received from the members of the society. To substantiate such claim, the assessee furnished certain additional evidences under Rule 46A of the Act. However, learned Commissioner (Appeals) refused to accept the additional evidences and proceeded to dispose of the appeal by sustaining the addition made by the Assessing Officer.
Before me, learned counsel appearing for the assesse submitted that the assessment was completed ex-parte as the authorized representative, who was entrusted by the assessee to represent in the proceeding, did not appear. He submitted, since, the assessee did not get any opportunity to explain the source of cash deposits with supporting evidences in assessment proceeding, the assessee did so in course of proceeding before learned first appellate authority. However, he submitted, the additional evidences furnished were not admitted on flimsy grounds. He submitted, the explanation offered by the assessee to explain the source of cash deposit was accepted by the Assessing Officer, while completing the assessment for assessment years 2010-11, 2011-12 and 2012-13. He submitted, only because assessee remained absent before the Assessing Officer, the addition was made.
Learned Departmental Representative strongly relied upon the observations of learned Commissioner (Appeals).
Observation by the Court
The court have considered rival submissions and perused the materials on record. Undisputedly, in course of assessment proceeding the assessee went unrepresented, for whatever may the reason. Therefore, the assessee did not get any opportunity to explain the source of cash deposits made in the bank account with supporting evidence. However, before learned first appellate authority, the assessee not only explained the source of cash deposits to be out of cash receipts from members for specific purpose but also furnished additional evidences to substantiate such claim. It is evident, learned Commissioner (Appeals) refused to accept the additional evidences on the ground that the assessee failed to explain, why the evidences could not be furnished before the Assessing Officer. This reasoning, in my view, is unsustainable. When the assessee remained unrepresented in the assessment proceeding and assessment order was passed ex- parte, the assessee could not have produced the evidences before the Assessing Officer. Therefore, at the stage of first appellate proceeding only, the assessee got an opportunity to explain the source and furnish supporting evidence. That being the case, learned Commissioner (Appeals) should have admitted the evidences and examined them on their own merits before deciding the issue. This is so because, the evidences furnished by the assessee can have a crucial bearing on disputed addition. Leaned counsel appearing for the assessee has brought to my notice that accepting identical explanation submitted by the assessee with supporting evidence, the Assessing Officer has accepted cash deposits made in the bank account while completing assessments for assessment year 2010-11, 2011-12 and 2012-13. He has also drawn my attention to the aforesaid assessment orders.
In view of the aforesaid, the court inclined to restore the issue relating to the disputed addition to the file of the Assessing Officer for examining afresh after considering the evidences furnished by the assessee before learned first appellate authority and any other evidence, which the assessee may furnish in course of the proceeding. The court further direct, while examining the issue, the Assessing Officer must also verify the assessment orders passed for assessment years 2010-11, 2011-12 and 2012-13, wherein, similar cash deposits were stated to have been accepted and accordingly decide the issue. Grounds are allowed for statistical purposes.
In the result, the appeal is allowed for statistical purposes.Dr.-BR-Ambedkar-Jain-Kalyan-Swayam-Sahayata-Samiti-Vs-ITO-ITAT-Delhi