2017 (1) TMI 617 - AT - Income Tax

Tribunal overturns CIT(A)'s decision, stresses proper examination in income tax case

The Tribunal allowed the Revenue's appeal, setting aside issues for fresh consideration by the AO due to improper admission of additional evidence and ... Unexplained cash deposit in bank account - admission of additional evidence under Rule 46A of the Income Tax Rules, 1962 - Assessee has not filed all the additional evidences i.e. 7 sale deeds of land from which the assesseee has received ₹ 52,07,500/- before this Bench - Held that:- The action of the Ld. CIT(A) in admitting these additional evidences is contrary to the conditions as laid down under Rule 46A of the Income Tax Rules, 1962. Assessee has not established before us that the AO has refused to admit the additional evidence which ought to be admitted by the AO. Assessee has also not established that assesee is prevented by sufficient cause for producing the additional evidence before the AO. After going through the assessment records, we have also seen that AO has given opportunity to the assessee for producing the evidence supporting the claim of the assessee, but the assessee has failed to avail the same and the AO has competed the assessment as per law. Keeping in view of the facts and circumstances as explained above, we are of the considered view that the additional evidences filed before the Ld. CIT(A) needs to be thoroughly examined at the level of the AO. Therefore, we set aside the issues in dispute to the file of the AO for fresh consideration, after thoroughly examining the additional evidences filed by the assessee before the Ld. CIT(A). As a result, the appeal filed by the Revenue stands allowed for statistical purposes. Issues Involved:1. Admission of additional evidence under Rule 46A during appellate proceedings.2. Deletion of additions made by the AO on account of income from undisclosed sources under Section 69 of the Income Tax Act.3. Acceptance of the contention regarding the sale proceeds of agricultural land without documentary evidence.4. Confirmation of partial addition on account of deposits in the bank account.5. Observations regarding capital gains and wealth tax on the sale of lands.Issue-wise Detailed Analysis:1. Admission of Additional Evidence under Rule 46A:The Revenue contended that the CIT(A) erred in admitting additional evidence during the appellate proceedings under Rule 46A of the Income Tax Rules, 1962, as none of the conditions laid down in Rule 46A were applicable. The Tribunal reviewed Rule 46A, which outlines specific circumstances under which additional evidence can be admitted, such as refusal by the AO to admit evidence, sufficient cause preventing the appellant from producing evidence, and lack of opportunity given by the AO to adduce evidence. The Tribunal found that the CIT(A) admitted additional evidence without properly confronting the AO or providing an opportunity for thorough examination. Consequently, the Tribunal set aside the issue to the AO for fresh consideration, emphasizing the need for a thorough examination of the additional evidence.2. Deletion of Additions Made by the AO under Section 69:The AO added Rs. 58 lakhs as income from undisclosed sources under Section 69 of the Income Tax Act, based on cash deposits in the assessee's bank account. The assessee explained the deposits as withdrawals, sale proceeds from ancestral agricultural land, and agricultural income but failed to provide supporting evidence during the assessment. The CIT(A) deleted the addition based on additional evidence, including sale deeds, which were not properly examined by the AO. The Tribunal found that the CIT(A)'s action of admitting additional evidence was contrary to Rule 46A and required thorough examination by the AO. Thus, the Tribunal set aside the issue for fresh consideration by the AO.3. Acceptance of Contention Regarding Sale Proceeds of Agricultural Land:The Revenue argued that the CIT(A) erred in accepting the assessee's contention regarding the sale proceeds of agricultural land without documentary evidence such as a will or gift deed. The Tribunal noted that the CIT(A) admitted additional evidence, including sale deeds, which were not examined by the AO. The Tribunal emphasized the need for a thorough examination of the additional evidence by the AO and set aside the issue for fresh consideration.4. Confirmation of Partial Addition on Account of Deposits in Bank Account:The assessee filed a cross-objection against the CIT(A)'s confirmation of an addition of Rs. 6,20,000 out of the total addition of Rs. 58,00,000 on account of deposits in the bank account. Since the Tribunal set aside the issues to the AO for fresh consideration, the cross-objection became infructuous and was dismissed.5. Observations Regarding Capital Gains and Wealth Tax:The assessee contended that the CIT(A) erred in observing that capital gains on the sale of lands require investigation and that wealth tax appears leviable on these lands. Additionally, the CIT(A) directed the AO to pass on information to the AO of Smt. Jagdish Kaur, which was challenged by the assessee. The Tribunal did not specifically address this issue but implied that all related matters would be reconsidered during the fresh examination by the AO.Conclusion:The Tribunal allowed the Revenue's appeal for statistical purposes, setting aside the issues to the AO for fresh consideration after thoroughly examining the additional evidence. The assessee's cross-objection was dismissed as infructuous. The Tribunal emphasized the need for proper examination of additional evidence and adherence to Rule 46A of the Income Tax Rules, 1962.