2017 (2) TMI 729 - AT - Income Tax

Tribunal upholds CIT(A)'s decision on additional evidence, emphasizes AO's duty to verify claims

The Tribunal upheld the CIT(A)'s decision to admit additional evidence under Rule 46A and delete the additions made by the AO regarding unexplained ... Unexplained cash deposit in bank account - Held that:- The assessee had entered into in an agreement with one Sh. Rajesh S/o Sh. Rajender Singh for sale of his ancestral agricultural land for ₹ 60 lacs and advance of ₹ 30 lacs was received on different dates as mentioned in agreement to sell and copy of the same was filed before the AO in remand proceedings. The AO in his remand report Dt. 23.12.2015 has admitted this fact and affidavit of the purchaser was also obtained by the AO. An affidavit is a valid piece of evidence as has been held by the Hon'ble Supreme Court of India in the case of Parikh and Co vs CIT [1956 (5) TMI 4 - SUPREME Court ]. The AO has admitted to the fact of the affidavit, dated 8.9.2015, affecting the repayment. The AO has however merely stated that no evidence was produced regarding the repayment, but no efforts were made by him. Filing of the affidavit and the fact the AO has made no effort to prove that it is false, makes the addition contentious. Hence, the Ld. CIT(A) has rightly deleted the addition which does not need any interference on our part, hence, uphold the same. Addition of ₹ 10,09,837 is concerned AO has admitted to the fact of the affidavit, dated 8.9.2015, affecting the repayment. The AO has however merely stated that no evidence was produced regarding the repayment, but no efforts were made by him. Filing of the affidavit and the fact the AO has made no effort to prove that it is false, makes the addition contentious. The addition of ₹ 10,09,837/- received through cheques. During the year under appeal the assesse had sold part of his ancestral agricultural land along with his other family members for ₹ 32,55,000/- and the assessee had received two cheques of ₹ 945000/- (708750.00+236250.00) as his share. The other credit entry of ₹ 64837/- on 18.05.2005 is on Alc transfer from BC 334. The AO had not bothered to verify from bank. The credit entry in the bank were from the sale proceeds of agriculture land and transfer entries. The entries relate to cheque deposits made on account of receipt of sale of land. The AO has made no effort to disprove the assessee’s claim. There is no concrete evidence to disprove the assessee, hence, Ld. CIT(A) has rightly deleted the addition in dispute. - Decided against assessee Issues Involved:1. Admission of additional evidence under Rule 46A.2. Deletion of additions made on account of unexplained deposits with the bank.3. Validity of the affidavit produced affirming the advance payment.4. Consideration of the AO's report regarding the repayment of the advance.Issue-wise Detailed Analysis:1. Admission of Additional Evidence under Rule 46A:The Revenue argued that the CIT(A) admitted additional evidence under Rule 46A without the assessee fulfilling the necessary conditions, as the assessee was not denied the opportunity to produce evidence during the assessment proceedings. The Tribunal noted that in the Remand Report dated 23.12.2015, the AO did not raise any objections to the additional evidence. It was also observed that in cases where an order is framed under section 144, the CIT(A) can call for additional evidence and remand the case to the AO, who can then consider this evidence without objection. The Tribunal upheld the CIT(A)'s decision to admit the additional evidence, referencing case laws such as Smt. Prabhavati S. Shah vs. CIT and Electra Jaipur (P) Ltd. vs. IAC, which support the admissibility of additional evidence in the interest of justice.2. Deletion of Additions Made on Account of Unexplained Deposits with the Bank:The AO added Rs. 29,75,000 and Rs. 10,09,837 to the assessee's income as unexplained deposits. The assessee contended that Rs. 29,75,000 was an advance received for the sale of agricultural land, supported by an affidavit from the buyer, Sh. Rajesh, and other documentary evidence. The CIT(A) accepted this explanation, noting that the AO did not dispute the evidence during the remand proceedings and failed to prove it false. Similarly, for the Rs. 10,09,837, the assessee provided evidence of the sale of agricultural land and transfer entries. The CIT(A) found that the AO did not make any effort to disprove the assessee's claim and deleted the additions. The Tribunal upheld the CIT(A)'s decision, emphasizing that the AO's failure to disprove the evidence made the additions contentious and unjustified.3. Validity of the Affidavit Produced Affirming the Advance Payment:The Revenue challenged the affidavit produced by Sh. Rajesh, arguing that it did not specify the dates of the transactions. The Tribunal noted that the affidavit was a valid piece of evidence as per the Supreme Court's ruling in Parikh and Co vs. CIT and the Allahabad High Court's ruling in Sohan Lal Gupta vs. CIT. The AO did not make any efforts to disprove the affidavit, and the Tribunal found that the CIT(A) correctly accepted it as evidence, leading to the deletion of the addition of Rs. 29,75,000.4. Consideration of the AO's Report Regarding the Repayment of the Advance:The AO's report mentioned that no evidence was produced regarding the repayment of the advance, but no efforts were made to verify this claim. The Tribunal observed that the affidavit stated the repayment dates, and the AO's lack of effort to disprove this affidavit made the addition contentious. The CIT(A) rightly deleted the addition of Rs. 10,09,837, as the AO did not verify the bank entries or disprove the assessee's claims. The Tribunal upheld this decision, noting that there was no concrete evidence against the assessee.Conclusion:The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision to admit additional evidence and delete the additions made by the AO. The Tribunal emphasized the importance of the AO's responsibility to verify and disprove claims made by the assessee, which was not done in this case.Order Pronounced in the Open Court on 13/02/2017.