2020 (12) TMI 557 - AT - Income Tax

Assessee's Investment Source Challenge: Appeal Upheld, Remand for Fresh Consideration

Naresh Kumar Versus The ITO, Ward 5 (1)

The appeal challenged the CIT(A)'s decision to sustain additions of Rs. 14 lacs and Rs. 7,16,000 due to the assessee's failure to explain the source of ... Admission of additional evidence - Purchase of agricultural land - AO stated that the addition was rightly made on account of failure on the part of the assessee to explain satisfactorily the source of investment and objected for admission of additional evidences - HELD THAT:- In the present case, it is an admitted fact that the additional evidences now furnished by the ld. counsel for the assessee in the form of affidavit of the assessee as well as of the seller of land namely Shri Om Parkash from whom the assessee purchased the agricultural land in question, were not available either to the ld. CIT(A) or to the AO for their consideration, however, these new evidences now furnished, go to the root of the matter, therefore the same are admitted. By keeping in view this fact that the evidences now furnished by the ld. counsel for the assessee first time before this Bench of the ITAT were not available to the authorities below and even the letter dated 28.11.2006 written by the then counsel to the ld. CIT(A) appears to be not considered by the ld. CIT(A) since there is no discussion in the impugned order and even that letter was also not available to the AO who passed the assessment order on 28.01.2015 i.e. much before 28.11.2006 and by considering peculiar facts of this case, we deem it appropriate to set aside this case back to the file of the AO to be considered afresh in accordance with law after providing due and reasonable opportunity of being heard to the assessee and by considering all the evidences furnished by the assessee. Appeal of the assessee is allowed for statistical purposes. Issues:1. Sustenance of addition of Rs. 14 lacs and Rs. 7,16,000/- by CIT(A).2. Explanation of source of investment in property by the assessee.3. Consideration of additional evidences by the authorities.Issue 1: Sustenance of Additions by CIT(A)The appeal by the assessee challenged the order of CIT(A)-II, Chandigarh, sustaining the addition of Rs. 14 lacs and Rs. 7,16,000/-. The AO made these additions due to the failure of the assessee to explain the source of investment in property. The assessee claimed to have purchased land using an OD limit from a bank, but the AO found discrepancies in the explanations provided. The CIT(A) forwarded additional evidences submitted by the assessee to the AO, who objected to their admission, stating the explanations were inconsistent. The CIT(A) ultimately upheld the additions after considering the AO's remand report and the assessee's submissions.Issue 2: Source of Investment in PropertyThe assessee's explanation for the source of investment in the property was scrutinized by the AO and the CIT(A). The AO observed discrepancies in the claimed withdrawals and deposits from business accounts, as well as the timing of payments to the seller. The CIT(A) noted that the assessee's explanations did not align with the evidence on record, leading to the sustenance of the additions. The assessee contended that a typographical error in the date of payment caused confusion, and additional affidavits were submitted to clarify the payment date. The authorities, however, did not accept these explanations, leading to the appeal.Issue 3: Consideration of Additional EvidencesThe assessee submitted additional evidences, including affidavits, to support the claim that the payment to the seller was made on a different date than initially recorded. The ITAT acknowledged that these new evidences were crucial to the case but were not considered by the lower authorities. Consequently, the ITAT allowed the appeal for statistical purposes, remanding the case back to the AO for a fresh consideration, ensuring all evidences are duly evaluated and the assessee is given a fair opportunity to present their case.This detailed analysis of the judgment highlights the key issues of the case, the arguments presented by the parties, and the decisions made by the authorities, providing a comprehensive understanding of the legal proceedings and outcomes.