2021 (4) TMI 6 - AT - Income Tax

Tribunal orders reevaluation due to discrepancies, emphasizes fair process

Shri Mewa Singh Versus The ITO, Ward-1 Kaithal

The Tribunal set aside the CIT(A) order, directing a reevaluation due to discrepancies and lack of fair opportunity for the assessee to present evidence. ... Addition on account of undisclosed cash deposits the bank account of the appellant - as per assessee the said deposit was from disclosed and known sources - CIT-A decided appeal ex-parte qua the assessee appellant on meritsHELD THAT:- DR was required to address as to how where the assessee is stated to have included the Registry of the property etc. demonstrating availability of funds how it could be stated to be a case of lack of evidence unless copies of the stated Registries were not filed. No such categoric finding has been recorded in the order noting that the documents stated to be made available were not filed. Similarly, in the remand report of the AO relied upon by the ld. CIT(A), it is seen that the predominant argument has been opportunity already provided. The assessee's explanation that he could not participate fully having remained pre-occupied in marriage etc. responsibility of a child remains unrebutted. The explanation in the circumstances is plausible. Thus, the exercise of relying on the non-speaking remand report becomes meaningless and cannot be said to be a fair and impartial exercise of power. In order to discard the explanation from agricultural sources specific dates need be recorded to show that the bank deposits being prior to availability of funds as per Form-J etc. No such finding is recorded. Considering the fact that the assessee is also attempting to obtain further documentary evidences to satisfactorily support its case, it is deemed appropriate and in the interests of substantial justice to set aside the impugned order back to the file of the CIT(A) requiring the said authority to specifically address the evidences relied upon and in the eventuality, these are found to be insufficient and incomplete, the said fact be confronted to the assessee and opportunity to make good deficiencies noticed, if any, be provided. The First Appellate Authority thereafter to pass a speaking order in accordance with law after providing the assessee an effective opportunity of being heard. Issues:1. Correctness of CIT(A) order under S. 250(6) of the Income Tax Act, 1961.2. Addition of Rs. 7,00,000 on account of alleged undisclosed cash deposits.3. Request for amendment in the grounds of appeal.Analysis:1. The appeal challenged the CIT(A) order for contravening S. 250(6) of the Income Tax Act, 1961. The adjournment requested by the assessee was rejected, and the appeal was heard ex-parte. The assessee was subjected to an addition of Rs. 7 lacs, which was disputed before the CIT(A).2. The CIT(A) rejected the assessee's explanation, which included funds sourced from agricultural land purchased by friends. The CIT(A) relied on the AO's remand report, stating that sufficient opportunities had been given to the assessee. The CIT(A) found the explanation insufficient, as there was no nexus between the cash deposits and agricultural income.3. The CIT(A) discarded the explanation provided by the assessee, stating it lacked evidence. However, the Tribunal found discrepancies in the CIT(A)'s decision. The Tribunal set aside the order, directing the CIT(A) to address the evidences provided by the assessee and provide an opportunity to rectify any deficiencies. The Tribunal emphasized the need for a fair and impartial exercise of power.4. The Tribunal allowed the appeal for statistical purposes, highlighting the importance of providing the assessee with a fair opportunity to be heard. The order was pronounced in a virtual hearing, and the assessee was informed of the right to seek a remedy if prejudiced by the ex-parte hearing.This detailed analysis highlights the key issues raised in the appeal and the Tribunal's decision to set aside the CIT(A) order for a more thorough examination of the evidence presented by the assessee.