Unexplained cash additions set aside and remanded for fresh inquiry and verification with opportunity to produce corroborative evidence.

Whether additions under unexplained cash provisions and tax at a specified rate were sustainable where reassessment was completed under procedural sections without adequate inquiry and after rejecting supplementary evidence; the Tribunal found third party corroboration (bank statements, Form 26AS, accounts) filed before the Tribunal but not before revenue, and held that treating entire deposits as unexplained income without verifying payors was excessive. Outcome: additions set aside in part and the matter remanded to the Assessing Officer for de novo assessment, verification of evidence and an opportunity for the assessee to be heard.

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Issues: Whether the additions made by the Assessing Officer under section 69A and chargeable under section 115BBE by completing assessment under section 144 (r.w.s. 147 r.w.s. 144B) without adequate enquiry and without accepting the assessee's supplementary evidence should be upheld, and whether the matter should be restored to the Assessing Officer for de novo assessment.

Analysis: The appeal arises from reassessment proceedings under section 147 read with sections 144 and 144B of the Income-tax Act, 1961 and the first appellate order confirming additions recorded as unexplained cash and receipts treated as business income and rental. The record shows multiple bank deposits, Form 26AS entries reflecting contract receipts with TDS and claimed business turnover; yet the assessee failed to engage with notice proceedings before the Assessing Officer and the First Appellate Authority. The Tribunal examined whether the Assessing Officer and the Commissioner (Appeals) made necessary enquiries from third parties and whether the entire bank deposits were justifiably taxed without verification. The Tribunal noted the availability of third-party corroborative material (Form 26AS, bank statements, accounts) filed before the Tribunal but not before the revenue authorities, and observed that in the absence of any enquiry from the parties who purportedly paid the assessee, treating entire deposits as the assessee's unexplained income was excessive. The Tribunal balanced the assessee's non-compliance against the presence of verifiable external entries and held that a fresh inquiry by the Assessing Officer is necessary to verify the additional evidence and to permit the assessee a reasonable opportunity to be heard in set-aside proceedings.

Conclusion: The appeal is partly allowed in favour of the assessee by setting aside the additions and restoring the matter to the file of the Assessing Officer for de novo assessment and verification of evidence, with liberty to the assessee to produce corroborative material and be heard.

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