2024 (6) TMI 1214 - AT - Income Tax

CIT(A) fails to consider evidence properly, ITAT remands case for fresh consideration under sections 250-251

The ITAT Raipur remanded the case to CIT(A) for fresh consideration after finding that the appellate authority failed to decide the appeal on merits. ... Non disposal of appeal by CIT(A) on merits - non considering additional evidences -Addition of cash deposited in bank account - Addition invoking provisions of section either 68 or 69 or 69A - CIT(A) non considering evidence filed before him to prove sources of cash without giving any reason for doing so - HELD THAT:- Under the factual matrix of the present case, it is apparently discernible that the assessee has not discharged the onus cast upon him in explaining the huge cash amounts deposited in his bank accounts before the Ld AO. After the completion of assessment, it is stated by the assessee that the facts furnished before Ld AO were incorrect, thus the same should not be relied. Since the assessee himself had admitted that books of accounts are not maintained by him and no plausible explanation could be furnished before the Ld AO, the addition proposed by the AO under 69A cannot be faulted with. So, the contention of assesse that money if recorded in books of accounts can’t be treated as unexplained money u/s 69A is devoid of merit on the facts of present case. Thus, the case laws relied upon on this aspect by the assessee cannot rescue or support the contention of the assessee. Non-admission of additional evidences by CIT(A) - The audit of books of accounts under the provisions of section 44AB for the relevant AY 2017-18, which was due to be completed by 30th September 2017 further extended to 31st October 2017 have been conducted and certified on 07.12.2021, i.e., after more than 4 years of time. It is the assertion of Ld AR that such audit report was furnished before the Ld CIT(A) as additional evidence but the same was not even discussed by him. On perusal of the order of Ld CIT(A), no whisper with respect to submission of audit report or its discussion was perceptible, even the exhaustive submission of the assessee before the Ld CIT(A), running into 31 pages. CIT(A) was supposed to discuss the issue on its merits considering the additional evidence, if admissible under the provisions of rule 46A of the IT Rules following the pre-requisite conditions of the said rule. it is copiously clear that Ld. CIT(A) was in error in dismissing the appeal of the assessee without discussing the written submission of the assessee and without considering the evidence filed before him. This shows that Ld. CIT(A) has not decided the issue by considering the response and the documents furnished before him by the assessee. CIT(A) has discussed about contention of the assessee and certain documents like purchase ledger, Kirana Sales ledger, balance sheet and part of bank statement uploaded by the assessee but there was no whisper in the order of Ld. CIT(A) regarding admission of additional evidence in the form of such documents, neither said documents have been remitted to the Ld. AO for his comments. Under such facts and circumstances, it is evident that the issue to be decided was not dealt with on merits by the Ld. CIT(A) in consideration of the evidence submitted by the assessee, without rejecting or accepting such evidence, also the further enquiries which are obligatory for the Ld. CIT(A) to be conducted or to direct the Ld. AO to conduct the same. CIT(A) has grossly erred in dismissing the appeal of the Assessee mainly discussing the noncompliant conduct of the assessee by summarily accepting the decision of Ld AO, without attending to the merits of the issue by dealing with the submissions of the assessee or by causing any further enquiries by himself or by directing the Ld AO to do so - Thus we direct the Ld. CIT(A) to pass denovo order as per law, in accordance with Sections 250 and 251 of I.T. Act Appeal of the assessee is partly allowed for statistical purpose. Issues Involved:1. Jurisdiction of the Income Tax Officer (ITO) to pass the assessment order.2. Addition of Rs. 2,37,30,500/- under sections 68, 69, or 69A of the Income Tax Act.3. Application of section 115BBE(1) for taxing the addition at 60%.4. Non-admission of additional grounds of appeal by CIT(A).5. Non-consideration of evidence by CIT(A) to prove the sources of cash deposits.Issue-wise Detailed Analysis:1. Jurisdiction of the Income Tax Officer (ITO):The assessee contended that the ITO Ward, Kanker, did not have valid jurisdiction to pass the assessment order as the case should fall under the jurisdiction of Raipur, given the returned income exceeded Rs. 10 lakhs as per sections 120 and 124 of the Income Tax Act and the relevant notification. The Tribunal did not specifically address this issue in the detailed judgment, implying that the primary focus was on the substantive issues related to the additions made.2. Addition of Rs. 2,37,30,500/- under sections 68, 69, or 69A:The assessee argued that the CIT(A) erred in confirming the addition of Rs. 2,37,30,500/- made by the AO by invoking sections 68, 69, or 69A, as it was unclear which section was invoked. The AO treated the cash deposits as unexplained money/investment under section 69/69A due to the lack of documentary evidence and explanations from the assessee. The CIT(A) upheld the addition, noting that the assessee failed to provide a complete and detailed cash flow statement correlating the cash deposits with the books of accounts. The Tribunal observed that the assessee did not discharge the onus of explaining the huge cash deposits and had admitted to not maintaining books of accounts during the assessment proceedings.3. Application of section 115BBE(1) for taxing the addition at 60%:The assessee contended that the CIT(A) erred in confirming the addition and levying tax under section 115BBE(1) at 60%, treating the cash deposits as non-business receipts without any basis or evidence. The Tribunal noted that the CIT(A) did not properly consider the additional evidence submitted by the assessee, including the audited accounts, which showed the cash deposits were part of the regular business transactions. The Tribunal directed the CIT(A) to re-examine the issue, considering the additional evidence and conducting further inquiries if necessary.4. Non-admission of additional grounds of appeal by CIT(A):The CIT(A) did not admit additional grounds of appeal, stating that the appellant had not retained the right to add, alter, amend, or withdraw any grounds in the original appeal memo. The Tribunal did not specifically address this procedural issue but focused on the substantive grounds related to the addition of cash deposits.5. Non-consideration of evidence by CIT(A) to prove the sources of cash deposits:The assessee argued that the CIT(A) did not consider the evidence filed to prove the sources of cash deposits. The Tribunal observed that the CIT(A) failed to discuss the additional evidence, such as the audited accounts, and did not conduct further inquiries or direct the AO to do so. The Tribunal cited the Bombay High Court's decision in CIT vs. Premkumar Arjundas Luthra (HUF), emphasizing that the CIT(A) is obliged to dispose of the appeal on merits by considering all the evidence and conducting necessary inquiries. The Tribunal set aside the CIT(A)'s order and directed a denovo order, ensuring a fair opportunity for the assessee to present the evidence.Conclusion:The Tribunal concluded that the CIT(A) erred in dismissing the appeal without properly considering the additional evidence and conducting necessary inquiries. The Tribunal set aside the CIT(A)'s order and directed a fresh examination of the issues, providing the assessee with an opportunity to present the evidence. The appeal was partly allowed for statistical purposes, and the remaining grounds were left open for the assessee to raise in the set-aside appellate proceedings.