Section 250 – When addition made is on account of non-furnishing of sales-purchase bills, etc, if assessee comes forward and furnishes them as additional evidences, they deserve to be examined in proper perspective as the entire addition hinges on non-furnishing of evidences and that being the case, the evidences furnished by the assessee may have a crucial bearing on the issue.

5.  Devran N. Varn vs. ITO (Mumbai)

Members : Saktijit Dey (JM) and N. K. Pradhan (AM)

ITA No.: 1874/Mum/2014

A.Y.: 2009-10.  Date of Order: 10^th February, 2017.

Counsel for assessee / revenue: Dinkle Hariya / J Saravanan

FACTS  

The assessee, an individual, was a proprietor of M/s Moon Apparel carrying on business of manufacture and sale of ready-made garments.  In the course of assessment proceedings, the Assessing Officer (AO) found that the assessee had made cash deposits aggregating to Rs. 25,66,423 in his savings account with ICICI Bank. The AO called upon the assessee to furnish the source of these cash deposits.  The AO alleged that in spite of repeated opportunities, the assessee could not furnish documentary evidence to substantiate the source of cash deposits.  He treated the amount of cash deposit of Rs. 25,66,423 as undisclosed income and added the same to the total income.

Aggrieved, the assessee preferred an appeal to the CIT(A) who upheld the action of the AO.

Aggrieved, the assessee preferred an appeal to the Tribunal where it was contended that the AO did not afford adequate opportunity to the assessee to furnish evidence and that before the CIT(A) copies of sales and purchase bills, vouchers, etc. were furnished as additional evidences but the CIT(A) without examining the evidences on their own merit rejected to admit the same and proceeded to confirm the addition.

HELD 

The Tribunal noted that the assessee had submitted before the AO that the cash deposits came from cash sales and earlier withdrawals from the bank. However, the AO rejected the explanation of the assessee by stating that he has failed to furnish the sale / purchase bills, etc.  It also noted that the CIT(A) without examining the evidences, refused to admit them as additional evidences and proceeded to confirm the addition.

When the addition made is on account of non-furnishing of sale/purchase bills, etc., if before the first appellate authority the assessee comes forward and submits the same as additional evidences, they deserve to be examined in proper perspective as the entire addition hinges upon non-furnishing of such evidences and that being the case, the evidences submitted by the assessee may have a crucial bearing on the issue. Therefore, without properly verifying the authenticity / genuineness of the evidences produced, they cannot be brushed aside / rejected.

The Tribunal restored the matter back to the file of the AO for examining the assessee’s claim in the light of evidences produced by the assessee with a direction that the AO must afford a reasonable opportunity of being heard to the assessee on the issue.