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2023 (12) TMI 1431 - AT - Income TaxUnexplained income - cash deposits in his bank account and additional estimated income - CIT(A) noted assessee s submissions that the said account was joint account with his brother and the deposits were made by the brother - HELD THAT - As we find that a copy of the assessee s brother affidavit is produced before us which stated that the said account was a joint account of his and younger brother and the first name was of assessee s brother and the second name is the assessee. Further the brother of the assessee has sworn on affidavit that all the money deposit was his and his younger brother has nothing to do with the deposits. We find that in the interest of justice this additional evidence needs to be verified at the level of AO. Hence we restore the file to AO and AO shall verify all these submissions and decide as per law. Needless to add assessee should be given adequate opportunity of being heard. Assessee s appeal is allowed for statistical purposes.
ISSUES PRESENTED and CONSIDERED
The primary issue in this case was whether the addition of Rs. 8,25,000/- to the assessee's income, as sustained by the CIT (A), was justified. The core legal questions considered were:
ISSUE-WISE DETAILED ANALYSIS Relevant legal framework and precedents The assessment was completed under sections 147/144 of the Income-tax Act, 1961, which deal with income escaping assessment and best judgment assessment, respectively. The legal framework requires the assessee to provide a satisfactory explanation for any unexplained cash deposits to avoid them being considered as taxable income. Court's interpretation and reasoning The Tribunal considered the lack of initial response from the assessee to the notices issued by the AO and the failure to file a return of income. The CIT (A) found the explanation that the deposits were made by the brother unconvincing due to the absence of supporting evidence. The Tribunal noted the submission of an affidavit from the brother, which claimed that the deposits were his and not the assessee's. Key evidence and findings The key evidence presented was the affidavit from the assessee's brother, stating that the account was a joint account and that the deposits belonged to him. The Tribunal found this affidavit to be significant enough to warrant further verification by the AO. Application of law to facts The Tribunal applied the principle of natural justice, emphasizing the need for the AO to verify the new evidence (the brother's affidavit) and reassess the situation accordingly. The Tribunal recognized the potential for the deposits to be attributable to the brother, given the joint nature of the account and the affidavit provided. Treatment of competing arguments The Tribunal balanced the Revenue's position, which was based on the lack of initial evidence from the assessee, with the new evidence presented in the form of the affidavit. The Tribunal decided that the interests of justice required a remand to the AO for further examination of this evidence. Conclusions The Tribunal concluded that the case should be remanded to the AO for verification of the affidavit and other submissions. The Tribunal directed the AO to provide the assessee with an adequate opportunity to present their case and evidence. SIGNIFICANT HOLDINGS Preserve verbatim quotes of crucial legal reasoning The Tribunal held: "We find that in the interest of justice, this additional evidence needs to be verified at the level of AO. Hence, we restore the file to AO and AO shall verify all these submissions and decide as per law. Needless to add, assessee should be given adequate opportunity of being heard." Core principles established
Final determinations on each issue
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