SANJAY ARORA, ACCOUNTANT MEMBER 
AND G. PAVAN KUMAR, JUDICIAL MEMBER

G. Baskar, Advocate for the Appellant. 
A.V. Srrekanth, Jt. CIT for the Respondent.

ORDER

Sanjay Arora, Accountant Member - These are cross Appeals arising from the Order dated 15/6/2015 by the Commissioner of Income Tax (Appeals)-7, Chennai, partly allowing the Assessees' appeal contesting his assessment under section 143(3) of the Income-tax Act, 1961 ('the Act' here-in-after) dated 18/2/2014 for assessment year (AY) 2011-12.

2. Cash deposits of Rs. 42.28 lacs and Rs. 13.87 lacs during the relevant previous year were found in the assessee's savings bank accounts with Punjab National Bank, Mogappair East and State Bank of India, Padi, respectively. These bank accounts were not reflected in the books of the assessees business, i.e., manufacture and trading in plastic items, carried under the proprietary concern, M/s. Indtech Industries. The same being unexplained as to their source, were assessed as income from other sources. There was, likewise, another cash introduction of Rs. 62.75 lacs in the assessees' capital account in the said firm, and which was for the same reason assessed as business income. A comparison of the sales figure per the 'Profit & Loss A/c' of the business (Rs. 343.10 lacs) and that per the sales-tax return (Rs. 380.68 lacs), revealed difference of Rs. 37.57 lacs. Though explained to be on account of excise duty, included in the monthly sales turnover, credited in the books of account to a separate account, the same was not substantiated, so that the same came to be added as income. In appeal, the ld. CIT(A) was of the view that the cash introduced in the partnership firm as well as in the bank accounts is to be taken together. Also, the cash withdrawals shall form a source for cash deposits, i.e., subsequent to the withdrawals. Accordingly, it is the peak amount available in all the accounts together that should be considered and brought to tax. He also agreed with the assessee in that certain credits (in the firm) are by way of 'journal entries', in favour of specified persons, amounting to Rs.21.93 lacs (listed at para 4.4 of his order), for which deletion was therefore directed. Again, the assesee filing a sales reconciliation, stating the amount credited separately, he directed exclusion of addition on account of the said difference. Aggrieved, both the parties are in appeal.

3. Before us, the assessee's case was for admission of additional evidence in the form of two agreements for sale dated 5/4/2010 with two different persons for sale by the assessee of his two immovable properties at Rs. 35 lacs each. The same – per the endorsements made at the back of its pages, beginning page 1, had yielded him cash at Rs. 25 lacs each, i.e., at a total of Rs. 50 lacs. The ld. Department Representative (DR) would object to the said plea, stating that the same was not admissible in terms of Rule 29 of the Income Tax (Appellate Tribunal) Rules, 1963, relying for the purpose of the decision in the case of Velji Deoraj & Co. v. CIT [1968] 68 ITR 708 (Bom.), to which in fact reference was also made by the Bench during hearing. On a further enquiry by the Bench as to if the sale (of property) had matured, even if subsequently, which would find reflection in the assessee's return, he replied in the negative, furnishing no further explanation.

4. We have heard the parties, and perused the material on record.
The law
4.1 Rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963, which reads as under, is a provision regarding production of additional evidence before the Tribunal:

'29. Production of additional evidence before the Tribunal.
The parties to the appeal shall not be entitled to produce additional evidence either oral or documentary before the Tribunal, but if the Tribunal requires any documents to be produced or any witness to be examined or any affidavit to be filed to enable it to pass orders or for any other substantial cause, or, if the income-tax authorities have decided the case without giving sufficient opportunity to the assessee to adduce evidence either on points specified by them, or not specified by them, the Tribunal, for reasons to be recorded, may allow such document to be produced or witness to be examined or affidavit to be filed or may allow such evidence to be adduced.'

The rule places a bar on the parties to the appeal to produce additional evidence, either oral or documentary, before the tribunal. But the tribunal is vested with a judicial discretion to allow the production of the additional evidence in the following circumstances:

The tribunal's power to admit additional evidence is limited. On the existence of either of the circumstances mentioned above, the tribunal, for reasons to be recorded, may allow such document to be produced or witness to be examined or affidavit to be filed or may allow such evidence to be adduced. The rule does not thus enable an assessee or the Department to tender fresh evidence to support its case, much less to make out a new case. The Hon'ble High Court in Velji Deoraj & Co. (supra) clarified that the admission of additional evidence is made to depend not on the relevancy or materiality but upon the fact whether or not the appellate court requires the evidence to enable it to pronounce the order or for any other substantial cause. Further, the mere fact that the evidence sought to be produced is vital and important does not provide a substantial cause to allow its admission at the appellate stage, especially when the evidence was available to the party at the initial stage and had not been produced by him. This, it was further explained, is as the rule is not to allow a litigant, who has been unsuccessful in the lower courts, to patch up the weak parts of his case and fill up the omissions in the court of law. The admission of additional evidence by the tribunal is thus dependent on the tribunal requiring it for the purpose of pronouncing its judgment or for the purpose of curing some inherent lacuna which it has itself discovered (refer pgs. 713-715 of the reports). In this context, it would be useful to refer to the constitutional bench decision in K. Venkataramiah v. A. Seetharama Reddy AIR 1963 SC 1526, wherein it was observed in the context of the provision of Order 41, Rule 27(1) of Code of Civil Procedure, 1908, to which r. 29 is similar in terms, that the appellate court has the power to allow additional evidence not only where it requires such evidence to enable it to pronounce the judgment but also for any other substantial cause. There may well be cases where even though the Court finds that it is able to pronounce the judgment on the state of record as it is, so that it cannot strictly be said that it requires additional evidence to enable it to pronounce the judgment, it still considers that in the interest of justice something which remains obscure should be filled up, so that it can pronounce its judgment in a more satisfactory manner. Such a case will be one for allowing additional evidence for any other substantial cause under rule 27(1)(b) of the Code. This aspect was again emphasized recently by the Hon'ble Court in Union of India v. Ibrahiam Uddin [2012] 8 SCC 148, wherein it was explained that the words 'for any other substantial cause' must be read with the word 'requires' at the beginning of the sentence, so that it is only where, for any other substantial cause, the appellate court requires additional evidence, that this rule shall apply, for example, when evidence had been taken by the lower courts so imperfectly that the appellate court cannot pass a satisfactory judgment (refer pg. 168 of the reports).

Analysis
4.2 We may next examine the facts of the case, in the backdrop of which the evidence being prayed for admission is to be considered. Clearly, the assessee has not furnished any explanation with regard to the nature and source of the cash deposits in his two bank accounts as well as that introduced in business.The assessees' case was selected for assessment under the verification procedure by the issue of notice under section 143(2) on 01/8/2012. A detailed questionnaire was issued on 27/6/2013. The hearing was conducted at, beginning 7/8/2013, on different dates extending up to 17/1/2014, with the assessee personally attending on 25/11/2013. All this while no reference to any proposed sale or sale agreement was made by the assessee. Vide letter dated 11/2/2014, i.e., after the close of the hearing, the assessee for the first time submitted that he had received 'some advance money' for the sale of property. Then, again, no material to substantiate the claim, or details, were furnished. Before the first appellate authority as well, in whose office the assessee was personally present on 14/3/2014, the assessee raised the claim sans any details, much less material, leading to its rejection by him (refer para 4.4.2 of the impugned order). The same having not been considered by the assessing authority, this rather ought to have been assessee's first plea before the ld. CIT(A), i.e., admission of additional evidence. The same, regulated by Rule 46A of the Income-tax Rules, 1962, itself requires recording of reasons by him justifying his acceptance, only subject to which could the same be admitted. Further, and even as the same, i.e., admission, is subject to being challenged in further appeal, the reliance thereon is subject to its consideration by the assessing authority, including not only meeting the same but adducing material in rebuttal. The assessee's conduct in not furnishing the two agreements at any time, even years after executing the same on 5/4/2010, and even as the same constitutes his only explanation on merits, the substratum of his case in respect of the principal addition proposed and made, or in appeal, is incomprehensible, if not perplexing. To begin with, what is the legal validity of the said Agreements, which being in relation to the transfer of immovable property are required by law to be registered under the Registration Act, 1908? Then, again, it is not accompanied by any details, viz. confirmation by the proposed buyers, stating their PANs, or if the amount 'paid' by them was accounted for. Though, strictly speaking, the same should not concern the assessee, we refer to this as this could perhaps be the reason for not divulging these agreements. Or, is it that the same are an after-thought, with the assessee taking time to identify persons who could be said to have paid him cash to him against the purported sale? There is no explanation as to why the entire consideration has been paid in 'cash', i.e., assuming that the sale is otherwise accounted for or intended to be disclosed. Two, why had the same, agreed to be closed by 31/12/2010, not been even years later, particularly considering that the vendees had paid a substantial sum, i.e., both in absolute terms as well as relatively, i.e., in relation to the sale consideration, and could enforce performance through the court? Further, what is the fair market value (fmv) of the two properties at the relevant time? Again, had the parties/buyers, who continued paying intermittently up to January, 2011, demanded their money back or waived the same, i.e., the legal status of the said agreements. This becomes particularly relevant considering that the agreements have admittedly not been carried out. Did the assessee disclose the fact of advance received in any of the returns filed for the subsequent years? This is as the amount received is liable to be under section 51 reduced from the cost of acquisition of the capital asset/s under reference. Again, is it a case of forfeiture? This is as the same, coupled with non-transfer of the capital asset under reference, would render the amount liable to be considered as income u/s. 2(24)(xvii) r/w 56(2)(ix), i.e., for the year of forfeiture. Finally, we observe that, even considering the said agreements at face value, without any supporting material or explanation, the assessee has admittedly no explanation for the source of the balance amount of Rs. 68.90 lacs, i.e., Rs. 118.90 lacs minus Rs. 50 lacs, addition in respect of which shall in any case obtain. That is, there is in fact a tacit admission on the part of the assessee to be having no explanation (as to the nature and source of funds) for nearly Rs. 70 lacs, admittedly found with him during the relevant year.

Findings
4.3 Clearly, there was no dearth of opportunity with the assessee for producing the evidence, which it presses for admission before us vide application dated March 22, 2016. Rather, the very fact of its availability all through itself raises several questions, if not doubts, in the matter. With regard to our requiring the same for passing an order, we are not in the least moved. The jurisdictional fact of the assessee being found to be the owner of the monies in his accounts is admitted and not in dispute. All, therefore, that is required to considered is the reasonability of the assessee's explanation, if any, furnished toward the nature and source of the impugned cash deposits. A mere mention of the sale of property, if the reference thereto before the ld. CIT(A) is taken into account, without anything further, much less substantiated, cannot be in law regarded as an 'explanation', and was accordingly not considered by him. The aspect of 'any other substantial cause' stands also explained by the higher courts as in terms of the requirement by the tribunal for pronouncing its order in a satisfactory manner. We have analyzed the assessee's conduct as well as the documents prayed for admission in light of the obtaining facts and the position of law, to find that the same, on the contrary, need not be taken on record and only need to be ignored. The admission, as explained, is not to provide further innings or with a view to fill up the gaps in its case by a party and strengthen its case. We, accordingly, have no hesitation to hold that there is no requirement for the said 'evidence', even the credibility of which is suspect. The assessee's application or plea in this regard, i.e., admission of additional evidence, is accordingly rejected. Yes, of course, there is the quantitative aspect in-as-much as both the authorities have arrived at a different amount of the addition, resulting in cross appeals. The same though is independent of the evidence under reference.

On merits, we, considering the material on record, find the assessee's case qua the impugned addition, which stands also contested by the Revenue for the part relief allowed by the ld. CIT(A), as sans any explanation, much less materials, to the extent of the 'balance' amount - which we have arrived at Rs. 68.90 lacs (refer para 4.2 of this order). And an 'explanation' (before the ld. CIT(A)) for an unspecified amount - which is subsequently sought to be supported by Agreements for Rs.70 lacs, claiming to have received a substantial part (Rs.50 lacs) thereof, i.e., even where regarded as a part of the assessee's case. Who is a party/s to which the property/s is agreed to be sold; at what terms; how is the consideration received/to be received; when did the sale/transfer takes place; and where not, what is a course of action adopted by either party for specific performance, etc., are all questions that beg an answer. Why, even the amount/s remains unspecified? The bald statement before the first appellate authority can hardly be considered as an explanation. The provisions of sections 69/69A stand rightly invoked by the Revenue. The only question that survives is the quantum of the addition. We find the basis of a peak amount, as adopted by the ld. CIT(A), as reasonable. In fact, we find that the Assessing Officer (AO) has himself allowed the assessee credit for Rs. 1 lac (out of Rs. 2.35 lacs withdrawn) against deposits in the SBI account, as well as for Rs. 0.10 lac withdrawn from PNB a/c, so that it is not that he was not alive to the same. The balance Rs. 1.35 lac stands withdrawn from the capital account on 31/3/2011, i.e., the last date of the year. The utilization of the same as well as of that withdrawn earlier (Rs. 1.0 lac) in the books of the firm is to be seen before credit against the same could be allowed. This is as it could well be that the same is consumed for household/personal withdrawals or toward year-end investments – the assessee also availing deduction under Chapter VI-A at Rs. 1.04 lacs, in which case the credit, to that extent, could not be allowed. Why, it could be that the cash is reflected as cash-in-hand in the books of the firm, and carried over as such for utilization in the following year, so that allowing credit for the same (to that extent) would be inconsistent with the material on record. Again, we observe a difference between the cash deposits in the SBI account. While the AO takes this figure at Rs. 13.87 lacs (refer para 5.5 of his order), the ld. CIT(A) adopts this at Rs. 20.39 lacs. With regard to the credit of Rs. 21.93 lacs in respect of cash credit in the assessee's capital account, ostensibly against 'journal entries' 'allowed' by the ld. CIT(A), we observe that the Revenue is rightly aggrieved (per Ground 2.3 of it's appeal) in-as-much as no opportunity to examine and, where so, meet and/or rebut has been provided to the AO. Further, who are the creditors; their capacity; the genuineness of the transactions, which aspects remain obscure or over-looked. In fact, it does not appear that the ld. CIT(A) has 'allowed' credit, or else the aggregate of cash deposits (as considered by him) would not amount to Rs. 103.07 lacs, i.e., as against Rs. 118.90 lacs by the AO, or at a difference of Rs. 15.83 lacs.

Decision
4.4 In view of the foregoing, even as we confirm the addition in principle, the matter with regard to its quantification, being inchoate, clearly requires determination, to be decided after due verification, of course after allowing proper opportunity of hearing to the assessee. We direct accordingly. This decides the assessee's appeal and Gd. 2.3 of the Revenues' appeal.

5. The only other issue raised is vide Grounds 2.1 & 2.2 of the Revenue's appeal. While the ld. CIT(A) has allowed relief to the assessee on the basis of a sales reconciliation, the Revenue is aggrieved by it's admission, claimed to be in violation of Rule 46A supra. The said reconciliation appears at page 3 of the impugned order, as under:

(Amount in Rs.)
Sales Reconciliation

6. We have heard the parties, and perused the material on record. The AO clearly records that though a claim to that effect was made, no proper reconciliation was filed. The Revenue's grievance as to non-observance of r.46A is maintainable, with the assessee being obliged to furnish not only the reconciliation, but, where so required, the sales and the excise returns, substantiating his claims. In fact, the first thing that strikes one is that it is not so much the furnishing of the sales reconciliation that explains the assessee's case as is the deposit of the excise duty, which is, as claimed, the principal difference between the sales as per the books and the sales-tax return. The reason is simple. Even if the differential amount represents, as stated, excise duty (or sales-tax) on the sales for the year, credited to a separate account, it yet forms part of the assessee's turnover in view of section 145A of the Act. It is only by virtue of it's payment that deduction in its respect obtains, i.e., u/s. 37(1) r/w. s. 43B, and the same gets in effect excluded in computing the assessee's income. This is rather further subject to the same representing a liability, as otherwise the question of its deduction does not arise. The payment is to be made during the relevant year, except where the liability arises for the current year, in which case it could be made up to the due date of filing the return u/s. 139(1) for that year. Then, again, we observe a difference of Rs. 4,23,517/- (in the reconciliation) in the account 'labour charges', qua which there is no claim by the assessee or even finding by the ld. CIT(A), though gets 'deleted' in pursuance of his order. The matter requires being examined by the AO, who shall adjudicate in accordance with law by issuing definite findings of fact and after allowing the assessee an opportunity to state and prove his case. We decide accordingly.

7. In the result the assessee's appeal is partly allowed for statistical purposes, while the Revenue's appeal is partly allowed.