AO cannot object submission of additional evidence if same is accepted by CIT(A)

 

After considering the rival submissions and perusing the relevant material on record, it is noticed that though the assessee did not extend co-operation to the AO during the assessment proceedings, but such deficiency was made good by submitting the relevant evidence before the ld. CIT(A) as additional evidence. The ld. first appellate authority, in all fairness, remitted such additional evidence to the AO for examination and recording of statement of witnesses, if any. The AO did not adversely comment on such evidence but chose to oppose the admission of the additional evidence. In our considered opinion, the AO should have no objection  if the additional evidence was entertained by the ld. CIT(A), as the same was first sent to him for verification. If he was not satisfied with the correctness of the assessee’s claim in the light of such fresh evidence, he could have controverted the same. In case of cash deposit addition should be based on Peak Theory instead of based on cash total deposits AO chose to pick up deposit side of the bank accounts, totaled the same and made addition for the equal sum without giving benefit of the amounts withdrawn. In other words, certain amounts were withdrawn, then deposited, again withdrawn and re-deposited. When the position is such that there are certain debits and credits in the bank account, it is wholly impermissible to consider only the deposits in the bank account for the purposes of making addition by totaling ignoring the fact that there are withdrawals of the amount as well. In such a situation, it is a peak amount which is required to be added, which exactly has been done by the ld. CIT(A) in this case. The ld. DR could not point out any infirmity in the calculation of the peak amount, by which the ld. CIT(A) restricted the addition to Rs. 2.80 lac. We, therefore, uphold the impugned order.