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Facts
The Revenue appealed against an order of the Ld. CIT(A) which deleted additions made by the AO. The assessee's return for AY 2017-18 was selected for scrutiny, and additions were made, including disallowance of bonus and addition on account of unexplained cash deposit during demonetization.
Held
The Tribunal held that the Ld. CIT(A) erred by considering additional evidence produced by the assessee without calling for a Remand Report from the AO, thus violating Rule 46A of the Income Tax Rules, 1962.
Key Issues
Whether the Ld. CIT(A) erred by admitting additional evidence without following the procedure prescribed under Rule 46A of the Income Tax Rules, 1962?
Sections Cited
36(1)(ii), 68, 46A
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Income Tax Appellate Tribunal, DELHI
ORDER
PER YOGESH KUMAR, U.S. JM:
The present appeal is filed by the Revenue against the order of Ld. Commissioner of Income Tax (Appeals/ National Faceless Appeal Centre (‘Ld. CIT(A)/NFAC’ for short), New Delhi dated 23/10/2024 for the Assessment Year 2017-18.
Brief facts of the case are that, the Assessee being an individual, filed his return of income for the AY 2017-18 by declaring the total income at Rs. 8,79,110/-. The return of Assessee was selected for scrutiny through CASS. An assessment order came to be passed on 16/12/2019 by disallowing Rs. 4,22,891/- During the assessment proceedings, various statutory notices were issued to the Assessee and the assessment proceedings were completed by disallowing the bonus u/s 36(1)(ii) of the Income Tax Act, 1961 ('Act' for short) of Rs. 4,22,891/-, making addition of Rs. 91,31,710/- on account of unexplained cash deposit during the demonetization, disallowed Rs. 83,660/- claimed under the head of damage and penalty, disallowed Rs. 2,73,769/- claimed on account of unexplained expenses debited to profit and loss account and also made addition of Rs. 21,550/- on account of unexplained credit u/s 68 of the Act.
Aggrieved by the assessment order dated 16/12/2019, the Assessee preferred an Appeal before the Ld. CIT(A). The Ld. CIT(A) vide order dated 23/10/2024, by considering the submissions and the documents produced during the first appellate proceedings, deleted the additions made by the A.O. vide order impugneddated 23/10/2024. Aggrieved by the order of the Ld. CIT(A) dated 23/10/2024, the Department preferred the present Appeal.
The Department's Representative submitted that the Ld.CIT(A)/ NFAC has erred in not affording an opportunity to the AO to examine and verify the additional evidences submitted by the assessee during course of appellate proceedings and rebut the same thereby violating provision of Rule 46A of the Income Tax Rules, 1962. Thus, sought for setting aside the impugned order of the Ld. CIT(A) .
Per contra, the Ld. Assessee’s Representative submitted that the Ld. CIT(A) has rightly deleted the additions made by the A.O. on its merits after considering cogent and undisputed documents and also the submissions made by the Assessee during the first appellate proceedings, therefore, the order impugned requires no interference at the hands of the Tribunal. Thus, sought for dismissal of the Appeal of the Revenue.
We have heard both the parties and perused the material available on record. During the assessment proceedings, even after issuing several notices, the Assessee failed to make any submission or produce any document in support of the claim of the Assesse.The assessment has been framed based on the material available on record by making certain addition/disallowances. During the first appellate proceedings, the Assessee produced certain documents for the first time before the Ld. CIT(A) as additional evidence, however, the Ld. CIT(A) without calling for the Remand Report from the A.O., considered those additional evidence and deleted the additions/disallowance. In our considered opinion, the approach of the Ld. CIT(A) is contrary to Rule 46A of the Income Tax Rules, 1962.
When an application under Rule 46A of the Income Tax Rules, 1962 was filed, the Ld. CIT(A) ought to have called for the comments from the A.O. by way of Remand Report and after considering the Remand Report should have considered additional evidence produced by the Assessee. In view of the above, we remand the matter to the file of the Ld. CIT(A) for fresh adjudication of the Appeal with a direction to comply with Rule 46A of the Ruleswhile considering the additional evidence produced by the Assessee and decide the Appeal after receiving the comments/Remand Report from the A.O. All the contention of the Assessee are kept open.
In the result, Appeal of the Revenue is partly allowed for statistical purpose.