DEPUTY COMMISSIONER OF INCOME TAX, DELHI vs. AJIT SINGH OM PARKASH PRIVATE LIMITED, DELHI

This appeal by Revenue is directed against the order of National Faceless Appeal Centre (NFAC), Delhi [for short hereinafter referred to as the "(Ld. NFAC"] dated 04.09.2024 for Assessment Year 2017-18. The word Act hereinafter in this order shall mean the Income Tax Act, 1961.

The only issue raised in the present appeal of the revenue is regarding the deletion of addition of Rs. 2,32,39,792/- made by the ld AO u/s 68 of the Act by violation the provisions of Rule 46A. It is the case of the revenue that ld CIT(A) had entertained details and evidences which were not produced by the Assessee during the assessment proceedings. The ld DR invited our reference to assessment order. It was submitted that in respect of the unsecured loans received by the Assessee during the year, it was noted that the lending parties had received almost equitable amounts from some random parties. The ld AO had doubted the genuineness of the transactions as well as the creditworthiness. The ld DR argued that during the course of appellate proceedings, as evident from para 8 on page 12 of the order of the ld CIT(A), Assessee had filed details in submissions which were not produced before the ld AO.

The ld counsel for the Assessee could not adequately oppose the contentions raised by the ld DR from the revenue.

We have heard rival submissions in the light of the materials available on the record. The assessment order indicates that the ld AO was not satisfied with the creditworthiness of the lenders and genuineness of the transactions qua evidences produced during the assessment proceedings as a result of which he made the impugned additions. We have also noted that there are clear indications in the appellate order that the ld CIT(A) has given relief to the Assessee by entertaining details and evidences which were not available before the ld AO. Rule 46A of Income Tax Rules mandate that the CIT(A) shall give the assessing officer a clear opportunity of being heard while considering any evidences which were filed during the appellate proceedings. There is nothing on record to indicate that the same was done by the ld CIT(A). Accordingly, we are of the considered view that stipulation of Rule 46A has been violated. Adequate opportunity of being heard is basic right of every litigant in a dispute and in this case the said rights of the revenue have been violated.

Be that as it may be, we are of the view that ends of justice would be met if the revenue is given another opportunity to examine the impugned details and evidences produced by the Assessee before finally concluding its decision qua unsecured loans received by the Assessee. We, therefore, deem it necessary to remit the matter to the ld AO for fresh adjudication. The decision to remit it back to the Ld. AO is taken in view of the fact that an Assessing Officer is the fulcrum of assessment proceedings. He possesses the first right and responsibilities to examine facts of a case before arriving at his decision qua determination of taxable income in a particular case. Without prejudice it has also been noted that in this case the Ld. AO did not have adequate opportunities to examine the varied facts seminal therein as the same were produced before the ld CIT(A) only. We have noted with respectful deference the decision of Hon’ble Apex Court in the case of TIN box 249 ITR 216 on the subject matter. Accordingly, the issue of addition qua unexplained unsecured loans which have been contested by the revenue through its grounds of appeal supra stands remitted back to the Ld. AO for fresh adjudication de novo by passing a speaking order and in accordance with law. To the extent the order of lower authorities on this issue stands set aside. The Ld. AO shall give opportunities of being heard to the assessee and it shall be bounden upon the assesse to comply with the notices issued by the Ld. AO. Any non- compliance on the part of the assessee can be adversely viewed. The assessee is at liberty to produce all the evidences filed through its paper Page | 3 book before us including any other evidences deemed relevant in support of its claims before the Ld. AO during the re-adjudication proceedings. Accordingly, all the grounds of appeal raised by the revenue are therefore allowed for statistical purposes.

In the result, the appeal of the revenue is allowed for statistical purposes.