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Facts
The assessee filed a return declaring a loss, which was accepted. The case was reopened, and additions were made for unexplained cash credit and expenditure. The CIT(A) dismissed the assessee's appeal.
Held
The Tribunal held that the CIT(A) erred in rejecting additional evidence filed by the assessee, which was crucial for deciding the case. The Tribunal directed the CIT(A) to admit the additional evidence and decide the appeal afresh.
Key Issues
Whether the CIT(A) was justified in rejecting additional evidence filed by the assessee, and if not, should the appeal be decided afresh after considering such evidence?
Sections Cited
147, 148, 143(3), 68, 69, 46A
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Income Tax Appellate Tribunal, DELHI
(A.Y. 2010-11) Scraft Products Pvt. Ltd. Vs. ACIT D-28, South Extension Circle-22(2) Part-1, New Delhi New Delhi PAN: AALCS4578F Appellant Respondent Assessee by Dr. Rakesh Gupta, Advocate, Shri Somil Aggarwal, Advocate and Shri Deepesh Garg, Advocate Revenue by Sh. Mahesh Kumar, CIT (DR) Date of Hearing 27/05/2025 Date of Pronouncement 13/06/2025 ORDER
PER YOGESH KUMAR, U.S. JM:
The present appeal is filed by the Assessee against the order of the Commissioner of Income Tax (Appeals)-8, New Delhi [‘Ld. CIT(A)’ for short] dated 19/02/2019 pertaining to Assessment Year 2010-11.
Brief facts of the case are that, the Assessee filed return of income declaring loss of Rs. 2,93,40,641/- and the same was accepted u/s 143(1) of the Income Tax Act, 1961 ('Act' for short). The case of the Assessee was reopened u/s 147 r.w. Section 148 of the Act after recording reasons for reopening. Assessment order came to be passed on 31/12/2017 under Section 147/143(3) of the Act by making additions of Rs. 7,58,44,000/- u/s 68 of the Act on account of unexplained cash credit and Rs. 15,16,880/- u/s 69 of the Act on account of unexplained expenditure. Aggrieved by the assessment order dated 31/12/2017, the Assessee preferred an Appeal before the Ld. CIT(A). The Ld. CIT(A) vide order dated 19/12/2019, dismissed the Appeal filed by the Assessee. Aggrieved by the order of the Ld. CIT(A) dated 19/12/2019, the Assessee preferred the present Appeal.
The Ld. Assessee's Representative vehemently submitted that, the Ld. CIT(A) has committed grave error for rejecting the additional evidence filed by the Assessee which is in violation of principals of natural justice. Further submitted that, the Ld. CIT(A) ought to have admitted the additional evidence and should have deleted the additions made by the A.O., thus, sought for allowing the Appeal.
Per contra, the Ld. Departmental Representative submitted that, the additional documents can be admitted only in exceptional circumstances mentioned in the Rule 46A of the Income tax Rules 1962 and no such exceptional circumstances available to the Assessee, therefore the application has been rightly rejected and additions have been confirmed by the CIT (A). Thus in relying on the orders of the Lower Authorities sought for dismissal of the Appeal.
We have heard both the parties and perused the material available on record. During the first appellate proceedings, the Assessee has filed certain additional evidences under Rule 46A of the Income Tax Rules, 1962 contending that the Assessee was prevented from producing those documents before the A.O. due to paucity of time. The Ld. CIT(A) has rejected the application and has not admitted the additional evidence and consequently dismissed the Appeal by confirming the additions made by the A.O.
It is the specific case of the Assessee before the CIT(A) while filing the additional evidence that, the Assessee has produced all the details/document as required by the A.O. and the Assessee was under a bona-fide belief that the documents/evidence placed on record were substantially sufficient and which will satisfy the Ld. A.O., however, for Assessee’s surprise, the additions were made. Therefore, the Assessee made further efforts to get evidences which could not be arranged during the assessment proceedings due to paucity of time as the assessment order has been passed taking into consideration that the matter was getting time barred. The Assessee has produced the documentby way of additional evidence to prove the identity, creditworthiness and genuineness of the transaction after making extensive efforts and regular fellow ups from the parties.
Considering the above facts and circumstances and in view of the fact that the additional evidences filed by the Assessee are being crucial and will go to the root of the matters in deciding the lis, we are of the considered opinion, that the Ld. CIT(A) ought to have admitted the additional documents and should have decided the Appeal on merits. Accordingly, we direct the Ld. CIT(A) to admit the additional evidence filed by the Assessee and decide the issue involved inthe Appeal afresh after considering the additional documents produced by the Assessee. Thus, we allow Ground No. 4 of the Assessee.
Since, we have allowed the Ground No. 4 and remanded the matter to the file of the Ld. CIT(A) for deciding the Appeal afresh, other grounds of Appeal require no adjudication and the same are kept open.
In the result, the Appeal of the Assessee is partly allowed for statistical purpose.