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Facts
The Revenue appealed against an order that deleted an addition made by the AO. The addition was based on the difference between the stamp duty valuation of a property and the consideration value declared by the assessee, who acquired leasehold rights. The AO made the addition as the assessee failed to provide supporting documents for the transaction and the original allotment of rights.
Held
The Tribunal observed that the CIT(A) admitted additional evidence without giving the AO an opportunity to examine it, which violated Rule 46A(3) of the Income Tax Rules. Therefore, the Tribunal set aside the order and remanded the case back to the CIT(A) for fresh adjudication.
Key Issues
Whether the CIT(A) erred by admitting additional evidence without giving the AO an opportunity to examine it, thereby violating Rule 46A(3) of the Income Tax Rules.
Sections Cited
250, 46A(3), 46A(1), 46A(2), 46A(4)
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Income Tax Appellate Tribunal, MUMBAI BENCH “F”, MUMBAI
Before: SHRI NARENDER KUMAR CHOUDHRYSHRI PRABHASH SHANKAR
Assessment Year: 2018-19 Income Tax Officer Ward Jaikumar 2(2) Kalyan Amarlalphagwani Income Tax Office Mohan Plaza Flat No. 703, 7th Floor, Wayale Nagar Vs. Milan Palace A Wing Khemani, NR Ruhani Satsang Hall Ulhasnagar, Mumbai- 421002 PAN: AMNPP8597Q (Appellant) (Respondent) Present for: Assessee by : Shri Sunil Makhija a/w Ms. Manisha Ghind Revenue by : Shri Leyaqat Ali Aafaqui, Sr.D.R. Date of Hearing : 22.08.2025 Date of Pronouncement : 19.11.2025 O R D E R Per : Narender Kumar Choudhry, Judicial Member:
This appeal has been preferred by the Revenue against the order dated 17.10.2024, impugned herein, by the National Faceless Appeal Center (NFAC), Delhi / Ld. Commissioner of Income Tax {in short ‘Ld. Commissioner’} u/s 250 of the Income Tax Act, 1961 (in short ‘the Act’) for the A.Y. 2018-19.
In this case, the Assessee had declared its total income at Rs.22,31,440/- by filing return of income for the AY under consideration on dated 27.09.2018, which was selected for “limited scrutiny” through CASS on the following ground:
“Investment in immovable property”
The AO accordingly, issued statutory notices to the Assessee, who in response to the same submitted its response through e- proceedings facility on ITBA portal.
The AO thus, perusing the details filed observed that the Assessee was holding the leasehold rights in the plot, which was initially allotted to M/s. Ashirward Mineral, a proprietorship concern for a period of 99 years and further assigned to M/s. Sainath Garments, the Proprietary concern of the Assessee, but no supporting document has been produced to the department. As per Assessee’s reply, the total lum-sum purchase price of Rs.50 lakhs has been paid and the lease of the property can be renewed after the completion of the period but there is no mention of any period in the deed. Anyone, who purchases the property will own it only for a period, after which the ownership is given back to the land owner. However, the Assessee could not submit any supporting evidences that M/s. Ashirward Mineral was allotted right to assign the said property to the Assessee.
The AO therefore on the aforesaid observations/reasons did not accept the submission of the Assessee and ultimately by observing and holding “that the Assessee has actually purchased a property from a partnership concern and has not filed any objection against the stamp duty value to the Higher Authority and there is no agreement before the registration”, made the addition of Rs.1,69,18,000/- being difference between the stamp duty valuation to the tune of Rs.2,19,18,000/-and the consideration value of Rs.50 lakhs shown by the Assessee and added the same to the total income of the Assessee.
The Assessee being aggrieved challenged the said addition by filing first appeal before the Ld. Commissioner, who by considering the relevant documents and submissions filed before him specifically, and by relying on a judgment of the Hon’ble Pune Tribunal in the case of KANKAST Pvt. Ltd. dated 19.01.2015 ultimately allowed the appeal of the Assessee by deleting the said addition.
Thus, the Revenue Department being aggrieved has challenged the impugned order by filling instant and raised the following grounds of appeal: “a. On the facts and circumstances of the case and in law, the Ld. CIT(A) failed to appreciate that the submissions made by the assessee during appellate proceedings were in the nature of additional evidences and therefore erred in not allowing the A.O. to examine the additional evidence admitted by them as per the provisions w/s. 46A(3) of the 1. T. Rules, 1962. b. The appellant prays that the order of the CIT(A) may be set aside and that of the Assessing Officer be restored. c. The appellant craves leave to add, alter, amend and modify any of the above grounds of appeal either before or at the time of hearing of the appeal, if considered necessary”.
The Ld. D.R. in support of its grounds of appeal
, has submitted that the Ld. Commissioner during the appellate proceedings entertained the additional evidences, without giving an opportunity to the AO to examine the same and thus violated the provisions of section 46A(3) of the Income Tax Rules, 1962 (in short “Rules”) and therefore order passed by the Ld. Commissioner is liable to be quashed.
9. On the contrary, the Ld. Counsel for the Assessee supported the impugned order.
10. Heard the parties and perused the material available on record. The only effective ground raised by the Revenue pertains to not allowing any opportunity to the AO u/r 46A(3) of the Rules to examine the additional evidence, which were admitted and considered by the Ld. Commissioner, while adjudicating the appeal of the Assessee. Though the parties have also argued on merits of the case and also placed reliance on various contrary judgments qua Assessee’s claim, however, as the Revenue Department has raised the sole issue/grievance, which goes to the root of the case, therefore we deem it appropriate to adjudicate the main ground/grievance raised by the Revenue Department, first. We observe that from the grounds raised by the Assessee before the Ld. Commissioner it clearly appears that during the first appeal proceedings, the Assessee though filed the appeal and raised two grounds of appeal, however in the first ground has specifically mentioned as under: “Necessary documentary evidence will be provided in due course.” And therefore, the Assessee, in submissions dated 16.09.2024 filed before the Ld. Commissioner, has specifically mentioned the following facts: “Sir/madam, though during the course of assessment proceedings appellant for the sake of convenience had uploaded only the relevant pages of the deed of assignment, however, full copy of the said deed highlighting the relevant portion, is being uploaded herewith for your honours kind perusal”. 10.1 Thus, the Ld. Commissioner by considering full copy of agreement/deed of assignment and other documents filed by the Assessee and without seeking any report and/or giving any opportunity to the AO to examine such documents, admitted such additional evidences and considered the same and adjudicated the issue and allowed the relief to the Assessee by deleting the addition made by the AO and therefore the Revenue has challenged the decision of the Ld. Commissioner qua admitting and considering the additional evidences, as against the provisions of rule 46A(3) of the rules.
10.2 Provisions of Rule 46A, mandates that the Assessee shall not be entitled to produce before the Ld. Commissioner any evidence oral or documentary other than the evidence produced before the AO during the course of assessment proceedings, except in certain circumstances, such as where the AO has refused to admit evidence or the Assessee was prevented by sufficient cause from producing the evidence by the AO or where the Assessee has prevented from producing before the AO any evidence, which is relevant for adjudication of ground of appeal or where the AO has made the assessment order, without giving sufficient opportunity to adduce the relevant ground of appeal.
10.3 Here in the instant case, admittedly the Assessee has not filed complete copy of deed of assignment and other relevant documents such as genesis of transaction before the AO but in fact filed only some pages as per its own wisdom, but not as per satisfaction of the AO. It is also not the case here that the AO has refused to admit additional evidence or the Assessee was prevented from producing the evidence, which he was called upon to produce by the AO or the AO has made the assessment order without giving sufficient opportunity to the Assessee to adduce the evidence relevant to the grounds of appeal. Thus, the exceptions provided in rule 46A(1) of the rules, are not applicable to the case of the Assessee.
10.4 Further, in rule 46A(2) it is prescribed that no evidence shall be admitted under sub rule (1), unless the Commissioner (Appeals) records in writing the reasons for its admission. However, in the instant case, no such reason has been recorded by the Ld. Commissioner, while admitting the additional evidences filed by the Assessee.
10.5 The provisions of section 46A(3) prescribes further that the Commissioner (Appeal) shall not take into account any evidence under sub rule (1), unless the AO has been allowed a reasonable opportunity to examine the evidence or document produced by the Assessee or to produce any evidence or document in rebuttal of the additional evidence produced by the Assessee. Admittedly, the Ld. Commissioner in this case has not allowed any such opportunity as well, as prescribed under rule 46A(3). Thus, the case of the Assessee also does not fall under this clause/provision.
10.6 Now coming to the next provision of section 46A(4), which prescribe that nothing contained in this rule shall effect the power of the Commissioner (Appeals) to direct the production of any document or the examination of witness to enable him to dispose of the appeal or for any substantial cause ……………………………….. No doubt, the Ld. Commissioner has co-terminus powers of the Assessing Officer and also empowered to exercise save/exception clauses to direct the production of any document or the examination of any witness to dispose of the appeal or for any other substantial cause, however in this case it is a fact that the Assessee before the AO has not filed the relevant documents including geneses and complete chain of documents to substantiate the transaction and before the Ld. Commissioner neither filed any appropriate application for admission of additional evidences nor established that its case falls under any of the exceptions carved out in Rules 46A(1) of the Rules. Further, it is also not the case here that the AO has passed the assessment order without giving sufficient opportunity. It is also an admitted fact that no opportunity was allowed by the Ld. Commissioner to the AO to examine the evidences or documents produced by the Assessee. Further, it is also not the case here that the Ld. Commissioner under the provision of Rule 46A(4) has directed the Assessee the production of such documents in particular. It is also a fact that the Ld. Commissioner also not examined the genesis or complete chain of transactions, which resulted into assigning the leasehold rights to the Assessee but in fact only considered the last transaction for assignment of leasehold right in favour of the Assessee. Thus, considering the peculiar facts in totality for just and proper decision of the case and substantial justice and for fair play, we are inclined to remand the instant case to the file of the Ld. Commissioner for decision afresh by considering the genesis and chain of transactions, which ultimately resulted into assigning of leasehold rights in the name of the Assessee, suffice to say by affording a reasonable opportunity of being heard to the Assessee to file an appropriate application for adducing the additional evidences and to the AO for examination of the documents and/or seeking remand report from the AO. Thus, the impugned order is set aside and the case is accordingly remanded to the file of the Ld. Commissioner, in the aforesaid terms.
Coming to the merits of the case, we observe that the issue is contentious, as there are contrary judgements available on the issue under consideration and as we have remanded the case to the file of the Ld. Commissioner for decision afresh and therefore not delving into such aspect, however granting the liberty to the parties to address their arguments in respect of the merits of the case, after admission of the additional evidences by the Ld. Commissioner.
In the result, Revenue’s appeal is allowed for statistical purposes. Order pronounced in the open court on 19.11.2025.