KBC TRAVELS,DELHI vs. DCIT, CIRCLE-61(1), DELHI

Brief facts of the case are that the assessee is a partnership firm and had filed its return of income on 31.10.2018, declaring total income of INR 84,37,060/-. The case was selected under CASS for scrutiny for the reason “large payment made u/s 194C to persons who have not filed return of income”. Thereafter, the AO examined the issue in details and observed that there were certain receipts appearing in 26AS statements which were not included in total receipts declared by the assessee in the financial statements prepared for computing the income offered for tax and therefore, an addition was made for the differential amount of INR 1,92,06,524/-. The AO further observed that assessee has made payment to various contractors on which TDS @ 1 % was made. When the notices u/s 133(6) of the Act were issued to various parties, either the replies were not furnished or details furnished were incomplete and therefore, the AO has disallowed the total payment of INR 1,39,02,820/- u/s 69C of the Act as unexplained expenditure. The AO further observed that the assessee has not made TDS on the payment to petty contractors amounting to INR 3,24,16,270/- and thus has disallowed 30% of the said expenditure as unexplained u/s 69C of the Act and total income of the assessee firm was assessed at INR 5,14,74,288/-.

Against the said order, assessee filed an appeal before ld. CIT(A) with whom the assessee had filed certain details as additional evidences u/r 46A of the Income Tax Rules, 1962 (‘the Rules’) to justify the expenses claimed. However, the ld. CIT(A) has not admitted the additional evidences so filed by observing that the assessee has failed to justify with reasonable cause as to why these evidences were not filed before the AO despite of the various opportunity provided and accordingly, dismissed the appeal of the assessee.

Aggrieved by the order of ld. CIT(A), assessee is in appeal before the Tribunal by taking various grounds of appeal mentioned in the appeal memo out 2 of which Ground of appeal Nos. 2 to 4 raised by the assessee are with respect to the non-admission of additional evidences filed U/R 46A of the Rules and not providing sufficient opportunity of being heard on the merits of the assessee.

Heard the contentions of both parties at length and perused the material available on record. At the outset, it is observed that the assessee was engaged in the contract activity and case was taken up for complete scrutiny for verification of the payments made to various contractors. During the course of assessment proceedings, opportunities were provided and the assessment order was passed during the Covid-19 Pandemic where part compliances could be made due to pandemic. The assessee thereafter had collected all the necessary details to substantiate the claims and filed them before ld. CIT(A) as additional evidence u/r 46A of the Rules with a request to admit the same and sought Remand Report from the AO. The assessee has not made any submissions on the merits of the additions made as firstly additional evidences were filed for the admission. However, ld. CIT(A) without appreciating the nature of the evidences so filed, and further ignored the fact that assessment proceedings were concluded during Covid-19 Pandemic, has rejected the petition filed for admission of additional evidences and dismissed the appeal of the assessee without providing further opportunity to the assessee for making submission on merits.

In view of the above facts and circumstances of the case and in the interest of justice, we remand the issue back to the file of ld. CIT(A) with the directions to admit the additional evidences filed by the assessee and sought Remand Report, if any, required on such evidences from the AO and decide the appeal of the assessee in accordance with law. Needless to say that assessee should be provided reasonable opportunity of being heard before deciding the appeal. With these directions, Grounds of appeal Nos. 2 to 4 raised by the assessee are allowed for statistical purposes.

Ground of appeal No.5 raised by the assessee is rejected being not pressed.

In remaining Grounds of appeal, assessee has challenged the additions made however, once we have already set aside the issue to the file of ld. CIT(A) for fresh adjudication therefore, all remaining Grounds of appeal became academic and not adjudicated.

In the result, appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 19.08.2026. Sd/- Sd/-