INCOME TAX OFFICER, TUNI vs. SIVAGANESH NARISE, S ANNAVARAM

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ITA 711/VIZ/2025Status: DisposedITAT Visakhapatnam13 May 2026AY 2021-227 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the CIT(A) violated Rule 46A by admitting additional evidence without affording the AO an opportunity to examine or rebut it. Therefore, the matter was set aside to the CIT(A) for re-adjudication.

What were the facts?

The Revenue appealed the CIT(A)'s order which deleted additions made by the AO regarding unverifiable purchases, under-valuation of closing stock, and unexplained loans/creditors. The assessee's counsel conceded that the CIT(A) violated Rule 46A by admitting additional evidence without confronting the AO.

What were the issues?

Whether the CIT(A) erred in admitting additional evidence without following the procedure laid down in Rule 46A of the Income Tax Rules, 1962.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144B,Section 145A,Section 37,Section 68,Section 41

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, Visakhapatnam Bench, Visakhapatnam

Before: Shri Ravish Sood & Shri Omkareshwar Chidara

आयकर अपीलीय अिधकरण, िवशाखापटणम पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Visakhapatnam Bench, Visakhapatnam Before Shri Ravish Sood, Judicial Member and Shri Omkareshwar Chidara, Accountant Member आ.अपी.सं /ITA No.711/Viz/2025 (िनधा�रण वष�/Assessment Year:2021-22) Income Tax Officer, Vs. Sivaganesh Narise, Tuni. Tuni. PAN: ABDPN8712E (Appellant) (Respondent) िनधा�रती �ारा/Assessee by: Shri GVN Hari, Advocate (Hybrid hearing) राज� व �ारा/Revenue by: Shri K Prasad, Sr-AR सुनवाई की तारीख/Date of 04/05/2026 Hearing: घोषणा की तारीख/Date of 13/05/2026 Pronouncement: आदेश / ORDER PER. RAVISH SOOD, JM : The present appeal filed by the revenue is directed against the order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, dated 24/09/2025, which in turn arises from the order passed by the Assessing Officer (for short, “AO”) under section 143(3) r.w.s 144B of the Income Tax Act, 1961 (for short, “the Act”), dated 13/12/2022 for the Assessment Year (AY) 2021-22. The

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revenue has assailed the impugned order of the CIT(A) on the following grounds of appeal: “1. The order of the Ld.CIT(A), National Faceless Assessment Centu (NFAC) is erroneous both on facts and in Iaw. 2. The Ld.CIT(A) erred in deleting the addition of Rs.75,00,000/- made by the assessing Officer on account of unverifiable purchases, without appreciating that the assessee failed to produce proper evidence for genuineness, consumption of the goods purchased. 3. The Ld.CIT(A) erred in deleting the addition of Rs.7,28,280/- made رت the assessing Officer on account of unverifiable purchases, without appreciating that the assessee failed to produce proper evidence for genuineness, consumption of the goods purchased. 4. The Ld.CIT(A) erred in deleting the addition of Rs.1,17,13,699/- on account of under valuation of closing stock, ignoring the fact that the assessee had not maintained proper quantitative records and valuation was not in accordance with section 145A of the Income Tax Act as huge difference of Rs.9.82 per gunny bag claimed in compared to cost price and closing stock. 5. The Ld. CIT(A) erred in deleting the addition of Rs.3,00,000/- in the absence of proof from received party NHAI towards non- refundable deposit for tenders. 6. The Ld. CIT(A) erred in ignoring the fact that the alleged loan was advanced out of proceeds from the sale of godown i.e., a capital asset, and that the entire arrangement appeared to be orchestrated to offset capital gains by creating a sham business loss. 7. The Ld.CIT(A) erred in deleting the addition of Rs.33,78,411/- on account of unexplained unsecured loans, without appreciating that the assessee did not discharge the onus of proving identity, genuineness, and creditworthiness of the lenders as per section 68 of the Income Tax Act. 8. The order of the Ld.CIT(A) erred in deleting the addition of Rs. 19,94,300/- and interest paid of Rs.3,43,051/ on that on account of unexplained sundry creditors, despite the fact that the assessee failed to furnish confirmation, PAN and proof of identity/creditworthiness of creditors as required. 9. The order of the Ld.CIT(A) has failed to appreciate the detailed findings and reasoning recorded by the Assessing Officer in the assessment order, and has wrongly accepted unverified documents and explanations furnished during appellate proceedings.

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10.

The order of the Ld. CIT(A) has erred in granting relief without providing adequate opportunity to the Assessing Officer to rebut the new evidences furnished by the assessee during the appellate proceedings, contrary to the provisions of Rule 46A of the Income Tax Rules, 1962. 11. The appellant craves leave to add or delete or amend or substitute any ground of appeal before and/or at the time of hearing of appeal. 12. For these and other grounds that may be urged at the time of appeal hearing, it is prayed that all these above additions be restored.”

2.

Succinctly stated, the assessee had e-filed his return of income for AY 2021-22 on 06/01/2022, declaring an income of Rs. 23,30,590/-. The assessee's return of income was processed under section 143(1) of the Act. Subsequently, the case of the assessee was selected for scrutiny assessment, and notice under section 143(2) of the Act, dated 28/02/2022, was served upon the assessee.

3.

Thereafter, the AO vide his order under section 143(3) r.w.s 144B of the Act, dated 13/12/2022 determined the income of the assessee at Rs.2,82,88,331/- after making certain additions/disallowances, viz., (i) addition of unverified purchases of old gunny bags: Rs.75,00,000/-; (ii) addition of unverified purchases: Rs.7,28,280/-; (iii) addition towards under valuation of closing stock: Rs.1,17,13,699/-; (iv) disallowance of assessee’s claim for deduction under section 37 of the Act: Rs.3,00,000/-; (v) addition of unproved and unexplained credits under section 68 of the Act: Rs.33,78,411/-; (vi) addition/disallowance of

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interest expenditure: Rs.3,43,051/-; and (vii) addition of unproved creditors under section 41 of the Act: Rs.19,94,300/-.

4.

Aggrieved, the assessee carried the matter in appeal before the CIT(A), who vacated the additions/disallowances made by the AO and allowed the appeal.

5.

The revenue aggrieved with the order of the CIT(A) has carried the matter in appeal before us.

6.

We have heard the Learned Authorized Representatives of both parties, perused the orders of the authorities below and the material available on record.

7.

Shri GVN Hari, Advocate, Learned Authorized Representative (for short, “Ld. AR”) for the assessee at the threshold of hearing of the appeal fairly submitted that the “Ground of Appeal No.10” raised by the revenue, wherein it had objected to the admission of additional documentary evidence by the CIT(A) without affording adequate opportunity to the AO to rebut the same, i.e., in violation of the mandate of Rule 46A of the Income Tax Rules, 1962, merits acceptance. Elaborating on his contention, the Ld. AR submitted that, as informed by the assisting counsel, who had participated in the proceedings before the first appellate authority, multiple pieces of evidence, which were in the nature

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of fresh/additional documents, were admitted by the CIT(A) without confronting and calling for a remand report from the AO, which, thus contravened the provisions of Rule 46A of the IT Rules, 1962. The Ld. AR took us through the observations of the CIT(A) at Pages 44-46/Para 9.9.6 of the CIT(A) order, which revealed that the said appellate authority had relied on additional documentary evidence filed during the course of the proceedings before him. The Ld. AR candidly submitted that there is no objection if the matter be set aside to the file of the CIT(A) with a direction to redecide the appeal after complying with the procedure contemplated under Rule 46A of the IT Rules, 1962, for admission of additional documentary evidence.

8.

Per contra, Shri K Prasad, Learned Senior Departmental Representative (for short, “Ld. Sr-DR”) supported the contention of the assessee’s counsel.

9.

We have given thoughtful consideration to the contentions advanced by the Learned Authorized Representatives of both parties.

10.

In our view, as it is an admitted fact that the CIT(A) had admitted multiple additional/fresh documentary evidence that were produced before him without confronting the same to the AO and calling for his objections regarding the admission of the same, therefore, he has clearly

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violated the procedure prescribed under Rule 46A of IT Rules, 1962 for admission of additional documentary evidence. We find that as per sub- rule (2) & (3) of Rule 46A, the CIT(A) is statutorily obligated not to admit any additional evidence even if the same satisfies the conditions contemplated in sub-rule (1) unless he records in writing the reasons for its admission and allowing a reasonable opportunity to the AO, viz., (a) to examine the evidence or document produced by the appellant; or (b) to produce any evidence or document in rebuttal of the additional evidence produced by the appellant. As the CIT(A) has failed to comply with the procedure contemplated under Rule 46A for admission of additional evidence, therefore, in our view, the matter requires restoration to his file with a direction to re-decide the appeal after strictly complying with the procedure contemplated under Rule 46A for admission of the additional evidence that had been filed by the assessee appellant before him.

11.

Resultantly, the order passed by the CIT(A) is set aside to his file with a direction to re-decide the appeal in terms of our aforesaid observations.

12.

In the result, the appeal filed by the revenue is allowed for statistical purposes in terms of our aforesaid observations.

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13.

Order pronounced in the open court on 13th May, 2026.

Sd/- Sd/- (OMKARESHWAR CHIDARA) (RAVISH SOOD) ACCOUNTANT MEMBER JUDICIAL MEMBER Hyderabad, Dated 13th May, 2026 OKK / SPS Copy to:

S.No Addresses 1 Income Tax Officer, Door No.5-10-23, Bank Colony, Kothapeta, Tuni, Tuni, Andhra Pradesh-533401. 2 Sivaganesh Narise, 3-28/4, Main Road, S Annavaram, Tuni, Andhra Pradesh-533401. 3 The Pr. Commissioner of Income Tax, Visakhapatnam. 4 The DR, ITAT, Visakhapatnam Bench 5 Guard File

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