ITO 17(3)(1), MUMBAI vs. EUROPEAN TRUST, MUMBAI

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ITA 2525/MUM/2024Status: DisposedITAT Mumbai08 June 2026AY 2012-1311 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the breakup of business advances was not 'additional evidence' under Rule 46A as it was a clarification of figures already on record and part of the lenders' audited financial statements. The CIT(A) acted within his powers under Section 250(4) to conduct an independent inquiry.

What were the facts?

The Revenue challenged the CIT(A)'s decision to admit additional evidence and decide the appeal based on it without remanding to the AO. The CIT(A) had called for a breakup of sundry business advances from lenders to verify loans received by the assessee. The assessee had already provided loan confirmations, audited financials of lenders, and bank statements to the AO.

What were the issues?

Whether the CIT(A) was justified in admitting and relying on a breakup of business advances as additional evidence without remanding to the AO, and whether such a breakup constituted additional evidence under Rule 46A.

Which sections of the Income-tax Act were involved?

Section 68,Section 250(4),Section 251

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “E” BENCH, MUMBAI

Before: SHRI SANDEEP GOSAIN & SHRI GIRISH AGRAWAL

For Appellant: Shri Biren Shah (Virtually appeared)
For Respondent: Shri Ritesh Misra, CIT DR
Hearing: 22.04.2026Pronounced: 08.06.2026

Heard together (2 matters)

I.T.A. No. 2525/Mum/2024
CO. No. 116/Mum/2024

Read from the judgment's own cause title. This page is filed under one of them.

IN THE INCOME TAX APPELLATE TRIBUNAL “E” BENCH, MUMBAI BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER & SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER I.T.A. No. 2525/Mum/2024 AY: 2012-13 ITO – 17(3) (1), Vs European Trust, 4th Floor, Janmabhoomi chamber, Mumbai Room No. 110, 1st Floor, 29, Walchand Hirachand Marg, Kautilya Bhavan, Mumbai - Ballard Estate, Mumbai - 400038 400051 PAN – AAATE3654L (Appellant) (Respondent) CO. No. 116/Mum/2024 (Arising out of ITA No. 2525/Mum/2024) AY: 2012-13 European Trust, Vs ITO – 17(3) (1), 4th Floor, Janmabhoomi Mumbai chamber, 29, Walchand Room No. 110, 1st Floor, Kautilya Hirachand Marg, Ballard Bhavan, Mumbai - 400051 Estate, Mumbai - 400038 PAN – AAATE3654L (Appellant) (Respondent) Assessee by Shri Biren Shah (Virtually appeared) Revenue by Shri Ritesh Misra, CIT DR Date of Hearing 22.04.2026 Date of Pronouncement 08.06.2026

ORDER PER SANDEEP GOSAIN, JM: The present appeal has been filed by the Revenue and cross objection filed by the assessee challenging the order dt.

ITA No.2525/Mum/2024 and CO 116/Mum/2024 European Trust, Mumbai 27.03.2024 passed under section 250 of the Income Tax Act, 1961 (‘the Act’), by the National Faceless Appeal Centre (NFAC) / CIT(A) for the assessment years 2012-13.

2.

Since all the issues involved in the present appeal and cross objection are common and identical and belongs to one assessee therefore, they have been clubbed, heard together and consolidated order is being passed. Firstly, we shall take ITA No. 2525/Mum/2024, AY 2012-13 as lead case and facts narrated therein.

ITA No. 2525/Mum/2024, AY 2012-13 The revenue has raised the following grounds of appeal:

1.

"Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) was justified in admitting the additional evidence submitted by the assessee during the appellate proceedings in contravention of the provisions of Rule 46A(2) of the Income Tax Rules, 1962?" 2. "Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) was justified in deciding the appeal of the assessee based on the additional evidence submitted by the assessee during the appellate proceedings, without giving an opportunity to the AO as per the provisions of Rule 46A(3) of the Income Tax Rules, 1962?" 3. "Appellant prays the Hon'ble ITAT to set aside the order of the Ld.CIT(A) and to restore the matter to the file of Assessing Officer for fresh adjudication after examining the new facts emerged and the additional evidences submitted by the assessee during the appellate proceedings" 4. The appellant craves leave to amend or alter or add a new ground which may be necessary. 3. Ground Nos. 1 to 3 raised by the Revenue are interrelated and relates to challenging the order of the Ld. CIT(A) in admitting the additional evidence submitted by the assessee in contravention of the 2

ITA No.2525/Mum/2024 and CO 116/Mum/2024 European Trust, Mumbai provisions of Rule 46A (2) of the Income-tax Rules, 1962. Therefore, we have decided to adjudicate these grounds through the present consolidated order.

4.

We have heard the counsel for both the parties, perused the material placed on record, the judgments cited before us, and also the orders passed by the Revenue Authorities. From the records, we noticed that the return filed by the assessee for the year under consideration was processed only at the intimation level under Section 143(1) of the Act. However, the assessment was sought to be reopened under Section 147 read with Section 148 of the Act on the premise that the assessee had carried out "high-value transactions" in a short span of time.

5.

Consequently, the AO passed an order in the reassessment proceedings, thereby making additions under Section 68 of the Act in respect of unsecured loans received by the assessee from various lenders on the ground that the breakup of sundry business advances appearing in the audited financial statements of the said lenders did not directly reflect the loans given to the assessee.

6.

Aggrieved by the assessment order, the assessee preferred an appeal before the Ld. CIT(A). The Ld. CIT(A), however, on his own motion and only in the interest of completeness of the matter, called for the breakup of sundry business advances given so as to verify the stand taken by the assessee before the AO to the effect that the funds had, in fact, been received by the assessee through proper banking channels and were duly recorded in the books of account. After verification of the same, the Ld.

ITA No.2525/Mum/2024 and CO 116/Mum/2024 European Trust, Mumbai CIT(A) found that the said breakup duly reflected the loans given to the assessee and accordingly deleted the additions.

7.

Although, while filing the present appeal, the Revenue has challenged the same only on the limited ground that the breakup called for by the Ld. CIT(A) constituted additional evidence within the meaning of Rule 46A of the Income-tax Rules, 1962, and that the matter ought to have been remanded back to the AO for verification, during the course of hearing, in support of its contention, the Ld. DR argued that the breakup of loans and advances filed before the Ld. CIT(A) by the lenders ought to have been treated as additional evidence, thereby requiring verification by the AO. Since the Ld. CIT(A) failed to follow the provisions contained in Rule 46A of the Income-tax Rules, the same is bad in law.

8.

On the contrary, it was submitted by the assessee that the said contention is wholly misconceived, as the assessee had already discharged its initial onus by placing on record all the documents required to substantiate its stand. In this regard, our attention was drawn to the fact that the assessee had filed loan confirmation letters from each lender along with their respective addresses and PANs, audited financial statements of the lenders, ledger accounts of the lenders in the books of the assessee, bank statements of the assessee, and evidence of receipt of the advances through banking channels.

9.

In this way, according to the assessee, the three basic ingredients of Section 68 of the Act, namely identity, creditworthiness, and genuineness of the transaction, stood fully established and the burden thereafter shifted upon the Revenue.

ITA No.2525/Mum/2024 and CO 116/Mum/2024 European Trust, Mumbai 10. After having considered the submissions of both the parties, we find that during the course of assessment proceedings, the AO never called for the breakup of "sundry business advances", which was, in any event, forming part of the audited financial statements of the lenders and was already available on record. We also noticed that the AO neither issued any specific show-cause notice nor any notice under Section 142(1) of the Act seeking such breakup, even though the relevant details formed part of the audited financial statements of the lenders already available on record.

11.

We further noticed that the AO failed to invoke his statutory powers under Section 133(6) of the Act to call for any information directly from the lenders despite being aware of the fact that the entire transaction had been routed through banking channels. The AO neither sought any further information from the assessee nor from the lenders.

12.

In our view, documents which are already part of the assessment record cannot themselves be treated as additional evidence under Rule 46A of the Income-tax Rules, 1962. Since the breakup of business advances received (net of business advances paid) formed an integral part of the audited financial statements of the respective lenders, and the said audited financial statements were already filed by the assessee before the AO during the course of assessment proceedings and formed part of the assessment record, the Ld. CIT(A) did not call for any new or fresh evidence but only sought a clarification/disaggregation of figures already on record. Such clarification cannot be characterized as "additional evidence" within the meaning of Rule 46A so as to attract the procedural requirement of remand to the AO.

ITA No.2525/Mum/2024 and CO 116/Mum/2024 European Trust, Mumbai 13. The Ld. CIT(A), only in the interest of completeness of the matter and for proper adjudication of the issue before him, called for the breakup of the business advances given so as to verify the stand taken by the assessee before him, namely whether the funds had in fact been received by the assessee and duly recorded in its books of account.

14.

The said exercise was an independent inquiry undertaken by the Ld. CIT(A) on his own motion in exercise of the powers conferred by Section 250(4) read with Section 251 of the Act, the said powers being coterminous with those of the AO. Such an inquiry undertaken suo motu by the first appellate authority falls outside the scope of Rule 46A altogether and certainly does not require remand to the AO.

15.

The fact remains that all the necessary material to discharge the onus under Section 68 of the Act was on record before the AO. If the AO had any doubt as to why the loan to the assessee was not separately reflected in the audited financial statements of the lenders, he was duty-bound to issue a show-cause notice to the assessee or invoke Section 133(6) against the lenders. Having failed to do either, the AO presumed, without any basis, that the "business advances received (net of business advances paid)" appearing in the lenders' audited statements were either bogus or did not include the amount receivable from the assessee. The Ld. CIT(A) merely undertook the verification which the AO was statutorily obliged to undertake but failed to do.

16.

Therefore, there was no violation of the provisions contained in Rule 46A of the Income-tax Rules, 1962, and no prejudice was caused to the Revenue.

ITA No.2525/Mum/2024 and CO 116/Mum/2024 European Trust, Mumbai 17. In support of this preposition reliance is being placed upon the following decisions :

 In the case of Suretech Hospital & Research Centre Ltd. v. Commissioner of Income-tax-II, Nagpur [Bombay High Court] [293 ITR 53], the Hon'ble Bombay High Court has held as under:

"... The first contention of the revenue is that the Tribunal was not justified in invoking rule 46A(4) of the Income-tax Rules and allowing additional evidence to be produced before CIT(A) for the first time. It is contended that the mere fact that the evidence sought to be produced is vital and important, does not provide substantial cause to allow its admission at the appellate stage when the evidence was available to the assessee at the initial stage and was not produced by him. In our opinion, there is no merit in this contention because rule 46A(4) provides that notwithstanding rule 46A(1), the appellate authority can permit production of documents which enable him to dispose of the appeal. In the facts of the case, the finding given by the Tribunal is that the documents produced were necessary for disposal of the appeal on merits and no question of law arises from such finding of fact recorded by the Tribunal..."

(emphasis supplied)

 The above decision was followed by the Coordinate Bench of Mumbai Tribunal in the case of ITO v. Raj Maitry & Ekson Developer on identical set of facts, reported in (2024) 163 taxmann.com 43 (Mumbai Trib.)  In the case of Income-tax Officer, Wd. 13(2)(1), Mumbai v. Industrial Roadways [[2008] 112 ITD 293] (Mumbai) [ITAT, Mumbai), the Coordinate Bench has held as under:

"...14. In the instant case the entire additional evidence has come on the record of the first appellate authority because the first appellate authority decided to

ITA No.2525/Mum/2024 and CO 116/Mum/2024 European Trust, Mumbai examine the facts of the case in depth and adjudicate upon the matter on the basis of evidence and material thus gathered. The learned CIT(A) was empowered to do so under the provisions of section 250(4). The results of enquiry conducted by him could either go to further cement the case made out by the Assessing Officer or to help out the assessee against the findings of the Assessing Officer. The mere fact that the results of the enquiries thus conducted supported the case of the assessee and not that of revenue has no bearing on the jurisdiction and powers of the leamed CIT(A)... But we do not see any requirement in law that the first appellate authority should invariably consult or confront the Assessing Officer every time an additional evidence that was not before the Assessing Officer comes on the record of the first appellate authority. Where the additional evidence is obtained by the first appellate authority on its own motion, there is no requirement in law to consult/confront the Assessing Officer with such additional evidence..."

(emphasis supplied)

 In the case of ACIT, Circle 23(2), New Delhi v. Signature Global (India) Pvt. Ltd. [ITAT Delhi] [2025 (2) TMI 393-ITAT Delhi), it has been held:

"...24. With regard to ground no.iv on the issue of admission of additional evidences by the Id. CIT (A) without seeking remand report from the Assessing Officer, after considering the factual matrix in the present case, we observed that u/s 250(4) of the Act, the Commissioner (Appeals) has power to dispose off any appeal after making such an enquiry as he thinks fit or he was given reference option in case he thinks proper to remand the issue back to the Assessing Officer. Therefore, Commissioner (Appeals) has power to make such call. Further we observed that Rule 46A (4) gives right to the Commissioner (Appeals) to direct the production of any document or examination any witness to enable him to dispose off the appeal and also having power to enhancement of the assessment or penalty. Therefore, the above provisions and rule gives ample power to CIT (A) to make the call and it is not necessary that he has to remand the matter back to the Assessing Officer, it is only an additional power of 8

ITA No.2525/Mum/2024 and CO 116/Mum/2024 European Trust, Mumbai reference given to him. Similar views were expressed by Hon'ble Delhi High Court in the case of Manish Buildwell Pvt. Ltd. (supra) and Hotchand Techchand Punjabi (supra). Therefore, we are inclined to dismiss ground no.iv raised by the Revenue..."

(emphasis supplied)

 In the case of Income-tax Officer, TDS v. Tata Teleservices Ltd. [ITAT Delhi] [[2022] 134 taxmann.com 323] (Delhi - Trib.), the Coordinate Bench has held:

"...Section 251, read with section 250 of the Income-tax Act, 1961 and rule 46A of the Income tax Rules, 1962- Commissioner (Appeals) Power of Whether Commissioner (Appeals) has powers which are co-terminus with powers of Assessing Officer and that he is empowered to call for any details or documents which he deems necessary for proper adjudication of issue - Held, yes - Whether where Assessing Officer failed to provide proper opportunity to assessee, Commissioner (Appeals) had acted well within his power to adjudicate issues after calling for necessary information and details and it could not be said that there was any violation of rule 46A of Income-tax Rules Held, yes [Para 5.0] [In favour of assessee.]"

(emphasis supplied)

18.

Therefore, considering the totality of the facts and circumstances discussed above, we are of the view that the Ld. CIT(A) acted strictly in accordance with the statutory powers conferred upon him under Section 250(4) read with Section 251 of the Act, which are coterminous with those of the AO. Thus, the breakup of business advances called for by the Ld. CIT(A) is not additional evidence furnished by the assessee within the meaning of Rule 46A, but an independent verification undertaken by the first appellate authority of material that was already on record.

ITA No.2525/Mum/2024 and CO 116/Mum/2024 European Trust, Mumbai 19. Accordingly, considering the totality of the facts and circumstances discussed above, we reject the grounds raised by the Revenue and uphold the order passed by the Ld. CIT(A).

20.

In the result, the appeal filed by the Revenue is dismissed.

CO. No. 116/Mum/2024 (AY: 2012-13) 21. Since we have already dismissed the grounds raised by the Revenue, the Cross Objection filed by the assessee becomes infructuous and, therefore, does not require separate adjudication.

22.

In the net result, the appeal filed by the revenue and the CO filed by the assessee stand dismissed.

Order pronounced in the open court on 08.06.2026

Sd/- Sd/- (GIRISH AGRAWAL) (SANDEEP GOSAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER

Mumbai: Dated: 08.06.2026 RY, Sr. PS Copy of the order forwarded to: (1) The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy

ITA No.2525/Mum/2024 and CO 116/Mum/2024 European Trust, Mumbai By order

(Asstt. Registrar) ITAT, Mumbai

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