INCOME TAX OFFICER, INCOME TAX OFFICE, WARD NORTH LAKHIMPUR vs. TELI YOTU, ARUNACHAL PRADESH

On the facts and in the circumstances of the case, the Ld. CIT(Appeals) has erred in law and on facts in deleting the addition of Rs. 1,02,99,031/- made u/s 69A on account of unexplained money and the addition of Rs. 14,05,205/- related to the sale of a motor vehicle, by admitting and relying upon additional evidence for the first time during appellate proceedings, without providing the Assessing Officer a mandatory opportunity to examine the same, thereby violating the statutory provisions of Rule 46A(3) of the Income Tax Rules, 1961. Teli Yotu.

The Ld. CIT(Appeals) erred in granting relief solely based on the documents produced by the assessee without seeking a Remand Report from the Assessing Officer or conducting an independent inquiry to verify the veracity of the new claims regarding the unexplained money and the motor vehicle transaction.

On the facts and in the circumstances of the case, the Ld. CIT(Appeals)"

Brief facts of the case are that the assessee did not file the original return of income for AY 2018-19. Based on the information in possession of the Ld. AO regarding high value transactions, including cash withdrawals of ₹1,21,65,000/-, cash deposits, and the sale of a motor vehicle for ₹14,05,205/-, the case was reopened u/s 147 of the Act. In response to the notice issued u/s 148 of the Act, the assessee filed the return of income on 09.04.2022 declaring NIL income and claimed exemption u/s 10(26) of the Act. During the assessment proceedings, the assessee failed to furnish satisfactory explanation or supporting documentary evidence to substantiate the source of the transactions or the claim of exemption. Consequently, the Assessing Officer (hereinafter referred to as Ld. 'AO') passed the assessment order u/s 147 r.w.s. 144B of the Act, assessing the total income of the assessee at ₹1,18,62,151/-. This included an addition of ₹1,02,99,031/- u/s 69A of the Act on account of unexplained money and an addition of ₹14,05,205/- as short-term capital gains on the sale of a motor vehicle. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A). During the appellate proceedings, the Ld. CIT(A) noted that the assessee had furnished a certificate for belonging to Scheduled Tribe and a Permanent Residence Certificate, establishing membership in a Scheduled Tribe and residency in the State of Arunachal Pradesh. The Ld. CIT(A) observed that the Ld. AO had failed to bring any material on record to establish that the assessed income accrued or arose from a source outside the specified area. Consequently, the Ld. CIT(A) held that the assessee was legally entitled to the exemption u/s 10(26) of the Act, and since the entire Teli Yotu. income was exempt, the foundation of the additions made by the Ld. AO ceased to exist. Accordingly, the Ld. CIT(A) deleted the additions made by the Ld. AO and allowed the appeal of the assessee.

Aggrieved with the order of the Ld. CIT(A), the Revenue has filed the appeal before the Tribunal.

None appeared on behalf of the assessee and the case was heard with the assistance of the Ld. DR. The Ld. DR vehemently argued that there was violation of rule 46A of the Income Tax Rules, 1962 (“the Rules”) as the additional evidence was admitted by the Ld. CIT(A) and relief was granted without either calling for a remand report or allowing the opportunity to the Ld. AO for examining the evidence filed and requested that the order of the said to be is to be set aside and he may be directed to allow an opportunity to the Ld. AO for examining the evidence or to file a remand report.

We have considered the submissions made, gone through the facts of the case and perused the record and the order of the Ld. CIT(A). The Bench was of the view that no proper reason has been given on the legal issue raised by the Revenue by the Ld. CIT(A) in his order as to why the additional evidence could not be filed before the Ld. AO and was admitted by him. Therefore, the order of the Ld. CIT(A) is set aside and the appeal is remanded to him to pass a speaking order on the legal issue raised by the Revenue and call for the remand report from the Ld. AO. Needless to say, the assessee as well as the Ld. AO both shall be given a reasonable opportunity of being heard to make any further submission they want to make and shall not seek unnecessary adjournments and rule 46A of the I.T. Rules, 1962 shall also be followed. Accordingly, the grounds taken by the Revenue in its appeal are partly allowed for statistical purposes.

In the result, the appeal filed by the Revenue is partly allowed for statistical purposes. Order pronounced in the open Court on 5th June, 2026. [Sonjoy Sarma] [Rakesh Mishra] Judicial Member Accountant Member Dated: 05.06.2026 Bidhan (Sr. P.S.)

CIT-

CIT(DR), Guwahati Benches, Guwahati.

Guard File. //// By order