ABRAHAM AND THOMAS ENGINEERS PRIVATE LIMITED ,BANGALORE vs. DCIT, CIRCLE-1(1)(2), BENGALURU

The brief facts of the case are that the assessee is a contractor constructing buildings to various organizations. The case of the assessee was selected for scrutiny through CASS and notice u/s. 143(2) was issued. The assessee also filed their response to the above said notice. Further, notice u/s. 142(1) was also issued and the assessee had submitted the details called for by the AO. Subsequently, the AO had issued a show cause

As against the said order, the assessee filed an appeal before the Ld.CIT(A). The Ld.CIT(A) after considering the submissions as well as the documents had deleted the addition made u/s. 68 of the Act as well as deleted the disallowance of the contract payments at 5%. Insofar as the estimation of contract receipts based on the difference between the TDS declared in the bank statement and in form 26AS, the assessee had filed an application under Rule 46A for accepting the additional evidence. The Ld.CIT(A) had rejected the said application by saying that the conditions prescribed under Rule 46A for admitting the additional evidence was not fulfilled and therefore rejected the ground raised in the appeal.

As against the said order, the present appeal has been filed by the assessee.

At the time of hearing, the Ld.AR submitted that the assessee had explained the difference between the TDS in the bank statement as well as in form 26AS whereas the AO had not accepted the said explanation and therefore additional evidence was proposed to be filed before the Ld.CIT(A) in support of the claim made by the assessee but unfortunately the Ld.CIT(A) had rejected the said application and upheld the addition, which is not in order. The Ld.AR further submitted that the non-consideration of the application for admitting the additional evidence is not correct and in fact, it is an opportunity to the authorities to arrive a correct conclusion but unfortunately, the Ld.CIT(A) had not accepted the additional evidence and

The Ld.DR submitted that the conditions for admitting the additional evidence was not fulfilled in the present case and therefore the Ld.CIT(A) had rightly rejected the application.

We have heard the arguments of both sides and perused the materials available on record.

The assessee in order to explain the difference between the TDS mentioned in the bank statement as well as in the form 26AS, had filed an application to admit the evidence such as the ledger titled “Construction income-Sterling Developers Pvt. Ltd.”. From the said additional evidence, the assessee had tried to explain that there is no income credited by Sterling Developers Pvt. Ltd. and it is only an advance and therefore the same is not a revenue for the year under appeal and therefore the estimation of the contract receipts based on the difference between the TDS bank statement as well as the form 26A is not correct but unfortunately, the Ld.CIT(A who is also a quasi judicial authority, had refused to admit the said additional evidence by relying on some judgements of the Hon’ble High Courts.

The assessee had made a huge addition and in order to demonstrate that the said addition is not required, the assessee had intended to produce the additional evidence. If the additional evidence has been accepted and the issue has been decided on merits, it will give a quietus to the issue. Further, the liability cannot be fastened arbitrarily and also the correct quantum of liability should be arrived by the authorities based on the materials. If the assessee had missed the opportunity to adduce the evidence before the AO, which is not done wantonly by the assessee, then in

We are of the view that in such circumstances, the authority has to be liberal so that the issue can be adjudicated without any error. We therefore, inclined to set aside the order of the Ld.CIT(A) insofar as it rejects the application filed under Rule 46A of the Rules and remit this issue to the file of the Ld.CIT(A) with the direction to admit the additional evidence and thereafter decide the appeal on merits, in accordance with law after hearing the assessee. Insofar as the findings given by the Ld.CIT(A), in respect of the other issues, we are not disturbing the said findings.

In the result, the appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced in the open court on 01st June, 2026.