THE ITO WARD-1, GANDHIDHAM - KUTCH vs. SHRI GURJANT KARNAIL SINGH, GANDHIDHAM - KUTCH

Brief facts of the case are that the assessee filed his return of income for the Assessment Year 2015-16 on 17.09.2015, declaring total income of Rs.4,94,000/- The case was selected for limited scrutiny, and the assessment was completed ex- parte under section 144 of the Income-tax Act, 1961, vide order dated 21.12.2017. During the assessment proceedings, the Assessing Officer observed that the assessee had not furnished the party- wise reconciliation of receipts reflected in Form 26AS with the receipts disclosed in the return of income. The assessee also failed to produce the books of account and supporting documentary evidence for verification. Accordingly, the Assessing Officer treated the receipts reflected in Form 26AS amounting to Rs.1,97,56,210/- as undisclosed receipts and added the same to the total income of the assessee.

Aggrieved by the assessment order, the assessee preferred an appeal before the Ld. CIT(A). During the appellate proceedings, the assessee furnished additional evidence, including Form 26AS, the transportation income and profit and loss account for the relevant financial year, and a reconciliation statement of receipts reflected in Form 26AS. After admitting the additional evidence under Rule 46A of the Income-tax Rules, 1962, the Ld. CIT(A) allowed the appeal of the assessee.

Aggrieved by the order of the Ld. CIT(A), the Revenue preferred the present appeal before the tribunal.

At the time of hearing, the Ld. DR submitted that the order passed by the Ld. CIT(A) was not sustainable in law, as the additional evidence furnished by the assessee had been admitted without calling for a remand report from the Assessing Officer. It was contended that the Assessing Officer had not been afforded an opportunity to examine and verify the additional evidence, including the reconciliation of receipts reflected in Form 26AS, in accordance with Rule 46A of the Income-tax Rules, 1962.

On the other hand, the Ld. AR supported the order of the Ld. CIT(A) and submitted that the documents furnished by the assessee were available in the records of the Income-tax Department. Accordingly, it was contended that there was no necessity to call for a remand report from the Assessing Officer.

We have heard the rival submissions and perused the material available on record. We find that the Assessing Officer made the addition of Rs.1,97,56,210/- primarily on account of the failure of the assessee to furnish the party-wise reconciliation of receipts reflected in Form 26AS with the receipts disclosed in the return of income and to produce the books of account for verification. Before the Ld. CIT(A), the assessee furnished additional evidence comprising Form 26AS, the transportation income and profit and loss account, and a reconciliation statement of receipts. In our considered view, the aforesaid documents required proper examination and verification by the Assessing Officer. Merely because certain information was available in the departmental records would not, by itself, dispense with the necessity of providing the Assessing Officer an opportunity to verify the additional evidence and submit a remand report. In the interest of natural justice, the issue requires fresh examination. Accordingly, we set aside the impugned order of the Ld. CIT(A) on this issue and restore the matter to the file of the Ld. CIT(A) for fresh adjudication. The Ld. CIT(A) is directed to obtain a remand report from the Assessing Officer after allowing due opportunity to examine the additional evidence furnished by the assessee and thereafter decide the issue afresh in accordance with law, after providing reasonable opportunity of hearing to both parties.

In the result, the appeal filed by the Revenue is allowed for statistical purposes.