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Facts
The revenue filed an appeal against the CIT(A)'s order, which had allowed the assessee's appeal. The assessment was reopened under Section 147 for alleged bogus expenses of Rs. 2,15,83,750/-. The assessee failed to submit complete bank statements before the AO, but submitted them before the CIT(A).
Held
The Tribunal held that the CIT(A) violated principles of natural justice by admitting additional evidence (bank statements) without giving the AO an opportunity to examine them. The matter was remanded to the CIT(A) for fresh consideration.
Key Issues
Whether the CIT(A) erred in admitting additional evidence without affording the AO an opportunity to verify it, violating principles of natural justice.
Sections Cited
250, 147, 144B, 46A, 148, 148A, 143(2), 142(1), 115JB
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “E”, MUMBAI
Before: SHRI ANIKESH BANERJEE & SMT. RENU JAUHRI
O R D E R Per Anikesh Banerjee (JM):
The instant appeal of the revenue was filed against the order of the National Faceless Appeal Centre (NFAC), Delhi [hereinafter called, ‘Ld. CIT(A)] passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’) for Assessment Year 2017-18, date of order 27/11/2024. The impugned order emanated from the order of the Assessment Unit, Income-tax Department (for brevity, the “Ld.AO”) passed under section 147 read with section 144B of the Act, date of order 30/03/2023.
2 ITA 271/Mum /2025 Hue Retail Pvt Ltd 2. The revenue has taken the following grounds:- “1. Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) was correct in allowing the appeal of the assessee without obtaining the remand report from the Assessing Officer on the additional evidence furnished by the assessee during the appellate proceedings.
2. Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) as correct in allowing the appeal of the assessee, ignoring the fact that as per Rule 46A of the Income-tax Rule, 1961, the appellant shall not be entitled to produce before the Deputy Commissioner (Appeals) or, as the case may be, the Commissioner (Appeals). any evidence, whether oral or documentary, other than the evidence produced by him during the course of proceedings before the Assessing Officer.”
The Ld. DR argued and stated that during the assessment proceedings, the assessment was reopened under section 147 of the Act on the ground that assessee received accommodation entries towards bogus expenses amounting to Rs.2,15,83,750/- from M/s Trikesh Tradelink Pvt Ltd in impugned assessment year. Accordingly, the reopening was initiated under section 147 of the Act and finally, the assesse submitted details before the Ld.AO, but the Ld.AO was not satisfied with the evidence submitted by the assessee and addition was confirmed amount to Rs.2,15,83,750/- with the total income of the assesse. Aggrieved assesse filed an appeal before the Ld. CIT(A) and the Ld.CIT(A) has taken observations in page- 11 of impugned appellate order in following manner, which is duly mentioned by the Ld. DR in appeal hearing. “1. You are required to furnish the details of all bank accounts held by you during Financial Year 2016-17. Please also furnish copy of bank accounts statements for the period of 01.04.2016 to 31.03.2017.
Reply: Details of bank account is listed here under Bank Name Branch Account Number
3 ITA 271/Mum /2025 Hue Retail Pvt Ltd
State Bank of India Bandra Kurla Complex 00032647907867
HDFC Bank Fort Branch 00602000044726 HDFC Bank Fort Branch 00600340068647 HDFC Bank Fort Branch 50200021854483 HDFC Bank Fort Branch 50200022788283 ICICI Bank 0041605000323 We have attached herewith copies of Bank statements for the following accounts:
1. HDFC Bank-4726 (01/04/2016-31/03/2017)
HDFC Bank-8283 (01/04/2016-31/03/2017 We have submitted the bank statements which were readily available with us and we would like to request your good self to provide us time to collate the remaining bank statements and accordingly we will submit the same at the earliest
You are required to furnish copy of ledger of purchases A/c for the period under consideration along with copies of original bills and vouchers.
Reply: Kindly find attached herewith copy of ledger of purchase A/c for your reference in With respect to the other documents or information sought by your good self in the aforementioned notice, we would like to request your good self to provide us additional time to collate the documents and submit the same to your good self."
The Ld. DR also invited our attention on page 3 of the impugned appellate order, which is extracted below: - “3. The AO has made the following observations. The relevant portion of observations is reproduced as under:- The return of the income was filed by the assessee in the status of the Company on 09.10.2017 for the assessment year 2017-18, declaring total income of Rs. 1,30,91,370/- and deemed total income u/s 115JB of Rs. 2.29,44,710/-. As per information available with the department, the assessee received accommodation entries towards bogus expenses amounting
4 ITA 271/Mum /2025 Hue Retail Pvt Ltd to Rs. 2,15,83,750/- from M/s Trikesh Trade Link Private Limited during the year under consideration. In view of above facts, the then AO (Jurisdictional AO) had reasons to believe that the income to the extent of Rs. 2,15,83,750/- has escaped assessment in this case within the meaning of section 147 of the IT Act, 1961 for the AY 2017-18. Therefore, it was a fit case for issuance of notice u/s 148 of the IT Act, 1961. Accordingly, notice u/s 148 of the LT. Act, 1961 was issued by the then AO on 28.06.2021 after taking necessary approval which was duly served upon the assessee. Several Writ Petitions were filed by certain assessee before the Hon'ble High Courts, challenging the validity of the similar notices u/s 148 of the Act. The respective High Courts decided the writ petitions. Thereafter, matter reached before Hon'ble Supreme Court. The Hon'ble Supreme Court in Civil Appeal No. 3005/2022, vide order dated 04/05/2022 directed as under The impugned Section 148 notices issued to the respective assesses which were issued under unamended Section 148 of the IT Act, which were the subject matter of writ petitions before the various respective High Courts shall be deemed to have been issued under Section 148A of the IT Act as substituted by the Finance Act, 2021 and construed or treated to be show-cause notices in terms of Section 148A(b). The assessing officer shall, within thirty days from today provide to the respective assessees information and material relied upon by the Revenue, so that the assesses can reply to the show- cause notices with two weeks thereafter" In view of the above mentioned directions, the assessee was informed by the jurisdiction Assessing Officer that the above referred notice u/s. 148 of the Act issued to him shall be construed or treated to be the show cause notice in terms of Section 148A(b) of the Act. The Hon'ble Supreme Court has also directed to provide the information and material relied upon by the Revenue to the assessee. In compliance to the decision of Hon'ble Supreme Court, the underlying material and documents on which the show cause notice u/s 148A(b) is based were provided to the assessee by the jurisdictional Assessing Officer, through ITBA Portal on assessee's registered email id, asking him/her to show cause in accordance with section 148A(b) as to why notice u/s 148 should not be issued with reference to the information as provided. The assessee was requested to furnish explanation along with supporting document/evidence, within given time. In compliance to this, the assessee has not submitted written response within the given time. The JAO had reasons to believe that the income to the extent of Rs. 2,15,83,750/- has escaped assessment in this case for the AY 2017-18. Therefore, it was a fit case for issuance of notice uls 148 of the IT Act, 1961. Accordingly, the order u/s 148A(d) of the IT. Act, 1961 passed and notice u/s 148 of the L.T. Act, 1961 was issued by the JAO on 26.07.2022 after taking necessary approval, which was duly served upon the assessee, in compliance to this notice, the assessee filed income tax return on 27.08.2022 declaring total income of Rs. 1,30,91,370/- and deemed total income u/s 115JB of Rs. 2,29,44,710/- Thereafter, this case has been transferred
5 ITA 271/Mum /2025 Hue Retail Pvt Ltd from the jurisdictional Assessing Officer to the Faceless AO, Assessment Unit on 02.11.2022. Further, in order to complete the assessment proceedings, notices u/s 143(2) and 142(1) of the I.T. Act, 1961 were issued to the assessee on various dates along with questionnaire, the details of which is as follows:- 2. Details of opportunities given:- Type of notice/ Date of notice/ Date of Response of Date of Response Remarks if communication communication compliance the assesse response if type (Full / any. given received/not received part / received adjournment) 143(2) 15.11.2022 30.11.2022 Received 30.11.2022 Part - 142(1) 16.12.2022 02.01.2023 Received 02.01.2023 Part - 142(1) 30.01.2023 06.02.2023 Received 06.02.2023 Part - SCN 22.02.2023 28.02.2023 Received 28.02.2023 Part - 01.03.2023
The Ld. DR submitted that the assessee has failed to comply with the provisions of Rule 46A of the Income-tax Rules, 1962 (in short, the “Rule”), and that the Ld. AO was not afforded a reasonable opportunity to verify the documents submitted at the appellate stage. The Ld. DR pointed out that, in respect of the State Bank of India (SBI) account, only the bank book was submitted before the Ld. AO, and no bank statement was filed. Similarly, for the HDFC Bank Account Nos. 00602000044726 and 00600340068647 and ICICI Bank Account No. 0041605000323, no bank statements were furnished during the assessment proceedings. However, all the aforesaid bank statements were submitted for the first time before the Ld. CIT(A), who proceeded to adjudicate the matter without affording an opportunity to the Ld. AO to examine the said documents. Hence, the Ld. DR contended that the impugned appellate order is biased in favour of the assessee.
In response, the Ld. AR submitted a paper book containing pages 1 to 29, which has been placed on record. The Ld. AR admitted that the relevant bank 6 ITA 271/Mum /2025 Hue Retail Pvt Ltd statements were not submitted before the Ld. AO but were filed during the appellate proceedings before the Ld. CIT(A). He further submitted that only minimal transactions were recorded in those bank accounts. Based on the verification of those documents, the Ld. CIT(A) allowed the appeal in favour of the assessee.
We have heard the rival submissions and perused the material available on record. The grievance of the revenue is that the assessee failed to submit the relevant bank statements before the Ld. AO for the above-mentioned accounts and instead filed only the bank books, which are internal documents of the assessee. The Ld. CIT(A) has passed the appellate order without providing the Ld. AO an opportunity to verify the bank statements, which constitutes a violation of the principles of natural justice. While the bank books were filed before the Ld. AO, the bank statements being additional evidence fall within the scope of Rule 46A, and due compliance with the said Rule was not ensured by the Ld. CIT(A). In our considered view, there has been a clear breach of the principles of natural justice, as the fact-finding authority was not given an opportunity to examine the additional evidence. Accordingly, we deem it appropriate to remand the matter to the file of the Ld. CIT(A) for the limited purpose of allowing the assessee to file additional evidence in accordance with Rule 46A of the Income-tax Rules, 1962. The Ld. CIT(A) shall consider the said evidence in accordance with law. Needless to mention, the assessee shall be granted a reasonable opportunity of being heard, and if the assessee seeks to file any further evidence, the same may be permitted in the interest of justice.
7 ITA 271/Mum /2025 Hue Retail Pvt Ltd 7. In the result, the appeal filed by the revenue bearing