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Income Tax Appellate Tribunal, “B” BENCH : BANGALORE
Before: SHRI N.V. VASUDEVAN & SHRI CHANDRA POOJARI
Per Chandra Poojari, Accountant Member
This appeal by the department is directed against the order of the CIT(Appeals)-10, Bengaluru dated 29.03.2019 for the assessment year 2013-14 on the following grounds:-
“1. The order of the learned CIT(A) is opposed to facts of the case, and in law. 2. On the facts and in the circumstances of the case, and in law, the CIT(A) was not justified in admitting the fresh evidence, without deciding as to how the case is covered under any of the exceptions provided in clause (a) to (d) of sec. 46A of the Act, particularly when ample opportunity was provided to the assessee, as is brought out in the assessment order, as well as the remand report.
3. On the facts and in the circumstances of the case, the CIT(A) failed to appreciate that the remand report submitted by the AO was restricted to admission of fresh evidence, and the AO had not commented on the merits of the evidence through his remand report.
4. On the facts and in the circumstances of the case, the CIT(A) erred in proceeding to decide the issue on merits without calling for fresh report from the AD, when letters issued to a number of creditors were returned unserved, and also particularly considering that the assessee did not submit any evidences in support of its claim during the assessment proceedings, inspite of affording ample number of opportunities, however the some were submitted before the CIT(A), 5. The CIT(A) erred in not appreciating the fact that in some cases, though the letters came back unserved, yet reply was received confirming the transactions, which show that the transactions were coloured and bogus.
For these and other grounds that may be urged at the time of hearing, it is prayed that the order of the CIT(A) in so for as it relates to the above grounds may be reversed and that of the Assessing Officer may be restored.
The appellant craves leave to add, alter, amend and/or delete any of the grounds mentioned above.”
The facts of the case are that the AO made an addition of Rs.4,24,76,832 u/s. 68 of the Income-tax Act, 1961 [the Act] on account of creditors found to be bogus. Against this, the assessee went in appeal before the CIT(Appeals). The CIT(Appeals) observed that the assessee has shown sundry creditors of Rs.9,97,27,645. Notice u/s. 133(6) was issued to the sundry creditors by the AO. Most of the notices served to the creditors were returned back in some cases and in some other cases there was a difference in the balance shown by the them and the assessee. During the appeal proceedings, the assessee filed confirmation letters from various parties including copies of ledgers and bank statement in respect of assessee’s claim that sundry creditors are genuine creditors. These documents were sent to AO calling for remand report from him. The AO instead of sending a remand report, objected vide his letter dated 8.2.2019 that the fresh evidence filed by the assessee shall not be admitted on the reason that letters issued to creditors calling for information u/s. 133(6) of the Act to the address provided by the assessee were returned unserved and the assessee has not furnished correct address even after sufficient opportunities to give the particulars during the hearing. Being so, when the assessee failed to furnish requisite details even after giving adequate opportunity of hearing to the assessee, the fresh evidence by the assessee shall not be admitted by the CIT(Appeals). However, the CIT(Appeals) overlooked the objection of the AO and considered the various additional evidence filed by the assessee before him and decided the issue in favour of the assessee on merits.
In our opinion, when the AO objected to admission of additional evidence before the CIT(Appeals) vide his letter dated 8.2.2019, the CIT(Appeals) decided the issue on merits overlooking the letter written by the AO that fresh evidence should not be admitted. It was appropriate for the CIT(Appeals) to point out to the AO that he is not going to consider the objections raised by the AO for not admitting additional evidence and he is going to decide the issue on merits. For this purpose, he should have called the comments of the AO merits of the additional evidence filed by the assessee. In the present case, the CIT(Appeals) failed to do so. In our opinion, there is violation of principles of natural justice. Accordingly, in the interest of justice, it is appropriate to remit the issue to the file of AO to consider the additional evidence filed by the assessee in support of her claim. Accordingly, the issue in dispute is remitted to the file of the Assessing Officer for de novo consideration. Needless to state that proper opportunity of hearing to be given to the assessee before deciding the issue.
In the result, the appeal of the revenue is allowed for statistical purposes.
Pronounced in the open court on this 8th day of February, 2022.