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Facts
The assessee's appeal concerns an addition of Rs. 9,69,790/- made on account of capital gains. The assessee did not file a return for the assessment year 2015-16 and faced reassessment proceedings. The assessee claimed to be semi-literate and unable to provide sale purchase documents in time to the AO due to reasons beyond their control.
Held
The Tribunal held that the assessee had a legal right to produce additional evidence under Rule-46A of the Income Tax Rules, and the CIT(A) had violated this right by rejecting the request for admission of evidence without proper consideration. The CIT(A)'s rejection was not based on a correct understanding of the facts or the assessee's submissions.
Key Issues
Whether the CIT(A) erred in rejecting the assessee's request to admit additional evidence when sufficient cause was shown for not producing it before the AO.
Sections Cited
Rule-46A of Income Tax Rules
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Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI
Before: SHRI SS VISWANETHRA RAVI & SHRI AMITABH SHUKLA
Assessment Years: 2015-16 Perumal Ananthakumar, Income Tax Officer, No.144 GST Road, Chromepet, Non-Corporate Ward-22(1) Chennai-600 044. Chennai [PAN: AIGPA0836Q] (प्रत्यर्थी/Respondent) (अपीलार्थी/Appellant) अपीलार्थी की ओर से/ Assessee by : Shri N.Madhavan, Rtd, Addl.CIT प्रत्यर्थी की ओर से /Revenue by : Ms.Anitha, Addl.CIT सुनवाई की तारीख/Date of Hearing : 04.06.2025 घोषणा की तारीख /Date of Pronouncement : 13.06.2025 आदेश / O R D E R PER AMITABH SHUKLA, A.M :
This appeal is filed by the assessee against the order bearing DIN & Order No.ITBA / NFAC / S / 250 / 2024-25 / 1072469974(1) dated 23.01.2025 of the Learned Commissioner of Income Tax [herein after “CIT(A), National Faceless Appeal Center[NFAC], Delhi, for the assessment year 2015-16. The reference to the word “Act” in this order hereinafter shall mean the Income Tax Act, 1961 as amended from time to time.
2.0 The principal issue raised by the assessee through its grounds of appeal is addition of Rs.9,69,790/- made in the hands of assessee on account of capital gains by the Ld.AO and its confirmation by the Ld.CIT(A). The Ld.Counsel for the assessee submitted that admittedly it had not filed any return of income for AY-2015-16. Department had initiated 147 / 148 proceedings. The Ld.Counsel further admitted that it could not make due compliance to the statutory notices issued by the Ld.AO. The Ld.AR urged that the Ld.CIT(A) did not consider the evidences provided by him and erroneously proceeded to confirm the assessment order. Request was accordingly made to set aside the order of the lower authorities and order for deleting the impugned addition. 3.0 It is the case of the appellant assessee that it could not make sufficient compliances to the Ld.AO’s requirement to support its claim for sale purchase documents. It has been urged that the appellant assessee is a semi-literate person not conversant with Income Tax Laws and was depending upon advices of his friends etc. It has been argued that he did not keep any sale purchase documents with him and had to arrange for them from sellers and purchasers for their copies so as to comply with the Ld.AO’s notices. However, by the time they were procured, assessment order was passed. The Ld.Counsel has argued that within the meanings of Rule-46A of Income Tax Rules, it had Page - 2 - of 6 requested Ld.CIT(A) for their admission and consideration. However, the Ld.First Appellate Authority rejected the request on the premise that sufficient reasons have not been given as to what prevented the assessee from producing them before the Ld.AO. It is the case of the assessee that the it had its rights to file the impugned evidences under Rule-46A and that the Ld.CIT(A) has violated the impugned rights of the appellant assessee. In support of its contentions, the appellant assessee has filed a voluminous paper book comprising communications made with the Ld.First Appellate Authority during appellate proceedings, copies of sale and purchase deeds etc.
4.0 Per contra, the Ld.DR placed reliance upon the order of lower authorities.
5.0 We have heard rival submissions in the light of material available on records. At this stage, we deem it necessary to reproduce the provisions of Rule-46A of the Income Tax Rules:- “……7Production of additional evidence before the 8[8a[Joint Commissioner] (Appeals)] 9[and Commissioner (Appeals)]. 46A. (1) The appellant shall not be entitled to produce before the 8[8a[Joint Commissioner] (Appeals)] 9[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 10[Assessing Officer], except in the following circumstances, namely :— (a) where the 10[Assessing Officer] has refused to admit evidence which ought to have been admitted ; or (b) where the appellant was prevented by sufficient cause from producing the Page - 3 - of 6 evidence which he was called upon to produce by the 10[Assessing Officer] ; or (c) where the appellant was prevented by sufficient cause from producing before the 10[Assessing Officer] any evidence which is relevant to any ground of appeal ; or (d) where the 10[Assessing Officer] has made the order appealed against without giving sufficient opportunity to the appellant to adduce evidence relevant to any ground of appeal. (2) No evidence shall be admitted under sub-rule (1) unless the 11[11a[Joint Commissioner] (Appeals)] 12[or, as the case may be, the Commissioner (Appeals)] records in writing the reasons for its admission. 13(3) The 14[14a[Joint Commissioner] (Appeals)] 15[or, as the case may be, the Commissioner (Appeals)] shall not take into account any evidence produced under sub-rule (1) unless the 16[Assessing Officer] has been allowed a reasonable opportunity— (a) to examine the evidence or document or to cross-examine the witness produced by the appellant, or (b) to produce any evidence or document or any witness in rebuttal of the additional evidence produced by the appellant. (4) Nothing contained in this rule shall affect the power of the 17[17a[Joint Commissioner] (Appeals)] 18[or, as the case may be, the Commissioner (Appeals)] to direct the production of any document, or the examination of any witness, to enable him to dispose of the appeal, or for any other substantial cause including the enhancement of the assessment or penalty (whether on his own motion or on the request of the 19[Assessing Officer]) under clause (a) of sub-section (1) of section 251 or the imposition of penalty under section 271.]….”
We have noted from Form-35 and other communications made with the Ld.First Appellate Authority during appellate proceedings that the appellant had tried to impress upon the Ld.CIT(A) qua its inability to produce the impugned copies of sale and purchase deeds etc. before the Ld.AO. We have noted that in terms of Rule-46A(1) (b) & (c ) above, the appellant was well within its legal right to have asked for admission of additional evidences. It is pertinent to note that Rule-46A does not give an explicit authority to a Ld.First Appellate Authority to decline admission of an additional evidences. Rule-46A(1)(a) to (d) only provide for Page - 4 - of 6 circumstances in which an appellant is “entitled to produce…. any evidence, whether oral or documentary” before the Ld.CIT(A). In the present case Rule-46A(1) (b) & (c ) squarely cover assessee’s case. It is to be noted that permitting admission of evidence is not a right of an appellant authority but the same belongs to an appellant in existence of specific circumstances. The details filed by the appellant clearly shows that he was pleading for admission of evidence and the denial by the Ld.CIT(A) is not based upon correcting understanding of the facts of the case. He has argued that appellant has not justified the grounds. It appears that he has not been able to peruse the submissions, grounds of appeal and Form-35 of the appellant in which it was categorically stated as to why the appellant could not file the same before the Ld.AO. Thus, we are of the considered view that the Ld.CIT(A) has violated appellant’s right available under Rule-46A. Accordingly, we set aside the order of the Ld.CIT(A) and direct him to readjudicate afresh after giving due opportunity of being heard to the assessee. It shall bounden on the assessee to comply all the statutory notices issued by the Ld.CIT(A). Any non-compliace shall be viewed adversely. Accordingly, all the grounds of appeal raised by the assessee are therefore allowed for statistical purposes.
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