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Income Tax Appellate Tribunal, HYDERABAD BENCHES “A”,
Before: SHRI RAMA KANTA PANDA & SHRI K.NARASIMHA CHARY
आदेश / ORDER PER K. NARASIMHA CHARY, JM: Challenging the order dated 11/04/2022 passed by the learned Commissioner of Income Tax (Appeals)-National Faceless Appeal Centre (NFAC), Delhi (“Ld. CIT(A)”), in the case of Makam Radhakrishna Rammohan (“the assessee”) for the assessment year 2018-19, Revenue preferred this appeal. Assessee also filed cross-objections.
Assessee is an individual and filed the return of income for the assessment year 2018-19 on 12/10/2018 declaring an income of Rs. 1,57,94,676/-. National e-Assessment Centre (Learned Assessing Officer), however, by way of order dated 30/04/2021 made addition of Rs. 7,91,76,277/- on account of difference in valuation of gold jewelry stock, Rs. 29,51,226/- on account of difference in valuation of silver jewelry stock, Rs. 1,86,28,731/- on account of difference in valuation of diamond jewelry stock, Rs. 30,68,286/- on account of bogus making charges expenses, Rs. 5,74,843/- on account of non-deduction of TDS on bonus paid under section 40(a)(ia) of the Act and Rs. 24,00,000/- on account of bogus gift received. 3. Aggrieved by such an action of the Learned Assessing Officer, assessee preferred appeal before the learned CIT(A), filed elaborate written submissions and necessary supporting documentary evidences under Rule 46A of the Income tax Rules, 1963 (“the Rules”). After considering the written submissions and the necessary supporting evidence produced under Rule 46A of the Rules, learned CIT(A) by way of impugned order, deleted the addition to the tune of Rs. 10,50,53,360/- and confirmed it to the tune of Rs. 17,46,003/-. 4. Revenue, is, therefore, in this appeal before us mainly contending that the act of the learned CIT(A) in deleting the addition to the extent of Rs. 10,50,53,360/- without calling for the remand report or giving an opportunity to the learned Assessing Officer to examine the additional
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evidence submitted by the assessee during the course of the appellate proceedings, as specified in Rule 46A of the Rules.
It is the submission of the learned DR that under sub-Rule (3) of 46A of the Rules that the learned CIT(A) shall not take into account any evidence produced under sub-Rule (1) unless the learned Assessing Officer has been allowed a reasonable opportunity to examine evidence and to produce any rebuttal evidence. He, therefore, submits that the order of the learned CIT(A) is vitiated for violating the principles of natural justice.
Per contra, learned AR submitted that the Revenue cannot make such a request without establishing any prejudice caused by the learned CIT(A) receiving the additional evidence and considering the same before passing the first appellate order. According to him, the action of the NFAC is perfectly legal since it corrected the mistake committed by the learned Assessing Officer in the light of the cogent material produced by the assessee.
We have gone through the record in the light of the submissions made on either side. It is an admitted fact that the assessee filed an application under Rule 46A of the Rules along with the appeal to receive the documentary evidence in support of his contention. The impugned order also reads that the supporting details furnished by the assessee was considered. The impugned order, however, does not reveal that any opportunity was granted to the learned Assessing Officer to examine the material that was produced by the assessee or to produce any rebuttal evidence.
Rule 46A of the Rules reads as under:
46A. (1) 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], except in the following circumstances, namely :—
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(a) where the [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 evidence which he was called upon to produce by the [Assessing Officer] ; or (c) where the appellant was prevented by sufficient cause from producing before the [Assessing Officer] any evidence which is relevant to any ground of appeal ; or (d) where the [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 [Deputy Commissioner (Appeals)] [or, as the case may be, the Commissioner (Appeals)] records in writing the reasons for its admission. (3) The [Deputy Commissioner (Appeals)] [or, as the case may be, the Commissioner (Appeals)] shall not take into account any evidence produced under sub-rule (1) unless the [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 [Deputy Commissioner (Appeals)] [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 [Assessing Officer]) under clause (a) of sub-section (1) of section 251 or the imposition of penalty under section 271.] 9. A reading of Rule 46A of the Rules makes it clear that the compliance with the principles of natural justice vide sub Rule (3) is mandatory. Justice should not only be done but manifestly and undoubtedly be seen to be done. It is beyond doubt that there is a violation
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of this principles of natural justice and it is not open for the assessee to contend that the consequential prejudice must be established before seeking any remedy against such an order which is passed in violation of sub-Rule (3) of the Rules. It is only on examination of the material that was produced by the assessee, the Learned Assessing Officer could effectively put forth the case of the Revenue and to produce the rebuttal evidence, if necessary.
In these circumstances, we are of the considered opinion that the order passed by the learned CIT(A) in violation of principles of natural justice cannot be sustained and in the fitness of things, it is just and proper to set aside the impugned order and to restore the appeal to the file of the learned CIT(A) for providing an opportunity to Learned Assessing Officer in respect of the material that was produced under Rule 46A of the Rules and to take a view according to law. We direct and order accordingly. In view of our direction in the appeal to restore the appeal to the file of the learned CIT(A), the cross objection does not survive and the same is dismissed.
In the result, appeal of the Revenue is treated as allowed for statistical purposes and the cross objection of the assessee is dismissed.
Order pronounced in the open court on this the 27th day of December, 2022.
Sd/- Sd/- (RAMA KANTA PANDA) (K. NARASIMHA CHARY) ACCOUNTANT MEMBER JUDICIAL MEMBER Hyderabad, Dated: 27/12/2022 TNMM
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