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Facts
The Revenue appealed against the CIT(A)'s order for AY 2021-22, which had deleted an addition of Rs.2,18,85,918/- made by the Assessing Officer under Section 68 concerning unsecured loans. The assessee had submitted additional evidence, such as confirmation letters and bank statements, for the first time before the CIT(A), which were not available to the AO during the initial assessment.
Held
The Tribunal held that the CIT(A) committed an error by deleting the addition based on additional evidence without providing the Assessing Officer an opportunity to verify and examine it. This action was deemed a violation of Rule 46A of the Income Tax Rules, 1962, and the principles of natural justice. Consequently, the Tribunal set aside the CIT(A)'s order and remanded the matter back to the AO for fresh adjudication, ensuring the assessee is also given an opportunity of hearing.
Key Issues
Whether the CIT(A) can delete an addition based on additional evidence submitted for the first time without confronting it to the Assessing Officer for verification, and if such an action constitutes a violation of Rule 46A of the Income Tax Rules, 1962, and principles of natural justice.
Sections Cited
68, 142(1), Rule 46A
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Income Tax Appellate Tribunal, Hyderabad ‘ A ‘ Bench, Hyderabad
Before: Shri Vijay Pal Rao, Vice-Shri Manjunatha, G.
Per Vijay Pal Rao, Vice President
This appeal by the Revenue is directed against the order dated, 22/08/2024 of the learned CIT (A)-NFAC Delhi, relating to A.Y.2021-22.
The Revenue has raised the following grounds:
None appeared on behalf of the assessee when this appeal was called for bearing. It transpires from the record that the notices issued to the assessee through RPAD have been received back unserved with the remark of the postal authorities that “addressee has left”. Thereafter, the Bench directed the service of notice through the Assessing Officer vide order dated 5/12/2024. The learned DR has filed the report of the Assessing Officer dated 30/12/2024 effecting the service of the notice to the assessee wherein the Assessing Officer has reported that the notice was served to the assessee through e-mail which was successfully delivered to the mail id of the assessee. Accordingly, in view of the fact that despite repeated notices, the assessee has Page 2 of 5 neither responded nor appeared/represented in the appeal filed by the assessee, we propose to dispose of this appeal ex-parte.
The learned DR has submitted that the Assessing Officer has made addition on account of unsecured loans during the year under consideration when the assessee has failed to discharge its onus to prove the identity and creditworthiness of the creditors as well as the genuineness of the transaction. He has referred to the assessment order and submitted that the assessee has failed to produce supporting evidence in support of the claim and consequently the addition was made by the Assessing Officer. Before the learned CIT (A), the assessee has filed additional evidences in the shape of confirmation of creditors, ledger extracts of loan creditors and bank account statements. The learned CIT (A) deleted the addition by considering the additional evidences filed by the assessee without confronting the same to the Assessing Officer. Therefore, there is a violation of principles of natural justice under Rule 46A of the I.T Rules, 1962. Thus, the learned DR has pleaded that the impugned order of the learned CIT (A) should be set aside and the matter may be remanded to the record of the Assessing Officer for verification and examination of the additional evidences filed by the assessee.
Having considered the submissions of the learned DR as well as perusal of documentary record, we find that the Assessing Officer issued various notices u/s 142(1) calling the assessee to submit the supporting details and documents in respect of unsecured loans for which entries were recorded in the books of account of the assessee. Except PAN of the loan creditors, the assessee did not file any other supporting evidences Page 3 of 5 which were called for by the Assessing Officer including the ITR, ledger account to prove the creditworthiness of the loan creditors. Accordingly, the Assessing Officer made the addition of Rs.2,18,85,918/- u/s 68 of the I.T. Act, 1961. The learned CIT (A) has deleted the addition by considering the bank account statement and confirmations of the loan creditors. It is manifest from the impugned order of the learned CIT (A) that the evidences/supporting documents filed by the assessee before the learned CIT (A) were not confronted to the Assessing Officer or forwarded to the Assessing Officer for his comments or remand report. Therefore, considering the additional evidences filed before the learned CIT (A) without confronting the same to the Assessing Officer is a clear violation of principles of natural justice as well as Rule 46A of the Income Tax Rules, 1962. Hence, in the facts and circumstances of the case, the impugned order of the learned CIT (A) is set aside and the matter is remanded to the record of the Assessing Officer for fresh adjudication after verification and examination of the additional evidences filed by the assessee. Needless to say, before passing the fresh order, the assessee be given an opportunity of hearing.