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Facts
The assessee company declared an income of ₹15,91,33,440 for AY 2020-21. The Assessing Officer (AO) assessed the income at ₹32,52,61,258 after making several additions. The CIT(A) allowed relief on most grounds, except for disallowance under section 37(1)(va) which was upheld based on a Supreme Court judgment.
Held
The Tribunal observed that additional evidences were filed before the CIT(A) and the Tribunal, impacting most of the additions made by the AO. Therefore, the matter was remitted to the CIT(A) for fresh adjudication, considering all additional evidences and allowing opportunity for remand report and rebuttal.
Key Issues
Whether the CIT(A) erred in deleting additions made by the AO, especially when additional evidences were filed and admitted without a remand report, and whether the matter should be remitted for fresh adjudication.
Sections Cited
143(3), 144B, 143(2), 142(1), 37, 36(1)(va), 43B, 80G
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCHES “B”, PUNE
Before: DR.MANISH BORAD & SHRI VINAY BHAMORE
PER DR. MANISH BORAD, ACCOUNTANT MEMBER :
The captioned appeal at the instance of Revenue pertaining to A.Y. 2020-21 is directed against the order dated 26.09.2023 framed by National Faceless Appeal Centre, Delhi emanating out of Assessment Order dated 29.09.2022 passed u/s.143(3) r.w.s.144B of the Income Tax Act, 1961 (in short ‘the Act’).
When the case called for, none appeared on behalf of the respondent-assessee. However, written submissions has been filed running into 16 pages along with other documents forming part of the paper book running into 370 pages including the reference to certain documents which are in the nature of additional evidences including some documents which were even not filed before ld.CIT(A).
Brief facts of the case are that the assessee is a Private Limited Company and income of ₹15,91,33,440 declared in the return of income for A.Y.2020-21 e filed on 31.03.2021. Case selected for scrutiny assessment and valid notices u/s.143(2) and 142(1) of the Act were served on the assessee and replies were made on 31.08.2022, 09.09.2022 and 23.09.22. Ld. Assessing Officer (AO) examining the details filed by the assessee concluded the assessment proceedings and assessed income at ₹32,52,61,258 after making following additions :
(i) Addition for disclosing low capital gain by way of inflating cost of the property – ₹13,88,04,279 Disallowance of Brokerage expenditure – ₹40.00 lakh (ii) Undisclosed contract receipt – ₹1,66,52,098 (iii) Disallowance of expenses u/s.37 – ₹65,76,888 (iv) Disallowance u/s.36(1)(va) r.w.s.2(24((x) – ₹545,553 (v) Disallowance u/s.43B – ₹20,000 (vi) Total Addition – ₹16,61,07,818
4. Aggrieved respondent-assessee preferred appeal before ld.CIT(A) and made submissions with respect to each of the grounds of appeal based on which ld.CIT(A) except for the disallowance u/s.37(1)(va) being covered against the respondent-assessee by the judgment of Hon’ble Supreme Court in the case of Checkmate Services Pvt. Ltd. Vs. CIT (2022) 448 ITR 518 (SC), allowed the remaining grounds of appeal.
Aggrieved Revenue is now in appeal before this Tribunal raising following grounds of appeal :
“1. On the facts and circumstances of the case, the Ld. CIT (Appeals) has erred in deleting the addition of ₹162715737 (out of total addition of ₹166053265), stating that the AO has made these additions on the basis of assumptions and surmises and has not verified the authenticity of the documentary evidences, without appreciating the fact that AO has discussed each issue in detail and passed the order after due verification of the replies and documents submitted by the assessee. Further, the AO was not given any opportunity of being heard on the submission of additional evidences/grounds by the assessee during the appellate proceedings which is in violation of principles of natural justice and Rule 46A of the IT Rules.
2. On the facts and circumstances of the case, Ld. CIT (appeal) has erred in deleting the addition of ₹138804279 on account of improvement cost , stating that AO has just made simple assumptions and surmises in his assessment order and that he has not controverted the veracity of any of the documents submitted before him, without appreciating the fact that AO has concluded after due verification that the said transactions were entered into with the related parties of the assessee without Registering the Agreements, thereby leading to the conclusion that the transactions which the assessee had claimed in support of cost of improvement are sham transactions, with an intention to inflate cost of the property in order to reduce tax liability by disclosing low capital gain. Further, no opportunity was given to the AO to furnish his/her observations on the Additional Evidences submitted by the Assessee during the appellate proceedings in this regard, which is in violation of principles of natural justice and also Rule 46A of the IT Rules.
3. On the facts and circumstances of the case, the Ld. CIT (Appeals) has erred in deleting the addition of ₹40,00,000 on account of Brokerage paid, stating that the AO has not raised any questions on the authenticity and genuineness of the said transactions, without appreciating the fact that the AO after due verification of submissions made by the assessee has held the transactions to be sham, with an intention to inflate cost of the property in order to reduce tax liability by disclosing low capital gain.
On the facts and circumstances of the case, the Ld. CIT(appeals) has erred in deleting the addition of ₹16603014 on account of Contractual Receipts, stating
that the same have been reported as a part of Sale, without appreciating the fact that the nature of these contractual receipts along with supporting documentary evidences were not furnished by the Assessee before the AO, and therefore the veracity of such claim was questioned by the AO.
5. On the facts and circumstances of the case, Ld. CIT (Appeals) has erred in deleting the addition of ₹3288444 (out of 6576888/-) on account of donation paid, stating that 50% of the donation paid be allowed under section 80G of the Act without appreciating the fact that the identity and Registration status of the Donee was not verified based on the documents made available by the assessee during assessment proceedings. Further, no report was called for by CIT (Appeals) from the AO, when the assessee raised the additional ground during the appellate proceedings to allow the impugned transaction as Donation Under section 80G of the Act, which is in violation of principles of natural justice and also Rule 46A of the IT Rules.
6. On the facts and circumstances of the case, Ld. CIT (Appeals) has erred in deleting the addition of ₹20,000 on account of Taxes paid after due date, stating that such payments were made before the due date, without appreciating the fact that AO has discussed the issue in detail and passed the order after due verification of the replies and documents submitted by the assessee. Further, no opportunity was given to the AO to furnish his/her observations on the Additional Evidences submitted by the Assessee during the appellate proceedings in this regard, which is in violation of principles of natural justice and also Rule 46A of the IT Rules.”
Ld. Departmental Representative took us through the detailed written submissions running into 32 pages filed on 29.07.2025 in which submissions have been made for each of the grounds and has strongly objected to the relief granted by ld.CIT(A) and also has stated that certain additional evidences were accepted by ld.CIT(A) in violation of Rule 46A of the Income Tax Rules, 1962. Ld. DR also made reference to various documents filed in the paper book attached with the written submissions running from Annexure-A to Annexure-I and also filed the case law paper No.2 giving reference to various decisions and the Index of the same reads as under :
PAPER BOOK
CASE LAW COMPILATION
So far as the respondent-assessee is concerned even though no-appeared on behalf of the respondent-assessee but written submissions have been filed along with application for admission of additional evidences and for the sake of reference the index of the paper book reads as under :
We have heard the ld. Departmental Representative and perused the record placed before us. We have also carefully gone through the written submissions filed by the assessee as well as the ld. DR. We observe that the assessee is a Private Limited company and has been subjected to various additions in the assessment proceedings for A.Y.2020-21. Major addition is on account of excess claim of cost of acquisition/cost of improvement which is in regard to payments made to three parties under unregistered notarized Agreement and having paid sum of ₹13,55,81,655 to the following three parties :
Payment in ₹ Sl.No. Name 1. Pravin Surajmal 5,00,00,000 Lunkad 2. Nav Maharashtra 2,12,00,000 Portland Cement Industries 3. Samta Nagri Sahakari 6,43,81,655 Sanstha Kopargaon Total 13,55,81,655
So far as the remaining additions are concerned, major are relating to undisclosed contract receipt and disallowance of expenses.
Before us, respondent-assessee has furnished written submissions (extracted supra) and it has been stated that the documents appearing at Sl.No.3 to 7, 11 to 13 and 16 to 18 were filed for the first time before ld.CIT(A) and secondly certain new documents placed at Sl.No.8 to 10, 14, 15, 17 and 19 have been filed before this Tribunal for the first time as additional evidences.
Before us, Revenue has also raised the ground that certain additional evidences were entertained by ld.CIT(A) without calling for remand report from the AO which is in gross violation of Rule 46A of the I.T. Rules, 1962 and these documents have already been referred above which were filed before ld.CIT(A) for the first time.
Ld. DR without prejudice to the above and the additional evidences filed by the assessee have stated that except for the issue of brokerage payment and disallowance u/s.43B of the Act for the remaining issues the matter may be restored to the file of lower authorities.
We observe that the major issues are regarding the addition under the head capital gain, contractual receipts and disallowance of expenses since the additional evidences are having the impact on most of the additions made by ld. AO in the instant appeal, we deem it appropriate to remit the issues raised by the Revenue on merits of the case regarding the impugned additions to the file of ld.CIT(A) for afresh adjudication to be carried out by examining all the additional evidences which have been filed by the respondent-assessee before ld.CIT(A) for the first time and also the additional evidences filed before this Tribunal for the first time. Ld.CIT(A) shall call for a remand report from the ld. JAO with regard to the additional evidences not furnished before the ld.AO during the course of assessment proceedings. Further, opportunity of rebuttal shall also be granted to assessee. Needless to mention that ld.CIT(A) shall afford reasonable opportunity of hearing to the respondent-assessee. Impugned order is set aside and all the grounds of appeal raised by the Revenue are allowed for statistical purposes.
In the result, the appeal filed by the Revenue is allowed for statistical purposes.
Order pronounced on this 11th day of December, 2025.