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Facts
The assessee, registered under Section 12AA, received significant donations from Serum Institute of India and Gopal Nihalani, which were treated as corpus donations. The Assessing Officer, however, considered these as revenue receipts and made additions during assessment. The CIT(A) subsequently allowed the assessee's claim based on MOUs submitted as additional evidence, which had not been presented during the original assessment proceedings.
Held
The Tribunal found that the CIT(A) violated Rule 46A of the Income Tax Rules by admitting additional evidence (MOUs) without providing the Assessing Officer a reasonable opportunity to examine them or calling for a report. Consequently, the order of the CIT(A) was set aside, and the case was remanded for de-novo adjudication to ensure compliance with Rule 46A and principles of natural justice.
Key Issues
Whether the CIT(A) erred in admitting additional evidence (MOUs) without adhering to the procedural requirements of Rule 46A of the Income Tax Rules, thereby depriving the Assessing Officer of an opportunity to examine the evidence.
Sections Cited
250, 143, 143(3), 143(3A), 143(3B), 12AA, Rule 46A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCHES “A” :: PUNE
Before: DR.DIPAK P. RIPOTE & SHRI VINAY BHAMORE
This is an appeal filed by the Revenue against the order of ld.Commissioner of Income Tax(Appeal) [NFAC], Delhi passed under section 250 of the Income Tax Act, 1961 dated 23.09.2024 for the A.Y.2018-19 emanating from the Assessment Order under section 143 read with sections 143(3A) & 143(3B)of the Income Tax Act, 1961, dated 08.04.2021.
ITA No.2352/PUN/2024[R]
The Revenue has raised the following grounds of appeal :
“1. On the facts and circumstances of the case and in law, the Ld.CIT(A) has erred in treating the donations as corpus donations relying on the MoUs executed with the donors i.e. Serum Institute of India and Sh. Gopal Tarachand Nihalani filed by the assessee as an additional evidence during the appellate proceedings.
2. On the facts and circumstances of the case and in law, the Ld.CIT(A) has failed to follow the provisions of Rule 46A of the I.T. Rules, 1962 wherein it is laid down that the CIT/DC (Appeals) shall not take into account any evidence produced under sub-rule (1) unless the A.O. has been allowed a reasonable opportunity to examine the evidence or document or to cross-examine the witness produced by the appellant or to produce any evidence or document or any witness in rebuttal of the additional evidence produced by the appellant.
3. On the facts and circumstances of the case and in law, the Ld.CIT(A) has erred in allowing the additional claim of capital expenditure of Rs. 55,14,08,779/- excluding the amount of Rs.7.33 crores without remanding the same to the AO as the claim was neither verified during the assessment proceedings nor during the appellate proceedings. The CIT (A) has failed to appreciate the fact that to ascertain the veracity of the capital expenditure, it was necessary to remand the case to the A.Ο.”
Submission of ld.AR :
The ld.AR for the Assessee filed a paper book .ld AR however admitted that copy of the MU was not submitted during the assessment proceedings. However, ld.AR submitted that there was sufficient evidence to prove that the particular amount was specifically donated for construction of hostel and new cancer building. Ld.AR pleaded that order of the CIT(A) may be upheld. [R] Submission of ld.DR :
Ld.DR for the revenue submitted that the MOU was never submitted during the assessment proceedings hence the CIT(A) has violated Rule 46A by admitting the new evidence without recording reasons and without providing opportunity to the Assessing Officer.
DR strongly relied on the Assessment Order.
Findings &Analysis :
We have heard both the parties and perused the records. In this case, the assessee had filed Return of Income on 08/10/2018 declaring Total Income of NIL. The Assessee have a valid Registration u/s 12AA of the Income Tax Act dated 20/08/1973. The assessee’s case was selected for scrutiny. The Assessment order was passed on 08/04/2021 u/s 143(3) rws143(3A) and 143(3B) of the Act. In the Assessment Order the Assessing Officer held that the donation of Rs.7,00,00,000/- received from Serum Institute of India Pvt Ltd and Gopal Nihalani cannot be treated as Capital Receipt or earmarked fund.In the Assessment Order the Assessing Officer also noted that the Assessee suo moto added the impugned amounts as the revenue receipts and filed revised computation of income vide 3 [R] letter dated 11/02/2021.The Assessing Officer also made addition of Rs.33,00,69,972/- on account of depreciation claimed, the Assessing Officer stated in the Assessment order that the Assessee has accepted that it inadvertently claimed the said depreciation.
Aggrieved by the Assessment Order the Assessee filed appeal before the Commissioner of Income Tax(appeal).
5.1 The CIT(A) partly allowed the appeal of the assessee.
Aggrieved by the Order of the Commissioner of Income Tax(appeal) the Revenue has filed appeal before this Tribunal.
5.2 It is noted that the CIT(A) has accepted the copies of MOU between Assessee and Serum Institute of India , MOU between Assessee and Gopal Nihalani. CIT(A) has relied on these MOUs filed by the assessee. It is noted that these MOUs were not filed by the assessee before the Assessing Officer during the Assessment Proceedings. The Assessee has not filed any evidence to establish that these MOUs were filed before the Assessing Officer during assessment proceedings. It is also noted from the Order of the CIT(A) that the CIT(A) has not called for a report from the Assessing Officer as per Rule 46A of the Income Tax Rules.
[R] 5.2.1 Thus, the CIT(A) has not provided opportunity to the Assessing Officer to verify the MOUs and contention of the assessee qua MOU. This is against the principle of Natural Justice. As per Rule 46A of the Income Tax Rules it is mandatory for the Commissioner of Income Tax(appeal) to record his satisfaction before admitting any additional evidence and also it is mandatory for CIT(A) to call for a report from the AO. As per provisions of Rule 46A(3) the CIT(A) has to allow a reasonable opportunity to the assessing officer to examine the evidence produced by the assessee.
In this case , we have noted that no opportunity has been provided by the CIT(A) to the Assessing Officer to examine the MOUs. Thus, there is clear violation of Rule 46A of the income Tax rules.
5.3 Therefore, in the interest of justice, we set aside the order of the Commissioner of Income Tax(appeal) to Commissioner of income Tax (appeal) for de-novo adjudication. The CIT(A) shall provide opportunity of hearing to both the Assessing Officer and Assesseee.
5.4 Accordingly the Ground Number 2 raised by the Revenue is allowed.
[R] 6. Since we have set aside the order of the CIT(A) for de-novo adjudication , the other grounds become academic in nature. Accordingly, the ground number 1 and 3 are dismissed as unadjudicated. 7. In the result the appeal of the revenue is partly allowed. Order pronounced in the open Court on 26th Aug, 2025.