INCOME TAX OFFICER, WARD-1,, MEHSANA vs. MENA RICE MILLS, MEHSANA

Shri Kavan Limbasiya, Ld. Sr. DR submitted that the AO had allowed as many as six opportunities to the assessee but no compliance was made on any of the occasions. Therefore, the entire cash deposit of Rs.1,13,00,500/- was treated as unexplained income u/s.69A of the Act and added to the income. Ld. Sr. DR submitted that the Ld. CIT(A) had allowed relief to the assessee on the basis of additional evidences filed in the course of appellate proceeding without allowing any opportunity to the AO, which was contrary to the provisions of Rule 46A(3)

Per contra, Shri Parin Shah, the Ld. AR of the assessee submitted that the additional evidences filed in the course of appellate proceeding were duly verified by the Ld. CIT(A) and only thereafter, relief was allowed to the assessee.

We have considered the rival submissions. The undisputed fact is that no compliance was made by the assessee in the course of assessment proceeding. Before the Ld. CIT(A), the assessee had submitted that the assessee firm (Mena Rice Mills) having PAN No.AACFM9435F was dissolved in the year 2014 and was taken over by Shri Jagdishchandra Mohanlal Patel as a proprietary firm with PAN – ABIPP8206A. It was further submitted that the cash deposit of Rs.1,13,00,500/- in the bank account was duly disclosed in the income tax return of Shri Jagdishchandra Mohanlal Patel. In support of these submissions, assessee had filed copy of dissolution deed, audit report and copy of income tax return of Shri Jagdishchandra Mohanlal Patel. Further, the assessee had also filed a letter from Kalol Nagarik Sahakari Bank Limited to the effect the bank account no. 126255305000039 was operated and maintained by Shri Jagdishchandra Mohanlal Patel, proprietary of Mena Rice Mills since 19th January, 2016. Considering these evidences brought on record by the assessee in the course of appeal proceeding, the Ld. CIT(A) had allowed relief to the assessee and deleted the [ITO vs. Mena Rice Mills] A.Y. 2017-18 - 4 – addition as made by the AO. It is found from the order of the Ld. CIT(A) that fresh evidences filed by the assessee in the course of appeal proceeding were not at all confronted to the AO. It will be relevant to reproduce Rule 46A(3) of the IT Rules, which is as under :

The provision of Rule 46A(3) stipulates that the CIT(A) shall not take into account any evidence, other than the evidence produced before the AO, without allowing the AO a reasonable opportunity to examine the evidence or document or to cross examine the witness produced by the appellant. Thus, the Ld. CIT(A) was duty bound to forward the additional evidences filed by the assessee in the course of appeal proceeding to the AO and call for his remand report. Since, the AO was not allowed any opportunity to cross-examine the fresh evidences brought on record by the assessee in the course of appeal proceeding, the order of the Ld. CIT(A) is contrary to the provisions of IT Rules and cannot be sustained. We, therefore, deem it necessary to set aside the matter to the file of the Ld. CIT(A) with a direction to forward the additional evidences filed in the course of appeal proceeding to the AO, in order to enable him to examine those fresh evidences and also to produce any evidence in rebuttal of the additional evidences filed by the assessee. The matter may be [ITO vs. Mena Rice Mills] A.Y. 2017-18 - 5 – re-adjudicated by the Ld. CIT(A) after obtaining the remand report of the AO.

In the result, the appeal of the Revenue is allowed for statistical purposes.