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Facts
The Revenue appealed against the order of the Ld. CIT(A) who had deleted additions made by the AO on account of unexplained income from capital gains, unexplained investment in government bonds, and unexplained investment in fixed deposits. The additions were based on the assessee's failure to reply to notices during assessment proceedings.
Held
The Tribunal held that the Ld. CIT(A) ought to have followed the due process of law as enshrined under Rule 46A of the Income Tax Rules before admitting additional evidence. Consequently, the Tribunal set aside the impugned order and remanded the case back to the AO for a fresh adjudication.
Key Issues
Whether the Ld. CIT(A) was justified in deleting additions based on additional evidence without following the due procedure under Rule 46A, and whether the case should be remanded for fresh adjudication.
Sections Cited
253, 250, 147, 144, 144B, 139, 148, 69A, 246A, 54EC, 46A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: DR. MANISH BORAD & SHRI PARESH M JOSHI
आदेश/ O R D E R
Per Paresh M Joshi, J.M.:
This is an appeal filed by the Revenue Under Section 253 of the Income Tax Act, 1961 (hereinafter referred to as the Act for sake of brevity) before this Tribunal. The Revenue is aggrieved by order bearing Number ITBA/NFAC/250/2024-25/1065398935(1) dated 05.06.2024 passed by Ld. CIT(A), u/s 250 of the Act which is hereinafter referred to as the “impugned order”. The relevant
Page 1 of 8 period is from 01.04.2017 to 31.03.2018.
FACTUAL MATRIX 2.1 That as and by way of an assessment order made u/s 147 r.w.s. 144/144B of the Act, the assessee’s total income exigible to tax was computed at Rs.1,93,20,482/-. The returned income u/s 139 ws Rs.0/- as no ITR was filed by the assessee. No return of income was filed u/s 148 of the Act. The addition of Rs.60,20,482/- was made u/s 69A as unexplained investment.
Yet another addition of Rs.1,33,00,000/- was made at undeclared/unexplained income from capital gain. That the aforesaid assessment order bears No.- ITBA/AST/147/2022- 23/1050715013(1) & that same is dated 14.03.2023 which is hereinafter referred to as the “Impugned Assessment Order”.
2.2 That the assessee being aggrieved by the “Impugned Assessment Order” prefers the first appeal u/s 246A of the Act, before the Ld. CIT(A) who by the “Impugned order” has allowed, the first appeal of the assessee on the grounds & reasons stated
Page 2 of 8 of the assessee was allowed are as under:-
“4. Decision:- Ground No.1:- The ground of appeal has been raised against addition of Rs. 1,33,00,000/- on account of undeclared income on sale of property by the appellant during the A.Y.2018-19. During the course of assessment proceedings, the assessee failed to reply to the notices of the Ld. AO, consequent upon which the impugned addition u/s 69A was made thereof. During the course of appellate proceedings, the appellant has filed detailed submissions and explained the sale of immovable property undertaken by her. It has been submitted that a sum of Rs. 1,33,00,000/-has been received on account of sale of property (plot) on 23.04.2017. The appellant has submitted the copy of the sale deed and the bank statement thereof. The working of capital gains has also been provided wherein the Long Term Capital Gains of Rs.49,78,595/- has been invested in bonds and deduction u/s 54EC has been claimed to the extent of Rs.50,00,000/-. From the above discussion, it is evident that the sale proceeds have been received through banking channels and a relevant reply has been provided by the appellant. Hence, the addition of Rs. 1,33,00,000/- made by the Ld. AO is hereby deleted. The ground of appeal No.1 is allowed. Ground No.2:- The ground of appeal has been raised on account of unexplained source of investment in purchase of Government Bonds of Rs. 50,00,000/- made by the Ld. AO. During the course of assessment proceedings, the assessee failed to reply to the notices of the Ld. AO, consequent upon which the impugned addition was made thereof. As submitted by the appellant, the Government Bonds have been purchased by the appellant to avail deduction u/s 54EC on account of Long Term Capital Gains accrued to the appellant on sale of her immovable property. In view of the above, the addition of Rs.50,00,000/- made by the Ld. AO is hereby deleted. The ground of appeal no. 2 is allowed.
Page 3 of 8 A.Y. 2018-19 Ground No.3:- The ground of appeal has been made on account of addition of Rs. 10,20,482/- made by the Ld. AO u/s 69A of the Act. During the course of assessment proceedings, the assesse failed to reply to the notices of the Ld. AO, consequent upon which the impugned addition was made thereof. The appellant has submitted that a sum of Rs. 10,00,000/- was transferred by her son Sh. Shadab Khan on 29.11.2017 into her bank account maintained with Indian Overseas Bank and a term deposit was made by her on 07.12.2017. The sum of Rs.20,482/- is the interest credited into her bank account. The appellant has submitted her bank statement for the relevant period to explain the said investment. In view of the above, the addition of Rs. 10,20,482/- made by the Ld. AO is hereby deleted. The ground of appeal no.3 is allowed. Ground No.4:- This ground is general in nature and does not require any adjudication. In the result, the appeal is allowed.” 2.3. That the Revenue being aggrieved by the “Impugned Order” has preferred the instant appeal before this Tribunal and has raised following grounds of appeal in form no.36 against the “Impugned Order” which are as under:-
“1. The Ld. CIT(A) was not justified in deleting the addition of Rs. 1,33,00,000/- on account of income from capital gain, deleting the addition of Rs.50,00,000/- on account of unexplained investment in govt. bonds and deleting the addition of Rs. 10,20,482/- on account of unexplained investment in fixed deposits on the basis of additional evidence submitted by the assessee without following the due procedure required under Rule 46A of Income Tax Rules.” 3.
Page 4 of 8 3.1 That the hearing in the matter took place before this Tribunal on 22.10.2025 when the Ld. AR for and on behalf of the Revenue appeared before us and interalia contended that the “Impugned Order” is bad in law, not proper & illegal. It was submitted that Ld. CIT(A) in the “Impugned Order” has taken into consideration additional evidences & basis that has allowed the appeal of the assessee. That for considering the additional evidences the income tax Act 1961 & the Rules framed thereunder contemplates a “due process” which is contained in Rule 46A of the Rules which has not been followed by the Ld.
CIT(A) hence without strictly adhering to the due process/procedure prescribed by Rule/law as aforesaid the Ld. CIT(A) cannot entertain the additional evidences. It was also submitted that in the due process as contemplated by Rule 46A of the Rule, there is a requirement of giving an opportunity to the Ld. AO before additional evidences are admitted which opportunity too was not given by the Ld. CIT(A). It was therefore, finally contended that the “Impugned Order” be set aside & the matter be remanded back. Per contra, the Ld. AR appearing for &
Page 5 of 8 Assessment Order” is u/s 144/144B it would be in the fitness of things that the matter be remanded back to the file of Ld. AO for fresh adjudication & adjudgement on denovo basis in accordance with law. In this regard the Ld. AR undertook before us that the assessee would cooperate with the Department. In rejoinder the Ld. DR for the revenue brought to our notice that there is a slight delay of 5 days in preferring the instant appeal before this Tribunal which was not deliberate and hence in the interest of the ends of justice same should be condoned & appeal be admitted. With regard to prayer of Ld. AR of the assessee for remand back to the file of Ld. AO the Ld. DR has stated that the revenue has no serious objection. Hearing was then concluded.
Observations & findings & conclusions 4.1 We have to decide the legality, validity and proprietary of the “impugned order” basis records of the case and the contentions canvassed before us.
Page 6 of 8 presented to this Tribunal by both the Ld. AR and the Ld. DR to determine the legality, validity of the “Impugned Order” basis law and by following the due process.
4.3 We basis records of the case and after hearing and upon examining the rival contentions of the parties canvassed before us are of the view that the “Impugned Order” should be remanded back to the file of Ld. AO for passing a fresh order on merits of the case after giving reasonable opportunity of hearing to the assessee. The assessee is directed to furnish all the necessary documents, papers, evidences, before the Ld. AO so that he can correctly compute & assessee total income of the assessee exigible to tax. Needless to state that the Ld. CIT(A) ought to have followed the due process of law as enshrined under Rule 46A of the Act which are mandatory in the nature. Delay of 5 days is condoned, as same was not deliberate.
4.4 In view of the above, we set aside the “Impugned order” and remand the case back to the file of Ld. AO on denovo basis with direction to the assessee to cooperate with the Department and to Page 7 of 8 Assessee is directed not to seek unnecessary adjournment on any flimsy grounds whatsoever before the Ld. AO.
Order 5.1 In view of the aforesaid premises drawn up by us the “Impugned Order” is set aside & the matter is remanded back to the file of Ld. AO on denovo basis with directions as aforesaid.
5.2 In the result, appeal of the revenue is allowed for statistical purpose.
Order pronounced by putting on notice board in terms of Rule 34 of ITAT, Rules, 1963, on 29.10.2025.