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Facts
The assessee filed a revised return showing NIL income for AY 2017-18. During assessment, the AO noted a discrepancy in unsecured loans from Uniways Management Services and treated Rs.1,94,84,40,126/- as unexplained cash credit under Section 68. The assessment was completed at a total income of Rs.2,11,88,25,378/-.
Held
The Tribunal found that the Ld.CIT(A) erred in admitting additional evidence, including corrected financials and a confirmation ledger, without allowing the AO an opportunity to examine them or calling for a specific report. The Ld.CIT(A) did not follow the procedure under Rule 46A(3) of the Income Tax Rules, 1962.
Key Issues
Whether the Ld.CIT(A) correctly admitted additional evidence without providing the AO an opportunity to examine it and verify its correctness as per Rule 46A(3)?
Sections Cited
68, 143(3), 46A(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI PARESH M. JOSHI & SHRI NARENDRA PRASAD SINHA
PER NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER
This appeal by the Revenue is directed against the order dated 18.03.2024 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [hereinafter referred to as ‘CIT(A)’], for the Assessment Year (AY) 2017-18, arising from the assessment order dated 31.12.2019 passed under Section 143(3) of the Income Tax Act, 1961 [hereinafter referred to as ‘the Act’] by the ACIT/DCIT,4(1), Bhopal [hereinafter referred to as ‘AO’]. Dy.CIT-3(1) Bhopal vs. UAC Commodities Pvt.Ltd. Asst.Y ear : 2017-18 2
The brief facts of the case are that the assessee had filed its return of income for AY 2017-18 on 07/11/2017 declaring total loss of Rs.(-)55,89,06,056/-. Thereafter, a revised return was filed on 10/10/2018 declaring NIL income. The case was selected for scrutiny under CASS. During the course of assessment proceedings, the AO enquired about the unsecured loans obtained by the assessee. The assessee had shown closing balance of loan of Rs.1,94,84,40,126/- in respect of Uniways Management Services. However, from the ledger account of Uniways Management Services brought on record, during the course of assessment, it was found that a sum of Rs.83,56,95,211/- was payable to the assessee-company. In view of this discrepancy, the AO treated the outstanding loan of Rs.1,94,84,40,126/- in the books of the assessee in respect of Uniways Management Services as unexplained cash credit u/s.68 of the Act and, accordingly, made the addition. Certain other additions were also made and the assessment was completed u/s.143(3) of the Act on 31/12/2019 at total income of Rs.2,11,88,25,378/-.
Aggrieved with the order of the AO, the assessee had filed an appeal before the first appellate authority, which was decided by the Ld.CIT(A) vide the impugned order and the appeal of the assessee was partly allowed.
Now the Revenue is in second appeal before us by raising following grounds of appeal:
“1. On the facts and in the circumstances of the case, the Ld.CIT(A) has erred in considering the genuineness the documents offered by the assessee after completion of assessment proceedings. The Ld.CIT(A) did not offer the comments upon the sanctity of confirmation leger submitted by the assessee during appeal. Dy.CIT-3(1) Bhopal vs. UAC Commodities Pvt.Ltd. Asst.Y ear : 2017-18 3
On the facts in the circumstances of the case, the Ld.CIT(A) has erred in considering the assessee, how the assessee fulfilled conditions as down in Rule 46 of Income Tax Rules, 1962.”
During the course of hearing before us, Shri Ram Kumar Yadav, CIT- DR for the Revenue appeared and submitted that the Ld.CIT(A) had allowed relief in respect of addition of Rs.1,94,84,40,126/- on unsecured loan by considering additional evidences and without obtaining any remand report from the AO. He also submitted that the genuineness of the documents brought on record by the assessee, during the course of appellate proceedings, was not examined and the AO was not allowed any opportunity to examine the evidence/documents placed before the Ld.CIT(A). He further submitted that the assessee had revised the financial statements for the first time after the completion of assessment and, therefore, the relief allowed by the Ld.CIT(A) without any proper examination of the evidences brought on record was not correct.
At the time of hearing, none appeared on behalf of assessee nor any written submission has been submitted.
We have heard the Ld.CIT-DR and perused the material available on record as well as the orders of the authorities below. In the instant case, it is found that the assessee had filed additional evidences during the course of appellate proceedings, which were not filed at the stage of assessment proceedings. The additional evidences included “Corrected Audited Financials – Balance-Sheet and Profit and Loss Account”. It was explained that, during the course of appellate proceedings, by clerical mistake, balance-sheet and P&L A/c. prepared on 05/09/2017 were uploaded on Portal. As there were apparent errors in those accounts, the Auditors have withdrawn the same and issued a fresh signed account on 15/10/2017. Dy.CIT-3(1) Bhopal vs. UAC Commodities Pvt.Ltd. Asst.Y ear : 2017-18 4
However, due to clerical mistake, the correct set of accounts were not uploaded. The Ld.CIT(A) considering the fresh set of accounts as well as confirmation ledger submitted by the assessee dated 30/12/2019 in the books of the lender, i.e. Uniways Management Services held that the addition of Rs.1,94,84,40,126/- was not correct. It is found that the Ld.CIT(A) did not correctly follow the guideline as stipulated under Rule 46A(3) of Income Tax Rules, 1962 while admitting the additional evidences. The said Rule stipulates that the CIT(A) shall not take into account any evidence, that were not produced before the AO, without allowing a reasonable opportunity to the AO to examine the evidence/documents produced by the appellant. In the present case, the Ld.CIT(A) had accepted the confirmation ledger filed for the first time before him without verifying the correctness of this additional evidence. As per the requirement of Rule 46A(3) of IT Rules, the Ld.CIT(A) should have directed the AO to examine the additional evidence brought on record before him and called for a specific report on the correctness of the same. Since the Ld.CIT(A) did not follow the procedure for admitting the additional evidence, we deem it proper to set aside the issue back to the file of Ld.CIT(A) with a direction to call for a specific report from the AO on the correctness of the additional evidence/documents brought on record for the first time before him.
In the result, the appeal of the Revenue is treated as allowed for statistical purposes.
Order pronounced in the Open Court on 30th April, 2025 at Indore. ( PARESH M. JOSHI ) ACCOUNTANT MEMBER Dy.CIT-3(1) Bhopal vs. UAC Commodities Pvt.Ltd. Asst.Y ear : 2017-18 5
Dated 30/04/2025 टी.सी.नायर, व.िन.स./T.C. NAIR, Sr. PS
आदेशकी"ितिलिपअ"ेिषत/Copy of the Order forwarded to : 1. अपीलाथ"/ The Appellant
""थ"/ The Respondent. 3. संबंिधतआयकरआयु"/ Concerned CIT 4. आयकरआयु")अपील(/ The CIT(A)/(NFAC), Delhi 5. िवभागीय"ितिनिध,आयकरअपीलीयअिधकरण,इंदौर/DR,ITAT,Indore/Ahmedabad. 6. /Guard file. गाड"फाईल
आदेशानुसार/ BY ORDER,
स"ािपत"ित////
सहायकपंजीकार(Asstt.