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Facts
The appellant, an individual running a Vodafone Idea franchise, filed ITR for AY 2017-18 declaring an income of Rs. 4,10,100/-. The AO completed the assessment under Section 143(3), adding Rs. 15,00,500/- as unexplained cash deposits during the demonetisation period, citing the appellant's failure to produce sales registers and unauthorized acceptance of SBNs. The CIT(A) confirmed the AO's action and rejected additional evidence (paying slips, deposit slips) on the grounds that they were not produced before the AO.
Held
The ITAT held that the CIT(A)'s refusal to admit additional evidence was unreasonable, as the need for such evidence arises precisely because it was not produced before the AO. The ITAT reversed the CIT(A)'s order and remitted the case back to the CIT(A) with a direction to admit the additional evidence under Rule 46A of the I.T. Rules and decide the appeal on merits.
Key Issues
Whether the CIT(A) was justified in refusing to admit additional evidence during the appellate proceedings on the sole ground that it was not produced before the Assessing Officer.
Sections Cited
143(3), 46A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI INTURI RAMA RAO, AM & SHRI SOUNDARARAJAN K., JM
O R D E R Per: Inturi Rama Rao, AM This appeal filed by the assessee is directed against the order of the National Faceless Appeal Centre, Delhi [CIT(A)], dated 31.08.2023 for Assessment Year (AY) 2017-18.
Brief facts of the case are that the appellant is an individual engaged in the business of franchise of Vodafone Idea Ltd. The return of income for AY 2017-18 was filed on 06.11.2017declaring income of Rs. 4,10,100/-. Against the said return of income, the Sabu Joseph assessment was completed by the Income Tax Officer, Ward-4, Kottayam (hereinafter called "the AO") vide order dated 31.12.2019 passed u/s. 143(3) the Income Tax Act, 1961 (the Act) at a total income of Rs. 19,10,500/-. While doing so, the AO made addition of Rs. 15,00,500/- being cash deposits made during demonetisation period in SBN for the failure of the appellant to produce sales register for sale of recharge coupons of Vodafone, etc. It was also held that the appellant was not authorised to accept SBN during the demonetisation period. In the circumstances, the AO treated these cash deposits made during the demonetisation period as unexplained money of the assessee.
Being aggrieved, an appeal was filed before the CIT(A), who vide the impugned order confirmed the action of the AO by not admitting the additional evidence filed in the form of copies of paying slips, deposit slips by holding that the same were not produced before the AO.
Being aggrieved, the appellant is in appeal before us in the present appeal.
We have heard the rival contentions of both the parties and perused the material available on record. The only issue in the present appeal is whether the CIT(A) was justified in refusing to admit the additional evidences. The reasons given by the CIT(A) for refusing to admit the additional evidence is that the assessee has failed to file the same before the AO. In my considered opinion the Sabu Joseph CIT(A) had failed to appreciate the fundamental principle that the question of filing additional evidence before the first appellate authority arises only because the appellant had failed to produce the same before the AO. Thus the reason given by the CIT(A) in refusing to admit the additional evidence is unreasonable, does not stand by the eyes of law. Therefore, the order of the CIT(A) is reversed and remitted back to the file of the CIT(A) with a direction to admit the additional evidence under rule 46A of the I.T. Rules and decide the issues in appeal on merits in accordance with law after providing reasonable opportunity hearing to the assessee.
In the result, appeal filed by the assessee stands partly allowed.
Order pronounced in the open court on 11th March, 2025.