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Income Tax Appellate Tribunal, MUMBAI BENCHES “A”, MUMBAI
Before: SHRI G. MANJUNATHA (AM) & SHRI RAM LAL NEGI (JM)
O R D E R
PER RAM LAL NEGI, JM
This appeal has been filed by the revenue against the order dated 29.01.2018 passed by the Commissioner of Income Tax (Appeals) 45 (for short ‘the CIT(A), Mumbai, for the assessment year 2012-13, whereby the Ld. CIT(A) has partly allowed the appeal filed by the assessee against the assessment order passed u/s 144 of the Income Tax Act, 1961 (for short the ‘Act’).
2. Brief facts of the case are that the assessee engaged in the business of manufacturing of Moulds and Dies, filed its return of income for the assessment year under consideration declaring the total income of Rs. 4,85,220/-. Since, the case was selected for scrutiny, the Assessing Officer (AO) issued notice u/s 143 (2) and 142 (1), however, the AO did not receive any response from the assessee. Notice u/s 142 (1) was again issued for affording opportunity of being heard to the assessee. Again no response was received by the AO. Accordingly, the AO issued show cause notice stating that failure to Assessment Year: 2012-13 comply with the requirements would entail ex-parte proceedings. When the AO did not receive any response to the said notice, the AO passed assessment order u/s 144 of the Act and determined the total income of the assessee at Rs. 82,85,220/- after making addition of Rs. 28,00,000/- u/s 69 of the Act, on account of purchase of units of Mutual Funds and addition of Rs. 50,00,000/- paid towards consideration for purchase of immovable property. 3. The assessee challenged the assessment order passed u/s 144 of the Act before the Ld. CIT (A). The Ld. CIT (A) after hearing the assessee deleted both the additions holding the sources of the unexplained are available in the ITR-4 filed electronically by the assessee. Against the said findings of the Ld. CIT (A), the revenue is in appeal before the Tribunal. 4. The revenue has challenged the impugned order passed by the Ld. CIT (A) on the following effective grounds:- “1. Whether on the facts and circumstances of the case and in law, the Ld. CIT (A) erred in deleting the addition of Rs. 78,00,000/- made on account of unexplained investment u/s 69 of Income Tax Act, 1961 relying on fresh evidence without giving an opportunity under rule 46A to the AO before admitting it.
Whether on the facts and in circumstances of the case and in law, the Ld. CIT (A) erred in relyi9ng on the balance sheet as there were no books of account maintained by the assessee and gave relief of Rs. 78,00,000/- without giving an opportunity to the AO in this regard.”
Before us, the Ld. Departmental Representative (DR) submitted that the Ld. CIT (A) has wrongly deleted the addition of Rs. 78,00,000/- made on account of unexplained investment u/s 69 of the Act relying on fresh evidence without giving an opportunity under Rule 46A to the AO before admitting it. The Ld. DR further submitted that since the Ld. CIT (A) has decided the appeal on the basis of the additional evidence produced during the appellate Assessment Year: 2012-13 proceedings without giving opportunity to the AO to verify the genuineness of the documents, the order passed by the Ld. CIT (A) is liable to be set aside.
On the other hand, the Ld. counsel for the assessee relying on the order passed by the Ld. CIT (A) submitted that there is no infirmity in the impugned order to interfere with. The Ld. counsel further pointed out that since the AO had passed assessment order u/s 144 of the Act, the Ld. CIT (A) directed the assessee to produce the evidence under sub-rule 4 of the Rule 46A of the Income Tax Rules and in compliance thereof, the assessee filed complete copy of ITR including computation of income, statement, balance sheet and copy of bank statement. Since, there was a sufficient cause for non compliance of notice issued by the AO, the Ld. CIT (A) has rightly admitted the documents under clause B of rule 46A. The Ld. counsel further submitted that since these documents do not require investigation, the Ld. CIT (A) rightly verified the same and decided the appeal on merits. Therefore, there is no merit in the appeal of the revenue. 7. We have heard the rival submissions and carefully gone through the material on record. The Ld. CIT (A) has deleted the addition in question. The Ld. CIT (A) has deleted the additions in question holding as under:- “6.3 I have gone through the assessment order and the submissions made by the appellant along with printout of e- filed ITR-4, Balance Sheet and copy of Bank account of the assessee highlighting the relevant entries in ITR-4 and other documents. Verification of the ITR-4 shows that the assessee declared full value of consideration received under schedule ‘Capital Gain’ at Rs. 71,25,000/- and net capital gains of Rs. 45,78,620/-. In the Balance Sheet of the assessee investment in mutual funds of Rs. 28,00,000/- is separately shown. Therefore, there is enough evidence in ITR-4 for the source of investment made by the assessee, which is reported in AIR. In the best judgment assessment, the AO is supposed to examine all the material available with him and take a considered judgment. The AO could verified the ITR-4 filed and also could have written to the bank u/s 133(6) based on the Bank details Assessment Year: 2012-13 available in the Air, to call for statement of Bank account of the assessee and examined it before making a best judgment assessment. 6.4 However, it transpires from the record that the AO without examining the ITR-4 and without causing any enquiries, based on the AIR information, simply added the amounts appearing in the AIR. It is seen that, the source for the amounts of investments in Mutual Fund and also the flat purchased are available on record, the entries are appearing in the Balance Sheet maintained by the assessee. The bank account reflects the cheques received for sale of flat and factory and also debits reflects Rs. 28,00,000/- investment in Mutual Fund through JP Morgan and also the payments made for purchase of flat from Tirupati Developers by the appellant. After examination of the ITR-4, Balance Sheet and the Bank Account statement of the appellant, I am of the considered opinion that the investments in Mutual Funds and the flat purchased appearing in AIR have been made from accounted sources and there is no case for treating the same as unexplained investment. Therefore, the AO is directed to delete the additions made. This ground of appeal is allowed.”