TEJAS ARVINDKUMAR DESAI,SURAT vs. INCOME TAX OFFICER, WARD 1(3)(3), SURAT

The appellant filed written submission before CIT(A) in response to the notices issued by him. He filed an affidavit and submitted that notices issued by AO could not be complied with due to change of address as appellant /AY.16-17 Tejas A Desai shifted to a new place. He also submitted that his accountant left him abruptly and the details could not be filed before AO. He has, however, submitted all relevant details and documents during the appellate proceedings. The CIT(A) did not find the reasons for non-compliance acceptable. He has referred to provisions of Rule-46A of Income-tax Rules, 1962 and observed that clauses(a) & (c) of Rule-46A(1) are not applicable in case of the appellant. Clause(b) of Rules 46A(1) requires appellant to prove that he was prevented by sufficient cause from producing evidences called upon by the AO. According to CIT(A), the appellant failed to prove that any sufficient cause existed which prevented him from filing details before AO. Therefore, plea of the appellant to admit additional evidence was rejected. The CIT(A) thereafter observed that appellant has claimed loss of Rs.2,05,83,103/- but in the submission filed that appellant had shown net loss of Rs.65,53,900/- on transactions in F&O segment. In the result, he confirmed the addition of Rs.2,83,68,387/- made by the AO.

Aggrieved by the order of CIT(A), the appellant has filed present appeal before the Tribunal. The Ld. AR submitted that the appellant could not file details before AO due to change of address and also due to the fact that the accountant of appellant left the job abruptly. He submitted that the appellant was prevented by sufficient cause from producing the evidences which he was called upon to produce by the AO. He, therefore, requested that one more opportunity may be granted to the appellant in the interest of justice.

We have heard the rival submissions of the parties and perused the materials available on record. We have also deliberated on the relevant provisions of the Act and the Rule regarding admission of additional evidence and power of CIT(A) to dispose of appeal. The appellant was engaged in share/securities transactions in different segments during the year under consideration. The Ld. AR has submitted that appellant could not file necessary details in support of his claim of loss in the share/securities transactions because his accountant left abruptly and also due to change of address to a new place. He had, however, submitted all details before the CIT(A) during appellate proceedings. The CIT(A) has declined to admit the additional evidences and has simply confirmed the addition made by the AO. This is against the principles of natural justice and the case has been decided without proper hearing of the case on merit. We have again considered the case in the light of the submissions made by the Ld. AR of the appellant. Rule-46A is intended to put fetters on the right of appellant to produce before the CIT(A) any evidence, whether oral or documentary, other than the evidence produced by him before the AO, except in the circumstances set out therein. The case of the appellant is clearly covered under clause(b) of sub-rule(1) of Rule 46A of the Rule which permits production of additional evidences before /AY.16-17 Tejas A Desai CIT(A) where the appellant was prevented by sufficient cause from producing the evidences which he was called upon before the AO. Further, it may be stated that under sub-section (4) of Section 250 of the Act, the CIT(A) is empowered to make further enquiry as he thinks fit or to direct AO to make further enquiry and report the result of such enquiry to him. If the appellate authorities fail to exercise his discretion judicially and arbitrarily refuses to make enquiry in a case where the facts and circumstances so demand, his action would be open to correction by higher authorities. In case of ITO vs. Bajoria Foundation, 117 Taxman 126 (Cal.), the Kolkata ITAT held that where assessment was done u/s 144 of the Act, the assessee obviously did not have opportunities to produce evidence before the AO. In such circumstance, if the assessee produce some evidence before the CIT(A), such additional evidence was clearly covered by clause-(c) of Rule-46A of the Income-tax Rules, 1962 and admission of same was within the powers vested in CIT(A) u/s 250(4) of the Act. In view of these facts and circumstances of the case and the decision cited supra we are of the considered opinion that the additional evidence produced before the CIT(A) should have been admitted. Considering all the facts and circumstances of the case, in the interest of justice, we set aside the order of CIT(A) and remit the matter back to the file of AO with a direction to pass de novo assessment order in accordance with law after granting adequate opportunity of hearing to assessee. The assessee is directed to be more vigilant and diligent and to furnish all details and explanation as needed by AO /AY.16-17 Tejas A Desai by not seeking adjournment without valid reason. With this direction, the grounds of appeal raised by the assessee is treated as allowed for statistical purposes.