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Income Tax Appellate Tribunal, “C”, BENCH, MUMBAI
Before: SHRI RAJENDRA, AM & SHRI RAM LAL NEGI, JM
आदेश / O R D E R
PER RAM LAL NEGI, JM
This appeal has been filed by the revenue against the order dated 05.04.2016 passed by the Commissioner of Income Tax (Appeals)-3, Mumbai, pertaining to the Assessment Year 2012-13, whereby the Ld. CIT (A) has partly allowed the appeal filed by the assessee against assessment order passed u/s 143 (3) of the Income Tax Act, 1961 (for short ‘the Act’).
Brief facts of the case are that the assessee company engaged in the business of trading in plywood and allied products, filed its return of income for the assessment year under consideration declaring the total income of Rs. 87,69,020/-. Since the case was selected for scrutiny, the AO issued notice u/s 142 (1) of the Act, along with questionnaire. In response thereof the authorized representative appeared before the AO and submitted the details called for. During the course of assessment proceedings, the AO issued notices u/s 133 (6) of the Act to the four parties mentioned in the assessment order, from whom the assessee has shown purchases amounting to Rs. 66,95,541/- during the relevant period. However, no reply was received from three parties. Accordingly, the assessee was asked to produce the parties before the AO. The assessee submitted certain documents to prove the genuineness of the transaction, however, the assessee failed to prove the genuineness of transaction in respect of two parties from whom, the assessee had claimed made purchases holding that the transactions were not genuine.
Aggrieved by the assessment order, the assessee challenged the same before the Ld. CIT (A). During the course of appellate proceedings, the assessee submitted the details pertaining to the two parties from whom the purchases amounting to Rs. 66,95,541/-, including IT returns, statement of total income, balance sheet and P&L account, invoice copy of ledger, confirming the transaction, VAT challan etc. to prove the genuineness of the purchases in question. The Ld. CIT (A) after considering the documents produced before him allowed the said ground and deleted the addition made by the AO. The revenue is in appeal against the said order passed by the Ld. CIT (A).
The revenue has raised the following effective ground of appeal against the impugned order passed by the Ld. CIT (A):-
1. “On the facts and circumstances of the case and on law, the Ld. CIT (A) erred in cancelling the addition made u/s 69C of the Act by admitting additional evidence in course of appellate proceedings but not providing opportunity to the Assessing Officer to verify the same, in violation of Rule 46A of the I T Rules, 1962.”
5. Before us, the Ld. Departmental Representative (DR) submitted the Ld. CIT (A) has erred in deleting the addition made u/s 69C of the Act by admitting additional evidence in the course of appellate proceeding and not providing any opportunity to the Assessing Officer to verify the same. Since, the Ld. CIT (A) has admitted the additional evidence in violation rule 46A of the Income Tax Rules, 1962, the impugned order is liable to be set aside.
On the other hand, the Ld. counsel for the assessee submitted that since the first appellate authority has power to admit additional evidence under rule 46A of the Income Tax Rules, the Ld. CIT (A) has rightly admittedly documents submitted during the appellate proceedings and deleted the addition on the basis of the evidence on record. Moreover, no prejudice has been caused to the revenue as these documents had already been submitted before the AO, but by that time the AO had already passed the assessment order. Under these circumstances, the Ld. CIT (A) has rightly considered the said documents and deleted the addition. 7. We have heard the rival submissions and perused the material on record in the light of the rival contentions. The only grievance of the revenue is that the Ld. CIT (A) has wrongly deleted the addition made by the AO u/s 69C of the Act by admitting additional evidence in violation of rule 46A of the IT Rules. We notice that the Ld. CIT (A) has referred the documents produced by the appellant/assessee during the appellate proceedings and also considered those documents and on the basis of the said documents, the Ld. CIT (A) allowed the appeal of the assessee holding that since the transactions are genuine and there is no reason to sustain the addition. 8. Rule 46A of the IT Rules provides that the assessee is entitled to produce the additional evidence during the course of appellate proceedings where (a) the AO has refused to admit evidence which ought to have been admitted, or where (b) the appellant was prevented by sufficient cause from producing the evidence which he was called upon to produce by the AO or where (c) the appellant was prevented by sufficient cause from producing before the AO any evidence which is relevant to any ground of appeal or where (d) the AO has made the order appealed against without sufficient opportunity to the appellant to adduce evidence relevant to any ground of appeal
. In the present case, the assessee has contended that the documents were submitted before the AO, however, the AO had passed order by that time.
9. In view of the facts and circumstances of the case, we are of the considered view that since the assessee was entitled to produce the same before the appellate authority, the Ld. CIT(A) has rightly admitted the additional evidence adduced by the assessee. So far as the contention of the revenue that the AO was not given opportunity to examine the additional evidence, we notice that the Ld. CIT (A) has decided the appeal on the basis of additional evidence verifying the genuineness of the same or seeking remand report. So in our considered view the additional documents produced by the assessee during the appellate proceedings are required to be verified by the AO. We accordingly set aside the findings of the Ld. CIT (A) and send the appeal back to the AO for deciding the sole issue raised by the revenue in this appeal after due examination/verification of the additional evidence adduced by the assessee during the appellate proceedings.
In the result, appeal filed by the revenue for assessment year 2012-13 is partly allowed for statistical purposes.
Order pronounced in the open court on 6th July, 2018.