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Facts
The assessee's appeal challenges an order related to assessment year 2010-11. The original assessment was a best judgment assessment under section 144 as the assessee did not appear before the Assessing Officer. The Ld. CIT(A) made additions based on bank account details but granted partial relief. The assessee claims the deposited cash was from withdrawals and a gold loan.
Held
The Tribunal found that the Ld. CIT(A) did not follow the due procedure under Rule 46A of the Rules when admitting and considering additional evidence. Therefore, the order of the Ld. CIT(A) was set aside, and the matter was remanded back to the Ld. CIT(A) to follow the prescribed procedure.
Key Issues
Whether the Ld. CIT(A) erred in not following the due procedure under Rule 46A of the Income Tax Rules while admitting and adjudicating additional evidence filed by the assessee.
Sections Cited
144, 46A, 133(6)
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Income Tax Appellate Tribunal, MUMBAI BENCH “F”, MUMBAI
Before: SHRI OM PRAKASH KANT & SHRI SANDEEP SINGH KARHAIL
Per : OM PRAKASH KANT, Accountant Member:
This appeals by the assessee is directed against order dated 5/10/2023, passed by the Ld. Commissioner of Income Tax (Appeals) - National Faceless Appeal Center (NFAC), Delhi, (in short ‘the Ld. CIT(A)’) for Assessment Year 2010-11, raising following grounds:
“1 The order dated 05/12/2023 bearing No. ITBA/NFAC/S/250/2023-24/1058460800(1) Passed under section Saremal Nihalchand Jain 250 of Income Tax Act. 1961 by the Hon'ble CIT[Appeal], NFAC, DELHI is unreasonable, arbitrary, against the provisions of Income Tax Act, 1961 and therefore liable to be quashed.
2 On facts and circumstances of the case, and in law, the Honorable CIT[Appeal], NFAC, Delhi has erred in confirming the addition of Rs.5890940/-on account of cash deposited in the bank, even though Appellant had submitted evidence to support that the same is out of withdrawals of cash made earlier.
3 The appellant craves leave to add to, amend or alter the above grounds as may be deemed necessary.”
We have heard rival submissions of the parties and perused the relevant material on record.
The assessee in its grounds is aggrieved by the non considering of additional evidences filed by the assessee under rule 46A of the Income Tax Rules, 1962 ( in short ‘the Rules’). The relevant finding of the Ld. CIT(A) adjudicating issue in dispute is reproduced as under: “4.3 In the present case, the assessment has been completed under section 144. The assessing officer did all efforts to serve the notice even through affixture at the address available in the record. When the assessee did not comply, the assessment was completed by the assessing officer on the basis of bank account details received from the South Indian bank Itd. account number 0372053000013521 under section 133(6) of the Income Tax Act. The appellant has taken many pleas of bad health in the grounds of appeal but looking at the volume of business in transactions in shares and the loan business as claimed by appellant the pleas taken by appellant of bad health and age does not seem genuine. However during the course of appellate proceeding the appellant has submitted only a written submission in which it has claimed that the deposit of rupees 5890940/-which has been added by assessing
4.4 Further, out of an amount of Rs. 5890940/-, Rs. 810000/- is from gold loan from M/s Satkar co-operative credit society ltd. the appellant claims that the said amount was also deposited in the south indian bank in account of the assesse. The appellant has provided of receipts of loan taken from M/s Satkar co-operative credit society ltd amounting to Rs. 8,10,000/-.
4.5 The value of the previous withdrawals from south indian bank Itd. has been shown at Rs. 11478652. No other evidence has been submitted by the appellant regarding its business activity or otherwise regarding source of income. Now the appellant wants relief on the basis of business activity carried on by him, of loan providing.
4.6 In my opinion the amount deposited in the south Indian bank account in cash has not been explained by appellant with the help of evidence except loan of Rs. 810000/-, It has also not been demonstrated by appellant that his income is below taxable limit and hence he was not liable to file income tax return. The transactions undertaken by the appellant in the trading of shares are in crores and thus it is important to demonstrate that even after such a big trading business how come the income is not chargeable to tax. Even if there is a loss it should be brought on record in the income tax return to avail the benefit of loss sections in future. The appellant has not submitted any evidence with respect to fact that he is involved in any business activity which is source of cash deposit in the bank, the plea taken of previous withdrawal is also not acceptable because it is a very common for all the people to withdraw amount from bank account for various expenses but Withdrawing and not expending is very uncommon and is acceptable in only explained circumstances by the assessee. It is not possible to give any kind of relief to the appellant at this stage unless there is a proof of genuine business activity becoming the source of the credits in the bank account except for Rs. 810000/-. In such background a relief of Rs. 810000/- is granted from the addition of amount of rupees 5890940 and the balance is sustained. As a result the appeal is partly allowed.”
We find that Ld. CIT(A) has reduced the addition of Rs. 58,90,940/- and allowed relief of Rs. 8,10,000/-. We also note the assessee did not appear before the Assessing Officer and therefore the assessment was passed as a best judgment assessment in terms of the section 144 of the Income Tax Act, 1961(in short ‘the Act’). The assessee filed all the details in respect of deposit of 8,10,000/- and other deposits before the ld CIT(A). However Ld. CIT(A) without following the due procedure under rule 46A of Rules, allowed part relief to the assessee. Under the rule 46A, the Ld. CIT(A) was required to forward the additional evidences to the assessee for his comment on merit as well as objection for admitting of the additional evidence. No such procedure has been followed by the Ld. CIT(A) and therefore, finding of the Ld. CIT(A) is in violation of rule 46A of Rules. Therefore, we feel appropriate to set aside the order of the Ld. CIT(A) on the issue in dispute and refer the matter back to him with direction for following the due procedure of rule 46A in respect of the additional evidence filed by the assessee and after obtaining objections for admitting additional evidence as well as comment of the Assessing Officer on merit of the evidence, pass a reasoned and speaking order. The grounds of the appeal of the assessee are accordingly allowed for statistical purposes.
Order pronounced in the open court on 29.11.2024.