RUPINDER SINGH KHURANA,NOIDA vs. ADDL. CIT, NEW DELHI

The present appeal has been filed by the assessee assailing the correctness of the order dated 22.01.2016 of CIT(A)-33, New Delhi pertaining to 2008-09 AY on the following grounds:-

1. “Addition made by CIT & Addl. CIT is wrong and bad in law.

2. The order passed by AO is illegal as CIT(A) has no power to remand the matter and any assessment made consequent to an such direction is illegal and nonest.”

2. At the time of hearing, an adjournment was moved by the Ld.Sr.DR who was stated to be on leave and by the Ld.AR who pleaded prior commitments. However, considering the material available on record, the said requests were rejected. The record shows that the assessee in the year under consideration returned an income of Rs.10,39,500/- consisting of salary income from Angelz Technologies Pvt.Ltd. and rental income from property at E-549, Greater Kailash-1, New Delhi. The case was selected for scrutiny in view of the AIR information which disclosed that cash of Rs.10,70,000/- had been deposited in the bank account of the assessee in the ICICI Bank Ltd.

3. The assessee was required to explain the same. Not convinced with the explanation offered, the addition of the said amount was made in the hands of the assessee by the AO.

I.T.A .No.-1526/Del/2016 4. The issue travelled in appeal before the CIT(A). The assessee filed a petition before the CIT(A) seeking admission of fresh evidences under Rule 46A. The said request was considered by the CIT(A) in the following manner:-

6. I have gone through the assessment order and the submissions of the AR filed in this regard. 7. According to the AR< the appellant has received cash of Rs.17,50,000 in pursuance of Bayana agreement executed between the appellant and M/s Intiqua India Limited on 14.08.2007 in respect of sale of 1800 sq ft situated at LGF, E-549, G.K Part-II, New Delhi. The contention of the AR is that Rs.10,70,000 deposited in the Bank account is out the above advance. Since there was no proper explanation and evidence, the AO made the addition. 8. In the course of these proceedings, the AR has brought on record the confirmation letter and the P&L a/c and Balance sheet and also break up of advances of Rs.4,00,00,000 figuring in the balance sheet of the said company which included the advance made to the appellant. 9. There is some force in the arguments of the AR. However, the documents mentioned above were not made available to the AO for examination. In view of these facts, the AO is hereby directed to verify the documents and if he is satisfied with the genuineness of the documents and explanation, no addition is called for. The issue is set aside for limited verification.” (emphasis provided) 5. Considering the grievance of the assessee and statutory requirements as set out in section 251(1)(a) of the Income Tax Act, 1961 and requirements of Rule 46A of the I.T.Rules 1963, it is seen that the procedure followed by the Ld. Commissioner (Appeals) is not in-conformity with the Act and the Rules. The decision to admit fresh evidence is not in question in the present proceedings, it is the procedure followed after admitting the same which is questioned. The Statute no longer permit the CIT(A) to set aside the issue. After the amendment of the Income Tax Act, 1961 by the Finance Act, 2001 w.e.f.

01.06.2001 the power to set aside is no longer available to the Commissioner (Appeals).

The Statute in unambiguous terms encompasses the powers of the Commissioner (Appeals) under clause (a) of sub-section (1) of section 251 to “confirm, reduce, enhance or annul the assessment.” Thus even if fresh evidence is admitted the issue Page 2 of 3

I.T.A .No.-1526/Del/2016 can not be set aside by the Commissioner (Appeals) to the AO as then following the procedure set out in Rule 46A, the Commissioner (Appeals) is required to confront the same to the AO and obtain a Remand Report thereon. In the facts of the present case, the procedure prescribed under sub-Rule (3) of Rule 46A is required to be followed. It is only after obtaining a Remand Report and confronting the same to the assessee that the Commissioner (Appeals) can be said to have passed a speaking order in accordance with law. Accordingly, in view of this patent and obvious procedural and statutory shortcomings, the impugned order is set aside and the issue is restored back to the file of the CIT(A). The fresh evidences placed on record by the assessee taken on record by the said authority shall now be required to be confronted to the AO and only after obtaining a Remand Report and hearing the assessee thereon, the CIT(A) shall pass a speaking order in accordance with law. The said order was pronounced in the open Court at the time of hearing itself.