ITO, W-6(4), JAIPUR, JAIPUR vs. SHRINIWAS SHARMA, JAIPUR

It may be mentioned here that no challenge has been made by the Department to the impugned order by CIT(A) as regards deletion of the other addition. As regards the first mentioned addition under section 69A of the Act, when we advert to the impugned order passed in appeal, we find that in para 7.5 thereof, Learned CIT(A) specified production of record by the assessee-appellant in appeal i.e. copies of cash book, bank statements, details of sales and explanation regarding nature of his business. Learned AR for the assessee has placed on record copy of reply dated 16.09.2019 from the assessee to the Assessing Officer in reply to ITO vs. Shriniwas Sharma two notices u/s 142(1) i.e. on 19.09.2019 and 02.09.2019. Copies of the two notices have also been provided to us.

As per notice dated 02.09.2019, Assessing Officer had called upon the assessee to explain the source of cash deposited by him in his bank account during the year under consideration as well as demonetization period. Coming to the above said reply dated 16.09.2019, to the said notice, we find that the assessee annexed thereto copy of cash book for the period from 03.11.2016 to 22.12.2016 and “Ugai Bahi” for the same period, to justify the cash receipt, from time to time, from various vendtors/parties to whom the goods are stated to have been supplied. From the above reply, it becomes clear that the assessee did not produce before the Assessing Officer the cash book for the whole year under consideration, and rather produced there copy of relevant pages from the cash book pertaining to period from 03.11.2016 to 22.12.2016 and also “Ugai Bahi” , for the same limited period.

Record reveals that ultimately in the show cause notice dated 15.11.2019, issued to the assessee, as regards said fouramounts, the Assessing Officer, called upon the assessee to explain something else, i.e. reporting of zero turnover in the return of income, even though during the ITO vs. Shriniwas Sharma year under consideration, he had deposited cash of Rs. 25,00,000/-, Rs. 1,28,11,806/- , Rs. 1,29,21,923/- and Rs. 1,05,07,790/-. In other words, while issuing show cause notice dated 15.11.2019 from the Assessing Officer skipped the query to seeking justification of zero turnover, from the query initially raised i.e. as to the source of four cash deposit transactions by the assessee. This shows that while issuing show cause notice, the Assessing officer appears to have felt satisfied as regards the source of cash deposit transactions, with HDFC Bank .Otherwise, the Assessing Officer would have specifically mentioned even in the show cause notice dated 15.11.2019 that the assessee had failed to produce any documentary evidence to explain the source of cash deposit of Rs. 1,29,21,923/-, during the year under consideration.

Coming to the proceedings before Learned CIT(A), NFAC, from para 7.5 of the impugned order it transpires that the assessee had produced copies of cash book, bank statements, details of sales and explanation as regards nature of his business. Learned Counsel for the AR has drawn our attention to the show cause notice issued by the office of the Learned CIT(A) on 25.08.2022 whereby the assessee was requested to furnish copy of ITR and P & L ITO vs. Shriniwas Sharma account, balance sheet computation of income, bank statements of the aforesaid account with HDFC Bank, cash book, ledger, sale book, purchase book, stock register, sale bills, purchase book, bills/vouchers of expenses. Attention has been so drawn to submit that the requisite record was produced by the assessee before CIT(A), NFAC, as desired in the said notice, and only after its perusal the addition was vacated. No challenge to the direction by CIT(A) to assessee to produce records as per notice 12. It is noteworthy that in the course of arguments, learned DR has not challenged issuance of directions by CIT(A) to produce records as per the abovesaid notice.

Rule 46A of the Rules empowers Learned CIT(A) to take on record additional evidence in the manner prescribed therein. Sub-rule (3) of Rule 46A provides that the Commissioner (Appeals) shall not take into account any evidence produced under sub-rule (1) unless the Assessing Officer has allowed the reasonable opportunity - (a) to examine the evidence or document or cross examine, the witness produced by the appellant or (b) to produce any evidence or document or any witness in rebuttal of the additional evidence produced by the appellant.

It is only when he exercises his statutory suo motu power under the above sub-section that the requirements of r. 46A need not be followed. On the other hand, whenever the assessee who is in appeal before him invokes r. 46A, it is incumbent upon the CIT(A) to comply with the requirements of the rule strictly.” Case in hand is not a case where before CIT(A), the additional evidence was sought to be produced by the assessee. Rather, this is a case where CIT(A) himself directed production of additional evidence. Therefore, the bar put on the Commissioner (A) in exercising of powers for ITO vs. Shriniwas Sharma taking into account additional evidence allowed to be produced under sub- rule (1) of Rule 46A does not come in the way of the Commissioner (A) in taking into account such additional evidence, which he himself directed to be produced by the appellant.

In the given facts and circumstances, we find that the documents in the form of additional evidence produced before Learned CIT(A), as desired by the said authority, were necessary for dismissal of the appeal on ITO vs. Shriniwas Sharma merits. Revenue has not brought on record any material to suggest that any of the document requisition by Learned CIT(A) for dismissal of the appeal filed by the assessee, has been found to be false or fabricated or forced, so as to mislead CIT(A). In ITO, Ward -4(1) v. M/s Raj Maitry & Eskon Developer, pertaining to assessment year 2018-19, decided on 29.01.2024, Hon’ble Bench at Mumbai observed that substantive justice was delivered by Learned CIT(A) within the scope of powers given to him by statute and confirmed over the period by the superior Court, and as such no infirmity was found in the order passed by Learned CIT(A). Conclusion 18. In view of the above discussion, we find that Learned CIT(A), NFAC, felt justified firstly in directing the assessee to produce the additional evidence, as per notice dated 25.08.2013, and then in taking into account the said additional evidence for the purpose of disposal of the appeal. We also find that the impugned order does not suffer from any illegality or irregularity, simply because the Learned CIT(A) did not call for any report from the Assessing Officer for providing to the Assessing Officer any opportunity to examine the said evidence.