DCIT 9(2)(2), MUMBAI vs. CITYGOLD EDUCATION RESEARCH P. LTD, MUMBAI

PER RAM LAL NEGI, JM

1. “Whether on the facts and circumstances of the case and in law, the CIT(A) has erred in deleting the addition of Rs. 67,50,000/- made u/s 68 of the I.T.Act by the A.O ignoring the fact that assessee company has not furnished basic details like the loan confirmation and PAN of the loan creditor to prove the genuineness of transaction.

2. Whether on the facts and circumstances of the case and in law, the CIT(A) was misguided in making factual incorrect finding that during the course of assessment proceedings the identity of the creditor stands proved by furnishing balance confirmation, name & address, PAN, ledger confirmation, bank statement reflecting receipt of loan whereas the assessment order clearly states that the assessee did not furnish confirmation of account from lender.”

4. Before us the Ld. Departmental Representative (DR) submitted that the A.O has rightly treated the amount of Rs. 67,50,000/-, shown by the assessee as advance received from M/s. Surya Builders & Developers, as unexplained cash credit u/s 68 of the Act, as the assessee did not furnish balance sheet and income tax return of the aforesaid company to prove its creditworthiness and genuineness of the transaction, even after getting sufficient opportunity. The assessee also failed to produce statements of accounts and confirmation etc. to substantiate its claim. The Ld. DR further submitted that the A.O has passed the assessment order relying on the judgments of Hon’ble Delhi High Court passed in CIT vs. Titan Securities, 357 ITR 184, and In CIT vs. Navodaya Castle Pvt. Ltd. 367 ITR 306. The Ld. CIT(A) has allowed the appeal of the assessee on the basis of additional evidence adduced by the assessee during appellate proceedings without giving notice to the assessing officer concerned.

5. On the other hand the Ld. Counsel for the assessee vehemently reiterated the stand of the assessee taken before the Ld. CIT(A) and submitted that the Ld. CIT(A) has rightly deleted the addition made by the A.O. The Ld. CIT(A) has jurisdiction to allow the additional evidence during appellate proceedings under rule 46(A) of the Income Tax Rules. Moreover, the case of the assessee is covered by the judgment of Guwhati High Court in the case of Nemi Chand Kothari vs. CIT (2014) 264 ITR 254 in which it has been held that it is not the business of the assessee to find out whether the source or sources from which the creditor had agreed to advance the amounts were genuine or not. The Ld. counsel further submitted that since the Ld. CIT(A) has deleted the addition in question in accordance with the principles of law laid down by the Hon’ble Supreme Court and the various High Courts and also on the basis of evidence on record, there is no scope to further interfere with the findings of the Ld. CIT(A). Hence, the appeal of the revenue is liable to be dismissed.

8. In Smt. Prabhavati S Shah’s case (1998 231 ITR 1) the Hon’ble jurisdictional High Court has held that that if prima facie evidence is necessary to examine the claim of the assessee, the CIT(A) should consider the necessary evidence in exercise of powers u/s 250(4) of the Act even if the case of the assessee does not fall within conditions prescribed under Rule 46(1) of the Income Tax Rules. Hence, in view of the law laid down by the Hon’ble High Court, there is no illegality in admitting additional evidence during the course of the appellate stage. Moreover, the Ld. CIT(A) has co-terminus power with that of the A.O to verify any fact brought on record even by way of additional evidence. In other words, the Ld. CIT(A) should either himself conduct inquiry/verification qua the additional evidence brought on record and record his findings after giving an opportunity to the AO to rebut the same or the same should be referred to the AO concerned to examine the issue afresh in the light of the additional evidence so admitted. However, it appears that in the present case neither the Ld. CIT(A) has himself verified the facts nor any remand report was obtained from the A.O. Hence, in our considered opinion the Ld. CIT(A) has passed the impugned order in violation of Rule 46A(3), without giving an opportunity of being heard to the AO to rebut the additional evidence adduced before him. The Hon’ble Gujarat High Court in CIT vs. Valimohmed Ahmedbhai(1982) 134 ITR (Guj) has held that where additional evidence is admitted during the course of appeal, the AO should be given an opportunity to meet with the additional material by way of cross examination, counter evidence and urging submissions qua the additional evidence. In the light of the facts of the present case and the principles of law discussed above, we are of the considered view that the AO should get an opportunity to examine the additional evidence admitted by the Ld. CIT(A). We accordingly set aside the findings of the Ld. CIT(A) and restore this issue to the file of the A.O for fresh adjudication in the light of the additional evidence adduced before the Ld. CIT(A), after affording reasonable opportunity of being heard to the assessee.

Order pronounced in the open court 31st January, 2017.