ITO (IT)2(1)(1), MUMBAI vs. ANIL GILBER DSILVA, MUMBAI

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ITA 1346/MUM/2015Status: DisposedITAT Mumbai24 January 2017AY 2011-128 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the CIT(A) erred by admitting additional evidence without confronting it to the AO, violating Rule 46A(3) of the Income Tax Rules. The matter was restored to the CIT(A) for readjudication after confronting the AO with the evidence.

What were the facts?

The Assessing Officer (AO) made an addition of Rs. 1,32,00,000/- as unexplained investment for a property purchase. The assessee, a non-resident, claimed the investment was made from explained sources and submitted voluminous documentary evidence before the CIT(A).

What were the issues?

Whether the CIT(A) erred in admitting additional evidence without providing the AO an opportunity to examine and rebut it. The validity of the ex-parte assessment order was not adjudicated.

Which sections of the Income-tax Act were involved?

Section 69,Section 143(1),Section 143(2),Section 142(1),Section 144

AI-generated summary — verify with the full judgment below

IN THE INCOME TAX APPELLATE TRIBUNAL A" BENCH; MUMBAI BEFORE SHRI RC SHARMA, AM AND SHRI RAVISH SOOD, JM B1or adla &./ IT.A. No.1346/Mum/2015 (uur adf Assessment Year: 2011-12) Income Tax Officer Anil Gilber D Silva (International Taxation)-2(1)(1), Th F/13 Aaram Society, Room No. 114, 1st FloOr; Scindia Vakola Market; Santacruz (E), House, Ballard Estate, Vs. Mumbai 400055 Mumbai- 400038 R4 Tq #Ni3e H/PANGIR No: AJYPDIO960L (rarff /Appellant)_ (ageff_ Respondent) 3af & 3R # Appellant by Wayrif &1 31 Respondent by Td1s &1 Td Date_of Hearing aI4u11 & ~RT Date_of_ Pronouncement Shri AK Dhondial Shri Hari Raheja 24/10/2016 24/01/2017 HLORDER PER RA VISH SOOD, JM: The brief facts of the case are that the assessee had filed his return of income aS on 10.01.2013 declaring income of Rs.51,100, which was processed as such under Sec.143(1) of the Income Tax Act; 1961 (for short Act ) The case of the assessee was thereafter taken up for scrutiny proceedings and Notice under Sec. 14302), dated 17.08.2013 was served at the address of the assessee available ITA No. 1346/Mum/2015 (A.Y. 2011-12) Mr. Anil Gilber D' silva on the record of the department. The A.O thereafter in order to ensure that the assessee was put to notice of the proceedings initiated in his case, thus once again served a Notice us 143(2) at his aforesaid address, as well as dropped a soft copy of the same at the e-mail address of the assesse. Thereafter; the A.O issued notices under Sec. 142(1) to the assessee and called upon him to effect compliance to the same and furnish replies to the queries so raised. That aS the assessee failed to effect any compliance to the aforesaid noticeslquery letter, and did neither appear before the A.O, nor furnished any reply to the queries So raised, therefore the AO proceeded with the assessment proceedings 2. That during the course of the assessment proceedings it came to the notice of the A.O that the assessee had during the year purchased a property for a consideration of Rs.1,32,00,000/-_ That in the absence of any material available on record Or any explanation forthcoming from the assessee as regards the nature and source of the aforesaid investment; the AO held the same a8 an 'Unexplained Investment'and made an addition of Rs.1,32,00,000/- to the total income of the assessee under Sec.69 of the Act' . The AO thereafter deliberating 0 certain other issues therein framed the assessment under Sec.144 and assessed the income at Rs.1,32,84,984. 3_ The assessee assailed the ex-parte assessment order before the CIT(A) That before the first appellate authority it was submitted by the assessee that he being a non-resident was employed in UAE and was not residing in India. It was submitted by the assessee that during his absence the notices issued by the department were received by his aged mother, who though to the best of her understanding forwarded the same to a representative for doing the needful, but the latter failed to effect compliance to the same It was thus submitted by the assessee that the ex-parte assessment was framed at his back; and he was never 3 ITA No. 1346/Mum/2015 (A.Y. 2011-12) Mr: Anil Gilber D'silva aware of the proceedings which were initiated in his case. That it was further submitted by the assessee that he had during the year under consideration purchased a 2BHK flat in Santa Cruz (E), Mumbai, for & consideration of Rs.1.32 crores (aprox) from his duly explained sources, and the A.O had erred in treating the same aS an unexplained investment under Sec.

69.

The assessee deliberating on the sources from where the investment had been made by him towards purchase of the aforesaid flat, thus for the first time came up before the CIT(A) with an explanation as regards the source of the same, as under:- Particulars Amount From Fixed Deposits From Sale of shares From Inward transfer to NRI Ac Rs. 27,12,146.00 Rs. 3,66,523.00 Rs: 24,67,480.00 Received as loan from Mr. Leo Fernandes: From Housing Loan from ICICI Bank Ltd Total Rs. 23,80,000.00 Rs: 53,00,000.00 Rs. 1,32,26,149.00 4 The assessee further in order to substantiate his explanation as regards the Nature and Source' of the aforesaid investment of Rs: 1,32,26,149/-(supra) made by him towards purchase of the FFlat at Santa Cruz (E), Mumbai;, therein vide his letter dated 20h August, 2014, submitted bifurcated details as regards the respective sources of his aforesaid investment ad placed 0n the record of the CIT(A) voluminous documentary evidence. That aS the fact that the assessee had placed on the record of the CIT(A) certain fresh evidence' will have a strong bearing on the adjudication of the present appeal before US, therefore the relevant extract of the aforesaid letter dated. 20.08.2014, which accompanied the abovementioned documents, is reproduced as under:- ITA No. 1346/Mum/20l5 (A.Y. 2011-12) Mr: Anil Gilber D' silva 1, Anil Gilbert D'Silva, a Non-Resident Indian based in the United Arab Emirates (UAE) wish to inform you that I have purchased a 2 BHK Flat in Santa Cruz (E), Mumbai- 400 029 in the year 2010-1l for a consideration of Rs.1.32 crore In order to raise the corsideration amount, the payments were derived from the following 3 sources: Own NRI saving Of amount of Rs.64 lakhs for the last few years. b) Home Loan from ICICI Bankfor an amount of Rs.53 lakhs. Personal loan from my in-laws for an amount of Rs.15 lakhs from family fixed deposits: Accordingly, attached herewith please find the following statements highlighting the sources of funds received and payments made to the buyer Mr: Dinesh Chowdhary: 1) Statement of sources and payments (Page 1-2) 2) Indian Bank statements of Anil D'Silva for the_ year 2008-2011. (Page 3-26). 3) Home Loan disbursement letter with copy of Home Loan Cheque (Page 27-29). Documents from United Arab Emirates (UAE) Salary certificate for the year 2010 and 2011 (Page-30-31) UAE Bank statements for the year 2008-2010 (Page 32-121) Statement of remittance from foreign exchange companies (Page 128-147) 5) Bank statement of Leo Fernandes (Father-in-law) for the year 2008-2011.(Page.128-147) Considering that I am a salaried employee, 1 humbly request you to please consider my case in a fair manner, as the abovementioned investment was made through the salaries that I have earned over a period of time. The CIT(A) acting upon the aforesaid voluminous documentary evidence which was made available on his record by the assessee for the first time, summarily admitted and accepted the same. The CIT(A) after considering the explanation of the assessee and perusing the 'Fresh . evidence placed on his record by the 5 ITA No. 1346/Mum/2015 (A.Y. 2011-12) Mr: Anil Gilber D silva assessee, therein concluded that as the assessee had duly demonstrated before him the source of the investment of Rs.1,32,00,000/- (supra) made towards purchase of the Flat' at Santa Cruz (E), Mumbai, therefore the addition s0 made by the AO under Sec.69 was completely unjustified, and deleted the same 5. We have heard the Ld. Authorized Representatives for both the parties, perused the orders of the lower authorities and the material available on record We have given a thoughtful consideration to the facts of the case, and are of the considered view that the A.O who had carried out service of the respective Notice's issued under Sec.143(2) and 142(1) of the *Act' at the address of the assessee available with his office, had tried his level best to put the assessee to notice a8 regards the assessment proceedings initiated in his case. The efforts on the part of the A.O can be well appreciated from the very fact that he had issued and effected service of the aforesaid notices on more than one occasion; SO much SO that service of a soft copy of the Notice under Sec. 143(2) was carried out by dropping the same at the e-mail address of the assessee. We find that as the CIT(A) had declined to accept the contention of the assessee that the ex-parte order had been passed without affording a reasonable opportunity to him; and the assessee had not assailed the said finding of the CIT(A) before US, We thus refrain from adverting to the issue as regards the validity of service of the notice. 6_ We find that the assessee had for the very first time submitted voluminous documentary evidence running into 127 pages before the CIT(A), which being in the nature of new evidence that was furnished for the very first time during the course 0f the appellate proceedings, thus undoubtedly took the color and character as that of 'additional evidence'_ We are of the considered view that though the voluminous 'additional evidence furnished by the assessee during the course of the appellate proceedings, therein did cast a statutory obligation on the CIT(A) to ITA No. 1346/Mum/2015 (A.Y. 2011-12) Mr. Anil Gilber D' silva have confronted the same to the A.O, before taking the same into account; however the CIT(A) acted in a whimsical manner and summarily admitted the said additional evidence" The CIT(A) after considering the explanation of the assessee in light of the *Fresh evidence' placed before him, therein concluded that as the source of investment in the 'Flat' purchased by the assessee, was found to be duly explained, therefore the A.O was unjustified in treating the same as an 'Unexplained investment' under Sec.69 of the Act' . 6_ We are unable to persuade ourselves to subscribe to the view which had been arrived at by the CIT(A) That it remains as a matter of an undisputed act that the .voluminous material running into 127 pages; which was furnished by the assessee for the first time before the CIT(A), was in the nature of additional Evidence' as the same was never produced by the assessee during the course of the assessment proceedings We are of the considered view that aS per the clear mandate of law, as stands contemplated in Rule 46A(3) of the Income Tax Rules 1962, the CIT(A) before taking into account ay additional evidence' which is furnished by an assessee during the course of appellate proceedings, remains under_ a statutory obligation to allow a reasonable opportunity to the AO to examine, rebut and therein raise objections a8 regards admission of the same by the first appellate authority. Thus to be brief and explicit; without prejudice to the fact that the CIT(A) is vested with a judicious discretion to allow a assessee to furnish additional evidence' during the course of the appellate proceedings, which too is to be exercised strictly as per the parameters and on satisfaction of the conditions contemplated under Rule 46A(1), he however continues to remain under a statutory obligation to confront ay such *additional evidence' which is furnished with him during the course of the appellate proceedings, before taking the same into account We are of the considered view that as in the present case the CIT(A) had failed to confront the voluminous *additional evidence' which was furnished ITA No. 1346/Mum/2015 (A.Y. 2011-12) Mr. Anil Gilber D' silva by tthe assessee during the course of the appellate proceedings, thus the A.O having not been confronted with the aforesaid additional evidence' had remained divested of his statutory right to examine, rebut and object to the admission of the same during the course of the appellate proceedings We thus, without expressing any view as regards the genuineness and veracity of the documents which had been furnished by the assessee by way of *additional evidence' during the course of the appellate proceedings, thus in all fairness restore the matter to the file of the CIT(A), with a direction that he shall readjudicate the case after confronting to the A.0 the additional evidence' which was furnished by the assessee during the course of the appellate proceedings, and allow him a reasonable opportunity to examine, rebut and object to admission of the said additional evidence as per the terms and parameters contemplated Ulrule 464 of the Income-tax rules, 1962. Needles to say, the CIT(A) during the course of such fresh adjudication shall afford sufficient opportunity of being heard to the assessee. The order of the CIT(A) is thus restored to his file; with a direction to pass a fresh order in terms of our aforesaid directions The appeal of the department is allowed for statistical purposes. Order pronounced in the open court on 24/01/2017 (RC. Sharma) (Ravish Sood) qrl %a4 Accountant Member 7iya H Judicial Member Ha;f Mumbai; favd Dated 24.01.2017 PS Rohit Kumar 8 ITA No. 1346/Mum/20l5 (A.Y. 2011-12) Mr. Anil Gilber D' silva 3tuaterf -Copy of the Order forwarded t 1 . 3aireff The Appellant 2. 9r2ff The Respondent 3. 31Yq7 ayqrd) / The CIT(A) 4. 3143R 314&7 CIT concerned 5. faurfly uafu;, a14ar ariiay &fearu, Tasf DR ITAT; Mumbai 6. TR +1a Guard File JRIHR/ BY ORDER 34NeT4G 4ufeT (Dy /Asstt: Registrar) 304or edi &fddru, yar / ITAT, Mumbai

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