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Facts
The assessee, an individual running a wholesale food products business, had his assessment completed under section 147 r.w.s. 144 of the Act. Additions were made based on cash deposits of Rs. 2,78,45,600/-. The CIT(A), on appeal, considered fresh evidence and estimated income at 8% of gross receipts, making an addition of Rs. 23,20,595/-.
Held
The Tribunal noted that the admission of additional evidence by the CIT(A) without a remand report violated Rule 46A of the Income Tax Rules. Therefore, the matter was restored to the Assessing Officer (AO) for a fresh examination of the additional evidence and to provide the assessee with a reasonable opportunity of being heard.
Key Issues
Whether the CIT(A) erred in admitting additional evidence without a remand report and estimating income at 8% of gross sales?
Sections Cited
147, 144, 69A, 115BBE, 46A, 44AB
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI
Before: SHRI GEORGE GEORGE KAND SHRI S.R. RAGHUNATHA
& 2118/CHNY/2024 आदेश /O R D E R PER BENCH: These cross appeals is directed against the CIT(A)’s order dated 17.05.2024, passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Year is 2018-19.
Brief facts of the case are as follows: The assessee is an individual. He is having a wholesale business of food products under the name and style of M/s. Pooja enterprises. For the assessment year 2018-19, assessment was completed u/s.147 r.w.s. 144 of the Act vide order dated 01.03.2023. In the said assessment order, addition was made with reference to cash deposits made by the assessee amounting to Rs.2,78,45,600/- u/s.69A r.w.s. 115BBE of the Act.
Aggrieved, assessee filed appeal before the First Appellate Authority. Before the FAA, the assessee filed fresh evidence in the form of GST return and GST assessment. The CIT(A) without calling for a remand report held that assessee’s cash deposits are out of his business of running dealership of food products. The CIT(A) concluded that the income need to be assessed only at 8% of the gross receipts of Rs.2,90,07,437/-. Thereby making addition of Rs.23,20,595/- u/s.69A of the Act. & 2118/CHNY/2024
Aggrieved by the CIT(A)’s order, the assessee has filed an appeal (ITA No.1917/CHNY/2024) by challenging the estimation made at 8% of the gross sales. The Revenue being aggrieved, has also filed an appeal before ITAT in . In Revenue’s appeal, the primary ground is with reference to the admission of additional evidence by the CIT(A) in violation of provision of Rule 46A of the Income Tax Rules, 1962.
The ld.AR candidly admits that assessee before CIT(A) has filed additional evidence and there has been violation of Rule 46A of the Income Tax Rules. However, he submits that estimation made by the CIT(A) at 8% of the gross sales is on the higher side. The ld.AR has placed on record the profit ratio for the assessment years 2015- 16, 2016-17 and 2017-18. It was submitted by the ld.AR, for assessment years 2016-17 & 2017-18, books of accounts were audited u/s.44AB of the Act and the net profit ratio was only 3.77% for AY 2016-17 and 2.88% for AY 2017-18. It was further prayed by the ld.AR, if the case is to be remanded, the same may be remanded to the AO. The ld.DR was duly heard.
We have heard rival submissions and perused the material on record. The assessment in this case has been completed on best & 2118/CHNY/2024 judgment basis u/s.147 r.w.s. 144 of the Act, since there was non- appearance on the part of the assessee before the AO. Before the FAA, the assessee had filed additional evidences. The CIT(A) without calling for a remand report had made an estimation of income at 8% of the gross receipts. The admission of additional evidence without calling for a remand report is in violation of provision of Rule 46A of the Income Tax Rules, 1962. In light of the violation of provision of Rule 46A, we deem it appropriate to restore the matter to the files of the AO, since he did not have an occasion to examine / verify the additional evidence that was submitted before the FAA. The AO is directed to afford a reasonable opportunity of hearing to the assessee. The assessee shall co- operate with the Revenue and shall not seek adjournment without a valid reason. It is ordered accordingly.
In the result, the appeal filed by the assessee and the Revenue are allowed for statistical purposes.
Order pronounced in the open court on 18th November, 2024 at Chennai.