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Facts
The Revenue filed an appeal against the order of the Ld. CIT(A) who allowed the assessee's appeal, deleting an addition of Rs. 2,43,29,500/- made by the Assessing Officer as unexplained money. The assessee had declared total income of Rs. 77,80,030/-, and the case was reopened, leading to the addition under Section 69A of the Income Tax Act.
Held
The Tribunal held that the Ld. CIT(A) correctly admitted the documents produced by the assessee, as they were already on record before the Assessing Officer and did not constitute additional evidence. The Ld. CIT(A)'s decision to delete the addition was based on VAT and excise returns, which the assessee had provided. Therefore, the Revenue's appeal lacked merit.
Key Issues
Whether the Ld. CIT(A) erred in admitting evidence without giving the AO an opportunity to examine it, and whether the deletion of addition was justified based on the evidence presented.
Sections Cited
143(2), 142(1), 143(3), 69A, 68, 115JB, 250, 133A
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Income Tax Appellate Tribunal, DELHI
Before: SHRI S. RIFAUR RAHMAN & SHRI YOGESH KUMAR U.S.
PER YOGESH KUMAR, U.S. JM: The present appeal is filed by the Revenue against the order of Ld.
Commissioner of Income Tax (Appeals/ National Faceless Appeal Centre (‘Ld. CIT(A)/NFAC’ for short), New Delhi dated 10/06/2024 for the Assessment Year 2017-18.
Brief facts of the case are that, the Assessee filed return of income declaring total income of Rs. 77,80,030/-. The case of the Assessee was reopen through CASS and notice u/s 143(2) of the Income Tax Act, 1961 on the Assessee. An assessment order came to be passed on 18/12/2019 u/s 143(3) of the Act by making an addition of Rs.
2,43,29,500/- as unexplained money u/s 69A of the Act. Aggrieved by the assessment order dated 18/12/2019, the Assessee preferred an appeal before the Ld. CIT(A). The Ld. CIT(A) vide order dated 10/06/2024, allowed the Appeal of the Assessee. Aggrieved by the order of the Ld. CIT(A) dated 10/06/2024, the Revenue preferred the present Appeal.
The solitary grievance put forth by the Ld. Department's Representative that, the Ld. CIT(A) committed error in admitting the evidences filed by the Assessee and in violation of Rule 46A of the IT Rule 1962, without directing the A.O. to examine the additional evidences filed during the course of the proceedings and without controverting the findings of the A.O., admitted the evidence and deleted the addition, therefore, submitted that order of the Ld. CIT(A) deserves to be set aside.
Per contra, the Ld. Assessee's Representative vehemently submitted that the Assessee has not filed any application under Rule 46A of the Rules, 1962 (‘Rules’ for short) and the Ld. CIT(A) himself directed the Assessee to produce certain documents for the purpose of disposing the requirement to confront those document to the A.O. The Ld. Assessee's Representative justifying the action of the Ld. CIT(A) in admitting the documents and also deleting the addition, sought for dismissal of the Appeal.
We have heard both the parties and perused the material available on record. During the first appellate proceedings, while deleting the addition, the Ld. CIT(A) relied on the VAT return and excise Returns.
Further the Ld. CIT(A) has also asked for very same documents vide notice dated 06/05/2024 by exercising the power conferred u/s Rule 46A(4) of the Rules and deleted the additions in following manners:-
“3. Analysis and Decision: 3.1 The Assessing Officer in the order passed u/s.143(3) dated 18.12.2019 had scrutinized the issue of deposit of cash during the demonetization period. In such order he found that the total cash deposited by the assessee during demonetization period was Rs.2,53,29,500/-.After analyzing the issue from various angles, the Assessing Officer came to the conclusion that the claim of the assessee that the deposited cash was part of sale consideration immediately prior to the commencement of demonetization, was not acceptable and after giving credit of sum of Rs.10,00,000/- being the deposit made out of earlier withdrawals; the Assessing Officer made an addition of Rs.2,43,29,500/- to the total income of the assessee and considered it as unexplained cash credit u/s.68. 3.2 Aggrieved with the order, the assessee instituted the present appeal where it had raised many grounds of appeal but on merit the moot issue was the addition made by the Assessing Officer for Rs.2,43,29,500/- u/s.69, which was not only added in the normal computation of income but ACIT Vs. MS SPP Polymer Ltd. also added for the purpose of Minimum Alternate Tax (MAT) u/s.115JB. During the appeal proceedings, the assessee submitted the following:- 3.3 It stated that it is a company engaged in the business of manufacturing and trading of plastic packaging materials. Its Registered Office is at Delhi and its manufacturing plant is situated at Rudrapur in Uttarakhand State. It also stated that the final products as manufactured in the Uttarakhand State was sold through its Unit at Delhi, Rudrapur (Uttarakhand) and Kundli in Haryana. 3.4 It is stated that the Unit at Kundli started operating from 11.08.2016 when it got registered with the VAT authorities of State of Haryana. It also stated that the product manufactured by the assessee being non-woven fabric, was exempted from VAT in the State of Haryana and therefore, it transported its products from its manufacturing Unit at Rudrapur and sold them from the Haryana Unit at Kundli. In support of its claim, the assessee submitted the copy of quarterly VAT return of Rudrapur unit and Delhi unit for Financial Year 2015-16. It also claimed that the manufacturing Unit at Rudrapur (Uttarakhand) was not liable for payment of any Central Excise Duty as it was covered under 100% exemption for 10 years as per concessional industrial package of Uttarakhand Industrial Policy 2003. These were submitted for Financial Year 2015-16. The assessee stated for Financial Year 2016- 17, the 10 year exemption period of its Excise Duty at RudrapurUnit ended and therefore it started paying Central Excise Duty from May, 2016. It submitted the copy of Excise return from May, 2016 to March, 2017 for Financial Year 2016-17. It also submitted copies of VAT return for the Rudrapur Unit as well as Delhi Unit for Financial Year 2016- 17 and stated that the KundliUnit continued for exemption from VAT for Financial Year 2016-17. 3.5 The Assessing Officer in the assessment order did not take note of the business started at Kundli, Haryana from August, 2016 onwards. Therefore, he made the comparison of cash sales figure only with the available data of the preceding Financial Year, which is Financial Year 2015-16 relevant for Assessment Year 2016-17. 3.6 To be fair to the assessee for making comparison of its total sales as well as cash sales the return for Financial Year 2017-18 too had been requisitioned during the appeal proceedings. The assessee submitted Excise return of RudrapurUnit for Financial Year 2017-18, VAT returns of RudrapurUnit, Delhi Unit. After introduction of GST during Financial Year 2017-18, the exemption received by KundliUnit was withdrawn and it was covered under GST from July, 2017 onwards. To get a complete picture of the manufacture and trade of the assessee for Financial Years 2015-16 to 2017-18 such returns were perused and compared with the final accounts of the assessee during these three periods. On perusal of such data, I find ACIT Vs. MS SPP Polymer Ltd. that the total sales effected by the assessee during the three Financial Years are as follows:- Financial Year 2015-16Rs.52,24,36,311/- Financial Year 2016-17Rs.53,94,76,403/- Financial Year 2017
18. Rs.63,03,09,235/-
3.7 It is clearly seen that there was a substantial growth in sales of the assessee continuously from Financial Year 2015-16 to Financial Year 2017- 18. The amount of sales made through cash was around 7% of the total sales of the company. It is agreed that there was substantial increase in cash sales from Financial Year 2015-16 to Financial Year 2016-17. However, such increase in sales is continued for Financial Year 2017-18 too. The assessee claimed that the new Unit at Kundli, which was VAT free for a substantial period was the reason for sudden increase in cash sales of its products sold through that unit. Documentary evidence of beginning of such unit has been given and such data is found to be 11.08.2016 just three months prior to the demonetisation period. 3.8 Apart from this, the assessee also claimed that it had received a sum of Rs.29,44,902/- at its Delhi Unit during the months of September 2016 up to 8 th November, 2016, from sundry debtors to whom sales were effected prior to October, 2016. The entire cash of Rs.29,44,902/- was part of the total deposit made by the assessee during demonetisation period. Similarly, at RudrapurUnit such sum received from September, 2016 up to 8 th November, 2016 was Rs.42,03,743/- and the cash received from sundry debtors at KundliUnit was Rs.11,64,980/-. All these receipts were made in cash making a total of Rs.83,13,625/-. Therefore, the deposited cash of Rs.2,53,29,500/- constituted a substantial part of Rs.83,13,625/- received from sundry debtors in cash to whom sales were effected prior to the demonetisation period. This was, over and above, the cash sales made during this period. 3.9 I have considered the submission of the assessee. I have perused the audited accounts of the assessee and the statutory returns submitted by it to various authorities for indirect taxation. On perusal of all such data and the circumstances of the case, I find the explanation forwarded by the assessee is acceptable and reasonable. I also find that other than comparing with the sales figure (cash sales figure of other period) the Assessing Officer has not collected any information from any independent source to cross check the claims made by the assessee before him.Therefore, I direct the Assessing Officer to delete any addition made u/s.68 on account of deposit of cash in bank account as the source of such cash is clearly explained.
ACIT Vs. MS SPP Polymer Ltd. 3.10 The addition of Rs.2,43,29,500/- is, therefore, directed to be deleted both for normal computation and for computation of adjusted Book Profit taxed u/s.115JB. The appeal of the assessee is, therefore, allowed.”
It is evident from the copy of the notice issued u/s 250 of the Act by the Ld. CIT(A) placed at Page No. 51 to 183, the Ld. CIT(A) in exercising the power conferred under Rule 46A(4) of the Rules directed the Assessee to produce certain documents such as VAT Returns and Excise Returns.
Therefore, there is no requirement under law either to seek Remand Report form the A.O. or to confront those documents before admitting those documents. Apart from the same, the Assessee has already submitted those documents before the A.O. which are available on record, therefore, the documents produced by the Assessee before the Ld. CIT(A) cannot be held to be additional evidence.
The Hon'ble High Court of Madras in the case of Commissioner of Income Tax Vs. Standard Press (India) (P.) Ltd. reported [2023] 151 taxmann.com 94 (Madras), while dealing with the similar issue held as under:-
“The matter was carried in appeal by the Revenue before the Income Tax Appellate Tribunal, whereupon the order of the first appellate authority was confirmed on the premise that all the documents were furnished before the Assessing Officer and that there was no new material. The relevant portion in the order of the Tribunal is relevant and its is extracted below:-
After hearing rival contentions and going through the above facts narrated, we find that the Assessee has filed complete consolidation of both Profit & Loss account i.e. for head office as well as Mumbai branch. It is clear that there is a loss on Mumbai Branch of Rs. 6,08,85,738/- and profit of Rs. 6,83,00,406/- on head office at Sivakasi. The consolidated figure comes to net profit to Rs./ 76,14,663/- which is declared by the Assessee. We note that since the above details were incorporated in the relevant schedules in the audited accounts and return of income is field much before the survey conducted by the department u/s 133A of the Act, we find no reason to refer the matter back to the file of the A.O. particularly, when all the information were filed by the Assessee before him. Hence, we find no infirmity in the order of the Ld. CIT(A) deleting the addition. We confirm the order of the Ld. CIT(A) and dismiss this appeal of Revenue.”
Revenue is in appeal before this Court against the order of the Ld. Tribunal on the premise that the appellate authorities have erred in permitting the raising of additional evidence without affording an opportunity to the Assessing Officer and in violation of rule 46A of the Income tax Rules.
We find from the concurrent findings of the first appellate authority and also the tribunal that the documents assumed to be additional evidence were produced even before the Assessing Officer . As a matter of fact, the same was produce even during survey. Thus, the question of invoking Rule 46A of the Income-tax Rules does not even arise, in view of the fact that the alleged material, which was assumed to be the additional evidence, was always available before the Assessing Officer .
In the circumstances, we find no reason to interfere with the order impugned herein, for no question of law arises for consideration. Accordingly, this Tax Case Appeal is dismissed. No costs.”
under Rule 46A(4) of the Rules, suo-motu directed the Assessee to produce certain documents such as VAT Returns and Excise Returns, which were already produced before the A.O., in our considered view, there is no mandatory requirement in the law on the part of the Ld. CIT(A) either to seek Remand Report from the A.O. or to confront those documents to the A.O. before admitting those documents. Apart from the same, the Assessee has already submitted those documents before the A.O. which are available on record, therefore, by following the ratio laid down by the Hon'ble High Court of Madras in the case of Standard Press (India) (P.) Ltd. (supra) the documents so produced by the Assessee before the Ld. CIT(A) cannot be held to be additional evidence. Accordingly, we find no merits in the Grounds of appeal of the Revenue and we dismiss the grounds of appeal of the Revenue,
In the result, Appeal of the Revenue is dismissed.
Order pronounced in the open court on 23rd December, 2025 Sd/- Sd/-
(S. RIFAUR RAHMAN) (YOGESH KUMAR U.S.) ACCOUNTANT MEMBER JUDICIAL MEMBER Date:- 23.12.2025 R.N, Sr.P.S*