INCOME TAX OFFICER, TUTICORIN vs. ATHISAYAPANI PRAVIN GEORGE, KAVALKINARU, TIRUNELVELI

आदेश / O R D E R PER AMITABH SHUKLA, A.M :

These appeals are filed against the order bearing DIN & Order No.ITBA/APL/S/250/2023-24/1058297557(1) dated 29.11.2023 of the Learned Commissioner of Income Tax [herein after “CIT(A)], for the

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assessment years 2021-22. Through the aforesaid appeals Nos.180 and 323 the Revenue and the assesse have respectively challenged order u/s 250 dated 29.11.2023 passed by Ld. CIT(A). ITA no 180/Chny/2024 2.0 We would like to take the appeal of the Revenue first. Through the aforementioned appeal Revenue has raised 4 grounds of appeal, inter-alia, challenging action of the CIT(A) in deleting additions by Ld. AO on account of notional interest, addition of allowing exempt income even though assesse was resident in India , doubtful bank deposits as well as violation of rule 46A .It is seen that the Revenue has raised an all important issue vide ground number 4 of violation of principle of Natural justice. The Ld. DR would like us to believe that the CIT appeal has awarded relief to the assesse by admitting and considering evidences which were not confronted to the Ld. AO. We find that the alleged violation by the Ld. First Appellate Authority is evidenced in this case. The Ld. Counsel for the assesse could not satisfactorily counter revenue’s arguments.

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3.0 Before proceeding further it is imperative to extract the statutory provisions governing Rule 46A

“……46A. Production of additional evidence before the Deputy Commissioner (Appeals) and Commissioner (Appeals).

(1)The appellant shall not be entitled to produce before the Deputy Commissioner (Appeals) or, as the case may be, the Commissioner (Appeals), any evidence, whether oral or documentary, other than the evidence produced by him during the course of proceedings before the Assessing Officer, except in the following circumstances, namely :- (a)where the Assessing Officer has refused to admit evidence which ought to have been admitted ; or(b)where the appellant was prevented by sufficient cause from producing the evidence which he was called upon to produce by the Assessing Officer; or(c)where the appellant was prevented by sufficient cause from producing before the Assessing Officer any evidence which is relevant to any ground of appeal ; or(d)where the Assessing Officer has made the order appealed against without giving sufficient opportunity to the appellant to adduce evidence relevant to any ground of appeal.(2)No evidence shall be admitted under sub-rule (1) unless the Deputy Commissioner (Appeals) or, as the case may be, the Commissioner (Appeals)

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records in writing the reasons for its admission.(3)The Deputy Commissioner (Appeals) or, as the case may be, the Commissioner (Appeals) shall not take into account any evidence produced under sub-rule (1) unless the Assessing Officer has been allowed a reasonable opportunity-(a)to examine the evidence or document or to 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.(4)Nothing contained in this rule shall affect the power of the Deputy Commissioner (Appeals) or, as the case may be, the Commissioner (Appeals) to direct the production of any document, or the examination of any witness, to enable him to dispose of the appeal, or for any other substantial cause including the enhancement of the assessment or penalty (whether on his own motion or on the request of the Assessing Officer) under clause (a) of sub-section (1) of section 251 or the imposition of penalty under section 271….”

4.0 A bare reading of the statute narrated herein above indicates that a CIT (Appeal) is empowered to admit additional evidence during appellate proceedings which were not or could not be produced during assessment proceedings or in the opinion of the First Appellate Authority are necessary for adjudication of pending appeal with the exception that

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the assessing officer would be given an opportunity to consider said evidences. 5.0 The Revenue can always claim to be an aggrieved party if it’s this right is violated. At the outset it is noted that no request was made by the assesse before the Ld. First Appellate Authority for admission of any additional evidence under rule 46 A. While making the impugned additions in the assessment order u/s 143(3) dated 16.02.2023 the Ld. AO, on page 2 of his order clearly noted that as against various details asked in support of its claims in the return, the assesse merely supplied a copy of its NRE bank account bearing number TMB 176100100300423. The assesse further didn’t respond to AOs show cause notices or even the draft assessment orders. The default of assesse qua non-compliance to AOs notice is established. 6.0 On the impugned matter we have also noted para 3.5 on page 3 of the order of Ld. CIT(A) supra , where in it is vividly evident that the Ld. CIT(A) entertained from assesse documents comprising copy of passport, emails communication from his employer, and copies of Bank account . Page 2 of AOs orders evidences that the Ld. AO had asked for these details. Within meanings of provisions of Rule 46 A supra, any information which the Ld. AO had asked during assessment proceedings cannot be considered by the Ld. First Appellate Authority for any relief

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unless the AO is provided an opportunity of examining the same. The order of Ld. First Appellate Authority thus falls in mischief of being violative of natural justice available to the AO. It is trite law that any order which is based upon violation of principles of natural justice cannot pass the test of any judicial scrutiny and deserves to be set aside. 7.0 Accordingly, the ground of appeal number 4 raised by the appellant Revenue is allowed and the order of Ld. First Appellate Authority is set aside. It is seen that the Ld. AO has also passed a cryptic order without properly marshelling evidences, many of which were not available. Hence the order of the Ld.AO is also set aside. Since, as observed by Hon’ble Apex court in the Tin Box company case, an AO always possesses first authority and responsibility to determine taxable income and there are clear indications in this case that the AO was neither provided requisite details during assessment proceedings nor was he afforded opportunity to examine those filed during Ld. First Appellate proceedings, the Ld. AO is directed to pass an assessment order De novo after giving adequate opportunity of being heard. The assesse is directed to file before the Ld. AO all evidences filed before the Ld. First Appellate Authority as well as any other details on which it may like to rely for completion of its assessment proceedings. Any non-compliance on the part of assesse can be adversely viewed. As we have set aside the

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orders of lower authorities and directed fresh assessment, the other grounds of appeal numbers 1-3 raised by the appellant revenue have become academic in nature bereft of any adjudication. 8.0 In the result the appeal of the department is allowed for statistical purposes.

ITA number 323/Chny/2024 9.0 The assesse through impugned appeal challenged the action of CIT appeal in confirming addition of Rs.18,15,000/- on the premises that the assesse was having non-resident status and therefore not liable to any action u/s 68 or 69A. 10.0 As decided vide appeal number 180 supra the order of Ld. First Appellate Authority and the Ld. AO has been set aside for making of an assessment de novo by the Ld. AO and the appeal of the department has therefore been allowed for statistical purposes. The decision of confirmation of addition, by the Ld. First Appellate Authority, challenged by the assesse, is based upon same set of details and evidences considered by CIT appeal, which were not confronted to Ld. AO. Accordingly, the appeal of the assesse is also allowed for statistical purposes. The Ld. AO will pass an assessment order de novo after giving all opportunities of being heard to the assesse.

ITA No.180 & 323/Chny/2024 :- 8 -: 11.0 In the result appeal of the assesse is allowed for statistical purposes. Order pronounced on 30th August, 2024 at Chennai. Sd/- Sd/- (एबी टी. वर्की) (अमिताभ शुक्ला) (ABY T VARKEY) (AMITABH SHUKLA) न्याययक सदस्य / Judicial Member लेखा सदस्य /Accountant Member चेन्नई/Chennai, ददनांक/Dated: 30th August, 2024. KB/- आदेश की प्रयतललपप अग्रेपषत/Copy to: 1. अपीलार्थी/Appellant 2. प्रत्यर्थी/Respondent 3. आयकर आयुक्त/CIT - Madurai 4. पवभागीय प्रयतयनधि/DR 5. गार्ड फाईल/GF .