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Issues Involved:
1. Deletion of addition under Section 69 of the Income-tax Act, 1961, for unexplained investment in bogus purchases. 2. Admission of additional evidence by the CIT(A) without giving an opportunity to the Assessing Officer to examine and rebut it. Issue-wise Detailed Analysis: 1. Deletion of Addition under Section 69 for Unexplained Investment in Bogus Purchases: The Assessing Officer (AO) observed that purchases worth Rs. 1,89,454 from M/s. J.K. Industries and Birla Tyres were not included in the purchases account but were debited to the personal account of the company. Corresponding sales were also not reflected in the sales accounts. The AO estimated undisclosed sales at Rs. 4 lakhs and made an addition accordingly. The Commissioner of Income Tax (CIT) revised the order under Section 263, noting that the AO had overlooked the non-inclusion of these purchases in the purchase account. During the reassessment, the assessee explained that the purchases were recorded in the books of account and payments were made through bank drafts/cheques. However, the AO added the amount as unexplained investment under Section 69, citing the absence of a quantitative tally of opening and closing stock, purchase bills, and inventory of closing stock. On appeal, the CIT(A) deleted the addition, noting that the purchases were recorded in the cash book and payments were made through bank drafts/cheques. The CIT(A) found that the purchases were debited to the supplier's account and credited to OBC Bank Ltd., and thus did not constitute unexplained investment under Section 69. The CIT(A) also noted that the amount of Rs. 95,165 was adjusted against security and did not represent unrecorded purchases. The revenue, aggrieved by this order, filed an appeal. 2. Admission of Additional Evidence by the CIT(A) Without Opportunity for AO to Examine: The Departmental Representative argued that the assessee did not provide details about the purchases during the assessment proceedings and furnished them only before the CIT(A), constituting fresh evidence. The CIT(A) admitted this evidence without complying with Rule 46A(3), which requires the AO to be given an opportunity to examine and rebut the evidence. The CIT(A) neither recorded reasons for admitting the fresh evidence nor confronted the AO with it, violating Rule 46A(3). The assessee's counsel contended that the details furnished before the CIT(A) were not fresh evidence but related to the same transactions. The Tribunal, however, found that the details provided before the CIT(A), including certificates from M/s. J.K. Industries and Birla Tyres and photocopies of the cash book, constituted fresh evidence. The CIT(A) admitted and relied on this fresh evidence without recording reasons or allowing the AO to examine it, violating Rule 46A. The Tribunal cited various judicial precedents, including CIT v. Ranjit Kumar Choudhury, Bimal Kumar Anant Kumar v. CIT, and N.B. Surti Family Trust v. CIT, emphasizing that fresh evidence can only be admitted under specific conditions and must be confronted to the AO. The Tribunal concluded that the CIT(A) did not follow the mandatory requirements of Rule 46A. Conclusion: The Tribunal set aside the CIT(A)'s order and restored the appeal to the CIT(A) for a fresh decision as per law, complying with Rule 46A. Both parties are to be given a reasonable opportunity of being heard. The CIT(A) is directed to dispose of the appeal within three months from the receipt of the Tribunal's order. The grounds of appeal by the revenue are allowed for statistical purposes.
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