2012 (2) TMI 583 - AT - Income Tax

Admission of additional evidence - Held that - We find that the first appellate authority has indeed relied on certain averments made during the course of hearing and written submissions filed before him, and the Commissioner of Income-tax based his conclusion on the averments made in this petition without appreciating that the same have not attained finality having been not accepted by the judicial authority before which the same have been made. This action of the CIT(A) in this behalf in our opinion is bad in law. Further the assessing officer has no occasion to go through these averments and offer his comments thereon. In the circumstances we are of the view that it would be in the interests of justice to set aside the order of the CIT(A) and restore the entire issue to the file of the assessing officer to re-examine the same and redecide the issue in accordance with law after giving reasonable opportunity of hearing to the assessee. Levy of surcharge - Held that - We find that issue is covered in favour of the Revenue by the decision of the Apex Court in the case of CIT V/s. Suresh N.Gupta (2008 (1) TMI 396 - SUPREME Court ) wherein it has been held that amendment to the proviso to S.113 though came into operation with effect from 1.6.2002 the same being clarificatory in nature is applicable even in respect of searches conducted prior to 1.6.2002 and as such the assessing officer was justified in levying surcharge. We accordingly set aside the order of the CIT(A) on this aspect allowing this ground of the Revenue. Cancellation of penalty levied by the assessing officer under S.158BFA - Held that - As we have set aside the order of the CIT(A) and restored the matter to the file of the assessing officer for redeciding the issue and reframing the assessment this penalty appeal has become infructuous and on that ground it is liable to be dismissed. We do so accordingly. We however hasten to add that while reframing the assessment in accordance with law in pursuance of our directions hereinabove the assessing officer would be at liberty to initiate fresh proceedings in terms of S.158BFA of the Act if deemed fit.

Summary

Issues:
1. Condonation of delay in filing the first appeal by the assessee before CIT(A).
2. Admission of additional evidence without affording an opportunity to the AO.
3. Violation of principles of natural justice and Rule 46A of the Act by CIT(A).
4. Computation of income based on seized material.
5. Levy of surcharge by the assessing officer.

Analysis:

1. Condonation of Delay:
The Revenue appealed against the CIT(A) condoning the delay in the filing of the first appeal by the assessee. The Revenue argued that the delay was unjustified and the assessee had shown disrespect to income-tax proceedings. However, the CIT(A) found that the delay was due to the assessee being held up in Delhi for prosecution cases by the CBI. The assessing officer could not fault the submissions of the assessee, and the delay was condoned based on genuine reasons. The ITAT upheld the CIT(A)'s decision, stating that there was no infirmity in condoning the delay.

2. Admission of Additional Evidence:
The Revenue contended that the CIT(A) admitted additional evidence without giving the AO an opportunity to comment, violating Rule 46A of the IT Rules and principles of natural justice. The ITAT found that the CIT(A) relied on certain averments without them attaining finality and without the AO's comments. As a result, the ITAT set aside the CIT(A)'s order and directed the issue to be reexamined by the assessing officer with a fair opportunity for the assessee.

3. Computation of Income and Surcharge:
The Revenue challenged the CIT(A)'s decision not to confirm the computation of income based on seized material and the levy of surcharge by the assessing officer. Due to the decision on the previous issue, the ITAT did not adjudicate on these grounds. However, the ITAT allowed the levy of surcharge based on a Supreme Court decision, setting aside the CIT(A)'s order on this aspect.

4. Penalty Appeal:
The Revenue's penalty appeal under S.158BFA became infructuous due to the decision on the quantum appeal issues. The ITAT dismissed the penalty appeal but allowed the assessing officer to initiate fresh proceedings under S.158BFA if necessary while reframing the assessment.

In conclusion, one appeal of the Revenue was partly allowed, while the other was dismissed. The ITAT provided detailed reasoning for each issue, ensuring fairness and adherence to legal principles in the judgment.