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2012 (7) TMI 47 - AT - Income TaxViolation of Rule 46A - admission of additional evidences by Commissioner (Appeals) without allowing reasonable opportunity to the AO to examine the evidence and to rebut the same - ex-parte assessment completed by AO making addition on account of unexplained investment in relief RBI Bond - Held that - It is observed that CIT(A) admitted the additional evidence after considering the remand report from AO on just and reasonable grounds as the notices issued by the AO were not duly served on the assessee and due to this reason, the assessee was prevented from filing relevant evidence before the AO but the CIT(A) did not comply with the mandatory procedure as per Rule 46A (3) of the Rules as the AO has not been allowed reasonable opportunity to examine the evidence and to produce any evidence or documents in rebuttal of the additional evidence produced by the assessee. Therefore, matter remitted back to the file of CIT(A) for fresh adjudication - Decided in favor of Revenue for statistical purposes.
Issues involved:
Appeal against deletion of addition on unexplained investment in RBI Bond under IT Act, 1961 based on additional evidence admitted by CIT(A) in contravention of Rule 46-A of IT Rule, 1962. Analysis: 1. Issue of unexplained investment in RBI Bond: The AO made an addition of Rs.10 lakh to the assessee's income under section 69 of the IT Act due to lack of explanation regarding the investment in RBI bonds. The assessee invoked the CIT(A), who allowed the appeal based on admitting additional evidence. The CIT(A) noted that the assessee was prevented from furnishing evidence before the AO due to non-service of notices, leading to the deletion of the addition. 2. Admission of additional evidence: The Revenue contended that the CIT(A) erred in admitting additional evidence, arguing that the assessee avoided attending proceedings before the AO and directly submitted evidence to the CIT(A). The CIT(A) admitted the evidence without confronting it to the AO for examination and rebuttal. The assessee's representative justified the admission of additional evidence due to non-service of notices and the baseless nature of the addition. 3. Consideration of evidence by CIT(A): The ITAT observed that the CIT(A) sought comments from the AO on the admissibility of additional evidence. The AO objected to admitting the evidence, citing the assessee's non-participation in assessment proceedings. However, the CIT(A) noted that the AO did not comment on the merits of certain aspects related to the investment. The CIT(A) found the loan transaction from a specific individual reliable based on established identity, creditworthiness, and genuineness of the transaction. 4. Procedural irregularity: Despite finding the CIT(A)'s decision reasonable, the ITAT determined that the CIT(A) did not follow the mandatory procedure under Rule 46A of the IT Rules. The AO was not given a reasonable opportunity to examine and rebut the additional evidence submitted by the assessee. Consequently, the ITAT remitted the matter back to the CIT(A) for fresh adjudication, emphasizing the need to follow the required procedure and provide an opportunity for the assessee to be heard. 5. Conclusion: The ITAT treated the appeal of the Revenue as allowed for statistical purposes, emphasizing the importance of following procedural rules and providing a fair opportunity for both parties to present their case. The decision highlights the significance of adhering to procedural requirements in tax assessments to ensure a fair and transparent process.
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