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2012 (7) TMI 67 - AT - Income TaxAdmission of additional evidences by CIT(A) without recording in writing the reasons thereof - assessee failed to produce any vouchers of expenses before the AO at the assessment stage - Rule 46A - Held that - Since no regular books of account were found maintained by the assessee in survey and no vouchers were produced during the course of survey and the assessment proceedings, therefore, there was chance that the assessee would have prepared the self-made vouchers for the first time at the appellate stage. Therefore, such self made vouchers and unsupported vouchers should not have been admitted at the first appellate stage and that too without assigning any reason for admission of the same. It, therefore, appears that CIT(A) without appreciating the facts of the case and without properly examining the material on record, has wrongly allowed the appeal of the assessee partly. The matter, therefore, requires reconsideration at the level of the CIT(A) and is directed to give reasons for admission of additional evidence in the appellate order as required u/r. 46A of the IT Rules - Decided in favor of Revenue
Issues Involved:
1. Deletion of disallowance of expenses due to absence of bills and vouchers. 2. Admission of additional evidence under Rule 46A of the IT Rules. 3. Exemption under Section 10(23C)(iiiad) of the IT Act. Issue-wise Detailed Analysis: 1. Deletion of Disallowance of Expenses: The Revenue challenged the order of the Commissioner of Income Tax (Appeals) [CIT(A)] for deleting the disallowance of expenses amounting to Rs.24,19,888/- due to the absence of bills and vouchers. The Assessing Officer (AO) noted that during the survey under Section 133A, no regular books of account or vouchers for expenses were found. The Secretary of the society admitted that no receipts of donations were issued to donors and no regular books of account were maintained. Consequently, the AO treated the gross receipts of Rs.25,55,966/- as income from other sources and disallowed the expenses claimed. The CIT(A), however, allowed the expenses by noting that the assessee produced a day-to-day cash book and ledger along with bills and vouchers. The CIT(A) restricted the disallowance to Rs.1,00,000/- due to the absence of regular books of account during the survey. 2. Admission of Additional Evidence under Rule 46A: The Revenue contended that the CIT(A) violated Rule 46A of the IT Rules, which governs the production of additional evidence at the appellate stage. The CIT(A) admitted additional evidence without recording reasons in writing for its admission. The AO, in the remand report, noted that the assessee produced certain bills and vouchers for the first time, which were self-made and unsigned. The CIT(A) failed to provide reasons for admitting these additional evidences and did not verify their authenticity properly. 3. Exemption under Section 10(23C)(iiiad): The assessee claimed exemption under Section 10(23C)(iiiad) of the IT Act, arguing that it was an educational institution with receipts below Rs.1 crore. However, the CIT(A) rejected this claim, noting that no such claim was made before the AO either in the return of income or during the assessment stage. The CIT(A)'s decision on this matter was not contested by the assessee, making it final. Conclusion: The Tribunal observed that the CIT(A) did not follow Rule 46A properly and failed to record reasons for admitting additional evidence. The Tribunal noted that the assessee did not maintain regular books of account and vouchers, and the CIT(A) should have verified the authenticity of the self-made vouchers. The Tribunal set aside the order of the CIT(A) and remanded the matter for reconsideration, directing the CIT(A) to follow Rule 46A strictly and provide reasons for admitting additional evidence. The appeal of the Revenue was allowed for statistical purposes.
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