2012 (10) TMI 849 - AT - Income Tax

In genuine brokerage - CIT(A) allowed the claim on admitting additional evidence u/r 46A - Held that - On perusal of the record, it is found that AO has issued notice u/s 143(2) on 16.09.2009. He completed the assessment on 21.12.2009, meaning thereby the proceeding was alive only for a period of three months. The assessee has submitted before the AO that parties may not be easily accessible after a time gap. With one party, it had dealt with only once. Thus taking into consideration this aspect observed that assessee was prevented by sufficient reasons for not producing the evidence its case falls within the ambit of Rule I of Rule 46A. No reason to interfere in the order of CIT(A)and thereafter rightly deleted the addition - in favour of assessee.

Summary

Issues:
Appeal against deletion of additional evidence in violation of Rule 46A of IT Rules, 1962.

Analysis:
The case involved an appeal by the revenue against the deletion of Rs.10,48,340/- by the Ld. CIT(A) for AY 2007-08. The revenue contended that the Ld. CIT(A) erred in deleting the amount by allowing additional evidence in contravention of Rule 46A of the Income Tax Act Rules, 1962. The assessee had initially declared NIL income but during scrutiny, it was found that the company had shown income from real estate activities. The AO disallowed the claim of the assessee regarding brokerage payments to certain parties, leading to the addition of the disputed amount.

The assessee, dissatisfied with the addition, appealed before the Ld. CIT(A) and submitted additional evidence under Rule 46A to support the genuineness of the brokerage payments. The AO objected to the admission of additional evidence but agreed on the merits of the expenses. The Ld. CIT(A) considered the AO's objection but noted that due to the time gap, the parties involved might not be easily accessible, justifying the delayed submission of evidence. The Ld. CIT(A) admitted the additional evidence and subsequently deleted the addition based on the circumstances.

Upon careful review of the records, the ITAT found that the AO had a limited period to complete the assessment after issuing a notice to the assessee. Considering the difficulty in accessing the parties involved and the reasons provided by the assessee, the ITAT agreed with the Ld. CIT(A)'s decision to admit the additional evidence under Rule 46A. The ITAT concluded that the Ld. CIT(A) had appropriately entertained the additional evidence and rightly deleted the disputed amount.

In the final judgment, the ITAT dismissed the appeal of the revenue, stating that it lacked merit based on the circumstances and the proper application of Rule 46A by the Ld. CIT(A).