2012 (12) TMI 125 - AT - Income Tax

Addition under Section 68 - additional evidence alleged that addition made under Section 68 without affording an opportunity to the assessing officer of being heard as envisaged in sub-Rule (3) of Rule 46A Held that - CIT (A) forwarded the additional evidences to the Assessing Officer for calling the remand report. In the remand report, the Assessing Officer objected for admission of additional evidences and CIT (A) admitted these evidences and granted the relief to the assessee without giving an opportunity to the Assessing Officer regarding the merits of the additional evidences. - matter restored to the file of AO for fresh decision.

Summary

Issues Involved:
1. Deletion of addition of Rs.75,55,000/- made under Section 68 of the Income Tax Act for unconfirmed share application money.
2. Deletion of addition of Rs.31,80,000/- made on account of advance booking of flats.
3. Acceptance of additional evidences by CIT (A) without following Rule 46A of the Income Tax Rules, 1962.

Issue-wise Detailed Analysis:

1. Deletion of Addition of Rs.75,55,000/- under Section 68:
The assessee challenged the addition of Rs.75,55,000/- made by the Assessing Officer (AO) under Section 68 of the Income Tax Act, which pertains to unconfirmed share application money. The CIT (A) deleted this addition, but the Revenue contended that the assessee did not discharge the onus of proving the existence, creditworthiness of the creditors, and the genuineness of the transactions. The Tribunal noted that the CIT (A) admitted additional evidence without giving the AO an opportunity to examine it, violating Rule 46A. The Tribunal set aside this issue to the AO for fresh adjudication, ensuring compliance with Rule 46A.

2. Deletion of Addition of Rs.31,80,000/- for Advance Booking of Flats:
The AO added Rs.31,80,000/- on account of advance booking of flats, which was also deleted by the CIT (A). The Revenue argued that the assessee did not provide necessary documents during the assessment proceedings to substantiate its claim. Similar to the first issue, the Tribunal found that the CIT (A) admitted additional evidence without following the procedure under Rule 46A. Consequently, this issue was also set aside to the AO for proper adjudication in respect of the additional evidence filed before the CIT (A).

3. Acceptance of Additional Evidences by CIT (A) without Following Rule 46A:
The Revenue raised a significant procedural issue, arguing that the CIT (A) violated Rule 46A by admitting additional evidence without giving the AO a reasonable opportunity to examine and rebut it. The Tribunal referred to the decision of the Hon'ble Delhi High Court in the case of CIT vs. Manish Buildwell Pvt. Ltd., which emphasized strict compliance with Rule 46A. The Tribunal highlighted that Rule 46A mandates the CIT (A) to record reasons for admitting additional evidence and to provide the AO a reasonable opportunity to examine and rebut the evidence. The Tribunal noted that the CIT (A) failed to comply with sub-rule (3) of Rule 46A, which requires the AO to be given a reasonable opportunity to examine the additional evidence. Consequently, the Tribunal set aside all issues to the AO for fresh adjudication, ensuring adherence to Rule 46A.

Conclusion:
The Tribunal allowed the Revenue's appeal for statistical purposes, setting aside all issues to the AO for fresh adjudication in compliance with Rule 46A of the Income Tax Rules, 1962. The Tribunal emphasized the importance of procedural compliance when admitting additional evidence at the appellate stage.