2014 (12) TMI 62 - HC - Income Tax

Admission of additional evidence u/s 46A Direction made to AO to re-compute the additional tax Opportunity of being heard provided or not - The AO acting on assessee s letter dated 10.08.1995 rectified the order u/s 143(1)(a) by reducing the disallowance u/s 43B to the extent of ₹ 61,04,000 - Held that - The Tribunal was rightly of the view that the AO made addition u/s 143(1) (a) in respect of accrued interest on term loans from financial institutions, which were debited to profit and loss account, but were not paid to said financial institutions - there is no question of entertaining any new evidence as same was already on the record of AO - assessee had duly intimated the AO about the wrong statement in original return of income before the intimation u/s 143(1)(a) was passed and had also furnished the revised computation of income with a request to treat the original return, revised to that extent - the assessee had intimated the AO about the wrong statement given by him at the time of filing of the return of income, but the same was not considered by the AO the order of the Tribunal is upheld Decided against revenue.

Summary

Issues involved:
Challenge to ITAT order by revenue regarding addition of accrued interest on term loan, CIT(A) allowing assessee's appeal, ITAT dismissing revenue's appeal, substantial questions of law formulated by the Court, error in deciding the matter by authorities, appeal for interference by the Court.

Analysis:

1. Challenge to ITAT Order:
The appellant-revenue challenged the order passed by the Income Tax Appellate Tribunal (ITAT) regarding the addition of accrued interest on a term loan. The Assessing Officer had made an addition in the income tax assessment, which was later rectified. The Commissioner of Income Tax (Appeals) allowed the assessee's appeal, leading to the revenue's appeal before the ITAT, which was subsequently dismissed. The appellant sought the Court's intervention, claiming errors by the lower authorities in deciding the matter.

2. Formulation of Substantial Questions of Law:
Upon admitting the appeal, the Court formulated substantial questions of law. These questions pertained to the ITAT's alleged error in confirming the CIT(A)'s order allowing additional evidence and the consideration of a letter by the Assessing Officer. The Court was tasked with determining whether the lower authorities had erred in law in their decisions.

3. Arguments and Observations:
The advocate for the appellant-revenue contended that both lower authorities had erred in deciding the matter and urged the Court to allow the appeal. Conversely, the advocate for the respondent-assessee supported the ITAT's order, stating that no interference was necessary. The ITAT's decision was based on the observation that the Assessing Officer had not considered a letter provided by the assessee, leading to the direction for recomputation of additional tax.

4. Court's Decision:
After hearing arguments from both parties and reviewing the material on record, the Court agreed with the ITAT's decision. The Court found that the assessee had informed the Assessing Officer about errors in the original return of income, which were not considered. Therefore, the Court upheld the ITAT's decision, stating that no interference was required. The appeal was dismissed in favor of the assessee, and the questions raised were answered against the revenue.

This detailed analysis of the judgment highlights the key issues, arguments presented, substantial questions of law, and the Court's decision, providing a comprehensive overview of the legal proceedings and outcomes.