2018 (6) TMI 1584 - AT - Income Tax

Unexplained investment in factory shed by applying provision of section 69A - Whether addition made on assumption, imagination and pure guess work? - admission of additional evidence - HELD THAT - Assessee had filed additional evidence in support of his claim that the expenditure on colour, plaster and flooring of shed was incurred by labour contractor Shri Rameshbhai Nishad proprietor of B. Shah & Co for which payment on account of plaster, clear and flooring of ₹ 1,50,000 was made by cheque No. 506224 dtd. 13.07.2007 and ₹ 1,05,000 by cheque no. 506229 dtd. 19.09.2007. These evidence were not filed before the AO and CIT (A) as manifests from assessment order as well as from appellate order. Therefore, the assessee urged before us to admit the same in exercise the powers under Rules 29 to 31 of Income Tax Appellate Tribunal Rules, 1963, as the omission to furnish these additional evidence in form of account ledger account, bank account statement, copy of bills of plaster, colour and flooring of shed and bills raised by contractor was neither willful nor unreasonable. Looking to the facts and circumstances of the case and law, we are of the view that these additional evidences filed under Rules 28 to 31 of Income Tax Appellate Tribunal Rules 1963, before the Tribunal by the assessee are necessary for proper appreciation of the issue under appeal and would cause of substantial justice - restore this appeal to the file of Ld. AO for allowing proper opportunity of being heard in accordance with law - Decided in favour of assessee for statistical purposes.

Summary

Issues:
1. Addition of &8377; 2,25,000 on account of unexplained investment in factory shed under section 69A of the Income Tax Act.

Analysis:
The appeal was against the order of the Commissioner of Income Tax (Appeals) relating to the Assessment Year 2008-09. The primary issue revolved around the confirmation of the addition of &8377; 2,25,000 as unexplained investment in a factory shed under section 69A of the Income Tax Act. The Assessee contended that the addition was made without proper substantiation, as the expenditure on the shed was supported by evidence of payment to a labor contractor. The additional evidence, including cheque payments for plaster, color, and flooring of the shed, was not presented before the Assessing Officer (AO) and the Commissioner of Income Tax (Appeals). The Tribunal allowed the admission of this evidence, emphasizing the importance of substantial justice and the enabling provision under the Income Tax Appellate Tribunal Rules. Citing relevant case law, the Tribunal highlighted the discretion to admit additional evidence in the interest of justice, even if not presented initially. The Tribunal, in line with the cited judgment, decided to admit the additional evidence for proper adjudication of the matter, emphasizing the importance of ensuring justice is not hindered due to inadvertent errors or omissions by parties. Consequently, the appeal was allowed for statistical purposes, and the case was remanded to the AO for further proceedings, with a directive for the Assessee to cooperate and present necessary evidence during the appeal process.

This detailed analysis of the judgment showcases the procedural and substantive considerations involved in the decision-making process of the Appellate Tribunal. The Tribunal's approach to admitting additional evidence, the reliance on relevant legal principles, and the emphasis on ensuring justice and fairness in the proceedings are evident in the judgment. The case serves as an example of the importance of following due process and allowing parties the opportunity to present crucial evidence for a just and comprehensive resolution of tax disputes.