2017 (1) TMI 1795 - AT - Income Tax

Unexplained cash receipt - CIT-A deleted the addition admitting additional evidences - whether admission of addition evidence tantamount to violation of rule 46A? - AO mentioned that except the certificate from Mr. Japuria Infrastructure Developers Private Limited, the assessee did not produce any evidence for establishing that details seized during the course of search action in reference did not belong to the assessee - HELD THAT - CIT-A rejected the above contention of the Assessing Officer stating that it was not the correct statement of facts - we find that the CIT (Appeals) has not given any reasons as how it was not correct statement of facts. He neither brought on record any evidence in support that those documents were filed before the AO nor confronted those documents to the AO - Further, we find that before us the learned counsel of the assessee referred to the letter dated 25th of March 2013 of the Authorized Representative the assessee , which is claimed to have containing all the said documents and filed before the Assessing Officer. On perusal of the said letter, we find that it is not containing any evidence of acknowledgement of the letter by the Assessing Officer or his office and can t prove conclusively that those documents were filed before the Assessing Officer. In such circumstances, following the principles of Natural Justice and Income-tax Rules, Commissioner of Income-tax (Appeals) was required to direct the assessee for filing those documents as additional evidences and those documents should have been sent to the Assessing Officer for his comments, but he did not do so. We feel it appropriate to restore the matter to the file of learned Commissioner of Income-tax (Appeals) to decide the issue afresh with the direction to consider the documents, which were not produced before the Assessing Office but filed by the assessee before him, in accordance with the Rule 46A of the Income-tax Rules, 1962 and accordingly, decide the issue of addition in accordance with law. Revenue appeal allowed for statistical purposes.

Summary

Issues:
1. Validity of reassessment proceedings based on seized documents.
2. Admissibility of additional evidence in appeal.
3. Compliance with Rule 46A of the Income Tax Rules.

Issue 1: Validity of reassessment proceedings based on seized documents:
The case involved the reassessment of income for assessment year 2005-06 due to incriminating documents indicating unaccounted cash receipts of Rs.2.62 crores. The Assessing Officer issued notice under section 148 of the Income-tax Act based on these documents. The assessee challenged the reopening of assessment, arguing that the seized papers did not pertain to them. The Commissioner of Income-tax (Appeals) upheld the legality of the reassessment but deleted the addition as the seized documents were found unrelated to the assessee. This led to the Revenue appealing to the Tribunal.

Issue 2: Admissibility of additional evidence in appeal:
The Senior Departmental Representative contended that the additional documents submitted by the assessee before the Commissioner of Income-tax (Appeals) were not provided to the Assessing Officer for rebuttal, violating Rule 46A of the Income Tax Rules. The assessee's counsel argued that these documents were already submitted to the Assessing Officer. The Tribunal found discrepancies in the submission of documents and lack of evidence of their submission to the Assessing Officer, emphasizing the importance of following natural justice principles and Income-tax Rules in admitting additional evidence.

Issue 3: Compliance with Rule 46A of the Income Tax Rules:
The Tribunal noted that the Commissioner of Income-tax (Appeals) failed to follow Rule 46A of the Income Tax Rules by admitting additional evidence without giving the Assessing Officer an opportunity to comment on it. As a result, the Tribunal decided to remand the matter back to the Commissioner of Income-tax (Appeals) for a fresh decision, directing the consideration of all documents in accordance with Rule 46A and the principles of natural justice.

In conclusion, the appeal was allowed for statistical purposes, emphasizing the importance of procedural compliance and fair consideration of evidence in tax assessment proceedings.