2016 (3) TMI 1441 - AT - Income Tax

Admission of the additional evidences furnished before the ld. CIT(A) - CIT- A denied admission - HELD THAT - We find substance in the contentions of the ld. Counsel for the assessee. It is notable that even though the remand report of the AO was sought by the ld. CIT(A) on the said additional evidences he finally did not admit such evidences for consideration. Such an action of the ld. CIT(A) is not justified in view of the proposition made in the case of Sahrukh Khan vs. DCIT 2006 (7) TMI 532 - ITAT MUMBAI CIT(A) had called for the remand report on the additional evidences so furnished he has to admit the same on record for consideration on merits. CIT(A) however failed to do so but refused to admit the same which is not tenable in view of the aforesaid decisions. We further note that factum of calling of remand report on merits of the additional evidences etc. does not arise in the case of Moser Bear India Ltd. 2008 (12) TMI 19 - DELHI HIGH COURT relied upon by the ld. CIT(A). Therefore the decision of Hon ble Delhi High Court in our opinion does not help the Revenue having been rendered in different context. Besides on perusal of the impugned order it reveals that the ld. CIT(A) has not passed speaking order on merits of the case also by recording his specific findings on the objections of the AO and the submissions of the assessee but has simply endorsed the views taken by the AO in a very slip shod manner. Therefore the issues under consideration need fresh adjudication by the Revenue authorities. Since the Assessing Officer has to examine the additional evidences in order to verify the sundry creditors and to examine veracity of depreciation claimed it will be expedient in the interest of justice to restore the matter to the file of Assessing Officer for deciding both the issues de novo after considering the additional evidences noted above which shall be furnished by the Assessee before him in support of its claims. The Assessing Officer shall pass a speaking order in accordance with law - Appeal of the assessee is allowed for statistical purposes.

Summary

Issues:
Refusal to admit additional evidences, Sustenance of addition as bogus liability, Disallowance of depreciation.

Refusal to admit additional evidences:
The assessee challenged the assessment order due to the refusal to admit additional evidences before the ld. CIT(A). The AO rejected the evidences, stating that the assessee failed to provide sufficient cause for not producing them earlier. The ld. CIT(A) upheld the AO's decision based on the Delhi High Court ruling. However, the ITAT found the ld. CIT(A)'s action unjustified, citing precedents where the admission of additional evidence was mandatory after calling for a remand report. The ITAT directed the matter to be sent back to the AO for fresh adjudication, emphasizing the need for a speaking order and thorough examination of the additional evidences to verify sundry creditors and depreciation claims.

Sustenance of addition as bogus liability:
The AO disallowed a claim of Rs.26,91,22,083 as a bogus liability on account of sundry creditors due to lack of complete supporting details and documentary evidence. The ld. CIT(A) confirmed this disallowance, which the assessee challenged. However, the ITAT's decision to send the matter back to the AO for fresh adjudication implies a reevaluation of this disallowance in light of the additional evidences that the assessee will provide.

Disallowance of depreciation:
The AO disallowed depreciation of Rs.63,48,037 due to lack of complete supporting details and documentary evidence. The ld. CIT(A) confirmed this disallowance, which was also challenged by the assessee. The ITAT's decision to remand the matter to the AO for fresh adjudication includes a directive to reexamine this disallowance in conjunction with the additional evidences to be submitted by the assessee.

In conclusion, the ITAT allowed the appeal for statistical purposes, emphasizing the need for a thorough reevaluation by the Revenue authorities, specifically directing the AO to consider the additional evidences provided by the assessee and pass a speaking order after recording clear findings on the objections raised. The assessee was instructed to cooperate and not unduly delay the assessment proceedings.