2023 (2) TMI 1238 - AT - Income Tax

Admission of additional evidences CIT(A ) in violation of Rule 46A of the Income-tax Rules, 1962 - over-reporting of the value of time deposits deleted by CIT(A) - HELD THAT - Commissioner (Appeals) exercising statutory power vested with him has called for and examined necessary evidences for deciding the issue. Such exercise of power by learned first appellate authority assumes importance in the present case considering the fact that the assessee did not get a fair opportunity to represent his case before the AO. On a careful reading of the impugned order of Commissioner (A) it is very much clear that considering the fact that the assessee did not get a fair opportunity to represent his case before the AO, Commissioner (Appeals) took the responsibility upon himself to inquire into the matter and in the process has called for necessary evidences, not only from the assessee, but from the concerned bank through the assessee. After examining the evidences, Commissioner (Appeals) has factually found that the actual quantum of time deposits in Canara Bank was to the tune of Rs.9,50,00,000/-. He has further found that even Rs.9,50,00,000/- deposited in Canara Bank was out of overseas remittances from the income earned by the assessee as a resident in USA for past so many years. No contrary material has been brought on record by the Revenue to disturb the aforesaid factual findings of learned Commissioner (Appeals). Therefore, if, upon examining the material on record Commissioner (Appeals) has recorded a factual finding, without pointing out any deficiency or discrepancy in such finding, the decision of learned Commissioner (Appeals) cannot be reversed merely on the allegation of violation of Rule 46A. Revenue appeal dismissed.

Summary

Issues:
1. Alleged over-reporting of the value of time deposits without third party verification.
2. Acceptance of the genuineness of the source of investments without remand report.
3. Admission of additional evidences in violation of Rule 46A.

Analysis:

Issue 1: Alleged over-reporting of time deposits
The Revenue challenged the deletion of alleged over-reporting of time deposits without third-party verification. The Assessing Officer reopened the assessment due to unfiled returns and added an amount as unexplained investment. The assessee, a non-resident individual, contended that deposits were from NRI accounts and earned outside India. The Commissioner (Appeals) found discrepancies in the deposit amount and verified with the bank. The Commissioner deleted the differential amount based on bank statements.

Issue 2: Genuineness of source of investments
The Revenue questioned the acceptance of the source of investments without a remand report. The Commissioner found the source of the remaining amount to be from overseas earnings and remittances, deleting the balance addition. The Commissioner's decision was based on the source of credit entries in bank statements and income earned overseas, concluding no tax liability in India.

Issue 3: Admission of additional evidences
The core dispute revolved around the admission of additional evidences without forwarding them to the Assessing Officer. The Tribunal clarified that the first appellate authority has the power to inquire and call for evidence to decide an appeal. The Commissioner conducted a thorough examination considering the assessee's limited participation in the assessment proceedings. The Tribunal upheld the Commissioner's decision, emphasizing the statutory provisions empowering the first appellate authority to make necessary inquiries.

In conclusion, the Tribunal dismissed the Revenue's appeal, affirming the Commissioner's order based on factual findings and the authority's power to conduct inquiries. The decision highlighted the importance of fair opportunities for representation and the Commissioner's duty to examine evidence for a just resolution.