2022 (4) TMI 37 - AT - Income Tax

Admission of certain additional evidences which are critical - CIT(A) not accepting the additional evidences filed by the assessee on the only ground that it was not accompanied by an affidavit - HELD THAT - The appellate authority acted in violation of rule 46A and the acceptance of the documents as additional evidence de hors rule 46A of the Rules, because the appellant is not entitled to produce oral or documentary evidence afresh before the appellate authority, as a matter of right. Under special and certain circumstances only, as mentioned, in clauses (a), (b ), (c) and (d) of rule 46A(1) additional evidence can be adduced. Rule 46A itself contains the principles of natural justice. That being so, sub-rule (4) of rule 46A does not permit to accept any additional evidence in contravention of the provisions of sub-rules (2) and (3) of rule 46A. The appellate authority is not permitted to act whimsically while exercising the jurisdiction under rule 46A of the Rules. Accordingly,these additional evidences which are now sought to be admitted would be in the interest of proper adjudication of the issues at hand, the same are hereby admitted and the matter is set-aside to the file of AO to examine the same and decide the matter as per law after providing reasonable opportunity to the assessee as the earlier order disputed is also passed u/s 144 and therefore we deem it fit to remand it back to the file of AO. The impugned order passed by the Lower authority is hereby quashed and set aside. The appeal is remanded to the AO, who shall make an endeavour to dispose of the entire appeal in accordance with law - Appeal of the assessee is allowed for statistical purposes.

Summary

Issues Involved:
1. Condonation of delay in filing the appeal.
2. Jurisdiction of the Income Tax Officer (ITO).
3. Non-service and late service of statutory notices.
4. Admission of additional evidence under Rule 46A.
5. Validity of the assessment order and penalty proceedings.

Detailed Analysis:

Condonation of Delay:
At the outset, the bench observed a delay of 30 days in filing the appeal by the assessee. The assessee's representative cited reasons such as festival season crowds and COVID-19 fears for the delay. The Revenue had no objection to the condonation request. After hearing the rival contentions and reviewing the materials on record, the Tribunal found merit in the assessee's prayer and condoned the 30-day delay.

Jurisdiction of the Income Tax Officer:
The assessee contended that the ITO, Ward 2(3), Alwar, lacked jurisdiction as the assessee resided in Madanganj, Kishangarh (Dist. Ajmer). The address mentioned in the assessment order and demand notice confirmed the assessee’s residence in Ajmer. Therefore, it was argued that the ITO should have transferred the case to the appropriate jurisdiction in Ajmer. The Tribunal noted this argument but did not provide a final ruling on jurisdiction, focusing instead on procedural issues.

Non-service and Late Service of Notices:
The assessee argued that notices under section 142(1) and 144 were either not served or served late. Specifically, notices issued on 14.11.2018 and 27.11.2018 were not received, and the notice under section 144 dated 03.12.2018 was received after the assessment order was passed. The Tribunal acknowledged these contentions, emphasizing the importance of proper service of notices for a valid assessment.

Admission of Additional Evidence under Rule 46A:
The assessee submitted additional evidence, including bank statements and certificates, to explain cash deposits. The CIT(A) had rejected these on procedural grounds, citing the absence of an affidavit accompanying the Rule 46A application. The Tribunal found that the CIT(A) erred in not considering the additional evidence, emphasizing that Rule 46A allows for the admission of additional evidence under specific circumstances. The Tribunal cited several High Court judgments supporting the admission of additional evidence to ensure proper adjudication.

Validity of the Assessment Order and Penalty Proceedings:
The Tribunal noted that the assessment order was passed ex-parte under section 144 due to the non-cooperative attitude of the assessee. The assessee argued that the amount of ?12,30,000/- mentioned as deposited in the bank was incorrect and provided evidence to support this claim. The Tribunal found that the CIT(A) acted in violation of Rule 46A by not admitting the additional evidence and remanded the case to the Assessing Officer (AO) for fresh examination. The AO was directed to verify the additional evidence and decide the matter as per law, providing reasonable opportunity to the assessee.

Conclusion:
The Tribunal allowed the appeal for statistical purposes, quashing the lower authority's order and remanding the case to the AO for a fresh adjudication. The AO was instructed to follow the established procedures under Rule 46A and provide the assessee with a reasonable opportunity to present their case. The Tribunal emphasized the importance of proper service of notices and jurisdictional correctness in assessment proceedings.