2023 (3) TMI 277 - AT - Income Tax

Unexplained investment u/s 69 - CIT-A deleted addition admitting the additional evidences - sufficient reasons for complete non-compliance during assessment stage which is a pre-condition for accepting additional evidence under Rule 46A of the I.T. Rules,1962 - HELD THAT - We note that ld. CIT(A) has erred in admitting additional evidences, apart from the above, Ld. CIT(A) did not record reasons in writing for admitting additional evidences. We note that during the appellate proceedings, the assessee has not raised additional ground. The assessee furnished only additional evidences. Therefore, findings of ld CIT(A) that he had admitted additional ground, is factually incorrect. CIT(A) has not explained in his order that which issue he has adjudicated by way of additional ground. CIT(A) did not explain in his order the exceptional clause (a) to (d) of Rule 46A, which are (a) the Assessing Officer has refused to admit evidence(s); or (b) Assessee was prevented by sufficient cause from producing the evidence which he was called upon by the Assessing Officer; or (c) assessee was prevented by sufficient cause from producing before the Assessing Officer which is relevant to any ground of appeal; or (d) The Assessing Officer has made the order without giving sufficient opportunity to the assessee to adduce evidence relevant to any ground of appeal. Hence, we note that ld CIT(A) did not deal with these exceptions of Rule 46A, therefore, ld CIT(A) accepted the additional evidences in violation of Rule 46A of the Rules, which is not tenable in law. CIT(A) erred in admitting that source of investment of pound sterling for share of company namely Flightcare Ltd., in the name of Shri Nurudin Ajania i.e., husband of the assessee - there was no name of the assessee i.e., Smt. Shehnaz Nurdin Ajania. Besides, the learned CIT(A) also erred in admitting that source of investment of Rs.50,00,000/- as opening balance and other credits in bank account was jointly. We note that in the remand report, the assessing office mentioned that there is no details received from the Indian Banks. The assessing officer further mentioned that details received HSBC Bank, the source of investment was not clearly mentioned. Even in remand proceedings, the assessing officer did not get opportunity to verify these details hence it is a complete violation of Rule 46A of the Rules, therefore, we are of the view that matter may be remitted back to the file of the Assessing Officer for fresh examination of these documents and details. Hence, due to proceedings, and even in remand proceedings, the assessee has not submitted entire details before the assessing officer and there is no findings by ld CIT(A) on additional ground, therefore, we are of the view that an opportunity should be given to Assessing Officer to verify these documents and details. Therefore, we accept the prayer of Ld DR for the Revenue, and set aside the order of CIT(A) and remand the various issues raised by the assessee in the grounds of appeal before CIT(A) for fresh consideration - Appeal of the Revenue is allowed for statistical purposes.

Issues Involved:

1. Condonation of delay in filing the appeal.
2. Admissibility of additional evidence under Rule 46A of the Income-tax Rules, 1962.
3. Unexplained investment in mutual funds amounting to Rs. 4,05,00,000.
4. Source of investment in the name of the assessee's husband.
5. Deletion of addition made by the Assessing Officer under Section 69 of the Income Tax Act.

Detailed Analysis:

1. Condonation of Delay in Filing the Appeal:

The Revenue's appeal was delayed by 91 days. The delay was attributed to the COVID-19 pandemic, and the Revenue cited the Hon'ble Supreme Court's judgment in suo motu Writ (S) No.3 of 2020, which extended the limitation period for filing appeals. The Tribunal condoned the delay after considering the petition and the concession given by the Ld. DR for the Revenue, with no objection from the assessee.

2. Admissibility of Additional Evidence under Rule 46A:

The primary issue raised by the Revenue was the CIT(A)'s admission of additional evidence in contravention of Rule 46A of the Income-tax Rules, 1962. The Revenue argued that the assessee failed to justify that her case fell within the exception clauses of Rule 46A(1) and that the CIT(A) did not record detailed reasons for admitting the additional evidence, which is a sine qua non under Rule 46A(2). The Tribunal noted that the CIT(A) did not address the exceptional clauses (a) to (d) of Rule 46A and admitted the additional evidence without proper justification, thus violating Rule 46A.

3. Unexplained Investment in Mutual Funds:

During the assessment proceedings, the Assessing Officer observed that the assessee had made an investment of Rs. 4,05,00,000 in mutual funds during the financial year 2010-11. The assessee did not file a return of income, and the source of the investment remained unexplained. Despite multiple notices and opportunities provided by the Assessing Officer, the assessee failed to furnish any details or documentary evidence to substantiate the investment. Consequently, the Assessing Officer treated the investment as unexplained and made an addition under Section 69 of the Income Tax Act.

4. Source of Investment in the Name of the Assessee's Husband:

The Revenue contended that the CIT(A) erred in admitting the source of investment of 5,00,000 pound sterling (Rs. 3,55,25,000) for shares of a company in the name of the assessee's husband, and Rs. 50,00,000 as an opening balance in a joint bank account, without proper verification. The Tribunal noted that the Assessing Officer did not get an opportunity to verify these details during the remand proceedings, as the source of investment was not clearly mentioned in the details received from HSBC Bank.

5. Deletion of Addition Made by the Assessing Officer:

The CIT(A) deleted the addition of Rs. 4,05,00,000 made by the Assessing Officer by admitting additional evidence under Rule 46A. The Revenue argued that the CIT(A) admitted the additional evidence without recording reasons in writing and without proper verification of the source of investment. The Tribunal found merit in the Revenue's arguments and noted that the CIT(A) did not deal with the exceptions of Rule 46A properly. Therefore, the Tribunal set aside the order of the CIT(A) and remanded the matter back to the Assessing Officer for fresh examination of the documents and details, giving the assessee an opportunity to prove her case with sufficient evidence.

Conclusion:

The Tribunal allowed the appeal of the Revenue for statistical purposes, set aside the order of the CIT(A), and remanded the matter back to the Assessing Officer for fresh consideration, providing the assessee with an opportunity to produce sufficient evidence to substantiate her claims. The order was pronounced on 12/12/2022.

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