9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2025 (4) TMI 126 - AT - Income TaxViolation of principle of Natural justice - CIT appeal has awarded relief to the assesse by admitting and considering evidences which were not confronted to the Ld. AO - Whether the CIT(A) violated Rule 46A by admitting additional evidence without providing the AO an opportunity to examine it thereby breaching the principles of natural justice? - HELD THAT - Any information which the Ld. AO had asked during assessment proceedings cannot be considered by the Ld. First Appellate Authority for any relief unless the AO is provided an opportunity of examining the same. The order of Ld. First Appellate Authority thus falls in mischief of being violative of natural justice available to the AO. It is trite law that any order which is based upon violation of principles of natural justice cannot pass the test of any judicial scrutiny and deserves to be set aside. Accordingly the ground of appeal number 4 raised by the appellant Revenue is allowed and the order of Ld. First Appellate Authority is set aside. It is seen that the Ld. AO has passed a cryptic order without properly marshelling evidences many of which were not available. Hence the order of the Ld.AO is also set aside. Since as observed by Hon ble Apex court in the Tin Box company case 2001 (2) TMI 13 - SUPREME COURT an AO always possesses first authority and responsibility to determine taxable income and there are clear indications in this case that the AO was neither provided requisite details during assessment proceedings nor was he afforded opportunity to examine those filed during Ld. First Appellate proceedings the Ld. AO is directed to pass an assessment order De novo after giving adequate opportunity of being heard. The assesse is directed to file before the Ld. AO all evidences filed before the Ld. First Appellate Authority as well as any other details on which it may like to rely for completion of its assessment proceedings. Any non-compliance on the part of assesse can be adversely viewed.
ISSUES PRESENTED and CONSIDERED
The primary issues considered in this judgment involve the procedural and substantive correctness of the order passed by the Commissioner of Income Tax (Appeals) [CIT(A)] and the Assessing Officer (AO) regarding the assessment of the appellant's income. The core legal questions include:
ISSUE-WISE DETAILED ANALYSIS Violation of Rule 46A and Principles of Natural Justice The legal framework governing the admission of additional evidence in appellate proceedings is encapsulated in Rule 46A of the Income Tax Rules. This rule restricts the appellant from producing new evidence at the appellate stage unless specific conditions are met, such as the AO's refusal to admit necessary evidence or the appellant being prevented by sufficient cause from presenting it earlier. Importantly, any additional evidence admitted must be shared with the AO, who should be given a reasonable opportunity to examine and counter it. The Court found that the CIT(A) admitted additional evidence, including the appellant's passport, employer communications, and bank account copies, without providing the AO an opportunity to review these documents. This action contravened Rule 46A and the principles of natural justice, which require that both parties have a fair opportunity to present and challenge evidence. The Court emphasized that any order violating natural justice principles is inherently flawed and cannot withstand judicial scrutiny. Consequently, the Court set aside the CIT(A)'s order, allowing the Revenue's appeal on this ground. Deficiencies in the AO's Assessment Order The Court also scrutinized the AO's original assessment order, which was found to be cryptic and lacking in thorough evidence examination. The AO had noted the appellant's non-compliance with requests for additional information, such as details supporting claims in the tax return. The Court observed that the AO failed to marshal evidence properly, which is a fundamental responsibility in determining taxable income. Given these deficiencies, the Court set aside the AO's order and directed a de novo assessment, ensuring the appellant is given adequate opportunity to present all relevant evidence. Confirmation of Addition to Income The appellant contested the CIT(A)'s decision to uphold an addition of Rs.18,15,000/- to their income, arguing non-resident status and exemption from sections 68 or 69A of the Income Tax Act. However, as the decision was based on the same improperly admitted evidence, the Court allowed the appellant's appeal for statistical purposes, pending the de novo assessment. SIGNIFICANT HOLDINGS The Court's significant holdings include:
The Court emphasized the importance of adhering to procedural rules and ensuring fair opportunities for both parties in tax assessments. It reiterated that any order based on a violation of natural justice cannot withstand judicial scrutiny and must be set aside. Overall, the judgment underscores the necessity for thorough evidence examination and compliance with procedural rules to uphold the integrity of tax assessments and appeals. The Court's directive for a de novo assessment aims to rectify procedural lapses and ensure a fair determination of the appellant's taxable income.
|
