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2012 (12) TMI 185 - AT - Income TaxAdmission of additional evidence on alleged violation of Rule 46A - addition made for amount representing loans received, for the absence of confirmations from the creditor parties of the assessee - matter remanded back to AO by CIT(A) on assessee s submission that AO had never required the assessee to file the confirmations - AO, during remand proceedings, invoking the provisions of section 133(6), directly required the creditor Companies to furnish the particulars of their transactions with the assessee, the same being complied by creditors - AO did not submit any remand report to the CIT(A) despite reminders - CIT(A) deleted the addition on the basis of the confirmations and other supporting documents, explanations - Revenue now contesting the same Held that - It is worthy of note that whereas the confirmations filed by both the creditor Companies in compliance u/s 133(6) in the remand proceedings are dated 25.06.2010 and were also received by the ITI on 25.6.10 itself, the assessee Company s written submissions and application for additional evidence before the CIT(A) are of 26.3.10. This shows that it was after the filing of the application for additional evidence before the CIT(A), that the evidence was filed before and considered by the AO three months thereafter. Thus, the Department cannot have any grievance against the CIT(A) having entertained additional evidence at the back of the AO, particularly when the AO was duly supplied with the confirmations and all connected material and the AO, having considered the same, did not furnish any remand report before the CIT(A) inspite of reminders. The CIT(A) never entertained any additional evidence at all and deleted the addition on the basis of the aforesaid material filed with the AO in the remand proceedings. On merits also it is seen that the assessee had duly discharged its onus u/s 68. In the result, the appeal filed by the Department is dismissed.
Issues Involved:
1. Deletion of addition of Rs. 75,25,000/- made by the AO as unexplained credit under Section 68 of the I.T. Act. 2. Alleged violation of Rule 46A of the I.T. Rules by the CIT(A) in admitting additional evidence. Detailed Analysis: 1. Deletion of Addition of Rs. 75,25,000/- as Unexplained Credit: The primary issue in this case revolves around the deletion of an addition of Rs. 75,25,000/- made by the Assessing Officer (AO) under Section 68 of the Income Tax Act, 1961, which pertains to unexplained credits. The AO had added this amount to the income of the assessee company on the grounds that the assessee failed to furnish necessary bank statements and confirmations from the creditor parties, M/s Ashoka Mercantile Ltd. (Rs. 64,25,000/-) and M/s Sunrise Soya Products Ltd. (Rs. 11,00,000/-), during the assessment proceedings. The AO observed that the copies of returns filed by the creditor companies did not establish their creditworthiness and only showed the income earned by them. The CIT(A), however, deleted the addition made by the AO. The Department contended that the CIT(A) erred in deleting the addition as the assessee failed to provide evidence supporting the unsecured loans during the assessment proceedings. The Department also argued that the CIT(A) admitted fresh evidence in violation of Rule 46A of the I.T. Rules. The assessee, on the other hand, argued that the creditor companies had submitted their confirmations and complete details directly before the AO during the remand proceedings under Section 133(6) of the Act. The AO did not submit any remand report to the CIT(A), indicating satisfaction with the compliance made by the creditor companies. 2. Alleged Violation of Rule 46A of the I.T. Rules: The Department alleged that the CIT(A) violated Rule 46A by admitting additional evidence without providing the AO an opportunity to examine it. However, the Tribunal found no merit in this contention. It was noted that the CIT(A) had remanded the matter to the AO, who directly required the creditor companies to furnish details of their transactions with the assessee under Section 133(6). The creditor companies complied by providing confirmations and complete details, which were forwarded to the assessee as well. The Tribunal observed that the AO did not furnish any remand report despite reminders from the CIT(A), indicating that the AO was satisfied with the compliance made by the creditor companies. The CIT(A) considered the confirmations and other supporting documents submitted by the creditor companies and deleted the addition based on this evidence. The Tribunal further noted that the assessee had discharged its onus under Section 68 by providing complete details of the unsecured loans, utilization thereof, copies of accounts of the creditor companies, acknowledgment receipts of e-returns, and the assessee's bank account reflecting the loan receipts. The CIT(A) took into account that the creditor companies had confirmed the loans, provided their PANs, and detailed the nature of the transactions. The Tribunal concluded that the CIT(A) did not entertain any additional evidence at the back of the AO. The evidence was filed before the AO in the remand proceedings, and the AO's lack of a remand report indicated satisfaction with the evidence. Therefore, the CIT(A) rightly deleted the addition made by the AO. Conclusion: The Tribunal upheld the order of the CIT(A) deleting the addition of Rs. 75,25,000/- made by the AO under Section 68 of the I.T. Act. The Tribunal found no violation of Rule 46A by the CIT(A) and concluded that the assessee had duly discharged its onus of proving the genuineness of the loans. Consequently, the Department's appeal was dismissed.
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