2012 (12) TMI 700 - AT - Income Tax

Unexplained creditors, fixed assets and advances - CIT(A) deleted the addition - Held that - CIT(A) had failed to observe the procedure as laid down under Rule 46A of ITR 1962 as AO who has to be allowed reasonable opportunity to examine the additional evidences as well as, where deemed fit, cross-examine the witness(es) produced by the appellant. In view of the foregoing, it is fit and proper to restore the matter back to the file of the AO for the consideration of the evidences/materials furnished by the assessee before the CIT(A) for the first time. The scope of the examination by the AO would be the same as that defined under rule 46A of the Rules with placing no fetters or restriction on either party in the ensuing proceedings. See Tin Box Co. v. CIT 2001 (2) TMI 13 - SUPREME COURT - Revenue s appeal is allowed for statistical purposes.

Summary

Issues involved:
1. Appeal by the Revenue against the Order by the Commissioner of Income-tax (Appeals) partly allowing the assessee's appeal contesting its assessment under section 143(3) of the Income-tax Act, 1961 for the assessment year 2008-09.
2. Six grounds raised by the Revenue in the appeal.

Analysis:
1. The primary issue raised in the appeal was the deletion of various additions made by the assessing officer. The appellant contended that the CIT(A) unjustly deleted additions such as unexplained creditors, unreconciled bank balances, notional interest on loans, unexplained addition to fixed assets, pro-rata interest relating to work-in-progress, and unexplained fresh share application money. The appellant argued that necessary details and documentary evidence were not provided by the assessee during the assessment. The assessee's counsel raised a preliminary objection stating that the Revenue's grounds did not challenge the impugned order on its merits but only on the basis of the assessee's failure to furnish details before the assessing officer.
2. The appellant argued that the CIT(A) failed to follow the procedure as laid down under Rule 46A of the Income Tax Rules, 1962. The rule mandates a specific procedure for admitting additional evidence, including recording reasons for admission and allowing the assessing officer to examine such evidence. The appellant contended that the CIT(A) did not adhere to the mandatory steps outlined in Rule 46A.
3. The Tribunal considered the arguments presented by both parties. It noted that while there was a violation of Rule 46A, the Revenue did not specifically challenge this rule in its appeal. The Tribunal emphasized the importance of following procedural requirements and ensuring fairness in the adjudication process. Ultimately, the Tribunal decided to restore the matter back to the assessing officer for proper consideration of the evidences and materials furnished by the assessee before the CIT(A) for the first time. The assessing officer was directed to adjudicate the relevant issues afresh in light of the additional evidence and existing material on record.

In conclusion, the Tribunal allowed the Revenue's appeal for statistical purposes and directed a fresh examination of the case by the assessing officer in accordance with the law and procedural requirements.