2014 (5) TMI 989 - AT - Income Tax

Addition made u/s 68 and 69A of the Act - Principle of natural justice Reason to believe for issuance of notice u/s 148 of the Act Held that - CIT(A) has referred to the additional evidence filed by the assessee and remand report dated 30-4- 2012 submitted by AO - there is no finding as to whether the additional evidence has been admitted or not - the additional evidence which consists of income-tax record, confirmations etc. of the share applicants necessary for discharge of the onus of the assessee has not been cross verified by AO from the department s record - in the absence of consideration, the matter is required to be remitted back to the AO for fresh adjudication Decided in favour of Assessee.

Summary

Issues:
1. Validity of order passed by CIT(A)
2. Violation of natural justice in assessment order
3. Validity of notice to reopen assessment
4. Addition confirmed under sections 68 and 69A of the IT Act
5. Charging of interest under sections 234B & D

Analysis:
1. The appeal was against the order passed by the CIT(A) for the assessment year 2003-04. The appellant raised concerns about the legality and factual correctness of the CIT(A)'s order. The counsel argued that the order was bad both in law and on facts. The Tribunal noted that the appellant had applied for admission of additional evidence during the appellate proceedings. However, the CIT(A) did not provide a definite finding on the admission of this evidence, which was crucial for demonstrating the discharge of the appellant's onus under section 68. Referring to relevant case laws, the Tribunal emphasized the importance of verifying the evidence provided by the appellant to establish the identity, genuineness, and creditworthiness of share applicants.

2. The Tribunal observed that the entire addition was confirmed without proper appreciation of the evidence presented by the appellant. The appellant's inability to produce the share applicants physically after a significant time gap was considered. The Tribunal highlighted the violation of the principle of natural justice due to the lack of decision on the admission of additional evidence and the insistence on physical presence of share applicants. It was argued that the assessing officer should have verified the evidence through departmental records since the share applicants were already assessed to income tax.

3. The Tribunal directed the assessing officer to reconsider the issue in light of the evidence provided by the appellant and in accordance with the law, after giving the appellant an opportunity to be heard. The lack of cross-verification of the additional evidence from departmental records led the Tribunal to set aside the issue for fresh consideration. The appeal was allowed for statistical purposes, emphasizing the importance of following due process and principles of natural justice in tax assessments.

4. The Tribunal's decision highlighted the significance of properly admitting and considering additional evidence in tax assessments, especially in cases involving the discharge of onus under section 68 of the IT Act. The judgment underscored the need for assessing officers to conduct thorough verifications and provide opportunities for appellants to present their case effectively.