2016 (12) TMI 246 - HC - Income Tax

Admission of additional evidence - grievance of the Revenue is that the additional evidence ought not to have been admitted in the context of the remand report - Held that - We find that the additional evidence was in the form of confirmation letter from the lender and details of repayment which was not available on record during the Assessment Proceedings. It is this, additional evidence which was produced by the Respondent-Assessee to establish the genuineness of the loan. Thus, the exercise of discretion by the CIT(A) in admitting the to admit additional evidence under Rule 46A( 1)(d) of the Income Tax Rules cannot be said to be perverse. Incidentally, it needs to be noted that on merits of the claim being allowed on the basis of the additional evidence, the Revenue has made no grievance. No substantial question of law.

Summary

Issues:
Admission of additional evidence under Section 46A of IT Act, 1961 despite opportunities given to the Assessee.

Analysis:
The judgment by the High Court of Bombay pertains to an appeal challenging the order passed by the Income Tax Appellate Tribunal for Assessment Year 2005-06. The main issue raised by the Revenue was whether the Tribunal was justified in admitting additional evidence under Section 46A of the Income Tax Act despite the Assessee failing to produce evidence before the Assessing Officer. The Assessing Officer had added an amount of &8377; 93.19 lakhs to the Assessee's income as a loan received from a specific individual, which the Assessee failed to substantiate during the Assessment Proceedings, leading to the addition.

The Assessee then appealed to the Commissioner of Income Tax (Appeals) and submitted additional evidence in the form of confirmation letters from lenders. The CIT(A) admitted this evidence, stating that the Assessee was not given sufficient opportunity during the Assessment Proceedings to produce the evidence. The Tribunal, in its impugned order, found that no specific information to establish the loan was called for during the Assessment Proceedings and that the Assessment was completed quickly. Therefore, the Tribunal held that admitting additional evidence by the CIT(A) was permissible under Rule 46A(1)(d) of the Income Tax Rules and dismissed the Revenue's appeal.

The Revenue contended that the additional evidence should not have been admitted based on the remand report stating that necessary entries were available in the Assessee's books. However, the High Court noted that the additional evidence, including confirmation letters and repayment details, was crucial in establishing the genuineness of the loan, which was not available during the Assessment Proceedings. The Court upheld the CIT(A)'s discretion in admitting the evidence under Rule 46A(1)(d) as not being perverse. Since the Revenue did not challenge the merits of the claim based on the additional evidence, the Court found no substantial question of law to consider and dismissed the appeal without costs.