2017 (12) TMI 126 - AT - Income Tax

Admission of additional evidence - Held that - Having examined the records he expressed his reservations also on the admitting of the additional evidence produced before the Ld. CIT(A), because the conditions of Rule 46A has not been fulfilled in the case of the assessee. AO further contended that if at all the additional evidence were to be admitted they could not be done without depth enquiry/ investigation which might take a lot of time. However, he did not point out as to which of the evidence paper etc. were in the nature of additional evidence. After considering the Remand Report, the Ld. CIT(A) has rejected the aforesaid objection of the Assessee. However, in our considered opinion, the objection on the admission of additional evidence of the AO was valid one and needs to be enquired/investigated/verification in depth which was not done by him. Keeping in view of the facts and circumstances of the case as explained above, we are of the considered opinion that the orders passed by the Revenue Authorities are against the principle of natural justice and, therefore, the issues involved in the Appeals filed by the Assessee deserve to be set aside to the file of the AO to decide the same afresh, under the law, after detailed enquiry / investigation/verification of the each and every evidence including the additional evidence filed u/R 46A before the Ld. CIT(A) and provide adequate opportunity of being heard to the assessee.

Summary

Issues Involved:
1. Addition of agricultural income as unexplained income.
2. Validity of assumption of jurisdiction by the AO under section 144 of the Income Tax Act, 1961.
3. Admissibility of additional evidence under Rule 46A in assessment proceedings.

Analysis:

Issue 1: Addition of Agricultural Income
The Assessee contested the addition of ?2,95,000 as unexplained income by the AO, arguing that the agricultural income was already declared in the return of income and supported by sales receipts, proof of land ownership, and expenses incurred. The Commissioner of Income Tax (Appeals) upheld the addition based on suspicion without concrete evidence. The Tribunal found the assessment order completed ex-parte, denying sufficient opportunity to the Assessee. The Tribunal concluded that the Revenue's actions were against the principles of natural justice, directing a fresh assessment with detailed investigation and adequate opportunity for the Assessee to substantiate their case.

Issue 2: Validity of Jurisdiction under Section 144
The Assessee challenged the validity of the AO's assumption of jurisdiction under section 144 without issuing a statutory notice. The Tribunal found the AO's actions lacking in providing the required notice under section 144, which was crucial for a valid assessment. This issue was set aside for the AO to reassess after following due process.

Issue 3: Admissibility of Additional Evidence
The Revenue raised concerns about the admission of additional evidence under Rule 46A by the CIT(A). The AO objected to the admission, citing lack of fulfillment of Rule 46A conditions and the need for a thorough investigation. The Tribunal agreed with the AO's objection, emphasizing the necessity for a detailed inquiry before admitting additional evidence. The Tribunal set aside the issue for proper investigation and verification of all evidence, directing the Assessee to cooperate fully.

In conclusion, the Tribunal allowed all 7 Assessee's appeals for statistical purposes, setting aside the issues for fresh assessment with proper investigation and opportunity for the Assessee. The Revenue's 3 cross-appeals were dismissed as a result of the decision on the Assessee's appeals.