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2021 (9) TMI 545 - AT - Income TaxDenial of natural justice - non admission of additional evidence - CIT-A Power to admit additional evidences - CIT(A) rejecting the application moved by the assessee under Rule 46A of the Income Tax Rules, 1962 for leading the additional evidence - HELD THAT - Section 254 of the Act read with Rule 29 of the Income Tax (Appellate Tribunal) Rules, 1963 states about power to admit additional evidences, whether mere fact that evidence sought to be produced is vital and important does not provide a substantial cause to allow its admission at appellate stage, especially when evidence was available to party at initial state and had not been produced at that time. Rule 46A of the Rules speaks about production of additional evidence before the Deputy Commissioner (Appeals) and Commissioner (Appeals) . The additional evidences submitted by the assessee at this stage are the first time and are necessary for deciding the appeal. Even otherwise, all the documents so placed on record by the assessee by way of additional evidences before the ld. CIT(A) are necessary to adjudicate the controversy between the parties - in case, the additional evidence so placed on record by the assessee is allowed then in that eventuality, no prejudice shall be caused to the rights of the Revenue. Whereas on the contrary, in case, the said additional evidences placed on record by the assessee is not considered then in that eventuality the rights of the assessee shall be prejudiced. Therefore, we direct the ld. CIT(A) to admit additional evidences so placed on record by the assessee. - Decided in favour of assessee.
Issues Involved:
1. Rejection of application under Rule 46A of the Income Tax Rules, 1962. 2. Confirmation of addition of ?500,000 as unexplained investment. 3. Confirmation of addition of ?514,400 as unexplained credit. 4. Confirmation of addition of ?75,000 as unexplained credit. 5. Confirmation of addition of ?221,000 as unexplained credit. 6. Confirmation of various disallowances made by the ITO. 7. Confirmation of addition of ?95,400 on account of rent. Detailed Analysis: 1. Rejection of Application under Rule 46A: The assessee challenged the order of the CIT(A) for rejecting the application under Rule 46A, which pertains to the submission of additional evidence. The Tribunal observed that the CIT(A) initially called for a remand report from the AO, who examined the books of accounts and other records. The AO's comments indicated that the additions and disallowances were not justified. However, in the set-aside appellate proceedings, the CIT(A) denied the admission of additional evidence. The Tribunal noted that the CIT(A) should have considered the additional evidence as it was essential for a fair adjudication. The Tribunal directed the CIT(A) to admit the additional evidence and decide the case afresh, ensuring no prejudice to the rights of either party. 2. Addition of ?500,000 as Unexplained Investment: The assessee contended that the addition of ?500,000 as unexplained investment was incorrect, as the amount was jointly paid with his mother for purchasing a property, and the investment was recorded in the books. The AO, in the remand report, acknowledged that the investment was verifiable from the records. The Tribunal directed the CIT(A) to reconsider this addition in light of the additional evidence. 3. Addition of ?514,400 as Unexplained Credit: The assessee argued that the loan from Shri Ashok Matai was genuine and recorded in the books. The AO's remand report confirmed that the loan was shown in the return of income and the interest was credited in the account. The Tribunal instructed the CIT(A) to re-evaluate this addition based on the additional evidence provided. 4. Addition of ?75,000 as Unexplained Credit: The assessee claimed that the amount related to Shri Kamal Matai and was shown in the balance sheet under the "current account balance." The AO's remand report indicated that the facts were verifiable. The Tribunal directed the CIT(A) to reconsider this addition after admitting the additional evidence. 5. Addition of ?221,000 as Unexplained Credit: The assessee explained that the cash deposits were from the cash sales of Metro Wines, deposited in the Metro Wine UCO Bank account. The AO's remand report acknowledged that the details justified the assessee's statement. The Tribunal instructed the CIT(A) to re-evaluate this addition, considering the additional evidence. 6. Various Disallowances: The assessee contested the disallowances of conveyance expenses, depreciation, telephone expenses, and shop expenses, arguing that they were incurred for business purposes. The Tribunal directed the CIT(A) to reconsider these disallowances based on the additional evidence. 7. Addition of ?95,400 on Account of Rent: The assessee argued that the rent paid for Bubani Shop and Ajmer Shop was ?1,200 per month and ?6,750 respectively. The AO's remand report indicated that the rent details were filed. The Tribunal instructed the CIT(A) to re-evaluate this addition considering the additional evidence. Conclusion: The Tribunal allowed the appeal for statistical purposes, directing the CIT(A) to admit the additional evidence and decide the case afresh after providing a reasonable opportunity of hearing to the assessee. The Tribunal emphasized the importance of substantial justice and the need to ensure that no party's rights are prejudiced. The order was pronounced on 08th September 2021.
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