2021 (11) TMI 500 - AT - Income Tax

Validity of assessment without hearing the assessee and without looking into the documents/details - Absence of requisite details and proper explanations - HELD THAT - If the assessee had reasonable cause for not producing the same before the AO, CIT(A) ought to have proceeded as per Rule 46A of the Income Tax Rules, 1962 and adjudicated as to the admissibility of the additional evidence and proceeded further by calling for remand report from the AO if the assessee has made out a case for reasonable cause in not producing the relevant material before the AO and thereafter, decided the issue before him in accordance to law. In this case the AO has made the addition attributing failure on the part of assessee in producing the same documents/material/explanation . On appeal the Ld. CIT(A) did not allow the material/explanation called for by the AO on a hyper technical ground i.e., for non-filing of any petition for admission of additional/relevant evidence. It has been brought to my notice that during the appellate proceedings, the Ld. CIT(A) never raised any queries about reason for not filing the material/documents/explanation called for by the AO. The reason for not filing the material during the assessment proceedings were due to mis-placement of the notice u/s.142(1) of the Act, which led to the non-filing of documents/explanation during assessment proceedings. Assessee was prevented by reasonably cause for not presenting the documents/material/explanation before the AO.Appeal of assessee is allowed for statistical purposes.

Summary

Issues:
Assessment order passed without hearing the assessee and without looking into relevant documents/details; Denial of opportunity to file additional evidence before Ld. CIT(A) leading to confirmation of AO's order; Challenge to Ld. CIT(A)'s action before the Tribunal.

Analysis:
The appeal was filed against the order of Ld. CIT(A) for Assessment Year 2016-17, where the AO added an amount under section 68 of the Act to the assessee's total income due to unexplained "Cash in Hand." The main grievance was the AO's failure to hear the assessee and consider relevant documents. Ld. CIT(A) did not allow additional evidence, prompting the appeal before the Tribunal.

During the proceedings, it was noted that the AO had taken an adverse view due to the absence of necessary details and explanations. The assessee's attempt to submit additional evidence before Ld. CIT(A) was rejected, leading to the Tribunal's involvement. It was emphasized that the assessee should be given a fair opportunity to present documents and explanations during assessment proceedings.

The Tribunal found that Ld. CIT(A) did not address the issue of the assessee's reasonable cause for not submitting material before the AO. The assessee's explanation for non-filing during assessment proceedings was accepted, attributing it to the misplacement of a notice. Citing the decision in Tin Box Company vs. CIT, the Tribunal ruled in favor of the assessee, setting aside Ld. CIT(A)'s order and directing a fresh assessment by the AO.

Based on the Supreme Court's decision, the Tribunal remanded all issues back to the AO for a fresh assessment. The assessee agreed to provide all necessary documents and explanations, with the AO instructed to assess the income in accordance with the law. Ultimately, the appeal of the assessee was allowed for statistical purposes, and the order was pronounced on 28th October 2021.