2022 (1) TMI 882 - AT - Income Tax

Addition to the taxable income of the assessee trust - proof of investment under section 11(5) of accumulative profits under section 11(2) was not admitted as additional evidence under Rule 46A of the I.T. Rules 1962 - HELD THAT - The dispute raised in the present appeal requires to be remitted back to the AO. The assessment in the instant case was made u/s. 144 of the Act. The assessee has failed to furnish the proof of evidence of amount accumulated under section 11(2) as per the objects prescribed u/s. 11(5) of the Act before the AO. The AO has, therefore, denied the benefit of accumulated available for exemption u/s. 11 of the Act. The CIT(A) has also refused to admit the additional evidence to demonstrate the compliance of section 11(5) for the purpose of availment of benefits under section 11(2) of the Act without properly weighing the facts and circumstances of the case. Having regard to the observations made by the Hon'ble Supreme Court in the case of Tinbox Company 2001 (2) TMI 13 - SUPREME COURT and to prevent miscarriage of justice, we deem it expedient to restore the issue back to the file of the AO for DENOVO adjudication of the issue in accordance with law after taking into account the evidence and the defence propagated on behalf of the assessee. Needless to say, the AO shall frame the assessment after giving reasonable opportunity to the assessee for setting out its case. The order of the CIT(A) is accordingly set aside and the issue is restored to the file of the AO - Appeal of the assessee is allowed for statistical purpose

Summary

Issues: Challenge to order passed u/s. 144 of the IT Act, 1961 regarding addition to taxable income of the assessee trust.

Analysis:
1. The appeal was filed by the assessee challenging the order passed u/s. 144 of the IT Act, 1961, against the order of the Commissioner of Income Tax(A)-40, Delhi. The assessee contested the addition of ?4,15,80,000 to the taxable income of the trust.

2. During the hearing, it was noted that additional evidence submitted by the assessee before the CIT(A) was not admitted. The issue regarding proof of investment under section 11(5) of accumulative profits under section 11(2) was not examined on merits by the CIT(A) as it was not admitted as additional evidence under Rule 46A of the I.T. Rules 1962.

3. Considering the submissions and facts of the case, it was observed that the dispute raised in the appeal needed to be remitted back to the Assessing Officer (AO). The assessment under section 144 of the Act was conducted as the assessee failed to provide evidence of amount accumulated under section 11(2) as per the objects prescribed under section 11(5) of the Act. The AO denied the benefit of accumulated exemption under section 11. The CIT(A) also rejected the additional evidence without properly evaluating the circumstances.

4. Referring to the judgment in Tinbox Company Vs. CIT 249 ITR 216 (2001) and to ensure justice, the issue was directed to be sent back to the AO for fresh adjudication in accordance with the law, taking into account the evidence and defense presented by the assessee. The AO was instructed to provide a reasonable opportunity for the assessee to present its case. Consequently, the order of the CIT(A) was set aside, and the issue was remanded to the AO.

5. Ultimately, the appeal of the assessee was allowed for statistical purposes. The decision was pronounced on 11/01/2022.