2023 (2) TMI 793 - AT - Income Tax

Addition u/s 68 - additions towards trade payables - assessee could not furnish confirmation from the parties - violation of rule 46A of the IT Rules, 1962 by CIT-A deleting addition - whether CIT-A admitting certain additional evidence without providing opportunity to the AO for his verification in violation of Rule 46A of the Income-tax Rules, 1962 - HELD THAT - When the CIT(A) has recorded categorical finding that the assessee has furnished confirmation and also reproduced the party name and address from whom the assessee had transactions, there is no need to give opportunity to the Assessing Officer for his comments, because, the CIT(A) himself has verified confirmation filed by the assessee. Therefore, we are of the considered view that there is no error in the reasons given by the CIT(A) to partly allow appeal filed by the assessee. Thus, we are inclined to uphold the findings of the CIT(A) and dismiss the appeal filed by the revenue.

Issues Involved:
1. Appeal against the order passed by the Commissioner of Income Tax (Appeals) regarding assessment year 2017-18.
2. Deletion of addition of Rs. 3,51,30,505/- on account of sundry creditors.
3. Admission of additional evidences under Rule 46A of the I.T. Rule, 1962 without providing opportunity to the Assessing Officer.
4. Allegation of violation of Rule 46A of the Income-tax Rules, 1962 by the Commissioner of Income Tax (Appeals).

Issue 1:
The appeal was filed against the order passed by the Commissioner of Income Tax (Appeals) for the assessment year 2017-18. The case involved the deletion of an addition of Rs. 3,51,30,505/- on account of sundry creditors and pertained to the assessment proceedings conducted under section 143(3) of the Income-tax Act, 1961.

Analysis:
The appeal was directed against the order passed by the Commissioner of Income Tax (Appeals) for the assessment year 2017-18, where the appellant authority had partly allowed the appeal filed by the assessee. The primary issue revolved around the deletion of an addition of Rs. 3,51,30,505/- on account of sundry creditors. The assessment proceedings conducted under section 143(3) of the Income-tax Act, 1961 resulted in the determination of the total income of the assessee. The Commissioner of Income Tax (Appeals) considered the submissions made by the assessee and relied on judicial precedents to partially allow the appeal, deleting the addition made towards trade payables under section 68 of the Act. The appellant, being aggrieved by this decision, filed an appeal before the Appellate Tribunal ITAT Chennai.

Issue 2:
The deletion of the addition of Rs. 3,51,30,505/- on account of sundry creditors was a key issue raised in the appeal. The appellant contended that the Commissioner of Income Tax (Appeals) erred in admitting additional evidence under Rule 46A of the I.T. Rule, 1962 without providing an opportunity to the Assessing Officer.

Analysis:
The deletion of the addition of Rs. 3,51,30,505/- on account of sundry creditors was a contentious issue in the appeal. The appellant argued that the Commissioner of Income Tax (Appeals) erred in admitting additional evidence under Rule 46A of the I.T. Rule, 1962 without affording the Assessing Officer the opportunity for verification. The appellant claimed that the assessee failed to substantiate its claim despite ample opportunities provided during the assessment proceedings. However, the Commissioner of Income Tax (Appeals) had considered the evidence submitted by the assessee, including confirmation letters from certain parties, and based on the nature of transactions explained, partially allowed the appeal.

Issue 3:
The admission of additional evidences under Rule 46A of the I.T. Rule, 1962 without providing an opportunity to the Assessing Officer was raised as a separate issue in the appeal.

Analysis:
The admission of additional evidences under Rule 46A of the I.T. Rule, 1962 without providing an opportunity to the Assessing Officer was a significant contention in the appeal. The appellant alleged that the Commissioner of Income Tax (Appeals) erred in admitting additional evidence without following the procedural requirements, specifically violating Rule 46A of the Income-tax Rules, 1962. The appellant emphasized the importance of providing the Assessing Officer with the opportunity for verification before considering additional evidence, which was a procedural safeguard under the rules.

Issue 4:
The allegation of violation of Rule 46A of the Income-tax Rules, 1962 by the Commissioner of Income Tax (Appeals) was another crucial aspect of the appeal.

Analysis:
The allegation of violation of Rule 46A of the Income-tax Rules, 1962 by the Commissioner of Income Tax (Appeals) was a focal point in the appeal. The appellant contended that the Commissioner erred in admitting additional evidence without following the prescribed procedures, particularly in terms of providing the Assessing Officer with the opportunity to verify the evidence under Rule 46A. However, the Appellate Tribunal ITAT Chennai, after hearing both parties and examining the records, upheld the decision of the Commissioner of Income Tax (Appeals) and dismissed the appeal filed by the revenue. The Tribunal found no error in the Commissioner's reasoning and concluded that the appeal lacked merit based on the evidence presented and verified by the Commissioner.

In conclusion, the Appellate Tribunal ITAT Chennai dismissed the appeal filed by the revenue against the order passed by the Commissioner of Income Tax (Appeals) for the assessment year 2017-18. The Tribunal upheld the decision of the Commissioner, who had partially allowed the appeal by deleting the addition made towards trade payables under section 68 of the Income-tax Act, 1961. The Tribunal found no error in the Commissioner's findings and rejected the allegations of procedural violations raised by the revenue, thereby affirming the decision of the lower authority.

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