2023 (12) TMI 720 - HC - Income Tax

Disallowance of contributions to temple/panchayat - ITAT deleted the addition - whether the CIT (A) erred by admitting the additional evidence in violation to Rule 46A(3) of the Income Tax Rules, 1962? - HELD THAT - We find that no additional evidence was allowed to be produced. AO had made the addition based upon the evaluation of the material before the AO. Commissioner (Appeals) on evaluating the very same material disagreed with the AO. The ITAT agreed with the Commissioner of Appeals. Therefore, this is not a case of any violation of Rule 46A(3), and the first question of law now sought to be raised does not arise in this appeal. Respondent pointed out that the addition was based upon misconstruing the Assessee's case. He pointed out that merely because some contributions had been made to temples, etc., the Assessee had not claimed any exemption under Section 80-G of the Income Tax Act. He pointed out that these were routine revenue expenditures incurred by the Assessee after explaining the factual background in which such contributions were made. This explanation was accepted by the Commissioner (Appeals), and the ITAT upheld the Commissioner's view. Accordingly, the first question, as proposed, does not arise in this appeal. Addition u/sec. 28(iv) - benefits in some form other than money or cash - ITAT deleted the addition - whether CIT (A) erred in admitting the additional evidence in violation of Rule 46A(3) of Income Tax Rules, 1962? - HELD THAT - We are not too sure whether this was a case of admission of any additional evidence. However, even assuming that this was so, the Tribunal has decided the matter based upon the decision of this Court in Mahindra And Mahindra Ltd 2018 (5) TMI 358 - SUPREME COURT wherein held that the benefit as contemplated by Section 28(iv) of the Income Tax Act has to be some benefit other than a benefit in the shape of money or cash. In the present case, there is no dispute that there was no benefit other than in the form of money alleged to be received by the Assessee. Even the case of the Revenue was that the Assessee had accepted certain advances for which no proper explanation was furnished. Therefore, the issue of admission or non-admission of additional evidence is quite irrelevant since Section 28(iv) contemplates benefits in some form other than money or cash. Therefore, even if the additional evidence or the new documents allegedly admitted at the appellate stage were to be completely excluded from consideration, there would be no difference, and the Assessee s case would have to be accepted based upon the interpretation of Section 28(iv) in Mahindra and Mahindra (Supra). No substantial question of law arises.

Summary

Issues Involved:
The issues involved in this case are:
1. Whether the Hon'ble ITAT erred in deleting the addition of contributions to temple/panchayat and whether the CIT (A) erred by admitting additional evidence in violation of Rule 46A(3) of the Income Tax Rules, 1962?
2. Whether the Hon'ble ITAT erred in deleting the addition u/sec. 28(iv) and whether CIT (A) erred in admitting additional evidence in violation of Rule 46A(3) of Income Tax Rules, 1962?

Issue 1: Contributions to Temple/Panchayat and Admission of Additional Evidence:
The Commissioner of Appeals admitted additional evidence under Rule 46A(3) of the Income Tax Rules without giving the Revenue an opportunity to respond. However, upon review, it was found that no additional evidence was allowed to be produced. The Assessing Officer had made an addition based on existing material, which was later disagreed upon by the Commissioner (Appeals) and upheld by the ITAT. The Court concluded that there was no violation of Rule 46A(3) and the first question of law did not arise in this appeal.

Issue 2: Addition u/sec. 28(iv) and Admission of Additional Evidence:
The second substantial question of law revolved around the addition u/sec. 28(iv) and the admission of additional evidence. The Tribunal's decision was based on the precedent set by the Supreme Court in Mahindra And Mahindra Ltd. v/s. Commissioner of Income Tax. The Court clarified that for Section 28(iv) to apply, the benefit received must be in a form other than money. In this case, it was established that there was no benefit other than in the form of money received by the Assessee. Even if the additional evidence was excluded, the outcome would remain the same. Therefore, the second question of law did not arise and would have to be decided against the Revenue.

In conclusion, the Court declined to admit the appeal and dismissed it without any order for costs.