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TMI Blog2012 (10) TMI 538X X X X Extracts X X X X X X X X Extracts X X X X ..... d accountant having income from business besides income from other sources, after being processed u/s 143(1) of the Income-tax Act, 1961 (hereinafter referred to as the 'Act'), was taken up for scrutiny with the service of a notice u/s 143(2) of the Act. During the course of assessment proceedings, the Assessing Officer (A.O. in short) asked the assessee to submit his statement of affairs as on 31.3.2007 & 31.3.2008. After obtaining the said statement of affairs, the AO noticed that the assessee reflected jewellery of Rs.2,50,000/- during the year under consideration. To a further query by the AO, seeking source of purchase of jewellery, the assessee replied that he purchased jewellery for Rs.1,03,000/- on 5.2.2007 through his savings bank account with the ICICI bank while remaining was received from his in laws by way of gift on the occasion of his marriage in February,2007. However, the assessee did not furnish any evidence, bills for purchase of jewellery either by him or his in laws nor submitted quantitative details or value wise details of various items of jewellery. Since the jewellery was not reflected in the statement of affairs as on 31.3.2007 nor any evidence regarding s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from order sheet entry dated 31.08.2010 the assessee was requested to explain sources of addition/investment of Rs..2,50,000/-. A final show cause in this regard was also issued on 29/09/2010 asking the assessee again to explain sources of addition/investment of Rs..2,50,000/-. It means the assessee was given sufficient opportunity of being heard. Merely saying that the Ld. Assessing officer has without giving sufficient opportunity to the assessee to produce proof of investment in jewelry made the additions which is against the law is not tenable. 2 and 3 Regarding the addition of jewellery worth Rs..2,50,000/- the assessee replied vide his letter dated 04/10/2010 a note on addition to jewellery was filed as evident from assessment order which is as under:- "l have purchased jewellery for Rs.1, 03, 000/ - through my ICICI saving bank account on 05/02/2007 and received jewellery worth Rs.1,47,000/- from my in-laws as a gift on the occasion of my marriage in Feb, 2007 during the F. Y. 2006- 07." The confirmation submitted by the assessee states that the jewellery was purchased or marriage was held in Feb, 2007. Therefore, the jewellery should have been reflected in statement of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the assessee's assets and liabilities were not disclosed to the Assessing Officer during the course of assessment proceedings. In view of the facts and circumstances of the case, I am inclined to sustain addition of Rs.Rs.2,50,000/- made by the Assessing Officer. Appeal on this ground is dismissed." 4. The assessee is now in appeal before us against the aforesaid findings of the ld. CIT(A).The ld. AR on behalf of the assessee while carrying us through page 2 & 5 of the paper book submitted that the assessee purchased jewellery worth Rs.1,03,000/-on 2.2.2007 and paid vide cheque debited to the ICICI bank a/c of the assessee on 5.2.2007.Remaining jewellery was received by way of gift on the marriage of the assessee on 19.2.2007. The copies of various bills were placed on page 6 to 13 of the paper book. In these circumstances, the ld. CIT(A) was not justified in upholding the addition, the ld. AR added. On the other hand, the ld. DR vehemently argued that the assessee having failed to explain the source of investment in jewellery worth Rs.2,50,000/-, which did not find place in his statement of affaires as on 31.3.2007 , addition had rightly been upheld by the ld. CIT(A). 5. W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... genuineness of the said expenditure nowhere seems to have been examined by the ld. CIT(A) nor allowed any opportunity to the AO to examine the genuineness of bills submitted by the assessee. Apparently, the ld. CIT(A) nowhere directed the AO to examine the genuineness of additional evidence after the ld. CIT(A) admitted the same even when the AO objected against its admission nor she herself undertook any independent enquiries in this regard. The issue which now emerges before us is as to whether or not the ld. CIT(A) adhered to procedure laid down under rule 46A of the IT Rules,1962 while admitting additional evidence. It is not evident from the impugned order as to why the assessee did not submit before the AO, relevant bills for purchase of jewellery. Now what are the reasons given in the application for admission of additional evidence, is not evident from the impugned order nor the ld. AR explained before us. In nutshell, the ld. CIT(A) upheld the addition without following the procedure laid down under Rule 46A of the IT Rules,1962 . The ld. CIT(A) arrived at her conclusions without ascertaining as to whether or not the assessee was prevented by sufficient cause from submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A) can take into account any evidence produced under sub-r. (1)(b) & (c) of Rule 46A of the IT Rules, 1962 if the assessee was prevented by sufficient cause . In Haji Lal Mohd. Biri Works' case [2005] 275 ITR 496 (All), by making an elaborate discussion on rule 46A of the Rules in paragraph 10 at page 500 and 501, it was held that under rule 46A the authority is not permitted to act whimsically while exercising the jurisdiction under it .In the case under consideration, the assessee placed before the ld. CIT(A),certain additional evidence and admittedly, the said documents were not submitted before the AO. The powers of the CIT(A) in terms of rule 46A to admit fresh evidence, entail an element of discretion which is required to be exercised in a judicious manner. The powers of the CIT(A) to admit additional evidence are not only in situations where the evidence could not be produced before lower authorities owing to lack of adequate opportunity but also in situations where the fresh evidence would enable the CIT(A) to dispose of the appeal or for any other substantial cause. Of course, the power is to be exercised judiciously and for reasons to be recorded. Here we may point out th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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