2016 (8) TMI 1461 - AT - Income Tax

Appeal allowed due to procedural lapses in admitting evidence. Remanded for fair hearing and compliance with Rule 46A.

ITO, Ward-36 (3), New Delhi Versus Pardeepa Rani

The Tribunal allowed the Revenue's appeal for statistical purposes, setting aside the order due to procedural lapses in admitting additional evidence at ... Admission of additional evidence - return of the assessee declaring an income was selected for scrutiny assessment through CASS - HELD THAT:- CIT(A) has erred in deleting the addition made without first confronting the fresh evidences to the AO. We find that though before admitting the fresh evidences the CIT(A) remanded these to the AO. AO as per record objected to its admissibility. Thereafter over-ruling the objection the CIT(A) considering the reasons for filing fresh evidences and the fact that the “Agreement to Sell” “Possession letter” and “Power of Attorney in favour of the seller” were crucial and material evidences required to be considered for adjudicating upon the issue admitted the evidences. ' The decision to admit the evidences is upheld as facts justifying admission of fresh evidences namely the assessee remaining unavailable at her address for reasons beyond her control i.e. health reasons and thus did not receive the notices which may have been sent have been duly noted and thus we find fulfill the requirements of sub- Rules (2) of Rule 46A. However, having so concluded, we find it was incumbent upon the CIT(A) thereafter, in terms of sub-Rule (3) of Rule 46A to confront the evidences to the AO so as to allow him an opportunity to rebut the evidences placed on record which opportunity admittedly has not been provided. We are of the view that the CIT(A) after over-ruling the objection of the AO on the admissibility of the fresh evidences was required to communicate the decision to admit the evidence to the AO and provide him a reasonable opportunity to rebut the same. In the absence of any such exercises the order is in violation of the Statutory Rules and is open to the challenge of being perverse. Considering the submission of the parties before the Bench and the precedent relied upon the impugned order is set aside and allowing the departmental ground, the issue is restored back to the file of the CIT(A) to address the procedural lapses and pass a speaking order in accordance with law after giving the assessee a reasonable opportunity of being heard. Issues Involved:1. Admission of additional evidences at the appellate stage.2. Procedural compliance under Rule 46A of the Income Tax Rules, 1962.Detailed Analysis:1. Admission of Additional Evidences at the Appellate Stage:The Revenue challenged the CIT(A)'s decision to admit additional evidences at the appellate stage. The assessee had submitted fresh evidences during the appeal, citing health problems that caused her to temporarily relocate, leading to non-compliance with notices. The CIT(A) admitted these evidences, overruling the Assessing Officer's (AO) objections and provided partial relief by reducing the addition from Rs. 33,66,000 to Rs. 2,50,000.2. Procedural Compliance under Rule 46A:The Tribunal examined the procedural compliance under Rule 46A of the Income Tax Rules, 1962. Rule 46A(2) permits the admission of fresh evidence if justified reasons are provided in writing by the CIT(A). However, Rule 46A(3) mandates that the AO must be given a reasonable opportunity to examine and rebut the additional evidence. The Tribunal found that although the CIT(A) remanded the fresh evidences to the AO, the AO's objections were overruled without providing him the opportunity to rebut the evidences, violating Rule 46A(3).The Tribunal referred to the Jurisdictional High Court's decision in CIT vs. Manish Buildwell Pvt. Ltd., emphasizing that the procedural requirements of Rule 46A must be strictly followed. The High Court held that the CIT(A)'s powers under Section 250(4) of the Income Tax Act to conduct further enquiry do not negate the procedural mandates of Rule 46A when additional evidence is introduced by the assessee.The Tribunal concluded that the CIT(A) erred by not confronting the fresh evidences to the AO after overruling his objections. The CIT(A) should have communicated the decision to admit the evidence to the AO and provided him a reasonable opportunity to rebut it. The Tribunal set aside the impugned order and restored the issue to the CIT(A) to address the procedural lapses and pass a speaking order in accordance with law after giving the assessee a reasonable opportunity of being heard.Conclusion:The appeal of the Revenue was allowed for statistical purposes, and the order was pronounced in the open court on 19th August 2016.