2022 (2) TMI 183 - AT - Income Tax

Tribunal Upholds CIT(A) Decision on Additional Evidence, Revenue's Appeal Dismissed

ACIT, Cir. 6 (1) Ahmedabad. Versus M/s. Soni Associates

ACIT, Cir. 6 (1) Ahmedabad. Versus M/s. Soni Associates - TMI Issues:Admission of additional evidences under Rule 46A by CIT(A) | Justification of relief granted by CIT(A) on unsecured loan and interest disallowance | Alleged violation of Rule 46A by CIT(A)Admission of Additional Evidences under Rule 46A:The appeal by Revenue challenges the admission of additional evidence under Rule 46A by CIT(A). The AO had made additions under section 68 on unsecured loans and interest disallowance. During appellate proceedings, the assessee submitted additional evidence for unsecured loans. The AO, in the remand report, confirmed the verification of the evidence provided by the assessee, establishing the identity, credit-worthiness of creditors, and genuineness of transactions. Based on this report, CIT(A) partly allowed the appeal, deleting a significant portion of the additions. The Tribunal found that the assessee moved an application for additional evidence under Rule 46A, giving the AO sufficient time to rebut. As the AO verified the evidence and confirmed its authenticity, the Tribunal upheld CIT(A)'s decision, dismissing the Revenue's appeal.Justification of Relief Granted by CIT(A) on Unsecured Loan and Interest Disallowance:The AO had disallowed unsecured loans and corresponding interest debited by the assessee, leading to additions in the total income. The assessee appealed to CIT(A) and submitted additional evidence under Rule 46A, which was verified by the AO in the remand report. CIT(A, based on the report, deleted a significant portion of the additions, retaining only a minor amount. The Tribunal noted that the AO had issued a show cause notice with a short deadline for furnishing details, which hindered the assessee from producing evidence. However, during appellate proceedings, the assessee applied for additional evidence, which was duly considered. The Tribunal found that the relief granted by CIT(A) was justified based on the verified evidence, leading to the dismissal of the Revenue's appeal.Alleged Violation of Rule 46A by CIT(A):The Revenue contended that CIT(A) did not provide proper opportunity to the AO regarding the additional evidence submitted by the assessee, violating Rule 46A. However, the Tribunal observed that the assessee applied for additional evidence during appellate proceedings, and the AO, in the remand report, confirmed the authenticity of the evidence provided. As the AO had sufficient time to verify and rebut the evidence, the Tribunal concluded that there was no violation of Rule 46A by CIT(A). Consequently, the Tribunal dismissed the Revenue's appeal, upholding the decision of CIT(A) based on the verified evidence presented during the proceedings.