2025 (4) TMI 900

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.... 143(1) of the Income-tax Act (hereinafter referred to as the "Act"), dated 25.12.2021 for Assessment Year 2020-21. 2. Grounds taken by the Revenue are reproduced as under: 1. Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) was justified in admitting the additional evidence submitted by the assessee during the appellate proceedings in contravention of the provisions of Rule 46A(2) of the Income Tax Rules, 1962? 2. Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) was justified in deciding the appeal of the assessee based on the additional evidence proceedings, without giving an opportunity to the AO as per the provisions of Rule 46A(3) of the Income Tax Rules, 1962....

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....he return at Sr.No.7(e) 'expenditure by way of penalty or fine for violation of any law for the time being in force u/s. 37 of the Act" under the heading 'amounts debited to the profit and loss account, to the extent disallowable u/s. 37'. 5.1. In respect of the second addition towards liability of contingent nature, assessee submitted that this amount was reported in the audited balance sheet under Schedule 12 'significant accounting policies and notes on accounts' in compliance of disclosure requirements. This amount in the nature of contingent liability is neither debited to the profit and loss account for the year under consideration nor any deduction is claimed in the return of income. It is mentioned in the notes of accounts only f....

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....t the appellant did not claim the contingent liability as an expense, neither in the profit and loss account nor in the return of income nor as deduction in the computation of income. The disallowance of the contingent liability is due to an inadvertent error in reporting by the auditor in column 21(g) of the tax audit report. As the appellant did not debit this contingent liability in its profit and loss account or return of income, the adjustment of INR 4,10,88,888/- would be unjust and impose an undue burden on the assessee. Consequently, the appeal of the assessee on this ground is upheld." 7. Before us, ld. Sr. DR contended that relief has been granted to the assessee by ld. CIT(A) by admitting the additional evidence and deciding t....