TaxTMI 
TaxTMI 
TaxTMI 
2025 (6) TMI 896
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....tax Rule, 1962, for providing an opportunity of making further enquiries of parties' creditworthiness, genuineness and identity. 2.1 The Id. CIT(A) has erred in deleting the addition of Rs. 2,00,00,000/- u/s 68 on account of share capital and premium received from M/s Capital Electrotech Ltd. ignoring the factual findings of AO regarding the creditworthiness, identity and genuineness of the transaction. 2.2 The Ld. CIT (A) has erred in admitting the additional evidences in form of confirmation from shareholder, ITR and audited Balance sheet, P&L of shareholder, Bank Statement, Share certificate, valuation report without calling the report from assessing officer under Rule 46A of the Income-tax Rule, 1962, for providing an opportunity of making further enquiries of parties' creditworthiness, genuineness and identity 3.1 The Id. CIT(A) has erred in deleting the addition of Rs. 5,00,00,000/- u/s 68 on account of share capital and premium received from M/s Key Components Pvt. Ltd. ignoring the factual findings of AO regarding the creditworthiness, identity and genuineness of the transaction. 3.2 The Ld. CIT (A) has erred in admitting the additional evidences in form of ....
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.... Marketing Pvt Ltd Rs 1,00,00,000/- Total Rs 11,75,00,000/- 6. The Assessing Officer doubted the veracity of share subscription in the assessee company by the above companies and was not satisfied with the replies of the assessee with regard to the identity, creditworthiness and genuineness of transaction and held the parties as entry providers which is evident from the circular transactions in their bank account. Ultimately, the Assessing Officer made an addition of Rs 11,75,00,000/- u/s 68 and assessed the total income of the assessee at Rs. 12,52,28,950/- vide his order dated 28.12.2017 u/s 143(3). 7. Aggrieved, the assessee went in appeal before the ld. CIT(A) who decided the issue in favour of the assessee. 8. Now the Revenue is aggrieved and is in appeal before us. 9. Before us, the key grievance of the Revenue was with respect to the adherence of Rule 46A of the Income Tax Rules. The ld DR vehemently argued that the CIT(A) never directed the assessee to produce evidence/documents invoking his own inherent power u/s 250(4) of the Act. The ld. DR has erred in admitting the additional evidences in form of confirmation from shareholder, ITR and audited Balance sheet, P&L ....
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....power u/s 250(4) of the Act. It is submitted that the documents were produced at the behest of the ld. CIT(A) u/s 250(4) of the Act. Therefore, there is no violation of Rule 46A of the Act as the assessee had not invoked Rule 46A for admission of additional evidence. It is the say of the ld. counsel for the assessee that upon receipt of the information provided by the assessee, the ld. CIT(A) granted opportunity to the Assessing Officer to attend and rebut the submissions made by the assessee which the Assessing Officer failed to avail. The ld. counsel for the assessee relied upon the decision of the Jurisdictional High Court in the case of Manish Buildwell 363 ITR 369 and in the case of ARN Infrastructure India Ltd 469 ITR 333. 12. We have heard the rival submissions and have perused the relevant material on record. We find that the CIT(A) records at para 4 of his order that he had issued notice to the assessee under section 250 fixing the case for hearing on 1st March 2021 and 18th March 2021. The assessee in response to the notice, made a submission dated 01.03.2021 and 31.05.2021 where it furnished in support of its grounds of appeal, the following documents, which were not be....
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....may, before disposing of any appeal, make such further inquiry as he thinks fit, or may direct the Income-tax Officer to make further inquiry and report the result of the same to the Appellate Assistant Commissioner". "Production of additional evidence before the [Deputy Commissioner (Appeals)] [and Commissioner (Appeals)]. 46A. (1) The appellant shall not be entitled to produce before the [Deputy Commissioner (Appeals)] [or, as the case may be, the Commissioner (Appeals)], any evidence, whether oral or documentary, other than the evidence produced by him during the course of proceedings before the [Assessing Officer], except in the following circumstances, namely : (a) where the [Assessing Officer] has refused to admit evidence which ought to have been admitted ; or (b) where the appellant was prevented by sufficient cause from producing the evidence which he was called upon to produce by the [Assessing Officer] ; or (c) where the appellant was prevented by sufficient cause from producing before the [Assessing Officer] any evidence which is relevant to any ground of appeal ; or (d) where the [Assessing Officer] has made the order appealed against without giving suffici....
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....01.03.2021 and 18.03.2021 whereas the letter, where the CIT(A) has purportedly invoked his powers under section 250(4), is dated 12.04.2020, almost a year earlier from the date when the case was fixed for hearing. We are therefore of the considered view that in the impugned order, the CIT(A) has nowhere invoked his coterminous powers under section 250(4) of the Income Tax Act. We're also of the view that when fresh evidence/documents are filed before the CIT(A), without him calling for the documents, he has to follow Rule 46A of the Income Tax Rules 1962 and not render the Rule 46A otiose. 17. We also find that the submission of the assessee that upon receipt of the information provided by the assessee, the ld. CIT(A) granted opportunity to the Assessing Officer to attend and rebut the submissions made by the assessee which the Assessing Officer failed to avail, is not supported by the facts depicted in the CIT(A)'s order itself. The letters granting opportunity to the AO was issued on 24.02.2021 and 12.03.2021 which was prior to the date of submissions of documents by the assessee dated 01.03.2021 and 31.05.2021. Thus, the AO being allowed reasonable opportunity to controvert the....
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.... the additional evidence. Thus, the requirement of sub-rules (1) and (2) of Rule 46A have been complied with. However, subrule (3) which interdicts the CIT (A) from taking into account any evidence produced for the first time before him unless the Assessing Officer has had a reasonable opportunity of examining the evidence and rebut the same, has not been complied with. There is nothing in the order of the CIT (A) to show that the Assessing Officer was confronted with the confirmation letters received by the assessee from the customers who paid the amounts by cheques and asked for comments. Thus, the end result has been that additional evidence was admitted and accepted as genuine without the Assessing Officer furnishing his comments and without verification. Since this is an indispensable requirement, we are of the view that the Tribunal ought to have restored the matter to the CIT (A) with the direction to him to comply with sub-rule (3) of Rule 46A. In our opinion and with respect, the error committed by the Tribunal is that it proceeded to mix up the powers of the CIT (A) under sub- section (4) of Section 250 with the powers vested in him under Rule 46A. The Tribunal seems to h....