Additional Evidence admitted due to non-seriousness of Authorised Representative and for non service of notices
ABCAUS Case Law Citation:
ABCAUS 3186 (2019) (11) ITAT
In the instant case, the appeal by the assessee was directed against order passed by the Commissioner of Income-tax (Appeals) in not permitting the assessee to file additional evidence under Rule 46A of the Income Tax Rules 1962.
The case of the assessee was selected for the scrutiny and notice under section 143(2) of the Income-tax Act, 1961 (‘the Act’) was issued and served upon the assessee. The assessee was asked to produce books of accounts along with bills/vouchers for verification of the financial affairs and expenses claimed in the profit and loss account.
In view of the non-compliance, the Assessing Officer invoked section 145(3) of the Act and rejected the books of accounts and estimated net profit at the rate of 25% of total turnover.
Aggrieved, the assessee filed details of all expenses claimed and produced complete books of accounts before the CIT(A) as additional evidences. The CIT(A) forwarded the additional evidences to the Assessing Officer calling for any objection to the admission of the additional evidences as well as calling for a remand on merit of the addition.
The Assessing Officer objected admission of the additional evidences on the ground that sufficient opportunity was allowed to the assessee, which had not been availed and, therefore, no second inning should be allowed to the assessee.
The CIT(A) in view of the remand report of the Assessing Officer (AO) and submission of the assessee, rejected the request of admission of the additional evidence. According to the Ld. CIT(A), the assessee did not fulfil the requirement for admitting additional evidences.
The CIT(A) observed that for admitting the additional evidences, following circumstances should exist:
(a) Where the AO 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 AO; or
(c) Where the appellant was prevented by sufficient cause from producing before the AO any the evidence which is relevant to any ground of appeal; or
(d) Where the AO has made the order appealed against without giving sufficient opportunity to the appellant to adduce evidence relevant to any ground of appeal.
The CIT(A) held that none of the circumstances above existed in the case of the assessee and accordingly, he referred to various judicial decisions and declined to admit the additional evidences in view of the circumstances and Rule 46A of the Income Tax Rules, 1962.
Before the Tribunal, the assessee submitted that first three notices issued by the Assessing Officer were not served upon the assessee at all, which were either not issued or issued it wrong address and were written back and were lying in the record file of the AO.
It was submitted that subsequently, though the Authorised Representative of the assessee attended, however, he could not produce books of accounts and bills and vouchers before the Assessing Officer. He submitted that assessee could not be faulted for non-seriousness on the part of the Authorised Representative.
The Tribunal observed the CIT(A) has not admitted the additional evidences holding that:
– the Assessing Officer did not refuse to admit any evidence;
– the assessee was not prevented by sufficient cause for producing the evidence, which is relevant to any of the ground of the appeal; and
– the Assessing Officer provided sufficient opportunity to the assessee to adduce the evidences
The Tribunal observed that as far as non-service of first three notices were concerned, the Department had not disputed the finding of the fact. However, the contention of the Department had that once, the hearing was attended by the Authorised Representative, he was required to comply the queries raised by the Assessing Officer and was required to produce books of accounts/bill vouchers etc.
The Tribunal opined that the assessee was prevented from producing the books of accounts, bills and vouchers partly due to nonservice of the notices and partly due to non-seriousness on the part of the Authorised Representative dealing with the assessment. In such circumstances, one of the conditions for admitting the additional evidences under Rule 46A of the Income Tax Rules, 1962 was fulfilled by the assessee.
The Tribunal opined that in the interest of substantial justice, the assessee was to be provided opportunity to produce books of accounts, bills and vouchers etc. for verification of the claim of expenses and should not be punished by way of sustaining the addition without verification.
Accordingly, the Tribunal set aside the finding of the CIT(A) and directed him to admit the additional evidences in the form of books of accounts, bills and vouchers and any other documents and decide the additions made by the Assessing Officer on merit.
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