Mere 46A application to CIT-A do not justify that papers are on record if the assessee’s application under Rule 46A is declined-ITAT

Mere 46A application to CIT-A do not justify that papers are on record if the assessee’s application under Rule 46A is declined-ITAT

46A application to CIT-A

ABCAUS Case Law Citation:
1041 (2016) (10) ITAT

Brief Facts of the Case:
In the present bunch of 6 appeals for for the Assessment years 2005-06 to 2010-11, the assessee was aggrieved by the order of the CIT(A) in confirming penalty under section 271(1)(c) of the Income Tax Act, 1961.

A search and seizure operation was carried out at a Group under section 132. The premises of the assessee was also covered under search operation, and consequently, notice under section 153A was issued to the assessee in all these assessment years requiring him to furnish return of income within 45 days from the service of notice. The assessee filed his returns of income and disclosed certain additional income. The assessment was completed making additions on account of the following:

  1. Addition of cash credits u/s 68
  2. Disallowance of Interest on cash credits u/s 68
  3. Additional income disclosed in the 153A return
  4. Addition on account of low Household withdrawals
  5. Addition on Unaccounted Self Assessment Tax payment

Also penalty u/s 271(1)(c) was imposed for all the assessment years as under:

AY Penalty levied
2005-06 Rs. 24,100/
2006-07 Rs. 63,000/-
2007-08 Rs. 59,200/-
2008-09 Rs. 2,68,700/-
2009-10 Rs. 3,51,400/-
2010-11 Rs.3,90,300/-

Dissatisfied with the levy of above penalty, the assessee carried the matter in appeal before the CIT(A). The First Appellate Authority deleted penalty with regard to the additions made by the Assessing Officer (AO) for low household withdrawals. As far as other additions are concerned, penalty was confirmed.

Observations made the Tribunal:

Regarding additional income disclosed u/s 153A,
the ITAT observed that CIT(A) had drawn inference that since the assessee had not disclosed additional income in the original returns, meaning thereby, it was to be assumed that he had disclosed these amounts only when some incriminating material was found. However, this inferential assumption should be supported by incriminating material and accordingly in the absence of anything, deeming provisions provided in Explanation 5 for considering concealment of income qua the additions made to the total income of the assessee would not trigger.

Additions of cash credits
The ITAT observed that the assessee failed to prove genuineness of such credits in his books of accounts. In other words, he failed to discharge onus put upon him by virtue of section 68 of the Income Tax Act.

It was observed that according to the CIT(A), the assessee did not file confirmation and other details before the AO. The assessee sought to file these confirmation as additional evidences with help of Rule 46A(1) of the Income Tax Rules, 1962, but the CIT(A) had rejected the prayer of the assessee and did not take these documents on record.

Though the assessee had submitted copies of confirmation and copies of ledger account and given a certificate that these papers were submitted before the CIT(A). However, the Tribunal opined that the certificate was factually incorrect. Once the CIT(A) declined to take these papers on record by rejecting prayer of the assessee made under Rule 46A, then, it would mean that these papers were not on the record. By mere submission of papers before the ld.CIT(A) with an application under Rule 46A would not justify these papers are on the record. The assessee ought to had filed an application under Rule 29 of the IT(AT) Rules for permission to adduce additional evidence. In the absence of such application, this cannot be treated as part of the record.

Penalty u/s 271(1)(c) was sustained as there was no explanation at the end of the assessee about alleged cash credits. The assessee failed to give source of these cash credits, and also failed to give any plausible explanation.

46A application to CIT-A

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