No addl. evidence to be admitted by CIT(A) unless AO given opportunity of examining

No additional evidence to be admitted by CIT(A) unless Assessing Officer is given opportunity of examining the evidence and rebut the same

In a recent judgment, Hon’ble ITAT has held that as per Rule 46A, no additional evidence to be admitted unless CIT(A) gives Assessing Officer an opportunity of examining the evidence and rebut the same.

ABCAUS Case Law Citation:
ABCAUS 4020 (2024) (05) ITAT

In the instant case, the Income Tax Department had challenged the order passed by the CIT(A) in in inter alia admitting additional evidences without satisfying the pre-conditions and thus violating the principles of admissions of addl. Evidences.

A search and seizure operation was conducted under section 132 of the Income Tax Act, 1961 in a Group of cases, search and seizure operation was also conducted at the premises of the assessee.

During the course of search and seizure proceedings at the premises of the assessee, cash was found but not seized and jewellery items amounting were also found, out of which jewellery of approx. 60 per cent value was seized.

The Assessing Officer issued notice under section 142(1) of the Act to the assessee requiring the assessee to file his return of income. The assessee, in response, filed his return of income including the income surrendered by the assessee during the course of search and seizure operation.

The Assessing Officer while completing the assessment under section 143(3) of the Act, made additions on the basis of the figures found appearing on the seized documents during the course of survey, and assessed the total income of the assessee.

Before the CIT(A), assessee moved a petition under rule 46A of the I.T. Rules for admission of the additional evidences in relation to the additions made by the Assessing Officer. The additional evidences so filed by the assessee were admitted by the CIT(A).

The additional evidences furnished by the assessee were forwarded to the Assessing Officer for submitting the inquiry report under section 250(4) of the Act. The CIT(A), after admitting the additional evidence filed by the assessee and considering the inquiry report submitted by the Assessing Officer under section 250(4) of the Act, deleted most of the additions made by the Assessing Officer and partly allowed the appeal of the assessee.

Before the Tribunal, the main argument of the Revenue was that the CIT(A) even before calling for the inquiry report under section 250(4) of the Act from the Assessing Officer on the additional evidence furnished on behalf of the assessee, admitted such additional evidence on his own without giving any opportunity to the Assessing Officer to file his objections on admission of the additional evidence or passing any order under rule 46A(2) of the Rules to show that the conditions for filing the additional evidence under rule 46A(1) of the Rules were satisfied, therefore, the acceptance of fresh evidence by CIT(A) was in violation to Rule 46A of the Income Tax Rules.

It was submitted that Rule 46A mandates a specific procedure, which should have been followed by the CIT(A). It was further contended that the CIT(A) also failed to record any finding with regard to the circumstances under which the assessee was prevented from producing the evidence before the Assessing Officer.

It was prayed that in the interest of justice, the matter may be restored back to the file of the CIT(A) for deciding the same afresh after affording reasonable opportunity to the Assessing Officer to file his objection, if any, on the additional evidence filed on behalf of the assessee.

The Tribunal observed that that prior to admission of the additional evidence by the CIT(A), the Assessing Officer was not confronted with the additional evidence furnished on behalf of the assessee. Therefore, there was a clear cut violation of the provisions of rule 46A of the Rule by the CIT(A). Further, the CIT(A) prior to accepting the additional evidence furnished on behalf of the assessee, the Assessing Officer was not confronted with such additional evidence furnished on behalf of the assessee.

The Tribunal noted that Sub-rule (3) of rule 46A, 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, had not been complied with. There was nothing in the order of the CIT(A) to show that before accepting the additional evidence, the Assessing Officer was confronted with the additional evidence furnished on behalf of the assessee. 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. As per sub-rule (1) of rule 46A, no evidence shall be admitted unless the CIT(A) records in writing the reasons for its admission, whereas in the present case, no such reasons were recorded by the ld. CIT(A) for admission of the additional evidence furnished by the assessee for the first before him.

The Tribunal opined that rule 46A creates an indispensable requirement, therefore the issues in dispute needed to be restored to the CIT (A) with the direction to him to comply with the provisions of Rule 46A.

Accordingly, the Tribunal set aside the impugned order of the CIT(A) and restored the issues in dispute to his file for deciding the same afresh after affording reasonable opportunity to the Assessing Officer to furnish his report on the additional evidence filed by the assessee for the first time before the CIT(A) and also on affording reasonable opportunity of hearing to the assessee.

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