Material obtained during assessment cannot be made basis for additions without confronting to assessee

Material obtained during assessment cannot be made basis for additions without confronting the same to the assessee. ITAT remand the case back to AO

ABCAUS Case Law Citation:
ABCAUS 2431 (2018) 07 ITAT

The Appellant assessee had filed the present appeal against the order passed by CIT(A) inter alia in not admitting additional evidences u/r 46A of the Income Tax Rules 1962 (the Rules).

During the assessment proceedings, assessee had failed to furnish necessary details called for by the Assessing Officer and ultimately AO proceeded to pass the assessment order ex parte on the basis of material made available on record. He rejected the books of accounts and made best Judgment assessment by making the addition to the total income.

The assessee carried the matter before the CIT(A) who confirmed the addition, after dismissing the appeal.

Feeling aggrieved, the Assessee was before the Tribunal.

The Tribunal observed that during the appellate proceedings, assessee moved an application under Rule 46A of the Rules which had been rejected by the CIT(A) on the ground that since ample opportunities had already been given by the AO to the assessee, who had failed to file the requisite details and hence no ground was made out to entertain the additional evidence.

It was also observed that the AO during the assessment proceedings had issued summon u/s 131 of the Income-tax Act, 1961 (the Act) to two parties for producing certain documents regarding transactions with the assessee and had relied upon material produced without confronting the same to the assessee.

The Tribunal noted that the CIT(A) had treated the findings returned by AO collected by way of issuance of summon u/s 131 of the Act as a gospel truth. All these findings were damaging to the case of the assessee particularly when taken at its back without affording an adequate opportunity of being heard to the assessee.

The Tribunal further observed that the entire case of the AO as well as CIT(A) was based upon the discrepancies pointed out by the AO as well as confirmed by CIT(A), which the assessee had requested to explain by moving an application under Rule 46A of the IT Rules, which was rejected by CIT(A) merely on the ground that ample opportunities have been granted to the Assessee and he had failed to explain the discrepancies pointed out by the AO.

However the Tribunal opined that when the entire evidence had been taken on record by the AO on the back of the Assessee, there was no question of explaining the same by the Assessee. Under these circumstances, to meet with the ends of justice, the additional evidence sought to be brought on record by the Assessee by moving an application under Rule 46A of the IT Rules, was required to be allowed as the comprehensive material obtained during assessment cannot be made basis for additions without confronting the same to the assessee.

The Tribunal allowed the additional evidence sought to be produced by the Assessee and remanded the case back to the AO to decide afresh.

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