INCOME TAX ACT, 1961

Section 251

Appeal [CIT (A)] - Additional evidences - Admission of evidences without intimating to AO - Violation of rule 46A

Assessee's case was selected for scrutiny. Accordingly, AO issued notice under section 143(2) to the assessee calling for the required information; however, the assessee did not comply with the said notice and remained totally non-responsive during the assessment proceedings. Therefore, the AO completed the assessment to the best of his judgment, wherein he made addition to the income of the assessee. Such addition was made on the basis of possession of CIB/AIR information revealing investment/ transaction, in derivatives, futures and options. Further, before CIT (A), the assessee produced additional evidences to explain the nature and source of investment/ transactions as reported in the CIB/AIR information and after relying on the same, the CIT (A) deleted the entire addition made by the AO. Held: It was found that CIT (A) neither sent additional evidences for examination of AO nor called for any report from him. He simply relying upon the said evidences, deleted the addition as made by the AO. As per rule 46A(3) of Income Tax Rules, 1962, if assessee on his own furnishes additional evidences before CIT (A), such evidences shall not be taken into account unless AO had been allowed a reasonable opportunity verifying such evidences and offering his comment. In instant case, the CIT (A) on his own neither made any enquiry nor called for any evidences from the assessee. It was the assessee who, on his own, furnished the additional evidences to explain the information contained in CIB/AIR report. Therefore, the procedure laid down in sub-rules (2) and (3) of rule 46A, had to be followed, however, the same was not followed. Accordingly, the impugned order was set aside and matter was remanded to the CIT (A) for fresh adjudication after necessary compliance with the provisions of rule 46A.

REFERRED :

FAVOUR : Matter remanded

A.Y. :

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