INCOME TAX ACT, 1961

Section 251

Appeal CIT (A) - Additional evidence - Advances Opportunity of hearing not provided to AO -

Assessee had received a sum as advance received and was asked to explain this transaction so as to prove genuineness and creditworthiness of the same. However, assessee had miserably failed to furnish any detail. Thus, AO treated the same as unexplained credit under section 68. CIT(A) deleted the addition made by AO. Revenue against the order of CIT(A) held that when any materials or evidences are collected by CIT(A) in exercise of power under rule 46A(4), the same should be shared by CIT(A) with AO who should be given reasonable opportunity to examine and rebut the same. CIT(A) indeed collected materials and evidences during the appellate proceedings and it was not mentioned in order that any opportunity was given to AO to examine these materials and evidences and to rebut the same. Held: It is true that under rule 46A(4) CIT(A) has powers to direct the production of any documents, or the examination of any witness. However, when any materials or evidences are collected by CIT(A) in exercise of power under rule 46A(4) the same should be shared with AO. AO is an interested party in the appellate proceedings before the CIT(A) and even if CIT(A) accepts the additional evidences/materials under rule 46A(4) a reasonable opportunity must be provided by to AO to examine such additional. Therefore, matter was remanded back to AO with the direction to pass fresh order after providing opportunity of being heard to the assessee.

REFERRED :

FAVOUR : Matter remanded

A.Y. : 2013-14

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