INCOME TAX ACT, 1961

Rule 46A

Appeal [(CIT(A)] - Additional evidence - AO alleging violation of rule 46A -

Assessee-trust carried out construction activity and incurred expenditure through cheque payments. AO based on report given by Inspector of Income Tax disallowed expenditure incurred by assessee. CIT(A) after examining all the details deleted addition made by AO by observing that the assessee has actually carried construction activity in pursuance to the objects of the assessee trust. As per AO, CIT(A) erred in admitting additional evidence without offering an opportunity to AO for examining the same, in violation of rule 46A.Held: AO simply based on Inspector's report (who was not competent to estimate the cost of construction disallowed expenditure incurred by assessee without even examining the issue and without considering details filed, which was highly improper and unjustified assessee started construction activity in earlier years, i.e., assessment years all the years had allowed expenditure incurred by assessee. Only in the year under consideration, AO without giving proper opportunity disallowed expenditure incurred by assessee. Therefore, CIT(A) after examining each and every detail directed AO to delete the addition. Under the above facts and circumstances of case, CIT(A) did not violate rule 46A and adjudicated the issue after examining all the details. No remand report was required, for the reason that expenditure incurred by assessee was very clear from the records. Therefore, CIT(A) rightly directed AO to delete addition.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2013-14

INCOME TAX ACT, 1961

Section 11(1)(a)

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