Additional Evidence can’t be Admitted without explaining Issue that was Adjudicated by way of Additional Ground: ITAT

Case Details: ITO (International Taxation) v. Smt. Shehnaz Nurdin Ajania - [2023] 150 taxmann.com 11 (Surat-Trib.)

Judiciary and Counsel Details

• • Pawan Singh, Judicial Member & Dr A.L. Saini, Accountant Member
  • Gaurav Kabra, CA for the Appellant.
  • H.P. Meena – CIT – DR for the Respondent.

Facts of the Case

During the year under consideration, the assessee made investments in mutual funds. Despite repeated opportunities vide various statutory notices, no efforts were made by the assessee to explain the source of said investment. Afterwards, the Assessing Officer (AO) completed the assessment under section 144 and held that it was proved beyond doubt that the assessee had invested in various mutual funds out of his undisclosed investment. Therefore, an addition under section 69 was made by the AO.

On appeal, the assessee filed additional evidence regarding the source of investment and contended that investments made in mutual funds were joint investments by the assessee and her spouse. The CIT(A) deleted the additions based on the additional evidence.

Aggrieved by the order, an appeal was filed by the revenue to Tribunal, contending that additional evidence was admitted in violation of Rule 46A.

ITAT Held

The Tribunal held that the assessee only furnished additional evidence and did not raise any additional ground. There was merit in the contention of the revenue that the CIT(A) erred in admitting additional evidence. Further, the CIT(A) also did not write reasons for admitting additional evidence.

The CIT(A) has not explained in his order which issue he had adjudicated by way of additional ground. Further, he did not explain in his order the exceptional clauses (a) to (d) of rule 46A, which are:

a) AO has refused to admit evidence(s); or

b) Assessee was prevented by sufficient cause from producing the evidence which he was called upon by the Assessing Officer; or

c) Assessee was prevented by sufficient cause from producing before the Assessing Officer which is relevant to any ground of appeal; or

d) AO made the order without giving sufficient opportunity to the assessee to adduce evidence relevant to any ground of appeal.

Since the CIT(A) accepted the additional evidence in violation of rule 46A of the rules as he did not deal with these exceptions of rule 46A, the order he passed wasn’t tenable in law.
Therefore, the prayer of the revenue was accepted, and the order of CIT(A) was set aside. Further, the assessee raised various issues on the grounds of appeal before CIT(A) was remanded back to AO for fresh consideration.

List of Cases Referred to

• • Cognizance for Extension of Limitation, In re [2020] 117 taxmann.com 66 (SC) (para 2).