Ex-Parte Assessment Orders passed without considering Additional Evidence filed under Rule 46A of Income Tax Rules: ITAT directs Readjudication [Read Order]

The Income Tax Appellate Tribunal (ITAT) Ahmedabad bench while directing readjudication in respect of assessment order observed that the assessment order was passed without considering the additional evidence filed by the assessee under Rule 46A of the Income Tax Rules.

Assesee Ajay Gajanand Deshmukh is an individual earning income from salary and filed his Return of Income by  declaring total income of Rs. 61,500/-.

Thereafter, the assessment was reopened by issuing the notice under Section 148, on the ground that the assessee has given unsecured loan/share application money amounting to Rs. 29,04,264/- to M/s. Deshchem Technological Resources Pvt. Ltd.(DTRPL).

Since the assessee has not responded to the notices issued by the Assessing Officer, the assessment resulted in an ex-parte assessment determining the total income as Rs. 29,95,764/-. The Assessing Officer also initiated penalty proceedings under Section 271(1)(c) of the Income Tax Act.

Aggrieved against the assessment order, the assessee filed an appeal before the CIT(A) who confirmed the above addition made by the Assessing Officer on the unexplained investment and dismissed the assessee’s appeal. Thereafter the assesee filed a second appeal before the tribunal.

Before the bench, Tushar Hemani, counsel for the assessee submitted that the assessee has already submitted all the details and regarding the transaction and  application made under Rule 46A of the Income Tax Rules and various other documents.

However, the CIT(A) rejected the additional evidence and decided the case on merits without giving proper opportunity to the assessee which is gross violation of Principles of Natural Justice.

Departmental Representative, Ms. Saumya Pandey Jain, appearing for the Revenue argued that the documents were never filed by the assessee before the Assessing Officer in spite of proper opportunity given to the assessee. Therefore, the Assessing Officer was compelled to pass an ex-parte assessment order.

During the proceedings  tribunal observed that This is the second round of appeal filed by the assessee before this Tribunal. The first round of appeal set aside the matter back to the file of CIT(A), since in the case of DTRPL this Tribunal set aside the matter back to the file of ld. CIT(A), wherein the protective addition was made in the hands of the DTRPL.

Further During the set aside proceedings, the CIT(A) ought not have rejected the additional evidence filed by the assessee for the first time.

After considering  the facts submitted by both parties, the two member bench of Waseem Ahmed (Accountant Member) and T.R. Senthil Kumar, (Judicial Member) set aside the matter back to the file of CIT(A) with a direction to entertain the additional evidence filed by the assessee under Rule 46A of Income Tax Rules.

To Read the full text of the Order CLICK HERE

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