The Surat Bench of Income Tax Appellate Tribunal(ITAT) remanded the matter to the Commissioner of Income Tax(Appeals)[CIT(A)] for a fresh decision after rejecting the CIT(A)’s stance on the non-admission of additional evidence related to transport expenses under Section 40(a)(ia) of Income Tax Act,1961.
Bala Filling Station,appellant-assessee,filed its return of income on 10.10.2017, declaring ₹58,98,190. Engaged in retail trade of petroleum products, the case was selected for scrutiny under Computer Assisted Scrutiny Selection(CASS). During assessment, the Assessing Officer(AO) made additions of ₹10,47,297 as unexplained cash credit under Section 68, ₹4,26,950 disallowed under Section 40(a)(ia), ₹3,75,000 towards reconstitution fees, and ₹6,500 as interest income.
The assessee, aggrieved by the AO’s order, appealed before the CIT(A), challenging three additions. The CIT(A) deleted the additions of ₹10,47,297 and ₹3,75,000, but upheld the disallowance of ₹4,26,950 under Section 40(a)(ia). The assessee had submitted a declaration from M/s Sonal Transport to show the transporter owned fewer than ten trucks and requested it be admitted as additional evidence under Rule 46A.
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However, the CIT(A) rejected the request, stating the evidence was not submitted to the AO despite multiple opportunities and did not meet the conditions under Rule 46A(1). The assessee then filed a further appeal before the ITAT.
The two member bench comprising Pawan Singh ( Judicial Member ) and Bijayananda Pruseth(Accountant Member) heard both sides and reviewed the records. It noted that the assessee had filed an incorrect transporter certificate during assessment and later submitted the correct one before the CIT(A), requesting it be admitted as additional evidence. The CIT(A) rejected the request, stating that the assessee had enough opportunity earlier and did not meet the conditions under Rule 46A.
The appellate tribunal disagreed with this view, holding that the CIT(A) had the power to admit additional evidence and conduct further inquiry under Section 250(4), regardless of Rule 46A restrictions. It observed that the assessee’s mistake was genuine and the correct certificate should have been admitted in the interest of justice.
Accordingly, the ITAT set aside the CIT(A)’s order and remitted the matter back for fresh decision after admitting the additional evidence.
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