The Hyderabad Bench of the Income Tax Appellate Tribunal (ITAT), noted that there is no violation of Rule 46A of Income Tax Rules and observed that rules framed by the Board are statutory in nature.
The assessee, ArunaGullapalli, who is an individual filed her return of income for A.Y. 2017-18 admitting total income and subsequently, the case was selected for limited scrutiny under CASS. As there was no response from the assessee for the notices sent by the Assessing Officer, he issued show cause notice regarding proposed completion of assessment under Section 144 of the Income Tax Act.
As there was no reply from the assessee even to the said show cause notice, Assessing Officer completed the assessment by making addition of Rs.3 crores as long term capital gain disallowing cost of acquisition as well as deduction towards 54F and towards unexplained investment under Section 69 of the Income Tax Act and thus assessed the total income at Rs.4 crores.
The documents based on which the indexation was granted to the assessee were available with the Assessing Officer and on the basis of very same document, he had made the addition of Rs.3 crore in the hands of assessee. Further, the details of the investment made by the assessee in purchasing the immovable property were also available with the Department.
In the present case, it is an admitted fact that assessee did not furnish the information and additional evidence before the Assessing Officer during the course of assessment proceedings in spite of issuance of several notices under Section 143(2) and 142(1) of the Income Tax Act and as there is no other option, Assessing Officer had completed the assessment under Section 144 of the Income Tax Act.
The Departmental Representative argued that Section 250(4) of the Act does not override the duty cast on the part of the CIT(A) to afford opportunity to the Assessing Officer to say his/her view on the additional evidence produced by the assessee for the first time before the CIT(A) as per Rule 46A of Income Tax rules.
The Bench comprising R.K. Panda, Accountant Member and Laliet Kumar, Judicial Member observed that “As the rules were duly framed by the Board and are statutory in nature, in our view, the power given to CIT(A) is required to be exercised in accordance with the rules framed under the Income Tax Act.”
“In view of the above, we are of the opinion that no additional document / evidence was relied upon by the CIT(A) to grant the relief to the assessee. Hence, there is no violation of Rule 46A of the Act in the light of the above said facts” the Tribunal noted.
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