Additional Evidence Filed for Supporting Genuineness of Business Advance: ITAT Remands ₹30 Cr Unexplained Credit Matter [Read Order]

The Delhi Bench of the Income Tax Appellate Tribunal ( ITAT ) allowed the admission of additional evidence under Rule 29 of the ITAT Rules, 1963, to substantiate the genuineness of a business advance and remanded the addition of Rs. 30 crore as unexplained credit under Section 68, to the Assessing Officer (AO) for fresh adjudication.

Oracle Farms LLP (assessee), formerly M/s. Oracle Farms Pvt. Ltd., faced an assessment order for the assessment year 2013-14, wherein the AO added ₹30 crore as unexplained credit under Section 68 of the Income Tax Act.

The AO made an addition on the ground that assessee failed to furnish sufficient documents to support the transaction with M/s. Saisudhir Infrastructure Ltd. Aggrieved by the AO’s order, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)]. The CIT(A) upheld the AO’s addition.

Aggrieved by the CIT(A)’s order, the assessee appealed to the ITAT. The counsel for the assessee argued that the addition was unjustified as the advance was received through banking channels from a listed company, M/s. Saisudhir Infrastructure Ltd.,

The counsel also stated that there was no dispute regarding the identity, genuineness, or source of the funds. The counsel further contended that the CIT(A) failed to consider the legal ground that the assessee company had converted into an LLP

Additionally, the counsel also filed an application under Rule 29 of the ITAT Rules 1963, submitting additional evidence, including account confirmations, ITR acknowledgment, audited balance sheet, bank statements, and correspondence from M/s. Saisudhir Infrastructure Ltd., to support the transaction’s legitimacy.

The additional evidence could not be produced earlier due to circumstances beyond the assessee’s control, including ongoing litigation involving M/s. Saisudhir Infrastructure Ltd., which prevented communication with the company’s directors during the assessment and appellate proceedings.

The two-member bench comprising Shamim Yahya (Accountant Member) and Sudhir Kumar (Judicial Member), observed that the additional evidence submitted under Rule 29 was relevant for adjudication.

The tribunal observed that the assessee was prevented from producing them earlier due to sufficient cause. The tribunal held that Rule 29 permits the admission of additional evidence in the interest of justice when it is necessary for proper adjudication.

The tribunal set aside the CIT(A)’s order and remanded the matter to the AO with directions to consider the additional evidence and adjudicate the issue afresh, in accordance with law. The bench directed the AO to provide the assessee a reasonable opportunity to be heard. The appeals of the assessee were allowed for statistical purposes.

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