CIT(A)’s Deletion of ₹2.32 Cr Addition u/s 68 Based on Evidence Admitted in Violation of Rule 46A: ITAT Sets Aside Order and Remands to AO [Read Order]

The Revenue-appellant,challenged the order dated 04.09.2024 for Assessment Year 2017-18 passed by CIT(A). In this case,Ajit Singh Om Parkash Pvt. Ltd,respondent-assessee was granted relief from an addition of ₹2.32 crore made under section 68.

Know Practical Aspects of Tax Planning, Click Here

The main issue was that the CIT(A) deleted the addition based on new evidence submitted during the appeal, which was not shared during assessment, violating Rule 46A. The Department argued that the loans received by the assessee seemed doubtful, as the lenders had received similar amounts from unrelated parties, raising concerns over genuineness and creditworthiness.

The assessee’s counsel did not effectively counter these claims.

The two member bench comprising Mahavir Singh (Vice President) and Amitabh Shukla (Accountant Member) observed that the AO had made the addition under Section 68 after doubting the creditworthiness of the lenders and the genuineness of the transactions based on the evidence available during the assessment. It found that the CIT(A) gave relief by relying on additional evidence that was not shared with the AO.

Since Rule 46A requires the AO to be given an opportunity to examine such new evidence, the tribunal held that this rule was violated. It noted that the department's right to be heard was not respected.

 Clear all Your Doubts on RCM, TCS, GTA, OIDAR, SEZ, ISD Etc... Click Here

To ensure fairness, the appellate tribunal set aside the CIT(A)’s order on this issue and sent the matter back to the AO for fresh adjudication. The AO was directed to give proper opportunity to both sides, and the assessee was allowed to submit all relevant evidence during the reassessment.

Accordingly, the appeal filed was allowed for statistical purposes.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates