Perverse Finding by CIT(A) from Same Documents before AO: Chhattisgarh HC sustains Deletion of ₹4.89 Cr Income Tax Addition [Read Order]

The Chhattisgarh High Court recently dismissed an appeal filed by a Deputy Commissioner Of Income Tax, noting that no new evidence had been produced at any of the appellate stages that were not made available to the assessing officer.

The deputy commissioner approached the high court assailing an order by the Commissioner of Income Taxes (Appeals) ( CIT(A) ), later affirmed by the Income Tax Appellate Tribunal (ITAT) by which income tax additions of ₹4.89 crore were deleted against the financials of the respondent-assessee M/s Merigold Impex.

The primary contention raised by the Revenue before the High Court was that the CIT(A) had recorded a perverse finding by deleting the addition of ₹4,89,85,000 without any formal application for additional evidence, which was in violation of Rule 46A of the Income Tax Rules, 1962.

Accordingly, the appeal was admitted raising two substantial questions of law - whether the CIT(A) had erred in deleting the addition and whether the ITAT had wrongly upheld the same.

The Revenue, represented by Amit Chaudhari and Vijay Chawla appearing for the Revenue found fault with the CIT(A) order, contending that it was unsustainable as it relied on material that had not been provided to the Assessing Officer during the initial assessment.

Nikhilesh Begani represented the assessee.

The Division B

ench of Justice Sanjay S. Agrawal and Justice Amitendra Kishore Prasad noted that the ITAT order observes that all the information relied upon by the CIT(A) regarding the flow of source of funds had been duly submitted before the AO, and it had been noted in the CIT(A) order as well.

During the pendency of the present appeal, an affidavit was filed by the Assistant Commissioner of Income Tax, Central Circle-I, Raipur confirming that all the submissions and documents referred to by the CIT(A) were indeed received from the authorised representative of the assessee, and formed part of the assessment record.

The Division Bench, being certain that the CIT(A) had only referred to documents and information already available on record priorly to the Assessing Officer, affirmed that there was no violation of Rule 46A and accordingly dismissed the case.

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