AO is to be treated as in default under Rule 46A while not accepting additional evidence

IN THE INCOME TAX APPELLATE TRIBUNAL

MUMBAI BENCH “A”, MUMBAI

BEFORE SHRI G.E. VEERABHADRAPPA, HON’BLE PRESIDENT

AND SHRI V. DURGA RAO, JUDICIAL MEMBER

ITA No. 5467/Mum/2010

Assessment Year: 2006-07

Dr. Anup P. Nehete, … Appellant

Shushrusha Hospital & ICU

Shreenath Plaza, L.T. Road,

Mulund (E), Mumbai – 400 081

(PAN – ABVPN 9953 N)

Vs.

The Income Tax Officer, …Respondent

Ward 11(2), (1), Mumbai.

Appellant by: Mr. P. Daniel

Respondent by: Mr. Ashim Kumar Modi

Date of Hearing: 27/03/2012

Date of Pronouncement: 17/04/2012

ORDER

PER V. DURGA RAO, J.M.:

This appeal filed by the assessee is directed against the order of CIT(A)-26, Mumbai, passed on 14/05/2010 for the assessment year 2006-07, wherein, the assessee has raised the following grounds of appeal:-

“1. The learned CIT(A) erred in confirming a heavy assessment at Rs. 32,08,300/-.

2. The learned CIT(A) erred in not accepting the additional evidence under rule 46A in the form of books of accounts when in fact in the earlier and subsequent years the AO admitted the new books of accounts and made the assessment on the basis of additional evidence in the form of books of account.

3. The learned CIT(A) erred in not considering the argument that the AO did not give any opportunity of being heard before submitting the remand report even though specifically directed by the AO.

4. The learned CIT(A) erred in confirming an amount of Rs. 10,90,000/- out of deposits as unexplained cash credit u/s 68 during the year under assessment and adding the same to the total income.

5. The learned CIT(A) erred in confirming  an amount of Rs. 10,89,000/- out of unsecured loans as concealed income during the year under assessment and adding the same to the total income.

6. The learned CIT(A) erred in confirming  the security deposit of Rs. 1,75,000/- as concealed income and adding the same to the total income.

7. The learned CIT(A) erred in confirming  the capital introduced of Rs. 1,46,379/- as unexplained investment u/s 68 and adding the same to the total income.

8. The learned CIT(A) erred in confirming  the interest debited of Rs. 2,38,288/- treated as the income of the appellant.

9. The learned CIT(A) erred in confirming  the rent paid of Rs. 60,000/- as income and adding the same to the total income.

10. The learned CIT(A) erred in confirming  an addition of Rs. 3,117/- being the difference in the capital account.

11. The learned CIT(A) erred in confirming  an addition of Rs. 1,00,000/- on account of low withdrawals and adding the same to the total income.

12. The learned CIT(A) erred in confirming  the depreciation claimed and thereby making an addition of Rs. 12,514/- to the income returned.”

3. The facts, in brief, are that the assessee is a Doctor by profession and also a partner in Shushrusha Hospital & ICU. During the year under consideration, the assessee filed his return of income declaring total income at Rs. 2,94,000/-. Subsequently, the assessee's case was selected for scrutiny and in the scrutiny assessment the AO had made of Rs. 29,143,298/- on various counts. In an appeal before the CIT(A), the assessee had filed various details, which were required by the AO. It was submitted before the AO that the assessee being Auditor to travel various places, therefore, he handed over all the details to his Advocate, who is appearing before the AO, and the advocate failed to file the said details before the AO. The learned CIT(A) without considering the explanation offered by the assessee observed that the information and the evidence now sought to be presented before him is entirely fresh and the assessee seeks to change all the facts and the details in the return of income filed before the AO during the course of assessment proceedings, which is not possible, therefore, he confirmed the action of the AO without considering the details filed by the assessee. Aggrieved, by the order of the CIT(A), the assessee is in appeal before us.

4. Before us, the learned counsel for the assessee has submitted that the assessee is having all the details, which were failed to file by the advocate of the assessee when the assessee instructed to file, and therefore, the assessee is prevented by reasonable cause for not filing the details as required by the AO during the course of assessment proceedings. He, therefore, contended that making addition without examining the full details and evidences and merits of the case by the AO leading to breaking interest of natural justice. He further contended that the the learned CIT(A) has not considered the details filed by the assessee and simply rejected the same on the ground that the material is fresh. The learned counsel invited our attention to page nos. 57 & 58 and 199 & 200 of the paper book to submit that in AY 2005-06 and 2006-07, the CIT(A) gave directions to the AO to admit the additional evidence filed by the assessee and decide the issue afresh. He, therefore, submitted that in AY 2005-06 and 2006- 07 the learned CIT(A) admitted the additional evidence and remanded the issue back to the AO to consider the additional evidence and the AO after considering the same and giving opportunity of hearing to the assessee, deleted the addition made him initially. He, therefore, pointed out that in the year under consideration, no personal hearing was given.

5. On the other hand, the learned DR supported the orders passed by the authorities below in support of revenue's case.

6. After hearing both the parties and perusing the record as well as the orders of the authorities below, it is clear from the order of the AO that the AO has asked certain details, which were not filed by the assessee, and the AO made the additions after considering the material available on record. On appeal, the assessee filed the details, which are required by the AO, before the CIT(A), but the CIT(A) rejected the same. We find that under the similar circumstances in AY 2005-06 and 2006-07, the CIT(A) admitted the additional evidence and details filed by the assessee and remanded the matter to the AO with a direction to give opportunity of hearing to the assessee in the matter. After considering the facts of the case, in the interest of justice, one more opportunity may be given to the assessee to substantiate his case by way of submitting the details and evidence available with him, before the AO. We, therefore, set aside the order of the CIT(A) and restore the matter to the file of the AO with a direction to decide the issues afresh after considering the details and evidence, which will be filed by the assessee before him, and in accordance with law. Needless, to say the AO shall provide reasonable opportunity of hearing to the assessee. Thus, the grounds raised by the assessee are treated as allowed for statistical purposes.

7. In the result, appeal filed by the assessee is treated as allowed for statistical purposes.

Pronounced in the open court on 17th April, 2012.

                                                    Sd/-                                        Sd/-

                                 (G.E. VEERABHADRAPPA)      (V. DURGA RAO)

                                              PRESIDENT                   JUDICIAL MEMBER

Mumbai, Dated: 17th April, 2012

kv

Copy to: -

1) The Appellant.

2) The Respondent.

3) The CIT (A) concerned.

4) The CIT concerned.

5) The Departmental Representative, “A” Bench, I.T.A.T.,Mumbai.

//True copy//

By Order

Asst. Registrar,

I.T.A.T., Mumbai.