Facts of the Case

The assessee, Sapna, did not file a return of income for Assessment Year 2015-16. Based on information available on the ITBA system and Insight Portal, the Assessing Officer noted cash deposits of ₹5 crore in the assessee’s bank account. Proceedings were initiated under Section 148A, followed by issuance of notice under Section 148 on 30.03.2022. As there was no compliance from the assessee, the assessment was completed ex parte under Sections 144/147, treating the cash deposit of ₹5 crore as unexplained money and also adding interest income of ₹22,737. The CIT(A) deleted the entire addition after accepting additional evidence in the form of a bank statement and a certificate from Union Bank of India stating that the actual amount deposited was ₹5 lakh and not ₹5 crore, allegedly due to a technical and human error by the bank. The Revenue filed appeal before the Tribunal with a delay of 357 days.

Issues Involved

Whether the delay in filing the Revenue’s appeal deserved condonation, whether the CIT(A) erred in deleting the addition by admitting additional evidence without granting opportunity to the Assessing Officer as mandated under Rule 46A, and whether the matter required remand for verification of the bank certificate and bank statement.

Petitioner’s Arguments

The Revenue contended that the CIT(A) violated Rule 46A by admitting additional evidence without providing an opportunity to the Assessing Officer to examine or rebut the same. It was argued that the bank certificate relied upon was not independently verified, did not bear a bank stamp, and the Assessing Officer was denied an opportunity to examine its veracity. The Revenue submitted that during assessment proceedings the assessee had failed to furnish any explanation or documents and therefore the deletion of the addition was erroneous.

Respondent’s Arguments

The assessee submitted that she was a housewife and that the amount deposited was only ₹5 lakh, given by her husband, and that the bank had wrongly reported the figure of ₹5 crore. Reliance was placed on the bank statement and certificate furnished before the CIT(A). It was further argued that the small amount of interest income supported the claim of incorrect reporting by the bank.

Court Order / Findings

The ITAT Patna condoned the delay in filing the appeal by the Revenue after considering the reasons stated and relying on the decision of the Supreme Court in Collector, Land Acquisition vs. Mst. Katiji. On merits, the Tribunal held that the CIT(A) admitted additional evidence in violation of Rule 46A by not granting opportunity to the Assessing Officer to examine or rebut the same. The Tribunal further observed that the bank certificate relied upon by the CIT(A) was not independently verified. Accordingly, the Tribunal remanded the matter to the file of the Assessing Officer for the limited purpose of examining the veracity of the bank certificate and bank statement and to decide the issue in accordance with law after granting reasonable opportunity to the assessee. The Tribunal also directed the Assessing Officer to take appropriate action under the Income-tax Act against bank officials responsible for reporting incorrect figures, if warranted.

Important Clarification

The Tribunal clarified that while appellate authorities have the power to admit additional evidence, such power must be exercised strictly in accordance with Rule 46A by granting the Assessing Officer an opportunity to examine and rebut the evidence. Failure to follow the prescribed procedure vitiates the appellate order and necessitates remand.

Final Outcome

The appeal filed by the Revenue was allowed for statistical purposes, the order of the CIT(A) deleting the addition was set aside, and the matter was remanded to the Assessing Officer for limited verification of the bank evidence and fresh adjudication in accordance with law after providing due opportunity of hearing to the assessee.

 

Link to download order 
https://www.mytaxexpert.co.in/uploads/1769072643_INCOMETAXOFFICERBHAGALPURVS.SAPNANATHNAGARBHAGALPUR.pdf


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