S. 254(2) : Appellate Tribunal-Rectification of mistake apparent from the record-Cash credits-Accommodation entries-Additional evidence – Violation of Rule 46A by CIT(A)-Failure to produce the parties– Assessing Officer should exercise his powers under section 131 of the Act–Assessee cannot be compelled to produce the parties–Order of Tribunal rejecting the miscellaneous application and reversing the order of the CIT(A) is quashed and set aside–CIT(A) is directed to decide the appeal a fresh in accordance with law and following the procedure prescribed as per Rule 46A of the Income -tax Rules, 1962. [S. 68, 131, 254(1), Art. 226]
The assessment of the petitioner was reopened on the basis of information received from the Investigation wing, that the parties who have advanced the money to the petitioner were only name lenders. The Assessing Officer made addition under section 68 of the Act. On appeal the petitioner produced the additional evidence in the form of confirmation, bank statement etc. CIT(A) deleted the addition relying on the additional evidences produced by the petitioner. The Revenue has filed an appeal before the Tribunal, however the Revenue has not raised the ground of admitting the additional ground in violation of Rule 46A of the of the Income -tax Rules, 1962. The Tribunal allowed the appeal of the Revenue on the ground that the CIT(A) admitted the additional evidence, without following the procedure prescribed as per Rule 46A of the Income-tax, Rules 1962. The petitioner moved an application under section 254(2) of the Act, on various grounds. The Tribunal rejected the application on the ground that, the counsel has not consented for producing the lender if the matter is restored before the CIT(A) or the Assessing Officer. The petitioner filed a writ against and dismissal of the miscellaneous petition and also appeal against the order of the Tribunal wherein the Tribunal has allowed the appeal of the Revenue. Allowing the writ petition the Honourable High Court quashed the order of the Tribunal rejecting the Miscellaneous Application as well as order of the Tribunal allowing the appeal of the Revenue. Honourable High Court directed the CIT(A) to decide the issue on merit by following the due process of law and complying procedure prescribed as per the Rule 46A of the Income-tax Rules, 1962. The Honourable Court also observed that if the Assessing Officer feels that the presence of the certain parties are required by him to probe the matter further or go behind the entries made by the assessee in its books of account, the Assessing Officer should exercise his powers under Section 131 of the Act by issuing a summons to those parties. (WP No. 2440 of 2023 dt. 18-12-2023) (AY. 2011 -12) (ITA No. 2373 of 2023 dt 18-12-2023) (MA No. 178 -179/Mum./2022 dt. 21-11-2022, ITA No. 2595/Mum/2019, & CO No. 103/Mum/2021 dt. 29-4-2022)
Pravin Polimers Private Ltd. v. ITO (Bom.)(HC) www.itatonline.org
[Coram : Hon’ble Shri Justice K. R. Shriram & Hon’ble Justice Dr. Neela Gokhale]