INCOME TAX OFFICER, WARD-1, MEHSANA V. MENA RICE MILLS, MEHSANA

ITA 1029/AHD/2024

AI Insights

The case involves the Income Tax Officer, Ward-1, Mehsana as the appellant and Mena Rice Mills as the respondent. The dispute arose from the assessment year 2017-18, where the assessee did not file a return of income. The AO discovered a cash deposit of Rs.1,13,00,500 in the assessee's bank account and treated it as unexplained income under Section 69A of the Income Tax Act, 1961, due to non-compliance with notices. The CIT(A) later deleted this addition based on additional evidences provided by the assessee, which were not shared with the AO for examination. The Revenue appealed against this decision, leading to the current judgment which set aside the CIT(A)'s order and remanded the case for further examination of the new evidences.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 25182 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-04-2025
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KAVAN LIMBASIYA
• Assessee Lawyers: PARIN SHAH
• Keywords: Set aside; Additional evidence
• Section: 147; 148; 69A

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, AHMEDABAD BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER & SHRI NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER आयकर अपील सं./I.T.A. No. 1029/Ahd/2024 (Ǔनधा[रण वष[ / Assessment Year: 2017-18) Income Tax Officer Ward -1, Mehsana बनाम/ Vs. Mena Rice Mills Plot No.121, GIDC Estate, Highway, Kalol, Mehsana, Gujarat – 382725 èथायी लेखा सं./जीआइआर सं./PAN/GIR No. : AACFM9435F (Appellant) .. (Respondent) Assessee by : Shri Parin Shah, A.R. Revenue by : Shri Kavan Limbasiya, Sr. DR Date of Hearing 25/03/2025 Date of Pronouncement 02/04/2025 O R D E R PER SHRI NARENDRA PRASAD SINHA, AM: This appeal is filed by the Revenue against the order of National Faceless Appeal Centre (NFAC), Delhi (in short ‘the CIT(A)’) dated 18.03.2024 for the Assessment Year 2017-18. 2. The brief facts of the case are that the assessee is a firm and no return of income was filed for the A.Y. 2017-18. An information was received by the AO that assessee had made cash deposit of Rs.1,13,00,500/- in its current account no. 126255305000039 with Kalol Nagarik Sahakari Bank Limited. On the basis of this information, the AO had recorded the reason under Section 147 of the Income Tax Act, 1961 (in short ‘the ITA No. 1029/Ahd/2024 [ITO vs. Mena Rice Mills] A.Y. 2017-18 - 2 – Act’) for escapement of income and, thereafter, issued notice u/s. 148 of the Act. There was no compliance by the assessee to this notice and also to any of the subsequent notices issued by the AO. Therefore, the assessment was completed ex-parte u/s.144 r.w.s. 147 of the Act on 30.03.2022 at total income of Rs.1,13,00,500/-. 3. Aggrieved with the order of the AO, the assessee had filed an appeal before the First Appellate Authority, which was decided by the Ld. CIT(A) vide the impugned order and the addition as made by the AO was deleted. 4. Now, the Revenue is in second appeal before us. The following grounds of appeal have been taken in this appeal: “(a). The Ld. CIT(A) has erred in in law and on facts in deleting the addition of Rs.1,13,00,500/- made by AO on account of unexplained cash deposited in bank account treated as unexplained money u/s 69A of IT Act ? (b) The appellant craves leave to add, alter and / or to amend all or any the ground before the final hearing of the appeal.” 5. Shri Kavan Limbasiya, Ld. Sr. DR submitted that the AO had allowed as many as six opportunities to the assessee but no compliance was made on any of the occasions. Therefore, the entire cash deposit of Rs.1,13,00,500/- was treated as unexplained income u/s.69A of the Act and added to the income. Ld. Sr. DR submitted that the Ld. CIT(A) had allowed relief to the assessee on the basis of additional evidences filed in the course of appellate proceeding without allowing any opportunity to the AO, which was contrary to the provisions of Rule 46A(3) ITA No. 1029/Ahd/2024 [ITO vs. Mena Rice Mills] A.Y. 2017-18 - 3 – of the IT Rules. He, therefore, requested that the matter may be set aside to the file of the Ld. CIT(A) with a direction to call for the remand report of the AO on the additional evidences filed before him. 6. Per contra, Shri Parin Shah, the Ld. AR of the assessee submitted that the additional evidences filed in the course of appellate proceeding were duly verified by the Ld. CIT(A) and only thereafter, relief was allowed to the assessee. 7. We have considered the rival submissions. The undisputed fact is that no compliance was made by the assessee in the course of assessment proceeding. Before the Ld. CIT(A), the assessee had submitted that the assessee firm (Mena Rice Mills) having PAN No.AACFM9435F was dissolved in the year 2014 and was taken over by Shri Jagdishchandra Mohanlal Patel as a proprietary firm with PAN – ABIPP8206A. It was further submitted that the cash deposit of Rs.1,13,00,500/- in the bank account was duly disclosed in the income tax return of Shri Jagdishchandra Mohanlal Patel. In support of these submissions, assessee had filed copy of dissolution deed, audit report and copy of income tax return of Shri Jagdishchandra Mohanlal Patel. Further, the assessee had also filed a letter from Kalol Nagarik Sahakari Bank Limited to the effect the bank account no. 126255305000039 was operated and maintained by Shri Jagdishchandra Mohanlal Patel, proprietary of Mena Rice Mills since 19th January, 2016. Considering these evidences brought on record by the assessee in the course of appeal proceeding, the Ld. CIT(A) had allowed relief to the assessee and deleted the ITA No. 1029/Ahd/2024 [ITO vs. Mena Rice Mills] A.Y. 2017-18 - 4 – addition as made by the AO. It is found from the order of the Ld. CIT(A) that fresh evidences filed by the assessee in the course of appeal proceeding were not at all confronted to the AO. It will be relevant to reproduce Rule 46A(3) of the IT Rules, which is as under : (3) The 84[Joint Commissioner] (Appeals) or, as the case may be, the Commissioner (Appeals)] shall not take into account any evidence produced under sub-rule (1) unless the Assessing Officer has been allowed a reasonable opportunity— (a) to examine the evidence or document or to cross-examine the witness produced by the appellant, or (b) to produce any evidence or document or any witness in rebuttal of the additional evidence produced by the appellant. 8. The provision of Rule 46A(3) stipulates that the CIT(A) shall not take into account any evidence, other than the evidence produced before the AO, without allowing the AO a reasonable opportunity to examine the evidence or document or to cross examine the witness produced by the appellant. Thus, the Ld. CIT(A) was duty bound to forward the additional evidences filed by the assessee in the course of appeal proceeding to the AO and call for his remand report. Since, the AO was not allowed any opportunity to cross-examine the fresh evidences brought on record by the assessee in the course of appeal proceeding, the order of the Ld. CIT(A) is contrary to the provisions of IT Rules and cannot be sustained. We, therefore, deem it necessary to set aside the matter to the file of the Ld. CIT(A) with a direction to forward the additional evidences filed in the course of appeal proceeding to the AO, in order to enable him to examine those fresh evidences and also to produce any evidence in rebuttal of the additional evidences filed by the assessee. The matter may be ITA No. 1029/Ahd/2024 [ITO vs. Mena Rice Mills] A.Y. 2017-18 - 5 – re-adjudicated by the Ld. CIT(A) after obtaining the remand report of the AO. 9. In the result, the appeal of the Revenue is allowed for statistical purposes. This Order pronounced on 02/04/2025 Sd/- Sd/- (SANJAY GARG) (NARENDRA PRASAD SINHA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 02/04/2025 S. K. SINHA True Copy आदेश कȧ ĤǓतͧलͪप अĒेͪषत/Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant 2. Ĥ×यथȸ / The Respondent. 3. संबंͬधत आयकर आयुÈत / Concerned CIT 4. आयकर आयुÈत(अपील) / The CIT(A)- 5. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड[ फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलȣय अͬधकरण, अहमदाबाद / ITAT, Ahmedabad "