LATE MR. NILESH RATILAL SHAH, REP. BY L/H. MR. KUNAL NILES SHAH,CHENNAI V. ITO, NCW-9(1), CHENNAI

ITA 513/CHNY/2025

AI Insights

The case involves appeals by the legal heir of Late Mr. Nilesh Ratilal Shah against the orders of the Learned Commissioner of Income Tax (Appeals) for the Assessment Years 2016-17 and 2017-18. The primary contention revolves around the non-admission of additional evidences by the CIT(A) and the subsequent confirmation of substantial additions to the assessee's income. For AY 2016-17, the CIT(A) rejected additional evidences citing Rule 46A of the Income Tax Rules, 1962, which led to the confirmation of an addition of Rs.81,42,700. For AY 2017-18, a similar addition of Rs.59,84,000 was confirmed following an ex parte order under section 144 of the Income Tax Act, 1961. The Tribunal found that the CIT(A) had not provided adequate opportunity for the assessee to present his case regarding the additional evidences, leading to a violation of natural justice.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 633439 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2017-2018
• Other Referred Cases: TIN Box Co. v. CIT [2001] 249 ITR 216 (SC)
• Laws Referred To: Income Tax Act, 1961, Income Tax Rules, 1962
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N. RAJA KUMAR
• Keywords: Set aside; Additional evidence; Principle of natural justice

Judgement Text

"आयकर अपीलीय अिधकरण, ‘ए’ \u0001यायपीठ, चे ई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH: CHENNAI \u0001ी एबी टी. वक , ाियक सद\u0011 एवं एवं एवं एवं \u0001ी अिमताभ शु\u0018ा, लेखा सद क े सम\u001b BEFORE SHRI ABY T. VARKEY, JUDICIAL MEMBER AND SHRI AMITABH SHUKLA, ACCOUNTANT MEMBER आयकर अपील सं./ITA Nos.512 & 513/Chny/2025 िनधा\u000eरण वष\u000e/Assessment Years: 2016-17 & 2017-18 Late Mr. Nilesh Ratilal Shah, (Rep. by his legal heir Mr. Kunal Nilesh Shah), D-5 22, Arihant Apartments, Raja Annamalai Road, Purasaiwalkam, Chennai-600 084. v. The ITO, Non-Corporate Ward-9(1), Chennai. [PAN: AACPN 7197 B] (अपीलाथ\u0016/Appellant) (\u0017\u0018यथ\u0016/Respondent) अपीलाथ\u0016 क\u001a ओर से/ Appellant by : None \u0017\u0018यथ\u0016 क\u001a ओर से /Respondent by : Mr.N. Rajakumar, Addl.CIT सुनवाईक\u001aतारीख/Date of Hearing : 14.05.2025 घोषणाक\u001aतारीख /Date of Pronouncement : 11.06.2025 आदेश / O R D E R PER ABY T. VARKEY, JM: These are appeals preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeals)/NFAC, (hereinafter referred to as “the Ld.CIT(A)”), Delhi, dated 23.12.2024 for the Assessment Year (hereinafter referred to as \"AY”) 2016-17 & dated 24.12.2024 for AY 2017-18. ITA Nos.512 & 513/Chny/2025 (AY 2016-17 & 2017-18) Late Mr. Nilesh Ratilal Shah :: 2 :: 2. At the outset, the Ld.DR submitted that for AY 2016-17, the assessee filed additional evidences before the Ld.CIT(A) which has not been admitted by him citing Rule 46A of the Income Tax Rules, 1962 (hereinafter referred to as ‘the Rules‘) and by stating that the assessee have not made out a case for admission of the same under clause (a) to (d) of the Rule 46A [refer Para No.4.3.1 of the CIT(A) order]. Therefore, the Ld.CIT(A)/NFAC was pleased to confirm the addition of Rs.81,42,700/-. Likewise, for AY 2017-18, according to the Ld.DR, the AO passed an order u/s.144 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act‘) (ex parte order qua assessee) and added Rs.59,84,000/- which was confirmed by the Ld.CIT(A) albeit after taking Remand Report from the AO which has been reproduced at Para No.4.3 of his order and therefore, according to the Ld.DR, the action of the Ld.CIT(A) need not be disturbed. 3. Having heard the Ld.DR and after perusal of the records, we note that the assessee is an individual who filed his return of income (RoI) for AY 2016-17 on 14.11.2017 declaring total income at Rs.12,66,190/- which return was selected for scrutiny. The AO taking note that the assessee had cash deposits in his HDFC, Kilpauk Branch, Chennai, asked for the entire details of the bank accounts maintained by him. According to the AO, the assessee didn’t respond, therefore, he called for the details ITA Nos.512 & 513/Chny/2025 (AY 2016-17 & 2017-18) Late Mr. Nilesh Ratilal Shah :: 3 :: from the Branch Manager, HDFC, Kilpauk Branch, Chennai, who stated that Shri Nilesh Ratilal Shah, had joint account with three (3) different persons and had deposited in his bank account amounting to Rs.16,16,200/-; and the total cash deposits in all accounts was to the tune of Rs.81,42,700/-. The AO asked the assessee ‘as to why’ assessment u/s.144 should not be framed against the assessee. In response, the assessee submitted that he had only one account with HDFC wherein, he has deposited Rs.16,16,200/- and in the other bank accounts, he is only Joint Account holder and to support such a contention filed confirmation from his wife Smt. Urvashi N. Shah which stated that assessee was a Joint Account holder only. According to the AO, he thereafter asked the assessee for certain details. But the assessee failed to respond/file the same, which prompted him to add the entire cash deposits in four bank accounts [three accounts wherein he is a joint account holder and one account in his name] at Rs.81,42,700/-. On appeal, the assessee is noted to have filed additional evidences which have not been admitted, but rejected by the Ld.CIT(A) by holding as under: 4.3.1 The additional evidence furnished by the appellant cannot be accepted at this point of time. Clause (a) of rule 46A is not applicable because the AO never refused to admit evidences, for the simple reason that no evidences or information was provided by the assessee during the assessment proceedings. Clause (b) and (c) are not applicable because as per the additional evidences submitted by the assessee in appellate proceedings no cause or its sufficiency could be ITA Nos.512 & 513/Chny/2025 (AY 2016-17 & 2017-18) Late Mr. Nilesh Ratilal Shah :: 4 :: ascertained that prevented him from submitting the evidence during assessment proceedings. Clause (d) is not applicable because the AO did provide adequate opportunities to the assessee during the assessment proceedings to present evidence, which were not utilized by the assessee. Thus, the circumstances mentioned in the above mentioned four clauses of Rule 46A are not applicable to the present situation, and therefore, the additional evidence submitted by assessee during appellate proceedings is not admissible. 4. And thereafter, the Ld.CIT(A) has confirmed the addition of Rs.81,42,700/-. We don’t countenance the action of the Ld.CIT(A). According to us, when the assessee has filed additional evidences, he was bound to give two (2) stages of opportunity as contemplated under Rule 46A. First, the Ld.CIT(A) ought to have given to the AO, an opportunity before admitting additional evidences and second, after admission of additional evidences. But in this case, the Ld.CIT(A) has rejected the additional evidences without giving opportunity to the assessee to put up his case ‘as to why’ he couldn’t present the evidences before the AO during the assessment proceedings. Therefore, there is gross violation of natural justice and therefore, for the interest of justice and fair play, we are inclined to set aside the impugned order of the Ld.CIT(A) and taking note that assessee didn’t get proper opportunity before the AO, relying on the decision of the Hon’ble Supreme Court in the case of TIN Box Co. v. CIT reported in [2001] 249 ITR 216 (SC), restore the assessment back to the file of the AO for de novo assessment and the assessee is directed to be diligent and file all the relevant documents to prove his claim regarding the cash deposits in his bank ITA Nos.512 & 513/Chny/2025 (AY 2016-17 & 2017-18) Late Mr. Nilesh Ratilal Shah :: 5 :: accounts as well as give all the details regarding the three bank accounts wherein his name is included as Joint Account holder; and the AO after hearing the assessee to frame assessment in accordance to law. Similarly for AY 2019-20 also, we find contradictory stand / action of the Ld.CIT(A) in respect of admission of additional evidences. First of all, he is noted to have called for Remand Report and having taken the Remand Report and after reproducing the same at Para No.4.3, he confronted it to the assessee, and then reproduced the assessee’s submission at Para No.4.3.1, and thereafter, the Ld.CIT(A) is noted to have again copy pasted the same para for rejection of the additional evidences as he did in AY 2016-17 [refer Para No.4.3.1] 4.3.1 The additional evidence furnished by the appellant cannot be accepted at this point of time. Clause (a) of rule 46A is not applicable because the AO never refused to admit evidences, for the simple reason that no evidences or information was provided by the assessee during the assessment proceedings. Clause (b) and (c) are not applicable because as per the additional evidences submitted by the assessee in appellate proceedings no cause or its sufficiency could be ascertained that prevented him from submitting the evidence during assessment proceedings. Clause (d) is not applicable because the AO did provide adequate opportunities to the assessee during the assessment proceedings to present evidence, which were not utilized by the assessee. Thus, the circumstances mentioned in the above mentioned four clauses of Rule 46A are not applicable to the present situation, and therefore, the additional evidence submitted by assessee during appellate proceedings is not admissible. 5. The aforesaid action of the Ld.CIT(A), shows per-se non-application of mind which vitiates the impugned action of the Ld.CIT(A). Therefore, we set aside the impugned order of the Ld.CIT(A) and restore the ITA Nos.512 & 513/Chny/2025 (AY 2016-17 & 2017-18) Late Mr. Nilesh Ratilal Shah :: 6 :: assessment back to the file of the AO for de novo assessment and the assessee is directed to be diligent and file all the relevant documents to prove his claim regarding the cash deposits in his bank accounts as well as give all the details regarding the three bank accounts wherein his name is included as Joint Account holder; and the AO after hearing the assessee to frame assessment in accordance to law. 6. In the result, appeal filed by the assessee is allowed for statistical purposes. Order pronounced on the 11th day of June, 2025, in Chennai. Sd/- (अिमताभ शु\u0018ा) (AMITABH SHUKLA) लेखा सद\u0003य/ACCOUNTANT MEMBER Sd/- (एबी टी. वक ) (ABY T. VARKEY) \u0005याियक सद\u0003य/JUDICIAL MEMBER चे ई/Chennai, !दनांक/Dated: 11th June, 2025. TLN आदेश क\u001a \u0017ितिलिप अ$ेिषत/Copy to: 1. अपीलाथ /Appellant 2. \u000e\u000fथ /Respondent 3. आयकरआयु\u0015/CIT, Chennai / Madurai / Salem / Coimbatore. 4. िवभागीय\u000eितिनिध/DR 5. गाड फाईल/GF "