This case involves Simbhaoli Transport Carrier Pvt. Ltd. (the appellant) and the Income Tax Officer (ITO), Ward – 3(5), Hapur (the respondent), concerning the Assessment Year 2015-16. The core issues in this appeal revolve around the rejection of books of accounts and the admission of additional evidence during the appellate proceedings.
The appellant, Simbhaoli Transport Carrier Pvt. Ltd., filed its income tax return for AY 2015-16. During the assessment, the Assessing Officer (AO) completed the assessment ex parte under section 144 of the Income Tax Act, 1961, estimating the income at 8% of the turnover. The AO rejected the books of accounts, even though the audit report was on record, and treated certain expenses as personal in nature.
The appellant raised several grounds in the appeal against the order of the CIT(A) Ghaziabad, dated 26.03.2019:
The appeal was heard by the ITAT Delhi Bench ‘SMC’, with Shri C.M. Garg, Judicial Member, presiding. The appellant was represented by V. Raj Kumar, Advocate, while the respondent was represented by Sh. Om Prakash, Sr. DR.
During the hearing on 05.05.2022, the appellant’s counsel argued that the CIT(A) was not justified in denying the admission of additional evidence. The assessment was completed ex parte, and the appellant had submitted a medical certificate and affidavit to explain the absence of the Managing Director due to illness. The CIT(A) did not properly consider these documents, violating Rule 46A.
The respondent’s counsel supported the order of the CIT(A) and argued that the appellant failed to meet the conditions laid down in Rule 46A.
The ITAT carefully considered the rival submissions, assessment order, and first appellate order. It found that the CIT(A) denied the additional evidence based on alleged inconsistencies in the appellant’s stand. The CIT(A) did not make any enquiry into the authenticity of the medical certificate and affidavit submitted by the appellant.
The ITAT held that the denial of additional evidence on technical grounds, without proper enquiry into the truthfulness of the appellant’s explanations, was unjustified. The appellant’s medical certificate and affidavit were uncontroverted, and the CIT(A) failed to give a cogent finding on their authenticity. Therefore, the ITAT admitted the additional evidence in the interest of natural justice.
The ITAT restored the matter to the file of the AO for de novo adjudication, allowing the appellant an opportunity to present the additional evidence. The AO was directed to provide a fair hearing and consider the additional evidence in making a fresh assessment.
This case highlights the importance of adhering to principles of natural justice and providing adequate opportunities for taxpayers to present their case. The ITAT’s decision to admit additional evidence and remand the matter for fresh adjudication underscores the need for a fair and thorough examination of all relevant facts and documents in tax proceedings.
Order pronounced in the open court on 12th May 2022.
Judicial Member: Shri C.M. Garg
Date of Order: 12.05.2022
Copy forwarded to:
Assistant Registrar, ITAT, New Delhi
Simbhaoli Transport Carrier vs ITO: Assessment Rejection Dispute for AY 2015-16
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