ITO Vs Ashwin Popatlal Shah (ITAT Mumbai)
ITAT Mumbai: Rule 46A Violation Fatal – CIT(A) Cannot Delete Additions Without AO Verification
In this case, the ITAT Mumbai dealt with deletion of ₹2.01 crore alleged bogus purchase addition by the CIT(A), where the assessee had produced confirmations, invoices, and ITRs of suppliers during appellate proceedings.
The Tribunal found a serious procedural lapse—the CIT(A) had relied on additional evidence not furnished before the AO and failed to follow mandatory Rule 46A procedure, i.e., no remand report or opportunity was given to the Assessing Officer to verify such evidence.
It was emphasized that:
- Rule 46A is not a technicality but a safeguard of natural justice
- Any additional evidence admitted at appellate stage must be confronted to the AO
- Failure to do so results in denial of verification rights to Revenue
Accordingly, even though the assessee produced documents supporting genuineness of purchases, the Tribunal held that CIT(A)’s deletion cannot stand due to procedural illegality.
The Tribunal also noted that the CIT(A) failed to adjudicate the ground challenging validity of reassessment, which is a mandatory duty.
Final Outcome:
- CIT(A) order set aside
- Matter restored for fresh adjudication
- Direction to follow Rule 46A and obtain remand report
- CIT(A) directed to also decide reassessment validity ground
This ruling reinforces a critical principle: even strong evidence cannot cure violation of mandatory appellate procedure-Rule 46A compliance is essential.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
