Smt. Noothan P. Shetty Vs DCIT (ITAT Bangalore)
When CIT(A) Proposes Enhancement, Additional Evidence Cannot Be Shut Out Merely by Invoking Rule 46A: ITAT Bangalore
Summary: The Bangalore Bench of the Income Tax Appellate Tribunal has held that although an assessee does not have an unrestricted right to produce additional evidence before the CIT(A), where the CIT(A) proposes to enhance the assessed income, the principles of natural justice require him to properly examine the additional evidence furnished by the assessee in response to the proposed enhancement.
The Tribunal accordingly restored the issues relating to land-development expenditure and commission payments to the Assessing Officer for fresh examination.
Facts of the case
The assessee was an individual deriving income from shares, investments and agricultural activities. During the relevant year, she participated in certain land transactions and declared the resultant income as short-term capital gains.
The assessee, jointly with another person, had entered into an agreement dated 25 September 2006 to purchase land belonging to one Shri H.N. Shivananjaiah. The property was subsequently purchased by DMR Enterprises on 8 February 2007. The assessee was one of the confirming parties to that transaction and received consideration of approximately ₹3.97 crore.
While computing the income from the transaction, the assessee claimed, among other amounts:
- ₹54.54 lakh towards land development, demolition of structures, levelling, construction of compound wall and eviction of occupants; and
- ₹63 lakh towards commission allegedly paid to various persons who assisted in arranging the transaction.
The Assessing Officer held that the assessee had failed to produce adequate confirmations from the persons who had carried out the development and related work. Nevertheless, considering that some work had actually been carried out, he allowed expenditure of ₹20 lakh and disallowed the balance of ₹34.54 lakh.
