Maha Gujarat Silk Section Vs ITO (ITAT Ahmedabad)
ITAT Ahmedabad held that CIT(A) erred in upholding addition made by AO without considering the additional evidence. Such failure to admit and evaluate the additional evidence constitutes a violation of natural justice. Thus, matter remanded back for fresh adjudication.
Facts- The assessee is a partnership firm engaged in the business of trading and retail of sarees, had not filed its return of income for the AY 2014-15. The case was reopened by the AO under Section 147 of the Act, based on information received about the sale of immovable property for a consideration of Rs.33,50,000/-.
Despite issuance of multiple notices u/s. 148 and Section 142(1) of the Act, the assessee did not respond. The AO proceeded with an ex-parte best judgment assessment u/s. 144 of the Act, treating the entire sale consideration as unexplained income and adding Rs.33,50,000/- to the assessee’s total income. The assessment order was passed on 17.11.2019, and a demand notice was issued.
CIT(A) disposed of the appeal exparte, without considering the additional evidence submitted by the assessee under Rule 46A of the Income Tax Rules, 1962. Being aggrieved, the present appeal is filed.
Conclusion- Held that the CIT(A) did not consider the additional evidence submitted along with the appeal, particularly the sale and purchase agreements and the computation of income, which are crucial to determining the indexed cost of acquisition and whether the transaction resulted in a capital gain or loss. The failure to admit and evaluate the additional evidence constitutes a violation of natural justice.
