In the case of M/s ONS Creations Private Limited Vs. ITO, it was held by ITAT Delhi that if additional evidence can not be produced before AO for a reasonable cause by assessee, the CIT (A) must admit the additional evidences and assessee must be given an afresh opportunity of being heard.
Brief Facts of the Case:
The assessment in assessee’s case was completed U/s 144 of the Income tax Act, 1961 by AO. On appeal being filed by assessee, the CIT (A) passed an order U/s 263 and directed the AO to make an addition on account of unexplained loans along with any interest claimed on those loans and a further addition on account of unexplained share capital as the assessee failed to establish before the CIT (A) during the proceedings U/s 263 the identity and creditworthiness of the persons from whom the aforesaid loans and share capitals shown to have been received.
Further, on appeal being filed by the assessee against the Order U/s 263 to the Tribunal, the hon’ble tribunal restored the matter back to the AO for providing an opportunity of being heard before making any addition on the issue. Even after providing repeated opportunities to produce evidence by AO, assessee failed to produce the books of accounts. Therefore, AO gave effect to the order of the CIT (A) and made addition to the Income on account of unexplained loans and unexplained share capital.
The assessee again preferred an appeal before CIT (A) and the CIT (A) confirmed the additions made by the Assessing Officer and recorded that though the evidences submitted by the appellant goes to the root of the issues, the CIT (A) had not admitted the evidences as the director and AIR appeared before the AO on several occasions but failed to produce the evidences despite repeated reminders by the AO to produce the same.
Question of Law:
Whether CIT (A) was justified in completing the Assessment U/s 144 without admitting the additional evidences produced under Rule 46A of the Income Tax Act, 1961 when there was reasonable cause for non production of the same?
Contention of the Revenue:
The revenue contended that the despite giving repeated reminders to the assessee, the assessee failed to produce the evidences in support of the additions made to the total income. Therefore, as per Rule 46A of the Income Tax Act the CIT (A) is not bound to accept the additional evidences produced before him.
Contention of the Assessee:
The assessee contended that the Ld. CIT (A) has erred in not admitting the additional evidences filed by the assessee under Rule 46A of the Act despite fact that there was a reasonable cause for the assessee for not filling the same before the AO. Further, the assessee also contended that the Assessment order was passed without giving an opportunity of being heard to the assessee and no notice was ever served upon the assessee, therefore there was no occasion for the assessee to appear before the AO.
Held by Tribunal:
The hon’ble tribunal found that the matter was earlier restored back to the AO for providing a opportunity of being heard, however, the order was passed ex parte. The Tribunal contended that the CIT (A) himself have recorded that the evidences filed by the assessee goes to the root of the issues but no evidences have been admitted by the CIT (A). Therefore, the Tribunal has set aside the orders of the authorities below and restored the matter back to the file of the AO to decide afresh after providing an opportunity of being heard to the assessee. In result, the appeal of the assessee is allowed for statistical purposes.