Claim cannot be denied if sufficient documents are in hand of AO even though the party does not reply to notice issued u/s 133(6); (even though the party confirmation is not available against notice issued u/s 133(6))
The issue which was never raised by the AO or remained the subject matter of setting aside order of the ITAT, the same cannot be raised while passing fresh order.
Citation of the case:
Brief of the case:
AO had issued a notice u/s 133(6) to one of the party of the assessee for gaining some information but that party had responded late to the notice from the time frame mentioned in the notice so the AO had Not considered the reply and made addition to the income of the assessee. The AO was having sufficient documents related with that party to whom notice was issued u/s 133(6) which can solve the purpose of AO but he had not considered the same and made addition. Assessee aggrieved by the decision filed an appeal with CIT(A) who also confirmed the decision of AO against which appeal was filed then assessee filed the appeal with ITAT who remanded back the order to AO to consider the documents he was having and pass a fresh order.
When the order was remanded back to the AO to make the fresh assessment then CIT(A) directed AO to made addition for non deduction of TDS also on the payment made by the assessee to that party. Assessee challenged the same with ITAT and it was decided that the CIT(A) had exceeded its jurisdiction because the same matter was not considered before by the AO and also the same was not the matter which was set aside and remanded back for fresh order.
Contention of the assessee:
The assessee was of the view that although the documents which AO demanded was received by the AO after passing of his order but AO was having all the relevant documents like ledger account, bank statements etc which he required to test the genuineness of the party but the AO had not referred the same and again issued a notice u/s 133(6) to the third party to seek confirmation again.
The assessee was of the view that the CIT(A) had exceeded his jurisdiction by directing the AO to disallow the amount paid u/s 40(a)(ia) because the appeal was preferred against the order passed by the AO u/s 254 read with 143(3) of the act and the same matter was never raised before the ITAT and the ITAT had not asked the AO to make the fresh order on the TDS issue.
Contention of the revenue:
Revenue was of the view that the assessee had failed to discharge its onus to prove the genuineness of the claim and moreover the third party failed to respond to the notice of AO issued u/s 133(6). So the party did not seem to be genuine so the addition was to be made u/s 68.
Revenue was of the view that if the question of taxability of new income is concerned which was not dealt earlier then the same could be dealt by the first appellate authority i.e CIT(A).
Held by ITAT:
ITAT held that as the supporting documents were already there in the hands of the AO from whom he can judge the genuineness of the third party, So the disallowance made by the AO is not tenable in spite of the fact that the third party had not replied to the notice issued u/s 133(6).
ITAT held that when the question of taxability of new source of income is concerned which was never raised in the appeal or considered before by the AO in his order then the same cannot be raised by the first appellate authority i.e CIT(A)