Case Law Details
Abdulrahiman Abdulkadar Vs ITO (ITAT Cochin)
The Income Tax Appellate Tribunal (ITAT) Cochin has remanded the case of Abdulrahiman Abdulkadar for fresh adjudication after finding that the Commissioner of Income Tax (Appeals) [CIT(A)] dismissed the appeal without considering additional evidence submitted under Rule 46A of the Income Tax Rules. The case concerns an addition of ₹3,98,000 under Section 69A of the Income Tax Act, 1961, treating the amount as unexplained money for the Assessment Year 2017-18.
The assessee, a travel agency operator, had originally declared an income of ₹4,03,170 in the tax return filed on August 4, 2017. However, the Income Tax Officer (ITO), Palakkad, completed the assessment under Section 143(3), increasing the assessed income to ₹7,11,170 by adding ₹3,98,000 under Section 69A, alleging that the cash deposits in the assessee’s bank account were unexplained. Seeking relief, the assessee filed an appeal before the CIT(A) and submitted additional evidence to explain the source of the deposits.
The CIT(A) dismissed the appeal outright without admitting the additional evidence, stating that the assessee had not filed an application under Rule 46A of the Income Tax Rules, which regulates the admission of new evidence at the appellate stage. However, the ITAT found that the assessee had, in fact, filed an application under Rule 46A, which was placed on record but ignored by the CIT(A). The tribunal observed that the CIT(A) failed to apply the correct legal procedure and did not examine the merits of the additional evidence, leading to a procedural lapse in the adjudication process.
Citing established legal principles, the ITAT held that the right to present evidence is fundamental to a fair hearing and that appellate authorities must consider all relevant material before making a decision. Similar issues were previously addressed in Smt. Smita Gopal Agarwal v. ACIT (ITA No. 741/Pun/2017), where the ITAT Pune ruled that denial of the opportunity to present additional evidence, despite compliance with Rule 46A, warranted a remand. Following the same reasoning, the ITAT Cochin set aside the CIT(A)’s order and remanded the matter for fresh adjudication, instructing the CIT(A) to re-examine the additional evidence and provide a fair opportunity of hearing to the assessee.
With this ruling, the ITAT has reinforced the importance of procedural fairness in tax appeals. The case now returns to the CIT(A) for reconsideration, ensuring that the assessee’s explanation regarding the cash deposits is evaluated before any final decision is made.
FULL TEXT OF THE ORDER OF ITAT COCHIN
This appeal filed by the assessee is directed against the order of the National Faceless Appeal Centre, Delhi [CIT(A)] dated 26.07.2024 for Assessment Year (AY) 2017-18.
2. Brief facts of the case are that the assessee is an individual engaged in the business of travel agency. The return of income for AY 2017-18 was filed on 04.08.2017 declaring total income of Rs. 4,03,170/-. Against the said return of income, the assessment was completed by the Income Tax Officer, Ward-5. Palakkad (hereinafter called “the AO”) vide order dated 04.10.2018 passed u/s. 143(3) of the Income Tax Act, 1961 (the Act) at a total income of Rs.7,11,170/-. While doing the so, the AO made addition of Rs. 3,98,000/0 u/s. 69A of the Act on account of unexplained money.
3. Being aggrieved, an appeal was filed before the CIT(A), who dismissed the appeal without admitting the additional evidences filed by the appellant.
4. Being aggrieved, the appellant is in appeal before me in the present appeal.
5. At the outset I find that the learned CIT(A) dismissed the appeal without admitting the additional evidence filed in support of the source of cash deposit by holding that the appellant had not filed any application under rule 46A of the I.T. Rules. However, it is brought to my notice that during the course of proceedings before the learned CIT(A), the appellant had filed an application under rule 46A of the I.T. Rules, which is placed on page 9 of the paper book. The learned CIT(A) had not admitted the additional evidence, ignoring the application for admitting the additional evidence. In the circumstances, I am of the considered opinion that the matter requires to be remanded to the file of the CIT(A) for de novo adjudication in accordance with law after affording opportunity of hearing to the appellant. Therefore, the matter is remanded to the file of learned CIT(A) for fresh adjudication. All the contentions raised by the appellant are kept opened before CIT(A).
6. In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on 21st January, 2025.
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