ITO Vs Baba Vishwakarma Engineering Co. Pvt. Ltd (ITAT Delhi)
ITAT Delhi restores ₹2.35 Cr loan addition for fresh examination – CIT(A) deleted addition based on additional evidence without giving AO proper opportunity
Assessee company faced a best judgment assessment u/s 144 because it did not respond to multiple notices. AO treated ₹2,35,50,000 of unsecured loans as unexplained cash credits u/s 68 and added the entire amount. Assessee then went to CIT(A), produced fresh documentary evidence including confirmations, sale deed of the lender (Mrs. Savita Kamboj), and bank & financial statements of another lender (Director Shri Jugal Kishore Kamboj), claiming that funds were routed through them to pay urgent liabilities of the company.
CIT(A) admitted these additional evidences, sent them to AO for remand report, but AO objected, stating creditworthiness was not proved & the evidence was never examined in assessment due to non-compliance. However, CIT(A) deleted the entire addition without allowing the AO to fully verify the documents or giving him proper opportunity to examine the genuineness of the loans.
Before Tribunal, no one appeared for Assessee. Department argued that CIT(A) violated Rule 46A by accepting new evidence & deleting the addition without allowing the AO to verify creditworthiness. Tribunal noted from the record that the assessment was ex-parte due to assessee’s failure to participate, & that although CIT(A) admitted additional evidence, AO was not given adequate opportunity to verify or comment on the merits, as required by law.
