PCIT Vs Kamraz Rural Bank (Jammu And Kashmir High Court)
The Jammu & Kashmir and Ladakh High Court allowed a Revenue appeal under Section 260-A of the Income Tax Act, 1961 against an order of the Income Tax Appellate Tribunal (ITAT) relating to Assessment Year 2006-07. The appeal raised two substantial questions of law concerning the admission of additional evidence by the Commissioner of Income Tax (Appeals) [CIT(A)] under Rule 46A of the Income Tax Rules without granting the Assessing Officer (AO) an opportunity to examine or rebut the evidence and without recording reasons in writing for admitting such evidence.
The assessee had filed its return declaring an income of ₹5.19 crore. During scrutiny assessment, the AO found that the assessee had paid interest of ₹7.96 crore on term deposits without deducting tax at source under Section 194A. The AO observed that the assessee failed to furnish details showing the interest payments exceeding ₹10,000, the threshold above which tax was required to be deducted at source. Consequently, the AO invoked Section 40(a)(ia), added ₹7.96 crore to the income, and raised a demand.
The assessee challenged the assessment before the CIT(A). During the appellate proceedings, it produced additional documents indicating that tax was deductible only on interest payments of ₹24.18 lakh relating to deposits where the interest exceeded ₹10,000. The CIT(A) accepted the additional evidence and restricted the addition to ₹24.18 lakh instead of ₹7.96 crore. The Revenue appealed to the ITAT, which upheld the order of the CIT(A).
