Taxpayer Should Not Suffer For Non-Filing Of Material Evidences: Mumbai ITAT Admits Additional Evidence

While setting aside the order u/s 68 of the Income Tax Act, 1961 passed by CIT(A), the Mumbai ITAT restored the entire disputed issues to the AO along with the additional evidence to decide the case afresh on merits, so that the assessee should be provided adequate opportunity of hearing.

The Bench comprising Pavan Kumar Gadale (Judicial Member) observed that, “the evidences play important role in decision making in the adjudicating proceedings. Therefore, considering the facts, circumstances and additional evidences and the assessee should not suffer for non-filing of material information, as the evidences plays a vital role in decision making and accordingly admit the additional evidence.” (Para 6)

As per the brief facts of the case, the Assessee's return was selected for scrutiny, wherein AO found that the assessee has claimed Long Term Capital Gains (LTCG) on the sale of share u/s 10(38). The assessee was asked to furnish the details of shares purchase, mode of payment, share certificate, broker details, contract note, dematerialization details, bank details, etc. An explanation was provided that the assessee has purchased some shares. Subsequently, the company was amalgamated with CSL, and the assessee was allotted some shares, and the shares of CSL were dematerialized. Hence, the assessee has sold entire shares at an average price. The AO found that there is no correlation between the share price rise and the performance of the company. Finally, the AO was not satisfied with the explanations and material information and observed that the transactions were not genuine and made an addition as unexplained cash credit u/s 68. The CIT(A), upheld the addition made by the AO.

The Coram noted that the assessee has filed an application for admission of additional evidences Under Rule 29 of the Income Tax Rules, 1962.

The Bench found that the assessee has demat the shares and the shares were sold through SEBI registered broker of BSE and NSE and STT has been paid.

The Bench further found that the assessee has held the shares for more than one year and the AO has not accepted the fact of genuineness of the share transaction.

The Bench observed that the assessee has filed the application for admission of additional evidences under Rule 29 of ITAT rules with ITR along with the computation of total income, balance sheet and profit &loss account and Annual Audit Report which were not available earlier and could not produce before the lower authorities.

Therefore, considering the facts, circumstances and additional evidences which plays a vital role in decision making, the ITAT admitted the additional evidence, remanded the matter and directed the AO to decide the case freshly.

Counsel for Appellant/ Taxpayer: Ajay R. Singh

Counsel for Respondent/ Department: Shakuntala. N. Shet

Case Title: Rajesh Lakhmshi Nisar verses ITO

Case Number: ITA No. 1773/Mum/2023

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