Additional Evidence Cannot Be Admitted Without Calling For AO's Remand Report: ITAT

The Hyderabad Bench of the Income Tax Appellate Tribunal (ITAT) has held that the additional evidence cannot be admitted without calling for a remand report or comments from the AO.

The two-member bench of Laliet Kumar (Judicial Member) and R.K. Panda (Accountant Member) observed that if the CIT(A) chooses to admit any additional evidence, in that case, he/she is required to provide the Assessing Officer with a reasonable opportunity to examine the evidence or document or permit cross-examination of the evidence produced by the assessee.

The assessee/respondent was subjected to a searching assessment during AY 2011–12 under Section 153A. The assessee made a notional claim of Rs. 8.79 crores for site restoration costs. The department disallowed the provision on the grounds that the assessee had not incurred any such expenditure to date and the provision was created for an unknown future liability, which was claimed in the current year. The assessee filed additional evidence for expenses incurred in subsequent years for site restoration before CIT (A).

The CIT(A) granted the assessee's appeal and determined that the department failed to present evidence demonstrating that the assessee's estimate of liability was incorrect.

The department contended that the assessee has not produced supporting bills and vouchers for verification and reconciliation before the Assessing Officer. The bills, etc., that were produced before the AO did not disclose all of the details of the expenses incurred by the assessee.

The assessee contended that all the necessary vouchers and bills were duly examined by the Assessing Officer in the original assessment proceedings, and subsequently, they were also examined by the Assessing Officer in the 153A proceeding. Once the books of account have not been rejected by the assessor, it is not legal to disallow 20% of the assessee's claimed expenditure. The Assessing Officer failed to point out which vouchers or bills were not available to the assessee or explain the basis for disallowing 20% of the total expenditure.

The CIT(A) does not consider any evidence produced under sub-rule (1) of Rule 46A unless the AO has been given a reasonable opportunity, according to Rule 46A of the Income-tax Rules 1962.

The tribunal deemed it proper to restore the issue to the file of the Assessing Officer with a direction to grant one more opportunity to the assessee to substantiate its case by leading evidence to his satisfaction. After giving the assessee an opportunity to be heard, the assessing officer must make a decision based on facts and the law.

Case Title: ACIT Versus Ascend Telcom Infrastructure (P) Ltd.

Citation: ITA 508/Hyd/2020

Date: 30/11/2022

Counsel For Appellant: CIT(DR) Rajendra Kumar

Counsel For Respondent: Advocate K.R. Vasudevan

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