The assessee preferred an appeal against the order passed by the National Faceless Appeal Centre for Assessment Year 2014–15, whereby an addition made under section 68 of the Income-tax Act, 1961 was sustained. The addition pertained to unsecured loans aggregating to ₹38,67,500 allegedly received from five parties.

The assessment was completed ex parte due to non-compliance by the assessee, and in the absence of supporting evidence regarding the identity, creditworthiness, and genuineness of the loan transactions, the Assessing Officer treated the entire amount as unexplained cash credit under section 68 of the Act.

During the appellate proceedings, the assessee furnished comprehensive additional evidence, including confirmations from the creditors, copies of their income-tax returns, balance sheets, capital accounts, and bank statements. These additional evidences were admitted by the Commissioner (Appeals) and forwarded to the Assessing Officer for verification by calling for a remand report.

In the course of remand proceedings, the Assessing Officer issued notices under section 133(6) to the creditors, which were duly complied with. The creditors confirmed the transactions and furnished requisite details. However, despite the availability of confirmations, financial statements, and bank statements evidencing transactions through banking channels, the Assessing Officer merely reiterated the findings of the original ex parte assessment in the remand report, without recording any adverse findings on the additional evidence.

The Tribunal observed that the Commissioner (Appeals), while passing the impugned order, failed to independently analyse the additional evidence or deal with the confirmations and replies received under section 133(6). The appellate order also reflected a clear non-application of mind, as it confirmed an addition of ₹40,85,006, which was inconsistent with the original addition of ₹38,67,500 made by the Assessing Officer.

It was reiterated that once additional evidence is admitted, the appellate authority is duty-bound to examine such evidence on merits and render a reasoned finding. The Commissioner (Appeals), being a quasi-judicial authority, cannot mechanically affirm an addition without independent evaluation of the material on record.

Considering that the assessment was framed ex parte and that the primary onus under section 68 lies on the assessee, the Tribunal deemed it appropriate, in the interest of justice, to restore the matter to the file of the Commissioner (Appeals) for fresh adjudication. Accordingly, the impugned appellate order was set aside with a direction to decide the issue afresh after considering all additional evidence, replies received under section 133(6), and after granting adequate opportunity of hearing to both parties.

The appeal was thus allowed for statistical purposes.

Source Link- https://itat.gov.in/public/files/upload/1768214180-cgxrdV-1-TO.pdf

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