Application for additional evidence allowed where revenue could not submit anything on the contrary

Om Shanti Realtors Vs Income Tax Officer Mumbai [ITA NO. 4113/MUM/2023 (A.Y: 2015-16)]

The assessee is a partnership firm involved in real estate development. The assessee electronically filed their income tax return for the A.Y 2015–16, stating their total income as Nil. The case was chosen for examination under CASS.

The assessee took additional loans Rs. 2,25,00,000 during the relevant year and paid interest to different unsecured loan parties Rs. 1,51,31,232. The Ld. AO concluded that the assessee had not demonstrated the authenticity of the transactions or the identity and creditworthiness of the party providing the unsecured loans thereby making addition of aforementioned amounts.

The said observation contained in the assessment order had been challenged under section 250 of “the Act” before the Ld. CIT(A). which further dismissed the appeal. Thus, the assessee filed appeal before the Tribunal.

While making the appeal the Ld.AR on behalf of the assessee made application for additional evidence to prove the genuineness and creditworthiness of the parties from whom the unsecured loans were taken pursuant to Rule 29 of the Appellate Tribunal Rule, 1963 and submitted reason for not submitting it before lower authorities that the documents which were already on record of AO was sufficient to conclude the case in their favour.

In addition, the Ld.AR also relied on the judgment of the Ld. Coordinate Bench in ITA No. 5615/Mum/2017, dated 01.03.2019, for A.Y. 2014-15 in which the Hon’ble Tribunal accepted the identity of the creditors, their creditworthiness, and the accuracy of the transaction for A.Y. 2013–14 and that the present appeal pertains for A.Y. 2015-16. It was therefore argued that additional evidence be permitted to be filed to establish the identity of the creditors and their creditworthiness as well as genuineness of the transaction.

The Ld. DR on behalf of the revenue argued that no reason was assigned as to why the documents which were to be submitted through additional evidence were not produced before the Ld. AO or the Ld. CIT(A) and as such there was no justification for non-filing the same at appropriate time and therefore strongly argued that the application of additional evidence does not have any merit and was liable to be dismissed.

While considering the rival submissions and on perusal of the judgment of the Ld. Coordinate Bench, ITA No. 5615/Mum/2017 referred (supra), the Hon’ble Tribunal observed that “on the contrary, the assessee had filed the entire documents, required to establish the identity of the creditors and their creditworthiness, as well as genuineness of the transaction”. In support of their application, the assessee had relied on the judgment of the Hon’ble Bombay HC reported as Smt. Prabhavati S. Shah Vs. Commissioner of Income Tax.

The Tribunal examined the contents of the application for additional evidence to find out the reasons for not producing the said evidence before the Lower Authorities.

It was evident from the contents of the application that the assessee could not produce the documents thinking that the order of the Ld. Coordinate Bench in ITA No. 5615/Mum/2017 referred (supra) was sufficient for consideration of the Ld. AO or the documents were within the public domain and that the evidence already produced was sufficient to substantiate the case of the assessee.

In the absence of any contrary material brought on record by the revenue to oppose the allowing of the additional evidence, the Hon’ble Tribunal had no reason to disbelieve the contents of the application and genuineness of the claim of the assessee for producing additional evidence.

The Hon’ble Tribunal ruled that additional evidence should be allowed to establish the genuineness of transactions, as the Ld. Coordinate Bench’s judgment considered the identity, creditworthiness, and genuineness of the transactions. The end of justice requires the assessee to independently establish these factors for the relevant A.Y. 2015-16.

The case was returned to Ld. AO, who will consider the additional evidence within 60 days of the order. For the above reasons, the grounds of the appeal were allowed for statistical purposes.

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