ITAT Mumbai Remands Section 68 Additions After CIT(A) Admitted Fresh Evidence Without AO’s Verification

Background

The Mumbai “D” Bench of the Income Tax Appellate Tribunal has remanded the case involving Murlidhar M Pichad HUF after holding that the first appellate authority improperly admitted fresh evidence without seeking verification from the Assessing Officer. The dispute related to additions of ₹14.36 crore towards unsecured loans and ₹1.48 crore concerning sundry creditors under Section 68 of the Income Tax Act. These additions were originally made due to the assessee’s failure to furnish documentary proof during assessment proceedings. However, the CIT(A)-NFAC deleted the additions after considering bank statements, confirmations, and source details submitted for the first time in appeal.

ITAT Emphasises Mandatory Compliance With Rule 46A

Allowing the Revenue’s appeal, the Tribunal observed that while the CIT(A) is empowered to admit additional evidence, such admission must comply with Rule 46A, which requires recording reasons and obtaining a remand report from the Assessing Officer. Since no opportunity was given to the AO to verify the new documents and no findings were recorded justifying their admission, the appellate order was held to be legally defective. The ITAT accordingly restored the matter to the CIT(A) for fresh adjudication after proper verification. The Revenue’s appeal was allowed for statistical purposes.