CIT Vs. METAPHOR EXPORTS P. LTD.

JUDGEMENT

(1.) The revenue is aggrieved by the impugned order dated 09.05.2014 of the Income Tax Appellate Tribunal (hereinafter referred to the "ITAT") in ITA No.3014/Del./2013. It is urged that the substantial question of law sought to be urged in support of the appeal is that ITAT fell into error in directing the deletion of Rs. 2,85,75,905/- - which was added back under Section 68 of the Income Tax Act by the assessing officer (hereinafter referred to as "AO").

(2.) The assessee declared an income of Rs. 8,25,460/- for assessment year 2006-07. In the course of the scrutiny assessment, the AO determined that the assessee had received Rs. 35 lakhs towards share capital and unsecured loans to the extent of Rs. 2,50,75,905/-. After considering the materials placed on the record the AO found that the explanation furnished by the assessee was unconvincing and directed addition of these amounts under Section 68. This became the subject matter of the assessee's appeal before the Commissioner (A). In the first appellate proceedings the assessee sought to introduce additional evidence under Rule 46A, which was disallowed. The CIT(Appeals) ultimately ruled against the assessee and rejected the appeal.

(3.) In the proceedings before the ITAT, the question of permissibility of additional evidence under Rule 46A was first considered and given the circumstances, it was held that the CIT(Appeals) fell into error in rejecting the request. The ITAT also noticed that remand report had been sought from the AO during the first appellate proceedings. It went on to analyze the findings of the CIT(Appeals) and directed that the inclusion of amounts under Section 68 should be deleted. The relevant discussion is in the following terms :