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2013 (1) TMI 180 - AT - Income TaxCIT(A) entertained additional evidence u/r 46A of the ITR - revenue contested against ignoring the objections of the AO submitted in the Remand Report - Held that:- As decided in CIT vs Manish Build Well (P) Ltd [2011 (11) TMI 35 - DELHI HIGH COURT] whenever the assessee who is in appeal, invokes Rule 46A, it is incumbent upon CIT(A) to comply with the requirements of the Rule. As in the present case on perusal of remand report it reveals that the AO contended the admission of additional evidence but he did not examine and verify the additional evidence as required by Rule 46A(3) of the Rules. There is nothing in the order of the CIT (A) to show that the Assessing Officer was confronted with the confirmation letters received by the assessee - this issue deserves to be restored to the file of the CIT(A) for compliance of Rule 46A(3) - in favour of the Revenue by way of remand. Addition under the head "Brand Value" - CIT(A) deleted the addition observing the additional evidence pertaining to expenditure & granted relief to the assessee by allowing the same as expenditure incurred for the business & directed the AO to disallow depreciation - Held that:- As the CIT(A) considered the additional evidence without following the procedure as stipulated in Rule 4CA(3) of the Rules and issue has been restored back to the file of CIT(A) for necessary compliance therefore the issue of verification of bills of Rs.16,09,348/- also deserves to be restored to the file of the CIT(A) - also CIT(A) has given contradictory findings as in para 8.6, he held that the expenditure for which no evidence was produced stood at Rs.24,65,795/- and he allowed the expenditure of Rs.16,09,348 for which additional evidence was admitted. In para 8.7 the CIT(A) held that since the amount is recorded in the books of accounts and the best depreciation cannot be allowed directed AO to delete the entire addition of Rs.40,75,143. Further, in para 8.8, he allowed the AO to disallow the depreciation on the amount of Rs.24,65,795 for which no evidence was produced but unable to see any finding that the same was allowed by the AO either as capital or as revenue expenditure. Thus the findings of the CIT(A) are self-contradictory and not sustainable - in favour of revenue. Addition on account of cash balance - CIT(A) deleted the addition - Held that:- As the DR did not disputed that during the year under consideration the total withdrawal of cash from the bank was Rs.16,24,747 and opening cash balance was Rs. 1,70,856 and the closing cash balance was Rs.11,64,598. In this situation the finding of AO cannot be approved that the amount of cash withdrawals during the financial year be considered as assessee’s unexplained expenditure which was not recorded in the books of accounts. As the Assessing Officer has observed cash withdrawals during the year, at the same time, the fact should also be considered that a major amount of cash withdrawals has been found as cash balance at the end of the year - in favour of assessee. Business promotion expenditure - CIT(A)restricted addition to 10% - Held that:- The DR did not dispute the fact that the expenditure as claimed by the assessee was allowed in the AY 2003-04 and in the appellate order dated 23.08.2006, the disallowance was restricted to 10% of the expenses incurred on business promotion. Thus no reason to interfere with the findings of the CIT(A).
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