The appellate authority rightly admitted additional evidence, clarifying prior taxes paid under DTAA, rendering the initial assessment incorrect under sections 68 and 69.

PER NAVEEN CHANDRA, ACCOUNTANT MEMBER:-

This appeal by the Revenue is preferred against the order of the ld. CIT(A), New Delhi dated 31.01.2022 pertaining to A.Y 2017-18.

2. The Grounds raised by the Revenue read as under:

“1. Whether on the facts and circumstances of the case, Ld. CIT(A)

has erred in admitting additional evidences whereas conditions prescribed under R. 46A were not satisfied?

2. Whether on the facts and circumstances of the case, Ld. CIT(A) has erred in allowing income exclusion method of elimination of double taxation under India-USA DTAA instead of tax credit method as per the tax treaty?

3. Whether on the facts and circumstances of the case, Ld. CIT(A) has erred in adjudicating on taxability of credits in account under other provisions of the Act in view of explanation furnished by the assessee?

4. Whether on the facts and circumstances of the case, Ld. CIT(A) has erred in accepting plea of the assessee without obtaining running ledgers of the accounts and examination of taxability of each credit entry therein?

5. Whether on the facts and circumstances of the case, Ld. CIT(A) has erred in holding that provisions of section 68 and 69 of the Act are not applicable even though no satisfactory explanation on sources of credits could be furnished by the assessee?

6. The appellant craves to add, amend, modify or alter any grounds of appeal at any time or before the hearing of the appeal.”

3. Representatives of both the sides were heard at length. Case records carefully perused. Relevant documentary evidence brought on record duly considered in light of Rule 18(6) of the ITAT Rules. Judicial decisions wherever relevant, were duly considered.

4. Brief facts of the case are that the assessee is an Individual and his main source of Income is Income from Salary, House property and Income from Other Sources. The assessee filed its original return of income electronically on 26.03.2018 declaring total income of Rs. 2,98,17,320/-. The return of income was subsequently revised on 21.06.2018 declaring a total income of Rs. 2,98,17,320/-. The return of Income was subsequently processed u/s 143(1) of the Income-tax Act, 1961 [the Act, for short]. Later the case was selected for limited scrutiny under CASS due to the reason “large balance in foreign bank account". Thereafter, notices u/s 143(2) of the Act were issued and served upon the assessee which were not responded to in spite of several opportunities provided to the assessee.

5. Accordingly, the Assessing Officer, observing that the assessee failed to provide any justification/explanation along with valid supporting evidences, passed the assessment order u/s 144 of the Act treating the peak balances available of Rs. 3,53,81,501/- as unexplained credit found in the accounts of the assessee u/s 68 of the Act. Penalty proceedings u/s 271AAC of the Act were initiated separately.

6. The assessee carried the matter before the ld. CIT(A) and furnished additional evidences. The ld. CIT(A) called for a remand report from the Assessing Officer who categorically stated that the additional evidences should not be admitted because the assessee was given ample opportunities to explain his case. Therefore, the assessee does not satisfy the conditions laid down u/r 46A. The AO also commented on merits by stating that the bank statement filed as additional evidence is incomplete.

7. After considering the facts and submissions, the ld. CIT(A) was of the considered view that the Assessing Officer has wrongly invoked the provisions of section 68 of the Act and directed to delete the same.

8. Now the Revenue is aggrieved and has come in appeal before us.

9. Before us, both the rival representatives reiterated what has been stated before the lower authorities.

10. We have heard the rival submissions and have perused the relevant material on record. W