Kerala HC: Additional Evidence Can’t Be Used to Revise Voluntary Tax Returns

The Kerala High Court has made a ruling regarding tax returns. It stated that if someone has voluntarily submitted their tax returns, they cannot go back and change them by adding new evidence later on. This decision is based on a specific rule 29 of the ITAT rules that allows the tax appeal tribunal to accept additional evidence only when there is a strong reason to do so.

Justices A. Muhamed Mustaque and Harisankar V. Menon expressed that, as the respective appellants present the returns specifying the respective numbers as income from other sources, at the late phase of the second appeal to the Tribunal, if the venture of the appellants is accepted, it shall be directed to the revisions of the returns filed voluntarily, which is not allowable under the law.

Also Read: ITAT Ahmedabad Restores Reassessment Case, Citing AO’s Failure to Consider Evidence on Cash Deposits

Concerning the case, an amount was seized from the possession of three passengers. Officials took over the custody of the entire amount.

Thereafter, Sravan Kumar Neela and Uma Maheswara Rao Chinni submitted letters reporting the entire cash seized from them as their income from other sources.

As per that, the returns were also being submitted, and the amounts returned via the respective taxpayers were deemed as unexplained income under section 69A of the Income Tax Act, and tax under the provisions of Section 115BBE of the Act was demanded. The respective taxpayers filed appeals to the Commissioner of Income Tax (Appeals).

Some additional proof has been provided via Sravan Kumar in the form of financial/bank statements of a partnership firm, and the ITRs of some of the family members to define the income source.

The first appellate authority rejected the additional proof presented, as it would effectively require a revision of the reported income, which is not allowed.

Read Also: ITAT Chennai: Assessing Officer Didn’t Verify More Proof in Violation of IT Rule 46A

Before the Income Tax Appellate Tribunal, separate appeals were submitted arguing that the source of the cash was adequately explained and that the provisions of Section 69A of the Act should not have been applied.

The Tribunal dismissed the appeals, refusing to consider the additional evidence provided.

The taxpayer claims that such additional proof can be produced before the Tribunal under Rule 29 of the Income Tax (Appellate Tribunal) Rules, 1963.

The bench examined Rule 29 of the ITAT Rules and observed that the Tribunal mandates accepting such additional proof merely in a situation where the taxpayer was prevented from adducing such proof by the assessing authority.

As per the bench, the Income Tax Appellate Tribunal can accept other proof submitted before it. Though it is not as if such proof produced needs to be accepted by the Tribunal and acted upon.

The bench also stated that the additional evidence, presented as affidavits to the Tribunal, was merely an afterthought. Therefore, the Tribunal is justified in declining to rely on this basis.

The bench for the above view dismissed the appeals.