The Kerala High Court (Ernakulam Bench) ruled that additional evidence offered by the taxpayer for the first time at the appellate stage, contradicting his own voluntary returns, can be refused by the Tribunal, especially if they are found to be an afterthought.
The Court therefore upheld the ITAT’s decision to reject admission of additional evidence regarding the source of cash seized from the individual taxpayers, on the ground that such evidence was a belated afterthought and permitting the same would amount to an improper revision of voluntarily filed returns.
The Division Bench comprising Justice A. Muhamed Mustaque and Justice Harisankar V. Menon emphasized that while the Tribunal can accept additional evidence, it is not obligated to do so, especially if the taxpayer was not prevented from adducing evidence earlier. However, in the instant case, the affidavits explaining the source of cash were produced only before the Tribunal at a late stage, after having declared it as “income from other sources” in the returns.
The Bench underscored that accepting such evidence at a belated stage would result in a revision of the voluntary returns, which is disallowed by the statute itself. The Bench also noted that even though one appellant claimed that the cash belonged to a third party, the same was not claimed while furnishing the original ITR. Hence, the same is nothing but clearly an afterthought.
Briefly, in this case, in July 2016, the Excise Officials seized Rs. 2.39 crores from three passengers, including the appellant, while they were traveling from Hyderabad to Kozhikode, which was later taken over by Income Tax authorities. Later, the individuals filed their ITR declaring the seized cash as ‘income from other sources’. The AO, however, treated the amounts as unexplained income under Section 69A and taxed them under Section 115BBE of the Income Tax Act. The appeals before the CIT(A) as well as the ITAT seeking permission to adduce additional evidence regarding the source of money were also rejected, and the findings of the AO were confirmed.
Appearances:
Advocates Abraham Joseph Markos, Isaac Thomas, P.G. Chandapillai Abraham, John Vithayathil, and Alexander Joseph Markos, for the Appellant/ Taxpayer
Advocates Navneeth N. Nath, Susie Varghese, and Jose Joseph, for the Respondent/ Revenue
