DCIT, New Delhi V. M/s. Hema Engg. Inds. Ltd., New Delhi

ITA 1065/DEL/2010

• Counselvise Citation: 106520114 RSA 2010
• Duration Of Justice: 1 year(s) 11 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-03-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 16-02-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 11-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R S GILL
• Keywords: Opportunity of being heard; Additional evidence; Assessment record
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C NEW DELHI BEFORE SHRI R.P. TOLANI AND SHRI A.N. PAHUJA ITA NO. 1065/DEL/2010 ASSTT. YR: 2006-07 DCIT CIR. 12(1), VS. M/S HEMA ENGG. INDS. LTD., NEW DELHI. SACHIDANANDA FARM HOUSE, KISHAN GARH VILLAGE NEAR DDA SPORTS COMPLEX, MEHARULI, NEW DELHI. PAN/GIR NO. AAACH0118F (APPELLANT) ( RESPONDENT ) APPELLANT BY : SHRI R.S. GILL CIT DR RESPONDENT BY : SHRI ANIL KUMAR MALHOTRA CA O R D E R PER R.P. TOLANI, J.M : THIS IS REVENUES APPEAL AGAINST CIT(A)S ORDER D ATED 30-12-2009 RELATING TO A.Y. 2006-07. FOLLOWING EFFECTIVE GROUN DS ARE RAISED: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ORDER OF THE CIT(A) IS WRONG, PERVERSE, ILLEGAL AND AGAINST THE PROVISIONS OF LAW WHICH IS LIABLE TO BE SET ASIDE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE M ADE OF RS. 6,71,58,943/- OUT OF THE EXPENSES AT THE RATE OF 10 % AS THE SAME WAS RIGHTLY MADE IN VIEW OF THE FINDINGS OF THE AO WITH REGARD TO THE AUDIT STATEMENT FILED WITH THE RETURN. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, WHETHER THE LD. CIT(A) WAS CORRECT IN ENTERTAINING THE FRESH EVIDENCE(S) FILED BY THE ASSESSEE WITHOUT AFFORDING AN ITA NO. 1065/DEL/10 HEMA ENGG. INDUSTRIES LTD. 2 OPPORTUNITY TO THE AO TO COMMENT UPON THE SAME AS T HIS ACT OF THE CIT(A) WAS CLEARLY IN VIOLATION OF RULE 46A. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE M ERELY ON THE QUESTION OF AFFORDING AN OPPORTUNITY OF BEING HEARD BEFORE THE AO WITHOUT GOING INTO THE MERITS OF THE CASE. 2. BRIEF FACTS ARE : ASSESSEE IS ONE OF THE ANCILL ARY OF HERO HONDA, M/S T.V.S. MOTOR CO. LTD. AND IS A CLOSELY HELD COMPANY MAINTAINING ERP SYSTEM FOR ITS INVENTORY AND ACCOUNTING. ASSESSMEN T PROCEEDINGS FOR THE YEAR IN QUESTION STARTED ON 3-7-2008 PURSUANT TO NO TICE U/S 143(2), ASSESSEES REPRESENTATIVE ATTENDED AND PART DETAILS WERE FILED . THEREAFTER ON 2-12-2008 ASSESSEE WAS ASKED TO FILE VARIOUS DETAILS AND ON 1 1-12-2008 THE AO RECORDS THAT THE ASSESSEE WITH HIS C.A. ATTENDED AND FILED THE DETAILS IN PART. THE CASE WAS ADJOURNED TO 15-12-2008. ACCORDING TO AO, NO C OMPLIANCE WAS MADE AND THE CASE WAS GETTING TIME BARRED, EX PARTE ASSE SSMENT WAS FRAMED ON 24- 12-2008, MAKING THE IMPUGNED ADDITION VIZ. 10% OF T HE MANUFACTURING, ADMINISTRATIVE AND OTHER EXPENSES ON AD HOC BASIS 2.1. BEFORE CIT(A), IT WAS PLEADED THAT THE EX PART E ASSESSMENT WAS ARBITRARY AS THE ASSESSEE HAD COOPERATED IN THE PRO CEEDINGS AND THE LAST NOTICE FIXING THE DATE FOR HEARING ON 22-12-2008 WA S DISPATCHED BY SPEED POST ON 22-12-2008 ITSELF. SINCE THE ASSESSMENT WAS FRAMED WITHOUT ENSURING THAT THE NOTICE WAS SERVED, ASSESSEE FILED ADDITION AL EVIDENCE IN THE FORM OF VARIOUS STATEMENTS ETC. CIT(A) FORWARDED THE ADDITI ONAL EVIDENCE TO THE AO. DCIT FILED A REMAND REPORT DATED 3-9-2009 IN WHICH THE FACT THAT THE DATE OF HEARING WAS FIXED ON 22-12-2008 WAS NOT DENIED AND ABOUT ALLEGATION THAT THIS NOTICE WAS DISPATCHED ON 22-12-2008 ITSELF WAS CLAIMED TO BE UNFOUNDED WITHOUT GIVING ANY DETAILS / DATE OF RECEIPT OR ANY FURTHER COMMENTS. ITA NO. 1065/DEL/10 HEMA ENGG. INDUSTRIES LTD. 3 2.2. CIT(A) ADMITTED THE ADDITIONAL EVIDENCE AND CO NSIDERING THE REMAND REPORT, DELETED THE ADDITION BY FOLLOWING OBSERVATI ONS: 46A(4) NOTHING CONTAINED IN THIS RULE SHALL AFFECT THE POWER OF THE DEPUTY COMMISSIONER (APPEALS) OR, AS THE CASE M AY BE, THE COMMISSIONER (APPEALS)TO DIRECT THE PRODUCTION OF A NY DOCUMENT OR THE EXAMINATION OF ANY WITNESS, TO ENAB LE HIM TO DISPOSE OF THE APPEAL, OR FOR ANY OTHER SUBSTANTIAL CAUSE INCLUDING THE ENHANCEMENT OF THE ASSESSMENT OR PENA LTY (WHETHER ON HIS OWN MOTION OR ON THE REQUEST OF THE ASSESSING OFFICER UNDER CLAUSE (A) OF SUB-SECTION (1) OF SECT ION 25 OR THE IMPOSITION OF PENALTY UNDER SECTION 271. UNDER SECTION 250(4) OF THE ACT, THE FIRST APPELLAT E AUTHORITY MAY MAKE SUCH FURTHER ENQUIRY AS HE THINKS FIT. IN DESERVING CASES, THE APPELLATE AUTHORITY IS OBLIGED TO HOLD S UCH FURTHER ENQUIRY WHICH NECESSARILY INCLUDES THE PRODUCTION O F ADDITIONAL EVIDENCE. WHEREAS FRESH EVIDENCE IS AVAILABLE AND T HE ASSESSEE IS IN A POSITION TO PRODUCE THE SAME, THERE IS NO R EASON AS TO WHY THE FIRST APPELLATE AUTHORITY SHOULD NOT EXAMIN E IT ON MERITS AND PASS AN APPROPRIATE ORDER. THE ABOVE VIEW IS SU PPORTED BY THE DECISION OF HONBLE KERALA HIGH COURT IN THE CA SE OF K. MOHAMMED V. ITO [1977] 107 ITR 808. WE SEE THAT FACTS AND PRINCIPLE LAID DOWN IN CASE O F ANUPAM FASHION PALACE ARE APPLICABLE TO THE FACTS OF THE C ASE BEFORE US. IT IS NOT CORRECT THAT IN EVERY CASE, THE FIRST APP ELLATE AUTHORITY SHOULD PROVIDE OPPORTUNITY TO THE ITO TO EXAMINE AN Y EVIDENCE PRODUCED BY THE ASSESSEE IN THE APPELLATE PROCEEDIN G AND OBTAIN A REMAND REPORT FROM THE ASSESSING OFFICER. THERE I S AMPLE POWER AND JURISDICTION WITH FIRST APPELLATE AUTHORI TY TO TAKE EVIDENCE NECESSARY FOR DISPOSAL OF APPEAL. HOWEVER, IN COMPLEX CASES AND WHERE NEW MATERIAL IS PLACED IN APPEAL, A N OPPORTUNITY TO THE ITO TO FIND REBUTTING MATERIAL S HOULD BE PROVIDED IN TERMS OF RULE 46A OF INCOME-TAX RULES. THE ABOVE DECISION CLEARLY POINTS OUT THAT EVEN EX PARTE ASSESSMENT U/S 144 MUST CONFIRM TO THE RULES OF JUS TICE AND EQUITY AND CANNOT BE ARBITRARY AND CAPRICIOUS. SEVE RAL COURTS ITA NO. 1065/DEL/10 HEMA ENGG. INDUSTRIES LTD. 4 HAVE HELD THAT WHILE MAKING A BEST JUDGMENT ASSESSM ENT, THE AUTHORITY MUST MAKE AN HONEST & FAIR ESTIMATE OF TH E INCOME AND ALSO TAKE INTO ACCOUNT THE PERFORMANCE OF THE A SSESSEE IN THE PREVIOUS YEAR. PERUSAL OF THE RECORDS SHOW THAT THE AO HAS NOT BEEN ABLE TO POINT OUT ANY DEFECTS IN THE MATER IAL WITH WAS AVAILABLE BEFORE HIM DURING THE COURSE OF ASSESSMEN T PROCEEDINGS. THE AUDITORS HAVE ALSO CLEARLY POINTED OUT THAT PROPER BOOKS OF ACCOUNT HAVE BEEN MAINTAINED BY THE APPELLANT. DURING THE COURSE OF APPELLATE PROCEEDINGS ALSO ALL THE RELEVANT DETAILS OF MFG. AND ADMINISTRATIVE EXPENSES WERE F ILED. THE DISALLOWANCE MADE BY THE AO IS ONLY ON THE BASIS OF ESTIMATES AND WITHOUT POINTING OUT ANY DEFECTS IN THE MATERIA L WHICH WAS AVAILABLE ON RECORD. THE COPIES OF THE DETAILS FILE D DURING THE APPELLATE PROCEEDING WERE FORWARDED TO THE AO FOR H IS REPORT. THE ONLY COMMENTS OF THE AO ARE THAT PROPER OPPORTU NITY WAS GIVEN TO THE APPELLANT AND HE RELIED ON THE ORDER P ASSED BY HIM U/S 144. IN VIEW OF THE DISCUSSIONS ABOVE AND ON TH E BASIS OF THE EVIDENCES SUBMITTED DURING THE COURSE OF APPELLATE PROCEEDINGS I AM OF THE CONSIDERED OPINION THAT THE DISALLOWANC E MADE BY THE AO ON ESTIMATE BASIS IS WITHOUT MERIT. HENCE TH E DISALLOWANCE MADE BY THE AO IS DELETED. AGGRIEVED, REVENUE IS BEFORE US. 3. LD. DR CONTENDS THAT RULE 46A(3) CLEARLY MANDATE S REASONABLE OPPORTUNITY BEING GIVEN TO THE AO IN RESPECT OF ADD ITIONAL EVIDENCE WHICH IS PROPOSED TO BE ADMITTED BY THE CIT(A). IN THIS CASE AO WAS NOT GIVEN REASONABLE OPPORTUNITY OF BEING HEARD. ASSESSEE WAS GRANTED SUFFICIENT OPPORTUNITIES IN ASSESSMENT PROCEEDINGS, THEREFORE, THE EX PARTE ASSESSMENT WAS JUSTIFIED AND CIT(A) SHOULD NOT HAVE ADMITTED T HE ADDITIONAL EVIDENCE AS THE ASSESSEE WAS NOT PREVENTED BY SUFFICIENT CAU SE. RELIANCE IS PLACED ON HONBLE DELHI HIGH COURT JUDGMENT DATED 15-11-2011I N ITA NO. 928/2011 IN THE CASE OF CIT VS. MANISH BUILD WELL PVT. LTD., HOLDING AS UNDER: 24. IN THE PRESENT CASE, THE CIT(A) HAS OBSERVED T HAT THE ADDITIONAL EVIDENCE SHOULD BE ADMITTED BECAUSE THE ASSESSEE ITA NO. 1065/DEL/10 HEMA ENGG. INDUSTRIES LTD. 5 WAS PREVENTED BY ADDUCING THEM BEFORE THE ASSESSING OFFICER. THIS OBSERVATION TAKES CAR OF CLAUSE (C) OF SUB-RUL E (1) OF RULE 46A. THE OBSERVATION OF THE CIT(A) ALSO TAKES CARE OF SUB-RULE (2) UNDER WHICH HE IS REQUIRED TO RECORD HIS REASO NS FOR ADMITTING THE ADDITIONAL EVIDENCE. THUS, THE REQUIR EMENT OF SUB-RULES (1) AND (2) OF RULE 46A HAVE BEEN COMPLIE D WITH. HOWEVER, SUB-RULE (3) WHICH INTERDICTS THE CIT(A) F ROM TAKING INTO ACCOUNT ANY EVIDENCE PRODUCED FOR THE FIRST TI ME BEFORE HIM UNLESS THE ASSESSING OFFICER HAS HAD A REASONAB LE OPPORTUNITY OF EXAMINING THE EVIDENCE AND REBUT THE SAME, HAS NOT BEEN COMPLIED WITH. THERE IS NOTHING IN THE ORD ER OF THE CIT(A) TO SHOW THAT THE ASSESSING OFFICER WAS CONFR ONTED WITH THE CONFIRMATION LETTERS RECEIVED BY THE ASSESSEE F ROM THE CUSTOMERS WHO PAID THE AMOUNTS BY CHEQUES AND ASKED FOR COMMENTS. THUS, THE END RESULT HAS BEEN THAT ADDITI ONAL EVIDENCE WAS ADMITTED AND ACCEPTED AS GENUINE WITHO UT THE ASSESSING OFFICER FURNISHING HIS COMMENTS AND WITHO UT VERIFICATION. SINCE THIS IS AN INDISPENSABLE REQUIR EMENT, WE ARE OF THE VIE THAT THE TRIBUNAL OUGHT TO HAVE RESTORED THE MATTER TO THE CIT(A) WITH THE DIRECTION TO HIM TO COMPLY WITH SUB-RULE (3) OF RULE 46A. IN OUR OPINION AND WITH RESPECT, T HE ERROR COMMITTED BY THE TRIBUNAL IS THAT IT PROCEEDED TO M IX UP THE POWERS OF THE CIT(A) UNDER SUB-SECTION (4) OF SECTI ON 250 WITH THE POWERS VESTED IN HIM UNDER RULE 46A. THE TRIBUN AL SEEMS TO HAVE OVERLOOKED SUB-RULE (4) OF RULE 46A WHICH I TSELF TAKES NOTE OF THE DISTINCTION BETWEEN THE POWERS CONFERRE D BY THE CIT(A) UNDER THE STATUTE WHILE DISPOSING OF THE ASS ESSEES APPEAL AND THE POWERS CONFERRED UPON HIM UNDER RULE 46A. THE TRIBUNAL ERRED IN ITS INTERPRETATION OF THE PRO VISIONS OF RULE 46A VIS A VIS SECTION 250(4). ITS VIEW THAT SINCE I N ANY CASE THE CIT(A), BY VIRTUE OF HIS CONTERMINOUS POWERS OVER T HE ASSESSMENT ORDER, WAS EMPOWERED TO CALL FOR ANY DOC UMENT OR MAKE ANY FURTHER ENQUIRY AS HE THINKS FIT, THERE WA S NO VIOLATION OF RULE 46A IS ERRONEOUS. THE TRIBUNAL APPEARS TO H AVE NOT APPRECIATED THE DISTINCTION BETWEEN THE TWO PROVISI ONS. IF THE VIEW OF THE TRIBUNAL IS ACCEPTED, IT WOULD MAKE RUL E 46A OTIOSE AND IT WOULD OPEN UP THE POSSIBILITY OF THE ASSESSEE CONTENDING THAT ANY ADDITIONAL EVIDENCE SOUGHT TO B E INTRODUCED BY THEM BEFORE THE CIT(A) CANNOT BE SUBJECTED TO TH E CONDITIONS PRESCRIBED IN RULE 46A BECAUSE IN ANY CA SE THE ITA NO. 1065/DEL/10 HEMA ENGG. INDUSTRIES LTD. 6 CIT(A) IS VESTED WITH CONTERMINOUS POWERS OVER THE ASSESSMENT ORDERS OR POWERS OF INDEPENDENT ENQUIRY UNDER SUB- SECTION (4) OF SECTION 250. THIS IS A CONSEQUENCE W HICH CANNOT AT ALL BE COUNTENANCED. ORDER OF AO IS RELIED ON. 4. LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, VEHEMENTLY ARGUES: I. THAT THE ASSESSEE FILED AN APPLICATION FOR ADMISSIO N OF ADDITIONAL EVIDENCE AND MADE OUT A CLEAR CUT CASE OF BEING PRE VENTED BY SUFFICIENT REASONS IN FILING THIS ADDITIONAL EVIDEN CE INASMUCH AS THE NOTICE OF HEARING WAS THE CIT(A) BEFORE ADMITTI NG THE ADDITIONAL EVIDENCE FORWARDED THE SAME TO AO. II. THAT AO GAVE A VAGUE REPLY IN REMAND AND DID NOT CO NTROVERT THE ASSESSEES CONTENTION THAT NOTICE FIXING THE DATE O F HEARING ON 2- 12-2008 WAS DISPATCHED BY THE SPEED POST ON 22-12-2 008. WITHOUT ENSURING THE SERVICE OF NOTICE OF HEARING, AO FRAMED THE EX PARTE ASSESSMENT ON 24-12-2008. 4.1. IT IS FURTHER PLEADED THAT THE CONDITIONS OF R ULE 46A(3) AS HELD BY HONBLE HIGH COURT IN THE CASE OF MANISH BUILD WELL PVT. LTD. (SUPRA), STANDS DULY COMPLIED WITH INASMUCH AS THE CIT(A) FO RWARDED ALL DOCUMENTS PROPOSED AS ADDL. EVIDENCE TO AO. IN REPLY THEREOF, AO HAS GIVEN FOLLOWING REMAND REPORT: IN THIS CONNECTION IT IS SUBMITTED THAT THE PLEA O F THE ASSESSEE THAT IT WAS NOT AFFORDED AN OPPORTUNITY OF BEING HE ARD, IS WRONG AS THE ASSESSEE WAS ACCORDED SEVERAL OPPORTUNITIES TO FILE IN THE DETAILS AS IS APPARENT FROM THE ORDER SHEET ENTRY D ATED 07-10- 2008 ADJOURNING THE CASE TO 23-10-2008. THE AR OF T HE ASSESSEE COMPANY APPEARED ON 02-12-2008 ONLY I.E. A FTER A LAPSE OF 38 DAYS, WHICH PROVES THAT THE ASSESSEE HA D SUFFICIENT TIME TO PREPARE/ SUBMIT THE DETAILS AS REQUIRED. TH E AR OF THE ASSESSEE APPEARED ON 02-12-2008, WHEREIN HE WAS ASK ED TO ITA NO. 1065/DEL/10 HEMA ENGG. INDUSTRIES LTD. 7 APPEAR ON 08-12-2008. SIMILARLY THE CASE WAS ADJOUR NED TO 15- 12-2008 BUT NONE ATTENDED ON THE SAID DATE. THE NON COOPERATION FROM THE ASSESSEE IS APPARENT FROM THE EVENTS AS ELABORATED ABOVE. AS THE CASE WAS GOING TO BE BARRE D BY LIMITATION ON 31-12-2008, THE UNDERSIGNED WAS LEFT WITH NO OPTION BUT TO PASS THE ORDER U/S 144 WITH THE HELP OF THE PART DETAILS SUBMITTED BY THE ASSESSEE. IN VIEW OF THE A BOVE, IT IS SUBMITTED THAT THE PLEA OF THE ASSESSEE THAT IT WAS NOT ACCORDED REASONABLE TIME TO SUBMIT THE DETAILS IS NOT ACCEPT ABLE. FURTHER, THE PLEA OF THE ASSESSEE THAT THE NOTICE U/S 143(2) WAS DISPATCHED ON 22-12-2008 ASKING HIM TO ATTEND THE P ROCEEDINGS ON 22-12-2008 ITSELF IS UNFOUNDED IN VIEW OF THE RE ASONS THAT SUFFICIENT TIME BEFORE THE ISSUE OF FINAL NOTICE WA S GIVEN TO THE ASSESSEE SO AS TO SUBMIT THE DETAILS WHICH WAS NOT COMPLIED WITH BY THE ASSESSEE IN VIEW OF THE ABOVE FINDINGS , I RELY ON THE ORDER PASSED U/S 144 DATED 24-12-2008. 4.2. THE REMAND REPORT MAINLY CONTAINS FOLLOWING C OMMENTS: (I) THE ASSESSEE WAS GIVEN SUFFICIENT OPPORTUNITIES. (II) 144 ASSESSMENT WAS PROPER, WHICH IS RELIED ON. (III) ASSESSEES PLEA ABOUT THE DATE OF HEARING DATED 22- 12-2008 HAS BEEN REPORTED VAGUELY AS UNFOUNDED WITHOUT INDICAT ING ON WHICH DATE THE NOTICE OF HEARING WAS DISPATCHED AND ON W HICH DATE IT WAS SERVED. 4.3. AO RELIED ON HIS 144 ASSESSMENT AND NO ADVERS E COMMENTS HAVE BEEN OFFERED ABOUT THE MERITS OF AD HOC DISALLOWANCE AND DOCUMENTS FILED BY THE ASSESSEE. 4.4. THUS THE AO WAS GIVEN SUFFICIENT OPPORTUNITY B Y THE CIT(A) TO PRESENT HIS CASE. THUS ON THE ISSUE OF ADMISSION OF ADDITIONAL EVIDENCE AND MERITS THEREOF, THE PROVISIONS OF RULE 46A(3) ARE D ULY COMPLIED WITH. 4.5. LD. COUNSEL CONTENDS THAT THE AO HAS NOT CONTR OVERTED THE MERITS OF THE ADDITIONAL EVIDENCE; CIT(A) WAS RIGHT IN ADMITT ING THE ADDITIONAL ITA NO. 1065/DEL/10 HEMA ENGG. INDUSTRIES LTD. 8 EVIDENCE ON FULFILLMENT OF CONDITIONS OF RULE 46A A ND ON MERITS HIS ORDER IS RELIED ON. 5. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH THE ENTIRE MATERIAL AVAILABLE ON RECORD. RULE 46A PROVIDES AS UNDER: PRODUCTION OF ADDITIONAL EVIDENCE BEFORE THE [DEPUT Y COMMISSIONER (APPEALS)] [AND COMMISSIONER (APPEALS) ]. 46A. (1) THE APPELLANT SHALL NOT BE ENTITLED TO PRODUCE BEFORE THE [DEPUTY COMMISSIONER (APPEALS)] [OR, AS THE CAS E MAY BE, THE COMMISSIONER (APPEALS)], ANY EVIDENCE, WHETHER ORAL OR DOCUMENTARY, OTHER THAN THE EVIDENCE PRODUCED BY HI M DURING THE COURSE OF PROCEEDINGS BEFORE THE [ASSESSING OFF ICER], EXCEPT IN THE FOLLOWING CIRCUMSTANCES, NAMELY: (A) WHERE THE [ ASSESSING OFFICER] HAS REFUSED TO ADMIT EVIDENCE WHICH OUGHT TO HAVE BEEN ADMITTED ; OR (B) WHERE THE APPELLANT WAS PREVENTED BY SUFFICIENT CAU SE FROM PRODUCING THE EVIDENCE WHICH HE WAS CALLED UPO N TO PRODUCE BY THE [ASSESSING OFFICER] ; OR (C) WHERE THE APPELLANT WAS PREVENTED BY SUFFICIENT CAU SE FROM PRODUCING BEFORE THE [ASSESSING OFFICER] ANY EVIDENCE WHICH IS RELEVANT TO ANY GROUND OF APPEAL ; OR (D) WHERE THE [ASSESSING OFFICER] HAS MADE THE ORDER APPEALED AGAINST WITHOUT GIVING SUFFICIENT OPPORTUN ITY TO THE APPELLANT TO ADDUCE EVIDENCE RELEVANT TO ANY GR OUND OF APPEAL. (2) NO EVIDENCE SHALL BE ADMITTED UNDER SUB-RULE (1 ) UNLESS THE [DEPUTY COMMISSIONER (APPEALS)] [OR, AS THE CAS E MAY BE, THE COMMISSIONER (APPEALS)] RECORDS IN WRITING THE REASONS FOR ITS ADMISSION. (3) THE [DEPUTY COMMISSIONER (APPEALS)] [OR, AS THE CASE MAY BE, THE COMMISSIONER (APPEALS)] SHALL NOT TAKE INTO ACCOUNT ANY EVIDENCE PRODUCED UNDER SUB-RULE (1) UN LESS THE [ASSESSING OFFICER] HAS BEEN ALLOWED A REASONABLE ITA NO. 1065/DEL/10 HEMA ENGG. INDUSTRIES LTD. 9 OPPORTUNITY (A) TO EXAMINE THE EVIDENCE OR DOCUMENT OR TO CROSS-EXAMINE THE WITNESS PRODUCED BY THE APPELLANT, OR (B) TO PRODUCE ANY EVIDENCE OR DOCUMENT OR ANY WITNESS IN REBUTTAL OF THE ADDITIONAL EVIDENCE PRODUCED BY THE APPELLANT. (4) NOTHING CONTAINED IN THIS RULE SHALL AFFECT THE POWER OF THE [DEPUTY COMMISSIONER (APPEALS)] [OR, AS THE CASE MAY BE, THE COMMISSIONER (APPEALS)] TO DIRECT THE PRODUCTION OF ANY DOCUMENT, OR THE EXAMINATION OF A NY WITNESS, TO ENABLE HIM TO DISPOSE OF THE APPEAL, OR FOR ANY OTHER SUBSTANTIAL CAUSE INCLUDING THE ENHANCEME NT OF THE ASSESSMENT OR PENALTY (WHETHER ON HIS OWN MO TION OR ON THE REQUEST OF THE [ASSESSING OFFICER]) UNDER CLAUSE (A) OF SUB-SECTION (1) OF SECTION 251 OR THE IMPOSITION OF PENALTY UNDER SECTION 271.] 5.1. SO FAR AS CONDITIONS OF RULE 46A(1) ARE CONCE RNED, IT CLEARLY EMERGES FROM THE RECORD THAT NOTICE FIXING THE DATE OF HEAR ING 22-12-2008, WAS DISPATCHED ON THE SAME DATE. AO IN HIS REMAND REP ORT HAS NO WHERE MENTIONED THE ACTUAL DATE OF DISPATCH AND SERVICE OF NOTICE ON THE ASSESSEE. FROM THE ASSESSMENT ORDER IT IS CLEAR THAT CASE WAS EARLIER LISTED FOR HEARING ON 15-12-2008, THEREFORE, IT IS BUT OBVIOUS THAT TH E NOTICE OF HEARING FOR THE DATE OF 22-12-2008 MUST HAVE BEEN ISSUED AFTER THAT DATE. ASSUMING THE NOTICE OF HEARING IS PREPARED ON 16-12-08 AND DISPA TCHED ON 17-12-2008, THE SERVICE WILL TAKE ABOUT TWO DAYS, THUS IN ANY CASE THE NOTICE WILL NOT REACH THE ASSESSEE BEFORE 18-12-2008, WHICH WILL NOT BE A SUFFICIENT TIME FOR COMPLYING ON HEARING DATED 22-12-2008. UNDER THESE CIRCUMSTANCES, WE ARE INCLINED TO ACCEPT THE PLEA OF THE ASSESSEE THAT IT WAS NOT GIVEN SUFFICIENT TIME FOR COMPLIANCE DURING THE ASSESSMENT WHICH NEC ESSITATED FILING OF ADDITIONAL EVIDENCE. ITA NO. 1065/DEL/10 HEMA ENGG. INDUSTRIES LTD. 10 5.2. IN VIEW OF THE ABOVE, WE ARE INCLINED TO HOLD THAT THE ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE, THEREFORE, THE CONDI TIONS OF RULE 46A(1) ARE COMPLIED WITH. 5.3. THE CONDITIONS OF RULE 46A(2) ARE COMPLIED AS THE CIT(A) HAS RECORDED HIS REASONS FOR ADMITTING THE ADDITIONAL E VIDENCE. 5.4. COMING TO RULE 46A(3), IT IS UNDISPUTED FROM T HE RECORD THAT THE ENTIRE ADDITIONAL EVIDENCE WAS FORWARDED TO AO FOR INQUIRY AND REMAND REPORT. AOS REMAND REPORT IS REPRODUCED ABOVE. THE RE IS NO OBJECTION ON ADMISSION OF ADDITIONAL EVIDENCE, AO ONLY REITERATE S THAT THE ASSESSEE WAS GIVEN SUFFICIENT OPPORTUNITY AND THE ORDER U/S 144 WAS PROPER. 5.5. HONBLE DELHI HIGH COURT IN THE CASE OF MANISH BUILD WELL PVT. LTD. (SUPRA) HOLDS THAT AO SHOULD BE GIVEN ADEQUATE OPP ORTUNITY OF BEING HEARD BY CIT(A). IN THE REMAND REPORT AO HAS NO WHERE POI NTED OUT PAUCITY OF TIME OR ANY REASON FOR FURTHER TIME TO ON THE ADDIT IONAL EVIDENCE. AS A PROPER OPPORTUNITY IS GIVEN BY CIT(A), RULE 46A(3) HAS BEE N PROPERLY COMPLIED WITH BY THE LD. CIT(A). 5.6. BEFORE THE HONBLE DELHI HIGH COURT IN THE CAS E MANISH BUILD WELL PVT. LTD. (SUPRA), THE FACT WAS THAT ADDITIONAL EV IDENCE SOUGHT TO ADMITTED, WAS NOT FORWARDED TO AO AND ASSESSEE PLEADED THAT THE ADDITIONAL EVIDENCE MAY BE CONSIDERED U/S 250(4) AS ASKED BY CIT(A) AS HIS SUO MOTU ENQUIRIES, WHICH WAS DENIED BY THE HONBLE HIGH COURT. 5.7. IN THIS CASE, AO WAS GIVEN PROPER OPPORTUNITY BY CIT(A), WHICH CLEARLY EMERGES FROM RECORD. IN VIEW OF THE FOREGOI NG, THERE IS NO VIOLATION ITA NO. 1065/DEL/10 HEMA ENGG. INDUSTRIES LTD. 11 OF RULE 46A. THEREFORE, WE ARE UNABLE TO ALLOW THE GROUND RAISED BY THE REVENUE IN THIS BEHALF. 5.8. COMING TO THE AD HOC 10% DISALLOWANCE ACROSS T HE BOARD ON ALL THE EXPENSES, IN OUR VIEW CIT(A) HAS GIVEN SUFFICIENT R EASONS FOR DELETING THE ADDITION, WHICH ARE REPRODUCED ABOVE. WHILE FRAMING THE EX PARTE ASSESSMENT, AO HAS STATUTORY RESPONSIBILITY TO BE R EASONABLE AND MAKING 10% AD HOC DISALLOWANCE OUT OF ALL THE EXPENDITURE WITHOUT CONSULTING THE PRECEDING OR SUBSEQUENT ASSESSMENT RECORD OF THE AS SESSEE, THE DISALLOWANCE MADE BY AO WAS ARBITRARY AND RIGHTLY DELETED BY CIT (A). WE UPHOLD HIS ORDER. 6. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 02-03-2012. SD/- SD/- ( A.N. PAHUJA) ( R.P. TOLANI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 02-032012. MP COPY TO : 1. ASSESSEE. 2. AO 3. CIT 4. CIT(A) 5. DR ITA NO. 1065/DEL/10 HEMA ENGG. INDUSTRIES LTD. 12