ACIT, New Delhi V. Sh. Pradeep Kumar Thakur, New Delhi

ITA 1487/DEL/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7377 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 20-06-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 13-03-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V R SONBHADRA
• Keywords: Recovery proceedings; Source of fund; Additional evidence; Procedural lapse
• Section: 56

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F NEW DELHI BEFORE SMT DIVA SINGH, JUDICIAL MEMBER AND SH.O.P.KANT, ACCOUNTANT MEMBER I.T.A .NO.-148 7/DEL/2013 (ASSESSMENT YEAR-20 08-09) ACIT, CIRCLE-33(1), ROOM NO.1505, 15 TH FLOOR, DR. SHYAMA PRASAD MUKHERJEE CIVIC CENTRE, NEW DELHI (APPELLANT) VS PRADEEP KUMAR THAKUR, 664 B/1, MILITARY ROAD, ANAND PARBAT, NEW DLEHI-110005. PAN-AADPT2585N (RESPONDENT) APPELLANT BY SH. V.R.SONBHADRA, SR.DR RESPONDENT BY NONE ORDER PER DIVA SINGH, JM THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE AS SAILING THE CORRECTNESS OF THE ORDER DATED 26.12.2012 OF CIT(A)-XXVI, DELHI PERTAI NING TO 2008-09 ASSESSMENT YEAR ON THE FOLLOWING GROUNDS:- 1. THE CIT(A) HAS ERRED IN DELETING ADDITION OF RS.15 ,05,000/- OUT OF TOTAL ADDITIONS OF RS.21,26,000/- BY ADMITTING ADDITIONAL EVIDENCES WHICH WERE NOT PRODUCED BEFORE THE AO DURING THE ASSESSMENT PR OCEEDINGS DESPITE PROVIDING THREE OPPORTUNITIES ON 07.12.2010, 14.12. 2010 & 16.12.2010. 2. THE CIT(A) HAS ERRED IN DELETING ADDITION OF RS.18, 13,000/- MADE BY THE AO ON ACCOUNT OF UNEXPLAINED CASH DEPOSITS IN BANK. 3. THE CIT(A) HAS ERRED IN DELETING ADDITION OF RS.6,6 2,108/- MADE BY THE AO ON ACCOUNT OF BOGUS SUNDRY CREDITORS DESPITE THE FA CTS THAT THE ASSESSEE COULD NOT SUBMIT CONFIRMATION OF THESE CREDITORS DU RING THE ASSESSMENT PROCEEDINGS AS WELL AS DURING THE APPELLATE PROCEED INGS. DATE OF HEARING 20 .06.2016 DATE OF PRONOUNCEMENT 19 .0 8 .2016 I.T.A .NO.-148 7/DEL/2013 PAGE 2 OF 8 2. NO ONE WAS PRESENT ON BEHALF OF THE ASSESSEE. T HE LD. SR.DR INVITING ATTENTION TO THE GROUND RAISED SUBMITTED THAT THE PRESENT APPEAL CAN BE DECIDED EVEN IN THE ABSENCE OF THE ASSESSEE ON THE BASIS OF THE MATERIAL AVAILABLE ON RECORD AS ADMITTEDLY THERE IS A VIOLATION OF THE STATUTORY PROVISIONS. REFERRING T O THE RECORD, IT WAS SUBMITTED THAT THE ADDITION WAS MADE BY THE AO AS THE ASSESSEE FAILED TO RESPOND TO THE ORDER-SHEET ENTRIES REQUIRING THE ASSESSEE TO SHOW-CAUSE WHY ADDITION F OR THE CASH DEPOSITS IN BANK ACCOUNTS; UNSECURED LOANS FROM UNIDENTIFIED PARTIES IN VIOLAT ION OF SECTION 68; EXPENSES AND DEPOSITS FOR UNSECURED LOANS ETC. SHOULD NOT BE MADE TO THE RETURNED INCOME OF THE ASSESSEE. SINCE THE ASSESSEE FAILED TO EXPLAIN DESPITE OPPORT UNITIES THE ASSESSMENT WAS CONCLUDED AT RS.1,65,63,826/- AS OPPOSED TO THE RETURNED INCO ME OF RS.14,77,863/-. 2.1. IN APPEAL BEFORE THE CIT(A), IT WAS SUBMITTED THE ASSESSEE FILED FRESH EVIDENCES. THE AO OBJECTED TO THE ADMISSION OF THE EVIDENCES. THIS WAS OVER-RULED BY THE CIT(A) WHO ADMITTED THESE. HOWEVER, AFTER ADMITTING THE SAME, THE CIT(A) DID NOT PROVIDE ANY OPPORTUNITY TO THE AO TO REBUT THE SAME. THE RELIE F GRANTED ON THE BASIS OF THE EVIDENCE NOT CONFRONTED ON MERIT TO THE AO IT WAS STATED IS IN VIOLATION OF RULE 46A OF THE ACT AND SETTLED LEGAL POSITION. ACCORDINGLY IT WAS HIS SUB MISSION THAT THE ISSUE MAY BE RESTORED TO THE CIT(A). THE FACT THAT NO OPPORTUNITY AFTER ADM ITTING THE FRESH EVIDENCE SIT WAS SUBMITTED IS EVIDENT FROM THE FOLLOWING EXTRACT OF THE IMPUGNED ORDER:- 5.HENCE, I ADMIT THE ADDITIONAL EVIDENCE FURNISHED BY THE APPELLANT AS SUFFICIENT OPPORTUNITY WAS NOT PROVIDE BY THE ASSESSING OFFICER TO SUBSTANTIATE AND EXPLAIN THE ISSUES PERTAINING TO T HE APPELLANT. 6. AFTER ADMITTING THE ADDITIONAL EVIDENCE, I NOW P ROCEED TO ADJUDICATE THE ISSUES RAISED IN THE GROUNDS OF APPEAL IN THE FOLLO WING PARAGRAPHS. I.T.A .NO.-148 7/DEL/2013 PAGE 3 OF 8 3. WE HAVE HEARD THE SUBMISSIONS AND PERUSED THE MA TERIAL AVAILABLE ON RECORD. WE FIND THAT RULE 46A OF THE ITAT RULES ENJOINS UPON T HE CIT(A) THAT INCASE THE FRESH EVIDENCE MOVED BY THE ASSESSEE IS TO BE ADMITTED TH EN THE REASONS FOR ADMITTING THE SAME HAVE TO BE BROUGHT OUT IN WRITING BY THE CIT(A). W E FIND THAT IN THE FACTS OF THE PRESENT CASE THE SAID EXERCISE HAS BEEN DONE. HOWEVER, AFT ER ADMITTING THE SAME, THE CIT(A) IS REQUIRED UNDER LAW TO CONFRONT THESE EVIDENCES TO T HE AO AND ALLOW HIM AN OPPORTUNITY EITHER TO REBUT THE SAME OR LEAD ON EVIDENCES IN SU PPORT OF HIS STAND AND IT IS ONLY AFTER THE SAID EXERCISE HAS BEEN DONE THAT THE CIT(A) CA N CONSIDER THE FRESH EVIDENCES ON MERIT. THE SAID EXERCISE IN THE FACTS OF THE PRESE NT CASE PATENTLY HAS NOT BEEN DONE. THE LEGAL POSITION IS WELL-SETTLED THEREON AND REFERENC E MAY BE MADE TO CIT VS MANISH BUILDWELL PVT. LTD. [2012] 204 TAXMAN 106 (DELHI) . 3.1. A PERUSAL OF THE SAID DECISION SHOWS THAT CONS IDERING THE NON-FULFILLMENT OF THE REQUIREMENTS SET OUT IN SUB-RULE (3) OF RULE 46A T HE HONBLE COURT WAS PLEASED TO RESTORE THE ISSUE BACK TO THE CIT(A) DIRECTING THE SAID AUT HORITY TO ADDRESS THE SHORTCOMINGS. THE HONBLE COURT TOOK INTO CONSIDERATION THE OFF REPE ATED ARGUMENT IN SUCH CASES BY NOTING THAT IT IS TRUE THAT THE POWERS OF CIT(A) AS FIRST APPELLATE AUTHORITY ARE CO-TERMINOUS WITH THAT OF THE AO BY DRAWING ATTENTION TO THE DISTINCT ION THAT THE POWERS OF THE CIT(A) AS FIRST APPELLATE AUTHORITY ARE CO-TERMINOUS POWER OVER THE SOURCES OF INCOME CONSTITUTING THE SUBJECT MATTER OF THE ASSESSMENT, EXCEPT THE POWER TO TOUCH NEW SOURCES OF INCOME NOT CONSIDERED BY THE ASSESSING OFFICER. THE JURISDICT IONAL HIGH COURT HAS HELD THAT THE CIT(A) CAN ALSO DO AND CAN DIRECT THE ASSESSING OFFICER TO DO WHAT HE HAS FAILED TO DO, AS HELD BY THE SUPREME COURT IN THE CASE OF COMMISSIONER OF INCOME-TAX, U.P. V. KANPUR COAL SYNDICATE, (1964) 53 ITR 225. THE HONBLE COURT FOUND THAT THE CIT (A) IN THE FA CTS I.T.A .NO.-148 7/DEL/2013 PAGE 4 OF 8 BEFORE THE COURT WHICH FACT IS EVIDENT FROM THE FAC TS OF THE PRESENT CASE ALSO THAT THE CIT(A) DID NOT EXERCISE THE POWERS RECOGNIZED IN SU B-SECTION (4) OF SECTION 250 AND HAS TO BE EXERCISED BY THE CIT (A). THE HONBLE COURT HAS HELD THAT IN ORDER TO SHOW THAT THE POWER UNDER SUB-SECTION (4) TO SECTION 250 IS BEING EXERCISED THERE SHOULD BE MATERIAL ON RECORD TO SHOW THAT WHILE DISPOSING OF THE APPEAL, THE CIT(A) HAD DIRECTED FURTHER ENQUIRY AND CALLED FOR THE CONFIRMATION LETTERS FROM THE AS SESSEE EVEN IN RESPECT OF RECEIPT OF MONIES FROM CUSTOMERS BY WAY OF CHEQUES. RULE 46A, IT WAS OBSERVED WAS A PROVISION IN THE INCOME TAX RULES, 1962 WHICH IS INVOKED, ON THE OTHER HAND, BY THE ASSESSEE WHO IS IN AN APPEAL BEFORE THE CIT (A). ONCE THE ASSESSEE INV OKES RULE 46A AND PRAYS FOR ADMISSION OF ADDITIONAL EVIDENCE BEFORE THE CIT (A), THEN THE PROCEDURE PRESCRIBED IN THE SAID RULE IT HAS BEEN HELD HAS TO BE SCRUPULOUSLY FOLLOWED. THE FACT THAT SUB-SECTION (4) OF SECTION 250 CONFERS POWERS ON THE CIT (A) TO CONDUCT AN ENQUIRY AS HE THINKS FIT, WHILE DISPOSING OF THE APPEAL THE HONBLE COURT HELD CANNOT BE RELIED UPON TO CONTEND THAT THE PROCEDURAL REQUIREMENTS OF RULE 46A NEED NOT BE COMPLIED WITH. THEIR LORDSHIPS HAVE HELD THAT IF SUCH A PLEA OF THE ASSESSEE IS ACCEPTED THEN IT WOU LD REDUCE RULE 46A TO A DEAD LETTER BECAUSE IT WOULD THEN BE OPEN TO EVERY ASSESSEE TO FURNISH ADDITIONAL EVIDENCE BEFORE THE CIT (A) AND THEREAFTER CONTEND THAT THE EVIDENCE SH OULD BE ACCEPTED AND TAKEN ON RECORD BY THE CIT (A) BY VIRTUE OF HIS POWERS OF ENQUIRY U NDER SUB-SECTION (4) OF SECTION 250. THE COURT HELD THAT THIS WOULD MEAN IN TURN THAT: (I) THE REQUIREMENT OF RECORDING REASONS FOR ADMITTING THE ADDITIONAL EVIDENCE; (II) THE REQUIREMENT OF EXAMINING WHETHER THE CONDITIONS FOR ADMITTING THE ADDITIONAL EVIDENCE AR E SATISFIED; AND (III) THE REQUIREMENT THAT THE ASSESSING OFFICER SHOULD BE ALLOWED A REAS ONABLE OPPORTUNITY OF EXAMINING THE EVIDENCE ETC. CAN ALL BE THROWN TO THE WINDS, A POS ITION WHICH THE HONBLE COURT HELD WAS I.T.A .NO.-148 7/DEL/2013 PAGE 5 OF 8 WHOLLY UNACCEPTABLE AND MAY RESULT IN UNACCEPTABLE AND UNJUST CONSEQUENCES. THE HONBLE COURT HELD THAT THE PROCEDURAL REQUIREMENTS MENTION ED IN THE RULE MUST BE STRICTLY COMPLIED WITH SO THAT THE RULE IS MEANINGFULLY EXER CISED AND NOT EXERCISED IN A ROUTINE OR CURSORY MANNER. THE TRIBUNAL IN VIEW THEREOF IN T HE FACTS BEFORE THE COURT WAS FAULTED WITH FOR OVER-LOOKING THE REQUIREMENTS OF SUB-RULE (3) OF RULE 46A AND CONFUSING IT WITH SUB-RULE (4) OF RULE 46A. ADDRESSING THE RATIONALE FOR THE RULE THE HONBLE COURT OBSERVED THAT THE FUNDAMENTAL RULE WHICH IS VALID IN ALL BRA NCHES OF LAW, INCLUDING INCOME TAX LAW IS THAT THE ASSESSEE SHOULD ADDUCE THE ENTIRE EVIDENCE IN HIS POSSESSION AT THE EARLIEST POINT OF TIME. THIS ENSURES FULL, FAIR AND DETAILED ENQUI RY AND VERIFICATION. REFERRING TO THE DECISION IN KESHAV MILLS CO. LTD. V. COMMISSIONER OF INCOME-TAX , BOMBAY NORTH, AHMEDABAD (1965) 56 ITR SC 365 , 7-JUDGE BENCH JUDGEMENT OF THE SUPREME COURT, IT WAS OBSERVED THAT THE COURT HELD THAT 'PROCEEDINGS TAKEN FOR THE RECOVERY OF TAX UNDER TH E PROVISIONS OF THE ACT ARE NATURALLY INTENDED TO BE OVER WITHOUT UNNECESSARY DELAY, AND SO, IT IS THE DUTY OF THE PARTIES, BOTH THE DEPARTMENT AND THE ASSESSEE, TO LEAD ALL THEIR EVIDENCE AT THE STAGE WHEN THE MATTER IS IN CHARGE OF THE INCOME-TAX OFFICER.' IT WAS HELD BY THE JURISDICTIONAL HIGH COURT THAT IT IS FOR TH E SAID REASON THAT RULE 46A STARTS IN A NEGATIVE MANNER BY SAYING THAT AN APPELLANT BEFORE THE CIT (A) SHALL NOT BE ENTITLED TO PRODUCE BEFORE HIM ANY EVIDENCE, WHETHER ORAL OR DO CUMENTARY, OTHER THAN THE EVIDENCE PLACED BY HIM BEFORE THE ASSESSING OFFICER. THEIR L ORDSHIPS HELD THAT AFTER MAKING THE SAID GENERAL STATEMENT, WHICH WAS FOUND TO BE IN CONSONA NCE WITH THE PRINCIPLE STATED IN THE AFORESAID JUDGMENT OF THE APEX COURT, EXCEPTIONS HA VE BEEN CARVED OUT SETTING OUT UNDER WHAT CIRCUMSTANCES IT WOULD BE OPEN TO THE CIT (A) TO ADMIT ADDITIONAL EVIDENCE. THE COURT HELD THAT ADDITIONAL EVIDENCE CAN ONLY THEN B E PRODUCED AT THE FIRST APPELLATE STAGE I.T.A .NO.-148 7/DEL/2013 PAGE 6 OF 8 WHEN CONDITIONS STIPULATED IN THE RULE 46A ARE SATI SFIED AND A FINDING IS RECORDED TO THAT EXTENT WHICH MAKES IT CLEAR IN UNAMBIGUOUS LANGUAGE THAT FIRSTLY THE CONDITIONS PRESCRIBED IN RULE 46A MUST BE SHOWN TO EXIST BEFORE ADDITIONA L EVIDENCE CAN BE ADMITTED AND THEREAFTER EVERY PROCEDURAL REQUIREMENT MENTIONED I N THE RULE HAS TO BE STRICTLY COMPLIED WITH SO THAT THE RULE IS MEANINGFULLY EXERCISED AND NOT EXERCISED IN A ROUTINE OR CURSORY MANNER. THEIR LORDSHIPS HAVE HELD THAT A DISTINCT ION SHOULD BE RECOGNIZED AND MAINTAINED BETWEEN A CASE WHERE THE ASSESSEE INVOKES RULE 46A TO ADDUCE ADDITIONAL EVIDENCE BEFORE THE CIT (A) AND A CASE WHERE THE CIT (A), WITHOUT B EING PROMPTED BY THE ASSESSEE, WHILE DEALING WITH THE APPEAL, CONSIDERS IT FIT TO CAUSE OR MAKE A FURTHER ENQUIRY BY VIRTUE OF THE POWERS VESTED IN HIM UNDER SUB-SECTION (4) OF SECTI ON 250. IT IS ONLY WHEN THE CIT(A) EXERCISES HIS STATUTORY POWER SUO MOTO UNDER THE AB OVE SUB-SECTION THAT THE REQUIREMENTS OF RULE 46A NEED NOT BE FOLLOWED. ON THE OTHER HAND , WHENEVER THE ASSESSEE WHO IS IN APPEAL BEFORE HIM INVOKES RULE 46A, IT IS INCUMBENT UPON THE CIT (A) TO COMPLY WITH THE REQUIREMENTS OF THE RULE STRICTLY. 3.2. IN THE FACTS OF THE CASE BEFORE THE HONBLE HI GH COURT IT WAS FOUND THAT THE CIT(A) HAD RECORDED THAT THE ADDITIONAL EVIDENCE SHOULD BE ADMITTED BECAUSE THE ASSESSEE WAS PREVENTED BY ADDUCING THEM BEFORE THE ASSESSING OFF ICER. THE SAID OBSERVATION IT WAS HELD WOULD TAKE CARE OF CLAUSE (C) OF SUB-RULE (1) OF RU LE 46A. THE OBSERVATION OF THE CIT (A) IT WAS HELD WOULD ALSO TAKE CARE OF SUB-RULE (2) UNDER WHICH HE IS REQUIRED TO RECORD HIS REASONS FOR ADMITTING THE ADDITIONAL EVIDENCE. THUS , THE REQUIREMENT OF SUB-RULES (1) AND (2) OF RULE 46A IT WAS HELD HAD BEEN COMPLIED WITH. HOWEVER, THE HONBLE COURT FOUND THAT SUB-RULE (3) WHICH INTERDICTS THE CIT (A) FROM TAKI NG INTO ACCOUNT ANY EVIDENCE PRODUCED FOR THE FIRST TIME BEFORE HIM UNLESS THE ASSESSING OFFICER HAS HAD A REASONABLE OPPORTUNITY I.T.A .NO.-148 7/DEL/2013 PAGE 7 OF 8 OF EXAMINING THE EVIDENCE AND REBUT THE SAME, HAD N OT BEEN COMPLIED WITH. THE COURT FOUND THAT THERE WAS NOTHING IN THE ORDER OF THE CI T (A) TO SHOW THAT THE ASSESSING OFFICER WAS CONFRONTED WITH THE CONFIRMATION LETTERS RECEIV ED BY THE ASSESSEE FROM THE CUSTOMERS WHO PAID THE AMOUNTS BY CHEQUES AND ASKED FOR COMME NTS. THUS, THE END RESULT THE HONBLE COURT HELD WAS THAT ADDITIONAL EVIDENCE WER E ADMITTED AND ACCEPTED AS GENUINE WITHOUT THE ASSESSING OFFICER FURNISHING HIS COMMEN TS AND WITHOUT VERIFICATION. IN THESE CIRCUMSTANCES THE COURT HELD SINCE THIS IS AN INDISPENSABLE REQUIREMENT, WE ARE OF THE VIEW THAT THE TRIBUNAL OUGHT TO HAVE RESTORED THE M ATTER TO THE CIT (A) WITH THE DIRECTION TO HIM TO COMPLY WITH SUB-RULE (3) OF RULE 46A. IN OUR OPINION AND WITH RESPECT, THE ERROR COMMITTED BY THE TRIBUNAL IS THAT IT PROCEEDED TO M IX UP THE POWERS OF THE CIT (A) UNDER SUB- SECTION (4) OF SECTION 250 WITH THE POWERS VES TED IN HIM UNDER RULE 46A. COMMENTING UPON THE ORDER OF THE ITAT THEIR LORDSHI PS FURTHER HELD THAT THE TRIBUNAL ERRED IN ITS INTERPRETATION OF THE PROVISIONS OF RU LE 46A VIS--VIS SECTION 250(4). ITS VIEW THAT SINCE IN ANY CASE THE CIT (A), BY VIRTUE OF HI S CONTERMINOUS POWERS OVER THE ASSESSMENT ORDER, WAS EMPOWERED TO CALL FOR ANY DOC UMENT OR MAKE ANY FURTHER ENQUIRY AS HE THINKS FIT, THERE WAS NO VIOLATION OF RULE 46 A IS ERRONEOUS. THE TRIBUNAL APPEARS TO HAVE NOT APPRECIATED THE DISTINCTION BETWEEN THE TW O PROVISIONS. IF THE VIEW OF THE TRIBUNAL IS ACCEPTED, IT WOULD MAKE RULE 46A OTIOSE AND IT W OULD OPEN UP THE POSSIBILITY OF THE ASSESSEES' CONTENDING THAT ANY ADDITIONAL EVIDENCE SOUGHT TO BE INTRODUCED BY THEM BEFORE THE CIT (A) CANNOT BE SUBJECTED TO THE CONDITIONS P RESCRIBED IN RULE 46A BECAUSE IN ANY CASE THE CIT (A) IS VESTED WITH CONTERMINOUS POWERS OVER THE ASSESSMENT ORDERS OR POWERS OF INDEPENDENT ENQUIRY UNDER SUB-SECTION (4) OF SECTION 250. THAT IS A CONSEQUENCE WHICH CANNOT AT ALL BE COUNTENANCED. I.T.A .NO.-148 7/DEL/2013 PAGE 8 OF 8 4. APPLYING THE PRINCIPLE LAID DOWN BY THE JURISDI CTIONAL HIGH COURT, WE FIND THAT IN THE FACTS OF THE PRESENT CASE ALSO AS HAVE BEEN ADDRESS ED AT LENGTH IN THE EARLIER PART OF THIS ORDER THE PROCEDURAL LAPSE IS PATENT AND EVIDENT ON THE FACE OF THE RECORD ITSELF. ACCORDINGLY, CONSIDERING THE SUBMISSION AND THE PRE CEDENT RELIED UPON THE IMPUGNED ORDER IS SET ASIDE AND ALLOWING THE DEPARTMENTAL GROUND, THE ISSUE IS RESTORED BACK TO THE FILE OF THE CIT(A) TO ADDRESS THE PROCEDURAL LAPSES AND PAS S A SPEAKING ORDER IN ACCORDANCE WITH LAW AFTER GIVING THE ASSESSEE A REASONABLE OPPORTUN ITY OF BEING HEARD. 5. IN THE RESULT THE APPEAL OF THE REVENUE IS ALLOW ED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 19 TH AUGUST 2016. SD/- SD/- (O. P.KANT) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR, ITAT NEW DELHI