The ITO,Vapi Ward-4, Nani Daman V. Gautam Enterprises, Daman

ITA 1832/AHD/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0892 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 11 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 13-06-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 22-08-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: JAGDISH
• Assessee Lawyers: PARIMAL SINGH PARMAR
• Keywords: Additional evidence

Judgement Text

, B IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ./ ITA.NO.1832/AHD/2012 / ASSTT. YEAR: 2009-10 ITO, VAPI - WARD - 4 DAMAN. VS M/S.GAUTAM ENTERPRISE PLOT NO.10, HINGRAJ INDUSTRIAL ESTATE, DABHEL NANI DAMAN PAN : AADFG 2704 J ! / (APPELLANT) '# ! / (RESPONDENT) REVENUE BY : SHRI JAGDISH, CIT - DR ASSESSEE BY : PARIMAL SINGH PARMAR, AR / DATE OF HEARING : 13/06/2016 / DATE OF PRONOUNCEMENT: 03/08/2016 $%/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL AGAINS T THE ORDER OF THE LD.CIT(A), VALSAD DATED 22.6.2012 PASSED FOR TH E ASSTT.YEAR 2009- 10. 2. THE REVENUE HAS TAKEN FOUR GROUNDS OF APPEAL, BU T ITS GRIEVANCE REVOLVES AROUND A SINGLE ISSUE VIZ. LD.CIT(A) HAS E RRED IN DELETING THE ADDITIONS MADE ON ACCOUNT OF SUNDRY CREDITORS AND D EBTORS BY ITA NO.1832/AHD/2012 2 ENTERTAINING ADDITIONAL EVIDENCE IN VIOLATION TO RU LE 46A OF THE INCOME TAX RULES, 1962. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED ITS RETURN OF INCOME ELECTRONICALLY ON 10.8.2009 DECLARING TOTAL INCOME AT RS.4,65,520/-. THE CASE OF THE ASSESSEE WAS SELECTE D FOR SCRUTINY ASSESSMENT AND NOTICE UNDER SECTION 143(2) OF THE A CT WAS ISSUED ON 208.2010 WHICH WAS DULY SERVED UPON THE ASSESSEE. ON SCRUTINY OF THE ACCOUNTS, IT REVEALED TO THE AO THAT THE ASSESSEE H AS SHOWN SUNDRY CREDITORS OF RS.1,75,04,250/-. THERE ARE 24 INDIVI DUALS/ENTITIES IN THE LIST OF SUNDRY CREDITORS. THE MAJOR AMOUNT WAS AGAINST THE NAME OF MARUBENI TAKMATEX CORPORATION. FROM THIS CONCERN , THE ASSESSEE HAS SHOWN ADVANCE OF RS.1,67,68,688/-. SIMILARLY, THE ASSESSEE HAS SHOWN SUNDRY DEBTORS OF RS.46,56,011/-. IN THE LIST, THE ASSESSEE HAS SHOWN 20 INDIVIDUALS/ENTITIES AS SUNDRY DEBTORS. ACCORDING TO THE AO, THE ASSESSEE HAS FILED CONFIRMATION FROM FEW OF CREDITO RS/DEBTORS. THEREFORE, HE AO HAS DOUBTED THE OUTSTANDING OF CRE DITORS AND DEBTORS. HE MADE ADDITION OF BOTH THESE AMOUNTS WHILE DETERM INING TOTAL TAXABLE INCOME OF THE ASSESSEE AT RS.2,26,55,510/-. 4. ON APPEAL, THE LD.CIT(A) HAS DELETED BOTH THESE ADDITIONS. THE FINDING RECORDED BY THE LD.CIT(A) ON THIS ISSUE REA D AS UNDER: 5.3 DECISION :- I HAVE CONSIDERED THE OBSERVATION OF THE AO IN THE ASSESSMENT ORDER AS WELL AS THE CONTENTION RAIS ED BY THE AR OF THE APPELLANT IN THE WRITTEN SUBMISSION. I HAVE ALS O CONSIDERED THE FACTS OF THE CASE. I FIND FORCE IN THE ARGUMENT THA T ONCE THE CREDITORS NAMES, ADDRESSES AND PAN ARE FILED BEFORE THE AO, THEN THE ONUS CAST UPON THE ASSESSEE IS DISCHARGED. I FI ND THAT THE ENTIRE PURCHASES MADE BY THE APPELLANT FROM THE CREDITORS ARE FULLY ITA NO.1832/AHD/2012 3 VOUCHED AND HENCE GENUINENESS OF THE SAME CAN NOT B E DOUBTED AND EVEN THE AO HAS NOT DISPUTED THE PURCHASE PART AS NO GLARING DEFECT IN ANY OF THE PURCHASE BILLS HAS BEEN POINTE D OUT IN THE ASSESSMENT ORDER. SECONDLY, FROM THE BANK STATEMENT S AND LEDGER ACCOUNTS OF THE CREDITORS OF THE SUBSEQUENT FINANCI AL YEAR FILED BY THE APPELLANT, IT IS CLEAR THAT PAYMENT TOWARDS THE CLOSING BALANCE REFLECTED IN CASE OF 24 PARTIES OF CREDITORS AGGREG ATING TO RS.1,75,04,250/- HAS BEEN MADE IN THE SUBSEQUENT FI NANCIAL YEAR. DURING THE APPELLATE PROCEEDINGS, THE APPELLANT HAS ALSO FURNISHED CONFIRMATION OF ALL THESE CREDITORS. IN THESE CIRCU MSTANCES, THE ADDITION OF CLOSING BALANCE OF THE CREDITORS AGGREG ATING TO RS.1,75,04,250/- CANNOT BE SUSTAINED. BASED ON THE FACTUAL AND LEGAL MATRIX, I AM INCLINED TO AGREE WITH THE CONTE NTION RAISED BY THE AR OF THE APPELLANT AND THE AO IS DIRECTED TO D ELETE THE ADDITION OF RS.1,75,04,250/- AS THE SAME CANNOT BE SUSTAINED. THUS, THIS GROUND OF APPEAL IS ALLOWED. . 6.3 DECISION :- I HAVE CONSIDERED THE OBSERVATION O F THE AO IN THE ASSESSMENT ORDER AS WELL AS THE CONTENTIONS RAI SED BY THE AR OF THE APPELLANT IN THE WRITTEN SUBMISSION. IT HAS BEE N ESTABLISHED FROM THE BANK STATEMENTS AND LEDGER ACCOUNTS OF THE DEBTORS OF THE SUBSEQUENT FINANCIAL YEAR FILED BY THE APPELLANT IT IS CLEAR THAT PAYMENT TOWARDS THE CLOSING BALANCE REFLECTED IN CA SE OF 20 PARTIES OF DEBTORS AGGREGATING TO RS.46,56,011/- HA S BEEN RECEIVED IN THE SUBSEQUENT FINANCIAL YEAR AND THE SAME IS CR OSS-VERIFIABLE FROM THE BANK STATEMENTS FILED. DURING THE APPELLAT E PROCEEDINGS, THE APPELLANT HAS FURNISHED CONFIRMATION OF ALL THE SE DEBTORS AS THE APPELLANT WAS NOT GIVEN SUFFICIENT OPPORTUNITY BY T HE AO DURING THE ASSESSMENT PROCEEDINGS. I FIND THAT THERE IS A FORCE IN THE ARGUMENT THAT THE DEBIT BALANCE IN DEBTORS ACCOUNT IS FORMED UP DUE TO SALES MADE TO THEM AND REVENUE IN RESPECT OF THE SAME HAS BEEN OBVIOUSLY BOOKED AND IF THE AO ADDS THE DEBIT BALANCE OF DEBTORS ACCOUNT, IT WOULD TANTAMOUNT TO DOUBLE ADDI TION OF THE SAME INCOME AND THE SAME CANNOT BE SUSTAINED. SUNDR Y DEBTORS CANNOT BE TERMED AS INCOME. THIS ADDITION IS BEYOND THE CONCEPT OF INCOME CHARGEABLE TO TAX. BASED ON THE FACTUAL A ND LEGAL MATRIX, I AM INCLINED TO DELETE THE ADDITION OF RS. 46,56,011/-MADE BY THE AO TOWARDS DEBTORS CLOSING BALANCE AS THE SA ME CANNOT BE SUSTAINED. THUS, THIS GROUND OF APPEAL IS ALLOWED. ITA NO.1832/AHD/2012 4 5. THE LD.CIT-DR CONTENDED THAT THE LD.FIRST APPELL ATE AUTHORITY HAS ENTERTAINED FRESH EVIDENCES IN VIOLATION TO RULE 46 A OF THE INCOME TAX RULES, 1962, AND THEREFORE, FINDING OF THE LD.CIT(A ) IS NOT SUSTAINABLE. THE LD.COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, CONTENDED THAT THE AO DID NOT GRANT SUFFICIENT OPPORTUNITY TO THE ASSE SSEE. THE CONFIRMATIONS WERE CALLED FOR FROM THE ASSESSEE ON 12.12.2011, WHEREAS THE ASSESSMENT ORDER WAS PASSED ON 28.12.2011. THE TIME GAP WAS ONLY 16 DAYS. IT WAS QUITE DIFFICULT FOR THE ASSESSEE T O COLLECT EVIDENCES, OTHERWISE, THE ASSESSEE HAS GIVEN LIST OF SUNDRY CR EDITORS AS WELL AS DEBTORS WHICH CONTAINED THEIR NAMES AND ADDRESSES. THE LD.AO COULD ISSUE NOTICES TO THEM BY EXERCISING HIS POWER. NO SUCH STEP WAS TAKEN BY THE LD.AO. THUS, THE LD.CIT(A) HAS RIGHTLY ADMI TTED THE EVIDENCE SUBMITTED BY THE ASSESSEE AND HAS RIGHTLY DELETED T HE ADDITION. 6. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GO NE THROUGH THE RECORD CAREFULLY. RULE 46A OF THE INCOME TAX RUL ES, 1962 HAS DIRECT BEARING ON THE CONTROVERSY, THEREFORE, IT IS IMPERA TIVE UPON US TO TAKE NOTE OF THIS RULE. IT READS AS UNDER: 46A. (1) THE APPELLANT SHALL NOT BE ENTITLED TO PRO DUCE BEFORE THE [DEPUTY COMMISSIONER (APPEALS)] [OR, AS THE CASE MA Y 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 OFFICE R], 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 UPON 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 ITA NO.1832/AHD/2012 5 WHICH IS RELEVANT TO ANY GROUND OF APPEAL ; OR (D) WHERE THE [ASSESSING OFFICER] HAS MADE THE ORDER APPEALED AGAINST WITHOUT GIVING SUFFICIENT OPPORTUNITY TO TH E APPELLANT TO ADDUCE EVIDENCE RELEVANT TO ANY GROUND OF APPEAL . (2) NO EVIDENCE SHALL BE ADMITTED UNDER SUB-RULE (1 ) UNLESS THE [DEPUTY COMMISSIONER (APPEALS)] [OR, AS THE CASE M AY BE, THE COMMISSIONER (APPEALS)] RECORDS IN WRITING THE REAS ONS FOR ITS ADMISSION. (3) THE [DEPUTY COMMISSIONER (APPEALS)] [OR, AS T HE CASE MAY BE, THE COMMISSIONER (APPEALS)] SHALL NOT TAKE INTO ACCOUNT ANY EVIDENCE PRODUCED UNDER SUB-RULE (1) UNLESS THE [A SSESSING OFFICER] HAS BEEN ALLOWED A REASONABLE 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 M AY BE, THE COMMISSIONER (APPEALS)] TO DIRECT THE PRODUCTION OF ANY DOCUMENT, OR THE EXAMINATION OF ANY WITNESS, TO ENA BLE HIM TO DISPOSE OF THE APPEAL, OR FOR ANY OTHER SUBSTANTIAL CAUSE INCLUDING THE ENHANCEMENT OF THE ASSESSMENT OR PENALTY (WHETH ER ON HIS OWN MOTION OR ON THE REQUEST OF THE [ASSESSING OFFICER] ) UNDER CLAUSE (A) OF SUB-SECTION (1) OF SECTION 251 OR THE IMPOSI TION OF PENALTY UNDER SECTION 271.] 7. A BARE PERUSAL OF THIS RULE WOULD INDICATE THAT APPELLANT I.E. ASSESSEE SHALL NOT BE ENTITLED TO PRODUCE BEFORE TH E FIRST APPELLATE AUTHORITY ANY EVIDENCE, WHETHER ORAL OR DOCUMENTARY , EXCEPT EVIDENCE PRODUCED BY HIM DURING THE COURSE OF ASSESSMENT PRO CEEDINGS, UNLESS CONDITIONS ENUMERATED IN SUB-CLAUSE (A) TO (D) EXIS TS. THESE SUB-CLAUSES WOULD INDICATE THAT THE ASSESSEE COULD BE ABLE TO F URNISH ADDITIONAL EVIDENCE, IF THE AO HAS REFUSED TO ADMIT EVIDENCE, WHICH OUGHT TO HAVE BEEN ADMITTED, (B) THE ASSESSEE WAS PREVENTED BY SU FFICIENT CAUSE FROM ITA NO.1832/AHD/2012 6 PRODUCING THE EVIDENCES, OR WHERE THE ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING EVIDENCE, WHICH HE WAS CALLED UPON TO PRODUCE BY THE AO OR WHERE THE ASSESSEE WAS PREVENT ED BY SUFFICIENT CAUSE FROM PRODUCING BEFORE THE AO ANY EVIDENCE WHI CH IS RELEVANT TO ANY GROUNDS OF APPEAL OR WHERE THE AO HAS MADE ORDE R APPEALED AGAINST WITHOUT GIVING SUFFICIENT OPPORTUNITY TO THE ASSESS EE TO ADDUCE EVIDENCE RELEVANT TO ANY GROUNDS OF APPEAL. AS FAR AS FULFI LLMENT OF THESE CLAUSE ARE CONCERNED, IN THE PRESENT CASE, THE ASSESSEE HA S DEMONSTRATED THAT THE EVIDENCE IN THE SHAPE OF CONFIRMATION AND OTHER DET AILS ARE RELEVANT TO THE GROUNDS OF APPEAL TAKEN BY THE ASSESSEE BEFORE THE LD.CIT(A). THE ASSESSEE WAS PREVENTED TO PRODUCE SUCH EVIDENCE FOR THE REASON THAT THE AO DID NOT GRANT SUFFICIENT TIME. THE CONFIRMATION WAS SPECIFICALLY CALLED UPON ON 12.12.2011 AND THE ASSESSMENT ORDER WAS PASSED ON 28.12.2011. THUS, TIME GAP WAS NOT SUFFICIENT. TH OUGH, THE LD.CIT(A) HAS NOT PASSED ANY SPECIFIC ORDER AS REQUIRED UNDER SUB-RULE-2 FOR ADMITTING ANY ADDITIONAL EVIDENCE, BUT IMPLIEDLY IT CAN BE CONSTRUED THAT CONDITIONS MENTIONED IN CLAUSE (A) TO (D) WERE AVAI LABLE, AND THEREFORE, THE LD.CIT(A) HAS ENTERTAINED THE EVIDENCE FILED BE FORE HIM. A PERUSAL OF SUB-RULE (3) WOULD INDICATE THAT EVIDENCE WAS TA KEN ON THE RECORD AS REQUIRED UNDER SUB-RULE (2) SHALL NOT BE TAKEN INTO ACCOUNT UNLESS AN OPPORTUNITY HAS BEEN GIVEN TO THE AO TO REBUT THAT EVIDENCE OR PRODUCE ANY OTHER EVIDENCE IN REBUTTAL OF THAT EVIDENCE. I N THE PRESENT CASE, PROCEDURE CONTEMPLATED IN SUB-RULE (3) HAS NOT BEEN FOLLOWED BY THE LD.CIT(A). EVIDENCE, WHICH WERE PRODUCED FOR THE FI RST TIME BEFORE THE LD.CIT(A) COULD NOT BE USED IN VIEW OF SUB-RULE (3) UNLESS AN OPPORTUNITY IS GIVEN TO THE AO. THEREFORE, WE ARE OF THE VIEW THAT THE ORDER OF THE LD.CIT(A) IS NOT SUSTAINABLE. IT DESE RVES TO BE SET ASIDE. ITA NO.1832/AHD/2012 7 NORMALLY, WHENEVER ANY IRREGULARITY IS CREPT IN THE PROCEEDINGS, THEN THAT IRREGULARITY IS TO BE REMOVED FROM THAT LEVEL. IN THE PRESENT CASE, THE IRREGULARITY HAS CREPT IN AT THE LEVEL OF LD.CIT(A) WHEN ADDITIONAL EVIDENCE IN VIOLATION OF SUB-RULE 2 OF RULE 46A WAS ENTERTAINED BY THE LD.CIT(A). THE PROCEEDINGS DESERVES TO BE RESTORED TO THE FILE OF THE LD.CIT(A). BUT TO OUR MIND THAT WILL ONLY ENHANCE MULTIPLICITY OF LITIGATION, BECAUSE, THE LD.CIT(A) WILL HAVE TO CAL L FOR A REMAND REPORT FROM THE AO AND A SEPARATE PROCEEDINGS WOULD BE INS TITUTED BEFORE THE AO FOR CARRYING OUT VERIFICATION OF THESE EVIDENCES . CONSIDERING THIS ASPECT, WE DEEM IT PROPER TO SET ASIDE THE ISSUE TO THE FILE OF THE AO FOR RE-VERIFICATION AND RE-ADJUDICATION. THE ASSESSEE WILL BE AT LIBERTY TO SUBMIT ANY EVIDENCE IN SUPPORT OF ITS CONTENTIONS B EFORE THE AO. THE LD.AO SHALL PROVIDE DUE OPPORTUNITY OF HEARING TO T HE ASSESSEE. THE OBSERVATIONS MADE BY US WILL NOT IMPAIR OR INJU RE THE CASE OF THE AO AND WILL NOT CAUSE ANY PREJUDICE TO THE DEFENCE/EXPLANATION OF THE ASSESSEE. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLO WED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE COURT ON 3 RD AUGUST, 2016 AT AHMEDABAD. SD/- SD/- ( N.K. BILLAIYA ) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 03/08/2016