M/s Osho Home Appliances, Baddi V. ITO, Parwanoo

ITA 190/CHANDI/2018

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5021 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2004-2005
• Appeal Filed On: 16-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUKHWINDER SHARMA
• Keywords: Principle of natural justice; Additional evidence; Reasonable cause
• Section: 68; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH SMD, CHANDIGARH BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER AND SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO. 190/CHD/2018 (ASSESSMENT YEAR: 2004-05) M/S OSHO HOME APPLIANCES, VS. THE INCOME TAX OFFICER, PLOT NO.2H EPIP, PHASE-1, PARWANOO. JHARMAJRI, BADDI, H.P. PAN NO. AADFY9591L (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MANOJ KUMAR, CA RESPONDENT BY : SMT. SUKHWINDER SHARMA, ADDL.CIT (DR) DATE OF HEARING : 07.05.2018 DATE OF PRONOUNCEMENT : 11. 05.2018 ORDER PER ANNAPURNA GUPTA, AM THE PRESENT APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER PASSED BY THE CIT(APPEALS), SHIML A DATED 18.8.2017 AND RELATES TO ASSESSMENT YEAR 2004 - 05. 2. BRIEF FACTS RELATING TO THE CASE ARE THAT ASSESSMENT IN THE PRESENT CASE WAS COMPLETED U/S 14 4 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED T O AS ACT), WHICH WAS INVOKED BY THE AO ON ACCOUNT OF T HE NON-COOPERATIVE ATTITUDE OF THE ASSESSEE THROUGHOUT THE ASSESSMENT PROCEEDINGS, WHICH FACT WAS BROUGHT OUT BY THE AO BY WAY OF A DETAIL SHOWING THE NUMBER OF THE DATES ON WHICH THE CASE WAS FIXED FOR HEARIN G AND THE RESPONSE OF THE ASSESSEE TO THE SAME BY WAY OF EITHER SEEKING ADJOURNMENT OR NOT ATTENDING AT ALL, AND 2 WHICH IS ALSO REPRODUCED AT PAGE 4 OF THE CIT(APPEA LS) ORDER. THE AO AFTER INVOKING SECTION 144 OF THE ACT , PROCEEDED TO ASSESSEE THE INCOME MAKING ADDITIONS TO THE RETURNED INCOME BY DISALLOWING DEDUCTION CLAIME D BY THE ASSESSEE U/S 80 IC OF THE ACT, SINCE AS PER THE AO THE SCRUTINY OF EXPENSES INCURRED BY THE ASSESSE E SHOWED NO MANUFACTURING ACTIVITY CARRIED OUT BY IT. THE AO THEREAFTER RESTRICTED THE NET PROFIT DECLARE D BY THE ASSESSEE ON ITS MANUFACTURING ACTIVITY TO 5% AS AGAINST 8% SHOWN BY THE ASSESSEE, HOLDING THE NET PROFIT RETURNED BY THE ASSESSEE TO BE ABNORMALLY HI GH AND FURTHER TREATED THE BALANCE OF THE NET PROFIT AS INCOME FROM OTHER SOURCES OF THE ASSESSEE. THE AO ALSO ESTIMATED THE NET PROFIT EARNED BY THE ASSESSE E FROM ITS TRADING BUSINESS AT THE RATE OF 3% OF SALE S, JOB WORK AND AMC INCOME AT RS.1,32,945/- AS AGAINST NET LOSS OF RS.4884/- SHOWN BY THE ASSESSEE AND MADE ADDITION OF THE SAME TO THE INCOME OF THE ASSESSEE. THE AO FURTHER MADE ADDITION ON ACCOUNT OF UNEXPLAINED CAPITAL INTRODUCED IN THE FIRM BY THE PARTNERS AND LOANS RAISED DURING THE YEAR TO THE EXTENT OF RS. 3 LACS AND RS.4 LACS RESPECTIVELY. 3. AGGRIEVED BY THE SAME, THE ASSESSEE FILED APPEAL BEFORE THE CIT(APPEALS). DURING THE PENDENCY OF APPEAL THE CIT(APPEALS) ISSUED ENHANCEMENT NOTICE T O THE ASSESSEE STATING THAT SINCE THE BOOKS OF ACCOUN TS OF THE ASSESSEE WERE NOT RELIABLE AND WERE DEFECTIV E, 3 THE NET PROFIT RATE OF 3% WAS TO BE APPLIED ON THE TOTAL TURNOVER SHOWN BY THE ASSESSEE, RESULTING IN ENHANCEMENT OF INCOME AT RS.2,23,445/-. FURTHER ANOTHER ENHANCEMENT NOTICE WAS ISSUED TO THE ASSESSEE STATING THAT THE ENTIRE CAPITAL INTRODUCED DURING THE YEAR AS ALSO THE ENTIRE LOANS TAKEN DURI NG THE YEAR NEEDED TO BE ADDED TO THE INCOME OF THE ASSESSEE AS BEING UNEXPLAINED INSTEAD OF THE ADDITI ON MADE BY THE AO TO THE EXTENT OF ONLY RS.3 LAKH AND RS.4 LACS RESPECTIVELY ON ACCOUNT OF THE SAME. THE ASSESSEE FILED ADDITIONAL EVIDENCES BEFORE THE CIT (A), ALONG WITH AN APPLICATION SEEKING ADMISSION OF THE SAME, STATING THAT THERE WAS SUFFICIENT CAUSE FOR N OT PRODUCING THE EVIDENCES DURING ASSESSMENT PROCEEDINGS AND THEREFORE REQUESTING THE CIT(A) TO ADMIT THEM NOW. BESIDES WRITTEN SUBMISSIONS WERE FILED BY THE ASSESSEE ON EACH ADDITION/ DISALLOWANC E MADE BY THE AO. THE CIT(APPEALS) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, REFUSED TO ADMIT THE ADDITIONAL EVIDENCES STATING THAT THE ASSESSEE HAD BEEN NON-COOPERATIVE THROUGHOUT THE ASSESSMENT PROCEEDINGS AND THE REASON STATED BY THE ASSESSEE F OR NOT BEING ABLE TO PRODUCE THE EVIDENCES BEFORE THE CIT(APPEALS) WERE NOT SUFFICIENT AND APPEARED TO BE DEVOID OF ANY MERITS. THEREAFTER THE LD. CIT(APPEAL S) UPHELD ALL THE ADDITIONS MADE BY THE AO AND DISMISS ED THE APPEAL FILED BY THE ASSESSEE. 4 4. AGGRIEVED BY THE SAME THE ASSESSEE HAS COME UP IN APPEAL BEFORE US CHALLENGING THE VARIOUS ADDITI ONS UPHELD BY CIT(APPEALS) AND ALSO CHALLENGING THE ACT ION OF THE CIT(APPEALS) IN CONFIRMING THE EX PARTE ASSESSMENT FRAMED AND REJECTING THE APPLICATION SEEKING ADMISSION OF ADDITIONAL EVIDENCES FILED BY THE ASSESSEE AS PER RULE 46A OF THE INCOME TAX RULES,1962. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THE LD. CIT(A) IS WRONG IN CONFIRMING THE EX-PA RTE ASSESSMENT U/S 144 FOR NON-PRODUCING INFORMATION BECAUSE ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING THE INFORMATION DURING THE ASSESSMEN T PROCEEDINGS. 2. THE ID. CIT(A) IS WRONG IN REJECTING THE APPLICAT ION OF ADDITIONAL EVIDENCES FILED UNDER RULE-46A BECAUSE ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING THE INFORMATION DURING THE ASSESSMENT PROCEEDINGS. 3. THE ID. CIT(A) IS WRONG IN CONFIRMING THE ADDITI ON OF RS. 9,53,018/- MADE ON ACCOUNT OF DISALLOWANCE OF DEDUC TION U/S 80IC. 4. THE ID. CIT(A) IS WRONG IN CONFIRMING THE ADDITI ON OF RS. 1,32,945/- MADE BY APPLYING ARBITRARILY RATE OF 3% ON TRADING SALES, JOB WORK AND AMC INCOME. 5. THE ID. CIT(A) IS WRONG IN CONFIRMING THE ADDITIO N OF RS.3,00,000/- MADE BY ID. ASSESSING OFFICER ON ACCOUN T OF CAPITAL CONTRIBUTION BY CONSIDERING IT AS INCOME FROM UNEXPLAINED SOURCES AND FURTHER ENHANCING THE ADDITION FROM RS.3,00,000/- TO RS.9,70,572/-. 6. WITHOUT PREJUDICE TO GROUND NO. 5, THE ID. CIT(A ) IS WRONG IN ENHANCING THE ESTIMATED INCOME OF THE ASSESSEE F IRM FROM RS.3,00,000/- TO RS.9,70,572/- ON ACCOUNT OF C APITAL CONTRIBUTION BY CONSIDERING THE SAME AS UNEXPLAINED U/S 68 WITHOUT APPRECIATING THE FACT THAT POWER OF ENHANCEMENT IS NOT TO BE EXERCISED BY CIT(A) TO SUBSTITUTE THE ESTIMATE MADE BY THE ASSESSING OFFICER AND FURTHER INCOME WAS ENHANCED WITHOUT ADMITTING THE ADDITIONAL EVIDENCES FILED BY THE ASSESSEE DURING T HE APPELLATE PROCEEDINGS, WHICH IS AGAINST THE PRINCIPL ES OF NATURAL JUSTICE. 5 7. THE ID. CIT(A) IS WRONG IN CONFIRMING THE ADDITIO N OF RS.4,00,000/- MADE BY ID. ASSESSING OFFICER ON ACCOUNT OF UNSECURED LOAN BY TREATING IT AS INCOME FROM UNDISC LOSED SOURCES AND FURTHER ENHANCING THE ADDITION FROM RS.4,00,000/- TO RS.14,50,000/-. 8. WITHOUT PREJUDICE TO GROUND NO.7, THE ID. CIT(A) IS WRONG IN ENHANCING THE ESTIMATED INCOME OF THE ASSESSEE F IRM FROM RS.4,00,000/- TO RS.14,50,000/- ON ACCOUNT OF UNSECURED LOAN BY CONSIDERING THE SAME AS UNEXPLAINE D U/S 68 BY IGNORING THE FACT THAT POWER OF ENHANCEME NT IS NOT TO BE EXERCISED BY CIT(A) TO SUBSTITUTE THE EST IMATE MADE BY THE ASSESSING OFFICER AND FURTHER INCOME WAS ENHANCED WITHOUT ADMITTING THE ADDITIONAL EVIDENCES FILED BY THE ASSESSEE DURING THE APPELLATE PROCEEDIN GS, WHICH IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 5. LD COUNSEL FOR THE ASSESSEE FIRST TOOK UP THE GROUNDS CHALLENGING THE FRAMING OF EXPARTE ASSESSME NT ORDER AND THE REJECTION OF THE APPLICATION SEEKING ADMISSION OF ADDITIONAL EVIDENCES, RAISED BY THE ASSESSEE IN GROUND NO. 1 AND 2. 6. DURING THE COURSE OF HEARING BEFORE US, LD. COUNSEL FOR THE ASSESSEE STATED THAT THE ASSESSEE H AD AMPLY DEMONSTRATED THE EXISTENCE OF SUFFICIENT CAUS E WITH THE ASSESSEE FOR NOT HAVING PARTICIPATED IN T HE ASSESSMENT PROCEEDINGS. LD. COUNSEL FOR THE ASSESSE E DREW OUR ATTENTION TO THE SUBMISSIONS MADE BEFORE THE LD. CIT(APPEALS) IN THIS REGARD REPRODUCED AT P ARA 4.1 OF THE ORDER AS UNDER: 4. APPELLANT'S SUBMISSION 4.1 DURING HEARING OF THE APPEAL, THE APPELLANT HAS MADE WRITTEN SUBMISSIONS , THE RELEVANT EXTRACTS OF THE SAME ARE REPRODUCED AS UNDER:- VIDE REPLY DATED 17/07/2017, APPELLANT SUBMITTED AS UNDER:- 6 THE AFORESAID APPEAL IS PENDING BEFORE YOUR GOODSELF FO R ADJUDICATION WHEREIN THE ASSESSMENT ORDER WAS PASSE D U/S 144 OF THE INCOME TAX ACT, 1961. DURING THE APPELLATE PROCEEDINGS, ASSESSEE FIRM FILED WRITTEN SUBMISSIONS ALONG WITH VARIOUS DOCUMENTARY EVIDENCES. IN RESPONSE TO THE SAME, YOUR GOODSE/F VI DE ORDER SHEET ENTRY ASKED THE ASSESSED WHY,THE ADDITIONAL EVIDENCES SHOULD BE ADMITTED. IN THIS REGAR D, IT IS SUBMITTED THAT ASSESSEE FIRM COULD NOT ATTEND/ FILE THE INFORMATION BEFORE THE ASSESSING OFFICER BECAUSE OF THE FOLLOWING REASONS: - REASONS FOR ADMISSION OF ADDITIONAL EVIDENCES:- A) THAT THE ASSESSEE FIRM WAS ENGAGED IN THE BUSINESS OF MANUFACTURING OF LABORATORY EQUIPMENTS AT PLOT NO. 2H, EPIP, PAHSE-1, JAHRMAJRI, TEHSIL- NALAGARH AND HAVING TWO PARTNERS SH. MAHINDERA TANDON AND SH. VIPUL TANDON. B) THAT MR. MAHINDRA TANDON IS THE FATHER OF MR. VIPUL TANDON AND HE IS THE ONE WHO WAS LOOKING AFTER ALL THE OPERATING FUNCTIONS OF THE ASSESSEE FIRM I.E. MARKETING, ADMINISTRATION FUNCTION, EXECUTION WORK ETC. C) THAT THE FATHER OF THE MANAGING PARTNER MR. TIRATH RAM TANDON WAS SUFFERING FROM PROLONGED ILLNESS AT THE TIME OF ASSESSMENT PROCEEDINGS AND FINALLY DUE TO ILLNESS, FATHER OF THE MANAGING PARTNER DIED ON 06.06.2006.(COPY OF DEATH CERTIFICATE IS ENCLOSED AS PER ANNEXURE-1). THAT DUE TO PROLONGED ILLNESS OF THE FATHER OF THE MANAGING PARTNER AND HIS HOSPITALIZATION FOR A PERIOD IN DIFFERENT HOSPITALS, A LL THE FAMILY MEMBERS WERE MENTALLY DISTURBED BY SUCH INCIDENTS I.E. ILLNESS AND DEATH OF FATHER OF MANAGING PARTNER. FURTHER, THE OTHER PARTNER OF THE ASSESSEE FIRM I.E. SON OF MANAGING PARTNER WAS OF ORDINARY BACKGROUND AND DID NOT KNOW THE INTRICACIES OF THE INCOME-TAX LAW AND THE STATUTORY REQUIREMENTS THERE-UNDER AND A/SO WAS TOTALLY UNAWARE OF ASSESSMENT PROCEEDINGS. D) THAT DUE TO DEATH OF FATHER OF THE MANAGING PARTNER, A/I THE FAMILY MEMBERS OF MANAGING PARTNER OF THE ASSESSEE FIRM WERE IN GREAT SHOCK AND HE IS THE ONE WHO HAD TO HOLD HIS FAMILY IN THIS CRISIS SITUATION. A/SO, THE MANAGING PARTNER WAS BUSY IN ORGANIZING 'SHOK SABHA PROGRAMME' ACCORDING TO FAMILY RITUALS AND TRADITIONS. E) FURTHER, LATER ON, ASSESSEE FIRM ALSO FACED FINANCI AL CRISIS AND FINALLY, THE ASSESSEE FIRM HAD BEEN TAKEN 7 OVER BY THE HIMACHAL PRADESH FINANCIAL CORPORATION (H.P.F.C.) AND PUT THE SAME TO AUCTION. F) THAT THE ASSESSEE FIRM COULD NOT EVEN REORGANIZE THE BUSINESS WHICH HAD TO BE DISCONTINUED DUE TO ABOVE MENTIONED CIRCUMSTANCES. THAT DUE TO THESE SUFFICIEN T REASONS AND CIRCUMSTANCES, ASSESSMENT PROCEEDINGS COULD NOT BE ATTENDED AS PREVENTED BY SUFFICIENT CAUSE. HOWEVER, ON RECOVERY OF ADVERSE SITUAT IONS, ASSESSEE FIRM FILED ALL THE RECORDS/EVIDENCES BEFORE YOUR GOODSELF DURING THE APPELLATE PROCEEDINGS. KEEPING IN VIEW OF ALL ABOVE FACT S AND CIRCUMSTANCES OF THE CASE, ASSESSEE PRAYS FOR ADMISSION OF ADDITIONAL EVIDENCE TO PROVIDE SUBSTANTIAL JUSTICE AS ASSESSEE IS PREVENTED BY SUFFICIENT CAUSE. 8. REFERRING TO THE SAME LD. COUNSEL FOR THE ASSESS EE STATED THAT IT IS CLEARLY EVIDENT FROM THE ABOVE TH AT THE CIRCUMSTANCES PREVAILING WITH THE ASSESSEE WHEN THE ASSESSMENT PROCEEDINGS WERE ON, BEING THE DEMISE OF THE FATHER OF THE MANAGING PARTNER OF THE ASSESSEE FIRM AFTER A PROLONGED ILLNESS BECAUSE OF WHICH THE PART NER WAS IN A STATE OF SHOCK AND BECAUSE OF THE FACT THA T LATER ON THE ASSESSEE FIRM ALSO FACED FINANCIAL CRI SIS AND WAS TAKEN OVER BY THE HIMACHAL PRADESH FINANCIA L CORPORATION WHICH HAD PUT THE ASSESSEE FIRM TO AUCTION, THE ASSESSMENT PROCEEDINGS COULD NOT BE ATTENDED BY THE ASSESSEE. LD. COUNSEL FOR THE ASSES SEE CONTENDED THAT THE ASSESSEE HAD THUS DULY DEMONSTRATED THE EXISTENCE OF SUFFICIENT CAUSE WITH THE ASSESSEE WHICH PREVENTED IT FROM PARTICIPATING IN T HE ASSESSMENT PROCEEDINGS. LD. COUNSEL FOR THE ASSESSE E THEREAFTER DREW OUR ATTENTION TO THE RELEVANT FINDI NGS OF THE CIT(APPEALS) REJECTING THE ASSESSEES APPLICA TION FOR ADMISSION OF ADDITIONAL EVIDENCES AT PARA 5.1 O F THE ORDER AS UNDER: 8 5.1 THE FIRST ISSUE TO DECIDED IS REGARDING THE A DMISSION OF ADDITIONAL EVIDENCE WHICH THE APPELLANT HAS FILED DURING THE APPELLATE PROCEEDINGS. IN THIS REGARD, THE TOTAL NON COOPERATION OF THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS HAS BEEN ELABORATELY HIGHLIGHTED IN THE ASSESSMENT ORDER, THE EXTRACTS OF WHICH HAS BEEN REPRODUCED SUPRA. NO INFORMATION ON THE MAJOR ISSUES FLAGGED BY THE ASSESSING OFFICE R WAS FURNISHED BY THE ASSESSEE. THE ASSESSMENT PROCEEDINGS WERE LITERALLY CONVERTED INTO A FARCE OR MOCKERY BY THE APPELLANT. THE ITO ACTED ON THE MATERIAL BEFORE HIM AND ALSO DULY ISSUED A NOTICE T O THE APPELLANT FOR THE PURPOSES OF SECTION 144 OF THE AC T. NO BOOKS OF ACCOUNTS, BILLS, VOUCHERS AND OTHER RELATED DOCUMENTS WERE PRODUCED BY THE ASSESSEE BEFORE THE A.O. THE RECORD OF THE ASSESSMENT PROCEEDINGS CLEARLY ESTABLISHES THAT AMPLE TIME AND OPPORTUNITIES WERE AVAILABLE TO THE ASSESSEE TO FURNISH THE COMPLETE INFORMATION IN ORDER TO ESTABLISH THE GENUINENESS OF HIS ACCOUNTS BUT THE ASSESSEE MISERABLY FAILED TO DISCH ARGE HIS ONUS. AS REGARDS THE PLEA SET UP BY HIM THAT HE WAS PREVENTED BY SUFFICIENT CAUSE FROM FURNISHING T HE REQUISITE INFORMATION, THE SAME IS FOUND TO BE DEVOI D OF ANY MERIT. THE ASSESSMENT WAS COMPLETED ALMOST 6 MONTHS AFTER THE DEMISE OF THE PARTNER'S FATHER AND AMPLE OPPORTUNITIES WERE PROVIDED . THE REASONS GIVEN BY THE APPELLANT HAVE BEEN PERUSED. THE ASSESSMENT ORDER CLEARLY BRINGS OUT THAT THE INFORMATION CALLED FOR BY THE A.O. WAS NOT PRODUCED BEFORE THE AO. THE ASSESSMENT PROCEEDINGS CONTINUED FROM 09.06.2005 TIL L 23.112006 WHICH IS A LONG ENOUGH PERIOD TO ENABLE COMPLIANCE OF THE NOTICES ISSUED BY THE A.O AND FURNI SH THE INFORMATION CALLED FOR. INSTEAD, THE ASSESSEE CONTINUED TO SIT ON THE FENCE AND SHOWED SCANT RESP ECT TO THE A.O.'S NOTICES AND TO THE ASSESSMENT PROCEEDINGS . THERE IS NO MENTION IN THE ASSESSMENT ORDER ABOUT T HE REASONABLE CAUSE WHICH PREVENTED THE ASSESSEE FROM FURNISHING THE DESIRED INFORMATION. THE APPELLANT HAS ALSO NOT FILED ANY COPIES OF LETTERS TO THE A.O. BRING ING OUT THE SAME. THE ENTIRE HISTORY OF HIS ASSESSMENT PROCEEDINGS SMACKS OF HIS CONTUMACIOUS CONDUCT AND SHOWS NEITHER DUE DILIGENCE NOR ANY SINCERITY OF PURPOSE. HENCE THE PLEA REGARDING HIS INABILITY TO FURNISH THE NECESSARY EVIDENCE AT THE STAGE OF ASSESSMENT PROCEEDINGS AMOUNTS TO JUST A BALD ASSER TION AND DESERVES TO BE REJECTED. BY SEEKING ADMISSION O F ADDITIONAL EVIDENCE UNDER RULE 46A OF THE IT. RULES, 1962, THE APPELLANT IS ONLY TRYING TO SEEK THE REASSESSMENT OF HIS CASE. IT IS A STRATEGY BEING RE SORTED TO BY THE APPELLANT TO EXPLOIT THE APPELLATE PROCEED INGS TO HIS UNDUE ADVANTAGE AFTER COMPLETELY SQUANDERING THE TIME AND OPPORTUNITY AVAILABLE TO HIM DURING THE COU RSE OF ASSESSMENT PROCEEDINGS. SINCE THE ASSESSMENT PROCEEDINGS HAD CLEARLY BEEN CONVERTED INTO A FARCE BY THE ASSESSEE, THE ASSESSEE IS NOT FOUND ENTITLED TO 9 ANY INDULGENCE AT THE STAGE OF APPELLATE PROCEEDING S. HENCE HIS REQUEST TO ADDUCE ADDITIONAL EVIDENCE IS HEREBY REJECTED. 9. REFERRING TO THE SAME IT WAS CONTENDED BY THE LD . COUNSEL FOR THE ASSESSEE THAT THE LD. CIT(APPEALS) HAD DISMISSED THE CONTENTIONS OF THE ASSESSEE SUMMARILY BY SIMPLY STATING THAT THE ASSESSMENT WAS COMPLETED 6 MONTHS AFTER THE DEMISE OF THE PARTNERS FATHER AND AMPLE OPPORTUNITIES WERE PROVIDED DESPITE WHICH THE ASSESSEE FAILED TO PRODUCE RELEVANT INFORMATION BEF ORE THE ASSESSING OFFICER. LD. COUNSEL FOR THE ASSESSEE POINTED OUT THAT THE CIT(APPEALS) HAD SIMPLY HARPED ON THE FACT THAT THE ASSESSEE DID NOT PARTICIPATE I N THE ASSESSMENT PROCEEDINGS WHICH SMACKED OF HIS CONTUMACIOUS CONDUCT AND SHOWED THAT HE WAS NOT DILIGENT AND SINCERE IN HIS APPROACH TO THE ASSESSM ENT PROCEEDINGS. LD COUNSEL FOR THE ASSESSEE STATED THA T THE CIT(APPEALS) HAD NOT DULY CONSIDERED THE CIRCUMSTANCES IN WHICH THE ASSESSEE FIRM WAS AT THE TIME OF THE ASSESSMENT PROCEEDINGS WHEN THE FATHER OF THE MANAGING PARTNER OF THE ASSESSEE FIRM HAD EXPIR ED DUE TO PROLONGED ILLNESS AND LD. COUNSEL FOR THE ASSESSEE POINTED OUT THAT THE LD. CIT(APPEALS) HAD ALSO FAILED TO CONSIDER THE FACT THAT THE ASSESSEE FIRM WAS ALSO FACING FINANCIAL CRISIS AND HAD BEEN TAKEN OVER BY THE HIMACHAL PRADESH FINANCIAL CORPORATION(HEREINAFTER REFERRED TO AS HPFC). 10. AT THIS JUNCTURE THE LD. COUNSEL FOR THE ASSESS EE WAS ASKED AS TO WHAT EVIDENCE WAS PLACED BEFORE THE 10 COMMISSIONER OF INCOME TAX REGARDING THE PREVAILING FINANCIAL CRISIS IN THE ASSESSEE FIRM AND ITS TAKEO VER BY THE HIMACHAL PRADESH FINANCIAL CORPORATION. TO THIS THE LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT EVIDENCES WERE AVAILABLE AND WOULD BE PLACED IF OPPORTUNITY WAS GIVEN TO THE ASSESSEE IN THIS REGAR D. LD. COUNSEL FOR THE ASSESSEE THEREAFTER STATED THAT HIS LIMITED PRAYER BEFORE US WAS THAT THE ISSUE OF ADMISSION OF ADDITIONAL EVIDENCES BE RESTORED BACK TO THE CIT(APPEALS) TO AFFORD THE ASSESSEE AN OPPORTUN ITY TO PRESENT ITS CASE WITH ALL NECESSARY EVIDENCES AN D WITH A DIRECTION TO THE CIT(APPEALS) TO CONSIDER IT S CIRCUMSTANCES HOLISTICALLY AND IN ENTIRETY AND THEREAFTER PASS AN ORDER WITH REGARD TO THE ADMISSI ON OF ADDITIONAL EVIDENCES. 11. THE LD. DR OBJECTED TO THE SAME STATING THAT TH E CIT(APPEALS) HAD GIVEN A CATEGORICAL FINDING THAT THE ASSESSEE HAD NOT BEEN ABLE TO DEMONSTRATE THE EXISTENCE OF SUFFICIENT CAUSE WHICH PREVENTED HIM F ROM ADDUCING THE ADDITIONAL EVIDENCES BEFORE THE AO AND ITS CONTENTION THAT BECAUSE OF THE PROLONGED ILLNE SS AND DEATH OF THE FATHER OF THE MANAGING PARTNER HE WAS PREVENTED FROM ATTENDING THE ASSESSMENT PROCEEDINGS , WAS DEVOID OF MERIT SINCE THE ASSESSMENT PROCEEDING S WERE CARRIED ON UP TO A PERIOD OF 6 MONTHS THEREAFT ER, WHICH WAS SUFFICIENT PERIOD FOR THE ASSESSEE TO ATT END 11 THE ASSESSMENT PROCEEDINGS AND FURNISH THE NECESSAR Y EVIDENCES. 12. HAVING HEARD THE CONTENTIONS OF BOTH THE PARTIE S, WE FIND MERIT IN THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE. WE ARE IN AGREEMENT WITH THE LD. COUNSEL FOR THE ASSESSEE THAT THE CIT(APPEALS) HAD NOT TAKEN INTO CONSIDERATION THE ENTIRE CIRCUMSTANCES A S DEMONSTRATED BY THE ASSESSEE TO EXIST WHEN THE ASSESSMENT PROCEEDINGS WERE ON AND WHICH THEREBY PREVENTED HIM FROM PARTICIPATING IN THE PROCEEDINGS AND FILING ALL NECESSARY EVIDENCES. THE LD. CIT(APPEALS) HAS, WE FIND, ONLY CONSIDERED THE FACT OF ILLNESS AND DEATH OF THE FATHER OF THE MANAGING DIRECTOR OF THE ASSESSEE FIRM AND HELD THAT THIS WA S NOT SUFFICIENT CAUSE TO PREVENT THE ASSESSEE FROM PARTICIPATING IN THE PROCEEDINGS BEFORE THE AO. THE LD. CIT(APPEALS) DID NOT CONSIDER THE FINANCIAL CRISIS SAID TO EXIST IN THE FIRM RESULTING IN THE FIRM BEING TA KEN OVER BY HPFC. THUS WITHOUT CONSIDERING THE ENTIRE SITUATION, AS POINTED OUT BY THE ASSESSEE TO BE PREVAILING AT THE TIME OF ASSESSMENT, THE CIT(APPEA LS) WE FIND DISMISSED THE ASSESSEES PLEA OF EXISTENCE O F SUFFICIENT CAUSE PREVENTING IT FROM ATTENDING THE ASSESSMENT PROCEEDINGS AND ALSO REFUSED THEREFORE T O ADMIT THE ADDITIONAL EVIDENCES FILED BY THE ASSESSE E. THE ASSESSEE ALSO WE FIND HAS CONTENDED THAT IT COU LD SUFFICIENTLY DEMONSTRATE WITH EVIDENCES THE EXISTEN CE 12 OF FINANCIAL CRISIS IN THE ASSESSEE FIRM PREVAILING AT THAT TIME AND ITS CONSEQUENT TAKEOVER BY HPFC. WE FIND THAT THE EXISTENCE OF FINANCIAL CRISIS COUPLED WITH THE PERSONAL LOSS SUFFERED BY THE MANAGING PARTNER OF THE ASSESSEE ARE RELEVANT FACTS WHICH NEED TO BE CONSIDERED IN ENTIRETY FOR DETERMINING THE EXISTENC E OF SUFFICIENT CAUSE WITH THE ASSESSEE PREVENTING IT TO ATTEND THE ASSESSMENT PROCEEDINGS AND THUS FILING T HE NECESSARY EVIDENCES. IT IS ONLY AFTER CONSIDERING T HE ENTIRE FACTS AND CIRCUMSTANCES THAT THE DECISION ON THE ADMISSIBILITY OF ADDITIONAL EVIDENCES SHOULD BE TAK EN. THE LD. CIT(APPEALS) HAVING FAILED TO CONSIDER ALL THE FACTS WE CONSIDER IT FIT AND IN THE INTEREST OF JUS TICE TO RESTORE THE APPEAL DENOVO TO THE CIT(APPEALS) TO DE CIDE AFRESH THE ADMISSIBILITY OF ADDITIONAL EVIDENCES ADDUCED BY THE ASSESSEE AFTER CONSIDERING ALL CONTENTIONS AND EVIDENCES FILED BY THE ASSESSEE AND THEREAFTER DECIDE THE REST OF THE GROUNDS RAISED BY THE ASSESSEE IN ACCORDANCE WITH LAW. WE MAY DIRECT THAT DUE OPPORTUNITY OF HEARING BE GIVEN TO THE ASSESSEE IN THIS REGARD. 13. THE APPEAL OF THE ASSESSEE IS THEREFORE ALLOWED FOR STATISTICAL PURPOSES. SD/- SD/- (DIVA SINGH) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 13 3. THE CIT 4. THE CIT(A) 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH