ITO-12(2)(3), MUMBAI V. GRD STEELINDUSTRIES PVT. LTD, MUMBAI

ITA 1918/MUM/2019

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 7560 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-06-2022
• Appeal Filed By: Department
• Order Result: PartlyAllowed
• Bench Allotted: G
• Assessment Year: 2015-2016
• Appeal Filed On: 01-04-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Additional evidence
• Section: 68; 143(3); 69B; 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “G” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI RAHUL CHAUDHARY (JUDICIAL MEMBER) ITA No. 1918/MUM/2019 Assessment Year: 2015-16 ITO-12(2)(3), Room No. 226, 2 nd floor, Aayakar Bhavan, Churchgate, Mumbai-400020. Vs. M/s GRD Steel Industries Private Limited 203, Tirupati Udyog, I B Patel Road, Off W E Highway Goregaon East, Mumbai-400063. PAN No. AACCN 8254 G Appellant Respondent Revenue by : Mr. Hoshang B. Irani, DR Assessee by : Mr. Haresh P. Shah, AR Date of Hearing : 28/04/2022 Date of pronouncement : 14/06/2022 ORDER PER OM PRAKASH KANT, AM This appeal by the Revenue is directed against order dated 31/01/2019 passed by the Ld. Commissioner of Income-tax (Appeals)-20, Mumbai [in short ‘the Ld. CIT(A)’] for assessment year 2015-16, raising following grounds: 1. Whether on the facts and in circumstances of the case and in law, the ld. CIT(A) has erred in giving relief to the assessee with respect to the payment of Rs.89 lakhs merely on the basis that the payments were made from the assessee's account in Bharat Co contention is not rebutted by the AO without appreciating the facts that the AO had made addit source of the in 2. "Whether on the facts and in circumstances of the case and in law, the ld. CIT(A) has erred in accepting the claim of the assessee that the balance amount payable of Rs.1,64,31,900/ Satra Group Companies without ap the Hon'ble Bombay High Court while disposing the petition no.1236 of 2015 held that " it is not possible to accept the petitioner's version that the purchase price for goods is payable by both the companies notwithstanding their liability to pay the 3. Whether on the jacts and in circumstances of the case and in law, the Id. CIT(A) has erred in giving relief to the assessee without appreciating the facts that all the properties of Satra Plaza were mortga and that in the NOC issued by FL for executing the sale agreement, the condition mentioned was that the payment of Rs.1,64,31,900/ account Satra Plaza in Aris Bank before 14.01.2015 and said condition has not been met by the assessee which indicates clearly that the investment to that extent has not been recorded in the M/s GRD Steel Industries Limited Whether on the facts and in circumstances of the case and in law, the ld. CIT(A) has erred in giving relief to the assessee with respect to the payment of Rs.89 lakhs merely on the basis that the payments were made from the assessee's account in Bharat Co-operative Bank and that this contention is not rebutted by the AO without appreciating the facts that the AO had made addition because alleged source of the investment remained unexplained? "Whether on the facts and in circumstances of the case and in law, the ld. CIT(A) has erred in accepting the claim of the assessee that the balance amount payable of Rs.1,64,31,900/- was adjusted against the amount due from Satra Group Companies without appreciating the facts that the Hon'ble Bombay High Court while disposing the petition no.1236 of 2015 held that " it is not possible to accept the petitioner's version that the purchase price for goods is payable by both the companies notwithstanding their liability to pay the purchase price for the shop ? Whether on the jacts and in circumstances of the case and in law, the Id. CIT(A) has erred in giving relief to the assessee without appreciating the facts that all the properties of Satra Plaza were mortgaged with India Infoline Finance Ltd and that in the NOC issued by FL for executing the sale agreement, the condition mentioned was that the payment of Rs.1,64,31,900/- was to be deposited in the Escrow account Satra Plaza in Aris Bank before 14.01.2015 and said condition has not been met by the assessee which indicates clearly that the investment to that extent has not been recorded in the books of the assessee? M/s GRD Steel Industries Limited ITA No. 1918/Mum/2019 2 Whether on the facts and in circumstances of the case and in law, the ld. CIT(A) has erred in giving relief to the assessee with respect to the payment of Rs.89 lakhs merely on the basis that the payments were made from the assessee's operative Bank and that this contention is not rebutted by the AO without appreciating ion because alleged "Whether on the facts and in circumstances of the case and in law, the ld. CIT(A) has erred in accepting the claim of the assessee that the balance amount payable of was adjusted against the amount due from preciating the facts that the Hon'ble Bombay High Court while disposing the petition no.1236 of 2015 held that " it is not possible to accept the petitioner's version that the purchase price for goods is payable by both the companies notwithstanding their Whether on the jacts and in circumstances of the case and in law, the Id. CIT(A) has erred in giving relief to the assessee without appreciating the facts that all the properties of ged with India Infoline Finance Ltd and that in the NOC issued by FL for executing the sale agreement, the condition mentioned was that the payment was to be deposited in the Escrow account Satra Plaza in Aris Bank before 14.01.2015 and the said condition has not been met by the assessee which indicates clearly that the investment to that extent has not 2. Briefly stated fa was engaged in the busines relevant assessment year, 18/09/2015 declaring total income of further revised to ₹ income filed by the assessee notices under the Income issued and complied with. In the assessment completed under section 143(3) of the made certain additions/ CIT(A) allowed part relief to the assessee. Aggrieved with the relief allowed, the Revenue grounds as reproduced above. 2.1 In support of ground No. 3.4 to 3.8 of the assessment order and para 4.3.3 of Ld. CIT(A) and submitted that during remand proceeding the M/s GRD Steel Industries Limited acts of the case are that the assessee company was engaged in the business of trading in Iron and relevant assessment year, the assessee filed return of income on 18/09/2015 declaring total income of ₹15,55,630/ ₹11,75,630/- on 26/10/2015. The return of income filed by the assessee was selected for scrutiny and statutory Income-Tax Act, 1961 (in short issued and complied with. In the assessment completed under section 143(3) of the Act on 29/12/2017, the Assessing Officer made certain additions/disallowances. On further appeal, the Ld. CIT(A) allowed part relief to the assessee. Aggrieved with the relief Revenue is before the Tribunal by way of raising the grounds as reproduced above. In support of ground No. 1 (One) the Ld. DR refe 3.4 to 3.8 of the assessment order and para 4.3.3 of Ld. CIT(A) and submitted that during remand proceeding the Ld. Assessing Officer M/s GRD Steel Industries Limited ITA No. 1918/Mum/2019 3 s of the case are that the assessee company and Steel. For the filed return of income on 630/-, which was on 26/10/2015. The return of was selected for scrutiny and statutory , 1961 (in short ‘the Act’) were issued and complied with. In the assessment completed under Assessing Officer allowances. On further appeal, the Ld. CIT(A) allowed part relief to the assessee. Aggrieved with the relief is before the Tribunal by way of raising the DR referred to Para 3.4 to 3.8 of the assessment order and para 4.3.3 of Ld. CIT(A) and Assessing Officer objected admission of additional evidences including copy of bank statement of the assessee maintained with B Bank. The Ld. CIT(A) though admitted the said additional evidence, however did not obtain comments of the said additional evidence. The decision of the Hon’ble Delhi High Cour Well Private Limited required to call for comments of the admitting the additional evidence along with the objections raised evidence. 3. The Ld. counsel order of the Ld. CIT(A) and submitted that Ld. CIT(A) has duly verified the source of payments in respect of the purchase of the property and therefore no ad presumption basis. M/s GRD Steel Industries Limited objected admission of additional evidences including copy of bank statement of the assessee maintained with Bharat Co Bank. The Ld. CIT(A) though admitted the said additional evidence, however did not obtain comments of the Assessing Officer said additional evidence. The Ld. DR submitted that in view of the decision of the Hon’ble Delhi High Court in the case of Well Private Limited ITA No. 928/2011, the Ld. CIT(A) was required to call for comments of the Assessing Officer admitting the additional evidence, if no such comments are given along with the objections raised, for admitting the additional of the assessee on the other hand relied on the order of the Ld. CIT(A) and submitted that Ld. CIT(A) has duly verified the source of payments in respect of the purchase of the property and therefore no addition is warranted on the M/s GRD Steel Industries Limited ITA No. 1918/Mum/2019 4 objected admission of additional evidences including copy of bank harat Co-operative Bank. The Ld. CIT(A) though admitted the said additional evidence, Assessing Officer on the DR submitted that in view of the t in the case of Manish Build Ld. CIT(A) was Assessing Officer after if no such comments are given tting the additional of the assessee on the other hand relied on the order of the Ld. CIT(A) and submitted that Ld. CIT(A) has duly verified the source of payments in respect of the purchase of the dition is warranted on the 4. We have heard rival submission the relevant material on record. The issue in dispute raising ground, is related to investment in property namely office B1006 at Cello Height, Goregaon (Mumbai). The as property vide agreement dated 04/07/2014 for a consideration of ₹2,39,00,000/-, payment of which was explained as out of the loan received from was paid on 01/07/2014 to the seller party. As regard to the remaining amount of same was paid on 27/06/2014 and source of the same was explained as out of the unsecured loan taken from two parties namely M/s Anupam Stockbroking Private Limited and Sh Sandeep Didwani (i.e. Director received from these two parties, the contention of the assessee in view of part of the loans received a M/s GRD Steel Industries Limited We have heard rival submissions of the parties and perused the relevant material on record. The issue in dispute raising is related to investment in property namely office B1006 at Goregaon (Mumbai). The assessee purchased this agreement dated 04/07/2014 for a consideration of , payment of which was explained as out of the loan received from M/s India Bulls Housing Ltd was paid on 01/07/2014 to the seller party. As regard to the remaining amount of ₹89,00,000/- the assessee submitted that same was paid on 27/06/2014 and source of the same was explained as out of the unsecured loan taken from two parties s Anupam Stockbroking Private Limited and Sh Sandeep .e. Director of the assessee-company). Regarding the loans received from these two parties, the Assessing Officer contention of the assessee in view of part of the loans received a M/s GRD Steel Industries Limited ITA No. 1918/Mum/2019 5 of the parties and perused the relevant material on record. The issue in dispute raising in is related to investment in property namely office B1006 at sessee purchased this agreement dated 04/07/2014 for a consideration of , payment of which was explained as ₹1,50,00,000/- India Bulls Housing Ltd., which was paid on 01/07/2014 to the seller party. As regard to the the assessee submitted that same was paid on 27/06/2014 and source of the same was explained as out of the unsecured loan taken from two parties s Anupam Stockbroking Private Limited and Sh Sandeep company). Regarding the loans Assessing Officer rejected the contention of the assessee in view of part of the loans received after the date of the payment of 27/06/2014 to the seller party. The relevant finding of the “3.5 The AR has submitted the ledger copies of both the Unsecured Loans giving parties and on perusal of the same it is s that the amount received M/s Anupam Stock Broking Pvt Ltd are as follow: Rs. 16,00,000/ received on 03.07.2014 and Rs.55,00,000/ Further seen that the said amounts received in July have repaid in March 2015. Hence there are no loans of M/s Anupam Stock Broking Put Ltd in the books of the assessee for 31.03.2015. Further the amount of Rs. 89,00,000/ and the first amount received from M/s Anupam Stock Broki Ltd is on 02.07.2014 and hence the claim of the AR that the source for Rs. 89,00,000/ Anupam Stock Broking Pt Ltd cannot be accepted. 3.6 Similarly on perusal of the ledger account of the Shri Sandeep Didwani that the amount of Rs. 15,40,000/ 30.05.2014 Rs. 4,95,000/ 12.09.2014, Rs. 9,50,000/ 09.10.2014, Rs. 4,40 10.11.2014, Rs. 24,35,000/ 28.03.2015. It is further seen that all the loans received from Shri Sandeep Didwania have been squared off before 13.02.2015 and no loan of the said dire of Rs.89,00,000/ M/s GRD Steel Industries Limited the date of the payment of 27/06/2014 to the seller party. The relevant finding of the Assessing Officer is reproduced as under: The AR has submitted the ledger copies of both the Unsecured Loans giving parties and on perusal of the same it is s that the amount received M/s Anupam Stock Broking Pvt Ltd are as follow: Rs. 16,00,000/- received on 02.07.2014, Rs. 15,00,000/ received on 03.07.2014 and Rs.55,00,000/- received on 14.07.2014. Further seen that the said amounts received in July have repaid in March 2015. Hence there are no loans of M/s Anupam Stock Broking Put Ltd in the books of the assessee for 31.03.2015. Further the amount of Rs. 89,00,000/- has been paid on 27.06.2014 and the first amount received from M/s Anupam Stock Broki Ltd is on 02.07.2014 and hence the claim of the AR that the source for Rs. 89,00,000/- is partly from amount received from M/s Anupam Stock Broking Pt Ltd cannot be accepted. Similarly on perusal of the ledger account of the Shri Sandeep Didwania in the books of the assessee company it is noted that the amount of Rs. 15,40,000/- have been received on 30.05.2014 Rs. 4,95,000/- received on 12.07.2014, Rs. 2,75,000/ 12.09.2014, Rs. 9,50,000/- on 30.09.2014, Rs. 4,60,000/ 09.10.2014, Rs. 4,40,000/- on 11.10.2014, Rs. 3,20,000/ 10.11.2014, Rs. 24,35,000/- on 26.03.2015 and Rs. 78,400/ 28.03.2015. It is further seen that all the loans received from Shri Sandeep Didwania have been squared off before 13.02.2015 and no loan of the said director are as on 31.03.2015. Further the amount of Rs.89,00,000/- has been paid on 27.06.2014 and the first amount M/s GRD Steel Industries Limited ITA No. 1918/Mum/2019 6 the date of the payment of 27/06/2014 to the seller party. The is reproduced as under: The AR has submitted the ledger copies of both the Unsecured Loans giving parties and on perusal of the same it is seen that the amount received M/s Anupam Stock Broking Pvt Ltd are as received on 02.07.2014, Rs. 15,00,000/- received on 14.07.2014. Further seen that the said amounts received in July have been repaid in March 2015. Hence there are no loans of M/s Anupam Stock Broking Put Ltd in the books of the assessee for 31.03.2015. has been paid on 27.06.2014 and the first amount received from M/s Anupam Stock Broking Pt Ltd is on 02.07.2014 and hence the claim of the AR that the source is partly from amount received from M/s Similarly on perusal of the ledger account of the Shri a in the books of the assessee company it is noted have been received on received on 12.07.2014, Rs. 2,75,000/- on on 30.09.2014, Rs. 4,60,000/- on on 11.10.2014, Rs. 3,20,000/- on on 26.03.2015 and Rs. 78,400/- on 28.03.2015. It is further seen that all the loans received from Shri Sandeep Didwania have been squared off before 13.02.2015 and no ctor are as on 31.03.2015. Further the amount has been paid on 27.06.2014 and the first amount received from Shri Sandeep Didwania is on 30.05.2014 of Rs.15,4,00,000/ for Rs. 89,00,000/ Sandeep Didwania can 4.1 The Assessing Officer payment to the seller, the assessee also incurred following expenses/investment during the year in relation to t Particulars Stamp Duty Registration of the property Society maintain and other expenses Interest on loans of ₹1,50,00,000/ which was capitalized Payment towards purchase of shop No. 61, Satra Plaza, Vashi Stamp Duty Registration of the property (shop No. 61, Satra Plaza, Vashi) 4.2 In response to the queries raised, the assessee explained that ultimate source of the paymen The Assessing Officer only profit of ₹6,32,686/ the assessee of source of payment out of business profit. The Assessing Officer accordingly made addition of M/s GRD Steel Industries Limited received from Shri Sandeep Didwania is on 30.05.2014 of Rs.15,4,00,000/- only and hence the claim of the AR that the source for Rs. 89,00,000/- is partly from amount received from Shri Sandeep Didwania cannot be accepted.” Assessing Officer further found that in addition to the payment to the seller, the assessee also incurred following expenses/investment during the year in relation to the property: Stamp Duty Registration of the property Society maintain and other expenses ₹1,50,00,000/- for purchase of the property towards purchase of shop No. 61, Satra Plaza, Vashi Stamp Duty Registration of the property (shop No. 61, Satra Total In response to the queries raised, the assessee explained that ultimate source of the payment was business profit during the year. Assessing Officer found that during the year asses 686/-, therefore he rejected the contention of the assessee of source of payment out of business profit. The accordingly made addition of ₹89,00,000/ M/s GRD Steel Industries Limited ITA No. 1918/Mum/2019 7 received from Shri Sandeep Didwania is on 30.05.2014 of only and hence the claim of the AR that the source from Shri further found that in addition to the payment to the seller, the assessee also incurred following he property: Amount (in ₹) 12,25,000/- 7,78,960/- 12,66,560/- 10,23,800/- 43,94,320/- In response to the queries raised, the assessee explained that t was business profit during the year. found that during the year assessee has shown , therefore he rejected the contention of the assessee of source of payment out of business profit. The 00,000/-. 4.3 Before the Ld. CIT(A) the assessee submitted that it had sufficient credit balance in its bank account maintained with Bharat co-operative bank and produced the bank account for the period from 23/06/2014 to Assessing Officer objected admissibil however, the Ld. CIT(A) admitted the additional evidence and thereafter deleted the addition observing as under: “4.4.1 I have considered the r maintaining regular books of accounts. It is not the AO's case that the investments in question are not reflected in the appellant's books of accounts. In the course of assessment proceedings, the AO requested the appella The AO has failed to appreciate that generally speaking it is not possible to relate any specific payment to any specific receipt in case of a company. As long as the investments and the corresponding payments are payments are to be treated as explained. have given finding as to whether the payments were reflected in books of accounts or not. Therefore, the manner in which the AO approached the issue 4.4.2 In the course of the appellate proceedings, the appellant has established that the M/s GRD Steel Industries Limited Before the Ld. CIT(A) the assessee submitted that it had sufficient credit balance in its bank account maintained with Bharat operative bank and produced the bank account for the period from 23/06/2014 to 28/06/2014 as additional evidence objected admissibility of the additional evidence, he Ld. CIT(A) admitted the additional evidence and thereafter deleted the addition observing as under: 4.4.1 I have considered the rival submissions. The appellant is maintaining regular books of accounts. It is not the AO's case that the investments in question are not reflected in the appellant's books of accounts. In the course of assessment proceedings, the AO requested the appellant to furnish the source of the investments. The AO has failed to appreciate that generally speaking it is not possible to relate any specific payment to any specific receipt in case of a company. As long as the investments and the corresponding reflected in the books of accounts, the source of payments are to be treated as explained. Therefore, the AO ought to have given finding as to whether the payments were reflected in books of accounts or not. Therefore, the manner in which the AO roached the issue is, in my view, is not correct. In the course of the appellate proceedings, the appellant has established that the payment of Rs. 89 lakhs was reflected in the M/s GRD Steel Industries Limited ITA No. 1918/Mum/2019 8 Before the Ld. CIT(A) the assessee submitted that it had sufficient credit balance in its bank account maintained with Bharat operative bank and produced the bank account for the period 28/06/2014 as additional evidence. The Ld. ity of the additional evidence, he Ld. CIT(A) admitted the additional evidence and ival submissions. The appellant is maintaining regular books of accounts. It is not the AO's case that the investments in question are not reflected in the appellant's books of accounts. In the course of assessment proceedings, the AO nt to furnish the source of the investments. The AO has failed to appreciate that generally speaking it is not possible to relate any specific payment to any specific receipt in case of a company. As long as the investments and the corresponding reflected in the books of accounts, the source of Therefore, the AO ought to have given finding as to whether the payments were reflected in the books of accounts or not. Therefore, the manner in which the AO In the course of the appellate proceedings, the appellant has payment of Rs. 89 lakhs was reflected in the appellant's bank account in Bharat co mentioned abov giving him a chance to rebut the appellant's contention. The AO has not been able to rebut the objection to the admission of the additional my view, the addition made is not sustainable. Accordingly, I direct the AO to delete the addition. In the result ground of appeal No. 1 is allowed.” 4.4 Before us the Ld. the decision of the wherein the Hon’ble Delhi High Court has held that after admitting the additional evidence, the Ld. CIT(A) is required to provide opportunity to the Assessing Officer merit of the additional evidence. Delhi High Court is reproduced as under: “24. In the present case, the CIT (A) has observed that the additional evidence should be admitted because the assessee was prevented by adducing them before the assessing officer observation takes care of clause (c) of sub observation of the CIT (A) also takes care of sub which he is required to record his reasons for admitting the additional evidence. Thus, the requirement of sub M/s GRD Steel Industries Limited appellant's bank account in Bharat co-operative mentioned above, the bank statement was sent to the AO thereby chance to rebut the appellant's contention. The AO has not been able to rebut the appellant's contention (though he raised objection to the admission of the additional evidence). Therefore, in y view, the addition made is not sustainable. Accordingly, I direct the AO to delete the addition. In the result ground of appeal No. 1 is Ld. Departmental Representative has relied on the decision of the Manish Buildwell Private Limited (supra) wherein the Hon’ble Delhi High Court has held that after admitting the additional evidence, the Ld. CIT(A) is required to provide Assessing Officer for giving his comment on the merit of the additional evidence. The relevant finding of the Hon’ble Delhi High Court is reproduced as under: In the present case, the CIT (A) has observed that the additional evidence should be admitted because the assessee was prevented by adducing them before the assessing officer observation takes care of clause (c) of sub-rule (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 reasons for admitting the additional evidence. Thus, the requirement of sub-rules (1) and (2) M/s GRD Steel Industries Limited ITA No. 1918/Mum/2019 9 Bank. As e, the bank statement was sent to the AO thereby chance to rebut the appellant's contention. The AO has appellant's contention (though he raised evidence). Therefore, in y view, the addition made is not sustainable. Accordingly, I direct the AO to delete the addition. In the result ground of appeal No. 1 is Departmental Representative has relied on Private Limited (supra), wherein the Hon’ble Delhi High Court has held that after admitting the additional evidence, the Ld. CIT(A) is required to provide for giving his comment on the The relevant finding of the Hon’ble In the present case, the CIT (A) has observed that the additional evidence should be admitted because the assessee was prevented by adducing them before the assessing officer. This rule (1) of Rule 46A. The rule (2) under which he is required to record his reasons for admitting the es (1) and (2) of Rule 46A have been complied with. However, sub interdicts the CIT (A) from taking into account any evidence produced for the first time before him unless the Assessing Officer has had a reasonable opportunity of examining t rebut the same, has not been complied with. There is nothing in the order of the CIT (A) to show that the Assessing Officer was confronted with the confirmation letters received by the assessee from the customers who paid the amounts by che comments. Thus, the end result has been that additional evidence was admitted and accepted as genuine without the Assessing Officer furnishing his comments and without verification. Since this is an indispensable requirement, we are of t ought to have restored the matter to the CIT (A) with the direction to him to comply with sub with respect, the error committed by the Tribunal is that it proceeded to mix up the powers of of Section 250 with the powers vested in him under Rule 46A. The Tribunal seems to have overlooked sub itself takes note of the distinction between the powers conferred by the CIT (A) under the st appeal and the powers conferred upon him under Rule 46A. The Tribunal erred in its interpretation of the provisions of Rule 46A vis à-vis Section 250(4). Its view that since in any case the CIT (A), by virtue of his conterminous powers over the assessment order, was empowered to call for any document or make any further enquiry as he thinks fit, there was no violation of Rule 46A is erroneous. The Tribunal appears to have not appreciated the distinction between the two provisions. If the view of the Tribunal is accepted, it would make Rule 46A otiose and it would open up the possibility of the M/s GRD Steel Industries Limited of Rule 46A have been complied with. However, sub-rule (3) which interdicts the CIT (A) from taking into account any evidence produced for the first time before him unless the Assessing Officer has had a reasonable opportunity of examining the evidence and rebut the same, has not been complied with. There is nothing in the order of the CIT (A) to show that the Assessing Officer was confronted with the confirmation letters received by the assessee from the customers who paid the amounts by cheques and asked for comments. Thus, the end result has been that additional evidence was admitted and accepted as genuine without the Assessing Officer furnishing his comments and without verification. Since this is an indispensable requirement, we are of the view 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, the error committed by the Tribunal is that it proceeded to mix up the powers of the CIT (A) under sub section (4) of Section 250 with the powers vested in him under Rule 46A. The Tribunal seems to have overlooked sub-rule(4) of Rule 46A which itself takes note of the distinction between the powers conferred by the CIT (A) under the statute while disposing of the assessee’s appeal and the powers conferred upon him under Rule 46A. The Tribunal erred in its interpretation of the provisions of Rule 46A vis vis Section 250(4). Its view that since in any case the CIT (A), by conterminous powers over the assessment order, was empowered to call for any document or make any further enquiry as he thinks fit, there was no violation of Rule 46A is erroneous. The Tribunal appears to have not appreciated the distinction between o provisions. If the view of the Tribunal is accepted, it would make Rule 46A otiose and it would open up the possibility of the M/s GRD Steel Industries Limited ITA No. 1918/Mum/2019 10 rule (3) which interdicts the CIT (A) from taking into account any evidence produced for the first time before him unless the Assessing Officer he evidence and rebut the same, has not been complied with. There is nothing in the order of the CIT (A) to show that the Assessing Officer was confronted with the confirmation letters received by the assessee ques and asked for comments. Thus, the end result has been that additional evidence was admitted and accepted as genuine without the Assessing Officer furnishing his comments and without verification. Since this is an he view that the Tribunal ought to have restored the matter to the CIT (A) with the direction rule (3) of Rule 46A. In our opinion and with respect, the error committed by the Tribunal is that it section (4) of Section 250 with the powers vested in him under Rule 46A. The rule(4) of Rule 46A which itself takes note of the distinction between the powers conferred by atute while disposing of the assessee’s appeal and the powers conferred upon him under Rule 46A. The Tribunal erred in its interpretation of the provisions of Rule 46A vis- vis Section 250(4). Its view that since in any case the CIT (A), by conterminous powers over the assessment order, was empowered to call for any document or make any further enquiry as he thinks fit, there was no violation of Rule 46A is erroneous. The Tribunal appears to have not appreciated the distinction between o provisions. If the view of the Tribunal is accepted, it would make Rule 46A otiose and it would 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 th conditions prescribed 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 That is a consequence which cannot at all be countenanc 25. For the above reasons, we answer the substantial questions of law framed in paragraph 21 above, in favour of the Revenue and against the assessee. The issue relating to the addition of Rs. 1,61,67,600/- CIT (A) who shall comply with the requirements of Rule 46A and take a fresh decision on the merits of the addition in accordance with law.” 4.4 We find that in the instant case , the copy of the bank statement was not available before the merit, which is evident from the observation of the Ld. CIT(A) in para 4.3.2 of the impugned order wherein he has observed as under: “4.3.2 The copy of the bank statement was sent as required under Rule 46A of the Income comment on the admissibility of the new submitted that the appellant has not stated what prevented it producing the bank statement at the time of assessment proceedings and therefore, admissible. In the course of the appellate proceedings the AR of M/s GRD Steel Industries Limited assessees’ contending that any additional evidence sought to be introduced by them before the CIT (A) cannot be subjected to th conditions prescribed 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. For the above reasons, we answer the substantial questions of law framed in paragraph 21 above, in favour of the Revenue and against the assessee. The issue relating to the addition of Rs. made under Section 68 of the Act is restored CIT (A) who shall comply with the requirements of Rule 46A and take a fresh decision on the merits of the addition in accordance We find that in the instant case , the copy of the bank statement was not available before the Assessing Officer for his comment on , which is evident from the observation of the Ld. CIT(A) in para 4.3.2 of the impugned order wherein he has observed as under: The copy of the bank statement was sent as required under Rule 46A of the Income Tax Rules, 1962. The AO was requested to comment on the admissibility of the new evidence. In response, the A submitted that the appellant has not stated what prevented it producing the bank statement at the time of assessment proceedings and therefore, the additional evidence was not In the course of the appellate proceedings the AR of M/s GRD Steel Industries Limited ITA No. 1918/Mum/2019 11 assessees’ contending that any additional evidence sought to be introduced by them before the CIT (A) cannot be subjected to the conditions prescribed in Rule 46A because in any case the CIT (A) is vested with conterminous powers over the assessment orders or section (4) of Section 250. ed. For the above reasons, we answer the substantial questions of law framed in paragraph 21 above, in favour of the Revenue and against the assessee. The issue relating to the addition of Rs. made under Section 68 of the Act is restored to the CIT (A) who shall comply with the requirements of Rule 46A and take a fresh decision on the merits of the addition in accordance We find that in the instant case , the copy of the bank statement for his comment on , which is evident from the observation of the Ld. CIT(A) in para 4.3.2 of the impugned order wherein he has observed as under: The copy of the bank statement was sent as required under Rules, 1962. The AO was requested to evidence. In response, the A submitted that the appellant has not stated what prevented it from producing the bank statement at the time of assessment he additional evidence was not In the course of the appellate proceedings the AR of the appellant submitted that the AO did not call for the bank statement specifically; that the appellant was under the impression that the source of the fund ha explained to the AO 4.5 In view of the above, following the finding of the Hon’ble Delhi High Court(supra), we feel it appropriate to restore this issue back to the file of the Ld. CIT(A) for deciding Rule 46A of Income opportunity of being heard to the 1 (One) of the appeal of the statistical purposes. 5. The ground No ₹1,64,31,900/-made under section 6 property purchased from M/s Satra properties (India) Ltd. The f qua the issue in dispute are that the assessee entered into an agreement for purchase of the property from M/s Satra properties (India) Ltd for a consideration of M/s GRD Steel Industries Limited the appellant submitted that the AO did not call for the bank statement specifically; that the appellant was under the impression that the source of the fund had been satisfactorily explained to the AO.” (emphasize supplied externally) In view of the above, following the finding of the Hon’ble Delhi High Court(supra), we feel it appropriate to restore this issue back f the Ld. CIT(A) for deciding afresh after compliance of Income-Tax Rules, 1962 for providing adequate opportunity of being heard to the Assessing Officer. The ground of the appeal of the Revenue is accordingly allowed for ound No. 2 of the appeal relates to addition of made under section 69B of the Act property purchased from M/s Satra properties (India) Ltd. The f qua the issue in dispute are that the assessee entered into an agreement for purchase of the property from M/s Satra properties (India) Ltd for a consideration of ₹1,65,51,900/- M/s GRD Steel Industries Limited ITA No. 1918/Mum/2019 12 the appellant submitted that the AO did not call for the bank statement specifically; that the appellant was under the d been satisfactorily (emphasize supplied externally) In view of the above, following the finding of the Hon’ble Delhi High Court(supra), we feel it appropriate to restore this issue back fresh after compliance of Tax Rules, 1962 for providing adequate . The ground No. accordingly allowed for . 2 of the appeal relates to addition of pertaining to a property purchased from M/s Satra properties (India) Ltd. The facts qua the issue in dispute are that the assessee entered into an agreement for purchase of the property from M/s Satra properties -but during the previous year corresponding to the assessment year under consideration the assessee paid (India) Ltd. The Assessing Officer was not shown in the balance sheet therefore asked the assessee accordingly. The assessee submitted that there was a dispute between the assessee M/s Satra Properties (India) Ltd payment had been made. In support of its claim of dispute, the assessee filed a copy of the order o details of which are mentioned in the order of the According to the assessee, it made said builder and payment of which was due to the assessee and therefore the balance payment against the pro the said builder. The submission of the assessee and according to him have paid the payment from unconfirmed sources and therefore he M/s GRD Steel Industries Limited previous year corresponding to the assessment year under deration the assessee paid ₹1,00,000/- to M/s Satra Assessing Officer noticed that remaining amount in the balance sheet as liability to be paid and therefore asked the assessee accordingly. The assessee submitted that there was a dispute between the assessee and M/s Satra Properties (India) Ltd. and because of which no further payment had been made. In support of its claim of dispute, the assessee filed a copy of the order of the Hon’ble Bombay Hi details of which are mentioned in the order of the lower According to the assessee, it made certain sales of the goods to the said builder and payment of which was due to the assessee and therefore the balance payment against the property was not paid to the said builder. The Assessing Officer was not satisfied with the submission of the assessee and according to him, have paid the payment from unconfirmed sources and therefore he M/s GRD Steel Industries Limited ITA No. 1918/Mum/2019 13 previous year corresponding to the assessment year under to M/s Satra Properties noticed that remaining amount as liability to be paid and therefore asked the assessee accordingly. The assessee submitted the said builder and because of which no further payment had been made. In support of its claim of dispute, the f the Hon’ble Bombay High Court, lower authorities. sales of the goods to the said builder and payment of which was due to the assessee and perty was not paid to was not satisfied with the , assessee must have paid the payment from unconfirmed sources and therefore he held the remaining amount of the conside amounting to ₹1,64, disclosed in the books of 6. Before the Ld. CIT(A) the assessee filed certified copies of the account of M/s Satra properties (I Properties Private Limited in its books of accounts as an additional evidence, which were forwarded to the Assessing Officer however objected that said unconfirmed and self generated do of the Ld. CIT(A) are as under: “5.3.3 Regarding the observation of the AO that the appellant did not record the value of period 2014-15, the AR of the appellant entry is passed in the books of accounts, it will not affect the because the asset is a capital account. 5.3.4 In the course of the appellate proceedings, the appellant was requested to furnish and Satra Properties Pvt. Ltd. in its books for 15. In response, the appellant furnished the ledgers for P.Y.2014 M/s GRD Steel Industries Limited held the remaining amount of the consideration of the property 64,31,900/-as unexplained investment the books of accounts in terms of section 6 Before the Ld. CIT(A) the assessee filed certified copies of the Satra properties (India) Ltd. and Properties Private Limited in its books of accounts as an additional evidence, which were forwarded to the Assessing Officer however objected that said ledger unconfirmed and self generated document. The relevant observation of the Ld. CIT(A) are as under: 5.3.3 Regarding the observation of the AO that the appellant did not record the value of the property in its books of accounts for the 15, the AR of the appellant contended that even if the entry is passed in the books of accounts, it will not affect the because the asset is a capital account. 5.3.4 In the course of the appellate proceedings, the appellant was requested to furnish certified copies of Satra Properties India and Satra Properties Pvt. Ltd. in its books for previous year 2014 15. In response, the appellant furnished the ledgers for P.Y.2014 M/s GRD Steel Industries Limited ITA No. 1918/Mum/2019 14 ration of the property as unexplained investment, not accounts in terms of section 69B of the Act. Before the Ld. CIT(A) the assessee filed certified copies of the and M/s Satara Properties Private Limited in its books of accounts as an additional Assessing Officer. The ledger accounts were cument. The relevant observation 5.3.3 Regarding the observation of the AO that the appellant did the property in its books of accounts for the even if the entry is passed in the books of accounts, it will not affect the income 5.3.4 In the course of the appellate proceedings, the appellant was certified copies of Satra Properties India Ltd. previous year 2014- 15. In response, the appellant furnished the ledgers for P.Y.2014-15 and also P.Y. 2015 additional evidence. As Rules, 1962, the copies of those ledgers were sent was requested to furnish his comments on the admissibility of the ledgers for the P.Y. 2015 appellant's claim with AO submitted that the said ledger is generated document which has no evidentially value. 6.1 The Ld. CIT(A) after admitting of the additional evidence including certified copies of accounts of the Builder the assessee, allowed the ground of the appeal of the assessee, observing as under: 5.4.1 I have considered the rival contentions. I find that the AO has stated that amount of unconfirmed sources. 5.4.2 The appellant's contention that the sale consideration payable to Satra Properties Pvt. Ltd. was subsequently adjusted against the their (Satra Properties India Ltd. and Satra Properties Developm Pvt. Ltd.) account is acceptable. I adjustment of the amount receivable. M/s GRD Steel Industries Limited and also P.Y. 2015-16. The ledgers for P.Y. 2015-16 constitute additional evidence. As required under Rule 46A of the Ince Tax Rules, 1962, the copies of those ledgers were sent to the AO. The AO was requested to furnish his comments on the admissibility of the ledgers for the P.Y. 2015-16 and also on the allowability of the appellant's claim with reference to those ledgers. In response, the AO submitted that the said ledger is unconfirmed and is self generated document which has no evidentially value.” The Ld. CIT(A) after admitting of the additional evidence including certified copies of accounts of the Builder the assessee, allowed the ground of the appeal of the assessee, have considered the rival contentions. I find that the AO has stated that amount of Rs.1,64,31,900/- has been paid from unconfirmed sources. The appellant's contention that the sale consideration payable to Satra Properties India Ltd, and Satra Properties Development Pvt. Ltd. was subsequently adjusted against the debit balance in their (Satra Properties India Ltd. and Satra Properties Developm Ltd.) account is acceptable. I do not find anything unusual in adjustment of the amount payable against outstanding amount M/s GRD Steel Industries Limited ITA No. 1918/Mum/2019 15 16 constitute the Ince Tax to the AO. The AO was requested to furnish his comments on the admissibility of the 16 and also on the allowability of the edgers. In response, the unconfirmed and is self The Ld. CIT(A) after admitting of the additional evidence including certified copies of accounts of the Builder in the books of the assessee, allowed the ground of the appeal of the assessee, have considered the rival contentions. I find that the AO has has been paid from The appellant's contention that the sale consideration payable India Ltd, and Satra Properties Development debit balance in their (Satra Properties India Ltd. and Satra Properties Development do not find anything unusual in payable against outstanding amount 5.4.3 In the assessment order, the AO has stated that the appellant had taken possession year. In the course of the appellate stated that the possession of the property was actually taken 31.03.2015. In this context, the AO by this office letter dated 04.01.2019, was the basis of which the he has taken possession of the property during the P.Y.2014 response, the AO by his letter dated 22.01.2019 relied on the observation of High Court's Hon'ble High Court has observed as under: "However, it is pertinent to note that the petitioners concedes that it is in possession 5.4.4 I find that the Hon'ble High Court's dated 10.08.2017 and, therefore, the observation erred in presuming that the appellant had taken property during the P.Y.2014 5.4.5 In any case, the AO has not brought any material on record to rebut the contenti consideration for the premise remained unpaid as at and was subsequently adjusted against amount receivable from Satra Properties Ltd. I, therefore, hold that Accordingly, I direct the AO to delete the addition of Rs.1,64,31,900/ M/s GRD Steel Industries Limited In the assessment order, the AO has stated that the appellant had taken possession of the property during the relevant previous year. In the course of the appellate proceedings, the appellant stated that the possession of the property was actually taken 31.03.2015. In this context, the AO by this office letter dated 04.01.2019, was requested to furnish certified copies of evidences on the basis of which the he has concluded that the appellant had taken possession of the property during the P.Y.2014 response, the AO by his letter dated 22.01.2019 relied on the observation of High Court's order dated 10.08.2017 wherein the Hon'ble High Court has observed as under: "However, it is pertinent to note that the petitioners concedes that it is in possession of the Office No.61 at Satra Plaza. 5.4.4 I find that the Hon'ble High Court's dated 10.08.2017 and, therefore, the observation was valid on that date. Therefore, the AO erred in presuming that the appellant had taken possession of the property during the P.Y.2014-15. 5.4.5 In any case, the AO has not brought any material on record to rebut the contentions of the appellant that the balance consideration for the premise remained unpaid as at 31.03.2015 and was subsequently adjusted against amount receivable from Satra Properties India Ltd. and Satra Properties Development Pvt. Ltd. I, therefore, hold that the addition is not sustainable. Accordingly, I direct the AO to delete the addition of Rs.1,64,31,900/-.” M/s GRD Steel Industries Limited ITA No. 1918/Mum/2019 16 In the assessment order, the AO has stated that the appellant the relevant previous proceedings, the appellant stated that the possession of the property was actually taken after 31.03.2015. In this context, the AO by this office letter dated certified copies of evidences on concluded that the appellant had taken possession of the property during the P.Y.2014-15. In response, the AO by his letter dated 22.01.2019 relied on the d 10.08.2017 wherein the "However, it is pertinent to note that the petitioners concedes that it 5.4.4 I find that the Hon'ble High Court's dated 10.08.2017 and, was valid on that date. Therefore, the AO possession of the 5.4.5 In any case, the AO has not brought any material on record to of the appellant that the balance 31.03.2015 and was subsequently adjusted against amount receivable from India Ltd. and Satra Properties Development Pvt. not sustainable. Accordingly, I direct the AO to delete the addition of 6.2 Thus we find that the Ld. CIT(A) has concluded that balance consideration for the property which was unpaid as on 31/03/2015 has been subsequen M/s Satra Properties Development Private Limited. 7. We find that the unconfirmed and self generated evidences submitted by the assessee for admitting as additional evidence. In our opinion, the Ld. CIT(A) has not complied the conditions of Rule 46A of Income Tax Rules, 1962 as explained by the Hon’ble Delhi High Court in the case of Manish Build Well already discussed while adjudicating the ground appeal. In the circumstances, we restore this issue back to the file o the Ld. CIT(A) for deciding a opportunity of being heard to the assessee. The assessee is required to file certified copy of M/s GRD Steel Industries Limited find that the Ld. CIT(A) has concluded that balance consideration for the property which was unpaid as on 31/03/2015 has been subsequently adjusted against amount receivable from M/s Satra Properties (India) Ltd. and M/s Satra Property Development Private Limited. We find that the Ld. Assessing Officer objected to the unconfirmed and self generated evidences submitted by the for admitting as additional evidence. In our opinion, the Ld. CIT(A) has not complied the conditions of Rule 46A of Income Tax 1962 as explained by the Hon’ble Delhi High Court in the case Well Private Limited (supra), which we have already discussed while adjudicating the ground No. 1 appeal. In the circumstances, we restore this issue back to the file o the Ld. CIT(A) for deciding afresh after providing adequate opportunity of being heard to the Assessing Officer as well as to the assessee. The assessee is required to file certified copy of M/s GRD Steel Industries Limited ITA No. 1918/Mum/2019 17 find that the Ld. CIT(A) has concluded that balance consideration for the property which was unpaid as on 31/03/2015 tly adjusted against amount receivable from Satra Property objected to the unconfirmed and self generated evidences submitted by the for admitting as additional evidence. In our opinion, the Ld. CIT(A) has not complied the conditions of Rule 46A of Income Tax 1962 as explained by the Hon’ble Delhi High Court in the case Private Limited (supra), which we have No. 1 (One) of this appeal. In the circumstances, we restore this issue back to the file of providing adequate as well as to the assessee. The assessee is required to file certified copy of ledger account of the two parties namely M/s Satra Properties (India) Ltd and M/s Satra Property Development Private Limited and also certified copy of ledger account of the a accounts, so as to verify the adjustment of amount receivable from these two parties by the assessee against the payment which was due to be paid by the assessee towards purchase consideration of the property. The ground accordingly allowed for statistical purposes. 8. In the result, the appeal of the purposes. Order pronounced in the open Court on Sd/- (RAHUL CHAUDHARY JUDICIAL MEMBER Mumbai; Dated: 14/06/2022 Dragon Legal/Rahul Sharma, Sr. P.S. Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. The CIT(A)- 4. CIT M/s GRD Steel Industries Limited account of the two parties namely M/s Satra Properties (India) Ltd and M/s Satra Property Development Private Limited and also certified copy of ledger account of the assessee in their books of accounts, so as to verify the adjustment of amount receivable from by the assessee against the payment which was due to be paid by the assessee towards purchase consideration of the property. The ground No. 2 of the appeal of the accordingly allowed for statistical purposes. In the result, the appeal of the Revenue is allowed for statistical ounced in the open Court on 14/06/2022. Sd/- RAHUL CHAUDHARY) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT Copy of the Order forwarded to : M/s GRD Steel Industries Limited ITA No. 1918/Mum/2019 18 account of the two parties namely M/s Satra Properties (India) Ltd. and M/s Satra Property Development Private Limited and also ssessee in their books of accounts, so as to verify the adjustment of amount receivable from by the assessee against the payment which was due to be paid by the assessee towards purchase consideration of appeal of the Revenue is is allowed for statistical /06/2022. OM PRAKASH KANT) MEMBER 5. DR, ITAT, Mumbai 6. Guard file. //True Copy// M/s GRD Steel Industries Limited BY ORDER, (Sr. Private Secretary ITAT, Mumbai M/s GRD Steel Industries Limited ITA No. 1918/Mum/2019 19 Sr. Private Secretary) ITAT, Mumbai