DCIT, New Delhi V. M/s Connaught Plaza Restaurant Pvt. Ltd., New Delhi

ITA 2066/DEL/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 91172 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 1 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-06-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 07-05-2015
• Assessment Year: 2002-2003
• Appeal Filed On: 26-04-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJNA
• Keywords: Gift; Opportunity of being heard; Proportionate interest; Reasonable cause

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: B NEW DELHI BEFORE SMT DIVA SINGH, JUDICIAL MEMBER AND SH. T .S. KAPOO R, ACCOUNTANT MEMBER I.T.A .NO. - 2066 /DEL/201 1 (ASSESSMENT YEAR - 200 2 - 03 ) DCIT, CIRCLE - 3(1), NEW DELHI . (A PPELLANT) VS CONNAUGHT PLAZA RESTAURANT PVT. LTD. , 13A, JOR BAGH MARKET, NEW DELHI. PAN - AAACC1201E (RESPONDENT) APPELLANT BY SH.P.DAM KANUNJNA, SR. DR RESPONDENT BY SH.ROHIT GARG, CA ORDER PER DIVA SINGH, JM THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE ASSAILING THE CORRECTNESS OF THE ORDER DATED 21.02.2011 OF CIT(A) - IV, NEW DELHI PE RTAINING TO 200 2 - 03 ASSESSMENT YEAR ON THE FOLLOWING GROUNDS: - 1. THE LD.CIT(A) HAS ERRED ON FACTS AND IN LAW IN DELETING ADDITION OF RS.2160000/ - ON ACCOUNT OF DISALLOWANCE OF INTEREST EXPENSES NOT ALLOWABLE U/S 36(1 )(III) IGNORING THAT THE ASSESSEE PASSED ON FUNDS TO SISTER CONCERN FRE E OF INTEREST WHEREAS, THE ASSESSEE COMPANY ITSELF IS PAYING INTEREST ON BORROWED FUNDS. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING ADDITION OF RS.13157098/ - ON ACCOUNT OF DISALLOWANCE OF 2% OF T OTAL EXPENSES CLAIMED BY THE ASSESSEE, IGNORING THAT THE ASSESSEE FAILED TO SUBSTANTIATE ITS CLAIM OF EXPENSES BY NOT FILING THE COMPLETE DETAILS OF EXPENSES AND NOT PRODUCING THE BOOKS OF ACCOUNT DURING THE ASSESSMENT PROCEEDINGS AND EVEN DURING THE REMAN D PROCEEDINGS. 3. THE APPELLANT CRAVES LEAVE FOR RESERVING THE RIGHT TO AMEND, MODIFY, AFTER, ADD OR FOREGO ANY GROUND(S)OF APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL. 2. THE PRESENT APPEAL WAS HEARD ON 07.05.2015 HOWEVER WHILE DIC TATING CERTAIN CLARIFICATION W ERE REQUIRED TO BE ADDRESSED QUA GROUND NO. - 1 IN THE PRESENT APPEAL AS THE CIT(A) IN THE FACTS OF THE PRESENT CASE WHILE CONSIDERING DATE OF HEARING 04 .0 6 .2015 DATE OF PRONOUNCEMENT 16 .0 6 .2015 I.T.A .NO. - 2066/DEL/2011 PAGE 2 OF 9 THE ADDITION OF RS.21,60,000/ - AS INTEREST NOT ALLO WABLE U/S 36(1)(III) OF THE ACT, F OLLOWING THE ORDER OF THE ITAT IN ITA NO. - 1985/DEL/2009 FOR 1998 - 99 ASSESSMENT YEAR DELETED THE ADDITION MADE QUA THE SAID ISSUE . T HE PARTIES BEFORE THE BENCH HAD INITIALLY RELIED UPON THE ORDERS OF THE AO AND THE CIT(A) RESPECTIVELY. HOWEVER, I N VIEW OF THE FA CT THAT THE FACTS WERE N O T REFERRED TO BY THE PARTIES SO AS TO THROW LIGHT ON THE POSITION FOR THE INTERVENING YEARS 1999 - 2000 TO 2001 - 02 ASSESSMENT YEARS , T HE PARTIES WERE DIRECTED TO ADDRESS THE SAME. IN RESPONSE TO THE SAID QUERY, LD. AR SUBMITTED THAT QU A THE ISSUE, NO ADDITION HA D BEEN MADE BY THE AO IN THE INTERVENING YEARS AS THE ASSESSMENT S W ERE CONCLUDED U/S 143(1). THE LD. SR. DR WAS NOT AWARE OF THE POSITION. IN VIEW OF THE SAME AFTER HEARING THE PARTIES THEREON IT WAS DECIDED THAT IN THE CIRCUMST ANCES THE AO MAY BE DIRECTED TO VERIFY THE FACTUAL POSITION OF THE INTERVENING YEARS. THE ABOVE DIRECTION WAS NECESSITATED AS THE LD. SR. DR WAS UNABLE TO ADDRESS THE FACTUAL POSITION ON FACTS WHERE THE AO ON THE FACTS HAS TAKEN COGNIZANCE OF THE FACT THAT THE ASSESSEE HAD GIVEN A SECURITY DEPOSIT OF RS.2.7 CRORES TO A PRIVATE COMPANY IN WHICH ONE OF THE DIRECTORS WAS INTERESTED. TH E SAID DEPOSIT WAS GIVEN I NTEREST FREE TO M/S CRESCENT PRINTING WORKS PVT. LTD. FOR USE OF THE PREMISES P - 14, CONNAUGHT CIRCUS , NEW DELHI. SHRI VIKRAM BAKSHI, THE PROMOTER WAS DIRECTOR IN M/S CRESCENT PRINTING WORKS PVT. LTD. THE ASSESSEE IN THE COURSE OF THE ASSESSMENT PROCEEDINGS WAS ASKED TO JUSTIFY SAME. IN RESPONSE THERETO IT WAS STATED THAT THE ADVANCE WAS GIVEN AS A REF UNDABLE SECURITY DEPOSIT FOR TAKING ON LEASE THE PREMISES OF THE SAID COMPANY , IT WAS STATE D TO BE A NORMAL BUSINESS PRACTICE. THE ASSESSEE ALSO SUBMITTED LEASE DEED BY VIRTUE OF WHICH M/S PIZZA HUT HAD LEASED PREMISE AT D - 10, CONNAUGHT PLACE. IT WAS ALSO SUPPORTED BY FURNISHING LETTER DATED 28/12/1995 FROM M/S BANSAL PROPERTIES WITH REGARD TO RENTAL DETAILS OF D - 13, INNER CIRCLE, CONNAUGHT PLACE. THE AO TAKING NOTE OF THE FACT THAT THE PREMISES OF PIZZA HUT & M/S BANSAL PROPERTIES WERE AT DIFFERENT LOCAT IONS, WHEREAS THE ASSESSEE WAS SITUATED ON THE OUTER SIDE OF CONNAUGHT PLACE WHICH ACCORDINGLY TO THE AO COMMANDED THE HIGHEST RENTAL VALUE. IN THESE FACTS, HE WAS OF THE BELIEF THAT THE SECURITY DEPOSIT GIVEN TO M/S CRESCENT PRINTING WORKS PVT. LTD. WAS ON A HIGHER SIDE. CONSIDERING THE FACT THAT THE ASSESSEE HAD TAKEN SUBSTANTIAL INTEREST BEARING FUNDS ON WHICH AMOUNT OF RS.5,78,12,574/ - I.T.A .NO. - 2066/DEL/2011 PAGE 3 OF 9 HAD BEEN PAID. IN VI EW OF THESE FACTS THE AO WAS OF THE BELIEF THAT BORROWED INTEREST BEARING FUNDS HAD BEEN DIVERTED TO INTEREST FREE ADVANCES PERSUADING HIM TO DISALLOW PROPORTIONATE INTEREST U/S 36(1)(III). 3 . I T IS SEEN THAT IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY, IT WAS SUBMITTED ON BEHALF OF THE ASSESSEE THAT A REFUNDABLE SECURITY DEPOSIT OF RS.2.70 CRO R ES HAD BEEN MADE IN FAOVUR OF M/S CRESCENT PRINTING WORKS (P.) LTD. WHICH WAS PAID BY CHEQUE. IT WAS FURTHER STATED THAT THE A SSESSEE AGREED TO PAY LEASE RENT @ 8.5% OF GROSS TURNOVER OF THE RESTAURANT FOR THE INITIAL 4 YEARS AND THEREAFTER @ 7% OF THE GROSS REVENUES TO THE SAID PARTY. IT WAS STATED THAT BY MAKING THE ADDITION, THE AO HAD ACTED PURELY ON SUSPICION, CONJECTURES AND SURMISES WITHOUT APPRECIATING TH E FACTS OF THE CASE. RELIANCE WAS PLACED ON VARIOUS DECISIONS. IT WAS FURTHER STATED THAT THE AO HAD MECHANICALLY COPIED ASSESSMENT ORDER FOR THE A.Y.1998 - 99 WITHOUT ANY APPLICATION OF MIND TO MAKE THE ADDITIONS. CONSIDERING THESE FACTS THE CIT(A FOLLOWI NG THE ORDER OF THE CO - ORDINATE BENCH CAME TO THE FOLLOWING CONCLUSION: - 7. I HAVE CONSIDERED THE ORDER OF THE LD. AO AND THE SUBMISSIONS MADE BY THE LD. AR OF THE ASSESSEE. THIS ISSUE STANDS COVERED IN FAVOUR OF THE ASSESSEE BY THE HON'BLE ITAT IN ITA N O. 1985/DEL/2009 FOR THE A.Y. 1998 - 99. IT HAS BEEN HELD BY THE HON'BLE ITAT , AS UNDER: '7 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFULLY. SECTION 36(1)(III) OF THE ACT, WHICH IS PRESENTLY IN DISPUTE, PERMITS DEDUCTION OF THE AMOUNT OF INTEREST PAID IN RESPECT OF CAPITAL BORROWED FOR THE PURPOSE OF BUSINESS. IN THIS CASE, THE ASSESSING OFFICER HAS OBSERVED THAT THE ASSESSEE HAS ADVANCED CERTAIN SUMS TO A SISTER CONCERN FREE OF INTEREST. ACCORDING TO THE ASSESSING OFFICER, IN TERMS OF SUCH ADVANCE, THE ASSESSEE HAS PASSED ON FUNDS TO A SISTER CONCERN FREE OF INTEREST WHEREAS THE ASSESSEE IS PAYING INTEREST ON FUNDS BORROWED BY IT. ACCORDINGLY, PROPORTIONATE INTEREST ON SUCH ADVANCE HAS BEEN DISALLOWED U/S 36(1)(III) OF THE ACT. 4 . COPY OF THE SAID ORD ER DATED 25.01.2010 OF THE CO - ORDINATE BENCH, IT IS SEEN IS AT PAGE 63 - 69 OF THE PAPER BOOK. A PERUSAL OF THE SAME SHOW BRINGS OUT THE FOLLOWING FACTS: - 3. BRIEFLY STATED, THE FACTS RELEVANT TO THE IMPUGNED DISPUTE CAN BE UNDERSTOOD AS FOLLOWS. THE ASSES SEE IS A COMPANY INCORPORATED UNDER THE PROVISIONS OF THE COMPANIES ACT, 1956 AND IS INTER ALIA ENGAGED IN RUNNING OF FAST FOOD RESTAURANTS UNDER THE NAME OF MC DONALD, AS FRANCHISEE. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THA T THE ASSESSEE HAD GIVEN A SECURITY I.T.A .NO. - 2066/DEL/2011 PAGE 4 OF 9 DEPOSIT OF RS.2.70 CRORES TO M/S CRESCENT PRINTING WORKS PVT.LTD. (IN SHORT THE OTHER COMPANY ) ON WHICH NO INTEREST WAS BEING CHARGED. THE ASSESSING OFFICER ALSO NOTED THAT THE OTHER COMPANY WAS A SISTER CONCERN INASMU CH AS, THE PROMOTER DIRECTOR OF THE ASSESSEE COMPANY WAS A DIRECTOR IN THE OTHER COMPANY. THE ASSESSEE WAS FOUND TO HAVE INCURRED EXPENDITURE BY WAY OF INTEREST ON BORROWED FUNDS. ACCORDINGLY, THE ASSESSEE WAS ASKED TO JUSTIFY ADVANCING OF A SUBSTANTIAL AM OUNT TO A SISTER CONCERN FREE OF INTEREST. IN REPLY, THE ASSESSEE SUBMITTED THAT IT HAD TAKEN PREMISES SITUATED AT P - 14, CONNAUGHT CIRCUS, NEW DELHI ON RENT FROM THE OTHER COMPANY AND THE STATED AMOUNT WAS ADVANCED AS INTEREST FREE SECURITY DEPOSIT AGAINST LEASE OF SUCH PREMISES. THE ASSESSEE STATED THAT IT WAS A NORMAL BUSINESS PRACTICE TO ADVANCE INTEREST FREE DEPOSIT AGAINST LEASE OF PREMISES. TO SUBSTANTIATE THE SAME, THE ASSESSEE SUBMITTED A LEASE DEED BY VIRTUE OF WHICH ANOTHER CONCERN HAD TAKEN LEASE OF THE PREMISES AT CONNAUGHT PLACE BY PAYING REFUNDABLE SECURITY DEPOSIT. IN ADDITION, THE ASSESSEE ALSO FURNISHED A COMMUNICATION FROM A CONCERN M/S BANSAL PROPERTIES ENUMERATING RENTAL DETAILS OF ANOTHER PROPERTY IN CONNAUGHT PLACE, WHICH ALSO INCLUDED PAYING OF A REFUNDABLE SECURITY DEPOSIT. THE ASSESSING OFFICER CONSIDERED THE SUBMISSIONS OF THE ASSESSEE. THE ASSESSING OFFICER NOTED THAT EVEN AS PER THE TWO DOCUMENTS SUBMITTED BY THE ASSESSEE, THE SECURITY DEPOSIT GIVEN BY THE ASSESSEE TO THE OTHER COM PANY WAS ON A HIGHER SIDE. AS PER THE ASSESSING OFFICER, CONSIDERING THE RENTALS QUOTED BY M/S BANSAL PROPERTIES, THE DEPOSIT OF RS.2.70 CRORES GIVEN BY THE ASSESSEE WAS IN EXCESS BY AT LEAST RS.1.20 CRORES. BY APPLYING INTEREST RATE OF 18% ON SUCH EXCESS DEPOSIT, A SUM OF RS.21,60,000/ - WAS WORKED OUT AND THE SAME HAS BEEN DISALLOWED U/S 36(1)(III) OF THE ACT. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(APPEALS). 5 . IN VIEW OF THE ABOVE MENTIONED PECULIAR FACTS AND CIRCUMSTANCES WHERE THE FACTUAL POSITION ON THE SAME SET OF FACTS FOR THE INTERVENING YEARS IS NOT BROUGHT ON RECORD AS THE LD. AR HAS ALSO MADE HIS STAND KNOWN O R A L L Y ON CLARIFICATION ONLY BASED ON ORAL SUBMISSION AND THE LD. SR. DR WAS NOT ABLE TO THROW ANY LIGHT THEREON. IN THE ABOVE - MENTIONED PECULIAR FACTS AND CIRCUMSTANCES , THE ISSUE IS RESTORED BACK TO THE FILE OF THE AO WITH THE DIRECTION TO VERIFY THE CLAIM OF THE ASSESSEE AND ASCERTAIN THAT THE ORDER DATED 25.01.2010 OF THE CO - ORDINATE BENCH IN 1998 - 99 ASSESSMENT YE AR OVER THE YEARS HA S NOT BEEN VARIED. IN THE EVENTUALITY THE CLAIM OF THE ASSESSEE IS FOUND TO BE NOT CORRECT , THE AO WOULD BE AT LIBERTY TO PASS A SPEAKING ORDER IN ACCORDANCE WITH LAW AFTER GIVING THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD. 6 . QUA GROUND NO. - 2, A PERUSAL OF THE RECORD SHOWS THAT A LUMPSUM ADDITION WAS MADE BY THE AO TAKING THE FOLLOWING FACTS INTO CONSIDERATION: - I.T.A .NO. - 2066/DEL/2011 PAGE 5 OF 9 AS PER NOTE NO.5(A) OF 'NOTES TO 'ACCOUNTS', ASSESSEE HAS GIVEN SECURITY DEPOSIT OF RS.2.7 CRORE TO A PRIVATE COMP ANY IN WHICH ONE OF THE MAIN DIRECTORS OF THE COMPANY IS INTERESTED. ON ENQUIRY, IT WAS FOUND THAT AN AMOUNT OF RS.2.7 CRORE HAS BEEN GIVEN FREE OF INTEREST TO M/S CRESENT PRINTING WORKS PVT. LTD. FOR USE OF THEIR PREMISES AT P - 14, CONNAUGHT CIRCUS, NEW DE LHI. SH. VIKRAM BAKSHI, THE MAIN PROMOTER OF THE ASSESSEE COMPANY IS ALSO INTERESTED AS DIRECTOR IN M/S CRESENT PRINTING WORKS PVT. LTD. ASSESSEE WAS ASKED TO JUSTIFY THE PAYMENT OR SUCH SUBSTANTIAL AMOUNT TO A SISTER CONCERN THAT TOO FREE OF INTEREST. TH E ASSESSEE COMPANY WAS ASKED TO PRODUCE BOOKS OF ACCOUNTS ALONG WITH SUPPORTING VOUCHERS VIDE ORDER SHEET ENTRY DT. 15.03.2005. THE ARS HAVE ATTENDED CASE TODAY ALSO FILED DETAILS VIDE LETTER DT.31.03.2005 BUT HAVE NOT PRODUCED BOOKS OF ACCOUNTS ALONG WITH SUPPORTING VOUCHERS OF THE EXPENSES CLAIMED AND SALES & PURCHASE MADE. IT IS 4.30 P.M. THE ASSESSEE COMPANY HAS REQUESTED TO ALLOW THEM THE TIME UP TO 4.30 P.M. BUT THEY HAVE FAILED TO PRODUCE THE BOOKS OF ACCOUNTS. FOR WANT OF VERIFICATION OF HUGE EXPENS ES CAN NOT BE ALLOWED. THE ASSESSEE COMPANY HAS CLAIMED EXPENSES OF RS.657854896/ - . 7 . IN APPEAL BEFORE THE FIRST APPELLANT AUTHORITY, FRESH EVIDENCE WAS MOVED BY THE ASSESSEE PLEAD ING THAT ADEQUATE OPPORTUNITY WAS NOT MADE AVAILABLE B Y THE AO. CONSIDERING THE SAME, FRESH EVIDENCE WAS ADMITTED AND THE ISSUE WAS REMANDED TO THE AO. CONSIDERING THE REMAND REPORT, THE CIT(A) PROCEEDED TO DELETE THE ADDITION MADE. 8 . AGGRIEVED BY WHICH, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 9 . THE LD. SR. DR RELYING UPON THE ASSESSMENT ORDER SUBMITTED THAT THE ASSESSEE FAILED TO PRODUCE THE SUPPORTING VOUCHERS BEFORE THE AO. REFERRING TO THE IMPUGNED ORDER IT WAS HIS SUBMISSION THAT THE DETAILS WERE NOT PROVIDED BEFORE THE AO IN THE REMAND PROCEEDI NGS ALSO AND DESPITE THE OBJECTIONS OF THE AO IN THE REMAND REPORT, RELIEF HAS BEEN GRANTED BY THE CIT(A) WITHOUT ANY POSITIVE FINDING IN HIS ORDER . RELYING UPON THE PROPOSITION LAID DOWN BY THE CO - ORDINATE BENCH IN THE CASE OF JCIT VS SWAROP VEGETABLE PR ODUCTS INDUSTRIES LTD. (2005) 96 ITD 468 (DEL.), IT WAS HIS SUBMISSION THAT ON FACTS THE IMPUGNED ORDER DESERVES TO THE SET ASIDE AS THE ORDER IS BASED ON THE FACTS WHERE THE AO HAS NOT DONE AND NOT ON FACTS WHERE THE SHORTCOMING OF THE AO HAS BEEN COMPLE TED BY THE CIT(A). 1 0 . LD. AR, ON THE OTHER HAND, REFERRING TO THE ASSESSMENT ORDER, SUBMITTED THAT ADMITTEDLY THE ASSESSEE WAS GIVEN TIME UPTO 4.30 PM TO PRODUCE RELEVANT BOOKS OF ACCOUNTS ETC. REFERRING TO THE PARA 16 OF THE IMPUGNED ORDER IT WAS I.T.A .NO. - 2066/DEL/2011 PAGE 6 OF 9 HIS S UBMISSION THAT THE SOFT COPY MADE AVAILABLE IN THE CDS DUE TO A TECHNICAL PROBLEM DID NOT RUN , A S A RESULT OF WHICH THE ASSESSEE WAS REQUIRED TO PRODUCE THE HARD COPY BY 4.30 PM . F OR THE SPECIFIC L A P S E PENALTY U/S 271(1)(B) WAS IMPOSED BY THE AO WHICH WAS QUA SHED BY THE ITAT ACCEPTING THE EXPLANATION OF THE ASSESSEE THAT ITS REPRESENTATIVE WAS CAUGHT IN A TRAFFIC JAM AND WAS A BLE TO REACH THE OFFICE ONLY AT 4.45 PM BY WHICH TIME THE ASSESSMENT ORDER STOOD PASSED. COPY OF THE SAID ORDER, IT WAS SUBMITTED HAS BEEN SEPARATELY FILED AT PAPER BOOK PAGES 89 - 93 WHEREIN THE CO - ORDINATE BENCH VIDE ITS ORDER DATED 25.05.2007 IN ITA NO. - 1530/DEL/2006 IN THE CASE OF THE ASSESSEE QUASHED THE PENALTY ACCEPTING THE EXPLANATION OFFERED BY THE ASSESSEE AS A REASONABLE CAUSE. IN THE SAID BACKGROUND IN VIEW OF THE FACT THAT NO SPECIFIC DETAIL WAS FOUND MISSING BY THE AO THE B A LD STATEMENT IN THE REMAND REPORT THAT THE DETAILS WERE NOT FILED HAS RIGHTLY NOT BEEN ACCEPTED BY THE CIT(A) WHO HAD BE EN SATISFIED WITH THE FACT THAT THE BOOKS OF ACCOUNTS OF THE ASSESSEE WERE PRODUCED WHEREIN NO SPECIFIC DEFECT WAS POINTED AS SUCH HE PROCEEDED TO DELETE THE ADDITION MADE IN THE IMPUGNED ORDER. ON QUERY, IT WAS SUBMITTED THAT COPY OF THE REMAND REPORT IS FOUND PLACED AT PAGES 79 - 80 OF T HE PAPER BOOK. ACCORDING THE LD. AR STATED THAT THE IMPUGNED ORDER DESERVES TO BE UPHELD. 1 1 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ON A PERUSAL OF THE SAME WHERE THE FACTS RELATABLE TO THE ISSUE HA VE ALREADY B EEN BROUGHT OUT IN DETAIL IN THE EARLIER PART OF THIS ORDER, WE FIND THAT THE IMPUGNED ORDER ON FACTS CANNOT BE ACCEPTED. WE HAVE COME TO THE SAID CONCLUSION IN VIEW OF THE SPECIFIC SHORTCOMING POINTED OUT QUA THE ISSUE IN THE ASSESSMENT PROCEEDINGS AND I N THE REMAND PROCEEDINGS. IT IS SEEN THAT FRESH EVIDENCE WAS ACCEPTED BY THE CIT(A) IN THE REMAND REPORT, CONSIDERING WHICH THE RELIEF WAS GRANTED IN THE APPELLATE PROCEEDINGS OBSERVING AS UNDER : - 16. IN THE WRITTEN SUBMISSION FILED BEFORE MY ID. PREDECESSOR. THE ASSESSEE SUBMITTED THAT THE REQUISITIONS AS MADE BY THE AO WERE SUBMITTED TO HIM. ACCOUNTS OF THE ASSESSEE WERE MAINTAINED ON A SOFTWARE CALLED 'SUN ACCOUNTING SYSTEM'. ON 29/3/2005 SOFT COPIES OF THE BOOKS OF ACCOUNTS WERE SUBMITTED. HOWEVER, THE CD COULD NOT BE RUN BY THE AO DUE TO TECHNICAL INCOMPATIBILITY. ON 31/3/2005, THE ASSESSEE UNDERTOOK TO PRODUCE THE SAME BY 4:30 P.M. DUE TO HIGH VOLUME OF ENTRIES INVOLVED, SUBSTANTIAL TIME WAS TAKEN IN ARRANGING HARD COPIES OF THE BOOKS OF ACCOUNTS. IN ADDITION, THE APPELLANT WAS I.T.A .NO. - 2066/DEL/2011 PAGE 7 OF 9 STUCK IN A HEAVY TRAFFIC JAM ENROUTE TO THE DEPARTMENT. IT WAS REITERATED THAT THE APPELLANT MAINTAINED PROPER BOOKS OF ACCOUNTS WHICH WAS ALSO AUDITED U/S 43AB. THE ASSESSEE RELIED ON SEVERAL DECISIONS INCLUDING THAT OF THE JURISDICTIONAL HIGH COURT. 17. IN THE REMAND REPORT SUBMITTED, IT WAS STATED THAT THE AMOUNT WAS ADDED BACK DUE TO NON PRODUCTION OF THE BOOKS. IT WAS FURTHER STATED THAT DURING THE REMAND PROCEEDINGS TH E ASSESSEE WAS REQUESTED TO PROVIDE THE DETAILS OF EXPENSES CLAIMED BY HIM. THE ASSESSEE DID NOT PROVIDE THE COMPLETE DETAILS ALONGWITH DOCUMENTARY EVIDENCE IN RESPECT OF EXPENSES BOOKED UNDER THE HEAD 'MAINTENANCE & REPAIRS' ETC. SINCE THE ASSESSEE FAILED TO FILE THE DETAILS OF EXPENSES, THE CONTENTION OF THE ASSESSEE SHOULD BE REJECTED. 18. I HAVE GONE THROUGH THE ORDER OF THE LD. AO AND THE SUBMISSIONS MADE BY THE LD. AR OF THE ASSESSEE. IT IS OBSERVED THAT DURING THE REMAND PROCEEDINGS. DATED 18/1/20 10, THE ASSESSEE HAS SUBMITTED DETAILS OF SALARY, DETAILS OF PAY ROLL TAXES, DETAILS OF TRADE MARK FEES, DETAILS OF INTEREST EXPENSE, DETAILS OF INTEREST PAYMENTS, DETAILS OF FOREIGN EXCHANGE TRANSACTION, COPIES OF SOME OF THE BILLS OF EXPENSES, MAINTENANC E AND REPAIRS OF RESTAURANTS AND HEAD OFFICE, DETAILS OF ADVERTISEMENT EXPENSES, DETAILS OF STAFF WELFARE EXPENSES, DETAILS OF LEGAL AND PROFESSIONAL EXPENSES AND DETAILS OF GIFTS AND COMPLIMENTARIES. AT THE END OF THE LETTER, IT WAS ALSO 'SUBMITTED THAT I F THE AO REQUIRED ANY FURTHER INFORMATION, THE ASSESSEE WOULD BE GLAD TO SUBMIT THE SAME. IN THE REMAND REPORT, THE LD. AO HAS SIMPLY STATED THAT ALL THE DETAILS WERE NOT FILED. IT HAS NOT BEEN MENTIONED, THAT WHAT WERE THE SPECIFIC DETAILS NOT SUBMITTED B Y THE ASSESSEE. HE HAS NOT PIN - POINTED ANY SUCH DETAILS UNDER THE HEAD MAINTENANCE & REPAIRS. 19. IN VIEW OF THE ABOVE, I HOLD THAT THE DETAILS WERE FILED. THE BOOKS OF ACCOUNTS WERE ALSO SUBMITTED. IT IS DIFFICULT TO BELIEVE THAT THE ASSESSEE WHICH IS RUNNING A REPUTED FAST FOOD RESTAURANT SUCH AS MCDONALDS WOULD NOT MAINTAIN BOOKS OF ACCOUNTS AND WOULD NOT PRODUCE THE SAME BEFORE THE AO. THE BOOKS WERE ALSO ASSESSEE. THE ADDITION ON DISALLOWANCE OF 2% OF THE EXPENSES IS DELETED. THE ASSESSEE SUCCEEDS I N GROUNDS OF APPEAL NO. 5 AND ITS PARTS. 1 2 . A PERUSAL OF THE COPY OF THE REMAND REPORT IN THE PAPER BOOK SHOWS THAT THE ASSESSEE INFACT FAILED TO PRODUCE THE SUPPORTING BILLS AND VOUCHERS AS WOULD BE EVIDENT FROM THE FOLLOWING EXTRACT OF THE REMAND REPORT: - F.NO.DCIT/CIRCLE3(1)/REMAND REPORT/2009 - 10/142 OFFICE OF THE DY. COMMISSIONER OF INCOME - TAX, CIRCLE - 3(1), ROOM NO. - 390, C.R.BUILDING, I.P.ESTATE, NEW DELHI - 110002. TO, THE COMMISSIONER OF INCOME TAX (APPEA L) - IV, NEW DELHI I.T.A .NO. - 2066/DEL/2011 PAGE 8 OF 9 SUB: - REMAND REPORT IN THE CASE OF M/S CONNAUGHT PLAZA R ESTAURANT PRIVATE LTD. APPEAL NO.221/05 - 06 FOR THE AY 2002 - 03 - REGARDING SIR, THE POINT WISE REPORT ON BOTH THE ABOVE ISSUES AS UNDER: - 1. DISALLOWANCE OF 2% OF TOTAL EXPENSES (RS.13157098/ - ) - DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE COMPANY WAS ASKED TO PRODUCE BOOKS OF ACCOUNTS ALONGWITH SUPPORTING VOUCHERS VIDE NOTE SHEET ENTRY DATED 15.03.2005. THE ASSESSEE COMPANY FILED DETAILS VID E LETTER DATED 31.3.2005 BUT FAILED TO PRODUCE THE BOOKS OF ACCOUNTS ALONGWITH SUPPORTING VOUCHERS OF THE EXPENSES CLAIMED AND SALES & PURCHASE MADE. FOR WANT OF VERIFICATION OF HUGE EXPENSES THE AO DISALLOWED 2% OF THE TOTAL EXPENSES CLAIMED BY THE ASSES SEE . DURING THE REMAND PROCEEDINGS THE ASSESSEE COMPANY WAS REQUESTED TO PROVIDE THE DETAILS OF EXPENSES CLAIMED BY H IM. IN RESPONSE THE ASSESSEE COMPANY FILED THE FOLLOWING DETAILS: - SALARY EXPENSES - THE ASSESSEE ONLY FILED LIST OF EXPENSES IN GENERAL MANNER HOWEVER LIST OF EMPLOYEES TO WHOM THE SALARY AS BEEN PAID HAS NOT BEEN PROVIDED. SALARY REGISTER NOT BEEN SUBMITTED. PAYMENT OF TRADE MARK FEE - NO BILLS//VOUCHERS FOR THE PAYMENT OF TRADE MARK FEE HAS BEEN SUBMITTED. NO BANK DETAILS FOR THE PAYMENT OF ABOVE EXPENSES HAVE BEEN SUBMITTED. NO BANK DETAILS FOR THE PAYMENT OF ABOVE EXPENSES HAVE BEEN PROVIDED BY THE ASSESSEE. PAYMENT OF INTEREST EXPENSES - NO BILLS/VOUCHERS FOR THE PAYMENT OF INTEREST HAVE BEEN SUBMITTED. NO BANK DETAILS FOR THE PAYMENT OF ABOVE EXPENSES HAVE BEEN PROVIDED BY THE ASSESSEE. THE ASSESSEE COMPANY HAS NOT PROVIDED THE COMPLETE DETAILS ALONGWITH DOCUMENTARY EVIDENCE IN RESPECT OF EXPENSES BOOKED UNDER THE HEAD MAINTENANCE & REPAIRS FOR RESTAURANTS AND HEAD OFFICE, ADVERTISEMEN T EXPENSES, LEGAL AND PROFESSIONAL EXPENSES, STAFF WELFARE EXPENSES AND GIFT AND COMPLIMENTARIES AND HAS FILED ONLY SOME OF THE BILLS. SINCE THE ASSESSEE FAILED TO FILE THE DETAILS OF EXPENSES IN THE ASSESSMENT PROCEEDINGS AS WELL AS THE REMAND PROCEEDING S HENCE THE CONTENTION OF THE ASSESSEE SHOULD BE REJECTED ON THIS ISSUE. (EMPHASIS PROVIDED) 13 . IN VIEW OF THE ABOVE, WE FIND THAT THE CIT(A) ON FACTS HAS ERRONEOUSLY CONCLUDED THAT NO SPECIFIC DEFECT WAS POINTED OUT BY THE AO. IN THE FACTS OF THE PRES ENT CASE EVIDENTLY THE SUPPORTING VOUCHERS WERE NEVER PRODUCED. THE PRESUMPTION DRAWN IN PARA 19 FOR GRANTING RELIEF ACCORDINGLY CANNOT BE UPHELD. THE IMPUGNED ORDER ACCORDINGLY IS SET ASIDE AND GROUND NO. - 2 RAISED BY THE I.T.A .NO. - 2066/DEL/2011 PAGE 9 OF 9 REVENUE IS ALLOWED AND THE ISSUE IS RESTORED BACK TO THE FILE OF THE AO WITH THE DIRECTION TO DECIDE THE SAME BY WAY OF A SPEAKING ORDER AFTER GIVING THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD. QUA, THE SAID ISSUE, THE LD. SR. DR WAS SPECIFICALLY REQUIRED TO ADDRESS WHETHER HE WOULD INSIST THE ISSUE TO BE RESTORED TO THE AO OR THE CIT(A). THE LD. SR. DR STATED THAT SINCE THE EVIDENCE IS BEING PRODUCED FOR THE FIRST TIME LET IT BE PRODUCED BEFORE THE AO. THE ASSESSEE IS DIRECTED TO PARTICIPATE IN THE PROCEEDINGS IN THE EVENTUA LITY THE ASSESSEE FAILS TO PROVIDE THE NECESSARY EVIDENCE IN SUPPORT OF ITS CLAIM , THE AO WOULD BE AT LIBERTY TO PASS A SPEAKING ORDER IN ACCORDANCE WITH LAW. 1 4 . IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 1 6 T H OF JUNE 2015. S D / - S D / - (T.S.KAPOOR) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 1 6 / 06/2015 *AMIT KUMAR & ANIL KUMAR VERMA * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI