M/s Dhanna Ram Garg, New Delhi V. ITO, New Delhi

ITA 2216/DEL/2011

• Counselvise Citation: 221620114 RSA 2011
• Duration Of Justice: 3 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 05-07-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 04-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y KAKKAR
• Assessee Lawyers: D V TANEJA
• Keywords: Additional evidence
• Section: 44AD; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH B NEW DELHI) BEFORE SHRI RAJPAL YADAV AND SHRI B.C. MEENA ITA NO. 2216/DEL/2011 ASSESSMENT YEAR: 2006-07 DHANNA RAM GARG, V INCOME-TAX OFFICER, 56- TARUN ENCLAVE, WARD 25(1), PITAMPURA, NEW DELHI NEW DELHI. (PAN: ABCPG7998J) (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI D.V. TANEJA, CA RESPONDENT BY: MS. Y. KAKKAR, SR . DR ORDER PER RAJPAL YADAV: JUDICIAL MEMBER THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE ORD ER OF THE LEARNED CIT(APPEALS) DATED 4.3.2011 PASSED FOR ASSESSMENT YEAR 2006-07. THE GROUNDS OF APPEALS TAKEN BY THE ASSESSEE ARE NOT IN CONSONANCE WITH RULE 8 OF THE ITAT'S RULES, THEY ARE DESCRIPTIVE AND ARGUM ENTATIVE IN NATURE. IN BRIEF, ASSESSEE HAS PLEADED THAT LEARNED CIT(APPEAL S) HAS ERRED IN CONFIRMING THE ADDITION OF RS11,98,100. THE ASSESSE E HAS FURTHER PLEADED THAT LEARNED CIT(APPEALS) HAS ERRED IN NOT ADMITTIN G ADDITIONAL EVIDENCE DEMONSTRATING THE ASSESSEE AS A PETTY CIVIL CONTRAC TOR. ACCORDING TO THE ASSESSEE, LEARNED FIRST APPELLATE AUTHORITY SOUGHT TO HAVE ADMITTED THE ADDITIONAL EVIDENCE AND OUGHT TO HAVE ASSESSED THE INCOME OF THE ASSESSEE AT 8% UNDER SEC.44AD ON GROSS CONTRACT RECEIPT OF RS.1 7,99,773 WHICH WOULD 2 GIVE AN INCOME OF RS.1,38,400 ONLY INSTEAD OF ASSES SING THE INCOME AT RS.11,98,100. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E HAS FILED HIS RETURN OF INCOME ON 26.7.2006 DECLARING AN INCOME OF RS.1,09, 560. ACCORDING TO THE ASSESSING OFFICER, A NOTICE UNDER SEC.143(2) WAS IS SUED AND SERVED DULY WITHIN STATUTORY PERIOD WHICH REMAINED UNATTENDED B Y THE ASSESSEE. IT EMERGES OUT FROM THE ASSESSMENT ORDER THAT HE STAR TED THE INVESTIGATION IN THIS CASE ON 16 TH OCTOBER 2008 WHEN HE ISSUED A NOTICE UNDER SEC. 14 2(1) AND DIRECTED THE ASSESSEE TO APPEAR ON 23.10.2008. ASSE SSING OFFICER HAS PASSED AN EX PARTE ASSESSMENT ORDER ON 26.12.2008. HE DETE RMINED THE TAXABLE INCOME OF THE ASSESSEE AT RS18,07,660. ASSESSING OF FICER HAS MADE ADDITION ON ACCOUNT OF UNEXPLAINED DEPOSITS MADE WITH HDFC A CCOUNT AS WELL AS PUNJAB & SIND BANK ACCOUNT. HE FOUND ENTRIES OF DEP OSITS IN CASH AT RS.12,98,100 ON VARIOUS DATES IN THE BANK ACCOUNT W ITH HDFC BANK AND SIMILARLY RS.4,00,000 IN PUNJAB & SIND BANK ACCOUNT BEARING NO.1940. ASSESSING OFFICER FURTHER FOUND THAT THE ASSESSEE H AS DISCLOSED CONTRACT RECEIPTS OF RS.3,48,250 AFTER DEBITING EXPENSES HE HAS SHOWN NET PROFIT AT RS.1,77,,173. 3 3. DISSATISFIED WITH THE DETERMINATION OF INCOME AT RS.18,07,660, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LE ARNED CIT(APPEALS). HE PLEADED THAT ASSESSING OFFICER HAS ERRED IN ADDING AN AMOUNT OF RS.16,98,100 WITH THE AID OF SECTION 68 ON ACCOUNT OF UNEXPLAINED CASH DEPOSITS IN BANK ACCOUNT. THE ASSESSEE HAS FILED AN APPLICATION FOR PERMISSION TO LEAD ADDITIONAL EVIDENCE. WITH THE HE LP ADDITIONAL EVIDENCE,, ASSESSEE SOUGHT TO DEMONSTRATE THAT HE IS A CIVIL C ONTRACTOR AND HIS INCOME HAS TO BE DETERMINED AS PER SECTION 44AD. THE CASH DEPOSITED IN THE BANK ACCOUNT ON VARIOUS DATES ARE THE CONTRACT RECEIPTS RECEIVED BY HIM. LEARNED FIRST APPELLATE AUTHORITY HAS CALLED FOR REMAND REP ORTS BUT REJECTED THE APPLICATION OF THE ASSESSEE ON THE GROUND THAT DOCU MENTS SUBMITTED BY THE ASSESSEE ARE NOT WORTH ADMITTING. ON AN ANALYSIS OF BANK ACCOUNTS, LEARNED CIT(APPEALS) IS OF THE OPINION THAT THERE ARE WITHD RAWALS FROM THE BANKS ALONG WITH THE AMOUNTS DEPOSITED BY THE ASSESSEE. H E FORMED AN OPINION THAT AMOUNTS WITHDRAWN FROM THE BANK ACCOUNT MUST HAVE B EEN USED FOR MAKING DEPOSITS. IN A WAY, THE PEAK AMOUNT AVAILABLE ON TH E CREDIT SIDE OF THE BANK ACCOUNT HAS BEEN CONSIDERED AS UNEXPLAINED AMOUNTS OF THE ASSESSEE. AN ADDITION OF RS.11,98,100 HAS BEEN CONFIRMED BY THE LEARNED CIT(APPEALS). 4 4. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT ASSESSING OFFICER DID NOT GRANT PROPER OPPORTUNITY OF HEARING TO THE ASSESSEE. HE HAS CONCLUDED THAT THE ASSESSMENT PROCEEDINGS WITHIN TW O AND HALF MONTHS, THEREFORE, LEARNED CIT(APPEALS) OUGHT TO HAVE CONSI DERED THE EVIDENCE SUBMITTED BY THE ASSESSEE. HE FURTHER CONTENDED THA T THE ASSESSEE IS A PETTY CONTRACTOR . HIS INCOME DESERVES TO BE ASSESSED AS PER SECTION 44AD OF THE ACT. LEARNED DR ON THE OTHER HAND SUBMITTED THAT TH ERE IS NO EVIDENCE WITH THE ASSESSEE WHICH CAN DEMONSTRATE THAT HE WAS DOIN G CIVIL CONTRACT WORK. LEARNED CIT(APPEALS) HAS RECORDED A CATEGORICAL FIN DING THAT ASSESSEE FAILED TO ESTABLISH WITH ANY INDEPENDENT EVIDENCE/THIRD PA RTY DOCUMENT THAT HE WAS ENGAGED IN THE CONTRACT WORK AND HAD RECEIVED RS.18 .67 LACS AS CONTRACT RECEIPTS. HIS CONTRACT BUSINESS COULD NOT BE VERIFI ED IN THE REMAND PROCEEDINGS. ASSESSING OFFICER HAS DOUBTED ON THE B ILLS AND VOUCHERS SUBMITTED BY THE ASSESSEE IN THE REMAND PROCEEDINGS . 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND GON E THROUGH THE RECORD CAREFULLY. RULE 46A HAS A DIRECT BEARING ON THE CONTROVERSY, THEREFORE, IT IS SALUTARY UPON US TO TAKE NOTE OF THIS RULE. IT READ S AS UNDER: 46A (1) THE APPELLANT SHALL NOT BE ENTITLED TO PRO DUCE BEFORE THE DC(APPEALS) OR, AS THE CASE MAY BE, THE COMMISSIONE R (APPEALS), ANY EVIDENCE, WHETHER ORAL OR DOCUMENTARY, OTHER TH AN THE EVIDENCE 5 PRODUCED BY HIM DURING THE COURSE OF PROCEEDINGS BE FORE THE ASSESSING OFFICER, EXCEPT IN THE FOLLOWING CIRCUMST ANCES, NAMELY:- A) WHERE THE ASSESSING OFFICER HAS REFUSED TO ADMIT EVIDENCE WHICH OUGHT TO HAVE BEEN ADMITTED; OR B) WHERE THE APPELLANT WAS PREVENTED BY SUFFICIENT CAU SE FROM PRODUCING THE EVIDENCE WHICH HE WAS CALLED UPO N TO PRODUCE BY THE ASSESSING OFFICER; OR C) WHERE THE APPELLANT WAS PREVENTED BY SUFFICIENT CAU SE FROM PRODUCING BEFORE THE ASSESSING OFFICER ANY EVIDENCE WHICH IS RELEVANT TO ANY GROUND OF APPEAL; OR D) WHERE THE ASSESSING OFFICER HAS MADE THE ORDER APPE ALED AGAINST WITHOUT GIVING SUFFICIENT OPPORTUNITY TO TH E APPELLANT TO ADDUCE EVIDENCE RELEVANT TO ANY GROUND OF APPEAL. (2) NO EVIDENCE SHALL BE ADMITTED UNDER SUB-RULE( 1) UNLESS THE DEPUTY COMMISSIONER (APPEALS) OR, AS THE CASE MAY B E, THE COMMISSIONER (APPEALS) RECORDS IN WRITING THE REASO NS FOR ITS ADMISSION. (3) THE DEPUTY COMMISSIONER (APPEALS) OR, AS TH E CASE MAY BE, THE COMMISSIONER(APPEALS) SHALL NOT TAKE INTO ACCOUNT A NY EVIDENCE PRODUCED UNDER SUB-RULE (1) UNLESS THE ASSESSING OF FICER HAS BEEN ALLOWED A REASONABLE OPPORTUNITY- A) TO EXAMINE THE EVIDENCE OR DOCUMENT OR TO CROSS-EXA MINE THE WITNESS PRODUCED BY THE APPELLANT; OR 6 B) TO PRODUCE ANY EVIDENCE OR DOCUMENT OR ANY WITNESS IN REBUTTAL OF THE ADDITIONAL EVIDENCE PRODUCED BY THE APPELLANT. (4) NOTHING CONTAINED IN THIS RULE SHALL AFFECT THE POWER OF THE DEPUTY COMMISSIONER( APPEALS) OR, AS THE CASE MAY B E, THE COMMISSIONER(APPEALS) TO DIRECT THE PRODUCTION OF A NY DOCUMENT, OR THE EXAMINATION OF ANY WITNESS, TO ENABLE HIM TO DI SPOSE OF THE APPEAL, OR FOR ANY OTHER SUBSTANTIAL CAUSE INCLUDIN G THE ENHANCEMENT OF THE ASSESSMENT OR PENALTY (WHETHER ON HIS OWN MO TION OR ON THE REQUEST OF THE [ASSESSING OFFICER] UNDER CLAUSE (A) OF SUB-SECTION (1) OF SECTION 251 OR THE IMPOSITION OF PENALTY UNDER S ECTION 271. 6. A BARE PERUSAL OF THIS RULE WOULD REVEAL THAT A PPELLANT I.E. ASSESSEE SHALL NOT BE ENTITLED TO PRODUCE ANY EVIDENCE WHETH ER ORAL OR DOCUMENTARY, OTHER THEN THE EVIDENCE PRODUCED BY HIM DURING THE ASSESSMENT PROCEEDINGS UNLESS CONDITIONS ENUMERATED IN CLAUSE A TO D OF SU B-RULE (1) ARE AVAILABLE. ACCORDING TO THESE CLAUSES, ADDITIONAL EVIDENCE WOU LD BE PERMITTED, IF IT IS PROVED THAT ASSESSING OFFICER HAS REFUSED TO ADMIT THE ADDITIONAL EVIDENCE OR ASSESSEE WAS CALLED UPON TO PRODUCE A SPECIFIC EVID ENCE BY THE ASSESSING OFFICER BUT BY VIRTUE OF SUFFICIENT REASONS HE COUL D NOT PRODUCE SUCH EVIDENCE OR ASSESSEE WAS TO PRODUCED ANY EVIDENCE R ELEVANT TO THE GROUNDS OF APPEAL BUT HE COULD NOT PRODUCE IT BEFORE THE AS SESSING OFFICER OR ASSESSING OFFICER HAS PASSED THE ASSESSMENT ORDER W ITHOUT GIVING SUFFICIENT 7 OPPORTUNITY TO THE ASSESSEE. IF ANY ONE CONDITIONS IS AVAILABLE THEN ASSESSEE WOULD BE PERMITTED TO ADDUCE ADDITIONAL EVIDENCE. T HE NEXT STEP SUGGESTED IN THE RULE IS THAT LEARNED CIT(APPEALS) HAS TO REC ORD REASONS FOR PERMITTING AN ASSESSEE TO ADDUCE THE ADDITIONAL EVIDENCE. AFTE R THIS EXERCISE, IT HAS BEEN PROVIDED IN SUB-RULE (3) THAT LEARNED FIRST APPELLA TE AUTHORITY SHALL NOT TAKE INTO ACCOUNT SUCH EVIDENCE UNLESS AN OPPORTUNITY TO REBUT THE EVIDENCE WAS GIVEN TO THE ASSESSING OFFICER. ASSESSING OFFICER S HALL BE PROVIDED AN OPPORTUNITY TO EXAMINE THE DOCUMENT SUBMITTED BY TH E ASSESSEE AND HE WILL BE PROVIDED AN OPPORTUNITY TO ADDUCE EVIDENCE FOR R EBUTTING THE EVIDENCE PRODUCED BY THE ASSESSEE. SUB-CLAUSE (4) OF RULE 46 A, IS AN EXCEPTION TO THESE CONDITIONS. IT EMPOWERS THE FIRST APPELLATE A UTHORITY TO DIRECT THE PRODUCTION OF ANY DOCUMENT OR EXAMINATION OF ANY WI TNESS WHICH CAN HELP THE LEARNED FIRST APPELLATE AUTHORITY TO DISPOSE OF THE APPEAL IN ACCORDANCE WITH LAW AND FOR ANY OTHER SUBSTANTIAL CAUSE. LEARN ED CIT(APPEALS) HAS REMITTED THE SUBMISSIONS OF THE ASSESSEE ALONG WITH THE DOCUMENTS TO THE ASSESSING OFFICER FOR HIS COMMENTS. ASSESSING OFFIC ER HAS SUBMITTED TWO REMAND REPORT. AFTER AN ANALYSIS OF THE REMAND REPO RTS AS WELL AS THE SUBMISSIONS OF THE ASSESSEE, LEARNED CIT(APPEALS) H AS OBSERVED THAT THE DOCUMENTS SUBMITTED BY THE ASSESSEE ARE NOT WORTH A DMITTING. TO OUR MIND THIS IS NOT THE RIGHT COURSE. ONCE HE CALLED FOR A REMAND REPORT ON THE MERITS 8 OF THE EVIDENCE AND GAVE AN OPPORTUNITY TO THE ASSE SSING OFFICER FOR REBUTTING THE EVIDENCE THEN CONDITIONS OF SUB-RULES (1) AND (2) WOULD BE CONSTRUED AS FULFILLED. LEARNED CIT(APPEALS) MAY NO T RELY UPON THE EVIDENCE FOR REJECTING THE ARGUMENTS OF THE ASSESSEE ON THE GROUND THAT IT IS NOT SUFFICIENT TO BUTTRESS THE CONTENTIONS OF THE ASSES SEE, BUT HE CANNOT SAY THAT EVIDENCE IS NOT TO BE TAKEN ON RECORD. THE ADMISSIB ILITY OF THE EVIDENCE IS TO BE DECIDED AT THE FIRST STAGE UNDER SUB-RULE(1). FO R THAT HE NEED NOT TO CALL FOR A REMAND REPORT ON THE MERIT OF THE EVIDENCE. HE CA N SIMPLY HEAR THE ASSESSING OFFICER AS IS PROVIDED IN SEC. 250(1) OF THE ACT. IN OTHER WORDS, LEARNED CIT(APPEALS) SUPPOSED TO GIVE JUST AN OPPOR TUNITY OF HEARING TO THE A.O. BEFORE ADMISSION OF EVIDENCE. ONCE, IT IS ADMI TTED BY RECORDING REASONS AS PROVIDED IN SUB-RULE(2) THEN NEXT STAGE WOULD CO ME AS ENUMERATED IN SUB- RULE(3), WHERE LEARNED CIT(APPEALS) WOULD CALL UPON A REMAND REPORT OF THE ASSESSING OFFICER ON THE MERIT OF THE EVIDENCE AND ALSO GIVE AN OPPORTUNITY TO THE ASSESSING OFFICER TO LEAD EVIDENCE IN REBUTT AL OF THE EVIDENCE SUBMITTED BY THE ASSESSEE. 7. WE FIND FROM THE ANALYSIS OF THE RECORD THAT SUF FICIENT OPPORTUNITIES WERE NOT GRANTED TO THE ASSESSEE BY THE ASSESSING O FFICER. HE HAS COMPLETED THE INQUIRY FOR THE PURPOSE OF THE ASSESSMENT ORDER WITHIN JUST TWO MONTHS. 9 THEREFORE, WE DEEM IT APPROPRIATE TO SET ASIDE BOTH THE IMPUGNED ORDERS AND REMIT ALL THE ISSUES TO THE FILE OF THE ASSESSING O FFICER FOR READJUDICATION. THE OBSERVATIONS MADE BY US WILL NOT IMPAIR OR INJU RE THE CASE OF THE ASSESSING OFFICER AND WOULD NOT CAUSE ANY PREJUDICE TO THE DEFENCE/EXPLANATION OF THE ASSESSEE. THE ASSESSEE W ILL BE AT LIBERTY TO SUBMIT ANY EVIDENCE IN HIS DEFENCE BEFORE THE ASSESSING OF FICER. ASSESSING OFFICER SHALL GRANT DUE OPPORTUNITY OF HEARING TO THE ASSES SEE AND THE ASSESSEE SHALL CO-OPERATE WITH THE ASSESSING OFFICER.. 8. IN THE RESULT, THE APPEAL FILED BY ASSESSEE IS A LLOWED FOR STATISTICAL PURPOSES. DECISION PRONOUNCED IN THE OPEN COURT ON 12.08.201 1 SD/- SD/- ( B.C. MEENA ) ( RAJ PAL YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 12/08/2011 MOHAN LAL COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR