ACIT, New Delhi V. M/s. Janta Dal (Secular), New Delhi

ITA 229/DEL/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65513 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 19-07-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 13-01-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: ASHOK GA NDHI
• Keywords: Additional evidence; Reasonable cause
• Section: 142(1); 144; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH `D : NEW DELHI) BEFORE SHRI U.B.S. BEDI, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER ITA NO.229/DEL./2012 (ASSESSMENT YEAR : 2007-08) ACIT, CIRCLE 31(1), VS. JANTA DAL (SECULAR) NEW DELHI. 5, SAFDARJUNG LANE, NEW DELHI. (PAN/GIR NO.AAAAJ5437B) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI ASHOK GANDHI, ADV. REVENUE BY : SMT. SHUMANA SEN, CIT(DR) PER U.B.S. BEDI, J.M. THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST TH E ORDER PASSED BY THE CIT(A)- XXVI, NEW DELHI DATED 13.10.2011 RELEVANT TO ASSESS MENT YEAR 2007-08, WHEREIN FOLLOWING SOLITARY EFFECTIVE GROUND HAS BEEN RAISE D: WHETHER CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.50,00,000/- MADE BY ASSESSING OFFICER ON ACCOUNT OF INCOME UNDE R THE HEAD OF OTHER SOURCES, AS ASSESSEE FAILED TO FURNISH THE EVIDENCE TO PROVE INCOME/EXPENDITURE DECLARED BY HIM AND COULD NOT FU LFILL CONDITIONS LAID DOWN IN SECTION 13A OF THE I.T. ACT, 1961. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A REGISTERED POLITICAL PARTY WITH ELECTION COMMISSION OF INDIA. IT WAS MANDATORY FOR THE POLITICAL PARTY TO FILE A RETURN OF THE INCOME U/S 139 (4B) OF THE IT ACT, 1961. HOWEVE R, THE ASSESSEE DID NOT FILE ITS RETURN OF INCOME WITHIN THE TIME STIPULATED U/S 139(1) OF THE I.T. ACT. THEREFORE, THE ASSESSING OFFICER ISSUED NOTICE U/S 142(1) DATED 28.11.2008, TO THE A SSESSEE REQUIRING IT TO FILE ITS RETURN OF INCOME. THIS NOTICE WAS FOLLOWED BY A QUESTIONNAIRE DATED 9 .3.2009. THE ASSESSEE DID NOT RESPOND OR I.T.A NO.229/DEL./2012 (A.Y. : 2007-08) 2 COMPLY TO NOTICE DATED 28.11.2008 U/S 142(1) NOR FI LED ANY DETAIL/REPLY TO THE QUESTIONNAIRE ISSUED VIDE DATED 9.3.2009. IN VIEW OF NON-COMPLIANCE BY T HE ASSESSEE TO THE STATUTORY NOTICES ISSUED, THE ASSESSING OFFICER PROCEEDED TO COMPLETE THE ASS ESSMENT ON MERITS U/S.144 OF THE IT ACT 1961. TO FORM AN OPINION AND TO FACILITATE JUSTICE, THE A SSESSING OFFICER DEPUTED THE INSPECTOR TO MAKE NECESSARY ENQUIRIES FROM THE OFFICE OF THE ASSESSEE . IT WAS REPORTED BY THE INSPECTOR THAT AT THE PREMISES, THE BOOKS OF ACCOUNTS WERE NOT AVAILABLE. IT WAS ALSO REPORTED THAT THE PERSON-IN-CHARGE WAS PRESENT AT THAT TIME AND STATED THAT DURING THE F.Y.2006-07, VOLUNTARY CONTRIBUTIONS AMOUNTING BETWEEN RS.40 TO 50 LAKHS WERE RECEIVED. NECESSARY ENQUIRIES WERE ALSO MADE FROM THE ELECTION COMMISSION OF INDIA. VIDE LETTER DATED 10.12.2009, THE ELECTION COMMISSION OF INDIA, REPORTED THAT JANATA DAL (SECULAR) PARTY I.E . THE ASSESSEE DID NOT FILE ANY REPORT REGARDING THE RECEIPT OF VOLUNTARY CONTRIBUTIONS U/S.29 (C)(3) OF THE R. P. ACT NOR THE INCOME AND EXPENDITURE ACCOUNT FOR F.Y. 2006-07. ON THE BASIS OF THE INSPE CTORS REPORT, THE ASSESSING OFFICER ESTIMATED THE INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONS IDERATION AT RS.50 LAKHS AND ASSESSED IT AS 'INCOME FROM OTHER SOURCES' BECAUSE THE ASSESSEE D ID NOT FULFILL THE CONDITIONS STIPULATED IN THE PROVISIONS OF SECTION 13A OF THE IT ACT, WHICH IS M ANDATORY FOR CLAIMING EXEMPTION U/S 13A OF THE IT ACT, 1961. 3. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFI CER, ASSESSEE FILED APPEAL AND CHALLENGED THE ACTION OF THE ASSESSING OFFICER IN I NVOKING THE PROVISIONS OF SECTION 144 OF THE ACT AND ALSO DETERMINATION OF INCOME AT RS. 50,00,000/- WHICH WAS STATED TO BE WITHOUT ANY BASIS AND PROPER MATERIAL ON RECORD. I T WAS FURTHER SUBMITTED BEFORE FIRST APPELLATE AUTHORITY THAT IT HAS BEEN SUBMITTED THAT THE RETURN COULD NOT BE FILED DUE TO VARIOUS PRE-ENGAGEMENTS AND UNAVOIDABLE CIRCUMSTANC ES, AS A RESULT OF WHICH THE ASSESSEE COULD NOT CONTACT THE COUNSEL/AR FOR THE PREPARATION AND FILING OF THE RETURN. IT WAS ALSO SUBMITTED THAT THE ASSESSEE MAINTAINED PROPER BOOKS OF ACCOUNTS, AND WERE DULY AUDITED BY AN ACCOUNTANT AS DEFINED IN SUB-SECTION (2) OF SECTION 288 OF THE IT ACT. IT WAS ALSO SUBMITTED THAT THE ASSESSEE DID I.T.A NO.229/DEL./2012 (A.Y. : 2007-08) 3 NOT RECEIVE ANY VOLUNTARY CONTRIBUTION IN EXCESS OF RS.20,000/- AND HENCE IT DID NOT MAINTAIN RECORD. IT WAS ARGUED THAT MAINTENANCE OF RECORD FOR RECEIP T OF AMOUNT ABOVE RS.20,000/- IS A REQUISITE CONDITION FOR CLAIMING EXEMPTION U/S 13A OF THE IT ACT 1961. IT WAS SUBMITTED BY THE AR THAT THE PROVISIONS OF SECTION 29(C)(3) ARE APPLICABLE, WHEN THE POLITICAL 'PARTY IS COVERED BY SUB-SECTION (1) AND SUB-SECTION (2) OF SECTION 29(C) OF REPRESE NTATION OF PEOPLE ACT 1951. ACCORDING TO THIS SECTION, A POLITICAL PARTY IS REQUIRED TO MAINTAIN A COMPLETE ACCOUNT REGARDING THE DONATIONS RECEIVED FROM ANY PERSON OR FROM ANY COMPANY IN EXC ESS OF RS.20,000/-. A REPORT WAS TO BE PREPARED REFLECTING SUCH INFORMATION PERTAINING TO SUCH RECEIPTS OF DONATIONS AND THIS REPORT WAS TO BE FURNISHED IN A PRESCRIBED FORM AS PER THE PRO VISIONS LAID DOWN IN SUB- SECTION (2). IT WAS SUBMITTED BY THE AR, THAT SINCE THE PROVISIONS OF S UB-SECTION (1) AND SUB-SECTION (2) OF SECTION 29(C} ARE NOT APPLIC ABLE IN ITS CASE, THE ASSESSEE WAS NOT UNDER ANY LEGAL OBLIGATION TO MAKE COMPLIANCE TO THE PROVISIO NS CONTAINED IN SUB-SECTION (3) OF SECTION 29(C) OF THE R.P. ACT AND HENCE IT WAS NOT REQUIRED TO FURNISH ANY REPORT TO THE ELECTION COMMISSION OF INDIA, BEFORE THE DUE DATE OF FILING THE RETURN U/S 139(1) OF THE ACT 1961. IT WAS ALSO SUBMITTED THAT THE ASSESSING OFFICER HAS NOT G IVEN SUFFICIENT REASON TO DENY EXEMPTION TO THE ASSESSEE U/S 13A AND DETERMINED VOLUNTARY CONTRIBU TIONS AS 'TAXABLE INCOME'. THIS ACTION OF THE ASSESSING OFFICER WAS DESCRIBED AS UNJUSTIFIED, UNW ARRANTED AND BAD IN LAW. THE AR OF THE ASSESSEE, FILED COPIES OF THE A) AUDITED BALANCE-SH EET B) INCOME AND EXPENDITURE ACCOUNT C) AUDITOR'S REPORT ALONG WITH COMPUTATIONS OF TOTAL I NCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. THE AR OF THE APPELLANT ALSO MOVED A N APPLICATION DATED 19.8.2010 UNDER RULE 46A ALONG WITH THE ABOVE ANNEXURES AS ADDITIONAL EV IDENCE TO BE ADMITTED. THEREFORE, SINCE THE APPLICATION UNDER RULE 46A HAS A DIRECT BEARING ON THE INCOME ESTIMATED BY THE ASSESSING OFFICER, THE SAME WERE REMANDED TO THE ASSESSING OF FICER FOR HIS COMMENTS. SINCE THE ASSESSMENT WAS COMPLETED EX PARTE U/S 144, THE ASSESSING OFFIC ER WAS ALSO ASKED TO MAKE NECESSARY ENQUIRIES AND EXAMINE THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND TO SUBMIT A REPORT, THE I.T.A NO.229/DEL./2012 (A.Y. : 2007-08) 4 ASSESSING OFFICER VIDE LETTER DATED 8.3.2011, SUBMI TTED HIS REPORT. 4. ASSESSING OFFICER SUBMITTED REPORT, COPY O F WHICH WAS PROVIDED TO THE ASSESSEE, WHO FILED REJOINDER AND CIT(A) WHILE REPRODUCING THE EX TRACT FROM THE REJOINDER FILED BY THE ASSESSEE AS WELL AS REMAND REPORT OF HE ASSESSING OFFICER HAS CONCLUDED TO DELETE THE IMPUGNED ADDITION AS PER PARAS.6,7 & 8 OF HIS ORDER AS UNDER: 6. I HAVE GONE THROUGH THE WRITTEN SUBMISSION S AND THE REMAND REPORT AND CAREFULLY CONSIDERED THE FACTS AND CIRCUMSTANCES OF THE CASE. IN ORDER TO DELIVER JUSTICE, I WOULD FIRST ADDRESS THE ISSUE OF ADMISSIBILITY OF T HE ADDITIONAL EVIDENCE UNDER SUB-SECTION (1) OF RULE 46A OF THE IT RULES. IN THE MATTER OF A DMISSION OF ADDITIONAL EVIDENCE, THE APPELLANT HAS TO SHOW THE FOLLOWING: I) THAT THE ASSESSING OFFICER HAD REFUSED TO ADMIT THE EVIDENCE, ALTERNATIVELY. II) HE WAS PREVENTED BY SUFFICIENT CAUSE FOR PRODU CING THE EVIDENCE BEFORE THE ASSESSING OFFICER. III) THAT EVIDENCE WAS RELEVANT TO THE GROUNDS OF APPEAL AND IV) THAT THE ASSESSING OFFICER DID NOT AFFORD OR G IVE HIM SUFFICIENT OPPORTUNITY IN REGARD THERE TO. FIRSTLY, THE REASONS GIVEN BY THE APPELLANT I.E. P RE-ENGAGEMENT FOR NOT COMPLYING THE PROVISIONS OF SECTION 139(4B) ARE NOT SATISFACTORY AND NO REASONS WERE FORWARDED FOR NON- APPEARANCE WHICH CAN BE TERMED AS 'UNAVOIDABLE CIRC UMSTANCES'. FURTHER, THE AR HAS NOT PUT FORTH ANY SATISFACTORY EXPLANATION TO SHOW THAT THE FAILURE TO COMPLY WITH STATUTORY NOTICES ISSUED BY THE ASSESSING OFFICER WAS NOT WIL LFUL. THERE IS NOT A SINGLE REASONABLE CAUSE PUT FORWARD BY THE AR OF THE APPELLANT THAT H E WAS PREVENTED BY CERTAIN VALID AND UNTOWARD CAUSE FOR NOT PRODUCING EVIDENCE THEN AND SOUGHT TO PRODUCE NOW. HOWEVER, SINCE THE AR OF THE APPELLANT FURNISHED AUDITED BAL ANCE-SHEET, INCOME AND EXPENDITURE ACCOUNT, WHICH IS RELEVANT TO THE GROUNDS OF APPEAL AND HAS DIRECT BEARING ON THE INCOME OF THE APPELLANT, THE SAME IS ADMITTED FOR CONSIDERATI ON IN THE LIGHT OF THE REMAND REPORT OF THE ASSESSING OFFICER. 7. ON PERUSAL, I FIND THAT THE DEFECTS NOTED BY THE ASSESSING OFFICER WHILE EXAMINING THE BOOKS OF ACCOUNTS OF THE APPELLANT HAVE BEEN EXPLAI NED IN HIS REPLY BY THE APPELLANT. I ALSO FIND THAT THE ASSESSING OFFICER IN HIS REMAND REPORT DID NOT CONTROVERT THE SUBMISSIONS MADE BY THE APPELLANT REGARDING THE REC EIPTS OF ANY VOLUNTARY CONTRIBUTIONS IN EXCESS OF RS.20,000/-. THE ASSESSI NG OFFICER HAS ALSO NOT GIVEN ANY BASIS FOR ESTIMATING THE INCOME OF THE APPELLANT AT RS.50 LAKHS. IN VIEW OF THE FACTS ABOVE, THE ADDITION MADE BY THE ASSESSING OFFICER A MOUNTING TO RS.50 LAKHS IS HEREBY I.T.A NO.229/DEL./2012 (A.Y. : 2007-08) 5 DELETED, AND THE ASSESSING OFFICER IS DIRECTED TO COMPUTE TH E INCOME OF THE APPELLANT FOR THE YEAR UNDER CONSIDERATION ON THE BASIS OF AU DITED INCOME AND EXPENDITURE ACCOUNT OF THE APPELLANT. 8. THE APPELLANT ALSO HAS CLAIMED FOR EXEMPTION U/ S 13A OF THE IT ACT 1961. ON PERUSAL AND CONSIDERATION, I FIND THAT THE EXEMPTION U/S 13 A IS NOT AVAILABLE TO THE APPELLANT AS IT DID NOT SATISFY THE STIPULATED CONDITIONS LAID D OWN FOR AVAILING EXEMPTION U/S 13A. SECTION 13A STIPULATED AS UNDER: I) THE POLITICAL PARTY KEEPS AND MAINTAINS SUCH BOOKS OF ACCOUNT S AND OTHER DOCUMENTS AS WILL ENABLE THE ASSESSING OFFICER TO PROPERLY DEDUCE ITS IN COME THEREFROM, II) WHERE VOLUNTARY CONTRIBUTIONS FROM A PERSON EXCEEDS RS. 20, 00 0/-, IT KEEPS AND MAINTAINS A RECORD OF SUCH CONTRIBUTIONS, ALONG WITH TH E NAME AND ADDRESS OF THE PERSONS WHO HAS MADE SUCH CONTRIBUTIONS, III) THE ACCOUNTS OF THE POLITICAL PARTY ARE AUDITED BY A C HARTERED ACCOUNTANT, IV] THE TREASURY OF SUCH POLITICAL PARTY, OR ANY PERSON AUT HORIZED BY THE POLITICAL PARTY ON THIS BEHALF MUST SUBMIT A REPORT UNDER SECTION 29(C)(3) OF THE REPRESENTATION OF PEOPLE ACT, 1951, FOR RELEVANT FINANCIAL YEAR. ON PERUSAL, I FIND THAT ALTHOUGH THE APPELLANT S ATISFIED THE CONDITIONS LAID DOWN AT (I), (II) AND (III), IT DID NOT SATISFY THE CONDITI ONS ENACTED IN CLAUSE (IV) MENTIONED ABOVE. IT IS CLEAR FROM CLAUSE (IV) THAT IF A REPOR T UNDER SECTION 29C (3) OF R.P. ACT 1951 IS NOT SUBMITTED, IT CANNOT AVAIL EXEMPTION UN DER THIS SECTION FOR SUCH FINANCIAL YEAR, IN WHICH SUCH REPORT IS NOT FURNISH ED. IN VIEW THIS DISCUSSION, EXEMPTION U/S 13A IS NOT AVAILABLE TO THE APPELLANT FOR THE YEAR UNDER CONSIDERATION. 5. AGGRIEVED BY SUCH ORDER OF CIT(A), DEPARTMENT HA S COME UP IN APPEAL AND IT IS THE MAIN CONTENTION THAT THE ASSESSEE HAS FAILED TO FUR NISH THE RETURN AS WELL AS THE EVIDENCE TO PROVE INCOME/EXPENDITURE REQUIRED TO BE DECLARED BY HIM AND COULD NOT FULFIL CONDITIONS AS LAID DOWN U/S 13A OF THE ACT. THEREF ORE, THERE WAS NO OCCASION FOR CIT(A) TO DELETE THE ADDITION MADE BY THE ASSESSING OFFICE R WHOSE ACTION IS NOT ONLY INVALID AND VIOLATIVE OF SPECIFIC PROVISIONS OF LAW AS CONTAINE D IN RULE 46A, BUT ALSO AGAINST SET PRINCIPLES AS LAID DOWN BY VARIOUS DECISIONS INCLUD ING THE RATIO OF DECISION IN THE CASE OF CIT VS. MANISH BUILDWELL PVT. LTD., REPORTED IN (20 12) 204 TAXMAN 106. THEREFORE, IN ALL FAIRNESS, THE ORDER OF LD.CIT(A) BE SET ASIDE A ND MATTER BE RESTOREDF TO THE ASSESSING OFFICER FOR RECONSIDERATION. I.T.A NO.229/DEL./2012 (A.Y. : 2007-08) 6 6. LD.COUNSEL APPEARED ON BEHALF OF THE ASSESSEE AN D SUBMITTED THAT NO DOUBT ALL MATERIAL WAS FURNISHED BEFORE CIT(A) WHO HAS ALSO C ONSIDERED THE SAME WHICH WAS IN FACT NOT FILED BEFORE THE ASSESSING OFFICER AND IN CASE MATTER IS RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER FOR RE-CONSIDERATION, HE SHAL L FULLY COOPERATE AND FILE ALL MATERIAL AND DETAILS BEFORE ASSESSING OFFICER ALSO IN ORDER TO SUBSTANTIATE HIS CLAIM FOR NON- TAXABILITY. SO, THE MATTER CAN BE RESTORED BACK ON THE FILE OF THE ASSESSING OFFICER AS PLEADED BY THE LD.DR. 7. AFTER HAVING HEARD BOTH THE SIDES AND CONSIDERIN G THE MATERIAL ON RECORD, WE FIND THAT DESPITE HAVING GIVEN OPPORTUNITIES TO THE ASSE SSEE THERE WAS NO COMPLIANCE TO THE VARIOUS NOTICES ISSUED TO THE ASSESSEE AND EX-PART E ORDER HAS BEEN PASSED WHEREAS ALL MATERIAL AND EVIDENCE HAS BEEN FURNISHED BEFORE CIT (A), WHO WITHOUT APPROPRIATELY COMPLYING WITH THE REQUIREMENT OF RULE 46A OF THE I .T. RULES, ADMITTED SUCH ADDITIONAL EVIDENCE AND AFTER HAVING ADMITTED SUCH ADDITIONAL EVIDENCE, NO FURTHER OPPORTUNITY HAS BEEN GIVEN TO THE ASSESSING OFFICER TO VERIFY SUCH MATERIAL AND EVIDENCE. THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. MA NISH BUILDWELL PVT. LTD. (SUPRA) HAS HELD AS UNDER: U/S 250(4), THE CIT (A) HAS THE POWER TO DIRECT EN QUIRY AND CALL FOR EVIDENCE FROM THE ASSESSEE. UNDER RULE 46A, THE ASSESSEE HAS THE RIGHT TO ASK F OR THE ADMISSION OF ADDITIONAL EVIDENCE. IF THE CIT (A) EXERCISES HIS POWERS U/S 250(4) TO CALL FOR ADDITIONAL EVIDENCE, THE AO NEED NOT BE GIVEN AN OPPORTUNITY TO SHOW-CAUSE. HOWEVER, IF THE CIT (A) ACTS ON AN APPLICATION UNDER RULE 46A, THEN THE REQUIREMENT OF GIVING THE AO AN OPPORTUNITY AS PER RULE 46A(3) IS MANDATORY . THE ARGUMENT THAT IN ALL CASES WHERE ADDITIONAL E VIDENCE IS ADMITTED, THE CIT (A) SHOULD BE CONSIDERED TO HAVE EXERCISED HIS POWERS U /S 250(4) IS NOT ACCEPTABLE AS IT WILL RENDER RULE 46A REDUNDANT . ON FACTS, AS THE ASSESSEE HAD PRODUCED THE EVIDEN CE, THE CIT (A) OUGHT TO HAVE FOLLOWED RULE 46A(3) AND REMANDED THE EVIDENCE TO THE AO FOR COMMENTS AND VERIFICATION (MATTER REMANDED TO THE CIT(A). 8. IN VIEW OF FACTS, CIRCUMSTANCES AND MATERIAL ON RECORD AS WELL AS RATIO OF THE ABOVE DECISION, WE ARE OF HE VIEW THAT IT WOULD MEET THE ENDS OF JUSTICE IF THE ORDER OF CIT(A) IS I.T.A NO.229/DEL./2012 (A.Y. : 2007-08) 7 SET ASIDE AND THE MATTER IS RESTORED BACK ON THE FI LE OF THE ASSESSING OFFICER FOR RE- CONSIDERATION OF THE ISSUE AFRESH AFTER GIVING DUE OPPORTUNITY TO THE ASSESSEE. WE HOLD AND DIRECT ACCORDINGLY. 9. AS A RESULT, THE APPEAL OF THE DEPARTMENT GETS A CCEPTED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 21.09.2012. SD/- SD/- (T.S. KAPOOR) ACCOUNTANTMEMBER (U.B.S. BEDI) JUDICIAL MEMBER DATED : SEPT. 21, 2012 SKB COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A)-XXVI, NEW DELHI. 5. CIT(ITAT) DEPUTY REGISTRAR, ITAT