Emergent Ventures India Pvt. Ltd., Gurgaon V. ACIT, Gurgaon

ITA 2459/DEL/2016

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 6785 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-10-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 03-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Rejection of books of accounts; Opportunity of being heard; Principle of natural justice; Additional evidence; Set aside
• Section: 142(1); 14A; 143(2); 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: C, NEW DELHI BEFORESHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER ITA NO.2459/DEL/2016 ASSESSMENT YEAR: 2011-12 M/S. EMERGENT VENTURES INDIA PVT. LTD., 11 TH FLOOR, VATIKA PROFESSIONAL POINT, SECTOR-66, GOLF COURSE EXTENSION ROAD, GURGAON VS. ACIT, RANGE-1, GURGAON PAN :AAACE6881G (APPELLANT) (RESPONDENT) ORDER PERO.P. KANT, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST OR DER DATED 17/02/2016 PASSED BY THE LEARNED COMMISSIONER OF IN COME-TAX (APPEALS)-I, GURGAON [IN SHORT THE CIT(A)] FOR AS SESSMENT YEAR 2011-12 RAISING FOLLOWING GROUNDS: APPELLANT BY SHRI TARANDEEP SINGH, ADV. RESPONDENT BY SHRI RAGHUNATH, SR.DR DATE OF HEARING 28.08.2019 DATE OF PRONOUNCEMENT 18.10.2019 2 ITA NO.2459/DEL/2016 1. THAT THE ORDER PASSED BY THE LEARNED CIT (A) IS ARBITRARY AND BASED ON CONJECTURES AND SURMISES. 2. THAT THE LEARNED CIT(A) HAS GONE WRONG IN NOT P ERMITTING THE ASSESSEE TO FILE ADDITIONAL EVIDENCE UNDER RULE 46A OF THE INCOME TAX RULES 1962. 3. THAT THE LEARNED CIT (A) DID NOT APPRECIATE THE FACT THAT THE FIRST THREE ALLEGED NOTICES WERE NOT SERVED UPON THE ASSE SSEE. 4. THAT THE LEARNED ASSESSING OFFICER AS WELL AS C IT (A) HAS ERRED IN LAW AND ON FACTS OF THE CASE ARBITRARILY AND ILLEGA LLY AND MISINTERPRETED PROVISIONS OF INCOME TAX ACT AND RUL ES WHILE MAKING ADDITION OF 2,89,82,566/- 5. THAT THE LEARNED AO AS WELL AS CIT (A) HAVE GON E WRONG IN CONSIDERING NET PROFIT RATE AT 25% OF THE TURNOVER WITHOUT ANY JUSTIFICATION OR BASIS. 6. THAT THE LEARNED AO AS WELL AS CIT (A) HAVE ARB ITRARILY AND UNWARRANTEDLY INVOKED THE PROVISIONS OF SECTION 145 (3) AND 144 OF THE INCOME TAX ACT 1961 WITHOUT APPRECIATING THE IS SUE AND FAILED TO AFFORD REASONABLE OPPORTUNITY OF BEING HEARD. THERE BY BREACHING THE NATURAL LAW OF JUSTICE. 7. WITHOUT PREJUDICE TO OUR RIGHTS, THE LEARNED AO AS WELL AS CIT (A) HAVE GONE WRONG IN MAKING THE FOLLOWING THREE ADDIT IONS: (A) DISALLOWANCE OF 1353253 UNDER SECTION 14A OF TH E INCOME TAX ACT. (B) DISALLOWANCE OF 5020246 UNDER SECTION 40 (A) (I ) OF THE INCOME TAX ACT (C) DISALLOWANCE OF RS. 107900000 U/S 366666(1 )(VV A) OF THE INCOME TAX ACT. 8. THAT THE APPELLANT CRAVES THE RIGHT TO ADD, ALT ER, AMEND ANY OR ALL OF THE GROUNDS OF APPEAL. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSE SSEE FILED RETURN OF INCOME ON 30/09/2011, DECLARING TOTAL INC OME OF RS.26,45,849/-. THE CASE WAS SELECTED FOR THE SCRUT INY AND NOTICE UNDER SECTION 143(2) OF THE INCOME-TAX ACT, 1961 (I N SHORT THE ACT) WAS ISSUED AND SERVED UPON THE ASSESSEE, HOWE VER, NONE ATTENDED IN COMPLIANCE. THE ASSESSING OFFICER HAS N OTED THAT, THE 3 ITA NO.2459/DEL/2016 SUBSEQUENT NOTICE UNDER SECTION 142(1) ALONG WITH Q UESTIONNAIRE WAS ALSO NOT COMPLIED. SUBSEQUENTLY, AUTHORISED REP RESENTATIVE OF THE ASSESSEE ATTENDED, HOWEVER, HE ALSO FILED PA RT REPLY OF THE QUERIES RAISED. VARIOUS ADJUSTMENT SOUGHT BY HIM WE RE GRANTED, HOWEVER, NO COMPLAINTS WAS MADE. 3. ACCORDING TO THE ASSESSING OFFICER, THE ASSESSEE W AS ASKED TO PRODUCE BOOKS OF ACCOUNTS ALONG WITH BILLS/VOUCH ERS FOR VERIFICATION OF THE FINANCIAL AFFAIRS AND EXPENSES CLAIMED IN THE PROFIT AND LOSS ACCOUNT. IN VIEW OF THE NON-COMPLIA NCE, THE ASSESSING OFFICER INVOKED SECTION 145(3) OF THE ACT AND REJECTED THE BOOKS OF ACCOUNTS AND ESTIMATED NET PROFIT AT T HE RATE OF 25% OF TOTAL TURNOVER. THE ASSESSING OFFICER ALSO MADE OTHER DISALLOWANCES AND ASSESSED THE TOTAL INCOME AT 3,16,28,420/-IN THE ASSESSMENT ORDER PASSED ON 27.02.2014. 3.1 AGGRIEVED, THE ASSESSEE FILED DETAILS OF ALL EXPEN SES CLAIMED AND PRODUCED COMPLETE BOOKS OF ACCOUNTS BEFORE THE LD. CIT(A) AS ADDITIONAL EVIDENCES. THE LD. CIT(A) FORWARDED THE ADDITIONAL EVIDENCES TO THE ASSESSING OFFICER CALLING FOR ANY OBJECTION TO THE ADMISSION OF THE ADDITIONAL EVIDENCES AS WELL AS CA LLING FOR A REMAND ON MERIT OF THE ADDITION. THE LD. ASSESSING OFFICER OBJECTED ADMISSION OF THE ADDITIONAL EVIDENCES ON T HE GROUND THAT SUFFICIENT OPPORTUNITY WAS ALLOWED TO THE ASSESSEE, WHICH HAS NOT BEEN AVAILED AND, THEREFORE, NO SECOND INNING SHOUL D BE ALLOWED TO THE ASSESSEE. THE LD. CIT(A) IN VIEW OF THE REMA ND REPORT OF THE ASSESSING OFFICER AND SUBMISSION OF THE ASSESSEE, R EJECTED THE REQUEST OF ADMISSION OF THE ADDITIONAL EVIDENCE. AC CORDING TO THE LD. CIT(A), THE ASSESSEE DID NOT FULFIL THE REQUIRE MENT FOR 4 ITA NO.2459/DEL/2016 ADMITTING ADDITIONAL EVIDENCES. THE LEARNED CIT(A) OBSERVED THAT FOR ADMITTING THE ADDITIONAL EVIDENCES, FOLLOWING C IRCUMSTANCES SHOULD EXIST: A) WHERE THE A. O. HAS REFUSED TO ADMIT EVIDENCE WHICH OUGHT TO HAVE BEEN ADMITTED; OR B) WHERE THE APPELLANT WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING THE EVIDENCE WHICH-HE WAS CALLED UPON TO PRODUCE BY THE A.O; OR C) WHERE THE APPELLANT WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING BEFORE THE A.O. ANY THE EVIDENCE WHICH IS RELEVANT TO ARTY GROUND OF APPEAL; OR D) WHERE THE A.O. HAS MADE THE ORDER APPEALED AGAI NST WITHOUT GIVING SUFFICIENT OPPORTUNITY TO THE APPELLANT TO ADDUCE E VIDENCE RELEVANT TO ANY GROUND OF APPEAL. AS FAR AS THE CIRCUMSTANCES OF THE CASE ARE CONCERN ED, IT IS STATED THAT THE ASSESSE WAS NEVER REFUSED TO ADMIT THE EVI DENCES PRODUCED BY HIM NOR THERE CERTAIN CIRCUMSTANCES WHICH PREVEN TED HIM TO PRODUCE THE EVIDENCE WHICH HE WAS CALLED UPON AS NO SUCH COMMUNICATION HAS BEEN RECEIVED IN THIS OFFICE. THE REFORE, ADDITIONAL EVIDENCES SHOULD NOT BE CONSIDERED IN VIEW OF THE C IRCUMSTANCES AND RULE 46A OF THE INCOME TAX RULES, 1962. 3.2 THE LEARNEDCIT(A) HELD THAT NONE OF THE CIRCUMSTAN CES ABOVE EXISTS IN THE CASE OF THE ASSESSEE AND ACCORDINGLY, HE REFERRED TO VARIOUS JUDICIAL DECISIONS AND DECLINED TO ADMIT THE ADDITIONAL EVIDENCES. 4. BEFORE US, IN THE GROUNDS RAISED ONE OF THE MAIN G ROUNDS IS AGAINST NOT ADMITTING ADDITIONAL EVIDENCES BY THE L EARNED CIT(A) UNDER RULE 46A OF THE INCOME-TAX RULES. THE LD. COU NSEL OF THE ASSESSING SUBMITTED THAT FIRST THREE NOTICES ISSUED BY THE ASSESSING OFFICER WERE NOT SERVED UPON THE ASSESSEE AT ALL, WHICH WERE EITHER NOT ISSUED OR ISSUED IT WRONG ADDRESS A ND WERE WRITTEN BACK AND WERE LYING IN THE RECORD FILE OF T HE ASSESSING 5 ITA NO.2459/DEL/2016 OFFICER. IT WAS SUBMITTED THAT THE ASSESSEE ATTENDE D THE HEARING EXCEPT THE LAST ONE I.E. 18 TO 2014. ACCORDING TO T HE LD. COUNSEL THE INCOME-TAX AUTHORITIES ARE REQUIRED TO COMPLY T HE PRINCIPLE OF NATURAL JUSTICE AND THE LEARNEDCIT(A) MIGHT BE DIREC TED TO ADMIT THE ADDITIONAL EVIDENCES AND DECIDE THE ADDITION ON MERIT. 5. THE LD. DR, ON THE OTHER HAND, OBJECTED TO THE PRO POSAL OF THE LD. COUNSEL OF THE ASSESSEE. 6. IN THE REJOINDER, THE LD. COUNSEL OF THE ASSESSEE S UBMITTED THAT EVEN NO SEPARATE ORDER FOR NOT ADMITTING ADDIT IONAL EVIDENCES WAS PASSED BY THE LD.CIT(A) AND THE ASSESSEE WAS NO T HEARD ON MERIT OF THE ADDITIONS ALSO. 7. WE HAVE HEARD THE RIVAL SUBMISSION OF THE PARTIES AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE LD. CI T(A) HAS NOT ADMITTED THE ADDITIONAL EVIDENCES HOLDING THAT: - THE ASSESSING OFFICER DID NOT REFUSE TO ADMIT ANY E VIDENCE; - THE ASSESSEE WAS NOT PREVENTED BY SUFFICIENT CAUSE FOR PRODUCING THE EVIDENCE, WHICH IS RELEVANT TO ANY OF THE GROUND OF THE APPEAL; AND - THE ASSESSING OFFICER PROVIDED SUFFICIENT OPPORTUNI TY TO THE ASSESSEE TO ADDUCE THE EVIDENCES 8. BEFORE US, THE LD. COUNSEL OF THE ASSESSEE SUBMITT ED THAT FIRST THREE NOTICES ISSUED BY THE ASSESSING OFFICER WERE NEVER SERVED UPON THE ASSESSEE AND THIS FACT WAS AVAILABL E ON THE RECORD OF THE ASSESSING OFFICER. SUBSEQUENTLY, THOU GH THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE ATTENDED, HOWEVER, HE COULD NOT PRODUCE BOOKS OF ACCOUNTS AND BILLS AND V OUCHERS BEFORE THE ASSESSING OFFICER. HE SUBMITTED THAT ASS ESSEE CANNOT 6 ITA NO.2459/DEL/2016 BE FAULTED FOR NON-SERIOUSNESS ON THE PART OF THE A UTHORISED REPRESENTATIVE. THE LD. COUNSEL OF THE ASSESSEE HAS PRAYED BEFORE US THAT ASSESSEE IS WILLING TO PRODUCE BOOKS OF ACC OUNTS ALONG WITH BILLS AND VOUCHERS FOR VERIFICATION OF THE EXP ENSES AND THUS, ONE MORE OPPORTUNITY MAY BE GRANTED IN VIEW OF THE PRINCIPLE OF NATURAL JUSTICE. 8.1 WE FIND THAT AS FAR AS NON-SERVICE OF FIRST THREE NOTICES IS CONCERNED, THE LD.DR HAS ALSO NOT DISPUTED THE FIN DING OF THE FACT. THE CONTENTION OF THE LD. DR HAS THAT ONCE, T HE HEARING WAS ATTENDED BY THE AUTHORISED REPRESENTATIVE, HE WAS R EQUIRED TO COMPLY THE QUERIES RAISED BY THE ASSESSING OFFICER AND WAS REQUIRED TO PRODUCE BOOKS OF ACCOUNTS/BILL VOUCHERS ETC. 8.2 IN OUR OPINION, THE ASSESSEE WAS PREVENTED FROM PR ODUCING THE BOOKS OF ACCOUNTS, BILLS AND VOUCHERS PARTLY DU E TO NON- SERVICE OF THE NOTICES AND PARTLY DUE TO NON-SERIOU SNESS ON THE PART OF THE AUTHORISED REPRESENTATIVE DEALING WITH THE ASSESSMENT. IN SUCH CIRCUMSTANCES, ONE OF THE CONDI TIONS FOR ADMITTING THE ADDITIONAL EVIDENCES UNDER RULE 46A O F THE INCOME TAX RULES, 1962 IS FULFILLED BY THE ASSESSEE. IN TH E INTEREST OF SUBSTANTIAL JUSTICE, THE ASSESSEE SHOULD BE PROVIDED OPPORTUNITY TO PRODUCE BOOKS OF ACCOUNTS, BILLS AND VOUCHERS ET C. FOR VERIFICATION OF THE CLAIM OF EXPENSES AND SHOULD NO T BE PUNISHED BY WAY OF SUSTAINING THE ADDITION WITHOUT VERIFICAT ION. 8.3 ACCORDINGLY, WE SET ASIDE THE FINDING OF THE LEARNE DCIT(A) AND DIRECT HIM TO ADMIT THE ADDITIONAL EVIDENCES IN THE FORM OF BOOKS OF ACCOUNTS, BILLS AND VOUCHERS AND ANY OTHER DOCUMENTS AND DECIDE THE ADDITIONS MADE BY THE ASSESSING OFFI CER ON MERIT. 7 ITA NO.2459/DEL/2016 THE GROUNDS OF THE APPEAL ACCORDINGLY ALLOWED FOR T HE STATISTICAL PURPOSES. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOW ED FOR THE STATISTICAL PROPERTIES. ORDER IS PRONOUNCED IN THE OPEN COURT ON 18 TH OCTOBER, 2019. SD/- SD/- (SUDHANSHU SRIVASTAVA) (O.P. KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 18 TH OCTOBER, 2019. RK/-(D.T.D.) COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI