ITO 15(1)(1), MUMBAI V. RIDDHI INFRASTRUCTURE P. LTD, MUMBAI

ITA 262/MUM/2011

• Counselvise Citation: 26219914 RSA 2011
• Duration Of Justice: 2 year(s) 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2013
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 18-09-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 11-01-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SALMAN KHAN
• Keywords: Additional evidence
• Section: 68; 144

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D MUMBAI . . , , BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI RAJENDRA, ACCOUNTANT MEMBER . / ITA NO.262/MUM/2011 ' ' ' ' # # # # / ASSESSMENT YEAR 2005-06 INCOME TAX OFFIER-1(3)(1), ROOM NO.541, AAYKAR BHAVAN, MUMBAI 400020 ' ' ' ' / VS. M/S. RIDDHI INFRASTRUCTURE PVT. LTD., 308, SHREYAS CHAMBERS, 175, D.N.ROAD, FORT, MUMBAI 400020 $ ./ % ./ PAN/GIR NO. : AACCR 7537G ( $& / APPELLANT ) .. ( '($& / RESPONDENT ) $& ) / APPELLANT BY: SHRI SALMAN KHAN '($& * ) / RESPONDENT BY : NONE ' * + / DATE OF HEARING : 18/09/2013 ,-# * + / DATE OF PRONOUNCEMENT : 18/09/2013 . / O R D E R PER I.P.BANSAL, J.M: THIS IS AN APPEAL FILED BY THE REVENUE. IT IS DIR ECTED AGAINST THE ORDER PASSED BY LD. CIT(A)-1,MUMBAI DATED 28/09/2010 FOR ASSESSMENT YEAR 2005- 06. THE GROUNDS OF APPEAL READ AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, AND IN LAW THE CIT(A) ERRED IN DIRECTING THE ADDITION OF RS.46.52 LACS U/S. 68 MADE BY THE A.O. 1.1. THE LD. CIT(A) HAS FURTHER ERRED IN ADMITTING ADDITIONAL EVIDENCE IN VIOLATION TO RULE 46A. . / ITA NO.262/MUM/2011 ' ' ' ' # # # # / ASSESSMENT YEAR 2005-06 2 2. THE LD. CIT(A) HAS FURTHER ERRED IN DELETING THE ADDITION OF DIVIDEND INCOME OF RS.46,8001- AND SERVICE ACTIVITY INCOME OF RS.98,50 01-. 2.1. THE LD. CIT(A) HAS FURTHER ERRED IN ADMITTING ADDITIONAL EVIDENCE IN VIOLATION TO RULE 46A. 2. THE IMPUGNED ASSESSMENT ORDER IS DATED 17/12/2 007 AND PASSED UNDER SECTION 144 OF THE INCOME TAX ACT, 1961(THE A CT), WHEREIN INCOME OF THE ASSESSEE HAS BEEN ASSESSED AT RS.48,88,269/- AGAINS T RETURNED INCOME OF RS.18,357/-. THE MAIN ADDITION IS IN RESPECT OF UN EXPLAINED LOANS AMOUNTING TO RS.46,52,969/-. THE FIRST GRIEVANCE OF THE ASSE SSEE BEFORE LD. CIT(A) WAS REGARDING PASSING OF EX-PARTE ASSESSMENT ORDER. L D. CIT(A) HAS HELD THAT AO WAS RIGHT IN PASSING ORDER UNDER SECTION 144 OF THE ACT. ON THE ISSUE OF ADDITION OF RS.46,52,969/- IT WAS SUBMITTED BY THE ASSESSEE THAT NONE OF THE LOANS WERE UN-EXPLAINED AND UNPROVED. TO SUPPORT SUCH CONTENTION THE ASSESSEE HAS FILED COPY OF BANK ACCOUNT OF THE IN DIVIDUAL SHAREHOLDERS WHO HAD SOLD SHARES TO THE ASSESSEE COMPANY AND AFTER C ONSIDERING ALL THE DETAILS OF THE TRANSACTION IN CONNECTION WITH PURCHASE OF SHA RES, WHICH ACCORDING TO THE FINDINGS RECORDED BY LD. CIT(A) ARE DULY RECORDED IN THE BOOKS OF ACCOUNTS AS WELL AS BANK ACCOUNT OF THE INDIVIDUALS FROM WHOM T HE SHARES WERE PURCHASED BY THE ASSESSEE COMPANY. IT IS ALSO FOUND BY LD. CIT(A) THAT THE ENTIRE LOAN OF RS.46,46,500/- WAS OBTAINED BY THE ASSESSEE COMPANY FROM SHRI SHIRISH OSWAL (HUF) AND THE SAME WAS UTILIZED BY THE ASSESS EE COMPANY FOR PAYMENT TO DIFFERENT PERSONS FROM WHOM THE SHARES WERE PURC HASED. THUS, LD. CIT(A) HAS ARRIVED AT A CONCLUSION THAT THE ASSESSEE COMPA NY HAS EXPLAINED THE SOURCE OF PURCHASE OF SHARES WHICH WAS LOAN TAKEN B Y THE ASSESSEE FROM SHRI SHIRISH OSWAL (HUF). LD. CIT(A) ALSO RELIED UPON T HE CONFIRMATION OBTAINED BY THE ASSESSEE FROM THE SAID PERSON. ACCORDINGLY, IT IS HELD THAT AO WAS NOT JUSTIFIED IN MAKING THE ADDITION. . / ITA NO.262/MUM/2011 ' ' ' ' # # # # / ASSESSMENT YEAR 2005-06 3 3. NOTICE OF HEARING WAS SENT TO THE ASSESSEE THROU GH RPAD. HOWEVER, NONE WAS PRESENT ON BEHALF OF ASSESSEE. WE, THERE FORE, PROCEED TO DECIDE THE PRESENT APPEAL EX-PARTE QUA THE ASSESSEE ON MERITS. 4. LD. DR REFERRED TO THE AFOREMENTIONED FACTS. HE PLEADED THAT ASSESSEE DID NOT APPEAR BEFORE THE AO. HE SUBMITTED THAT AD DITIONAL EVIDENCES WERE FILED BY THE ASSESSEE BEFORE LD. CIT(A). LD. CIT(A ) DID NOT ADHERE TO RULE 46A OF THE INCOME TAX RULES, 1962. THEREFORE, THE DELETIO N MADE BY LD. CIT(A) IS AGAINST THE PROVISION OF LAW AND HIS ORDER SHOULD BE SET ASIDE AND THE ADDITION MADE BY AO SHOULD BE CONFIRMED. 5. WE HAVE HEARD LD. DR AND WE HAVE ALSO CAREFULLY GONE THROUGH THE ASSESSMENT ORDER AS WELL AS ORDER PASSED BY LD. CIT (A). THE ASSESSEE DID NOT APPEAR BEFORE AO, THEREFORE, THE AO HAS PASSED ASSE SSMENT ORDER UNDER SECTION 144 OF THE ACT. LD. CIT(A) HAS UPHELD SUCH ACTION OF THE AO. THEREFORE, DETAILS WERE FILED BY THE ASSESSEE FOR THE FIRST TIME BEFORE LD. CIT(A). WHILE CONSIDERING THE ADDITION OF RS.46,52,969/- THE ADDI TIONAL EVIDENCES WHICH WERE FILED BY THE ASSESSEE BEFORE LD. CIT(A) IS REFERRED TO IN PARA 6.2 OF THE ORDER PASSED BY LD. CIT(A), WHEREIN IT HAS BEEN WRITTEN T HAT ASSESSEE ALONG WITH WRITTEN SUBMISSION HAS FILED COPY OF BANK ACCOUNT O F INDIVIDUAL SHARE HOLDERS WHO SOLD THEIR SHARES TO THE ASSESSEE COMPANY AND F ROM THOSE DETAILS LD. CIT(A) HAS RECORDED HIS FINDINGS AND DELETED THE AD DITION. IN THE ORDER PASSED BY LD. CIT(A) NOWHERE IT HAS BEEN MENTIONED THAT T HOSE DOCUMENTS WHICH WERE FILED BY THE ASSESSEE WERE IN PURSUANCE TO RUL E-46A. RULE - 46A(1) PROVIDES THAT ASSESSEE SHALL NOT BE ENTITLED TO PRO DUCE BEFORE LD. CIT(A) ANY EVIDENCE, WHETHER ORAL OR DOCUMENTARY, OTHER THAN T HE EVIDENCE PRODUCED BY HIM DURING THE COURSE OF PROCEEDINGS BEFORE THE AO EXCEPT IN CERTAIN CIRCUMSTANCES WHICH ARE ENUMERATED BELOW: (A) WHERE THE [ASSESSING OFFICER] HAS REFUSED TO ADMIT EVIDENCE W HICH OUGHT TO HAVE BEEN ADMITTED ; OR . / ITA NO.262/MUM/2011 ' ' ' ' # # # # / ASSESSMENT YEAR 2005-06 4 (B) WHERE THE APPELLANT WAS PREVENTED BY SUFFICIEN T CAUSE FROM PRODUCING THE EVIDENCE WHICH HE WAS CALLED UPON TO PRODUCE BY THE [ASSESSING OFFICER] ; OR (C) WHERE THE APPELLANT WAS PREVENTED BY SUFFICIEN T CAUSE 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 APPEALED AGA INST WITHOUT GIVING SUFFICIENT OPPORTUNITY TO THE APPELLANT TO A DDUCE EVIDENCE RELEVANT TO ANY GROUND OF APPEAL. SUB-RULE(2) OF RULE 46A PROVIDES THAT NO EVIDENCE S HALL BE ADMITTED UNDER SUB- RULE(1) UNLESS COMMISSIONER (APPEALS) RECORDS IN W RITING THE REASONS FOR ITS ADMISSION. SUB-RULE(3) PROVIDES THAT CIT(A) SHAL L NOT TAKE INTO ACCOUNT ANY EVIDENCE PRODUCED UNDER SUB-RULE (1) UNLESS AO HAS BEEN ALLOWED A REASONABLE OPPORTUNITY TO EXAMINE THE EVIDENCE OR DOCUMENTS OR TO CROSS EXAMINE THE WITNESS PRODUCED BY THE ASSESSEE OR TO PRODUCE ANY EVIDENCE OR DOCUMENTS OR ANY WITNESS IN REBUTTAL OF THE ADDITIONAL EVIDENCE PRODUCED BY THE ASSESSEE. HOWEVER, ACCORDING TO SUB-RULE (4) PROVISIONS OF SUB-RULE(1),(2) & (3) WILL NOT BE APPLICABLE WHERE LD. CIT(A) HIMSELF DIRECT THE PRODUCTION OF ANY DOCUMENT, OR THE EXAMINATION OF ANY WITNESS, TO ENABLE HIM TO DISPOSE OF THE APPEAL, OR FOR ANY OTHER SUBSTANTIAL CAUSE INCLUDING ENHANCEM ENT OF THE ASSESSMENT OR PENALTY WHETHER ON HIS OWN MOTION OR ON THE REQUEST OF THE AO UNDER CLAUSE(A) OF SUB-SECTION (1) OF SECTION 251 OR THE IMPOSITION OF PENALTY UNDER SECTION 271 OF THE ACT. 5.1 FROM THE ORDER OF LD. CIT(A) IT IS NOT CLEAR T HAT WHETHER THE EVIDENCE WHICH HAS BEEN CONSIDERED BY LD. CIT(A) WAS ON THE DIRECTION OF LD. CIT(A) SO AS TO SAY THAT WHETHER SUCH ACTION OF LD. CIT(A) IN ADMISSION OF ADDITIONAL EVIDENCE WAS PROTECTED BY SUB-RULE (4). ON THE OTH ER HAND, IN PARA 6.2 IT HAS BEEN CLEARLY RECORDED BY LD. CIT(A) THAT ASSESSEE H AS FILED ALL THESE DOCUMENTS. THEREFORE, IT IS CLEAR THAT THESE DOCUMENTS WERE FI LED BY THE ASSESSEE AS AN ADDITIONAL EVIDENCE AND ADDITIONAL EVIDENCE HAS BEEN USED BY T HE LD. CIT(A) TO GRANT RELIEF TO THE ASSESSEE WHICH IS AGAINST THE PROVISIONS OF RULE 4 6A. THUS, WE CONSIDER IT APPROPRIATE TO RESTORE THIS ISSUE TO THE FILE OF LD . CIT(A) WITH A DIRECTION TO ADOPT THE PROCEDURE LAID DOWN IN RULE 46A TO DECIDE THE IMPU GNED GROUND IN RESPECT OF WHICH ADDITIONAL EVIDENCES HAVE BEEN FILED BY THE ASSESSE E. . / ITA NO.262/MUM/2011 ' ' ' ' # # # # / ASSESSMENT YEAR 2005-06 5 5.1 IN THE RESULT, GROUND NO.1 IS ALLOWED FOR STATI STICAL PURPOSES. 6. NOW COMING TO GROUND NO.2, AS THE MAIN GROUND H AS RESTORED TO THE FILE OF LD. CIT(A) AND ASSESSEE DID NOT APPEAR BEFORE AO , TO ENABLE THE AO TO GO THROUGH THE SUBMISSIONS OF THE ASSESSEE AND THE DOC UMENTS RELIED UPON BY LD. CIT(A) TO GRANT SUCH RELIEF, WE CONSIDER IT JUST AN D PROPER TO RESTORE THE SECOND GROUND ALSO WITH SIMILAR DIRECTIONS. THIS GROUND IS ALSO ALLOWED FOR STATISTICAL PURPOSES. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S ALLOWED FOR STATISTICAL PURPOSES IN THE MANNER AFORESAID. ORDER PRONOUNCED IN THE OPEN COURT ON 18/09/2013 . * ,-# / 0'1 18/09/2013 - * 2 3 SD/- S D/- ( / RAJENDRA ) ( . . / I.P. BANSAL ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; 0' DATED 18/09/2013 . . . . * ** * '+45 '+45 '+45 '+45 65#+ 65#+ 65#+ 65#+ / COPY OF THE ORDER FORWARDED TO : 1. $& / THE APPELLANT 2. '($& / THE RESPONDENT. 3. 7 ( ) / THE CIT(A)- 4. 7 / CIT 5. 582 '+' , , / DR, ITAT, MUMBAI 6. 29 : / GUARD FILE. .' .' .' .' / BY ORDER, (5+ '+ //TRUE COPY// ; ;; ; / < < < < (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI . ' . ./ VM , SR. PS . / ITA NO.262/MUM/2011 ' ' ' ' # # # # / ASSESSMENT YEAR 2005-06 6 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 18/09/13 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 18/09/13 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7. FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER