IP SOFTCOM (INDIA) P.LTD, CHENNAI V. DCIT CORPORATE CIRCLE-2(2), CHENNAI

ITA 2764/CHNY/2019

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1734 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 26-09-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A SUNDARARAJAN
• Assessee Lawyers: K RAVI
• Keywords: Opportunity of being heard; Principle of natural justice; Additional evidence; TDS; Set aside; FORM 26AS
• Section: 115JB; 143(1); 201; 143(2); 43

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: CHENNAI . . . , ' , ' BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ITA NO.2764/CHNY/2019 ( ( /ASSESSMENT YEAR: 2010-11 M/S.IP SOFTCOM (INDIA) PVT. LTD., NO.18 & 19, MAHALAKSHMI NAGAR EXTENSION, NUMBAL VILLAGE, THIRUVERKADU POST, CHENNAI-600 077. V . THE DY. COMMISSIONER OF INCOME TAX, COMPANY CIRCLE-II(3), (PRESENTLY CORPORATE CIRCLE- 2(2)), CHENNAI. [PAN: AABCI5003K ] ( + /APPELLANT) ( ,-+ /RESPONDENT) + . / APPELLANT BY : MR.K.RAVI, ADV. ,-+ . /RESPONDENT BY : MR. A.SUNDARARAJAN, ADDL.CIT . /DATE OF HEARING : 09.12.2019 . /DATE OF PRONOUNCEMENT : 09.12.2019 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER : THIS APPEAL FILED BY ASSESSEE IS DIRECTED AGAINST APPELLATE ORDER DATED 29.07.2019 PASSED BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-9, CHENNAI (HEREINAFTER CALLED THE CIT(A )), IN ITA NO.11/CIT(A)-9/2009-10 FOR ASSESSMENT YEAR (AY) 201 0-11, THE APPELLATE PROCEEDINGS BEFORE LEARNED CIT(A) HAD ARISEN FROM A SSESSMENT ORDER DATED 08.02.2013 PASSED BY LEARNED ASSESSING OFFICE R (HEREINAFTER CALLED THE AO) U/S.143(3) OF THE INCOME-TAX ACT, 1961 ( HEREINAFTER CALLED THE ACT). ITA NO.2764/CHNY/2019 :- 2 -: 2. THE GROUNDS OF APPEAL RAISED BY ASSESSEE IN MEM O OF APPEAL FILED WITH THE INCOME-TAX APPELLATE TRIBUNAL, CHENNAI (HE REINAFTER CALLED THE TRIBUNAL) , READ AS UNDER:- 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOM E TAX (APPEALS) IS CONTRARY TO THE LAW, FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE ADDITION OF RS.3,26,88,378/-, WHICH WAS MADE BY THE ASSESSING OFFICER PURELY BASED OP ENTRIES IN FORM 26AS, WITHOUT MAKIN G SUFFICIENT ENQUIRY FROM THE CUSTOMERS OF THE APPELLANT AND FURTHER WIT HOUT GIVING SUFFICIENT OPPORTUNITY TO THE APPELLANT. 3. THE COMMISSIONER OF INCOME TAX (APPEALS) HAVING TAKEN ON RECORD THE DETAILED RECONCILIATION STATEMENT, CONFIRMATION STA TEMENTS FROM CUSTOMERS AND CREDIT NOTES ERRED IN NOT CONSIDERING THE SAME ON THE GROUND THAT APPLICATION WAS NOT MADE FOR ADMISSION OF NEW EVIDE NCE. 4. THE COMMISSIONER OF INCOME TAX (APPEALS) HAVING NOTED THAT NO APPLICATION WAS MADE FOR ADMISSION OF ADDITIONAL EV IDENCES UNDER RULE 46A, ERRED IN HOLDING THAT THE AUTHORIZED REPRESENT ATIVE COULD NOT MAKE OUT THAT THE EVIDENCES ARE NOT COVERED BY EXCEPTION S PRESCRIBED UNDER RULE 46A. 5. THE COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO EXERCISE HIS POWER VESTED UNDER RULE 46A(4) OF THE INCOME TAX RULES, 1 961 THEREBY IGNORING THE DUTY ASSOCIATED WITH SUCH POWER. 6. THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN HOLDING THAT THE APPELLANT HAS NOT CHALLENGED THE ADJUSTMENT TO BOOK PROFIT. THE COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO APPR ECIATE THAT, IN THE INSTANT CASE, THE ADJUSTMENT TO BOOK PROFIT IS ONLY A CONSEQUENCE TO THE ADDITION MADE UNDER NORMAL PROVISIONS OF THE INCOME TAX ACT. 7. THE COMMISSIONER OF INCOME TAX (APPEALS) FAILE D TO APPRECIATE THAT THE APPELLANT HAS INCLUDED THE INCOME AS REFLECTED IN FORM 26AS IN ITS BOOKS OF ACCOUNT. HOWEVER, IT HAS BEEN SET OFF BY W AY OF CREDIT NOTES. THEREFORE, THE APPELLANT HAS NOT VIOLATED PROVISION S OF RULE 37BA. 8. THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN UPHOLDING THE ADDITION OF RS.3,26,88,378/- MADE BY THE ASSESSING OFFICER EVEN AFTER DETAILED RECONCILIATION STATEMENTS HAVE BEEN FILED BEFORE HIM. 9. THE ADDITION OF RS.3,26,88,378/- TO THE BOOK P ROFIT FOR THE PURPOSE OF MAT COMPUTATION IS A CONSEQUENCE OF ADDITION MADE U NDER NORMAL ITA NO.2764/CHNY/2019 :- 3 -: PROVISIONS ARID THEREFORE FOR THE AFORESAID GROUNDS , THE CONSEQUENTIAL ADDITION TO BOOK PROFIT SHOULD ALSO BE DELETED. 10. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE PE RMITTED TO BE RAISED DURING THE HEARING OF THE APPEAL. 3. THE BRIEF FACTS OF CASE ARE THAT THE ASSESSEE IS ENGAGED IN BUSINESS OF PROVIDING TRADING KITS FOR SOFTWARE MANUFACTURERS. THE ASSESSEE FILED ITS RETURN OF INCOME WITH REVENUE ON 23.09.2010 REPORTI NG LOSS OF RS. 26,54,729/- . THE RETURN OF INCOME WAS ORIGINALLY P ROCESSED BY REVENUE U/S 143(1) OF THE 1961 ACT BUT LATER CASE OF THE A SSESSEE WAS SELECTED BY REVENUE FOR FRAMING SCRUTINY ASSESSMENT U/S 143( 3) READ WITH SECTION 143(2) OF THE 1961 ACT. THE AO DURING COURSE OF ASS ESSMENT PROCEEDINGS OBSERVED THAT THERE IS A MISMATCH BETWEEN INCOME AS PER FORM 26AS MAINTAINED IN DATA BASE OF REVENUE AND INCOME OFFER ED TO TAX BY ASSESSEE IN RETURN OF INCOME FILED WITH THE REVENUE AS IS REFLECTED IN BOOKS OF ACCOUNTS OF THE ASSESSEE, WITH RESPECT TO TWO PARTIES AS UNDER: S.NO. DEDUCTOR NAME INCOME AS PER FORM 26AS INCOME OFFERED BY THE ASSESSEE DIFFERENCE 1 HCL INFOSYSTEMS LIMITED 2,16,68,159 1,36,30,990 8 0,37,169 2 SONATA INFORMATION TECHNOLOGY LIMITED 12,56,45,854 8,87,13,327 3,69,32,527 TOTAL 4,49,69,696 THUS, THE DIFFERENCE IN THE INCOME AS IS REFLECTED IN BOOKS OF ACCOUNTS OF ASSESSEE WHICH WAS OFFERED TO TAX IN RETURN OF INCO ME FILED WITH REVENUE AND IN FORM 26AS WAS TO THE TUNE OF RS. 4,49,69,696/-. THE AO GAVE CREDIT FOR GOVERNMENT TAXES PAYABLE INCLUDED IN AFO RESAID DIFFERENTIAL INCOME VIZ. SERVICE TAX/VAT/CST TO THE TUNE OF 12% AND BROUGHT TO TAX ITA NO.2764/CHNY/2019 :- 4 -: REMAINING AMOUNT TO THE TUNE OF RS. 3 ,26,88,378/- BY MAKING ADDITIONS TO THE INCOME OF THE ASSESSEE, AS DETAILED HEREUNDER: SNO. DEDUCTOR NAME FORM 26AS INCOME ( ` ) INCOME OFFERED ( ` ) ADD: 12% ON (4) TREATED AS ST/VAT/CST ( ` ) TOTAL OF (4) + (5) INCOME NOT OFFERED (3) (6) (1) (2) (3) (4) (5) (6) (7) 1 HCL INFOSYSTEMS LIMITED 2,16,68,159 1,36,30,990 16,35,719 1,52,66,709 64,01,450 2 SONATA INFORMATION TECHNOLOGY LIMITED 12,56,45,854 8,87,13,327 1,06,45,599 9,93,58,926 2,62,86,928 TOTAL 3,26,88,378 THE AO BROUGHT TO TAX AFORESAID INCOME IN THE HANDS OF THE ASSESSEE BOTH UNDER NORMAL PROVISIONS OF INCOME-TAX AS WELL WHILE COMPUTING BOOK PROFITS U/S 115JB OF THE 1961 ACT, VIDE ASSESSMENT ORDER DATED 08.02.2013 PASSED U/S.143(3) OF THE ACT. 4. AGGRIEVED BY AN ASSESSMENT FRAMED BY THE AO, THE ASSESSEE FILED FIRST APPEAL WITH LEARNED CIT(A) AND THE ASSESSEE CLAIMED TO HAVE SUBMITTED RECONCILIATION OF INCOME OFFERED TO TAX VIS--VIS I NCOME AS REPORTED IN AS- 26, FOR FINANCIAL YEARS 2008-09 & 2009-10 TO RE CONCILE ITS INCOME AS IS REFLECTED IN ITS BOOKS OF ACCOUNTS/RETURN OF INCOME WITH INCOME AS IS REFLECTED IN DATA BASE OF THE REVENUE IN AS-26 . T HE ASSESSEE ADMITTEDLY FILED FRESH EVIDENCES BEFORE LEARNED CIT(A) TO SUBS TANTIATE THAT NO UNDERREPORTING OF INCOME TOOK PLACE IN IMPUGNED AY UNDER CONSIDERATION BUT IT IS CLAIMED THAT LD.CIT(A) HAD OBSERVED THAT ASSESSEE DID NOT FILED ANY APPLICATION FOR ADMISSION OF ADDITIONAL EVIDENC ES UNDER RULE 46A OF THE INCOME-TAX RULES, 1962 AND ALSO LEARNED CIT(A) REJECTED ADMISSION OF ITA NO.2764/CHNY/2019 :- 5 -: ADDITIONAL EVIDENCES ON THE GROUND THAT AO HAD GIVE N PROPER OPPORTUNITY TO ASSESSEE DURING COURSE OF ASSESSMENT PROCEEDINGS AND THERE IS NO JUSTIFICATION FOR ADMITTING THESE ADDITIONAL EVIDEN CES, WHEREIN LEARNED CIT(A) VIDE APPELLATE ORDER DATED 29.07.2019 HELD A S UNDER: 5. I HEARD THE CONTENTIONS OF THE AR OF THE APPELLA NT AND PERUSED THE GROUNDS OF APPEAL, ASSESSMENT ORDER AND MATERIAL A VAILABLE ON RECORD. MY OBSERVATIONS IN RESPECT OF THE GROUNDS RAISED BY THE APPELLANT ARE AS FOLLOWS: 'THE AUTHORISED REPRESENTATIVE STATED THAT THE RECO NCILIATION FOR F.Y 2008-09 AND F.Y 2009-10 HAVE BEEN SUBMITTED DURING THE APPELLATE PROCEEDINGS AND HAS ALSO FILED THE CONFIRMATION FRO M THE THIRD PARTIES AND FURTHER, CREDIT NOTES HAVE ALSO BEEN SU BMITTED. IN THIS REGARD, IT IS STATED THAT THESE ARE NEW EVIDENCE AN D THE AUTHORISED REPRESENTATIVE COULD NOT MAKE OUT A CASE THAT THE CASE OF THE APPELLANT IS COVERED UNDER ANY OF THE EXCEPTIONS PR ESCRIBED UNDER RULE 46A. DURING THE APPELLATE PROCEEDINGS, THE APP ELLANT HAS ALSO NOT MADE AN APPLICATION FOR ADMISSION OF NEW EVIDEN CE. FURTHER, DURING THE ASSESSMENT PROCEEDINGS, THE A.O HAD GRAN TED SPECIFIC OPPORTUNITY. IN VIEW OF THESE FACTS, IT IS NOT A FI T CASE FOR ADMISSION OF NEW EVIDENCE UNDER RULE 46A. 6. AS PER THE ASSESSMENT ORDER, THE A.O HAS MADE TH E ADDITION ON THIS ISSUE BOTH UNDER NORMAL PROVISIONS AS WELL AS U./S 115JB, WITH RESPECT TO THE DETERMINATION OF BOOK PROFIT, THE A.O HAS STATE D AS UNDER; *SINCE, THE ABOVE MENTIONED INCOME OF RS.3,26,88,37 8/- HAS NOT BEEN INCLUDED IN THE AUDITED STATEMENT WHILE PREPAR ING IT AS PER THE ACCOUNTING STANDARDS REFERRED TO IN SUB-SECTION 3C OF SECTION 211 OF COMPANIES ACT, 1956, THE SAID AMOUNT IS ALSO ADDED TO BOOK PROFIT, AND TAX LIABILITY IS CALCULATED ACCORDINGLY. HERE, RELIANCE IS ALSO PLACED ON THE JUDGEMENT IN THE CASE OF DREAM SHELTE RS (P) LTD VS. ITO BY HON'HLE ITAT AGRA BENCH (2013) 29 TAXMANN 14 (AGRA-TRIB} WHEREIN IT HAS BEEN HELD THAT THE LOAN INCOME ADMIT TED BY THE ASSESSEE SHOULD BE ADDED FOR MAT PURPOSE ALSO. THEREFORE, IN VIEW OF THE ABOVE, THE INCOME NOT INC LUDED IN AUDITED STATEMENT IS ADDED BACK TO BOOK PROFIT ' THEREAFTER, AS PER THE COMPUTATION OF BOOK PROFIT I N PAGE 4 OF THE ASSESSMENT ORDER, THE AO HAS ADDED RS.3,26,88,378/- TO THE BOOK PROFIT. THE APPELLANT HAS NOT CHALLENGED THE ADJUSTMENT TO THE BOOK PROFIT U/S 115JB. IN THE PRESENT APPEAL, THE APPELLANT HAS ONL Y CHALLENGED THE ADDITION UNDER NORMAL PROVISIONS AND NOT UNDER THE PROVISIONS OF SECTION 11SJB, HAVING ACCEPTED THE ADJUSTMENT U/S.115JB WHI CH HAS ATTAINED ITA NO.2764/CHNY/2019 :- 6 -: FINALITY, THERE IS JUSTIFICATION FOR THE ADDITION M ADE UNDER NORMAL PROVISIONS OF THE ACT AS WELL. 7. THE APPELLANT HAS STATED BEFORE THE A.O THAT THE DIFFERENCE IS ON ACCOUNT OF SERVICE TAX/VAT/CST AND IN THIS REGARD, THE AO HAS ALREADY ALLOWED AN AVERAGE OF 12% FOR THE SAME. 8. FURTHER, THE APPELLANT HAS CLAIMED CREDIT FOR TD S FOR THE ENTIRE RECEIPTS AS REFLECTED IN FORM NO.26AS. AS PER THE PROVISIONS OF SECTION 199 R.W.S 37BA, CREDIT FOR TAX DEDUCTED AT SOURCE, SHALL BE G IVEN FOR THE ASSESSMENT YEAR FOR WHICH SUCH INCOME IS ASSESSABLE. IN CASE, PART OF RECEIPTS / INCOME RELATES TO ANOTHER ASSESSMENT YEAR, THE CORRESPONDING TDS CANNOT BE CLAIMED FOR THE YEAR UNDER CONSID ERATION. AS A COROLLARY, THE VERY FACT THAT THE APPELLANT HAS CLAIMED THE CR EDIT FOR ENTIRE TDS DURING THE YEAR UNDER CONSIDERATION, THE ENTIRE GRO SS RECEIPTS IS ASSESSABLE FOR THE YEAR UNDER CONSIDERATION. 9. IN VIEW OF THE ABOVE FACTUAL AND LEGAL POSITION , THE ADDITION OF RS.3,26,88,378/- IS HEREBY CONFIRMED. ACCORDINGLY, THIS GROUND OF APPEAL IS DISMISSED. THUS, THE LD.CIT(A) CONFIRMED THE ADDITIONS AS WERE MADE BY AO OWING TO MISMATCH OF INCOME AS REPORTED IN BOOKS OF ACCOUNTS /RETURN OF INCOME AND INCOME AS REFLECTED IN INCOME TAX DATA BASE IN FORM NO. 26AS , BOTH UNDER NORMAL PROVISIONS OF THE 1961 ACT AND ALSO U NDER THE PROVISIONS OF SECTION 115JB WHILE COMPUTING BOOK PROFIT TO DETERM INE LIABILITY TO MINIMUM ALTERNATE TAX., VIDE APPELLATE ORDER DATED 29.07.2019 PASSED BY LEARNED CIT(A). 5. AGGRIEVED BY AN APPELLATE ORDER DATED 29.07.2019 PASSED BY LEARNED CIT(A), THE ASSESSEE HAS FILED THIS APPEAL BEFORE T HE TRIBUNAL AND LD.COUNSEL FOR THE ASSESSEE, AT THE OUTSET, DREW OU T ATTENTION TO THE PARA NO.5 OF LD.CIT(A) AND SUBMITTED THAT RECONCILIATIO N OF INCOME AS REPORTED IN BOOKS OF ACCOUNTS/RETURN OF INCOME WITH INCOME A S IS REFLECTED IN FORM NO. 26AS WAS SUBMITTED BEFORE LD.CIT(A). IT WAS STA TED BY LEARNED ITA NO.2764/CHNY/2019 :- 7 -: COUNSEL FOR THE ASSESSEE THAT THE ASSESSEE FILED AD DITIONAL EVIDENCES BY WAY OF CREDIT NOTES , CONFIRMATION FROM THIRD PARTI ES ETC. BEFORE LEARNED CIT(A) FOR THE FIRST TIME AS THE SAME COULD NOT BE FILED BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IT WAS SUBMITTED THAT THESE ADDITIONAL EVIDENCES GO THE ROOT OF THE MATTER AND SHOULD BE ADMITTED IN THE INTEREST OF SUBSTANTIAL JUSTICE TO RESOLVE THE DISPUTE BETWEEN RIVAL PARTIES. IT WAS SUBMITTED THAT LD.CIT(A) DID NOT AD MITTED THESE ADDITIONAL EVIDENCES FILED FOR THE FIRST TIME BEFORE LEARNED C IT(A) ON THE GROUND THAT THESE ARE FRESH EVIDENCES AND NO APPLICATION WAS MO VED FOR THE ADMISSION OF THE ADDITIONAL EVIDENCES AS IS CONTEMPLATED UNDE R RULE 46 OF INCOME TAX RULES, 1962 . IT WAS SUBMITTED BY LEARNED COUNS EL FOR THE ASSESSEE THAT LEARNED CIT(A) OBSERVED THAT AO HAS GIVEN SUFF ICIENT OPPORTUNITY TO THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEE DINGS AND REJECTED ADDITIONAL EVIDENCES FILED BY THE ASSESSEE. IT IS P RAYED BY LEARNED COUNSEL FOR THE ASSESSEE THAT THESE ADDITIONAL EVIDENCES GO TO ROOT OF THE MATTER AND BE ADMITTED IN THE INTEREST OF SUBSTANTIAL JUST ICE TO RESOLVE DISPUTE BETWEEN RIVAL PARTIES. IT IS PRAYED THAT THE MATTER BE SET ASIDE AND RESTORED TO THE FILE OF AO FOR DENOVO ASSESSMENT AN D THE ASSESSEE WILL PRODUCE ALL THESE ADDITIONAL EVIDENCES BEFORE AO I N DENOVO ASSESSMENT PROCEEDINGS WHEREIN THE AO CAN VERIFY THESE ADDITI ONAL EVIDENCES AND THEN FRAMED DENOVO ASSESSMENT ON MERITS IN ACCORDAN CE WITH LAW. ON ADDITIONS BEING MADE TO THE BOOK PROFIT OF THE ASSE SSEE U/S 115JB OF THE 1961 ACT, OF THE AFORESAID ADDITIONS BEING MADE TO INCOME UNDER NORMAL PROVISIONS OF THE 1961 ACT , IT IS THE SAY OF LEARN ED COUNSEL FOR THE ITA NO.2764/CHNY/2019 :- 8 -: ASSESSEE THAT THE SAID ADDITIONS TO COMPUTE BOOK PR OFIT U/S 115JB OF THE 1961 ACT IS CONSEQUENTIAL IN NATURE . THE LD.DR , ON THE OTHER HAND, FAIRLY SUBMITTED THAT THE MATTER CAN BE SET ASIDE A ND RESTORED BACK TO FILE OF AO FOR NECESSARY VERIFICATIONS AND DENOVO DETERM INATION OF THE ISSUE ON MERITS IN ACCORDANCE WITH LAW. THUS, IN NUT-SHELL B OTH THE RIVAL PARTIES ARE ALSO OF THE VIEW THAT ONE MORE OPPORTUNITY IS TO BE GRANTED TO THE ASSESSEE SO THAT ADDITIONAL EVIDENCES FILED BY ASSE SSEE FOR THE FIRST TIME BEFORE LEARNED CIT(A) CAN BE EVALUATED AND VERIFIED BY THE AO TO SEE WHETHER THE ASSESSEE IS ABLE TO RECONCILE ITS INCOM E AS IS REFLECTED IN BOOKS OF ACCOUNTS/RETURN OF INCOME WITH INCOME AS I S REFLECTED IN FORM NO. 26AS. 6. WE HAVE CONSIDERED RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. WE HAVE OBSERVED THAT ASSESSEE IS ENGAGED I N THE BUSINESS OF PROVIDING TRADING KITS FOR SOFTWARE MANUFACTURERS. THE ASSESSEE HAS FILED RETURN OF INCOME ON 23.09.2010 DECLARING LOSS OF RS . 26,54,729/- . THE SAID RETURN OF INCOME WAS INITIALLY PROCESSED U/S 1 43(1) BUT LATER SAID RETURN OF INCOME WAS SELECTED BY REVENUE FOR FRAMI NG SCRUTINY ASSESSMENT U/S.143(3) OF THE ACT. DURING THE COURS E OF ASSESSMENT PROCEEDINGS, THE AO OBSERVED THAT THERE IS MISMATCH BETWEEN INCOME AS IS REFLECTED IN BOOKS OF ACCOUNTS AND OFFERED TO TA X BY THE ASSESSEE IN THE RETURN OF INCOME FILED WITH THE REVENUE VIS--VIS I NCOME AS IS REPORTED IN FORM 26AS, WHICH LED TO THE ADDITIONS TO THE INCOME OF THE ASSESSEE TO THE TUNE OF RS. 3.27 CRS. , AFTER GIVING CREDIT FO R SERVICE TAX/VAT/CST ETC. COMPONENT @12% INCLUDED IN THE GROSS AMOUNT OF ALLEGED ITA NO.2764/CHNY/2019 :- 9 -: UNDERREPORTING OF INCOME TO THE TUNE OF RS. 4.50 CR ORES. ALL THE DETAILED BREAK-UPS ARE GIVEN BY US IN PRECEDING PARAS OF TH IS ORDER AND ARE NOT REPEATED. WE HAVE OBSERVED THAT THE ASSESSEE HAS SUBMITTED ADDITIONAL EVIDENCES BY WAY OF CREDIT NOTES, THIRD PARTY CONFI RMATIONS, RECONCILIATION STATEMENTS ETC. BEFORE THE LD.CIT(A) DURING THE COU RSE OF APPELLATE PROCEEDINGS BUT THESE ADDITIONAL EVIDENCES WERE NO T ADMITTED BY LD.CIT(A) ON THE GROUNDS THAT THE ASSESSEE NOT FURN ISHED AN APPLICATION FOR ADMISSION OF THESE ADDITIONAL EVIDENCES AS IS C ONTEMPLATED U/R 46A OF THE 1962 RULES AS ALSO THAT THE AO HAD GIVEN SUFFIC IENT OPPORTUNITIES TO THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCE EDINGS AND NO JUSTIFICATION IS FORTHCOMING FROM THE ASSESSEE FOR NOT PRODUCING THESE EVIDENCES BEFORE THE AO DURING THE COURSE OF ASSESS MENT PROCEEDINGS. WE HAVE OBSERVED THAT THE ASSESSEE ON ITS PART SUBM ITTED RECONCILIATION STATEMENT TO RECONCILE ITS INCOME AS REFLECTED IN F ORM 26AS WITH THE INCOME OFFERED TO TAX AS IS REFLECTED IN BOOKS OF A CCOUNTS MAINTAINED BY THE ASSESSEE. THE ASSESSEE HAS FILED DETAILS FOR FY 2008-09 & 2009-10 RELEVANT TO THE ASSESSMENT YEAR 2009-10 & 2010-11 R ESPECTIVELY BEFORE LEARNED CIT(A). THE LEARNED CIT(A) DID NOT ADMITTE D THESE ADDITIONAL EVIDENCES AND HENCE THESE ADDITIONAL EVIDENCES HAVE NOT STOOD THE TEST OF VERIFICATION AND ENQUIRY BY AUTHORITIES BELOW. BOTH THE PARTIES BEFORE US HAS ALSO FAIRLY AGREED THAT ONE MORE OPPORTUNITY IS TO BE ACCORDED TO ASSESSEE TO PROVE ITS CASE. WE ARE OF THE CONSIDER ED VIEW THAT THERE COULD BE SEVERAL REASONS FOR MISMATCH BETWEEN INCOM E AS IS REFLECTED IN FORM 26AS AND INCOME OFFERED TO TAX IN RETURN OF IN COME FILED WITH ITA NO.2764/CHNY/2019 :- 10 -: REVENUE WHICH COULD BE DUE TO RECOGNITION OF INCOME IN THE PRECEDING YEAR OR IN THE SUBSEQUENT YEAR BY THE TAXPAYER VIS- A-VIS THE OTHER PARTY OWING TO STAGE OF COMPLETION OF THE WORK, DIFFERENT METHOD OF ACCOUNTING FOLLOWED BY TAXPAYER AND OTHER PARTY , DEFICIENCY I N RENDERING OF SERVICES /SUPPLIES WHICH COULD LEAD TO REJECTION OF MATERIAL /SERVICES RENDERED , CREDIT NOTES /DEBIT NOTES ISSUED BY ONE PARTY WHILE THE SAME IS NOT ACCOUNTED BY OTHER PARTY ETC. . THE ASSESSEE ON ITS PART HAS TRIED TO RECONCILE ITS INCOME AS OFFERED IN THE BOOKS OF ACC OUNTS WITH FORM 26AS BUT THE SAID EVIDENCES WHICH ARE CRITICAL EVIDENCES GOING TO THE ROOT OF THE MATTER HAS BEEN DISCARDED BY THE LD.CIT(A) AT THE T HRESHOLD AS THE SAME WERE NOT ADMITTED BY LEARNED CIT(A). NO DOUBT, RUL E 46A OF THE 1962 RULES GIVE POWERS TO LD.CIT(A) TO REFUSE ADMIT ADDI TIONAL EVIDENCES IN CERTAIN CIRCUMSTANCES AS STIPULATED UNDER RULE 46A BUT WHENCE SUBSTANTIAL JUSTICE IS PITTED AGAINST TECHNICALITIES , THE COUR TS WILL LEAN TOWARDS SUBSTANTIAL JUSTICE. UNDER THESE CIRCUMSTANCES, WE ADMIT THE ADDITIONAL EVIDENCES FILED BY ASSESSEE BEFORE LD.CIT(A) AND RE STORE THE MATTER BACK TO THE FILE OF THE AO FOR FRAMING FRESH ASSESSMENT DENOVO AFTER CONSIDERING ENTIRE EVIDENCES FURNISHED BY THE ASSESSEE IN ITS D EFENSE ON MERITS IN ACCORDANCE WITH LAW. THE AO SHALL ADMIT ALL THE EV IDENCES/EXPLANATION FILED BY ASSESSEE IN ITS DEFENSE AND THEN DECIDE TH E ISSUE IN DENOVO ASSESSMENT ON MERITS IN ACCORDANCE WITH LAW. NEEDLE SS TO SAY THAT THE AO SHALL GIVE PROPER AND ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE IN THE INTEREST OF PRINCIPLES OF NATURAL JUSTICE IN ACCORDANCE WITH LAW. ITA NO.2764/CHNY/2019 :- 11 -: THUS, THE MATTER IS RESTORED TO THE FILE OF THE AO FOR DE NOVO ASSESSMENT IN ACCORDANCE WITH LAW ON MERITS. WEORDER ACCORDI NGLY. 7. IN RESULT, THE APPEAL FILED BY ASSESSEE IN ITA N O.2764/CHNY/2019 FOR AY: 2010-11 IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON CONCLUSION OF HE ARING ON THIS 09 TH DAY OF DECEMBER, 2019 IN CHENNAI. SD/- SD/- ( . . . ) ( N.R.S. GANESAN ) /JUDICIAL MEMBER ( ' ) ( RAMIT KOCHAR ) /ACCOUNTANT MEMBER /CHENNAI, 2 /DATED: 09 TH DECEMBER, 2019. TLN . ,'3 43 /COPY TO: 1. + /APPELLANT 4. 5 /CIT 2. ,-+ /RESPONDENT 5. 3 , /DR 3. 5 ( ) /CIT(A) 6. ( /GF