BUNTS INDUSTRIES P. LTD, MUMBAI V. ACIT 10(3), MUMBAI

ITA 3164/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0855 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 05-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMEN KUMAR
• Keywords: Principle of natural justice; Additional evidence; Reasonable cause
• Section: 142(1)

Judgement Text

D B IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO.3164 /MUM/2014 ( / ASSESSMENT YEAR : 2008-09) BUNTS INDUSTRIES PVT. LTD., 210 ANANDRAJ INDUSTRIAL ESTATE, LBS MARG, BHANDUP, MUMBAI 400 078. / V. ACIT, AAYAKAR BHAWAN, M.K. ROAD, MUMBAI 400 020. ./ PAN : AACCB5692C ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY SHRI BHADRESH DOSHI REVENUE BY : SHRI SUMEN KUMAR, D.R. / DATE OF HEARING : 06-04-2017 / DATE OF PRONOUNCEMENT : 26-04-2017 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER THIS APPEAL, FILED BY THE ASSESSEE, BEING ITA NO. 3164/MUM/2014, IS DIRECTED AGAINST THE APPELLATE ORDER DATED 13 TH FEBRUARY, 2014 PASSED BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS)- 22, M UMBAI (HEREINAFTER CALLED THE CIT(A)), FOR THE ASSESSMENT YEAR 2008- 09, THE APPELLATE PROCEEDINGS BEFORE THE LEARNED CIT(A) ARISING FROM THE ASSESSMENT ORDER DATED 25 TH NOVEMBER, 2010 PASSED BY THE LEARNED ASSESSING OFF ICER (HEREINAFTER CALLED THE AO) U/S 143(3)(II) OF THE INCOME-TAX ACT,1961 (HEREINAFTER CALLED THE ACT). ITA 3164/ MUM/2014 2 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE IN THE MEMO OF APPEAL FILED WITH THE INCOME-TAX APPELLATE TRIBUNAL, MUMBA I (HEREINAFTER CALLED THE TRIBUNAL) READ AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED C.I.T. (A) ERRED IN DISMISSING THE APPEAL. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED C.I.T. (A) ERRED IN DISMISSING THE APPEAL AND THAT TOO WITHOUT GIVING FULL AND PROPER OPPORTUNITY OF B EING HEARD IN THE MATTER. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED C.I.T. (A) ERRED DISMISSING THE AP PEAL AND THAT TOO WITHOUT APPRECIATING FULLY AND PROPERLY THE FACTS O F THE CASE. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED C.I.T. (A) ERRED IN NOT FOLLOWING THE DIRECTIONS OF THE APPELLATE TRIBUNAL AND DISMISSING THE APPEAL. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED C.I.T. (A) ERRED IN NOT ADMITTING ADDITIONAL EVIDENCES AND DISMISSING THE APPEAL. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS ENGAGED IN THE BUSINESS OF OFFSET PRINTING & PACKAGING AND MANUFAC TURING OF CONFECTIONERIES. THIS APPEAL BEFORE US IS AGAINST THE APPELLATE ORDE R OF THE LD. CIT(A) DATED 13- 02-2014 WHICH IS IN FACT SECOND ROUND OF LITIGATION BEFORE THE TRIBUNAL. IN THE FIRST ROUND OF LITIGATION, THE TRIBUNAL IN ITA NO. 2767/MUM/2011 VIDE ITS ORDERS DATED 15-06-2012 FOR THE IMPUGNED ASSESSMENT YEAR 2008-09 HAD OBSERVED AS UNDER:- THIS ASSESSEE'S APPEAL CHALLENGES ID. CIT (A) ORDE R CONFIRMING PENALTY U/S 271 (L)(C) OF THE ACT REGARDING ASSESSMENT YEAR 2008-09. 2. THE MAIN GRIEVANCE OF THE ASSESSEE IS THAT CIT(A ) HAS DISMISSED HIS APPEAL WITHOUT ADVERTING TO FACTS AND NATURE OF THE GROUNDS RAISED, THAT TOO, BY A TOTALLY NON-SPEAKING ORDER. ITA 3164/ MUM/2014 3 3. AS WE SEE FROM ID. CIT (A) ORDER WHOSE OPERATIVE PART READS AS UNDER: 'IN THE GROUNDS OF APPEAL AS ABOVE IT HAS BEEN SIMP LY BEEN REQUESTED THAT THE MATTER MAY BE REMANDED TO THE AO AND OPPORTUNITY MAY BE AFFORDED. HOWEVER, BEFORE ME THE ASSESSEE HAS NOT BROUGHT ON RECORD THE ''REASONABLE CAUSE' B ECAUSE OF WHICH IT FAILED TO FURNISH THE DETAILS CALLED FOR B Y THE AO. EVEN IN THE LETTER DATED 28.1.2011 NO SUCH SUBMISSIONS HAVE BEEN MADE. IN VIEW OF THIS, I AM OF THE OPINION THAT THE ASSES SEE IS NOT HAVING ANY REASONABLE CAUSE FOR GIVING ONE MORE OPPORTUNIT Y AND HENCE THE FINDINGS GIVEN IN THE ASSESSMENT ORDER ARE UPHE LD EVEN ON MERIT, THE ASSESSEE HAS NOT GIVEN ANY DETAILED SUBM ISSIONS WITH REGARD TO THE ADDITIONS MADE. HENCE, I HAVE NO REAS ON TO DEVIATE WITH THE FINDINGS GIVEN BY THE AO IN THE ASSESSMENT ORDER.' IT NOWHERE STATES THE POINTS FOR DETERMINATION, DEC ISION THEREON OR REASONS IN SUPPORT THEREOF AS PROVIDED U/S 250(6) O F THE ACT. 4. ALTHOUGH NOBODY HAS TURNED UP ON ASSESSEE'S BEHA LF, BUT WE HAVE HEARD ID DR. THE ORDER OF CIT (A) IS TOO CRYPTIC. A PART FROM BEING NON- SPEAKING ORDER, IT NOWHERE STATES POINTS FOR DETERM INATION, DECISION THEREON WITH REASONS IN SUPPORT AS REQUIRED UNDER T HE PROVISIONS OF THE ACT. 5. THEREFORE, WE HAVE NO HESITATION IN SETTING ASID E THE CIT(A)S ORDER AND RESTORE THE MATTER BACK TO HIM WITH A DIRECTION TO DECIDE THE APPEAL ON MERITS IN ACCORDANCE WITH LAW. ORDER PRONOUNCED IN THE OPEN COURT ON 15.6.2012. THUS AS COULD BE SEEN THAT THE TRIBUNAL IN FIRST RO UND OF LITIGATION SET ASIDE THE MATTER BACK TO THE FILE OF THE LD. CIT(A) WITH A DI RECTION TO DECIDE THE MATTER AFRESH ON MERITS IN ACCORDANCE WITH LAW. IN THE SECOND ROUND OF LITIGATION, THE ASSESSEE HAD EXPLAINED THAT THERE WAS A FAILURE ON THE PART OF CHARTERED ACCOUNTANT MR. VI JAY PATIL TO CONDUCT PROPER AUDIT FOR THE IMPUGNED PERIOD AND THE ASSESSEE MERELY SIG NED THE DOCUMENTS WITHOUT READING THE SAME WHICH WERE SENT TO THE ASSESSEE BY THE CA WHICH WERE SENT ONLY ON THE LAST DATE OF FILING THE RETURN OF INCOME IT WAS SUBMITTED THAT HENCE THE ITA 3164/ MUM/2014 4 ASSESSEE APPOINTED NEW CA AS HE WAS NOT SATISFIED W ITH THE PERFORMANCE OF CA MR VIJAY PATIL. THE DOCUMENTS FOR RELEVANT PERIOD WERE WITH THE OLD CA , MR VIJAY PATIL WHO WAS NOT CO-OPERATING AND REFUSING TO HAND OVER THE RECORDS OF THE ASSESSEE , HENCE DIFFICULTY WAS FACED BY THE ASSESSEE IN PROD UCING THE EVIDENCES IN FIRST ROUND OF LITIGATION BEFORE THE AO. THE REPLY OF THE ASSE SSEE BEFORE LEARNED CIT(A) IS AS UNDER:- 'WE REFER TO THE PERSONAL HEARING BY THE UNDERSIGNE D AT YOUR OFFICE ON 07.01.2014 AT 11.30 A.M. REGARDING ABOVE, MENTIONED SUBJECT. IN THIS REGARD, WE WOULD LIKE TO BRING TO YOUR NOTICE THE FACT OF OUR CASE FOR YOUR KIND CONS IDERATION: WE HAD APPOINTED MR. VIJAY PATIL AS OUR AUDITOR FOR THE FINANCIAL YEAR PERIOD 2006-07 & 2007-08. IN THE FIN ANCIAL YEAR 2007-0B OUR AUDITOR HAD NOT AUDITED OUR ACCOUN TS PROPERLY AND SENT US THE PAPERS FOR SIGNING ON THE LAST DATE OF FILING RETURNS. WITH NO OPTION LEFT, THE DIRECTO RS OF THE COMPANY SIGNED THE PAPERS AND FILED THE INCOME-TAX RETURN. BEING DISSATISFIED WITH THE AUDITOR, WE CHANGED OUR AUDITOR FROM THE FINANCIAL YEAR 2008-09 TO M/S ARVIND NAGDA AND ASSOCIATES. LATER WE RECEIVED A NOTICE FROM THE DEP ARTMENT FOR THE SCRUTINY FOR THE ASSESSMENT. YEAR 2008-09. WHEN WE APPOINTED M/S. ARVIND NAGDA & ASSOCIATES FOR THE SC RUTINY THEY DID NOT HAVE ANY PAPERS OF THE PREVIOUS YEAR I N HAND AS ALL FILES WERE WITH MR. VIJAY PATIL. HE WAS NOT CO-OPERATING TO US FOR THE SCRUTINY MATTER FOR WHICH WE HAVE FIL ED A COMPLAINT AT CA ASSOCIATION ALSO. SINCE THE FINANCIAL YEAR 2007-08 OUR COMPANY WAS IN LOSS DUE TO WHICH WE HAVE REDUCED STAFF AND ARE UNABLE T O MAINTAIN RECORDS AT OUR END. THEREFORE, ALL RECORDS WERE KEPT AT CA'S OFFICE. LATER WE MANAGED TO COLLECT ALL PAP ERS AS PER THE SCRUTINY; THE UNDERSIGNED AND HIS EX-EMPLOYEE M R, MURLEE KK VISITED THE SCRUTINY OFFICER. BUT AT THAT TIME THE OFFICER TOLD THAT IT WAS TOO LATE TO CONSIDER OUR P APERS AS ORDER WAS ALREADY PASSED. ON RECEIPT OF ORDER WE HA D APPLIED FOR APPEAL AND THEN LATER TRIBUNAL FOR JUST ICE. FROM TRIBUNAL ONCE AGAIN REMAND BACK TO YOUR OFFICE FOR THE CONSIDERATION. ITA 3164/ MUM/2014 5 WE HAVE GOT ONE MORE SCRUTINY NOTICE FOR THE ASSESS MENT YEAR 2009-10 WHICH WAS CLEARED BY US AND GOT THE ORDER A LSO (ENCLOSED COPY OF ORDER). WE REQUEST YOUR KINDSELF TO CONSIDER OUR CASE AND D O THE NEEDFUL. THE LD. CIT(A) DISPOSED OF THE APPEAL IN THE SECOND ROUND OF LITIGATION VIDE ITS APPELLATE ORDERS DATED 13-02-2014 , BY HOLDING AS U NDER:- 2.7 I HAVE CAREFULLY CONSIDERED THE DIRECTION GIVE N BY THE HON'BLE ITAT AND THE SUBMISSIONS OF THE APPELLANT. THE APPE LLANT WAS GIVEN AS MANY AS FOUR OPPORTUNITIES BY ISSUE OF NOT ICE U/S.143(2) AS WELL AS 142(1) BEFORE LEVY OF PENALTY U/S.271 (1 )(B). AFTER THE LEVY OF PENALTY THREE MORE OPPORTUNITIES WERE SPECI FICALLY GIVEN. ADHERING TO THE PRINCIPLES OF NATURAL JUSTICE THE A O HAD GIVEN REASONABLE OPPORTUNITIES, BUT STILL THE APPELLANT W AS NOT IN A POSITION TO COMPLY BY FILING THE RELEVANT DETAILS C ALLED FOR. 2.8 AS MENTIONED ABOVE, DURING THE APPELLATE PROCEE DING, A LETTER DATED 27.01.2011 RECEIVED IN THIS OFFICE ON 28.01.2011 CONTAINING ADDITIONAL EVIDENCES WERE FILED BY THE A PPELLANT BUT WITHOUT ANY REQUEST FOR ADMITTING SUCH ADDITIONAL E VIDENCES. IT WAS THE SUBMISSION OF THE APPELLANT THAT SINCE F.Y. 2007-08 THE COMPANY WAS INCURRING LOSS AND THERE WERE RETRENCHM ENT OF THE STAFF AND IT WAS NOT IN A POSITION TO MAINTAIN THE RECORDS AND THEREFORE ALL THE RECORDS WERE KEPT AT C.A.S OFFIC E. THE CONTENTION OF THE APPELLANT IS THAT ONE SHRI VIJAY PATIL WAS T HE AUDITOR DURING F.Y. 2006-07 AND 2007-08 AND NOT SATISFIED WITH HIS WORK HE WAS CHANGED IN THE F.Y. 2008-09 AND THE NEW AUDITOR M/S ARVIND NAGDA & ASSOCIATES WAS APPOINTED IN HIS PLACE. SINC E ALL THE BOOKS WERE KEPT WITH SHRI VIJAY PATIL, HE DID NOT H AND OVER THE RECORDS TO THE NEW AR. I FIND ALL THESE EXPLANATION S WERE NOT SUPPORTED BY ANY EVIDENCE. EVEN THOUGH BUSINESS IS RUNNING IN A LOSS, THE APPELLANT HAS NOT CLOSED DOWN THE BUSINES S HENCE, THE BOOKS OF ACCOUNTS AND OTHER DOCUMENTS ARE SUPPOSED TO BE MAINTAINED AT THE REGISTERED OFFICE. NO EVIDENCES W ERE PRODUCED BEFORE ME TO SHOW THAT THE REGISTERED OFFICE IS EIT HER SHIFTED OR IT IS CLOSED AND RECORDS WERE KEPT IN THE CA'S OFFICE FOR SAFE CUSTODY. NO EVIDENCE WAS ALSO FURNISHED BEFORE ME TO SHOW THAT THE BOOKS WERE KEPT IN THE CUSTODY OF MR. VIJAY PATIL, THE EX - CHARTERED ACCOUNTANT. NO SUCH EXPLANATION WAS OFFERED DURING THE ASSESSMENT PROCEEDINGS BEFORE THE AO HIGHLIGHTING T HIS FACT. ITA 3164/ MUM/2014 6 HENCE, ACCORDING TO ME, THE ENTIRE THEORY FLOATED I S ONLY AN AFTER THOUGHT AND I AM INCLINED TO ACCEPT THE CONCOCTED S TORY GIVEN BY THE APPELLANT. FURTHER, I DO NOT ACCEPT THIS AS A R EASONABLE CAUSE IN ENTERTAINING THE ADDITIONAL EVIDENCES. 2.8.1. I AM UNABLE TO ENTERTAIN THE FRESH EVIDENCE S FILED BEFORE ME AS PER THE CONDITIONS ENVISAGED IN RULE 4 6A OF INCOME TAX RULES. RULE 46A IS PRODUCED HERE FOR THE, SAKE OF CONVENIENCE. (1) THE APPELLANT SHALL NOT BE ENTITLED TO PRODUCE BEFORE THE DEPUTY COMMISSIONER (APPEALS) OR, AS THE CASE M AY BE, THE COMMISSIONER (APPEALS), ANY EVIDENCE, WHETHER O RAL OR DOCUMENTARY, OTHER THAN THE EVIDENCE PRODUCED BY HI M DURING THE COURSE OF PROCEEDINGS BEFORE THE ASSESSI NG OFFICER, EXCEPT IN THE FOLLOWING CIRCUMSTANCES, NAM ELY:- (A) WHERE THE ASSESSING OFFICER HAS REFUSED TO ADMIT EVIDENCE WHICH OUGHT TO HAVE BEEN ADMITTED; O R (B) WHERE THE APPELLANT WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING THE EVIDENCE WHICH HE WAS CALLED UPON TO PRODUCE BY THE ASSESSING OFFICER; OR (C) WHERE THE APPELLANT WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING BEFORE THE ASSESSIN G OFFICER ANY EVIDENCE WHICH IS RELEVANT TO ANY GROUN D OF APPEAL; OR (D) WHERE THE ASSESSING OFFICER HAS MADE THE ORDER APPEALED AGAINST WITHOUT GIVING SUFFICIENT OPPORTUN ITY TO THE 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 M AY BE, THE COMMISSIONER (APPEALS) RECORDS IN WRITING THE R EASONS FOR ITS ADMISSION. (3) THE DEPUTY COMMISSIONER (APPEALS) OR, AS THE CA SE MAY BE, THE COMMISSIONER (APPEALS) SHALL NOT TAKE INTO ACCOUNT ANY EVIDENCE PRODUCED UNDER SUB-RULE (1 UNLESS THE ITA 3164/ MUM/2014 7 ASSESSING OFFICER HAS BEEN ALLOWED A REASONABLE OPPORTUNITY (A) TO EXAMINE THE EVIDENCE OR DOCUMENT OR TO CROSS - EXAMINE THE WITNESS PRODUCED BY THE APPELLANT, OR (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 ANY DOCUMENT, OR THE EXAMINATION OF ANY WITNESS, TO ENA BLE HIM TO DISPOSE OF THE APPEAL, OR FOR ANY OTHER SUBSTANT IAL CAUSE INCLUDING THE ENHANCEMENT OF THE ASSESSMENT OR PENA LTY (WHETHER ON HIS OWN MOTION OR ON THE REQUEST OF THE ASSESSING OFFICER) UNDER CLAUSE (A) OF SUB-SECTION (1) OF SECTION 251 OR THE IMPOSITION OF PENALTY UNDER SECT ION 271'. 2.8.2 THE CIT(A} CAN ENTERTAIN ANY EVIDENCE OTHER TH AN THE ONE PRODUCED BY THE APPELLANT BEFORE THE ASSESSING OFFI CER PROVIDED THE EXCEPTIONAL CONDITIONS MENTIONED IN CLAUSE (A) TO (D) ABOVE IN RULE 46A ARE SATISFIED. THE FACTS IN THE PRESENT CASE IS AS UNDER: 1. CLAUSE (A) WHERE THE ASSESSING OFFICER REFUSES T O ADMIT THE EVIDENCES WHICH OUGHT TO HAVE BEEN ADMITTED IS NOT APPLICABLE TO THE FACTS IN THE APPELLANT'S CASE. IN FACT IT IS TH E FAILURE ON THE PART OF THE APPELLANT TO PRODUCE THE COMPLETE DETAILS, D URING THE ASSESSMENT PROCEEDINGS, PROMPTED THE ASSESSING OFFI CER TO MAKE THE IMPUGNED ADDITIONS. FURTHER, THE AR HAS NOT PRO DUCED ANY EVIDENCE BEFORE ME TO SHOW THAT THE ASSESSING OFFIC ER HAD REFUSED TO ADMIT ANY EVIDENCE. 2. CONDITIONS OF CLAUSE (B), WHERE THE APPELLANT WA S PREVENTED FROM SUFFICIENT CAUSE FROM FURNISHING THE EVIDENCE WHICH WAS CALLED FOR BY THE ASSESSING OFFICER IS ALSO NOT APP LICABLE BECAUSE THE AR OF THE APPELLANT HAS NOT BROUGHT ANY EVIDENC E BEFORE ME TO ITA 3164/ MUM/2014 8 SHOW THAT THE APPELLANT WAS PREVENTED FROM SUFFICIE NT CAUSE IN FURNISHING THE EVIDENCE IN SUPPORT OF HIS CONTENTIO N. 3. CLAUSE (C} IS NOT SATISFIED BY THE APPELLANT SINC E HE HAS NOT BROUGHT OUT ANY SUFFICIENT REASONS TO SHOW THAT THE APPELLANT WAS PREVENTED FROM FILING THE EVIDENCES. 4. CONDITIONS OF CLAUSE (D) THAT WHERE THE ASSESSIN G OFFICER HAS FAILED TO GIVE SUFFICIENT OPPORTUNITY TO THE APPELL ANT TO ADDUCE EVIDENCE RELATED TO THE GROUNDS TAKEN IN APPEAL IS ALSO NOT APPLICABLE TO THE PRESENT CASE. 2.8.3 FROM THE ASSESSMENT ORDER AS WELL AS FROM THE DETAILED SUBMISSIONS MADE BY THE AR NOWHERE IT HAS BEEN POIN TED OUT THAT THE ASSESSING OFFICER HAS NOT GIVEN SUFFICIENT OPPO RTUNITY TO THE APPELLANT. IN FACT, FOR THE SPECIFIC OPPORTUNITY GI VEN BY THE ASSESSING OFFICER, THE APPELLANT HAS FAILED TO FURN ISH THE DETAILS CALLED FOR. 2.8.4 I RELY ON THE DECISION OF KERALA HIGH COURT I N THE CASE OF UNNIKRISHNAN (C.) V. COMMISSIONER OF INCOME-TAX REP ORTED IN 233 ITR 485 KER IN THIS REGARD. THE HEAD NOTE IS AS UNDER: APPEAL--APPEAL TO COMMISSIONER (APPEALS) -PRODUCTIO N OF ADDITIONAL EVIDENCE--REQUIREMENTS TO BE SATISFIED - NO ATTEMPT MADE BY ASSESSEE TO PRODUCE ADDITIONAL EVIDENCE EIT HER BEFORE ASSESSING OFFICER OR AACFAILURE OF ASSESSEE TO FOL LOW REQUIREMENTS OF RULE 46A--AAC JUSTIFIED IN NOT CONS IDERING ADDITIONAL EVIDENCE--INCOME-TAX RULES, 1962, R. 46A . RULE 46A OF THE INCOME-TAX RULES, 1962, RELATES TO APPELLATE PROCEEDINGS BEFORE THE COMMISSIONER, IN THE MATTER OF PRODUCTION OF ADDITIONAL EVIDENCE BEFORE THE DEPUTY COMMISSIONER OF APPEALS AND THE COMMISSIONER (APPEALS). SUCH PRODUCTION IS CONDITIONED BY CERTAIN SITUATIONS. THE ASSESSEE HAS TO SHOW THAT T HE ASSESSING OFFICER HAS REFUSED TO ADMIT THE EVIDENCE. THE ASSE SSEE ALSO HAS TO SHOW ALTERNATIVELY THAT HE WAS PREVENTED BY SUFFICI ENT CAUSE FROM PRODUCING THE EVIDENCE BEFORE THE ASSESSING OFFICER . ALTERNATIVELY, ITA 3164/ MUM/2014 9 FURTHER, THE ASSESSEE ALSO HAS TO SHOW ITS RELEVANC Y TO THE GROUNDS OF APPEAL SOUGHT, TO BE URGED. LASTLY, THE ASSESSEE ALSO HAS TO ESTABLISH THAT THE ASSESSING OFFICER DID NOT AFFORD HIM SUFFICIENT OPPORTUNITY IN REGARD THERETO. THE HIGH COURT, IN A REFERENCE, HAS TO ACT ON THE B ASIS OF THE CONTENTS OF THE STATEMENT OF CASE. THE HIGH COURT I S NOT PERMITTED TO TRAVEL BEYOND THE STATEMENT OF CASE. HELD, THAT THE ORDER OF THE APPELLATE ASSISTANT COM MISSIONER SHOWED THAT NOT EVEN AN IOTA OF ADDITIONAL EVIDENCE WAS PRODUCED BEFORE HIM IN SUPPORT OF THE ASSESSEE'S CASE THAT T HERE WAS IMPROPER SERVICE OF NOTICE ON HIM AND THAT HE HIMSE LF WAS NOT RUNNING THE HOTEL BUT SOMEONE ON HIS BEHALF WAS RUN NING IT. EVEN BEFORE THE TRIBUNAL THE POINT RELATING TO SOMEONE R UNNING THE HOTEL ON BEHALF OF THE ASSESSEE WAS WITHHELD. THEREFORE, NO ATTEMPT WAS MADE BY THE ASSESSEE EITHER BEFORE THE INCOME-TAX O FFICER OR THE APPELLATE ASSISTANT COMMISSIONER TO PRODUCE ADDITIO NAL EVIDENCE. THEREFORE, THE TRIBUNAL WAS RIGHT IN HOLDING THAT T HE APPELLATE ASSISTANT COMMISSIONER WAS JUSTIFIED IN NOT CONSIDE RING THE ADDITIONAL EVIDENCE. 2.8.5 RELIANCE IS ALSO PLACED ON COMMISSIONER OF IN COME-TAX V, RANJIT KUMAR CHOUDHURY REPORTED IN 288 ITR 179 (GAU ). THE HEAD NOTE IS REPRODUCED BELOW: APPEAL TO COMMISSIONER (APPEALS)--POWERS OF COMMISS IONER (APPEALS)-- POWER TO ADMIT ADDITIONAL EVIDENCE-SCOP E OF RULE 46A- DOCUMENTARY EVIDENCE NOT TENDERED BEFORE ASSESSING OFFICER-NO REASON FOR FAILURE TO ADDUCE EVIDENCE-DOCUMENTS NOT ADMISSIBLE AS EVIDENCE BEFORE COMMISSIONER (APPEALS- INCOME TAX A CT, 1961, S. 250-LNCOME TAX RULES, 1,962, R.46A. RULE 46A(1) OF THE INCOME-TAX RULES; 19'62, ENUMERA TES FOUR CIRCUMSTANCES ALLOWING THE APPELLANT/ASSESSEE TO PR ODUCE ADDITIONAL EVIDENCE NAMELY, (I) IF THE ASSESSING OFFICER REFUSES TO ADMIT THE EVIDE NCE WHICH OUGHT TO HAVE BEEN ADMITTED ; ITA 3164/ MUM/2014 10 (II) WHEN THE APPELLANT WAS PREVENTED BY SUFFICIEN T. CAUSE FROM PRODUCING SUCH EVIDENCE WHICH HE WAS CALLED UPON TO PRODUCE BY THE ASSESSING OFFICER; (II) 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 AND LASTLY (IV) WHEN NO SUFFICIENT/REASONABLE OPPORTUNITY OF H EARING TO THE APPELLANT WAS GIVEN TO ADDUCE ANY RELEVANT EVIDENCE BY THE ASSESSING OFFICER AT THE TIME OF PASSING THE ORDER IMPUGNED. THEREFORE, IT IS CLEAR AND UNAMBIGUOUS THAT ONLY IN CASE OF AVAILABILITY OF ANYONE OF THOSE FOUR GROUNDS MENTIO NED IN SUB-RULE (1) OF RULE 46A, THE PRODUCTION OF ADDITIONAL EVID ENCE IS PERMITTED. 2.7.6 SINCE NONE OF THE ABOVE 4 EXCEPTIONAL CONDIT IONS MENTIONED IN RULE 46A ARE SATISFIED, THE ADDITIONAL EVIDENCES FILED BY THE APPELLANT IS NOT ADMITTED AND HENCE THE ADDITION MA DE BY THE AO IS SUSTAINED. THIS GROUND OF APPEAL IS DISMISSED. THUS, IT COULD BE OBSERVED FROM THE APPELLATE ORDER OF LEARNED CIT(A) DATED 13-02-2014 IN SECOND ROUND OF LITIGATION THAT THE L D. CIT(A) DID NOT ADMIT ADDITIONAL EVIDENCES FILED BY THE ASSESSEE HOLDING THAT THE CONDITIONS MENTIONED IN RULE 46A OF INCOME-TAX RULES, 1962 WER E NOT FULFILLED BY THE ASSESSEE AND HENCE THE ADDITION MADE BY THE A.O. WE RE SUSTAINED BY LEARNED CIT(A) VIDE APPELLATE ORDERS DATED 13-02-2014 PASSE D IN SECOND ROUND OF LITIGATION. 4. AGGRIEVED BY THE APPELLATE ORDER DATED 13-02-201 4 PASSED BY LD. CIT(A) IN SECOND ROUND OF LITIGATION, THE ASSESSEE FILED AN A PPEAL BEFORE THE TRIBUNAL IN SECOND ROUND OF LITIGATION. 5. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE TRIBUNAL IN THE FIRST ROUND OF LITIGATION, DIRECTED THE LD. CIT(A) TO ADJ UDICATE THE MATTER ON MERITS ITA 3164/ MUM/2014 11 BUT IT IS UNFORTUNATE THAT IN THE SECOND ROUND OF L ITIGATION ALSO , THE LD. CIT(A) DID NOT ADMIT THE ADDITIONAL EVIDENCES FILED BY THE ASSESSEE IN SUPPORT OF ITS CONTENTIONS ON MERITS. THE LD. COUNSEL DREW OUR AT TENTION TO THE CORRESPONDENCES BETWEEN THE SAID CHARTERED ACCOUNTA NT, MR VIJAY PATIL AND THE ASSESSEE , WHEREBY A COMPLAINT HAS BEEN LODGED BY THE ASSESSEE AGAINST THE SAID ERRING CHARTERED ACCOUNTANT WITH THE INSTI TUTE OF CHARTERED ACCOUNTANTS OF INDIA VIDE LETTER DATED 05-08-2011 C OMPLAINING ABOUT NON HANDING OVER OF THE RECORDS OF THE ASSESSEE BY THE SAID CA , MR VIJAY PATIL TO THE ASSESSEE. HE ALSO DREW OUR ATTENTION TO THE LET TER OF ICAI DATED 19-10- 2011 ABOUT ACTION TAKEN TO GET RECORDS FROM SAID ER RING CA MR. VIJAY PATIL. THE REPLIES OF SAID CA MR VIJAY PATIL ARE ALSO PLAC ED ON RECORDS. THE ENTIRE CORRESPONDENCE WITH ICAI AND THE ERRING CA IS PLAC ED ON RECORD AT PAGE 2-10. THE LD. COUNSEL FURTHER DREW OUR ATTENTION TO THE F ACT THAT THE ASSESSEE HAS SUFFICIENT REASONS WHICH PREVENTED ASSESSEE IN PRES ENTING HIS CASE BEFORE THE AUTHORITIES BELOW AND SUBMITTED THAT PREJUDICE IS C AUSED TO THE ASSESSEE BY THE APPELLATE ORDER OF THE LD. CIT(A) IN NOT ADMITT ING THE ADDITIONAL EVIDENCES BY INVOKING RULE 46A OF INCOME-TAX RULES, 1962. TH US, THE LD. COUNSEL PRAYED THAT THE MATTER MAY BE RESTORED TO THE FILE OF THE LD. CIT(A) WITH A DIRECTION TO ADMIT THE ADDITIONAL EVIDENCES AND ADJ UDICATE THE MATTER ON MERITS IN ACCORDANCE WITH LAW. IT WAS SUBMITTED THA T AFTER ADMITTING THE ADDITIONAL EVIDENCES, THE LD. CIT(A) CAN CALL FOR R EMAND REPORT FROM AO IN ACCORDANCE WITH RULE 46A OF 1962 RULES. 6. THE LD. D.R. FAIRLY CONCEDED THAT IN BOTH THE RO UND OF LITIGATION, THE ADDITIONAL EVIDENCES WERE NOT ADMITTED BY THE LD. C IT(A) AND LEAVE IT TO THE BENCH TO DECIDE THE ISSUE ON MERITS MORE-SO THE ASS ESSEE HAS NOW PRODUCED CORRESPONDENCE WITH ICAI COMPLAINING AGAINST THE SA ID ERRING CA, MR VIJAY PATIL. ITA 3164/ MUM/2014 12 7. WE HAVE CONSIDERED RIVAL CONTENTIONS AND ALSO PE RUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE OBSERVED THAT THE ASSE SSEE IS ENGAGED IN THE BUSINESS OF OFFSET PRINTING & PACKAGING AND MANUFAC TURING OF CONFECTIONERIES. WE HAVE OBSERVED THAT THE ASSESSEE BY FILING THE IN STANT APPEAL BEFORE THE TRIBUNAL IS IN SECOND ROUND OF LITIGATION BEFORE TH E TRIBUNAL. IN THE FIRST ROUND OF LITIGATION BEFORE THE TRIBUNAL, THE TRIBUNAL IN ITA NO. 2767/MUM/2011 VIDE ITS ORDERS DATED 15-06-2012 FOR THE IMPUGNED ASSESS MENT YEAR 2008-09 HAD OBSERVED AS UNDER:- THIS ASSESSEE'S APPEAL CHALLENGES ID. CIT (A) ORDE R CONFIRMING PENALTY U/S 271 (L)(C) OF THE ACT REGARDING ASSESSMENT YEAR 2008-09. 2. THE MAIN GRIEVANCE OF THE ASSESSEE IS THAT CIT(A ) HAS DISMISSED HIS APPEAL WITHOUT ADVERTING TO FACTS AND NATURE OF THE GROUNDS RAISED, THAT TOO, BY A TOTALLY NON-SPEAKING ORDER. 3. AS WE SEE FROM ID. CIT (A) ORDER WHOSE OPERATIVE PART READS AS UNDER: 'IN THE GROUNDS OF APPEAL AS ABOVE IT HAS BEEN SIMP LY BEEN REQUESTED THAT THE MATTER MAY BE REMANDED TO THE AO AND OPPORTUNITY MAY BE AFFORDED. HOWEVER, BEFORE ME THE ASSESSEE HAS NOT BROUGHT ON RECORD THE ''REASONABLE CAUSE' B ECAUSE OF WHICH IT FAILED TO FURNISH THE DETAILS CALLED FOR B Y THE AO. EVEN IN THE LETTER DATED 28.1.2011 NO SUCH SUBMISSIONS HAVE BEEN MADE. IN VIEW OF THIS, I AM OF THE OPINION THAT THE ASSES SEE IS NOT HAVING ANY REASONABLE CAUSE FOR GIVING ONE MORE OPPORTUNIT Y AND HENCE THE FINDINGS GIVEN IN THE ASSESSMENT ORDER ARE UPHE LD EVEN ON MERIT, THE ASSESSEE HAS NOT GIVEN ANY DETAILED SUBM ISSIONS WITH REGARD TO THE ADDITIONS MADE. HENCE, I HAVE NO REAS ON TO DEVIATE WITH THE FINDINGS GIVEN BY THE AO IN THE ASSESSMENT ORDER.' IT NOWHERE STATES THE POINTS FOR DETERMINATION, DEC ISION THEREON OR REASONS IN SUPPORT THEREOF AS PROVIDED U/S 250(6) O F THE ACT. 4. ALTHOUGH NOBODY HAS TURNED UP ON ASSESSEE'S BEHA LF, BUT WE HAVE HEARD ID DR. THE ORDER OF CIT (A) IS TOO CRYPTIC. A PART FROM BEING NON- SPEAKING ORDER, IT NOWHERE STATES POINTS FOR DETERM INATION, DECISION THEREON WITH REASONS IN SUPPORT AS REQUIRED UNDER T HE PROVISIONS OF THE ACT. ITA 3164/ MUM/2014 13 5. THEREFORE, WE HAVE NO HESITATION IN SETTING ASID E THE CIT(A)S ORDER AND RESTORE THE MATTER BACK TO HIM WITH A DIRECTION TO DECIDE THE APPEAL ON MERITS IN ACCORDANCE WITH LAW. ORDER PRONOUNCED IN THE OPEN COURT ON 15.6.2012. THUS AS COULD BE SEEN THAT THE TRIBUNAL IN FIRST RO UND OF LITIGATION SET ASIDE THE MATTER BACK TO THE FILE OF THE LD. CIT(A) WITH A DIRECTION TO DECIDE THE MATTER AFRESH ON MERITS IN ACCORDANCE WITH LAW. WE HAVE OBSERVED THAT THE LD. CIT(A) IN THE SECOND ROUND OF LITIGATION REFUSED TO ADMIT THE ADDITIONAL EVIDENCES BY INVOKING RULE 46A OF 1962 RULES. ON T HE OTHER HAND, THE ASSESSEE HAS PRODUCED LARGE NUMBER OF DOCUMENTS WIT H RESPECT TO THE COMPLAINT LODGED BY THE ASSESSEE WITH THE INSTITUTE OF CHARTED ACCOUNTANTS OF INDIA AGAINST ITS ERSTWHILE ERRING CA MR VIJAY P ATIL WHO WAS NOT HANDING OVER RELEVANT RECORDS TO THE ASSESSEE WHICH DISABLE D ASSESSEE IN FILING EVIDENCES BEFORE THE AO. THUS, IN OUR CONSIDERED VI EW THE ASSESSEE HAS ESTABLISHED A REASONABLE CAUSE FOR NOT PRESENTING T HE EVIDENCES BEFORE THE AO AT THE TIME OF FRAMING OF THE ASSESSMENT ORDER DATE D 25-11-2010 PASSED BY THE AO U/S 143(3)(II) OF 1961 ACT. THE RULE 46A OF 1962 ACT IS AN AID TO ADVANCE JUSTICE TO COMPUTE CORRECT INCOME WHICH CAN BE BROUGHT TO TAX UNDER THE PROVISIONS OF 1961 ACT IN THE HANDS OF TAX-PAYE R SO AS TO ACHIEVE MANDATE OF 1961 ACT WHICH ITSELF DERIVES ITS POWERS FROM AR TICLE 265 OF CONSTITUTION OF INDIA WHICH STIPULATES THAT TAXES ARE NOT TO BE IMP OSED SAVE BY AUTHORITY OF LAW AND NO TAX SHALL BE LEVIED OR COLLECTED EXCEPT BY AUTHORITY OF LAW. RULE 46A OF 1962 ACT CANNOT BE USED AS SWORD TO STIFLE BONA-FIDE TAX-PAYERS RATHER IT IS A SHIELD IN THE AID OF BONA-FIDE TAX-PAYERS A S WELL REVENUE TO ADVANCE THE CAUSE OF JUSTICE AND TO ACHIEVE MANDATE OF 1961 ACT . KEEPING IN VIEW THE FACTUAL MATRIX OF THE CASE AS IT EMERGES FROM THE R ECORDS AND TO ADVANCE JUSTICE , WE ARE OF THE CONSIDERED VIEW THAT, IN TH E INTEREST OF SUBSTANTIAL JUSTICE AND FAIR PLAY, THIS MATTER NEEDS TO BE SET ASIDE AND RESTORED TO THE FILE OF THE LD. CIT(A) WITH A DIRECTION TO ADMIT ALL THE ADDITIONAL EVIDENCES AND ITA 3164/ MUM/2014 14 EXPLANATIONS FILED BY THE ASSESSEE IN REMAND PROCEE DINGS BEFORE LEARNED CIT(A) AND, THEREAFTER, ADJUDICATE THE APPEAL ON ME RITS IN ACCORDANCE WITH LAW AFTER CONSIDERING THE ADDITIONAL EVIDENCES AND EXPL ANATIONS FILED BY THE ASSESSEE IN ITS DEFENSE IN REMAND PROCEEDINGS . TH E LEARNED CIT(A) SHALL FORWARD ADDITIONAL EVIDENCES AND EXPLANATIONS FILED BY THE ASSESSEE IN SET ASIDE PROCEEDINGS BEFORE LEARNED CIT(A) IN ITS DEFE NSE TO THE AO FOR HIS ENQUIRY, EXAMINATION AND VERIFICATION AS IS CONTEMP LATED U/R 46A OF 1962 RULES. NEEDLESS TO SAY THAT PROPER AND ADEQUATE OPP ORTUNITY OF BEING HEARD SHALL BE PROVIDED BY THE LD. CIT(A) TO THE ASSESSEE IN ACCORDANCE WITH PRINCIPLES OF NATURAL JUSTICE IN ACCORDANCE WITH LA W. WE ORDER ACCORDINGLY. 8. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IN I TA NO. 3164/MUM/2014 FOR ASSESSMENT YEAR 2008-09 IS ALLOWED FOR STATISTI CAL PURPOSES AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON26TH APRIL, 2 017. # $% &' 26-04-2017 ( ) SD/- SD/- (JOGINDER SINGH) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER $ MUMBAI ; & DATED 26-04-2017 [ .9../ R.K. R.K. R.K. R.K. , EX. SR. PS ITA 3164/ MUM/2014 15 !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. : ( ) / THE CIT(A)- CONCERNED, MUMBAI 4. : / CIT- CONCERNED, MUMBAI 5. =>( 99?@ , ?@ , $ / DR, ITAT, MUMBAI B BENCH 6. (BC D / GUARD FILE. / BY ORDER, = 9 //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , $ / ITAT, MUMBAI