The Income Tax Officer, Ward- 1(2)(1), Vadodara V. M/s. Rachana Enterprises, Vadodara

ITA 392/AHD/2022

AI Insights

The case involves the Income Tax Officer, Ward-1(2)(1), Vadodara as the appellant and M/s. Rachana Enterprises as the respondent. The dispute arose from the assessment order for the Assessment Year 2017-18, where the Income Tax Officer made several disallowances including an addition of Rs. 1,11,67,778 for the purchase of land, Rs. 73,69,505 for unexplained capital introduction, and Rs. 1,75,768 for transportation and management charges. The NFAC deleted these additions based on the documents provided by the assessee without a remand report from the Assessing Officer. The Revenue appealed against this decision, arguing that the NFAC had erred in not allowing the Assessing Officer to examine the additional evidence.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 133589 (ITAT-AHMEDABAD)
• Duration Of Justice: 7 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-05-2023
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 01-05-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 17-10-2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained investment; Principle of natural justice; Additional evidence; TDS
• Section: 68; 143(3); 37(1)

Judgement Text

आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरणआयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण, अहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठअहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठ ‘C’ अहमदाबाद। अहमदाबाद।अहमदाबाद। अहमदाबाद। IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, AHMEDABAD ] ] BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI T.R. SENTHIL KUMAR, JUDICIAL MEMBER ITA No.392/Ahd/2022 Assessment Year : 2017-18 Income Tax Officer Ward-1(2)(1), Vadodara Vs M/s. Rachana Enterprises Orchid Plaza, B.S. Mc Donalds Sama Savli Road, 1903 Fateh Gunj, Vemali, Vadodara-390018 [PAN No. :AARFR8061P] अपीलाथ / (Appellant) यथ / (Respondent) Appellant by : Shri Varis V Isani, A.R. Respondent by : Shri Rakesh Jha, Sr. DR स ु नवाई क तार ख/Date of Hearing: 02.05.2023 घोषणा क तार ख /Date of Pronouncement: 19.05.2023 आदेश/O R D E R PER T.R. SENTHIL KUMAR, JUDICIAL MEMBER: This appeal is filed by the Revenue as against the appellate order dated 22.08.2022 passed by National Faceless Appeal Center (in short “NFAC”), Delhi arising out of the assessment order passed under Section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the “the Act”) relating to the Assessment Year 2017-18. 2. The brief facts of the case is the assessee is partnership firm engaged in Construction and Real Estate business since 2014. The assessee filed its Return of Income for the A.Y. 2017-18 on 31.10.2017 declaring total income of Rs. ITA No.392/Ahd/2022 A.Y. 2017-18 2 14,00,250/-. The assessment was taken for scrutiny assessment and made disallowance on three counts namely (i) addition of Rs. 1,11,67,778/- being the amount paid for the purchase of plot of land, (ii) capital introduced of Rs. 73,69,505/- as unexplained income and (iii) addition of Rs. 1,75,768/- towards transportation expenses and management charges and demanded tax thereon. 3. Aggrieved against the assessment order the assessee filed an appeal before the National Faceless Appeal Center. The assessee filed copies of the relevant statement of the bank account from whom payments for the purchase of plot of land in question, including TDS thereon as Annexure-F, copy of the Ledger Account of the sellers of the plot of land as Annexure-G and relevant extract of TDS Return alognwith TDS challan paid as Annexure-H before the NFAC. After perusing the above documents and without calling for remand report from the Assessing Officer, the Ld. NFAC deleted the addition of 1,11,67,778/- observing that the Assessing Officer failed to make proper enquiries. Similarly second issue namely capital introduction of Rs. 73,69,505/- the assessee submitted copies of the relevant bank statements maintained by the respective Partners who introduce the capital during the year. The Ld. NFAC deleted the above addition on the ground that Section 68 of the Act cannot be applied in the case of capital introduced by the Partners of the assessee firm, when it is properly accounted for and explained by the assessee. Regarding the third issue namely transportation expenses and management charges of ITA No.392/Ahd/2022 A.Y. 2017-18 3 Rs. 1,75,768/- the assessee furnished copies of the Ledger Account of transportation expenses of Rs. 7,16,946/- and collection management charges of Rs. 10,38,736/- as Annexure-M before NFAC. The National Faceless Appeal Center deleted the additions stating that the expenses is wholly and exclusively laid for the purpose for the business and is to be allowable under Section 37(1) of the Act. Thus, the assessee’s appeal has been allowed. 4. Aggrieved against the same the Revenue is in appeal before us raising the following grounds of appeal: “1. “Whether on the facts and in the circumstances of the case, the Ld. CIT(A) is justified in deleting the addition of Rs.1,11,67,778/- made by the AO as unexplained investment in land without appreciating the fact that the assesses could not furnish the documentary evidence to prove the source of investment before the Assessing Officer.” 1.1 “Whether on the facts and in the circumstances of the case, the Ld. CIT(A) is justified in deleting the addition of Rs.1,11,67,778/- made by the AO as unexplained investment in land without giving an opportunity to examine additional evidences to the AO.” 2. “Whether on the facts and in the circumstances of the case, the Ld. CIT(A) is justified in deleting the addition of Rs.73,69,505/- made by the AO as unexplained capital introduction without appreciating the fact that the assesses could not furnish the documentary evidence to prove the introduction of capital before the Assessing Officer.” 2.1 “Whether on the facts and in the circumstances of the case, the Ld. CIT(A) is justified in deleting the addition of Rs.73,69,505/- made by the AO as unexplained capital introduction without giving an opportunity to examine additional evidences to the AO.” 3. Whether on the facts and in the circumstances of the case, the Ld.CIT(A) is justified in deleting the addition of Rs. 1,75,768/- made by the AO on account of disallowance of 10 % out of transportation and collection and management charges without appreciating the fact that the assesses could not furnish the documentary evidence to prove the genuineness of expenses. 3.1 “Whether on the facts and in the circumstances of the case, the Ld. CIT(A) is justified in deleting the addition of Rs.1,75,768/- made by the AO ITA No.392/Ahd/2022 A.Y. 2017-18 4 on account of disallowance of 10 % out of transportation and collection and management charges without giving an opportunity to examine additional evidences to the AO.” 4. The appellant craves leaves to add, modify, amend or alter any grounds of appeal at the time of, or before, the hearing of appeal. It is prayed that the order of the CIT(A) on the above issues be set- side and that of the Assessing Officer be restored.” 5. The Ld. Senior D.R. Shri Rakesh Jha appearing for the Revenue submitted before us that there is violation of Rule 46A and the Ld. CIT(A) entertained new documents without calling for a remand report from the Assessing Officer on all the three issues, where relief is given to the assessee. Therefore, the order passed by the CIT(A) is erroneous and an opportunity should be given to the Assessing Officer to decide the case afresh. 6. The Ld. A.R. Shri Varis V Isani appearing for the assessee could not establish before us that the Assessing Officer was been given proper opportunity under Rule 46A of entertaining the new documents namely Annexure- F, G, H & M by the CIT(A). However, the Ld. Counsel stated that the assessee has a good case on merits and therefore, the appeal may be set- aside back to the file of CIT(A). 7. We have perused the material available on record and found that Commissioner of Income Tax (Appeals) while passing orders has not given opportunity to the Assessing Officer to verify the submissions more particularly additional evidences filed by the assessee. In the interest of Natural Justice and Fairplay we deem it fit to set-aside the appeal to the file of ITA No.392/Ahd/2022 A.Y. 2017-18 5 National Faceless Appeal Center and direct to pass fresh orders after calling for remand report from the Assessing Officer. Thus, the grounds raised by the Revenue are hereby allowed. 8. In result, appeal filed by the Revenue is allowed for statistical purpose. Order pronounced in the Court on 19.05.2023 at Ahmedabad. Sd/- Sd/- (WASEEM AHMED) ACCOUNTANT MEMBER (T.R. SENTHIL KUMAR) JUDICIAL MEMBER Ahmedabad, dated 19/05/2023 Tanmay, Sr. P.S. TRUE COPY आदेश क त ल प अ े षत/Copy of the Order forwarded to : 1. अपीलाथ! / The Appellant 2. "यथ! / The Respondent. 3. संबं&धत आयकर आय ु (त / Concerned CIT 4. आयकर आय ु (त)अपील (/ The CIT(A)- 5. वभागीय त न&ध ,आयकर अपील य अ&धकरण,राजोकट/DR,ITAT, Ahmedabad, 6. गाड1 फाईल /Guard file. आदेशान ु सार/ BY ORDER, सहायक पंजीकार (Asstt. Registrar) आयकर अपील य अ&धकरण, ITAT, Ahmedabad 1. Date of dictation : 18-05-2023 2. Date on which the typed draft is placed before the Dictating Member. : 18-05-2023 3. Date on which the approved draft comes to the Sr.P.S./P.S : 18-05-2023 4. Date on which the fair order is placed before the Dictating Member for pronouncement. : 5. Date on which fair order placed before Other Member : 6. Date on which the fair order comes back to the Sr.P.S./P.S. : 19.05.2023 7. Date on which the file goes to the Bench Clerk. : 19-05-2023 8. Date on which the file goes to the Head Clerk. : 9. The date on which the file goes to the Assistant Registrar for signature on the order. : 10. Date of Despatch of the Order :