ACIT, New Delhi V. Sh. Prashant Tondon, Delhi

ITA 4239/DEL/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3939 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-05-2010
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 06-05-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 30-10-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M K GAUTAM SHRI H K LAL
• Keywords: Additional evidence; Procedural lapse
• Section: 142(1); 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : F NEW DELHI BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A NO. 4239/DEL/09 ASSTT. YEAR 2006-07 ASSTT. COMMISSIONER OF INCOME-TAX CIRCLE-42(1), ROOM NO. 621 MAYUR BHAWAN, NEW DELHI. VS. SHRI PRASHANT TONDON, B-401, MAURYA APARTMENTS, 95, I.P. EXTENSION, PATPARGANJ, NEW DELHI 110 092. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI M.K. GAUTAM, CIT/DR, SHRI H.K. LAL, SR. DR RESPONDENT BY: SHRI DINESH MOHAN SINHA, ADVOCAT E ORDER PER RAJPAL YADAV, JM: THE REVENUE IS IN APPEAL BEFORE US AGAINST THE ORDE R OF LD. CIT(A) DATED 24 TH JULY, 2009 PASSED FOR ASSTT. YEAR 2006-07. THE GRI EVANCE OF THE REVENUE IS THAT LD. CIT(A) HAS ERRED IN DELETIN G THE ADDITIONS OF RS. 60,00,000/- AND RS. 2,25,203/- MADE BY THE AO. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE HA S FILED HIS RETURN OF INCOME ON 28 TH JULY, 2006 DECLARING TOTAL INCOME AT RS. 7,10,890 /-. THE ITA NO. 4239/DEL/2009 ASSTT. YEAR 2006-07 2 CASE WAS SELECTED FOR SCRUTINY ASSESSMENT AND THE A O HAS ISSUED NOTICE U/S 143(2) ON 18.7.2007 WHICH ACCORDING TO A O WAS SERVED UPON THE ASSESSEE. IT EMERGES OUT FROM THE ASSTT. ORDER THAT THERE WAS NO COMPLIANCE AT THE END OF ASSESSEE AND AO HAS PASSED ASSTT. ORDER ON 16.12.08 U/S 144 OF THE ACT ACCORDING TO HIS BEST J UDGMENT. THE AO HAS OBSERVED THAT ASSESSEE HAD INCURRED A SUM OF RS. 2, 25,203/- THROUGH SBI CREDIT CARD. HE FAILED TO EXPLAIN THE SOURCE OF SUCH EXPENDITURE WITH DOCUMENTARY EVIDENCE AND THEREFORE AO MADE THE ADDI TION ON THE GROUND THAT SOURCE OF EXPENDITURE REMAINED UNDISCL OSED. THE AO FURTHER MADE ADDITION OF RS. 60,00,000/- ON THE GRO UND THAT HE HAS RECEIVED INFORMATION FROM THE ITS DATA AVAILABLE ON THE COMPUTER INDICATING THAT ASSESSEE MADE INVESTMENT OF RS. 60, 00,000/- IN PURCHASING MUTUAL FUND OF UTI. ACCORDING TO THE AO THE SOURCE REMAINED UNEXPLAINED AND THEREFORE HE MADE THE ADDI TION. IN THIS WAY AO HAS DETERMINED THE INCOME OF ASSESSEE AT RS. 69, 36,093/-. 3. DISSATISFIED WITH THE ACTION OF AO ASSESSEE CARR IED THE MATTER IN APPEAL BEFORE LD. CIT(A). THE ASSESSEE HAS SUBMITTE D A CERTIFICATE FROM UTI MUTUAL FUND, CERTIFYING THAT INVESTMENT MADE B Y HIM IN UTI SINCE 1 ST APRIL, 2005 IS RS. 10,000/- ONLY AND NOT RS. 60,00, 000/- CONSTRUED BY THE AO. WITH REGARD TO THE ADDITION OF RS. 2,25,203/- T HE ASSESSEE HAS CONTENDED THAT THESE EXPENSES WERE INCURRED DURING F.Y. 2005-06 ON ITA NO. 4239/DEL/2009 ASSTT. YEAR 2006-07 3 BEHALF OF THE COMPANY. LD. CIT(A) HAS DELETED BOTH THE ADDITIONS BY OBSERVING AS UNDER :- 5. I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE A SSESSEE AND I FIND THAT THE ASSESSMENT HAS BEEN COMPLETED U/S 144 ON THE GROUND THAT NO COMPLIANCE WAS MADE TO THE NO TICES ISSUED BY THE DEPARTMENT. HOWEVER, THE ASSESSEE HAS ASSERTED THAT THE NOTICES WERE NEVER SERVED UPON HI M. GIVING THE BENEFIT OF DOUBT TO THE ASSESSEE, THE AP PEAL IS BEING DECIDED TAKING INTO ACCOUNT THE EXPLANATION A ND DOCUMENTARY EVIDENCE FILED BY THE APPELLANT BEFORE ME. THE ADDITION OF RS. 60,00,000/- HAS BEEN MADE ON TH E BASIS OF A WRONG INFORMATION AS IS EVIDENT FROM THE CERTI FICATE ISSUED BY UTI MUTUAL FUND. THE ADDITION OF RS. 60,0 0,000/- IS THEREFORE DELETED. THE ADDITION OF RS. 2,25,203/ - IS ALSO DELETED IN VIEW OF THE FACT THAT THE SOURCE OF CRED IT CAR EXPENSES IS PROVED ALONG WITH DOCUMENTARY EVIDENCE. 4. LD. DR WHILE IMPUGNING THE ORDER OF LD. CIT(A) C ONTENDED THAT ASSESSMENT WAS MADE EX PARTE U/S 144 OF THE INCOME TAX ACT. THE CERTIFICATE FROM THE UTI WAS FILED BEFORE THE LD. C IT(A). SIMILARLY ASSESSEE HAS SUBMITTED EVIDENCE DEMONSTRATING THAT EXPENSES INCURRED THROUGH THE CREDIT CARD WERE FOR THE PURPOSE OF COM PANYS BUSINESS, WHERE HE IS AN EMPLOYEE. LD. CIT(A) HAS PERMITTED T HE ASSESSEE TO PRODUCE THESE EVIDENCES IN VIOLATION OF 46A. MOREOV ER LD. CIT(A) HAS NOT GRANTED ANY OPPORTUNITY TO THE AO AS CONTEMPLAT ED IN SUB RULE 3 OF RULE 46A. ON THE OTHER HAND LD. COUNSEL FOR THE ASS ESSEE SUBMITTED THAT LD. AO HAS ERRED IN CONSTRUING THE INFORMATION ALLEGED TO HAVE BEEN ITA NO. 4239/DEL/2009 ASSTT. YEAR 2006-07 4 GATHERED BY HIM DEMONSTRATING THE FACT THAT ASSESSE E HAS MADE INVESTMENT IN UTI MUTUAL FUND. HE FURTHER CONTENDED THAT BEFORE FILING AN APPEAL IN THE TRIBUNAL AO SHOULD HAVE ASCERTAIN THI S FACT WHETHER CERTIFICATE SUBMITTED BY THE ASSESSEE BEFORE THE LD . CIT(A) IS FACTUALLY INCORRECT. WITH REGARD TO THE ARGUMENT OF DR THAT T HESE EVIDENCES HAVE BEEN TAKEN IN CONTRAVENTION TO RULES 46A. LD. COUN SEL FOR THE ASSESSEE WAS UNABLE TO CONTROVERT THIS SUBMISSION. 5. WE HAVE DULY CONSIDERED THE RIVAL CONTENTION AND GONE THROUGH THE RECORD CAREFULLY. FROM THE PERUSAL OF THE ASSTT . ORDER IT REVEALS THAT AO HAD ISSUED NOTICE U/S 143(2) ON 18 TH JULY, 2007. HE FURTHER OBSERVED THAT SEVERAL NUMBER OF OPPORTUNITIES PROVIDED TO TH E ASSESSEE BY ISSUING OF SEVERAL NOTICES U/S 143(2) OF THE INCOME TAX ACT . HOWEVER IT EMERGES OUT FROM THE ASSTT. ORDER THAT NOTICE U/S 142(1) WA S ISSUED ON 3 RD NOVEMBER, 2008. THE ASSTT. PROCEEDINGS WERE GOING T O BE TIME BARRED ON 16.12.2008. IF NOTICE U/S 143(2) WAS ISSUED ON 1 8.7.2007 AND IT WAS DULY SERVED UPON THE ASSESSEE THEN THERE IS NO IDEA TO SERVE NOTICE UNDER THIS SECTION. THE AO OUGHT TO HAVE SERVED NOT ICE U/S 142(1) AND COMMENCED THE ASSTT. PROCEEDINGS. BUT HE DID NOT TA KE UP THE ISSUES FOR MORE THAN ONE AND A HALF YEAR. WHEN THE ASSESSMENT WAS GOING TO BE TIME BARRED, INSTEAD OF EXPLORING THE POSSIBILITY O F SERVICE OF NOTICE UNDER OTHER MODES HE PROCEEDS TO PASS THE ASSTT. ORDER EX PARTE. THE AO DID ITA NO. 4239/DEL/2009 ASSTT. YEAR 2006-07 5 NOT BOTHER TO OBTAIN THE DETAILS FROM THE UTI OR TO CROSS VERIFY THE DETAILS GATHER FROM AIR DATA FOR MAKING THE ADDITION. 6. SUB RULE 1 OF 46A PROVIDES, THAT APPELLANT SHAL L NOT BE ENTITLED TO PRODUCE ANY EVIDENCE WHETHER ORAL OR DOCUMENTARY OT HER THAN THE EVIDENCE PRODUCED DURING THE COURSE OF ASSTT. PROC EEDINGS EXCEPT THE CIRCUMSTANCES PROVIDED IN CLAUSE ABC & D. IN THESE CLAUSES IT HAS BEEN PROVIDED THAT IF AO HAS REFUSED TO ADMIT EVIDENCE T HEN ASSESSEE CAN BE PERMITTED TO ADDUCE EVIDENCE IN THE FIRST APPELLATE PROCEEDINGS. THE SECOND CONDITION IS THAT APPELLANT WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING SUCH EVIDENCE BEFORE THE AO WHICH WA S CALLED UPON TO PRODUCE BY THE AO. SIMILARLY CERTAIN EVIDENCE WAS E SSENTIAL FOR ADJUDICATION OF ANY GROUND OF APPEAL AND THE APPEL LANT WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING SUCH EVIDENCE BE FORE THE AO. THE NEXT CONDITION PROVIDED IN CLAUSE D IS THAT AO FAIL ED TO GRANT ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE TO LEAD SUCH EVIDENCE. IN SUB RULE 2 OF 46A IT HAS BEEN PROVIDED THAT LD. CIT(A) SHALL NOT ADMIT ANY EVIDENCE UNLESS HE RECORDS REASONS IN WRITING FOR A DMITTING SUCH EVIDENCE. IN SUB RULE 3 AN INTERDICTION HAS BEEN PR OVIDED PUTTING EMBARGO UPON THE DISCRETION OF LD. CIT(A) THAT HE S HALL NOT TAKE INTO ACCOUNT ANY EVIDENCE PRODUCED UNDER SUB RULE 1 UNLE SS THE AO HAS BEEN ALLOWED A REASONABLE OPPORTUNITY TO EXAMINE TH E EVIDENCE OR ITA NO. 4239/DEL/2009 ASSTT. YEAR 2006-07 6 DOCUMENT OR TO CROSS EXAMINE THE WITNESS PRODUCED B Y THE ASSESSEE OR TO PRODUCE ANY EVIDENCE DOCUMENT OR ANY WITNESS IN REBUTTAL OF THE ADDITIONAL EVIDENCE PRODUCED BY THE APPELLANT. SUB RULE 4 TO RULE 46 IS AN EXCEPTION TO ALL THESE RULES. THE LD. FIRST APPE LLATE AUTHORITY HAS BEEN EMPOWERED TO DIRECT THE PRODUCTION OF ANY DOCU MENT OR THE EXAMINATION OF ANY WITNESS TO ENABLE HIM TO DISPOSE OFF THE APPEAL OR FOR ANY OTHER SUBSTANTIAL CAUSE INCLUDING ENHANCEMENT O F THE ASSESSMENT OR PENALTY. IN THE PRESENT CASE ADMITTEDLY LD. CIT( A) HAS NOT EXERCISED HER POWER AVAILABLE UNDER SUB RULE 4. 7. ON PERUSAL OF THE ORDER OF LD. CIT(A) IT REVEALS THAT NEITHER THE CONDITIONS STIPULATED IN SUB RULE 2 NOR IN SUB RULE 3 HAVE BEEN FOLLOWED BY THE LD. FIRST APPELLATE AUTHORITY. NO DOUBT AO H AS NOT PROVIDED SUFFICIENT OPPORTUNITY TO THE ASSESSEE RATHER HE FA ILED TO TAKE UP THE ISSUES ON AN EARLY STAGE BUT LD. CIT(A) HAS ALSO N OT GRANTED ANY OPPORTUNITY TO THE AO TO VERIFY THE CLAIM MADE BY T HE ASSESSEE ON THE STRENGTH OF CERTIFICATE ISSUED BY UTI. IT ALSO DOES NOT EMERGE OUT FROM THE FINDING OF THE LD. CIT(A) EXTRACTED SUPRA WHETH ER SHE HAS VERIFIED THE DETAILS SUBMITTED IN THE CERTIFICATE FROM THE S OURCE OF GENERATION OF THIS CERTIFICATE. IN THE ORDINARY CIRCUMSTANCES WHE NEVER WE FIND ANY PROCEDURAL IRREGULARITY IN THE ORDERS OF THE SUBORD INATE AUTHORITIES, WE TEND TO REMOVE THAT IRREGULARITY AND SET ASIDE THE PROCEEDING TO THE FILE OF ITA NO. 4239/DEL/2009 ASSTT. YEAR 2006-07 7 THAT AUTHORITY. IN THE PRESENT CASE THE LD. CIT(A) FAILED TO COMPLY WITH RULE 46A. HOWEVER IF WE RESTORE THE ISSUE TO THE FI LE OF LD. CIT(A) THEN IT WILL ONLY GIVE RISE MULTIPLICITY OF LITIGATION, BE CAUSE LD. CIT(A) WOULD CALL UPON THE REMAND REPORT FROM THE AO AND IT IS THE AO WHO WILL ULTIMATELY REQUIRED TO BE GONE INTO THE EVIDENCE PRODUCED BY T HE ASSESSEE. THEREFORE, WE DEEM IT NECESSARY TO SET ASIDE THESE ISSUES TO THE FILE OF AO FOR RE-ADJUDICATION. AS FAR AS PERMITTING THE AS SESSEE TO PLACE ON RECORD THE DETAILS AND THE CERTIFICATE FROM UTI BY THE LD. CIT(A) WE DO NOT FIND ANY REASON TO INTERFERE THAT FINDING OF TH E LD. CIT(A) BECAUSE WE ARE SATISFIED THAT CASE OF ASSESSEE DULY COME WITHI N THE AMBIT OF CLAUSE D OF SUB RULE 1 OF THE RULE 46A. THE AO DID NOT G IVE SUFFICIENT OPPORTUNITY TO THE ASSESSEE DURING THE ASSESSMENT P ROCEEDINGS. IN VIEW OF THE ABOVE DISCUSSION WE SET ASIDE BOTH THE ISSUE S TO THE FILE OF AO FOR RE-ADJUDICATION. . IT IS NEEDLESS TO SAY THAT OBSER VATIONS MADE BY US WOULD NOT IMPAIR OR INJURE THE CASE OF AO OR WOULD CAUSE ANY PREJUDICE TO THE DEFENCE/EXPLANATION OF THE ASSESSEE. THE ASS ESSEE WILL BE AT LIBERTY TO PRODUCE ANY OTHER MATERIAL IN SUPPORT OF HIS EXPLANATION WITH REGARD TO THESE TWO ADDITIONS DISPUTED BY THE REVEN UE IN ITS APPEAL. THE AO IS FURTHER DIRECTED TO GRANT DUE OPPORTUNITY OF HEARING TO THE ASSESSEE. ITA NO. 4239/DEL/2009 ASSTT. YEAR 2006-07 8 8. IN THE RESULT APPEAL OF THE REVENUE IS ALLOWED F OR STATISTICAL PURPOSES ORDER PRONOUNCED IN THE OPEN COURT ON 6 TH MAY, 2010. [SHAMIM YAHYA] [RAJPAL YADAV] ACCOUNTANT MEMBER JUDICIAL MEMBER VEENA DATED: COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT