Appeal details
Counselvise Citation
43620114 RSA 2011
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 10 month(s) 19 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
14-12-2012
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
G
Next Hearing Date
22-11-2012
Assessment Year
2007-2008
Appeal Filed On
25-01-2011
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI G BENC H BEFORE SHRI A.N. PAHUJA, AM & SHRI C.M. GARG, JM ITA NO.436/DEL/2011 ASSESSMENT YEAR: 2007-08 SHRI SURESH CHAND GUPTA, PROP.,ELGIN ELECTRONICS, 4/28, ASHARAM MARG, NEW DELHI V/S . DCITCIRCLE-35 (1), NEW DELHI [PAN : AALPG 1809 Q] (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI ANIL SHARMA, AR REVENUE BY DR. DEEPAK SEHGAL,DR DATE OF HEARING 22-11-2012 DATE OF PRONOUNCEMENT 14-12-2012 O R D E R A.N.PAHUJA:- THIS APPEAL FILED ON 25 TH JANUARY, 2011 BY THE ASSESSEE AGAINST AN ORDER DATED 23-08-2010 OF THE LEARNED CIT(A)-XXVII, NEW DELHI ,RAISES THE FOLLOWING GROUNDS:- 1 THAT THE LEARNED CIT(A) HAS ERRED BOTH IN LAW AN D ON FACTS IN CONFIRMING THE ADDITION OF ` 13,50,000/- MADE BY THE LEARNED AO U/S 68 OF THE ACT ON ACCOUNT OF ALLEGED FOLLOWING UNEXPLAINED LOANS:- I. SHRI DEEN DAYAL ` `.4,00,000/- II. SHRI JAYANTI PRASHAD ` `.5,00,000/- III MS. NEETI GUPTA ` `.3,00,000/- IV. MS. SHWETA GUPTA ` ` .1,50,000/- 1.1 THAT THE FINDINGS OF THE LEARNED CIT(A)THAT TH E APPELLANT HAS NOT RECONCILED VARIOUS CREDITS AMOUNTING TO ` ` .13,50,000/- AND THAT THE LOAN TRANSACTIONS WERE ACCOMMODATION TRANSACTIONS AND THE CREDITWORTHINESS OF THE ABOVE LENDERS HAS NOT BEEN ESTABLISHED, IS WHOLLY INCORRECT AND I S CONTRARY TO THE FACT THAT THE BURDEN U/S 68 WHICH LAY UPON T HE ITA N O.436 /DEL./2011 2 ASSESSEE STOOD DISCHARGED BY FURNISHING NECESSARY EVIDENCE IN RESPECT OF ABOVE LOANS. 1.2 THAT THE FURTHER FINDINGS OF THE LEARNED CIT(A) THAT THE ASSESSEE IS HABITUALLY IN A PLETHORA OF ENTRIES IS WHOLLY ARBITRARY AND WITHOUT ANY BASIS OR MATERIAL ON RECO RD. THE ABOVE FINDING IS IN UTTER DISREGARD OF THE FACT THA T THE ASSESSING OFFICER HAD ACCEPTED THE, GENUINENESS OF REMAINING LOAN TRANSACTIONS. 2. THAT THE LEARNED CIT(A) HAS ERRED BOTH IN LAW AN D ON FACTS IN UPHOLDING THE AD HOC DISALLOWANCE OF RS.1,73,110/- BEING 20% OF CONVEYANCE EXPENSES, TRAVELLING EXPENSES, CA R MAINTENANCE EXPENSES AND DEPRECIATION ON CAR BEING EXPENSES ON PERSONA! NATURE. NO VALID REASON OR BAS IS HAS BEEN GIVEN WHILE UPHOLDING THE LUMP SUM DISALLOWANC E. 3. THAT THE LEARNED CIT(A) HAS ERRED BOTH IN LAW AN D ON FACTS IN UPHOLDING THE DISALLOWANCE OF RS.40,828/- BEING 20% OF THE TELEPHONE EXPENSES ON ACCOUNT OF ALLEGED PERSONAL EXPENSES OF THE PROPRIETOR AND HIS FAMILY MEMBERS. 2. ADVERTING FIRST TO GROUND NOS.1 TO 1.2 IN THE A PPEAL, FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THAT RETURN DECLARING INCO ME OF ` ` `6,03,212/- FILED ON 31.10.2007 BY THE ASSESSEE, TRADING IN ELECTRONIC I TEMS AND SOUND SYSTEMS, WAS SELECTED FOR SCRUTINY WITH THE SERVICE OF A NOTICE U/S 143 (2) OF THE INCOME-TAX ACT, 1961(HEREINAFTER REFERRED TO AS THE ACT), IS SUED ON 21.08.2008. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFF ICER (A.O. IN SHORT) NOTICED THAT THE ASSESSEE RECEIVED UNSECURED LOAN OF ` 4 LACS FROM SHRI DEEN DAYAL; ` 5 LACS FROM SHRI JAYANTI PRASAD; ` 3 LACS FROM MS. NITI GUPTA AND ` ` ,50,000/- FROM MS. SHWETA GUPTA DURING THE FINANCIAL YEAR 2006-07. VIDE ORDER SHEET ENTRY DATED 27.11.2009, THE AO ASKED THE ASSESSEE TO ESTABLISH IDENTITY AND CREDITWORTHINESS OF THE AFORESAID CREDITORS AS ALSO THE GENUINENESS OF THE TRANSACTIONS. THE ASSESSEE SUBMITTED CONFIRMATIONS FROM ALL THE AFORESAID PERSONS AND A COPY OF THE BANK STATEMENT OF SHRI DE EN DAYAL; MS. NITI GUPTA AND MS. SHWETA GUPTA. HOWEVER, IN THE CASE OF SHRI JAYANATI PRASAD, COPY OF HIS BANK STATEMENT FOR THE YEAR UNDER CONSIDERATION WAS NOT SUBMITTED NOR COPY OF I.T. RETURN FOR THE ASSESSMENT YEAR 2007-08 IN R ESPECT OF ANY OF THE CREDITORS. ITA N O.436 /DEL./2011 3 ACCORDINGLY, RELYING UPON DECISION OF HONBLE SUPRE ME COURT IN THE CASE OF ROSHAN DI HATTI VS. CIT (1977) 107 ITR 938(SC) AND KALE KHAN MOHD. HANIF VS. CIT (1963) 50 ITR 1(SC); CIT VS. R.S. RATHORE (1995 ) 212 ITR 309(RAJ); SUMATI DAYAL VS. CIT (1995) 80 TAXMAN 89/214 ITR 801 (SC); ADDL. CIT VS. BAHRI BROS. PVT. LTD. (1985) 154 ITR 244, (PATNA ); AND NEMI CH AND KOTHARI VS. CIT (2004) 136 TAXMAN 213 (GAUWAHATI), THE AO CONCLUDED THAT S INCE THE ASSESSEE FAILED TO ESTABLISH THE GENUINENESS OF THE TRANSACTIONS A ND CREDITWORTHINESS OF THE AFORESAID PERSONS, THE AMOUNT HAS TO BE ADDED AS DE EMED INCOME U/S 68 OF THE ACT. ACCORDINGLY, AN AMOUNT OF ` 13,50,000/- WAS ADDED. 3. ON APPEAL, THE LD. CIT(A) UPHELD THE FINDINGS O F THE AO AS UNDER: 5. DETERMINATION : I HAVE CAREFULLY GONE THROUGH THE SUBMISSIONS MADE BY THE APPELLANT AS WELL AS THE FINDINGS OF THE ASSESSING OFFICER. DURING THE COURSE OF THE APPELLATE PROCEEDINGS, I HAVE CAL LED FOR THE BANK ACCOUNT OF SURESH CHAND GUPTA TO ASCERTAIN THE NATU RE OF CREDITS WHICH ARE THE SUBJECT MATTER OF ADDITION. THE SAID BANK ACCOUNT WAS FURNISHED BY THE APPELLANT ASSESSEE. THE SAID B ANK ACCOUNT IS MAINTAINED WITH CANARA BANK, NEW DELHI A/C NO. CF CA 000010823. 5.1. THE ADDITIONS MADE BY THE ASSESSING OFFICER PE RTAINING TO THE - UNEXPLAINED CASH CREDITS WHICH FIND MENTION IN THE SAID ACCOUNT ARE AS UNDER: DATE OF CREDIT MODE OF CREDIT AMOUNT 22.07.2006 CLG. 5,00,000/- 16.12.2006 FROM S8 A/C 38276 3,00, 000/- 16.12.2006 FROM SB A/C 38385 1,50,000/- 5.2 THE APPELLANT HAS NOT RECONCILED THE VARIOUS CR EDITS AMOUNTS TO RS.13,50,000/- ADDED AS UNEXPLAINED INCOME BY TH E ASSESSING OFFICER. FROM THE ASSESSMENT ORDER, IT IS GATHERED THAT THE FOLLOWING ARE THE UNSECURED LOANS OBTAINED BY THE APPELLANT. FROM DEEN DAYAL RS. 4,00,000/- ITA N O.436 /DEL./2011 4 JAYANTI PRASAD RS. 5,00,000/- NITI GUPTA RS., 3,00,000/- SHWETA GUPTA RS. 1,50,000/- RS. 13,50,000/- 5.3. THE APPELLANT FILED A BANK ACCOUNT MAINTAINED WITH THE CANARA BANK (A/C NO. GFCA 000010823) FOR THE PERIOD 1.4.20 06 TO 31.3.2007. I FIND FROM THE BANK ACCOUNT THE FOLLOWI NG MAJOR CREDIT ENTRIES APART FROM OTHER SMALLER DEPOSITS: DATE OF CREDIT MODE AMOUNT [IN `] OPENING BALANCE AS ON 1.4.2006 B/F 146340.82 6.4.2006 BY CLG 509035 -DO- 283331 15.4.2006 BY GA 7653 500000 22.4.2006 -DO- 500000 25.4.2006 BY CLG. 20500 0 26.4.2006 -DO- 72800 28.4.2006 SB 10650 80000 28.4.2006 GA 7653 200000 28.4.2006 SB 8907 165000 9.5.2006 BY CASH 25000 18.5.2006 BY CLG. 30000 18.5.2006 -DO- 3500000 30.5.2006 -DO- 1100000 16.6.2006 BY GFKD 127359 20.6.2006 BY CLG. 226442 22.7.2006 BY DON 500000 26.7.2006 BY GFKD 50672 1.8.2006 -DO- 151259 1.8.2006 BY CLG. 53040 4.9.2006 -DO- 500000 ITA N O.436 /DEL./2011 5 28,9,2006 BY SLIT 60488 9.10.2006 BY CLG. 1500000 17.11.2006 BY GA 7653 500000 17.11.2006 BY CASH 200000 29.11.2006 BY CLG. 150000 6.12.2006 -DO- 500000 16.12.2006 BY SB 38276 300000 -DO- BY GA 7653 500000 -DO- BY SB 38385 150000 11.1.2007 BY CLG. 480000 16.1.2007 BY GA 7653 500000 24.1.2007 BY CLG. 1000000 7.2.2007 BY DGFKD 384266 20.2.2007 BY CLG. 1000000 16.3.2007 -DO- 500000 28.3.2007 -DO- 500000 17223983.82 5.4. AS CAN BE SEEN FROM THE ABOVE, THE TOTAL SUM O F THE ABOVE CREDITS WITH THE BANK ACCOUNT WORKS OUT TO RS.1,72, 23,983.82 THIS DOES NOT INCLUDE OTHER SMALLER CREDITS IN THE BANK ACCOUNT. IT IS ALSO PERTINENT TO NOTE THAT THE APPELLANT VIDE HIS WRITT EN SUBMISSIONS DATED 11.12.2009 ADDUCED TO THE ASSESSING OFFICER I N PARA 3 HAS MENTIONED THE LIST OF UNSECURED LOANS OUTSTANDING & PAYABLE AT THE END OF THE YEAR AS UNDER: UNSECURED LOANS : AN AMOUNT OF RS.45,68,869/- HAS B EEN PAYABLE AT THE END OF THE YEAR. DETAILS ARE GIVEN BELOW: SH. ASHISH AGGARWAL .RS. 35,817.00 SH. DEEH DAYAL RS. 3,00,000.00 SH. JAYANTI PRASAD RS.5,00,000. 00 SH. MANISH KUMAR RS. 2,07,658.00 SH. MANOJ GUPTA RS.1 0,85,680.00 MS. NIDHI GUPTA RS, 1,05,583.00 ITA N O.436 /DEL./2011 6 MS.NITI GUPTA RS. 189987.00 MR. SANJEEV AGGARWAL RS. 6,43,126.00 SHWETA GUPTA RS. 2,56,026.00 SMT. PRENIWATI RS. 2,80,836.00 SH. SUUT GUPTA RS.4,11,304,00 URMILA DEVI RS.4,43,847.00 5.5. THE ASSESSING OFFICER DURING THE COURSE OF SCR UTINY PROCEEDINGS ASKED THE APPELLANT TO ESTABLISH :- A) THE IDENTITY OF THE CREDITORS B) GENUINENESS OF THE TRANSACTION C) CREDITWORTHINESS OF THE CREDITORS. THE ASSESSING OFFICER DISALLOWED THE CREDITS FOR TH E FOLLOWING REASONS. - ` 4 LKAHS LOAN TAKEN FROM DEEN DAYAL HAS NOT BEEN ESTABLISHED BY THE APPELLANT TO BE A GENUINE TRANSACTION. - IN THE CASE OF ` 5 LAKHS LOAN OBTAINED FROM JAYANTI PRASAD, THE COPY OF BANK STATEMENT EVIDENCING THE LOAN TRANSACTION HAS NOT BEEN FILED. - COPIES OF TAX RETURNS OF THE LENDERS HAVE NOT BEE N FILED IN ANY OF THE ABOVE LENDERS. 5.6. THE ASSESSING OFFICER, THEREFORE, CONCLUDED AS UNDER: 'THEREFORE, THE GENUINENESS OF THE TRANSACTIONS & CREDITWORTHINESS OF THE PARSONS FROM WHOM THE ASSES SEE HAS TAKEN LOAN DURING THE FINANCIAL YEAR 2006-07 IS , NOT ESTABLISHED. IN THE LIGHT OF VARIOUS PROVISIONS OF THE ACT & JUDICIAL PRONOUNCEMENTS, IT IS EVIDENT THAT THE ONU S TO PROVE THE IDENTITY OF THE CREDITOR, GENUINENESS OF THE TR ANSACTION AS WELL AS THE CREDITWORTHINESS OF THE CREDITOR IS ON THE ASSESSEE, IN CASE OF CASH CREDITS ITS BOOKS OF ACCO UNTS. IN THE PRESENT CASE, THE ASSESSEE HAS NOT ESTABLISHED THE GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF DEEN DAYAL (LOAN OF ` `.4 LAKHS), JAYANTI PRASAD (LOAN OF ` ` `5 LAKHS), NITI GUPTA (LOAN OF ` ` `3 LAKHS) AND SHWETA GUPTA (LOAN OF `` ` 1,50,000/-) FROM WHOM IT HAD TAKEN LOANS DURING THE FINANCIAL YEAR 2006-07. ITA N O.436 /DEL./2011 7 5.7 I HAVE GONE THROUGH THE CASE LAWS RELIED UPON BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER & THOSE R ELIED UPON BY THE APPELLANT IS HIS WRITTEN SUBMISSIONS DURING THE COURSE OF ASSESSMENT PROCEEDINGS I AM OF THE VIEW THAT THE AP PELLANT IS HABITUALLY INDULGING IN A PLETHORA OF ENTRIES AS NA RRATED ABOVE & THAT THE ASSESSING OFFICER HAS EXAMINED ALL SUCH LOAN TR ANSACTIONS SHOWN BY THE APPELLANT ASSESSEE IN HIS BOOKS. AFTER CAREFUL EXAMINATION OF THE FACTS, THE ASSESSING OFFICER HAS ARRIVED AT A DEFINITIVE FINDING THAT THE FOLLOWING LOANS CREDITO RS NAMELY, A) DEEN DAYAL B) JATYANTI PRASAD C) NITI GUPTA D) SHWETA GUPTA ARE NOT GENUINE LOAN TRANSACTIONS BUT ONLY ACCOMMOD ATION TRANSACTIONS & THE CREDITWORTHINESS OF THE ABOVE PE RSONS/LENDERS TO ADVANCE SUMS TO THE APPELLANT HAS NOT BEEN ESTABLIS HED BY THE APPELLANT. 5.8. IN THE BACK DROP OF THE HUGE PLETHORA OF CREDI T ENTRIES EACH OF WHICH HAS BEEN ANALYZED BY THE ASSESSING OFFICER IN DETAIL, BALANCE OF WHICH HAS BEEN SCRUTINIZED TO BE UNEXPLA INED ENTRIES, THE APPELLANT HAS NOT BROUGHT ANY NEW MATERIAL EVI DENCE ON RECORD EVEN AT THE TIME OF APPELLATE PROCEEDINGS TO TAKE A CONTRARY VIEW TO THE STAND TAKEN BY THE ASSESSING OFFICER. I AM OF T HE VIEW THAT THE ASSESSING OFFICER'S ACTION IS JUSTIFIED IN ASSESSIN G THE ABOVE CASH CREDITS AS UNEXPLAINED U/S 68 OF THE ACT. THE ADDIT ION IS ACCORDINGLY, CONFIRMED. 4. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID THE FINDINGS OF THE LD. CIT(A).THE LD.AR ON BEHALF OF T HE ASSESSEE WHILE CARRYING US THROUGH THE FINDINGS OF THE AO AND THE LD. CIT(A) C ONTENDED THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE ADDITION. TO A QUERY BY BENCH, THE LD. AR ADMITTED THAT COPIES OF ITR RETURNS AND BANK STATEM ENT OF SHRI DEEN DAYAL, MS.NITI GUPTA, MS.SHWETA GUPTA AND MS.JAYANTI PRASA D WERE SUBMITTED BEFORE THE LD. CIT(A) AND NOT BEFORE THE AO. TO A FURTHER QUERY BY THE BENCH, THE LD. AR CONCEDED THAT THE ASSESSEE DID NOT FILE ANY APPLICA TION UNDER RULE 46A OF INCOME-TAX RULES, 1962 FOR ADMISSION OF THE DOCUME NTS SPECIFIED AT APPEAL NO.4 TO 6 OF THE PAPER BOOK FILED BEFORE THE LD. CIT(A) , IN EVIDENCE. ON THE OTHER HAND, THE LD. DR WHILE SUPPORTING THE FINDINGS OF THE LD. CIT(A) CONTENDED THAT COPY OF ITA N O.436 /DEL./2011 8 ITR AND BANK STATEMENT OF CREDITORS WERE NOT SUBMIT TED BEFORE THE AO DESPITE SPECIFIC OPPORTUNITY ALLOWED. THEREFORE, THE LD.CIT (A) WAS JUSTIFIED IN UPHOLDING THE ADDITION. 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUG H THE FACTS OF THE CASE. THE ISSUE BEFORE US RELATES TO ADDITION OF A N AMOUNT OF ` 13,50,000/-U/S 68 OF THE ACT. THE AO ADDED THE AMOUNT, THE ASSESSEE H AVING FAILED TO ESTABLISH IDENTITY & CREDITWORTHINESS OF THE AFORESAID CREDIT ORS SHRI DEEN DAYAL; SHRI JAYANTI PRASAD; MS. NITI GUPTA AND `MS. SHWETA GUPTA AS ALS O THE GENUINENESS OF THE TRANSACTIONS.. ON APPEAL THE LD. CIT(A) UPHELD THE FINDINGS OF THE AO WHILE OBSERVING, INTER ALIA, THAT THE ASSESSEE HAS NOT BROUGHT ANY NEW MATERIAL EVIDENCE ON RECORD EVEN AT THE TIME OF APPELLATE PR OCEEDINGS. THE LD. AR NOW APPEARING BEFORE US ADMITTED THAT COPIES OF ITR RE TURNS OF SHRI DEEN DAYAL; MS.NITI GUPTA; MS.SHWETA GUPTA AND COPY OF THEIR BA NK STATEMENTS FOR THE PERIOD RELEVANT TO THE YEAR UNDER CONSIDERATION, WE RE NOT SUBMITTED IN RESPECT OF ANY OF THE CREDITORS BEFORE THE AO BUT WERE PLACED BEFORE THE LD. CIT(A). THE LD. AR ALSO CONCEDED THAT THE ASSESSEE DID NOT SUBMIT A NY APPLICATION IN TERMS OF RULE 46A OF THE IT RULES ,1962 BEFORE THE LD. CIT(A ) WHILE SUBMITTING THE AFORESAID DOCUMENTS. THESE DOCUMENTS ARE PLACED AT SL. NO. 4 TO 6 ,PG 30 TO 36 OF THE PAPER BOOK FILED BEFORE US. THE LD. CIT(A) HAS NOT RECORDED ANY FINDINGS ON THE ADMISSION OF THESE DOCUMENTS BY WAY OF ADDITIONAL E VIDENCE NOR THE LD. DR THREW ANY LIGHT AS TO WHETHER OR NOT THESE DOCUMENT S WERE INDEED FILED BEFORE THE LD. CIT(A). APPARENTLY, THE ASSESSEE APPEARS TO HAVE SUBMITTED THESE DOCUMENTS FOR THE FIRST TIME BEFORE THE LD. CIT(A) WITHOUT SUBMITTING ANY APPLICATION IN TERMS OF RULE 46A OF THE IT RULES ,1 962. THE LD. CIT(A) WITHOUT EVEN TAKING COGNIZANCE OF THESE DOCUMENTS OR ALLOWI NG ANY OPPORTUNITY TO THE AO OR EVEN FOLLOWING THE PROCEDURE LAID DOWN IN RUL E 46A OF I.T. RULES, 1962, UPHELD THE ADDITION ON THE BASIS OF UNEXPLAINED CRE DIT ENTRIES IN THE BANK ACCOUNT OF THE ASSESSEE WITH CANARA BANK AND THE ASSESSEE H AVING NOT BROUGHT ANY MATERIAL ON RECORD DURING THE APPELLATE PROCEEDINGS . THERE IS NO MATERIAL BEFORE US TO INDICATE AS TO WHETHER OR NOT THE WRI TTEN SUBMISSIONS ITA N O.436 /DEL./2011 9 OR THE DETAILS FILED BEFORE THE LD. CIT(A),WERE C ONFRONTED TO THE AO. IN NUTSHELL, THE LD. CIT(A) UPHELD THE ADDITION, WI THOUT FOLLOWING THE PROCEDURE LAID DOWN UNDER RULE 46A OF THE IT RULES, 1962 AND THE PRINCIPLES OF NATURAL JUSTICE. ADMITTEDLY THE AFORE SAID DETAILS/DOCUMENTS WERE NEVER SUBMITTED BEFORE THE A O WHILE THE LD. AR CLAIMED BEFORE US THAT THESE WERE AVAILABLE BEFO RE THE LD. CIT(A). IN THIS CONNECTION, HONBLE GUJRAT HIGH COU RT IN THEIR DECISION IN THE CASE OF CIT VS. VALIMOHMED AHMEDBHA I,134 ITR 214(GUJ) WHILE REFERRING TO PROVISIONS OF SEC. 46A OF THE IT RULES,1962 OBSERVED THAT NOTICE OF APPEAL ISSUED BY AN AAC CANNOT BE EQUATED WITH NOTICE OF A FUTURE APPLICATI ON TO LEAD ADDITIONAL EVIDENCE WHICH NO ONE COULD HAVE ANTICIP ATED OR REASONABLY FORESEEN. HONBLE HIGH COURT HELD THAT O RDINARILY, THE APPEAL WOULD BE DECIDED ON THE EVIDENCE RECORDED IN THE COURSE OF ASSESSMENT PROCEEDINGS. THE POWERS OF THE LD. CIT(A ) IN TERMS OF RULE 46A TO ADMIT FRESH EVIDENCE, ENTAILS AN ELEMENT OF DISC RETION WHICH IS REQUIRED TO BE EXERCISED IN A JUDICIOUS MANNER. THE POWERS OF THE CIT(A) TO ADMIT ADDITIONAL EVIDENCE ARE NOT ONLY IN SITUATIONS WHERE THE EVIDE NCE COULD NOT BE PRODUCED BEFORE LOWER AUTHORITIES OWING TO LACK OF ADEQUATE OPPORTUNITY BUT ALSO IN SITUATIONS WHERE THE FRESH EVIDENCE WOULD ENABLE TH E CIT(A) TO DISPOSE OF THE APPEAL OR FOR ANY OTHER SUBSTANTIAL CAUSE. OF COUR SE, THE POWER IS TO BE EXERCISED JUDICIOUSLY AND FOR REASONS TO BE RECORDE D. HERE WE MAY POINT OUT THAT THE HONBLE JURISDICTIONAL HIGH COURT IN CIT VS. MANISH BUILD WELL (P.) LTD.,16 TAXMANN.COM27(DELHI) HELD THAT THAT THE CONDITIONS PRESCRIBED IN RULE 46A MUST BE SHOWN TO EXIST BEFORE ADDITIONAL EVIDENCE IS ADM ITTED AND EVERY PROCEDURAL REQUIREMENT MENTIONED IN THE RULE HAS TO BE STRICTL Y COMPLIED WITH SO THAT THE RULE IS MEANINGFULLY EXERCISED . THE HONBLE HIGH C OURT HELD THAT SUB-RULE (3) OF RULE 46A INTERDICTS THE CIT (A) FROM TAKING INTO A CCOUNT ANY EVIDENCE PRODUCED FOR THE FIRST TIME BEFORE HIM UNLESS THE AO HAS HAD A REASONABLE OPPORTUNITY OF EXAMINING THE EVIDENCE AND REBUT THE SAME. IN THE I NSTANT CASE, THERE IS NOTHING IN THE IMPUGNED ORDER OF THE LD. CIT (A) TO SHOW A S TO WHETHER OR NOT THE ITA N O.436 /DEL./2011 10 AFORESAID DOCUMENTS WERE INDEED SUBMITTED BEFORE TH E LD. CIT(A) NOR THE LD. DR THREW ANY LIGHT ON THIS ASPECT. THE LD. CIT(A) AL SO DID NOT PASS A SPEAKING ORDER IN RESPECT OF CREDITWORTHINESS OF EACH OF THE AFORE SAID CREDITORS AND GENUINENESS OF THE TRANSACTIONS. AS ALREADY STATED, THE LD. CIT (A) DID NOT FOLLOW THE PROCEDURE LAID DOWN IN RULE 46A OF THE IT RULES,1962 NOR ALL OWED ANY OPPORTUNITY TO THE AO. THE RULES OF NATURAL JUSTICE ARE NOT CODIFIED N OR ARE THEY UNVARYING IN ALL SITUATIONS, RATHER THEY ARE FLEXIBLE. THEY MAY, HOW EVER, BE SUMMARIZED IN ONE WORD : FAIRNESS. IN OTHER WORDS, WHAT THEY REQUIRE IS FAIRNESS BY THE AUTHORITY CONCERNED. OF COURSE, WHAT IS FAIR WOULD DEPEND ON THE SITUATION AND THE CONTEXT. LORD ESHER M.R. IN VOINET VS. BARRETT (1885) 55 L.J . QB 39, OBSERVED: 'NATURAL JUSTICE IS THE NATURAL SENSE OF WHAT IS RIGHT AND W RONG.' SINCE IN THE CASE UNDER CONSIDERATION, THE ADDITIONAL EVIDENCE/DOCUME NTS FILED BEFORE THE LD CIT(A) HAVE NOT BEEN CONSIDERED NOR ANY FIN DINGS REGARDING ADMISSION OF ANY ADDITIONAL EVIDENCE OR OTHERWISE H AVE BEEN RECORDED AND NOR EVEN THE LD. CIT(A) RECORDED HIS SPECIFIC FINDINGS ON THE CREDITWORTHINESS OF EACH OF THE AFORESAID FO UR CREDITORS AND GENUINENESS OF THE TRANSACTIONS, IN THE INTEREST OF JUSTICE AND FAIR PLAY, WE VACATE THE FINDINGS OF THE LD. CIT(A) AND RESTORE T HE MATTER TO HIS FILE WITH THE DIRECTIONS TO FOLLOW THE MANDATE IN TERMS OF RULE 46A OF THE IT RULES, 1962 AS ALSO PRINCIPLES OF NATURAL JUSTICE AND THEREAFTER, DISPOSE OF THE MATTER IN ACCORDANCE WITH LAW IN THE LIGHT OF OUR AFORESAID O BSERVATIONS, AFTER ALLOWING SUFFICIENT OPPORTUNITY TO BOTH THE PARTIES. SUBJECT TO THESE DIRECTIONS, GROUND NO.1 TO 1.2 IN THE APPEAL ARE DISPOSED OF. 6. GROUND NOS.2 AND 3 RELATE TO DISALLOWANCE OF ` ` `1,73,110/- BEING 20% OF CONVEYANCE EXPENSES, TRAVELLING EXPENSES, CA R MAINTENANCE EXPENSES AND DEPRECIATION ON CAR, FOR PERSONAL USE OF VEHICL ES AND THE DISALLOWANCE OF ` 40,828/- ,BEING 20% OF THE TELEPHONE EXPENSES ON AC COUNT OF PERSONAL EXPENSES OF THE PROPRIETOR AND HIS FAMILY MEMBERS. THE AO NOTICED THAT THE ASSESSEE CLAIMED CONVEYANCE EXPENSES OF ` 1,39,735/-; TRAVELLING EXPENSES OF ` 2,91,285/-; CAR MAINTENANCE EXPENSES- ` 1,44,333/- AND TELEPHONE EXPENSES- ITA N O.436 /DEL./2011 11 ` 2,04,141/- BESIDE DEPRECIATION OF ` 2,90,197/- ON CARS. SINCE THE ASSESSEE DID NOT PRODUCE LOG BOOK FOR THE CARS AND PERSONAL USE OF VEHICLES & TELEPHONES WAS ADMITTED, THE ASSESSEE AGREED FOR DISALLOWANCE OF 20% OF THE EXPENSES FOR PERSONAL USE OF VEHICLES AND TELEPHONES BESIDE CONV EYANCE AND TRAVELLING. 7. EVEN AFTER AGREEING BEFORE THE AO IN RESPECT OF 20% OF THE DISALLOWANCE OF THE AFORESAID EXPENSES, THE ASSESSE E PREFERRED APPEAL BEFORE THE LEARNED CIT(A) AND RELIED UPON DECISION IN THE CASE OF RAM BAHADUR THAKUR LTD. VS. CIT (2003) 1 KIT 687 (KER.)(FB). HOWEVER, THE LD. CIT(A) DID NOT ACCEPT THE SUBMISSIONS OF THE ASSESSEE, HOLDING AS UNDER:- 8. DETERMINATION: IT IS NOTICED FROM THE ASSESSMENT ORDER THAT THE APPELLANT HAS AGREED TO THE SAID DISALLOWANCES. TH IS BEING THE CASE, THE APPELLANT HAS NOT NEGATED THE STATED POSI TION OF A AGREED ADDITION MADE AS A RESULT OF THE SURRENDER MADE BY THE APPELLANT. THE CASE LAWS CITED BY THE APPELLANT IN THE COURSE OF THE APPELLATE PROCEEDINGS HAS NO RELEVANCE TO THE FACTS ON RECORD . 8. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LD. CIT(A).THE LD. AR ON BEHALF OF THE ASSESSEE RELIED UPON THE SUBMISSIONS BEFORE THE LOWER AUTHORITIES WHILE THE LD. DR SUPPORTED THE FINDINGS OF THE LD. CIT(A). 9. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUG H THE FACTS OF THE CASE. INDISPUTABLY, THE ASSESSEE ADMITTED BEFORE THE AO THAT VEHICLES AND TELEPHONES WERE,INTER ALIA, USED FOR PERSONAL PURP OSES AND ACCORDINGLY, AGREED FOR DISALLOWANCE OF 20% OF THE AFORESAID EXPENSES, INCLUDING DEPRECIATION ON CAR EVEN BEFORE THE LD. CIT(A), THIS AGREEMENT WAS NOT DISPUTED. CONSIDERING THE FACTS & CIRCUMSTANCES OF THE CASE, ESPECIALLY WHEN THE LD. AR DID NOT REFER US TO ANY MATERIAL WARRANTING INTERFERENCE WITH THE FINDI NGS OF THE LD. CIT(A) WHILE PERSONAL USE OF VEHICLES & TELEPHONES BY THE ASSE SSEE AND HIS FAMILY MEMBERS OR STAFF HAS NOT BEEN DENIED NOR IT WAS C LAIMED THAT THE ASSESSEE OR ITA N O.436 /DEL./2011 12 HIS FAMILY MEMBERS HAD ANY INDEPENDENT VEHICLES OR TELEPHONES FOR PERSONAL USE, IN OUR OPINION DISALLOWANCE OF 20% OF THE EX PENSES ON RUNNING AND MAINTENANCE OF VEHICLES, INCLUDING DEPRECIATION THE REON AS ALSO ON TELEPHONES , IN THE LIGHT OF PROVISIONS OF SEC. 38(2) OF THE AC T, IS REASONABLE . THEREFORE, GROUND NOS. 2 & 3 IN THE APPEAL OF THE ASSESSEE AR E REJECTED. 10. NO ADDITIONAL GROUND HAVING BEEN RAISED BEFORE US IN TERMS OF RESIDUARY GROUND IN THE APPEAL, ACCORDINGLY THIS GR OUND IS DISMISSED. 11.. NO OTHER PLEA OR ARGUMENT WAS MADE BEFORE US. 12. IN THE RESULT, APPEAL IS PARTLY ALLOWED BUT F OR STATISTICAL PURPOSES. SD/- SD/- (C.M. GARG) (A.N. PAHUJA) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) NS COPY OF THE ORDER FORWARDED TO :- 1. ASSESSEE 2. DCITCIRCLE-35 (1),NEW DELHI 3. CIT CONCERNED. 4. CIT(A)-XXVII, NEW DELHI 5. DR, ITAT,G BENCH, NEW DELHI 6.. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, DELHI ORDER PRONOUNCED IN OPEN COURT
Mehul