ACIT, New Delhi V. Shri Ramit Vohra, New Delhi

ITA 4373/DEL/2012

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 5891 (ITAT-DELHI)
• Duration Of Justice: 7 year(s) 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2019
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: 2009-2010
• Appeal Filed On: 13-08-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Bogus purchase; Unexplained cash credit; Unexplained investment; Recovery proceedings; Business income; Depreciation; Income from undisclosed sources; Source of fund; Additional evidence; Reasonable cause; Deemed dividend; Assessment record; Onus to prove; TDS; Set aside
• Section: 271(1)(c); 80C; 143(3); 142(1); 2(22)(e); 133(6); 37(1); 250; 251; 143(2); 208; 69; 37; 144

Judgement Text

FIT FOR PUBLICATION SD/- SD/- (JM) (AM) IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH: F: NEW DELHI) BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI ANADEE NATH MISSHRA, ACCOUNTANT MEMBER ITA NO:- 4373/DEL/2012 ( ASSESSMENT YEAR: 2009-10) ACIT, CIRCLE 39(1), NEW DELHI. VS. SHRI RAMIT VOHRA, NEW DELHI. PAN NO: AAEPV7263Q APPELLANT RESPONDENT REVENUE BY : SHRI SURENDER PAL, SR. DR ASSESSEE BY : SHRI G.S. KOHLI, CA ORDER PER ANADEE NATH MISSHRA, AM (A) THIS APPEAL BY REVENUE IS FILED AGAINST THE ORD ER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-XXVIII, NEW DELHI, [LD. CIT(A ), FOR SHORT], DATED 29.06.2012 FOR ASSESSMENT YEAR 2009-10. THE ORIGINAL GROUNDS OF APPEAL ARE AS UNDER: 1. THAT THE LD. CIT (A) ERRED IN ADMITTING ADDITIO NAL EVIDENCES UNDER RULE 46A DESPITE THE FACT THAT THE REPEATED OPPORTUNITIES WE RE GIVEN BY THE ASSESSEE BY THE AO AND HE WAS NOT PREVENTED BY SUFFICIENT CA USE FROM PRODUCING THE EVIDENCE. 2. THAT THE LD .CIT (A) ERRED IN ADMITTING ADDITIO NAL EVIDENCES IN CONTRAVENTION OF THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT V. MANISH BUILD WELL PVT. LTD. [2012] 204 TAXMAN 10 6 THAT ADDITIONAL EVIDENCE CAN BE PRODUCED AT FIRST APPELLATE STAGE O NLY WHEN CONDITIONS ITA NO.- 4373/DEL/2012. RAMIT VOHRA. PAGE 2 OF 39 STIPULATED IN RULE 46 A ARE SATISFIED. 3. THAT THE ORDER OF LD.CIT (A) IS PERVERSE AND FI T TO BE SET ASIDE AS SHE HAS COMPLETELY OVERLOOKED THE REASONS MENTIONED IN THE ASSESSMENT ORDER FOR MAKING ADDITIONS. 4. THAT THE LD. CIT(A) FAILED TO PROVIDE ANY OPPORT UNITY TO THE AO TO APPEAR PERSONALLY DURING HEARING DESPITE THE FACT THAT A R EQUEST WAS MADE BY THE ADDL. CIT, RANGE-39, VIDE LETTER DATED 01.06.2012 W HILE FORWARDING REMAND REPORT OF AO TO ALLOW THE AO TO APPEAR IN HEARING. 5. THAT THE LD. CIT (A) ERRED IN DELETING THE ADDIT ION OF RS. 1,31,761/- ON ACCOUNT OF INCOME FROM HOUSE PROPERTY MERELY ON THE SUBMISSION OF THE ASSESSEE COMPLETELY IGNORING THE REASON MENTIONED I N THE ASSESSMENT ORDER. 6. THAT THE LD. CIT(A) ERRED IN DELETING THE ADDITI ON OF RS. 1,31,761/- ON ACCOUNT OF INCOME FROM HOUSE PROPERTY ON THE BASIS OF ADDITIONAL EVIDENCE SUBMITTED BY THE ASSESSEE WITHOUT PROVIDING AO OPPO RTUNITY OF REBUTTAL UNDER RULE 46 A. 7. THAT THE LD. CIT (A) ERRED IN DELETING THE ADDI TION OF RS.20,69,898/- MADE ON ACCOUNT OF BOGUS PURCHASES MERELY ON THE SUBMISS ION OF THE ASSESSEE COMPLETELY IGNORING THE FACT THAT ASSESSEE FAILED T O FURNISH NEITHER THE COMPLETE ADDRESS NOR THE CONFIRMATIONS OF THE PERSO NS FROM WHOM PURCHASES WERE CLAIMED TO BE MADE EITHER BEFORE THE AO OR BEFORE THE CIT (A). 8. THAT THE LD. CIT (A) ERRED IN DELETING THE ADDIT ION OF RS.20,69,898/- MADE ON ACCOUNT OF BOGUS PURCHASES ON THE CIT V. ESCORTS LTD. (338 ITR 435) AS THE FACTS OF THIS CASE ARE COMPLETELY DIFFERENT AND THE RATIO DECIDENDI OF ABOVE JUDGMENT IS NOT APPLICABLE IN THIS CASE. 9. THAT THE LD. CIT(A) ERRED IN DELETING THE ADDITI ON OF RS.54,29,787/- MADE ON ACCOUNT OF UNEXPLAINED SUNDRY CREDITOR MERELY ON TH E SUBMISSION OF THE ASSESSEE COMPLETELY IGNORING THE FACT THAT THE ASSE SSEE FAILED TO FURNISH NEITHER THE COMPLETE ADDRESS NOR THE CONFIRMATIONS OF THE SUNDRY CREDITORS EITHER BEFORE THE CIT (A). 10. THAT THE LD. CIT (A) ERRED IN DELETING THE ADD ITIONS RS.54,29,787/- MADE ON ACCOUNT OF UNEXPLAINED SUNDRY CREDITORS ON THE BASI S OF THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT V. ESCO RTS LTD. (338 ITR 435) AS THE FACTS OF THIS CASE ARE COMPLETELY DIFFERENT AND THE RATIO DECIDENDI ON ABOVE JUDGMENT IS NOT APPLICABLE IN THIS CASE. 11. THAT THE LD. CIT (A) ERRED IN DELETING THE ADDI TION OF RS.4,83,994/- MADE ON ACCOUNT OF INCORRECT CLAIM OF DEPRECIATION MERELY O N THE SUBMISSION OF THE ITA NO.- 4373/DEL/2012. RAMIT VOHRA. PAGE 3 OF 39 ASSESSEE COMPLETELY IGNORING THE REASONS MENTIONED BY THE AO. 12. THAT THE LD. CIT (A) ERRED IN DELETING THE ADDI TION OF RS.44,32,000/- MADE ON ACCOUNT OF UNEXPLAINED ADDITION IN CAPITAL MEREL Y ON THE SUBMISSION OF THE ASSESSEE COMPLETELY IGNORING THE REASONS MENTIO NED BY THE AO. 13. THAT THE LD. CIT (A) ERRED IN DELETING THE ADDI TION OF RS.44,32,000/- MADE ON ACCOUNT OF UNEXPLAINED ADDITION IN CAPITAL BASIS OF ADDITIONAL EVIDENCE SUBMITTED BY THE ASSESSEE WITHOUT PROVIDING AO OPPO RTUNITY OF REBUTTAL UNDER RULE 46 A. 14. THAT THE LD. CIT (A) ERRED IN DELETING THE ADD ITION OF RS.8,59,643/- MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT IN ASSET MEREL Y ON THE SUBMISSION OF THE ASSESSEE COMPLETELY IGNORING THE REASONS MENTIO NED BY THE AO. 15. THAT THE LD. CIT(A) ERRED IN DELETING THE ADDI TION OF RS.8,59,643/- MADE ON ACCOUNT OF CLAIM OF DEPRECIATION DISALLOWED MERELY ON THE SUBMISSION OF THE ASSESSEE COMPLETELY IGNORING THE REASONS MENTIONED BY THE AO. 16. THAT THE LD. CIT(A) ERRED IN DELETING THE ADDI TION OF RS.8,59,643/- MADE ON ACCOUNT OF CLAIM OF DEPRECIATION ON THE BASIS OF AD DITIONAL EVIDENCE SUBMITTED BY THE ASSESSEE WITHOUT PROVIDING AO OPPO RTUNITY OF REBUTTAL UNDER RULE 46 A. 17. THAT THE LD. CIT (A) ERRED IN DELETING THE ADD ITION OF RS.45,29,191/- MADE ON ACCOUNT OF DEEMED DIVIDEND U/S. 2(22)(E) MERELY ON THE SUBMISSION OF THE ASSESSEE COMPLETELY IGNORING THE REASONS MENTIO NED BY THE AO. 18. THAT THE LD. CIT(A) ERRED IN DELETING THE ADDI TION OF RS.44,32,000/- MADE ON ACCOUNT OF UNEXPLAINED ADDITION IN CAPITAL ON TH E BASIS OF ADDITIONAL EVIDENCE SUBMITTED BY THE ASSESSEE WITHOUT PROVIDIN G AO OPPORTUNITY OF REBUTTAL UNDER RULE 46 A. 19. THAT THE LD. CIT (A) ERRED IN DELETING THE ADD ITION OF RS. 1,20,239/- ON ACCOUNT OF INTEREST PAYMENT ON HOUSING LOAN ON THE SUBMISSION OF THE ASSESSEE THAT THIS HAS NOT BEEN CLAIMED IN P&L A/C. DESPITE THE FACT THAT THE ASSESSEE FILED TO ESTABLISH ABOVE BY PRODUCING THE BOOKS OF ACCOUNT. (A.1) SUBSEQUENTLY, THE GROUNDS OF APPEAL WERE REVI SED. THE REVISED GROUNDS OF APPEAL ARE AS UNDER: 1. THE LD. CIT (A) ERRED IN ADMITTING ADDITIONAL E VIDENCES UNDER RULE 46A OF I.T. RULES, 1962 DESPITE THE FACT THAT THE REPEATED OPPORTUNITIES WERE GIVEN TO THE ASSESSEE BY THE AO AND HE WAS NOT PREVENTED BY SUFFICIENT CAUSE ITA NO.- 4373/DEL/2012. RAMIT VOHRA. PAGE 4 OF 39 FROM PRODUCING THE EVIDENCES BEFORE HIM. 2. THAT THE LD. CIT (A) ERRED IN DELETING THE ADDIT ION OF RS. 1,31,761/- ON ACCOUNT OF INCOME FROM HOUSE PROPERTY ON THE BASIS OF ADDITIONAL EVIDENCE SUBMITTED BY THE ASSESSEE UNDER RULE 46A THEREBY IG NORING THE REASONS MENTIONED IN THE ASSESSMENT ORDER. 3. THAT THE LD. CIT (A) ERRED IN DELETING THE ADDIT ION OF RS.20,69,898/- MADE ON ACCOUNT OF BOGUS PURCHASES BASED ON THE JUDGMENT OF HONBLE DELHI HIGH COURTS IN THE CASE OF CIT' V. ESCORTS LTD.(338 ITR 435) AS THE FACTS OF THIS CASE ARE COMPLETELY DIFFERENT AND THE RATIO DICIDEN DI OF ABOVE JUDGMENT IS NOT APPLICABLE IN THIS CASE. 4. THAT THE LD. CIT (A) ERRED IN DELETING THE ADDIT ION OF RS.54,29,787/- MADE ON ACCOUNT OF UNEXPLAINED SUNDRY CREDITORS ON THE B ASIS OF JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT V. ESCO RTS LTD. (338 ITR 435) AS THE FACTS OF THIS CASE ARE COMPLETELY DIFFERENT AND THE RATIO DICIDENDI ON ABOVE JUDGMENT IS NOT APPLICABLE IN THIS CASE. 5. THAT THE LD. CIT(A) ERRED IN DELETING THE ADDITI ON OF RS.4,83,994/- MADE ON ACCOUNT OF INCORRECT CLAIM OF DEPRECIATION MERELY O N THE SUBMISSION OF THE ASSESSEE, THEREBY COMPLETELY IGNORING THE REASONS M ENTIONED BY THE AO. 6. THAT THE LD. CIT (A) ERRED IN DELETING THE ADDIT ION OF RS.44,32,000/- MADE ON ACCOUNT OF UNEXPLAINED ADDITION IN CAPITAL MEREL Y ON THE SUBMISSION OF THE ASSESSEE, THEREBY COMPLETELY IGNORING THE REASO NS MENTIONED BY THE AO. 7. THAT THE LD. CIT (A) ERRED IN DELETING THE ADDIT ION OF RS.8,59,643/- MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT IN ASSET MERELY O N THE SUBMISSION OF THE ASSESSEE, THEREBY COMPLETELY IGNORING THE REASONS M ENTIONED BY THE AO AND WITHOUT PROVIDING AO, OPPORTUNITY OF REBUTTAL UNDER RULE 46A. 8. THAT THE LD. CIT (A) ERRED IN DELETING THE ADDIT ION OF RS.45,29,191/- MADE ON ACCOUNT OF DEEMED DIVIDEND U/S 2(22)(E) MERELY O N THE SUBMISSION OF THE ASSESSEE, THEREBY COMPLETELY IGNORING THE REASO NS MENTIONED IN ASSESSMENT ORDER BY THE AO. 9. THAT THE LD. CIT(A) ERRED IN DELETING THE ADDITI ON OF RS. 1,20,239/- ON ACCOUNT OF INTEREST PAYMENT ON HOUSING LOAN ON THE SUBMISSION OF THE ASSESSEE THAT THIS HAS NOT BEEN CLAIMED IN P&L A/C. , DESPITE THE FACT THAT THE ASSESSEE FAILED TO ESTABLISH THE SAME BY PRODUC ING THE BOOKS OF ACCOUNT. 10. THAT THE GROUNDS OF APPEAL ARC WITHOUT PREJUDIC E TO ONE ANOTHER. 11. THE APPELLANT CRAVES TO ADD, AMEND OR MODIFY TH E GROUNDS OF APPEAL AT ANY TIME. (B) AT THE TIME OF HEARING BEFORE US, THE LD. DEPAR TMENTAL REPRESENTATIVE (DR, FOR SHORT) APPEARING FOR REVENUE, DID NOT PRESS THE AFORESAID GROUNDS NO.- 2, 5 AND 9 OF THE REVISED GROUNDS OF APPEAL. ASSESSMENT ORD ER WAS PASSED UNDER SECTION 144 OF THE INCOME TAX ACT, 1961 (I.T. ACT, FOR SH ORT) ON 28.12.2011 IN WHICH TOTAL INCOME WAS DETERMINED AT RS. 2,16,95,055/- AS AGAIN ST THE RETURNED INCOME OF RS. ITA NO.- 4373/DEL/2012. RAMIT VOHRA. PAGE 5 OF 39 36,20,086/-; AS PER FOLLOWING COMPUTATION: S.NO DESCRIPTION AMOUNT 1. INCOME FROM HOUSE PROPERTY 1,31,761 2. INCOME FROM BUSINESS AND PROFESSION I. NET PROFIT FROM BUSINESS AS SHOW BY THE ASSESSEE : RS. 37,29,547 II. ADD: BOGUS PURCHASE : 20,69,898 III. ADD: CLAIM OF DEPRECIATION : RS. 4,83,994 IV. ADD: INTEREST PAYMENT DISALLOWED : RS. 1, 20,213 V. ADD: PERSONAL EXPENSES : RS. 18,482 3. INCOME FROM OTHER SOURCES I. AS PER THE RETURN : NIL II. UNEXPLAINED SUNDRY CREDITOR : RS. 54 ,29,787 II. UNEXPLAINED IN CAPITAL : RS. 44,32,0 00 IV. UNEXPLAINED INVESTMENT IN FIXED ASSETS : RS. 8,59 ,643 V. DEEMED DIVIDEND : RS. 45,29,191 1,52,50,621 4. GROSS TOTAL INCOME 2,18,04,516 5. LESS DEDUCTION UNCER CHAPTER VIA (UNDER SECTION 80C AND 80D) 1,09,461 6. TOTLA INCOME 2,16,95,055 (B.1) IN THE ASSESSMENT ORDER, THE ASSESSING OFFICE R (AO, FOR SHORT) HAS INCLUDED A DISCUSSION ON BEST JUDGMENT ASSESSMENT U/S 144 OF I.T. ACT. THE RELEVANT PORTION IS REPRODUCED AS UNDER: THE ASSESSEE FAILED TO PRODUCE BOOKS OF ACCOUNT AL ONG WITH THE ORIGINAL BILLS AND VOUCHERS DESPITE GETTING REPEATE D OPPORTUNITIES. THOUGH, THE AR OF THE ASSESSEE APPEARED ON 02.08.2011 AND 1 0.08.2011 BUT THEREAFTER HE FAILED TO APPEAR. FIRST SHOW-CAUSE NO TICE WAS ISSUED TO THE ASSESSEE ON 11.10.2011, WHICH IS REPRODUCED BELOW:- 1) YOU ARE PROVIDED LAST OPPORTUNITY ITA NO.- 4373/DEL/2012. RAMIT VOHRA. PAGE 6 OF 39 DESPITE GETTING REPEATED OPPORTUNITIES YOU HAVE NEI THER FILED THE BOOKS OF ACCOUNT NOR OTHER DETAILS AS ASKED VIDE NOTICE U/S 142(1) OF THE INCOME-TAX ACT, 1961, 24.03.2011, 16.06.2011 AND ORDER SHEET E NTRY DATED 02.08.2011. DESPITE GETTING REPEATED OPPORTUNITIES YOU HAVE NEI THER FILED CONFIRMATIONS OF SUNDRY CREDITORS AND SUNDRY DEBTORS NOR THEIR PA N , COPY OF THEIR LEDGERS AND THEIR COMPLETE ADDRESS. IN ABSENCE OF CONFIRMAT IONS, THE SUNDRY CREDITORS AND SUNDRY DEBTORS REMAINED UNVERIFIED. FOLLOWING NOTICES ISSUED U/S 133(6) OF THE INCOME-T AX ACT, ON THE BASIS OF YOUR EARLIER YEAR ASSESSMENT RECORD, TO VERIFY YOUR CLAIM OF SUNDRY CREDITORS/DEBTORS CAME BACK UN-SERVED:- I. M/S NEELKANTH ENTERPRISES II. M/S JAI BHAGWATI ENTERPRISES III. M/S MITTAL TIMBER PRODUCTS PVT. LTD. IV. M/S JYOTI ENTERPRISES V. M/S KESHAV INTERNATIONAL M/S OMPRAKASH FATECHAND HAS DENIED HAVING ANY TRANS ACTIONS WITH YOUR VIDE LETTER DATED 22.07.2011 DESPITE GETTING REPEATED OPPORTUNITIES YOU HAVE FAI LED TO PRODUCE ORIGINAL BILLS AND VOUCHERS PERTAINING TO THE EXPENSES CLAIM ED BY YOU IN THE P&L A/C, HENCE THE CLAIM OF THESE EXPENSES REMAINED UNVERIFI ED. DESPITE GETTING REPEATED OPPORTUNITIES YOU HAVE NE ITHER PRODUCED ORIGINAL BILLS REGARDING THE CLAIM OF ADDITION IN FIXED ASSE TS OF ?7,60,388 (MORE THAN 6 MONTHS) AND 299,255/- (LESS THAN 6 MONTHS) NOT SU BMITTED EVIDENCE OF THEIR PUT TO USE. 2) KINDLY EXPLAIN WHY THE PURCHASE OF CAR (26,06,500/ -), MOBILE PHONE (21 6,700/-), AC (2.25,312/-), COMPUTER (21,04,500) AND WATER DISPENSER (216,076) SHOULD NOT BE TREATED AS PERSONAL EXPENDI TURE NOT INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS U/S 37( 1) OF THE INCOME-TAX ACT ITA NO.- 4373/DEL/2012. RAMIT VOHRA. PAGE 7 OF 39 AS YOU HAVE FAILED TO FURNISH ANY EVIDENCE IN SUPPO RT OF YOUR CLAIM DESPITE GETTING REPEATED OPPORTUNITIES. 3) IT ALSO APPEARS THAT YOU HAVE TAKEN HOUSING LOAN F ROM THE UNION BANK OF INDIA KEEPING YOUR PROPERTY A-313, SHIVALIK, MALVIY A NAGAR, NEW DELHI AS PER THE DETAILS SUBMITTED BY THE BANK. KINDLY FURNI SH THE COMPLETE DETAILS REGARDING THE HOUSING LOAN TAKEN, COMPLETE ADDRESS OF THE PROPERTY PURCHASED. KINDLY ALSO EXPLAIN WHY YOU HAVE NOT DIS CLOSED THIS FACT IN YOUR RETURN OF INCOME OR IN YOUR SUBMISSIONS. KINDLY ALS O EXPLAIN HOW YOU HAVE SUBMITTED IN YOUR SUBMISSION DATED 10.08.2011 THAT YOU HAVE NO IMMOVABLE ASSET. KINDLY ALSO EXPLAIN WHY THE ANNUAL RENT FROM THE ABOVE PROPERTY SHOULD NOT BE ESTIMATED AS YOU HAVE FAILED TO FURNI SH YOUR PERSONAL BALANCE SHEET FOR THE F. Y. 2007-08 AND 2008-09. 4) THE DETAILS REGARDING THE NOTICES ISSUED TO THE ASS ESSEE AND FAILURE OF THE ASSESSEE TO MAKE COMPLIANCE ARE GIVEN BELOW: SL. NO. DETAILS OF NOTICE ISSUED MODE OF SERVICE REMARKS 1. NOTICE U/S 143(2) ISSUED ON 23.08.2010 FOR COMPLIANCE ON 31.08.2010 SERVED BY REGISTERED POST NO COMPLIANCE 2. NOTICE U/S 142(1) ISSUED ON 24.03.2011 FOR COMPLIANE ON 08.04.2011. ASSESSEE WAS ASKED TO PRODUCE BOOKS OF ACCOUNT AND OTHER DETAILS SERVED BY REGISTERED POST NO COMPLIANCE. HOWEVER, THE ASSESSEE FILED A LETTER ON 20.05.2011 WITHOUT ANY DETAILS. 3. NOTICE U/S 142(1) AND 143(2) ISSUED ON 16.06.2011 FOR COMPLIANCE ON 27.06.2011. THE ASSESSEE WAS AGAIN ASKED TO PRODUCE BOOKS OF ACCOUNT AND SERVED BY REGISTERED POST THE AR OF THE ASSESSEE REQUESTED FOR ADJOURNMENT VIDE LETTER DATED 27.06.2011. THE HEARING WAS AGAIN ADJOURNED ITA NO.- 4373/DEL/2012. RAMIT VOHRA. PAGE 8 OF 39 OTHER DETAILS TO 08.07.2011. HE AGAIN REQUESTED FOR ADJOURNMENT ON 08.07.2011. THE HEARING WAS AGAIN ADJOURNED TO 12.07.2011. THERE WAS NO COMPLIANCE ON 12.07.2011. 4. NOTICE U/S 142(1) ISSUED ON 11.10.2011 FOR COMPLIANCE ON 19.10.2011. ASSESSEE WAS ASKED TO EXPLAIN WHY THE ASSESSMENT SHOULD BE COMPLETED U/S 144. SERVED PERSONALLY THOUGH NOTICE SERVER A LETTER WAS FILED BY THE AR OF THE ASSESSEE REQUESTING TO ADJOURN THE HEARING ON THE FIRST WEEK OF NOVEMBER, 2011 5. ANOTHER NOTICE U/S 142(1) ISSUED ON 08.11.2011 FR COMPLIANCE ON `14.11.2011. ASSESSEE WAS ASKED TO EXPLAIN WHY THE ASSESSMENT SHOULD NOT BE COMPLETED U/S 144. SERVED PERSONALLY THROUGH NOTICE SERVER NO COMPLIANCE 6. ANOTHER NOTICE U/S 142(1) ISSUED ON 19.12.2011 FOR COMPLIANCE ON 22.12.2011. ASSESSEE WAS ASKED TO EXPLAIN WHY THE ASSESSMENT SHOULD NOT BE COMPLETED U/S 144. SERVED PERSONALLY THROUGH NOTICE SERVER NO COMPLIANCE ITA NO.- 4373/DEL/2012. RAMIT VOHRA. PAGE 9 OF 39 THUS, IT IS QUITE EVIDENT THAT THE ASSESSEE FAILED TO APPEAR WITHOUT ANY REASONABLE CAUSE AND FAILED TO PRODUCE BOOKS OF ACCOUNT WITH A DELIBERATE INTENTION TO HOODWINK THE DEPARTMENT BY AVOIDING FURTHER SCRUTINIZING OF HIS BUSINESS AFFAIRS. PENALTY PROCE EDINGS U/S 271(L)(B) OF THE INCOME-TAX ACT, 1961, ARE INITIATED FOR NON-COMPLIA NCE OF ABOVE THREE STATUTORY NOTICES WITHOUT ANY REASONABLE CAUSE. SINCE, THE ASSESSEE FAILED TO FURNISH THE BOOKS OF ACCOUNT WITH SUPPORTING BILLS/VOUCHERS/INVOICES, HENCE, THE EXPE NSES SHOWN BY THE ASSESSEE ARE NOT VERIFIABLE. IT IS ALSO EVIDENT THA T BOOKS OF ACCOUNT ARE NOT MAINTAINED. THERE CANNOT BE ANY OTHER EXPLANATION O F THE NON-PRODUCTION OF BOOKS OF ACCOUNT AS THE AUTHORIZED REPRESENTATIVE A PPEARED ON 02.08.2011 AND 0.08.2011 AND HE WAS DIRECTED TO PRODUCE THE BO OKS OF ACCOUNT VIDE ORDER SHEET ENTRY. SINCE, BOOKS OF ACCOUNT HAVE NOT BEEN PRODUCED DESPITE GETTING REASONABLE OPPORTUNITIES AND ADEQUATE TIME, HENCE, QUESTION OF REJECTING THE BOOKS OF ACCOUNT DOES NOT ARISE. MORE OVER, IT IS ALSO EVIDENT THAT THE ASSESSEE HAS NOT MAINTAINED BOOKS OF ACCOU NT AS PER THE PROVISION OF SECTION 44AA OF THE INCOME-TAX ACT, 1961, THUS, PENALTY PROCEEDINGS U/S 271A OF THE INCOME-TAX ACT, 1961 ARE INITIATED FOR NON-MAINTENANCE OF BOOKS OF ACCOUNT AS REQUIRED BY SECTION 44AA OF THE INCOME-TAX ACT, 1961. NOW THE ONLY OPTION LEFT IS TO COMPLETE THE ASSESSM ENT U/S 144 OF THE INCOME-TAX ACT, 1961, ON THE BASIS OF THE INFOR MATION AVAILABLE ON RECORD. THE HONBLE SC HAS ELABORATED ABOUT THE POWERS AND DUTY OF THE ASSESSING OFFICER MAKING THE BEST JUDGEMENT IN THE FOLLOWING JUDGEMENT :- CST V. H.M. ESUFALI, H.M. ABDULAI [1973} 32 STC 77 (SC) CST V. H.M. ESUFALI, H.M. ABDULAI [197 3} 90 ITR 271 (SC) THE RELEVANT PORTION OF THE JUDGMENT IS:- IT IS A WELL SETTLED LAW THAT THE ASSESSING AUTHOR ITY WHILE MAKING THE BEST JUDGEMENT ASSESSMENT, NO DOUBT, S HOULD ARRIVE AT ITS CONCLUSION WITHOUT ANY BIAS AND ON RATIONAL BASIS. THAT AUTHORITY SHOULD NOT ITA NO.- 4373/DEL/2012. RAMIT VOHRA. PAGE 10 OF 39 BE VINDICTIVE OR CAPRICIOUS. IF THE ESTIMATE MADE B Y THE ASSESSING AUTHORITY IS A BONA FIDE ESTIMATE AND IS BASED ON A RATIONAL BASIS, THE FACT THAT THERE IS NO GOOD PROOF IN SUPPORT OF THAT ESTIMATE IS IMM ATERIAL. PRIMA FACIE, THE ASSESSING AUTHORITY IS THE BEST JUDGE OF THE SITUAT ION. IN THE PRESENT CASE, THERE IS NO DISPUTE THAT THE ASSESSEES ACCOUNTS WE RE RIGHTLY DISCARDED. WE DO NOT AGREE WITH THE HIGH COURT THAT IT IS THE DUT Y OF THE ASSESSING AUTHORITY TO ADDUCE PROOF IN SUPPORT OF ITS ESTIMAT E. IF THE BASIS ADOPTED BY THE A.O IS A RELEVANT ONE WHETHER IT WAS THE MOST A PPROPRIATE OR NOT IS IMMATERIAL. THERE IS NO JUSTIFICATION IN INTERFERIN G WITH THE SAME. TO SUM UP THE IMPORT OF THE DECISION IS THAT: (I) WHILE MAKING A BEST JUDGMENT ASSESSMENT, THE A.O CA N TAKE ASSISTANCE OF ASSESSEES ACCOUNTS, INFORMATION GATHERED AND SURRO UNDING CIRCUMSTANCES OF THE CASE; (II) THE A.O IS NOT DUTY BOUND TO STATE PRECISELY THE AC COUNT OF SUPPRESSED TURNOVER OR UNDISCLOSED INCOME, WHERE IT IS OBVIOUS THAT THE ASSESSEE IS MAINTAINING FALSE ACCOUNTS OR NO ACCOUNTS. THE ASSE SSEE CANNOT PLEAD THAT IT IS THE DUTY OF THE A.O TO PROVE CONCLUSIVELY THE AM OUNT OF SUPPRESSED TURNOVER OR UNDISCLOSED INCOME, AS THIS FACT IS IN HIS PERSONAL KNOWLEDGE; (III) THE BURDEN OF PROVING THE FACT IS ON THE ASSESSEE W HO CANNOT BE PERMITTED TO TAKE ADVANTAGE OF HIS OWN ILLEGAL ACTS; (IV) THE APPELLATE AUTHORITIES CANNOT SUBSTITUTE THEIR BEST JUDGMENT FOR THAT OF THE A.O. (V) ESTIMATE OF INCOME IS ALLOWED AND THERE MAY BE AN O VERESTIMATE OR AN UNDERESTIMATE. AS LONG AS THE ESTIMATE IS NOT ARBIT RARY, HAS NEXUS WITH FACTS DISCOVERED AND BASIS ADOPTED IS RELEVANT, THERE CAN BE NO GROUND FOR INTERFERING WITH THE BEST JUDGMENT OF THE A.O; (VI) IN JUDGING A BEST JUDGMENT ASSESSMENT, THE POWERS O F THE APPELLATE ARE RESTRICTED. THEY HAVE MERELY TO SEE WHETHER THE BOO KS OF ACCOUNTS WERE RIGHTLY REJECTED OR NOT AND THEREAFTER IF THE CONCL USION IS POSITIVE, THEN WHETHER OR NOT THE BASIS FOR ESTIMATION HAS REASONA BLE NEXUS WITH THE ITA NO.- 4373/DEL/2012. RAMIT VOHRA. PAGE 11 OF 39 ESTIMATE. EVEN THOUGH THE BASIS ADOPTED MAY NOT BE MOST APPROPRIATE BASIS, BUT IF IT IS SUCH THAT SUCH CONCLUSION WAS A LSO POSSIBLE AMONG SEVERAL OTHER POSSIBLE CONCLUSIONS, THE ESTIMATE OF THE A.O CANNOT BE DISTURBED; AND (VII) WHILE MAKING BEST JUDGMENT ASSESSMENT:- (A) THE CONCLUSION DRAWN SHOULD BE UNBIASED AND RATION ALLY MADE, (B) THE AUTHORITY SHOULD NOT BE VINDICTIVE OR CAPRICIO US (C) ESTIMATE SHOULD BE BONA FIDE. (VIII) GOOD PROOF IS NOT REQUIRED WHILE MAKING AN ESTIMAT E PROVIDED THE ACCOUNTS ARE RIGHTLY REJECTED AND ESTIMATE IS FAIR AND REASONABLE. (B.2) TO JUSTIFY THE VARIOUS ADDITIONS MADE IN THE ASSESSMENT ORDER, THE AO HAS ALSO INCLUDED DETAILED DISCUSSION IN THE ASSESSMENT ORDER IN RESPECT OF THE VARIOUS ADDITIONS MADE BY HIM IN THE AFORESAID ORDER DATED 28.12.2011 UNDER SECTION 144 OF I.T. ACT. THE RELEVANT PORTION OF THE ASSESSMEN T ORDER IS REPRODUCED AS UNDER: 5. EVIDENCE OF MANIPULATION IN ACCOUNTS AS MENTIONED ABOVE, THE ASSESSEE HAS NOT SUBMITTED THE RELEVANT DETAILS WITH AN OBVIOUS INTENTION TO AVOID DEEPER SCRUTINY OF HIS ACCOUNTS AND BUSINESS AFFAIRS. THE COMPLETE INF ORMATION ABOUT HIS BUSINESS IS IN THE EXCLUSIVE KNOWLEDGE OF THE A SSESSEE WHICH HE HAS DELIBERATELY NOT FURNISHED WITH MALAFIDE MOTIVE , HENCE, I AM LEFT WITH NO OPTION OTHER THAN TO REASONABLY ESTIMA TE THE PROFIT OF THE ASSESSEE ON THE BASIS OF THE INFORMATION AVAILA BLE ON RECORD. FROM THE PERUSAL OF THE BALANCE SHEET OF THE ASSESS EE FOR THE F.Y. 2007-08 AND F.Y. 2008-09, IT HAS BEEN OBSERVED THAT THE SUN DRY CREDITORS HAVE DECLINED FROM RS. 2,54,96,604/- IN THE F.Y. 2007-08 TO RS. 5 4,29,787/- I.E. BY A WHOPPING 80%. THIS BECOMES EVEN MORE STRANGE IF WE CONSIDER THE FACT THAT PURCHASES HAVE INCREASED FROM RS.12,97,13,220/- TO RS. 20,69,89,76 6/- I.E. BY 60%. UNDER NORMAL CIRCUMSTANCES, SUNDRY CREDITORS SHOULD HAVE INCREAS ED BY AROUND 60% BUT THEY HAVE DECREASED BY 80%. THIS IS SOMETHING WHICH CANN OT BE REASONABLY EXPLAINED AND IT CLEARLY INDICATES THAT SOMETHING IS AMISS. A SIMILAR ANALYSIS OF THE SUNDRY DEBTORS ALSO POINT S TOWARDS THE FACT THAT SOMETHING IS NOT CORRECT IN THE ACCOUNTS AS THE SUN DRY DEBTORS HAVE ALSO DECREASED FROM RS. 3,97,39,400/- TO RS. 3,30,53,065 /- I.E. BY 16.86% DESPITE INCREASE IN SALES FROM RS. 12,74,55,170/- TO RS. 21 ,43,94,341/- I.E. BY 68%. ITA NO.- 4373/DEL/2012. RAMIT VOHRA. PAGE 12 OF 39 THIS PHENOMENAL DECLINE IN SUNDRY CREDITORS AND DEC LINE IN SUNDRY CREDITORS COUPLED WITH THE FACT THAT THE ASSESSEE H AS TAKEN HUGE AMOUNT OF SECURED AND UNSECURED LOANS FROM THE BANKS AND FINA NCIAL INSTITUTIONS CLEARLY INDICATES THAT THE ASSESSEE HAS COOKED HIS BOOKS OF ACCOUNT TO MAKE THEM MORE PRESENTABLE TO THE BANKS SO THAT HIGHER AMOUNT OF L OANS CAN BE OBTAINED. THE ABOVE THEORY ALSO GETS SUBSTANTIAL SUPPORT FROM THE FACT THAT THE ASSESSEE FAILED TO FURNISH THE COMPLETE ADDRESS OF SUNDRY CREDITORS AND SUNDRY DEBTORS AND THEIR LEDGERS OBVIOUSLY TO AVOID DEEPER SCRUTINY. MOREOVER, NOTICES ISSUED TO THE FOLLOWING SUNDRY DEBTORS AND CREDITOR S , WHOSE ADDRESSES HAVE BEEN TAKEN FROM THE ASSESSMENT FOLDER OF ASSESSEE FOR TH E A.Y. 2008-09, HAVE COME BACK UNSERVED:- I. M/S NEELKANTH ENTERPRISES II. M/S JAI BHAGWATI ENTERPRISES III. M/S MITTAL TIMBER PRODUCTS PVT. LTD. IV. M/S JYOTI ENTERPRISES V. M/S KESHAV INTERNATIONAL VI. M/S JYOTI INTERNATIONAL BESIDES ABOVE, M/S SWARAN WOOD PRODUCTS (I) PVT. LT D., IN WHICH ASSESSEE HIMSELF IS A DIRECTOR AND MAJORITY SHAREHOLDER , FA ILED TO FURNISH ANY REPLY DESPITE THE FACT THAT THE NOTICE WAS SERVED THROUGH REGISTE RED POST AND IT DID NOT COME BACK. THE HONBLE DELHI HIGH COURT HAS HELD IN THE CASE OF COMMISSIONER OF INCOME-TAX, DELHI (CENTRAL)- III V. YAMU INDUSTRIES LTD. [2007] [2008] 167 TAXMAN 67 (DELHI), THAT WHERE NOTICE WAS SENT BY RE GISTERED POST AT CORRECT ADDRESS OF ASSESSEE HAD NOT BEEN RECEIVED BACK UNS ERVED WITHIN PERIOD OF THIRTY DAYS OF ITS ISSUANCE, THERE WAS A PRESUMPTION UNDER LAW THAT SAID NOTICE HAD BEEN DULY SERVED UPON ASSESSEE. THUS, THE ASSESSEE NOT O NLY DELIBERATELY FAILED TO FURNISH THE RELEVANT INFORMATION IN HIS OWN CASE BU T ALSO IN THE CASE OF THE COMPANY IN WHICH HE IS A DIRECTOR. ASSESSEE HAS SHOWN DEBIT BALANCE OF RS. 45,29,191/- FROM M/S SWARAN WOOD PRODUCTS (I) PVT. LTD. IN WHICH HE HIMSELF IS DIRECTOR AND A MAJORITY SHAREHOLDER. THE ABOVE COMPANY WAS A SUNDRY CREDITO R WITH OUTSTANDING CREDIT BALANCE OF RS. 1,24,24,934/- AS ON 31.03.2008. HOWE VER, IN THE BALANCE SHEET AS ON 31.03.2009 THE ABOVE COMPANY APPEARED AS SUNDRY DEBTOR WITH A DEBIT BALANCE OF RS. 45,29,191/-. THE CASE BECOMES EVEN M ORE FASCINATING BY THE FACT THE ABOVE COMPANY WAS NOT A DEBTOR TILL 28.02.2009, AS PER THE INFORMATION FURNISHED BY THE UNION BANK OF INDIA. HOW THE ABOVE COMPANY WAS TRANSFORMED FROM A SUNDRY CREDITOR WITH CREDIT BALANCE OF RS. 1 ,24,24,934/- TO A SUNDRY DEBTOR WITH DEBIT BALANCE OF RS. 45,29,191/- IS A MYSTERY WHICH ONLY THE ASSESSEE CAN UNRAVEL. THE CASE BECOMES EVEN INTRIGUING IF WE CON SIDER THE FACT THAT THE ASSESSEE HAS NOT DISCLOSED ANY TRANSACTION WITH HIS OWN PRIVATE LIMITED COMPANY - M/S SWARAN WOOD PRODUCTS (I) PVT. LTD. IN THE EARLI ER ASSESSMENT YEARS. THUS, THE ABOVE TRANSACTIONS ARE CERTAINLY NOT A TRANSACTION IN THE NATURE OF SALES AND ITA NO.- 4373/DEL/2012. RAMIT VOHRA. PAGE 13 OF 39 PURCHASES BUT A LOAN TRANSACTION WITHIN THE MEANING OF DEEMED DIVIDEND PROVISION U/S 2(22)(E) OF THE INCOME-TAX ACT, 1961. WITH THESE MANIPULATIONS THE ASSESSEE MANAGED TO IM PROVE THE CURRENT RATIO (CURRENT ASSETS/CURRENT LIABILITIES) FROM 1.1 1 (646.93/579.17) AS ON 31.03.2008 TO 1.14 (634.06/554.53) AS ON 31.03.2009 , TOTAL INDEBTEDNESS RATIO (TOTAL OUTSIDE LIABILITIES / TOTAL NET WORTH) FROM 7.31 (579.17/79.21) AS ON 31.03.2008 TO 3.93 (554.53/140.78) AS ON 3 L-Q3.200 9 AND THE TOTAL DRAWING POWER FROM THE BANKS. THE LAW IS WELL SETTLED THAT FOR THE INCOME TAX ASS ESSMENT PROCEEDINGS, PROOF BEYOND REASONABLE DOUBT IS NOT REQUIRED. PREP ONDERANCE OF PROBABILITY IS SUFFICIENT TO ESTIMATE THE INCOME OR TO MAKE ANY DI SALLOWANCE. IN NUMEROUS JUDICIAL PRONOUNCEMENTS BY THE HONBLE SUPREME COUR TS, HIGH COURTS, ITATS, COURTS HAVE HELD THAT: (I) UNLIKE CRIMINAL PROCEEDINGS WHERE THE CHARGE HAS T O BE PROVED BEYOND DOUBT, INCOME-TAX PROCEEDINGS ARE QUASI-JUDI CIAL. TAX LIABILITY IN CASES OF SUSPICIOUS TRANSACTIONS HAS TO BE ASSESSED ON THE B ASIS OF THE MATERIAL AVAILABLE ON RECORD, SURROUNDING CIRCUMSTANCES, HUMAN CONDUCT AN D PREPONDERANCE OF PROBABILITIES; (II) RULES OF EVIDENCE DO NOT GOVERN INCOME TAX PROCEED INGS AND THE AO IS NOT FETTERED OR BOUND BY TECHNICAL RULES CONTAIN ED IN THE INDIAN EVIDENCE ACT AND IS ENTITLED TO ACT ON MATERIAL WHICH MAY NOT BE ACCEPTED AS EVIDENCE IN A COURT OF LAW; (III) IN CLANDESTINE TRANSACTIONS, IT IS IMPOSSIBLE TO H AVE DIRECT EVIDENCE OR DEMONSTRATIVE PROOF OF EVERY MOVE AND WHEN THE A SSESSEE IS NOT FORTHCOMING WITH PROPER FACTS AND CHOOSES TO BE ELUSIVE AND EVA SIVE, THE AO HAS NO CHOICE BUT TO TAKE RECOURSE TO ESTIMATE. THE ONLY CAVEAT IS TH AT IT SHOULD BE REASONABLE AND BASED ON MATERIAL AVAILABLE ON RECORD. IT SHOULD NO T BE PERVERSE OR BASED MERELY ON CONJECTURES. (IV) THERE IS NO PRESUMPTION IN LAW THAT THE AO IS SUPP OSED TO DISCHARGE AN IMPOSSIBLE BURDEN TO ASSESS THE TAX LIABILITY BY DIRECT EVIDENCE ONLY AND TO ESTABLISH THE EVASION BEYOND DOUBT AS IN CRIMINAL P ROCEEDINGS. HE CAN ASSESSEE ON CONSIDERATION OF MATERIAL AVAILABLE ON RECORD, SURR OUNDING CIRCUMSTANCES, HUMAN CONDUCT, PREPONDERANCE OF PROBABILITIES AND NATURE OF INCRIMINATING INFORMATION/ EVIDENCE AVAILABLE ON RECORD; ITA NO.- 4373/DEL/2012. RAMIT VOHRA. PAGE 14 OF 39 (V) AS REGARDS THE BURDEN OF PROOF, IF THE AO COMES ACR OSS MATERIAL INDICATING ACCRUAL OR RECEIPT OF INCOME IN THE HAND S OF THE ASSESSEE, HE IS EMPOWERED TO INVESTIGATE THE MATTER AND ASK RELEVAN T QUESTIONS. THE AOS BURDEN IS INITIAL IN NATURE. THEREAFTER, THE ASSESSEE HAS TO GIVE A PROPER EXPLANATION AND DISCLOSE FACTS WHICH ARE IN HIS EXCLUSIVE KNOWLEDGE . THE ASSESSEE HAS NO OPTION TO REMAIN SELECTIVE, ELUSIVE, EVASIVE OR RESTRAINED IN DISCLOSURE. AFTER SUCH EXPLANATION, THE AO HAS TO ASCERTAIN THE CORRECTNES S OF THE ASSESSEES SUBMISSIONS ON THE BASIS OF MATERIAL AVAILABLE ON RECORD, THE S URROUNDING CIRCUMSTANCES, THE CONDUCT OF THE ASSESSEE, THE PREPONDERANCE OF PROBA BILITIES AND THE NATURE OF INCRIMINATING INFORMATION,' EVIDENCE AVAILABLE WITH HIM. FROM THE BARE PERUSAL OF THE FACTS DISCUSSED ABOVE, ANY PRUDENT AND REASONABLE PERSON WOULD CONCLUDE THAT THE FIGURES M ENTIONED IN THE BALANCE SHEET AND PROFIT AND LOSS ACCOUNTS ARE NOT RELIABLE. PENALTY PROCEEDINGS U/S 271(1 )(C) OF THE INCOME-TA X ACT, 1961, ARE INITIATED FOR FURNISHING OF INACCURATE PARTICULARS OF HIS INCOME BY THE ASSESSEE. 6. BOGUS PURCHASES AS DISCUSSED ABOVE, THE ASSESSEE HAS FUDGED HIS BOO KS OF ACCOUNT BY MANIPULATING THE FIGURES OF SUNDRY CREDITORS, SUNDR Y DEBTORS ETC. TO MAKE THEM PRESENTABLE BEFORE THE BANKERS. THE ASSESSEE HAS CL EVERLY MANIPULATED HIS BOOKS OF ACCOUNT IN SUCH A MANNER THAT ONLY THE RELEVANT FIGURES ARE FUDGED SO THAT THE BANKER CAN ENHANCE HIS DRAWING LIMIT WITHOUT AFFECT ING HIS TAXABILITY UNDER THE INCOME-TAX ACT, 1961. IF THE MAJOR TURNAROUND STORY OF HIS BUSINESS IS AC CEPTED ON FACE VALUE THEN THIS IMPRESSIVE PERFORMANCE SHOULD HAVE BEEN REFLEC TED IN THE GP AND NP RATES. HOWEVER, THE GP AND NP RATES ARE COMPARABLE WITH TH E F.Y. 2007-08. UNDER THESE CIRCUMSTANCES, I AM LEFT WITH NO OPTION OTHER THAN TO DISALLOW THE PURCHASES SINCE THE ASSESSEE NEITHER FURNISHED THE NAME AND ADDRESS OF PERSONS FROM WHOM PURCHASES HAVE BEEN MADE NOR THEI R CONFIRMATIONS, HENCE IT IS REASONABLE TO PRESUME THAT THERE IS SOME ELEMENT OF BOGUS PURCHASES. MOREOVER, AS MENTIONED ABOVE, NUMBER OF NOTICES U/S 133(6) OF THE INCOME-TAX ACT, 1961, WHICH HAVE BEEN ISSUED TO VARIOUS DEBTORS AND CREDI TORS HAVE COME BACK UNSERVED. THE ASSESSEE HAS CLAIMED PURCHASES OF RS. 20,69,89, 765.81/- IN THE P&L A/C. I DISALLOW 1% OF THE ABOVE PURCHASES, WHICH IS REASONABLE IN MY OPINION, I.E. RS. 20,69,898/IS DISALLOWED AND ADDED BACK TO THE T OTAL BUSINESS INCOME. PENALTY PROCEEDINGS U/S 271(1 )(C) OF THE INCOME-TA X ACT, 1961, ARE ITA NO.- 4373/DEL/2012. RAMIT VOHRA. PAGE 15 OF 39 INITIATED FOR FURNISHING OF INACCURATE PARTICULARS OF HIS INCOME AND CONCEALMENT OF INCOME BY THE ASSESSEE. 7. UNEXPLAINED SUNDRY CREDITOR THE ASSESSEE HAS CLAIMED SUNDRY CREDITOR OF RS. 54, 29,787/- IN THE BALANCE SHEET. SINCE, THE ASSESSEE FAILED TO FURNISH THE NAME, ADD RESS AND CONFIRMATION OF THESE SUNDRY CREDITORS, HENCE, THE AUTHENTICITY OF THE CL AIM OF SUNDRY CREDITORS REMAINED UNVERIFIED. ONUS WAS ON THE ASSESSEE TO ES TABLISH THE GENUINENESS OF THESE SUNDRY CREDITORS WHICH THE ASSESSEE FAILED TO DISCHARGE. FROM THE ASSESSMENT FOLDER OF THE ASSESSEE FOR THE A.Y. 2008 -09, ADDRESS OF ONE OF SUNDRY CREDITORS - M/S MITTAL TIMBERS PVT. LTD. WAS OBTAIN ED AND NOTICE U/S 133(6) OF THE INCOME-TAX ACT, 1961, WAS ISSUED TO THIS COMPANY BU T THE NOTICE CAME BACK UNSERVED WITH POSTAL REMARKS -LEFT WITHOUT ADDRESS . FROM THE PERUSAL OF THE DETAILS OF TDS/TCS DEDUCTED AS PER THE INFORMATION AVAILABLE IN THE ITD SYSTEMS, IT HAS BEEN OBSERVED THAT THE TAX HAS BEEN COLLECTE D AT SOURCE BY THE ABOVE COMPANY ON TOTAL PURCHASES OF RS. 3,87,37,975/- BY THE ASSESSEE. THOUGH, TCS HAS BEEN COLLECTED BY THE ABOVE COMPANY BUT THAT DO ES NOT MAKE THE ABOVE TRANSACTION GENUINE. IT IS A COMMON KNOWLEDGE THAT EVEN ENTRY OPERATORS ACCEPT PAYMENT BY CHEQUE AND DEDUCT APPROPRIATE TAX ON THE PAYMENTS TO SHOW THE TRANSACTION AS GENUINE. HONBLE COURTS HAVE HELD IN PLETHORA OF JUDGEMENTS THAT SIMPLY BECAUSE TRANSACTIONS ARE BY CHEQUES, IT CANNOT BE SAID THAT THE TRANSACTIONS ARE GENUINE. RELIANCE IS PLACED ON THE FOLLOWING JUDGEMENTS:- I. M.A. UNNERI KUTTY VS. C.I.T. : S.L.P.(CIVIL) NO.478 9 OF 199312 - SUPREME COURT. II. PRECISION FINANCE PVT. LTD. V. CIT - (1994) 208 ITR 465 (CAL.) III. UNITED COMMERCIAL & INDUSTRIAL CO. PVT. LTD. V. CIT -(1991) 187 ITR 596 (CAL.) IV. NIZAM WOOL AGENCY V. CIT - ALLAHABAD HIGH COURT (19 92) 193 ITR 318 (ALL.) IT IS A WELL ESTABLISHED JUDICIAL PRINCIPLE THAT TH E ONUS IS ON THE ASSESSEE TO ESTABLISH THE AUTHENTICITY OF THE BALANCES DISCLOSE D IN THE ACCOUNTS. THE BURDEN TO PROVE THE CREDITWORTHINESS OF THE CREDITORS AND THE GENUINENESS OF THE TRANSACTIONS IS INDISPUTABLY ON THE ASSESSEE. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF VELJI DEORAJ & COMPANY (1968) 68 ITR 708 (BOM.) HAS HELD THAT THE ASSESSEE'S DUTY TO PROVE THAT AN UNEXPLAINED ENTRY IN HIS ACCO UNT BOOKS DOES NOT REPRESENT UNDISCLOSED INCOME IS NOT DISCHARGED BY MERELY SHOW ING THAT THE ENTRY APPEARS IN THE ACCOUNT OF THIRD PARTY AND THAT THE PARTY IN WH OSE NAME THE AMOUNT IS CREDITED IS NOT A FICTITIOUS PARTY BUT A REAL PARTY BUT THE ASSESSEE ALSO HAS TO PROVE FURTHER THAT THE ENTRY MADE IN THE ACCOUNT BOOK IS A GENUINE ENTRY. THE ASSESSEE FAILED TO DISCHARGE HIS PRIMARY ONUS D ESPITE GETTING REPEATED OPPORTUNITIES WHICH ESTABLISHES THE FACT THAT THE A SSESSEE TRIED TO SCUTTLE THE ITA NO.- 4373/DEL/2012. RAMIT VOHRA. PAGE 16 OF 39 INVESTIGATION BY NOT PROVIDING RELEVANT INFORMATION . THUS, THE CLAIM OF SUNDRY CREDITORS OF RS. 54,29,78 7/- IS TREATED AS FICTITIOUS AND FALSE, HENCE, RS. 54,29,787/- IS TRE ATED AS UNEXPLAINED CASH CREDIT WITHIN THE MEANING OF SECTION 68 OF THE INCOME-TAX ACT, 1961, AND ADDED AS THE TOTAL INCOME FROM UNDISCLOSED SOURCES. PENALTY PROCEEDINGS U/S 271 (1 )(C) OF THE INCOME-T AX ACT, 1961, ARE INITIATED FOR FURNISHING OF INACCURATE PARTICULARS OF HIS INCOME AND CONCEALMENT OF INCOME BY THE ASSESSEE. 8. UNEXPLAINED ADDITION IN CAPITAL DURING THE F.Y. 2008-09, THE ASSESSEE HAS DISCLOSED ADDITION IN CAPITAL OF RS. 44,32,000/-. THE ASSESSEE HAS JUST MENTIONED IN THE BALANCE SHEET THAT THE ABOVE AMOUNT HAS BEEN TRANSFERRED FROM HIS SAVING B ANK ACCOUNT. HOWEVER, FROM THE PERUSAL OF THE REPLY SUBMITTED BY THE AR OF THE ASSESSEE VIDE LETTER DATED 10.08.2011, IT HAS BEEN OBSERVED THAT THE ASSESSEE FAILED TO MENTION ANYTHING ABOUT THE ABOVE SAVING BANK ACCOUNT WHILE LISTING H IS BANK ACCOUNTS. THUS, AGAIN THE INTENTION IS OBVIOUS I.E. TO AVOID FURTHER SCRU TINY. AS DISCUSSED ABOVE, IT IS A WELL SETTLED LEGAL POSITION THAT THE ONUS OF ESTABL ISHING THE SOURCE OF ANY CREDIT ENTRY INTO THE ACCOUNTS OF THE ASSESSEE IS ON THE A SSESSEE. HERE , THE ACTION OF THE ASSESSEE BY DELIBERATELY NOT MENTIONING ANY DETAILS ABOUT THE SAVING BANK ACCOUNTS LEADS TO ONLY ONE CONCLUSION THAT ASSESSEE DOES NOT WANT TO FURNISH COPY OF BANK STATEMENT TO THE ASSESSING OFFICER AND HE M OST CERTAINLY HAS SOMETHING TO HIDE. UNDER THESE CIRCUMSTANCES, IT IS EXTREMELY LOGICAL AND REASONABLE TO BELIEVE THAT THE SOURCE OF THE ABOVE ADDITION IN CAPITAL IS UNEXPLAINED. THUS, RS. 44,32,000/- IS TREATED AS INCOME FROM UNDISCLOSED S OURCES. PENALTY PROCEEDINGS U/S 271(L)(C) OF THE INCOME-TAX ACT, 1961, ARE INITIATED FOR FURNISHING OF INACCURATE PARTICULARS OF HIS INC OME AND CONCEALMENT OF INCOME BY THE ASSESSEE. 9. UNEXPLAINED INVESTMENT IN FIXED ASSETS AND CLAIM OF DEPRECIATION ON PURCHASE OF ASSETS DURING THE YEAR THE ASSESSEE HAS CLAIMED THE PURCHASE OF FOLLOWING DEPRECIABLE ASSETS DURING THE F.Y. 2008-09:- NAME OF ASSETS ADDITION BEFORE 30/09/2008 AFTER 30/09/2008 RATE OF DEP FURNITURE & FIXTURE - 23,348.00 10% T.V. - 5,600.00 15% AIR CONDITIONER 25,312.00 - 15% ITA NO.- 4373/DEL/2012. RAMIT VOHRA. PAGE 17 OF 39 COMPUTER 68,100.00 - 60% MOBILE PHONE 16,700 - 15% WATER DISPENSER 16,076.00 - 15% CAR 608,500.00 - 15% CAMERA 10,000.00 - 15% DVD PLAYER 8,200.00 - 15% FIRE CYLINDER 23,907.00 15% REFRIGERATOR 17,500.00 15% TOTAL 7,60,388.00 99,255.00 SINCE, DESPITE REPEATED OPPORTUNITIES THE ASSESSEE FAILED TO EITHER PRODUCE THE COPY OF THEIR INVOICES AND DATE OF THEIR PUT TO USE DESPITE GETTING REPEATED OPPORTUNITIES VIDE VARIOUS SHOW-CAUSE/NOTICES U/S 1 42(1) OF THE INCOME-TAX ACT, 1961, AS DISCUSSED ABOVE, HENCE, THE ABOVE INVESTME NTS AMOUNTING TO RS. 8,59,643/- IS TREATED AS UNEXPLAINED INVESTMENT U/S 69 OF THE INCOME-TAX ACT, 1961, AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE AS INCOME FROM UNDISCLOSED SOURCES. SIMILARLY, CLAIM OF DEPRECIATION AMOUNTING TO RS. 4 ,83,994/- IS DISALLOWED AND ADDED BACK TO THE TOTAL INCOME AS THE ASSESSEE FAILED TO FURNISH THE EVIDENCE OF ANY BUSINESS USE. PENALTY PROCEEDINGS U/S 271 (1 )(C) OF THE INCOME-T AX ACT, 1961, ARE INITIATED FOR FURNISHING OF INACCURATE PARTICULARS OF HIS INCOME AND CONCEALMENT OF INCOME BY THE ASSESSEE. 10. DEEMED DIVIDEND AS MENTIONED ABOVE, THE ASSESSEE HAS SHOWN DEBIT BA LANCE OF RS. 45,29,19L/- FROM M/S SWARAN WOOD PRODUCTS (I) PVT. LTD. IN WHICH HE HIMSELF IS DIRECTOR AND MAJORITY SHAREHOLDER. HOWEVER, THE ASS ESSEE QUITE DELIBERATELY REMAINED UNCOOPERATIVE , NOT ONLY AS AN INDIVIDUAL BUT ALSO A DIRECTOR IN THE ABOVE COMPANY, WITH A MALAFIDE INTENTION, SO THE EXACT QU ANTUM OF TRANSACTIONS BETWEEN THE ASSESSEE AND THE ABOVE COMPANY IS NOT KNOWN. HOWEVER, IT IS QUITE EVIDENT THAT THERE IS NO REGUL AR BUSINESS TRANSACTION WITH THE ABOVE COMPANY AND ABOVE TRANSACTIONS ARE L OAN TRANSACTION WITHIN THE MEANING OF SECTION 2(22)(E) OF THE INCOME-TAX ACT, 1961. SINCE NEITHER THE ASSESSEE DIRECTLY NOR THE ABOVE C OMPANY FURNISHED ANY DETAILS IN RESPONSE TO THE STATUTORY NOTICES AND TH E DETAILS REGARDING THE NATURE OF THE TRANSACTION AND QUANTUM OF TRANSACTION BETWEEN THE TWO IS IN EXCLUSIVE KNOWLEDGE OF THE ASSESSEE AND THE ABOVE COMPANY, HE NCE, I HAVE NO OPTION OTHER THAN TO ESTIMATE THAT THE ASSESSEE HAS RECEIVED PAY MENTS FROM THE ABOVE COMPANY, WHICH IS COVERED U/S 2(22)(E) OF THE INCOM E-TAX ACT, 1961, AMOUNTING TO RS. 45,29,191/-. PENALTY PROCEEDINGS U/S 271(L)(C) OF THE INCOME-TAX ACT, 1961, ARE INITIATED ITA NO.- 4373/DEL/2012. RAMIT VOHRA. PAGE 18 OF 39 FOR FURNISHING OF INACCURATE PARTICULARS OF HIS INC OME AND CONCEALMENT OF INCOME BY THE ASSESSEE. 11. INTEREST PAYMENT ON HOUSING LOANS AS PER THE INFORMATION FURNISHED BY THE MANAGER OF UNION BANK OF INDIA VIDE LETTER DATED 16.07.2011, THE ASSESSEE HAS PAID INTEREST ON THE TWO HOUSING LOANS. THE DETAILS ARE GIVEN BELOW:- MONTH DURING (FY) (2008- 09) INTEREST ACCRUED HOUSING LOAN I INTEREST ACCRUED HOUSING LOAN II APRIL 6,116.00 LOAN WAS MAY 6,277.00 SANCTIONED IN JUNE 6,088.00 DECEMBER, 2008 JULY 6,149.00 AUGUST 6,129.00 SEPTEMBER 5,870.00 OCTOBER 5,993.00 NOVEMBER 5,757.00 DECEMBER 5,899.00 7,572.00 JANUARY 5,837.00 17,982.00 FEBRUARY 5,309.00 11,261.00 MARCH 5,746.00 12,254.00 71,170 49,069 SINCE, THE INTEREST PAID ON HOUSING LOANS CANNOT BE QUALIFIED AS EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS AS PER THE PROVISION OF SECTION 37(1) OF THE4PTE-TAX ACT , 1961, HENCE, THE ABOVE INTEREST PAYMENTS I.E. RS. 1,20,239/- ARE DISALLOWE D AND ADDED BACK TO THE TOTAL INCOME. PENALTY PROCEEDINGS U/S 27L(L)(C) OF THE INCOME-TAX ACT, 1961, ARE INITIATED FOR FURNISHING OF INACCURATE PARTICULARS OF HIS INC OME AND CONCEALMENT OF INCOME BY THE ASSESSEE. 12. INCOME FROM HOUSE PROEPRTY IT HAS BEEN OBSERVED THAT THE ASSESSEE HAS TAKEN TW O HOUSING LOANS FROM UNION BANK OF INDIA, FOR A RESIDENTIAL HOUSE AT A-3 13, SHIVALIK, MALVIYA NAGAR, NEW ITA NO.- 4373/DEL/2012. RAMIT VOHRA. PAGE 19 OF 39 DELHI. THE DETAILS REGARDING THE INTEREST PAYMENTS ON THE HOUSING LOAN ARE GIVEN IN THE ABOVE PARAGRAPH. AS MENTIONED ABOVE, IN ALL THE SHOW-CAUSE NOTICES I SSUED TO THE ASSESSEE , FOLLOWING EXPLANATION WAS SPECIFICALLY ASKED FROM T HE ASSESSEE:- IT ALSO APPEARS THAT YOU HAVE TAKEN HOUSING LOAN F ROM THE UNION BANK OF INDIA KEEPING YOUR PROPERTY A-313, SHIVALIK, MALVIYA NAGA R, NEW DELHI AS PER THE DETAILS SUBMITTED BY THE BANK. KINDLY FURNISH THE COMPLETE DETAILS REGARDING THE HOUSING LOAN TAKEN, COMPLETE ADDRESS OF THE PROPERTY PURCHASED. KINDLY ALSO EXPLAIN WHY YOU HAVE NOT DISCLOSED THIS FACT IN YOUR RETURN OF INCOME OR IN YOUR SUBMISSIONS. KINDLY ALSO EXPLAIN HOW YOU HAVE SUBMITTED IN YOUR SUBMISSION DATED 10.08.2 011 THAT YOU HAVE NO IMMOVABLE ASSET. KINDLY ALSO EXPLAIN WHY THE ANNUAL RENT FROM THE ABOVE PROPERTY SHOULD NOT BE ESTIMATED AS YOU HAVE FAILED TO FURNISH YOUR PERSON AL BALANCE SHEET FOR THE F. Y. 2007-08 AND 2008-09. HOWEVER, IN THE WRITTEN SUBMISSION DATED 10.08.2011 , THE ASSESSEE SUBMITTED THAT HE IS NOT HAVING ANY IMMOVABLE PROPE RTY AND HE IS RESIDING IN THE PARENTAL HOUSE. HOWEVER, THE ASSESSEE FAILED TO FUR NISH ANY DETAIL REGARDING HIS PARENTAL HOUSE. THE PAYMENT OF INTEREST ON THE HOUSING LOAN PROVES BEYOND ANY REASONABLE DOUBT THAT THE ASSESSEE HAS ACQUIRED ONE RESIDENTIAL HOUSE IN THE EARLIER FINANCIAL YEARS AS HE IS PAYING EMI SINCE A PRIL, 2008. HOWEVER, THE ASSESSEE MAY ARGUE THAT HE HAS NOT TAKEN THE POSSESSION OF T HE ABOVE RESIDENTIAL HOUSE IN THE F.Y. 2008-09 SO NO ANNUAL VALUE CAN BE DETERMIN ED. HOWEVER, THE BANK STATEMENT OF THE ICICI BANK SUBMITTED BY THE ASSESS EE REVEALS THAT THE ADDRESS MENTIONED IN THE STATEMENT IS A-313, SHIVALIK, MALV IYA NAGAR, NEAR AUROBINDO COLLEGE, DELHI 110017. THE ABOVE BANK STATEMENT PER TAINS TO THE SCOOTER LOAN TAKEN BY THE ASSESSEE AND THE EMIS HAVE BEEN PAID F ROM 5 TH FEBRUARY, 2008. THUS, THE POSSESSION OF THE ABOVE RESIDENTIAL HOUSE HAS CERTAINLY BEEN TAKEN BY THE ASSESSEE EITHER IN THE F.Y. 2008-09 OR IN THE E ARLIER FINANCIAL YEARS. NON-SUBMISSION OF DETAILS REGARDING HIS PARENTAL PR OPERTY LENDS CREDENCE TO BELIEVE THAT THE ABOVE PARENTAL PROPERTY IS ALSO IN THE OWNERSHIP OF ASSESSEE, FOR WHICH HE CAN CLAIM NIL ANNUAL VALUE AS PER THE PROV ISION OF SECTION 23 OF THE INCOME-TAX ACT, 1961. BECAUSE OF THE FAILURE ON THE PART OF ASSESSEE, COM PLETE DETAILS REGARDING ACTUAL RENT RECEIVED/RECEIVABLE IS NOT AVAILABLE, F ROM THE ABOVE RESIDENTIAL PROPERTY, HENCE, I REASONABLY ESTIMATE THE ANNUAL R ENT TO BE RS. 3,60,000/- PER ANNUM I.E. RS. 30,000/- PER MONTH KEEPING IN VIEW T HE FACT THAT THE PROPERTY IS LOCATED IN POSH SOUTH DELHI LOCALITY. THE INCOME FROM HOUSE PROPERTY IS COMPUTED AS BELOW : I. ANNUAL VALUE : RS. 3,60,000/- II. LESS: DEDUCTION (30%) : RS. 1,08,000 III. LESS: INTEREST PAID : RS. 1,20,239/- INCOME FROM HOUSE PROPERTY : RS. 1,31,761/- ITA NO.- 4373/DEL/2012. RAMIT VOHRA. PAGE 20 OF 39 THUS, INCOME FROM HOUSE PROPERTY IS ESTIMATED AT RS . 1,31,761/-. PENALTY PROCEEDINGS U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961, ARE INITIATED FOR FURNISHING OF INACCURATE PARTICULARS OF HIS INC OME AND CONCEALMENT OF INCOME BY THE ASSESSEE. 13. EXPENSES OF PERSONAL NATURE THE ASSESSEE HAS CLAIMED EXPENSES OF RS. 77,460/- O N STAFF WELFARE, RS. 5,330/- ON VEHICLE MAINTENANCE, RS. 55,590/- ON CON VEYANCE AND TRAVELING AND RS. 66,195/- ON SALES PROMOTION EXPENSES. IT IS A MATTE R OF COMMON KNOWLEDGE THAT ALL THESE EXPENSES HAVE ELEMENTS OF PERSONAL NATURE . THUS, 10% OF ABOVE EXPENSES I.E. RS. 12,712/- IS DISALLOWED AND ADDED BACK TO THE TOTAL INCOME OF ESTIMATE BASIS. THE ASSESSEE HAS ALSO DEBITED RS. 1 ,84,823/- ON TELEPHONE FOR WHICH THE ASSESSEE HAS HIMSELF ADDED RS. 18,482/- A S PERSONAL EXPENSES IN THE COMPUTATION OF INCOME, HENCE, NO FURTHER DISALLOWAN CE IS REQUIRED ON ACCOUNT OF TELEPHONE EXPENSES. (C) THE ASSESSEE FILED APPEAL BEFORE LD. CIT(A) AGA INST THE AFORESAID ASSESSMENT ORDER DATED 28.12.2011. DURING APPELLATE PROCEEDIN GS BEFORE LD. CIT(A) THE ASSESSEE FILED ADDITIONAL EVIDENCES. THE ASSESSING OFFICER O BJECTED TO ADMISSION OF THE ADDITIONAL EVIDENCES VIDE LETTER (REMAND REPORT) D ATED 31.05.2012. HOWEVER, THE LD. CIT(A) ADMITTED THE ADDITIONAL EVIDENCES. THE RELEV ANT PORTION OF THE AFORESAID IMPUGNED ORDER DATED. 29.06.2012 OF LD. CIT(A), PER TAINING TO ADMISSION OF ADDITIONAL EVIDENCES, IS REPRODUCED BELOW FOR EASE OF REFERENCE : ADDITIONAL EVIDENCE THAT BEFORE GIVING THE SUBMISSION ON MERITS IN REFE RENCE TO EACH ADDITION AS NARRATED IN REMAND REPORT BY THE A.O. I T WILL BE APPROPRIATE TO JUSTIFY THE FILING OF ADDITIONAL EVI DENCE IN REGARD TO THE REMARKS GIVEN BY THE A.O. ON PAGE 7. THE A.O. HAS GIVEN THE FOLLOWING CONTENTIONS FOR NON-AC CEPTANCE / REJECTION OF ADDITIONAL EVIDENCES:- ITA NO.- 4373/DEL/2012. RAMIT VOHRA. PAGE 21 OF 39 1. NOTICE DATED 23/08/10 FOR HEARING DATED 31/08/10 THE A.O. HAS STRESSED THAT THE APPELLANT DID NOT CO MPLIED WITH THE NOTICE AND HAS ALSO WRONGLY CONTENDED THAT HE (A.O) WAS HEAVILY OCCUPIED IN ASSESSMENTS RELATED TO ASSESSMENT YEAR 2008-09 WHILE NEITHER IT WAS THE PERIOD OF SCRUTINY SELECTION NOR SCRUTINY COMPLETION. THAT, MERELY COMING TO THE ROOM OF THE A.O. CANNOT BE CALLED COMPLIANCE. HE (ASSESSEE) MUST HAVE FILED THE SUBMI SSION EITHER BEFORE THE A.O. OR AT THE OFFICE DAK RECEIPT COUNTE R. THAT BY GIVING THE AFORESAID FACTS THE TOTAL BLAME HAS BEEN PUT ON THE FACE OF THE APPELLANT. IT IS QUESTIONABLE IF THE AP PELLANT DID NOT ATTEND WHY THE ORDER SHEET WAS NOT RECORDED BY GIVING THE REMARK OF HIS ABSENCE. WHY IT WAS NOT RECORDED IN THE ORDER SHEET FOR HIS ABSENCE AND ISSUE OF FRESH NOTICE. THE ORDER SHEETS (ASSESS MENT PROCEEDINGS) REFLECT AS UNDER:- 23/08/10 NOTHING IS RECORDED 22/07/11 ISSUE NOTICE FOR COMPLIANCE ON 02/08/11 02/08/11 G.S. KOHLI CA ATTENDED, CASE ADJOURNED FOR 10/08/11 10/08/11 PARTLY DETAIL FILED. CASE DISCUSSED AND WAS ASKED TO COMPLETE THE REPLY OF QUESTIONNAIRE LETTER. IT COULD HAVE ADMITTED FACT THAT THE MONTH OF AUGUS T WAS NOT THE PERIOD OF HOLDING OF SPEEDY ASSESSMENTS. BUT SIMULTANEOUSLY IT COULD NOT BE DENIED THAT THE (A.O) MIGHT HAVE EN DED THE MATTER BY GIVING THE IMPRESSION THAT THE FRESH NOTICE WOULD B E SERVED UPON AFTER 31 ST DECEMBER, THUS, IN THESE CIRCUMSTANCES THE ASSESSE E IS NOT TO BE TREATED AS ASSESSEE IN DEFAULT. 2. NOTICE DATED 24/03/11 FOR HEARING ON 08/04/11 IT IS NOT FAIR TO SAY THAT THE RECORD DOES NOT REVE AL THAT ON WHICH DATE HARD COPY OF PROFIT & LOSS ACCOUNT WAS FILED. THE A.O. HAS ALSO NOT GIVEN ANY COMMENT THAT THE PR OCEEDINGS U/S 271(1 )(B) VIDE NOTICE DATED 11/05/05 WAS ALSO DROP PED WHERE THE WRITTEN SUBMISSION WAS PLACED ON THE RECORD THAT TH E HARD COPY OF PROFIT & LOSS ACCOUNT HAD ALREADY BEEN FILED. IT IS EVIDENT THAT IT WAS FILED IN COMPLIANCE TO THE NOTICE DATED 24/03/11. 3. NOTICE DATED 16/06/11 FOR THE HEARING ON 27/06/11 ITA NO.- 4373/DEL/2012. RAMIT VOHRA. PAGE 22 OF 39 IT IS ADMITTED BY THE A.O. THAT IT WAS ATTENDED AND CASE WAS ADJOURNED FOR 08/07/11 AND AGAIN IT WAS ADJOURNED FOR 12/07/1 1, SIMULTANEOUSLY WITH REMARK THAT IT PROVES THE RELUCTANCE ON THE PA RT OF THE ASSESSEE OR A.R. OF THE ASSESSEE. BUT THE A.O. HAS NOT GIVEN ANY COMMENTS IN RESPECT OF THE PROCEEDINGS WHERE THE WRITTEN SUBMISSION WAS PLACED ON THE RECO RD VIDE LETTER DATED 10/08/ 11 WHERE THE BOOKS OF ACCOUNTS WERE AL SO PRODUCED AND IT WERE TEST- CHECKED BY THE A.O. THAT SUCH SUBMISSION AND PRODUCTION EVIDENTLY PROVES THAT THE APPELLANT WAS NOT IN DEFA ULT AND WAS KEEN TO GET THE ASSESSMENT COMPLETED ON MERITS AS HELD IN T HE IMMEDIATE TWO EARLIER ASSESSMENT YEARS. THIS SUBMISSION IS IN REFERENCE TO THE REMAND REPO RT DATED 31/05/12 IN RESPECT OF THE CAPTIONED APPEAL. THE AO HAS ABSOLUTELY REITERATED THE FACTS IN HER REMAND REPORT FROM PAGE 1 TO 7 AS IT WERE GIVEN IN ASSESSMENT ORD ER FRAMED U/S 144 OF INCOME TAX ACT, 1961. THE APPELLANT HAD PLACED ON THE RECORD THE SUBMISSI ON VIDE LETTER /PAPER BOOK DATED 16 TH MAY, 2012 ALONG WITH DOCUMENTARY EVIDENCES TO PROVE THAT E ACH ADDITION / DISALLOWANCE WAS NOT JUSTIFIED. THE A.O. HAS NOT GIVEN ANY REMARK TO SUCH SUBMISSION, HOWEVE R, FROM PAGE 7 TO 10 IN HER REMAND REPORT SHE HAS OBJECTED OR ENTERTAINMENT OF ADDITIONAL EVIDENCE BY GIVING THE FACTS THAT THE SUFFICIENT OPPORTUNITY WERE PROVIDED TO THE ASSESSE E FOR FILING THESE RELEVANT DOCUMENTS DURING THE COURSE OF ASSTT PROCE EDINGS WHICH HE FAILED TO DO SO HE (ASSESSEE) DID NOT COMPLY WITH T HE SOUGHT INFORMATION, THEREFORE, AN ASSESSMENT HAS BEEN COMP LETED ON SCIENTIFIC BASIS AFTER HAVING CONSIDERED THE EVIDEN CE PRODUCED BY THE ASSESSEE AND AFTER TAKING INTO CONSIDERATION ALL RE LEVANT DOCUMENTS GATHERED BY THE A.O. HIMSELF. THE A.O. HAD ALSO STA TED IN HER REPORT THAT THE ASSESSEES SUBMISSION IS AFTER-THOUGHT TO EXPLAIN THE NEXPLAINED ISSUES INVOLVED IN THE ASSESSMENT PROCEE DINGS. BUT KEEPING IN VIEW THE FACTS THAT THE SUFFICIENT OPPORTUNITY H AS BEEN PROVIDED DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THEREF ORE, IT DESERVES TO BE REJECTED. 4. NOTICE DATED 11/10/11 FOR COMPLIANCE ON 19/10/11 THE A.O. ADMITTED THAT IT WAS ATTENDED AND AN ADJOU RNMENT WAS SOUGHT WHICH WAS GRANTED. BUT SHE HAS ALSO GIVEN THE REMAR K THAT IT PROVES THE TENDENCY OF THE ASSESSEE FOR LINGERING ON THE MATTE R. IT IS HUMBLY SUBMITTED THAT THE ASSESSEE WAS NOT HA BITUAL. THE EARLIER TWO IMMEDIATE ASSESSMENT YEAR HAS ALSO BEEN COMPLET ED U/S 143(3) WHERE THE ASSESSEE HAS FULLY CO-OPERATED. AN ADJOUR NMENT WAS SOUGHT BY GIVING THE SUFFICIENT CAUSE WHICH WAS ACCEPTED B Y THE A.O., THUS, ITA NO.- 4373/DEL/2012. RAMIT VOHRA. PAGE 23 OF 39 SUCH REMARKS ARE MORALLY WRONG. ' 5. NOTICE DATED 08/11/11 FOR HEARING ON 14/11/11 IT IS AN ADMITTED FACT THAT DUE TO SHORT OF TIME-GA P IN BETWEEN SERVICE OF NOTICE AND ITS HEARING IT COULD NOT BE ATTENDED ON THE FIXED DATE, HOWEVER, IT WAS ATTENDED ON THE NEXT DAY AND THE IM PRESSION WAS GIVEN THAT THE FRESH NOTICE WOULD BE SERVED 6. NOTICE DATED 19/12/11 FOR ITS COMPLIANCE ON 22/12/11 AGAIN THE TIME-GAP WAS SHORT IN BETWEEN THE DATE OF NOTICE AND ITS HEARING THAT IT COULD NOT BE ATTENDED ON THE FIXED DATE. IT WAS ATTENDED ON THE NEXT DATE, BUT THIS TIME THE APPELLANT WAS N OT ENTERTAINED AND WAS TOLD THAT AN EX-PARTE ORDER HAD BEEN PASSED WHI LE AS PER THE ASSESSMENT ORDER IT WERE FRAMED ON 28/ 12/11. IN THE REMAND REPORT DATED 1.06.2012 THE ASSESSING OFFICER HAS STATED AS UNDER: - * . IN VIEW OF THE ABOVE ADDITIONAL EVIDENCE FILED BEF ORE YOU DESERVES TO BE REJECTED ON MERITS AS WELL AS ON THE GROUND THAT THE ASSESSEE HAD SUFFICIENT OPPORTUNITY TO FILE THE SAME DURING ASSE SSMENT PROCEEDINGS. THE ASSESSEES SUBMISSION APPEARS TO BE AN AFTER-TH OUGHT TO EXPLAIN THE UNEXPLAINED ISSUES INVOLVED IN THE ASSESSMENT PROCE EDINGS. THUS, THE ADDITIONAL EVIDENCE SHOULD NOT BE ADMITTED UNDER RU LE 46A. THE ADDITIONAL EVIDENCES IN NO WAY FULLY EXPLAIN THE UN EXPLAINED ISSUES AND HENCE THE ASSESSMENT FRAMED UNDER SECTION 144 OF TH E IT ACT IS JUSTIFIED AND I STAY WITH THE ASSESSMENT. IT IS EVIDENT FROM THE ASSESSMENT FOLDER THAT DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS ALSO REPEATED OPPORTUNITIES WERE GIVEN TO THE ASSESSEE BUT THE ASSESSEE FAILED TO FURNISH ANY EXP LANATION, HENCE, IN MY OPINION, HE IS NOT ENTITLED TO SUBMIT ANY ADDITI ONAL EVIDENCE AT THIS STAGE. THE HONBLE DELHI HIGH COURT HAD HELD IN THE CASE OF CIT V. MANISH BUILD WELL PVT. LTD. (2012) 204 TAXMAN 106 T HAT ADDITIONAL EVIDENCES CAN BE PRODUCED AT FIRST APPELLATE STAGE ONLY WHEN CONDITIONS STIPULATED IN RULE 46A ARE SATISFIED AND A FINDING IS RECORDED. THE APPELLANT HAS FURTHER CONTENDED THAT WITHOUT PR EJUDICE TO THE ABOVE SUBMISSION IT. IS SUBMITTED THAT THE OBSERVATION GI VEN BY THE A.O. FOR EACH DATE GIVING THE REMARK IT PROVES THE TENDENCY OF TH E ASSESSEE FOR THE LINGERING ON THE MATTER, TOTALLY REMAINED NEGLIGENT AND NON-COOPERATIVE THROUGHOUT ASSESSMENT PROCEEDINGS WAS UNJUSTIFIED A ND WERE CONTRARY TO THE PAST-HISTORY AVAILABLE ON THE RECORD AS GIVEN H EREUNDER:- ITA NO.- 4373/DEL/2012. RAMIT VOHRA. PAGE 24 OF 39 I] THE ASSESSMENT FOR THE TWO EARLIER ASSESSMENT YE AR I.E. ASSESSMENT YEAR 2007-08 AND 2008-09 HAVE BEEN COMPL ETED U/S 143(3) OF INCOME TAX ACT, 196L WHERE THE ASSESSEE HAS GIVE N HIS FULL COOPERATION AND THE DECLARED RESULTS HAVE ALSO BEEN ACCEPTED. II] SUFFICIENT DOCUMENTS WERE PLACED ON THE RECORD ALONG WITH LETTER DATED 10 TH AUGUST, 2011. THE BOOKS OF ACCOUNTS WERE ALSO PROD UCED WHICH WERE TEST-CHECKED AS CONFIRMED BY THE A.O. TH E APPELLANT WAS ALSO IN POSSESSION OF CONFIRMATION OF TRADE CREDITORS AN D OTHER ALLIED INFORMATION SOUGHT BY THE LEARNED A.O., THUS, THERE WAS NO REASON TO DEPRIVE THEIR SELVES FROM THE ASSESSMENT PROCEEDING S. THAT AN AFFIDAVIT GIVING THE CONTENTS ON OATH IN RESPECT OF SUFFICIEN T CAUSE WHICH PREVENTED HIM IN ATTENDING THE A.O HAD ALSO BEEN PLACED ON TH E RECORD. THE A.O. HAS ALSO STATED MEDICAL CERTIFICATE PROV IDED BY THE ASSESSEE IS MERELY RELATED TO HEADACHE AND BACK ACHE, IT DOES N OT PROVE THAT HE WAS HOSPITALIZED WAS MORALLY WRONG. IT IS ALSO QUITE AD MITTED THAT HEADACHE AND BACKACHE TEMPORARILY DOES NOT INDICATE ANY SERI OUS MATTER AS STATED BY THE A.O. BUT SOMETIMES KEEPING IN VIEW THE AGE O F THE APPELLANT WHO IS ABOUT 45 YEARS NOT ONLY THE ASSESSEE, THE ENTIRE FAMILY WAS IN SHOCK AND DISTURBED AND AT THE MOMENT ONE MUST BEAR IN MI ND THAT HEALTH IS ABOVE ALL FROM ALL OTHER MATTERS. FURTHER THE CONTENTS IN AN AFFIDAVIT AS ITEM NO.4 ALONG WITH DOCUMENTARY EVIDENCE THAT DUE TO HIS ILL-HEALTH THE BUSINESS WAS CONDUCTED IN QR. ENDING 31 ST DEC, 2011 ONLY TO THE TUNE OF RS.79,436/- WHILE FOR THE CORRESPONDING PERIOD OF THE PREVIOUS YEAR IT WERE AMOUNTING TO RS.4,80,74,708/-, THUS, IT EVIDENTLY PROVES THAT THE ENTIRE ACTIVITIES OF THE HUMBLE APPELLANT WERE FREEZED. III] IT IS SUBMITTED THE SOLE PURPOSE OF JUDICIARY AS WELL AS OF THE REVENUE IS TO GET AT THE TRUTH. THERE SHOULD BE NO OBJECTION TO CONSIDER ANY EVIDENCE PRODUCED TO TEST ITS AUTHENTICITY RELE VANT AND THEN TO ACT ON IT AS HELD BY I.T.A.T. DELHI-A BENCH [26 ITD 236] IN THE CASE OF ELECTRA (JAIPUR) PIRT. LTD. V. INSPECTING ASSISTANT COMMISSIONER THE SOLE PURPOSE OF JUDICIARY AS WELL AS OF THE RE VENUE IS TO GET AT THE TRUTH. IF THE TRUTH IS THAT THE PAYMENT OF COMMISSI ON WAS GENUINE AND WAS DICTATED BY THE BUSINESS NEEDS, SUCH A PAYMENT SHOULD NOT BE DISALLOWED MERELY ON THE GROUND THAT THE ASSESSEE A S TO CREATE A VERY HIGH DEGREE OF SUSPICION. THERE SHOULD BE NO OBJECTION TO CONSIDER ANY EVIDEN CE PRODUCED TO TEST ITS AUTHENTICITY RELEVANT AND THEN TO ACT ON IT. SIMILARLY IT HAS ALSO BEEN HELD BY MADHYA PRADESH H IGH COURT IN THE CASE OF C.I.T. VS. SHIYA DAWOODI BOHARA JAMAT 304 ITR 33 6 IT IS SUBMITTED THAT THE APPELLANT HAD PLACED ON TH E RECORD THE NECESSARY DOCUMENTS LIKE CONFIRMATION OF TRADE CRED ITORS, SALES TAX / VAT ASSESSMENT ORDER AND OTHER RELEVANT DOCUMENTS R ELATING TO EACH ADDITION TO PROVE THE AUTHENTICITY, GENUINENESS AND BONAFIDITY OF THE DECLARED PROFIT AND THE A.O. HAS NOT GIVEN ANY PART ICULAR COMMENTS ON ITA NO.- 4373/DEL/2012. RAMIT VOHRA. PAGE 25 OF 39 SUCH DOCUMENTS. THOSE APART FROM THE SUFFICIENT CAUSE OF TIME-GAP I N BETWEEN DATE OF NOTICE AND DATE OF HEARING AN AFFIDAVIT ALONG WIT H MEDICAL CERTIFICATE ARE ENCLOSED AS AN EVIDENCE TO PROVE ONE OF THE SUF FICIENT CAUSES WHICH PREVENTED HIM FROM ATTENDING THE PROCEEDINGS AND IT S DISPOSAL ON MERITS AS IT WERE HELD IN THE EARLIER TWO ASSESSMEN T YEARS. THE APPELLANT HAD ALSO FILED AN APPLICATION UNDER R ULE 46A SEPARATELY FOR AN ENTERTAINMENT OF SUPPORTING DOCUMENTS/EVIDENCES WHICH WERE NOT PRODUCED DURING THE COURSE OF ASSESSMENT PROCEEDING S AND THE ADDITIONS HAS BEEN HELD BY THE A.O. THE A.O. HAS ONLY REITERATED THE FACTS IN THE REMAN D REPORT AS FRAMED IN THE ASSESSMENT ORDER AND FURTHER SHE HAS ALSO REFER RED THE CASE CST V. H.M. ESUFALI, H.M. ABDULAI [1973] 32 STC 77( SC) AND CST V. H.M. ESUFALI, H.M. ABDULAI [1973] 90 ITR 271 (SC) IN SUPPORT TO PROVE THE VALIDITY OF AN EX-PARTE ORD ER. IN THIS CONNECTION IT IS SUBMITTED THAT THE METHOD OF ACCOUNTING, ITS REPRESENTATION AS WELL AS ITS RELIANCE HAS BEEN CHA NGED BY PASSAGE OF TIME. THESE REFERRED CASES ARE RELATED TO 1973 WHILE AT P RESENT THE TAX AUDIT IS THERE , AUDIT REPORT IS THERE IN THE PRESCRIBED PERFORMA AS INSERTED INCOME TAX ACT, 1961. THE APPELLANT HAS FURTHER CONTENDED THAT THE ASSESS ING OFFICER ONLY REITERATED THE FACTS FRAMED IN ASSESSMENT ORDER TO STAND WITH ITS VALIDITY, SUCH SPIRIT IS FAR OFF FROM THE JUDICIARY AND NATURAL LAW OF JUSTICE AS IT IS ALSO HELD BY DELHI HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. VIRGIN SECURITIES & CREDITS PVT. LTD. 332 ITR 396 THE ASSESSEE PRODUCED REQUISITE MATERIAL BEFORE TH E COMMISSIONER (APPEALS) FOR THE FIRST TIME JUSTIFYING THE CLAIMS. THE COMMISSIONER (APPEALS) CALLED FOR A REMAND REPORT FROM THE ASSES SING OFFICER AND THEREAFTER DELETED THE ADDITION AND OBSERVED THAT T HE ASSESSING OFFICER IN HIS REMAND REPORT HAD NOT SPECIFICALLY COMMENTED UPON THE ADDITIONAL EVIDENCE SUBMITTED BY THE ASSESSEE. IT IS SUBMITTED THAT THE SUFFICIENT CAUSE PLACED BE FORE YOU ALONG WITH DOCUMENTARY EVIDENCE THAT EVEN THE BUSINESS OF THE APPELLANT WAS FREEZED IN QR. ENDING 31/12/11 IT WAS CONDUCTED ONL Y RS.79,436/- AS COMPARED TO CORRESPONDING PERIOD OF THE PREVIOUS YE AR WHERE IT WERE TO ITA NO.- 4373/DEL/2012. RAMIT VOHRA. PAGE 26 OF 39 THE TUNE OF RS.4,80,74,708/-. IT EVIDENTLY PROVES T HE SUFFICIENT CAUSE WHICH PREVENTED HIM FROM ATTENDING THE CASE OTHERWI SE THERE WAS NO REASON TO DEPRIVE THEIR SELVES FROM THE ASSESSMENT PROCEEDINGS PARTICULARLY WHERE ALL THE DOCUMENTS HAVE BEEN PLAC ED ON THE RECORD, THUS, IT DESERVES TO BE ENTERTAINED FOR THE DISPOSA L OF AN APPEAL ON MERITS. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE, ABOVE DISCUSSION , JUDICIAL PRONOUNCEMENTS CITED ABOVE AND KEEPING IN VIEW THE PAST HISTORY AND THE FACT THAT THE DECLARED INC OME IN THE EARLIER YEARS HAVE BEEN ACCEPTED BY FRAMING AN ASSESSMENT U /S 143(3) AND TO RENDER JUSTICE BEING THE SOLE PURPOSE OF JUDICIARY, THE DOCUMENTS PLACED ON THE RECORD AS ADDITIONAL EVIDENCE ARE ADMITTED. NOW I PROCEED TO ADJUDICATE THE GROUNDS OF APPEAL ON MERITS. (C.1) THE LD. CIT(A) WENT ON TO DECIDE THE APPEAL H AVING ADMITTED THE ADDITIONAL EVIDENCES, AND ALLOWED SUBSTANTIAL RELIEF TO THE ASS ESSEE, VIDE THE AFORESAID IMPUGNED ORDER DATED 31.05.2012. AGGRIEVED, REVENUE HAS FIL ED THIS PRESENT APPEAL IN ITAT. IN THE COURSE OF APPELLATE PROCEEDINGS, A PAPER BOOK C ONTAINING THE FOLLOWING PARTICULARS WAS FILED FROM ASSESSEES SIDE: 1. WRITTEN SUBMISSION 2. PHOTOCOPIES OF ASSESSMENT ORDERS RELATING TO ASS TT. YEAR 2007-08 AND 2008-09 FAMED U/S 143(3) OF INCOME TAX ACT, 196 1. 3. PHOTOCOPY OF NOTICE DATED 11/05/11 U/S 271(1)(B) AN D ITS COMPLIANCE ON 20/05/2011 TO PROVE THAT THE APPELLANT WAS NOT I N DEFAULT ANYWHERE IN ATTENTING THE PROCEEDINGS. 4. PHOTOCOPY OF LETTER DATED 10/08/2011 WHICH WAS PLAC ED ON THE RECORD IN PERSON. THE LEARNED A.O. HAS NOT GIVEN ANY REFE RENCE OF SUCH FILING. 5. A] PHOTOCOPY OF AN AFFIDAVIT (ORIGINAL IS ENCLOSE D ALONG WITH AN APPLICATION UNDER RULE 46A) GIVING THE CONTENTS ON OATH RELATED TO SUFFICIENT CAUSE WHICH PREVENTED THE ASSESSEE FROM ATTENDING THE PROCEEDINGS ALONG WITH COPY OF MEDICAL CERTIFICATE . B] COMPARATIVE FIGURES OF SALE FOR QR. ENDING 31/12 /10 AND ITA NO.- 4373/DEL/2012. RAMIT VOHRA. PAGE 27 OF 39 31/12/11 TO PROVE THAT THE ASSESSEE COULD NOT RUN THE BUSINESS IN QR. ENDING 31/12/11 UE TO THE PHYSICALLY ILL-HE ALTH AND MENTAL DEPRESSION HE ALSO COULD NOT ATTEND THE A.O. FOR I TS DISPOSAL ON MERITS. 6 A] PHOTOCOPY OF SANCTION OF LOAN BY U.B.I FOR RE NOVATION, REPAIR AND EXTENSION OF RESIDENTIAL HOUSE FOR RS. 10 LACS DA TED 20/09/05 AND RS. 17 LACS DATED 17/12/08. B] THE BREAKUP OF INTEREST CHARGED BY THE BANKERS O N SUCH LOAN WHICH NO DOUBT TALLIES WITH THE A.O.S ORDER. C] PHOTOCOPY OF SAVING ACCOUNT WHERE THE CONCERNED PAYMENT HAVE BEEN HIGHLIGHTED TO PROVE THAT IT HAD BEEN PAI D FROM THE SAVING ACCOUNT BY TREATING IT AS PERSONAL EXPENSES, ITS DISALLOWANCE U/S 37 WAS NOT JUSTIFIED. D] PHOTOCOPY OF I. CARD AND DRIVING LICENSE TO PROV E THAT IT IS SELF- OCCUPIED PROPERTY (RESIDENTIAL HOUSE) AND THUS THE DETERMINATION OF ANNUAL VALUE WAS NOT JUSTIFIED. E] PHOTOCOPY OF TRADING, PROFIT & LOSS ACCOUNT FOR THE YEAR ENDING 31 ST MARCH, 2009 AND BALANCE SHEET ON THAT DATE ALONG W ITH AUDIT REPORT ON THE PRESCRIBED FORM 3CD FOR THE AUDIT HEL D U/S 44AB OF THE INCOME TAX ACT, 1961. 7. EXPLANATION/ CONFIRMATION OF THE PARTIES WHERE T HE NOTICE U/S 133(6) WERE UNCOMPLETED. M/S NEELKANTH ENTERPRISES M/S MITTAL TIMBER PRODUCTS PVT. LTD. M/S JYOTI ENTERPRISES M/S KESHAV INTERNATIONAL THE EXPLANATION OF OTHER PARTIES ARE GIVEN IN THE W RITTEN SUBMISSION ON PAGE 8 A] PHOTOCOPY RECEIPTS FOR FILING OF VAT RETURNS ( SALES TAX RETURNS) ALONG WITH ITS SUMMARY FOR THE FINANCIAL YEAR 200 8-09 TO PROVE THAT THE DECLARED PURCHASE AND SALES HAS BEEN ACCEP TED BY THE CONCERNED DEPARTMENT. B] FOR AN INSTANCE THE DETAIL FOR THE MONTH OF AUGU ST, 2008 ON THE PRESCRIBED PROFORMA DVAT 30 AND DVAT 31 RELATED TO PURCHASE AND SALES WHICH ARE REGULARLY FILED WITH THE DEPART MENTAL TO ESTABLISH THAT IT LEAVES TO SCOPE OF SUSPICION IN R ESPECT OF PURCHASE AND SALES AS THE FULL PARTICULARS AE TO BE FILED WI TH THE APPROPRIATE AUTHORITIES. 9. A] DETAIL OF SUNDRY CREDITORS FOR AN AMOUNT OF R S. 54,29,787/- ITA NO.- 4373/DEL/2012. RAMIT VOHRA. PAGE 28 OF 39 B] CONFIRMATION OF ALL THE TRADE CREDITORS TO ESTAB LISH THAT AN ADDITION OF ENTIRE OUTSTANDING CREDITORS WAS NOT JU STIFIED. 10 A] CAPITAL ACCOUNT OF THE ASSESSEE GIVING THE DA Y TO DAY TRANSACTIONS RELATED TO THE RELEVANT ASSTT. YEAR UN DER APPEAL. B] THAT AN ANNEXURE GIVING THE NATURE OF DEBIT AN D CREDIT TRANSACTIONS. 11. A] SCHEDULED OF FIXED ASSETS AS ON 31.03.09 TO PROVE THAT THE CLAIM OF DEPRECIATION IS RS. 2,79,854/- AND THUS IT S DISALLOWANCE RS. 4,83,994/- WAS NOT JUSTIFIED. B] PHOTOCOPY OF THE PURCHASE INVOICE FOR AN ADDITIO N HELD AMOUNTING TO RS. 8,59,640/- IN THE RELEVANT ASSTT. YEAR. 12. A] COPY OF PROFIT & LOSS ACCOUNT FOR THE ENDING 31/03/08 AND BALANCE SHEET AS ON THAT OF SWARAN WOOD PRODUCTS PV T. LTD. TO PROVE THAT RESERVE & SURPLUS WERE AMOUNTING TO RS. 1,41,070/- ONLY, THUS, AN ADVERSE ACTION U/S 2(22) (E) FOR AN ADDITION OF RS. 45,29,191/- WAS NOT JUSTIFIED. B] THE ENTIRE OUTSTANDING BALANCE OF RS. 45,29,291/ - IS RELATED TO SALE TO M/S SWARAN WOOD PRODUCTS PVT. LTD. THE DE TAIL OF OUTSTANDING BILLS IS ENCLOSED, THUS, AN ACTION U/S 2(22)(E) WAS NOT JUSTIFIED. (C.1.1) AT THE TIME OF HEARING BEFORE US, THE LD. DEPARTMENTAL REPRESENTIVE (LD. DR, FOR SHORT) VEHEMENTLY PROTESTED THE ADMISSION OF ADDITIONAL EVIDENCES BY THE LD. CIT(A) DURING APPELLATE PROCEEDINGS BEFORE THE LD. CIT(A) DESPITE THE ASSESSEE HAVING FAILED TO AVAIL OF OPPORTUNITIES PROVIDED BY THE AO DURING ASSESSMENT PROCEEDINGS. THE LD. DR STRONGLY EXPRESSED THE FURTHER GRIEVANCE OF REVENUE, THAT EVEN AFTER ADMISSION OF THE ADDITIONAL EVIDENCES BY THE LD. CIT(A), THE L D. CIT(A) FAILED TO PROVIDE REASONABLE OPPORTUNITY TO THE ASSESSING OFFICER IN GROSS VIOLATION OF RULE 46A(3) OF INCOME TAX RULES, 1962 (I.T. RULES, FOR SHORT). THE LD. AUTHORISED REPRESENTATIVE OF ITA NO.- 4373/DEL/2012. RAMIT VOHRA. PAGE 29 OF 39 THE ASSESSEE STRONGLY RELIED ON THE ORDER OF THE LD . CIT(A). HE FURTHER RELIED ON THE PAPER BOOK FILED FROM THE ASSESSEES SIDE DURING AP PELLATE PROCEEDINGS IN ITAT [ALREADY REPRODUCED BY US IN THE FOREGOING PARAGRAPH (C.1)]. HE ALSO PLACED RELIANCE ON JUDICIAL PRECEDENTS CONSIDERED BY LD. CIT(A) IN HER IMPUGNED ORDER. (C.2) WE HAVE HEARD BOTH SIDES PATIENTLY. WE HAVE ALSO CAREFULLY PERUSED THE MATERIALS ON RECORDS. WE HAVE CONSIDERED JUDICIAL PRECEDENTS REFERRED TO IN THE RECORDS OR BROUGHT TO OUR ATTENTION AT THE TIME OF HEARING BEFORE US. THE STATUTORY PROVISIONS REGARDING ADMISSION OF ADDITIONAL EVIDENCE BY COMMIS SIONER OF INCOME (APPEALS) ARE CONTAINED IN RULE 46A OF I.T. RULES, AND ARE REPROD UCED BELOW FOR EASE OF REFERENCE: 46(A). (1) THE APPELLANT SHALL NOT BE ENTITLED TO PRODUCE BEFORE THE [DEPUTY COMMISSIONER OF (APPEALS) [OR, AS THE CASE MAY BE C OMMISSIONER (APPEALS)], ANY EVIDENCE, WHETHER ORAL OR DOCUMENTA RY, OTHER THAN THE EVIDENCE PRODUCED BY HIM DURING THE COURSE OF P ROCEEDINGS BEFORE THE [ASSESSING OFFICER], EXCEPT IN THE FOLLO WING CIRCUMSTANCES, NAMELY:- (A) WHETHER THE [ASSESSING OFFICER] HAS REFUSED TO ADMI T EVIDENCE WHICH OUGHT TO HAVE BEEN ADMITTED; OR (B) WHERE THE APPELLANT WAS PREVENTED BY SUFFICIENT CAU SE FROM PRODUCING THE EVIDENCE WHICH HE WAS CALLED UPON T O PRODUCE BY THE [ASSESSING OFFICER]; OR (C)WHETHER THE APPELLANT WAS PREVENTED BY SUFFICIEN T CAUSE FROM PRODUCING BEFORE THE [ASSESSING OFFICER]ANY EVIDE NCE WHICH IS RELEVANT TO ANY GROUND OF APPEAL; OR (D) WHETHER THE [ASSESSING OFFICER ] HAS MADE THE ORDER APPEALED AGAINST WITHOUT GIVING SUFFICIENT OPPORTUNITY TO TH E 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 MAY BE, TH E COMMISSIONER (APPEALS)] RECORDS IN WRITING THE REASONS FOR ITS A DMISSION. ITA NO.- 4373/DEL/2012. RAMIT VOHRA. PAGE 30 OF 39 (3) THE [DEPUTY COMMISSIONER (APPEALS)] [OR, AS THE CASE MAY BE, THE COMMISSIONER (APPEALS) SHALL NOT TAKE INTO ACCOUNT ANY EVIDENCE PRODUCED UNDER SUB-RULE(1) UNLESS THE [ASSESSING OF FICER] 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 WITN ESS 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 BE, TH E COMMISSIONER (APPEALS) TO DIRECT THE PRODUCTION OF ANY DOCUMENT, OR THE EXAMINATION OF ANY WITNESS, TO ENABLE HIM TO DISPOSE OF THE APPEAL, OR FOR ANY OTHER SUBSTANTIAL CAUSE INCLUDIN G THE ENHANCEMENT OF THE ASSESSMENT OF PENALTY (WHETHER O N HIS OWN MOTION OR ON THE REQUEST OF THE [ASSESSING OFFICER] ) UNDER CLAUSE (A) OF SUB-SECTION (1) OF SECTION 251 OR THE IMPOSI TION OF PENALTY UNDER SECTION 271.] (C.2.1) ON PERUSAL OF THE AFORESAID IMPUGNED APPELL ATE ORDER OF LD. CIT(A), WE FIND THAT THE FACT, THAT IN EARLIER YEARS THE DECLA RED INCOME OF THE ASSESSEE HAVE BEEN ACCEPTED BY FRAMING ASSESSMENT U/S 143(3) OF I.T. A CT, HAS BEEN CONSIDERED FAVOURABLY BY LD. CIT(A). HOWEVER, IN OUR VIEW, THE FACT WHETHER IN EARLIER YEARS THE DECLARED INCOME OF THE ASSESSEE HAVE BEEN ACCEPTED IN FRAMING ASSESSMENT U/S 143(3) OF I.T. ACT, OR NOT; IS AN ENTIRELY IRRE LEVANT CONSIDERATION FOR THE PURPOSE OF ADMISSION OF ADDITIONAL EVIDENCES. FURTHER, . TO RENDER JUSTICE BEING THE SOLE PURPOSE OF JUDICIARY IS THE OTHER REASON CITED BY LD. CIT(A) FOR ADMISSION OF ADDITIONAL EVIDENCES. WE MUST ADD HERE THAT JUSTICE IS TO BE RENDERED IN ACCORDANCE WITH LAW AND NOT IN CONTRAVE NTION OF LAW . THE LAW IN RELATION TO ADMISSION OF ADDITIONAL EVIDENCES, AS CO NTAINED IS RULE 46A OF I.T. RULES HAS ITA NO.- 4373/DEL/2012. RAMIT VOHRA. PAGE 31 OF 39 ALREADY BEEN REPRODUCED IN FOREGOING PARAGRAPH (C.2 ) OF THIS ORDER. THE CIRCUMSTANCES UNDER WHICH LD. CIT(A) MAY ADMIT ADDI TIONAL EVIDENCES HAVE BEEN EXHAUSTIVELY LISTED IN CLAUSES (A), (B), (C) A ND (D) OF RULE 46A(1) OF I.T. RULES. HOWEVER, ON PERUSAL OF THE IMPUGNED ORDER OF LD. C IT(A) WE FIND THAT SHE HAS NOWHERE COMMENTED WHICH OF THE AFORESAID CLAUSES OF RULE 46A(1) OF I.T. RULES WERE APPLICABLE IN THE INSTANT CASE. MOREOVER, WE FIND THAT UNDER RULE 46A(3) OF I.T. RULES, THE LD. CIT(A) IS DUTY BOUND, ONCE THE LD. C IT(A) ADMITS THE ADDITIONAL EVIDENCES, TO ALLOW A REASONABLE OPPORTU NITY TO THE AO, AS PER CLAUSES (A) AND (B) OF RULE 46A(3) OF I.T. RULES . HOWEVER, AFTER ADMITTING THE ADDITIONAL EVIDENCES, LD. CIT(A) FAILED TO PROVIDE S UCH OPPORTUNITY TO THE AO AS HAS BEEN PRESCRIBED UNDER RULE 46A(3) OF I.T. RULES. AFTER COMMISSIONER OF INCOME TAX (APPEALS) ADMITS ADDITIONAL EVIDENCES PRODUCED BY ASSESSEE, SCRUTINY OF SUCH ADDITIONAL EVIDENCES ADMITTED BY COMMISSIONER OF INCOME TAX (APPEALS) IS THE STATUTORY RIGHT OF THE AO, CONFERR ED UNDER RULE 46A(3) OF I.T. RULES. FOR OUR AFORESAID VIEWS WE TAKE SUPPORT FROM ORDE R OF CO-ORDINATE BENCH OF ITAT, DELHI IN THE CASE OF ITO VS. PARDEEPA RANI [2016] 73 TAXMANN.COM 392 (DELHI- TRIB.) AND ORDER OF HONBLE JURISDICTIONAL HIGH COU RT IN THE CASE OF CIT VS. MANISH BUILD WELL (P) LTD [2011] 16 TAXMANN.COM 27 (DELHI). IN T HE CASE OF CIT VS. MANISH BUILDWELL (P) LTD. (SUPRA), HONBLE DELHI HIGH COURT HELD AS UNDER: 21 . IN OUR OPINION, SUBSTANTIAL QUESTIONS OF LAW DO AR ISE OUT OF THE ORDER OF THE TRIBUNAL IN RESPECT OF ITS DECISION REGARDING THE A DDITION OF RS. 1,61,67,600/- MADE UNDER SECTION 68. WE, ACCORDINGLY, RE-FRAME THE FOL LOWING SUBSTANTIAL QUESTIONS OF LAW:- '1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND ON A PROPER ITA NO.- 4373/DEL/2012. RAMIT VOHRA. PAGE 32 OF 39 INTERPRETATION OF RULE 46A OF THE INCOME TAX RULES, 1962, THE TRIBUNAL WAS RIGHT IN LAW IN TAKING A DECISION ON THE MERITS OF THE AD DITION MADE UNDER SECTION 68 WITHOUT AFFORDING AN OPPORTUNITY TO THE ASSESSING O FFICER OF BEING HEARD AS ENVISAGED IN SUB-RULE (3) OF RULE 46A?' 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE TRIBUNAL WAS RIGHT IN LAW IN HOLDING THAT SINCE THE CIT (A) POSSESSES CO- TERMINUS POWERS OVER THE ASSESSMENT APART FROM APPELLATE POWERS, THERE WAS N O VIOLATION OF RULE 46A COMMITTED BY HIM ?' 22 . AS WE HAVE WITH THE CONSENT OF THE LEARNED COUNSE L, HEARD THEM ON MERITS, WE PROCEED TO DECIDE THE AFORESAID SUBSTANTIAL QUESTIO NS OF LAW. SINCE THE CIT (A) HIMSELF REFERS TO RULE 46A AND HAS ALSO ADMITTED THAT THE C ONFIRMATION LETTERS ADDUCED BY THE ASSESSEE BEFORE HIM WERE TECHNICALLY FRESH EVIDENCE , IT IS NOT POSSIBLE TO ACCEPT THE PLEA OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE CI T (A), IN EXAMINING THE CONFIRMATION LETTERS, WAS EXERCISING HIS INDEPENDENT POWERS OF E NQUIRY UNDER SUB-SECTION (4) OF SECTION 250 OF THE INCOME TAX ACT. IT IS TRUE THAT THE CIT (A) AS FIRST APPELLATE AUTHORITY HAS CONTERMINOUS POWERS OVER THE SOURCES OF INCOME CONSTITUTING THE SUBJECT MATTER OF THE ASSESSMENT, EXCEPT THE POWER TO TACKLE NEW SOUR CES OF INCOME NOT CONSIDERED BY THE ASSESSING OFFICER, AND CAN DO WHAT THE ASSESSING OF FICER CAN DO AND CAN DIRECT THE ASSESSING OFFICER TO DO WHAT HE HAS FAILED TO DO, A S HELD BY THE SUPREME COURT IN THE CASE OF CIT V. KANPUR COAL SYNDICATE , [1964] 53 ITR 225 , BUT IN THIS CASE, THE CIT (A) DID NOT EXERCISE THIS RIGHT. THIS POWER, WHICH IS R ECOGNIZED IN SUB-SECTION (4) OF SECTION 250, HAS TO BE EXERCISED BY THE CIT (A) AND THERE S HOULD BE MATERIAL ON RECORD TO SHOW THAT HE, WHILE DISPOSING OF THE APPEAL, HAD DIRECTE D FURTHER ENQUIRY AND CALLED FOR THE CONFIRMATION LETTERS FROM THE ASSESSEE EVEN IN RESP ECT OF RECEIPT OF MONIES FROM CUSTOMERS BY WAY OF CHEQUES. RULE 46A IS A PROVISIO N IN THE INCOME TAX RULES, 1962 WHICH IS INVOKED, ON THE OTHER HAND, BY THE ASSESSE E WHO IS IN AN APPEAL BEFORE THE CIT (A). ONCE THE ASSESSEE INVOKES RULE 46A AND PRAYS F OR ADMISSION OF ADDITIONAL EVIDENCE BEFORE THE CIT (A), THEN THE PROCEDURE PRESCRIBED I N THE SAID RULE HAS TO BE SCRUPULOUSLY FOLLOWED. THE FACT THAT SUB-SECTION (4) OF SECTION 250 CONFERS POWERS ON THE CIT (A) TO CONDUCT AN ENQUIRY AS HE THINKS FIT, WHILE DISPOSIN G OF THE APPEAL, CANNOT BE RELIED UPON TO CONTEND THAT THE PROCEDURAL REQUIREMENTS OF RULE 46A NEED NOT BE COMPLIED WITH. IF SUCH A PLEA OF THE ASSESSEE IS ACCEPTED, IT WOULD R EDUCE RULE 46A TO A DEAD LETTER BECAUSE IT WOULD THEN BE OPEN TO EVERY ASSESSEE TO FURNISH ADDITIONAL EVIDENCE BEFORE THE CIT (A) AND THEREAFTER CONTEND THAT THE EVIDENCE SHOULD BE ACCEPTED AND TAKEN ON RECORD BY THE CIT (A) BY VIRTUE OF HIS POWERS OF ENQUIRY UNDER SU B-SECTION (4) OF SECTION 250. THIS WOULD MEAN IN TURN THAT THE REQUIREMENT OF RECORDIN G REASONS FOR ADMITTING THE ADDITIONAL EVIDENCE, THE REQUIREMENT OF EXAMINING WHETHER THE CONDITIONS FOR ADMITTING THE ADDITIONAL EVIDENCE ARE SATISFIED, THE REQUIREMENT THAT THE ASSESSING OFFICER SHOULD BE ALLOWED A REASONABLE OPPORTUNITY OF EXAMINING THE E VIDENCE ETC. CAN BE THROWN TO THE WINDS, A POSITION WHICH IS WHOLLY UNACCEPTABLE AND MAY RESULT IN UNACCEPTABLE AND UNJUST CONSEQUENCES. THE FUNDAMENTAL RULE WHICH IS VALID I N ALL BRANCHES OF LAW, INCLUDING INCOME TAX LAW, IS THAT THE ASSESSEE SHOULD ADDUCE THE ENTIRE EVIDENCE IN HIS POSSESSION AT THE EARLIEST POINT OF TIME. THIS ENSURES FULL, F AIR AND DETAILED ENQUIRY AND VERIFICATION. ITA NO.- 4373/DEL/2012. RAMIT VOHRA. PAGE 33 OF 39 A 7-JUDGE BENCH OF THE SUPREME COURT IN KESHAV MILLS CO. LTD. V. CIT [1965] 56 ITR 365 HAD OBSERVED AS UNDER:- 'PROCEEDINGS TAKEN FOR THE RECOVERY OF TAX UNDER TH E PROVISIONS OF THE ACT ARE NATURALLY INTENDED TO BE OVER WITHOUT UNNECESSARY DELAY, AND SO, IT IS THE DUTY OF THE PARTIES, BOTH THE DEPARTMENT AND THE ASSESSEE, TO LEAD ALL THEIR EVIDENCE AT THE STAGE WHEN THE MATTER IS IN CHARGE OF THE INCOME-TAX OFFICER.' 23 . IT IS FOR THE AFORESAID REASON THAT RULE 46A STAR TS IN A NEGATIVE MANNER BY SAYING THAT AN APPELLANT BEFORE THE CIT (A) SHALL NOT BE ENTITL ED TO PRODUCE BEFORE HIM ANY EVIDENCE, WHETHER ORAL OR DOCUMENTARY, OTHER THAN THE EVIDENC E ADDUCED BY HIM BEFORE THE ASSESSING OFFICER. AFTER MAKING SUCH A GENERAL STAT EMENT, WHICH IS IN CONSONANCE WITH THE PRINCIPLE STATED IN THE ABOVE JUDGMENT, EXCEPTIONS HAVE BEEN CARVED OUT THAT IN CERTAIN CIRCUMSTANCES IT WOULD BE OPEN TO THE CIT (A) TO AD MIT ADDITIONAL EVIDENCE. THEREFORE, ADDITIONAL EVIDENCE CAN BE PRODUCED AT THE FIRST AP PELLATE STAGE WHEN CONDITIONS STIPULATE IN THE RULE 46A ARE SATISFIED AND A FINDING IS RECO RDED. RULE 46 A READS:- 'PRODUCTION OF ADDITIONAL EVIDENCE BEFORE THE [DEPU TY COMMISSIONER (APPEALS)] [AND COMMISSIONER (APPEALS)]. 46A. (1) THE APPELLANT SHALL NOT BE ENTITLED TO PRO DUCE BEFORE THE [DEPUTY COMMISSIONER (APPEALS)] [OR, AS THE CASE MAY BE, THE COMMISSIONE R (APPEALS)], ANY EVIDENCE, WHETHER ORAL OR DOCUMENTARY, OTHER THAN THE EVIDENCE PRODUC ED BY HIM DURING THE COURSE OF PROCEEDINGS BEFORE THE [ASSESSING OFFICER], EXCEPT IN THE FOLLOWING CIRCUMSTANCES, NAMELY : ( A ) WHERE THE [ASSESSING OFFICER] HAS REFUSED TO ADMIT EVIDENCE WHICH OUGHT TO HAVE BEEN ADMITTED ; OR ( B ) WHERE THE APPELLANT WAS PREVENTED BY SUFFICIENT CAU SE FROM PRODUCING THE EVIDENCE WHICH HE WAS CALLED UPON TO PRODUCE BY THE [ASSESSING OFFICER] ; OR ( C ) WHERE THE APPELLANT WAS PREVENTED BY SUFFICIENT CAU SE FROM PRODUCING BEFORE THE [ASSESSING OFFICER] ANY EVIDENCE WHICH I S RELEVANT TO ANY GROUND OF APPEAL ; OR ( D ) WHERE THE [ASSESSING OFFICER] HAS MADE THE ORDER AP PEALED AGAINST WITHOUT GIVING SUFFICIENT OPPORTUNITY TO THE APPELLANT TO A DDUCE 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 MAY BE, THE COMMISSIONE R (APPEALS)] RECORDS IN WRITING THE REASONS FOR ITS ADMISSION. (3) THE [DEPUTY COMMISSIONER (APPEALS)] [OR, AS THE CASE MAY BE, THE COMMISSIONER (APPEALS)] SHALL NOT TAKE INTO ACCOUNT ANY EVIDENCE PRODUCED UNDER SUB-RULE (1) UNLESS THE [ASSESSING OFFICER] HAS BEEN ALLOWED A REASONAB LE OPPORTUNITY ITA NO.- 4373/DEL/2012. RAMIT VOHRA. PAGE 34 OF 39 ( A ) TO EXAMINE THE EVIDENCE OR DOCUMENT OR TO CROSS-EXA MINE 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 BE, THE COMMISSIONE R (APPEALS)] TO DIRECT THE PRODUCTION OF ANY DOCUMENT, OR THE EXAMINATION OF ANY WITNESS, TO ENABLE HIM TO DISPOSE OF THE APPEAL, OR FOR ANY OTHER SUBSTANTIAL CAUSE INCLUDIN G THE ENHANCEMENT OF THE ASSESSMENT OR PENALTY (WHETHER ON HIS OWN MOTION OR ON THE REQUES T OF THE [ASSESSING OFFICER]) UNDER CLAUSE (A) OF SUB-SECTION (1) OF SECTION 251 OR THE IMPOSITION OF PENALTY UNDER SECTION 271.] WE ARE HIGHLIGHTING THESE ASPECTS ONLY TO PRESS HOM E THE POINT THAT THE CONDITIONS PRESCRIBED IN RULE 46A MUST BE SHOWN TO EXIST BEFOR E ADDITIONAL EVIDENCE IS ADMITTED AND EVERY PROCEDURAL REQUIREMENT MENTIONED IN THE RULE HAS TO BE STRICTLY COMPLIED WITH SO THAT THE RULE IS MEANINGFULLY EXERCISED AND NOT EXE RCISED IN A ROUTINE OR CURSORY MANNER. A DISTINCTION SHOULD BE RECOGNIZED AND MAINTAINED B ETWEEN A CASE WHERE THE ASSESSEE INVOKES RULE 46A TO ADDUCE ADDITIONAL EVIDENCE BEFO RE THE CIT (A) AND A CASE WHERE THE CIT (A), WITHOUT BEING PROMPTED BY THE ASSESSEE, WH ILE DEALING WITH THE APPEAL, CONSIDERS IT FIT TO CAUSE OR MAKE A FURTHER ENQUIRY BY VIRTUE OF THE POWERS VESTED IN HIM UNDER SUB-SECTION (4) OF SECTION 250. IT IS ONLY WH EN HE EXERCISES HIS STATUTORY SUO MOTO POWER UNDER THE ABOVE SUB-SECTION THAT THE REQUIREM ENTS OF RULE 46A NEED NOT BE FOLLOWED. ON THE OTHER HAND, WHENEVER THE ASSESSEE WHO IS IN APPEAL BEFORE HIM INVOKES RULE 46A, IT IS INCUMBENT UPON THE CIT (A) TO COMPL Y WITH THE REQUIREMENTS OF THE RULE STRICTLY. 24 . IN THE PRESENT CASE, THE CIT (A) HAS OBSERVED THA T THE ADDITIONAL EVIDENCE SHOULD BE ADMITTED BECAUSE THE ASSESSEE WAS PREVENTED BY ADDU CING THEM BEFORE THE ASSESSING OFFICER. THIS OBSERVATION TAKES CARE OF CLAUSE (C) OF SUB-RULE (1) OF RULE 46A. THE OBSERVATION OF THE CIT (A) ALSO TAKES CARE OF SUB-R ULE (2) UNDER WHICH HE IS REQUIRED TO RECORD HIS REASONS FOR ADMITTING THE ADDITIONAL EVI DENCE. THUS, THE REQUIREMENT OF SUB- RULES (1) AND (2) OF RULE 46A HAVE BEEN COMPLIED WI TH. HOWEVER, SUB-RULE (3) WHICH INTERDICTS THE CIT (A) FROM TAKING INTO ACCOUNT ANY EVIDENCE PRODUCED FOR THE FIRST TIME BEFORE HIM UNLESS THE ASSESSING OFFICER HAS HAD A R EASONABLE OPPORTUNITY OF EXAMINING THE EVIDENCE AND REBUT THE SAME, HAS NOT BEEN COMPL IED WITH. THERE IS NOTHING IN THE ORDER OF THE CIT (A) TO SHOW THAT THE ASSESSING OFF ICER WAS CONFRONTED WITH THE CONFIRMATION LETTERS RECEIVED BY THE ASSESSEE FROM THE CUSTOMERS WHO PAID THE AMOUNTS BY CHEQUES AND ASKED FOR COMMENTS. THUS, THE END RE SULT HAS BEEN THAT ADDITIONAL EVIDENCE WAS ADMITTED AND ACCEPTED AS GENUINE WITHO UT THE ASSESSING OFFICER FURNISHING HIS COMMENTS AND WITHOUT VERIFICATION. SINCE THIS I S AN INDISPENSABLE REQUIREMENT, WE ARE OF THE VIEW THAT THE TRIBUNAL OUGHT TO HAVE RESTORE D THE MATTER TO THE CIT (A) WITH THE DIRECTION TO HIM TO COMPLY WITH SUB-RULE (3) OF RUL E 46A. IN OUR OPINION AND WITH RESPECT, THE ERROR COMMITTED BY THE TRIBUNAL IS THA T IT PROCEEDED TO MIX UP THE POWERS OF THE CIT (A) UNDER SUB-SECTION (4) OF SECTION 250 WI TH THE POWERS VESTED IN HIM UNDER RULE 46A. THE TRIBUNAL SEEMS TO HAVE OVERLOOKED SUB -RULE (4) OF RULE 46A WHICH ITSELF ITA NO.- 4373/DEL/2012. RAMIT VOHRA. PAGE 35 OF 39 TAKES NOTE OF THE DISTINCTION BETWEEN THE POWERS CO NFERRED BY THE CIT (A) UNDER THE STATUTE WHILE DISPOSING OF THE ASSESSEE'S APPEAL AN D THE POWERS CONFERRED UPON HIM UNDER RULE 46A. THE TRIBUNAL ERRED IN ITS INTERPRETATION OF THE PROVISIONS OF RULE 46A VIS--VIS SECTION 250(4). ITS VIEW THAT SINCE IN ANY CASE THE CIT (A), BY VIRTUE OF HIS CONTERMINOUS POWERS OVER THE ASSESSMENT ORDER, WAS EMPOWERED TO CALL FOR ANY DOCUMENT OR MAKE ANY FURTHER ENQUIRY AS HE THINKS FIT, THERE WAS NO VIOL ATION OF RULE 46A IS ERRONEOUS. THE TRIBUNAL APPEARS TO HAVE NOT APPRECIATED THE DISTIN CTION BETWEEN THE TWO PROVISIONS. IF THE VIEW OF THE TRIBUNAL IS ACCEPTED, IT WOULD MAKE RULE 46A OTIOSE AND IT WOULD OPEN UP THE POSSIBILITY OF THE ASSESSEES' CONTENDING THA T ANY ADDITIONAL EVIDENCE SOUGHT TO BE INTRODUCED BY THEM BEFORE THE CIT (A) CANNOT BE SUB JECTED TO THE CONDITIONS PRESCRIBED IN RULE 46A BECAUSE IN ANY CASE THE CIT (A) IS VEST ED WITH CONTERMINOUS POWERS OVER THE ASSESSMENT ORDERS OR POWERS OF INDEPENDENT ENQU IRY UNDER SUB-SECTION (4) OF SECTION 250. THAT IS A CONSEQUENCE WHICH CANNOT AT ALL BE C OUNTENANCED.' (C.3) IN THE CASE OF ITO VS. PARDEEPA RANI (SUPRA), CO-ORDINATE BENCH OF ITAT, DELHI HAS HELD AS UNDER: 6.3 WE ARE OF THE VIEW THAT THE CIT(A) AFTER OVER-RULI NG THE OBJECTION OF THE AO ON THE ADMISSIBILITY OF THE FRESH EVIDENCES WAS REQ UIRED TO COMMUNICATE THE DECISION TO ADMIT THE EVIDENCE TO THE AO AND PROVID E HIM A REASONABLE OPPORTUNITY TO REBUT THE SAME. IN THE ABSENCE OF ANY SUCH EXERC ISES THE ORDER IS IN VIOLATION OF THE STATUTORY RULES AND IS OPEN TO THE CHALLENGE OF BEING PERVERSE. SUPPORT IS DRAWN FROM THE DECISION OF JURISDICTIONAL HIGH COURT IN T HE CASE OF CIT V. MANISH BUILDWELL (P.) LTD.[2012]204 TAXMAN106/[2011]16 TAX MANN.COM 27 (DELHI). A PERUSAL OF THE SAID DECISION SHOWS THAT CONSIDERING THE NON-FULFILLMENT OF THE REQUIREMENTS SET OUT IN SUB-RULE (3) OF RULE 46A TH E HON'BLE COURT WAS PLEASED TO RESTORE THE ISSUE BACK TO THE CIT(A) DIRECTING THE SAID AUTHORITY TO ADDRESS THE SHORTCOMINGS. THE HON'BLE COURT TOOK INTO CONSIDERA TION THE OFF REPEATED ARGUMENT IN SUCH CASES BY NOTING THAT IT IS TRUE THAT THE PO WERS OF CIT(A) AS FIRST APPELLATE AUTHORITY ARE CO-TERMINOUS WITH THAT OF THE AO BY D RAWING ATTENTION TO THE DISTINCTION THAT THE POWERS OF THE CIT(A) AS FIRST APPELLATE AUTHORITY ARE CO- TERMINOUS POWER OVER THE SOURCES OF INCOME CONSTITU TING THE SUBJECT MATTER OF THE ASSESSMENT, EXCEPT THE POWER TO TOUCH NEW SOURCES O F INCOME NOT CONSIDERED BY THE ASSESSING OFFICER. THE JURISDICTIONAL HIGH COURT HA S HELD THAT THE CIT(A) CAN ALSO DO AND CAN DIRECT THE ASSESSING OFFICER TO DO WHAT HE HAS FAILED TO DO, AS HELD BY THE SUPREME COURT IN THE CASE OF CIT V. KANPUR COAL SYNDICATE[1964] 53 ITR 225. THE HON'BLE COURT FOUND THAT THE CIT (A) IN THE FAC TS BEFORE THE COURT WHICH FACT IS EVIDENT FROM THE FACTS OF THE PRESENT CASE ALSO THA T THE CIT(A) DID NOT EXERCISE THE POWERS RECOGNIZED IN SUB-SECTION (4) OF SECTION 250 AND HAS TO BE EXERCISED BY THE CIT (A). THE HON'BLE COURT HAS HELD THAT IN ORDER T O SHOW THAT THE POWER UNDER SUB-SECTION (4) TO SECTION 250 IS BEING EXERCISED T HERE SHOULD BE MATERIAL ON RECORD ITA NO.- 4373/DEL/2012. RAMIT VOHRA. PAGE 36 OF 39 TO SHOW THAT WHILE DISPOSING OF THE APPEAL, THE CIT (A) HAD DIRECTED FURTHER ENQUIRY AND CALLED FOR THE CONFIRMATION LETTERS FROM THE AS SESSEE EVEN IN RESPECT OF RECEIPT OF MONIES FROM CUSTOMERS BY WAY OF CHEQUES. RULE 46A, IT WAS OBSERVED WAS A PROVISION IN THE INCOME TAX RULES, 1962 WHICH IS IN VOKED, ON THE OTHER HAND, BY THE ASSESSEE WHO IS IN AN APPEAL BEFORE THE CIT (A) . ONCE THE ASSESSEE INVOKES RULE 46A AND PRAYS FOR ADMISSION OF ADDITIONAL EVIDENCE BEFORE THE CIT (A), THEN THE PROCEDURE PRESCRIBED IN THE SAID RULE IT HAS BEEN H ELD HAS TO BE SCRUPULOUSLY FOLLOWED. THE FACT THAT SUB-SECTION (4) OF SECTION 250 CONFERS POWERS ON THE CIT (A) TO CONDUCT AN ENQUIRY AS HE THINKS FIT, WHILE D ISPOSING OF THE APPEAL THE HON'BLE COURT HELD CANNOT BE RELIED UPON TO CONTEND THAT TH E PROCEDURAL REQUIREMENTS OF RULE 46A NEED NOT BE COMPLIED WITH. THEIR LORDSHIPS HAVE HELD THAT IF SUCH A PLEA OF THE ASSESSEE IS ACCEPTED THEN IT WOULD REDUCE RU LE 46A TO A DEAD LETTER BECAUSE IT WOULD THEN BE OPEN TO EVERY ASSESSEE TO FURNISH ADD ITIONAL EVIDENCE BEFORE THE CIT (A) AND THEREAFTER CONTEND THAT THE EVIDENCE SHOULD BE ACCEPTED AND TAKEN ON RECORD BY THE CIT (A) BY VIRTUE OF HIS POWERS OF ENQUIRY U NDER SUB-SECTION (4) OF SECTION 250. THE COURT HELD THAT THIS WOULD MEAN IN TURN TH AT: (I) THE REQUIREMENT OF RECORDING REASONS FOR ADMITTING THE ADDITIONAL EVID ENCE; (II) THE REQUIREMENT OF EXAMINING WHETHER THE CONDITIONS FOR ADMITTING THE ADDITIONAL EVIDENCE ARE SATISFIED; AND (III) THE REQUIREMENT THAT THE ASSES SING OFFICER SHOULD BE ALLOWED A REASONABLE OPPORTUNITY OF EXAMINING THE EVIDENCE ET C. CAN ALL BE THROWN TO THE WINDS, A POSITION WHICH THE HON'BLE COURT HELD WAS WHOLLY UNACCEPTABLE AND MAY RESULT IN UNACCEPTABLE AND UNJUST CONSEQUENCES. THE HON'BLE COURT HELD THAT THE PROCEDURAL REQUIREMENTS MENTIONED IN THE RULE MUST BE STRICTLY COMPLIED WITH SO THAT THE RULE IS MEANINGFULLY EXERCISED AND NOT EXE RCISED IN A ROUTINE OR CURSORY MANNER. THE TRIBUNAL IN VIEW THEREOF IN THE FACTS B EFORE THE COURT WAS FAULTED WITH FOR OVER-LOOKING THE REQUIREMENTS OF SUB-RULE (3) O F RULE 46A AND CONFUSING IT WITH SUB-RULE (4) OF RULE 46A. ADDRESSING THE RATIO NALE FOR THE RULE THE HON'BLE COURT OBSERVED THAT THE FUNDAMENTAL RULE WHICH IS V ALID IN ALL BRANCHES OF LAW, INCLUDING INCOME TAX LAW IS THAT THE ASSESSEE SHOUL D ADDUCE THE ENTIRE EVIDENCE IN HIS POSSESSION AT THE EARLIEST POINT OF TIME. THIS ENSURES FULL, FAIR AND DETAILED ENQUIRY AND VERIFICATION. REFERRING TO THE DECISION IN KESHAV MILLS CO. LTD. V. CIT [1965] 56 ITR 365 (SC), 7-JUDGE BENCH JUDGEMENT OF THE SUPREME COURT, IT WAS OBSERVED THAT THE COURT HELD THAT 'PR OCEEDINGS TAKEN FOR THE RECOVERY OF TAX UNDER THE PROVISIONS OF THE ACT ARE NATURALL Y INTENDED TO BE OVER WITHOUT UNNECESSARY DELAY, AND SO, IT IS THE DUTY OF THE PA RTIES, BOTH THE DEPARTMENT AND THE ASSESSEE, TO LEAD ALL THEIR EVIDENCE AT THE STAGE W HEN THE MATTER IS IN CHARGE OF THE INCOME-TAX OFFICER.' IT WAS HELD BY THE JURISDICTIO NAL HIGH COURT THAT IT IS FOR THE SAID REASON THAT RULE 46A STARTS IN A NEGATIVE MANN ER BY SAYING THAT AN APPELLANT BEFORE THE CIT (A) SHALL NOT BE ENTITLED TO PRODUCE BEFORE HIM ANY EVIDENCE, WHETHER ORAL OR DOCUMENTARY, OTHER THAN THE EVIDENC E PLACED BY HIM BEFORE THE ASSESSING OFFICER. THEIR LORDSHIPS HELD THAT AFTER MAKING THE SAID GENERAL STATEMENT, WHICH WAS FOUND TO BE IN CONSONANCE WITH THE PRINCI PLE STATED IN THE AFORESAID JUDGMENT OF THE APEX COURT, EXCEPTIONS HAVE BEEN CA RVED OUT SETTING OUT UNDER WHAT CIRCUMSTANCES IT WOULD BE OPEN TO THE CIT (A) TO ADMIT ADDITIONAL EVIDENCE. THE COURT HELD THAT ADDITIONAL EVIDENCE CAN ONLY TH EN BE PRODUCED AT THE FIRST APPELLATE STAGE WHEN CONDITIONS STIPULATED IN THE R ULE 46A ARE SATISFIED AND A ITA NO.- 4373/DEL/2012. RAMIT VOHRA. PAGE 37 OF 39 FINDING IS RECORDED TO THAT EXTENT WHICH MAKES IT C LEAR IN UNAMBIGUOUS LANGUAGE THAT FIRSTLY THE CONDITIONS PRESCRIBED IN RULE 46A MUST BE SHOWN TO EXIST BEFORE ADDITIONAL EVIDENCE CAN BE ADMITTED AND THEREAFTER EVERY PROCEDURAL REQUIREMENT MENTIONED IN THE RULE HAS TO BE STRICTLY COMPLIED W ITH SO THAT THE RULE IS MEANINGFULLY EXERCISED AND NOT EXERCISED IN A ROUTI NE OR CURSORY MANNER. THEIR LORDSHIPS HAVE HELD THAT A DISTINCTION SHOULD BE RE COGNIZED AND MAINTAINED BETWEEN A CASE WHERE THE ASSESSEE INVOKES RULE 46A TO ADDUC E ADDITIONAL EVIDENCE BEFORE THE CIT (A) AND A CASE WHERE THE CIT (A), WITHOUT B EING PROMPTED BY THE ASSESSEE, WHILE DEALING WITH THE APPEAL, CONSIDERS IT FIT TO CAUSE OR MAKE A FURTHER ENQUIRY BY VIRTUE OF THE POWERS VESTED IN HIM UNDER SUB-SECTIO N (4) OF SECTION 250. IT IS ONLY WHEN THE CIT(A) EXERCISES HIS STATUTORY POWER SUO M OTO UNDER THE ABOVE SUB- SECTION THAT THE REQUIREMENTS OF RULE 46A NEED NOT BE FOLLOWED. ON THE OTHER HAND, WHENEVER THE ASSESSEE WHO IS IN APPEAL BEFORE HIM I NVOKES RULE 46A, IT IS INCUMBENT UPON THE CIT (A) TO COMPLY WITH THE REQUI REMENTS OF THE RULE STRICTLY. 6.4 IN THE FACTS OF THE CASE BEFORE THE HON'BLE HIGH C OURT IT WAS FOUND THAT THE CIT(A) HAD RECORDED THAT THE ADDITIONAL EVIDENCE SH OULD BE ADMITTED BECAUSE THE ASSESSEE WAS PREVENTED BY ADDUCING THEM BEFORE THE ASSESSING OFFICER. THE SAID OBSERVATION IT WAS HELD WOULD TAKE CARE OF CLAUSE ( C) OF SUB-RULE (1) OF RULE 46A. THE OBSERVATION OF THE CIT (A) IT WAS HELD WOULD AL SO TAKE CARE OF SUB-RULE (2) UNDER WHICH HE IS REQUIRED TO RECORD HIS REASONS FO R ADMITTING THE ADDITIONAL EVIDENCE. THUS, THE REQUIREMENT OF SUB-RULES (1) AN D (2) OF RULE 46A IT WAS HELD HAD BEEN COMPLIED WITH. HOWEVER, THE HON'BLE COURT FOUND THAT SUB-RULE (3) WHICH INTERDICTS THE CIT (A) FROM TAKING INTO ACCOUNT ANY EVIDENCE PRODUCED FOR THE FIRST TIME BEFORE HIM UNLESS THE ASSESSING OFFICER HAS HA D A REASONABLE OPPORTUNITY OF EXAMINING THE EVIDENCE AND REBUT THE SAME, HAD NOT BEEN COMPLIED WITH. THE COURT FOUND THAT THERE WAS NOTHING IN THE ORDER OF THE CI T (A) TO SHOW THAT THE ASSESSING OFFICER WAS CONFRONTED WITH THE CONFIRMATION LETTER S RECEIVED BY THE ASSESSEE FROM THE CUSTOMERS WHO PAID THE AMOUNTS BY CHEQUES AND A SKED FOR COMMENTS. THUS, THE END RESULT THE HON'BLE COURT HELD WAS THAT ADDITION AL EVIDENCE WERE ADMITTED AND ACCEPTED AS GENUINE WITHOUT THE ASSESSING OFFICER F URNISHING HIS COMMENTS AND WITHOUT VERIFICATION. IN THESE CIRCUMSTANCES THE CO URT HELD: 'SINCE THIS IS AN INDISPENSABLE REQUIREMENT, WE ARE OF THE VIEW THAT THE TRIBUNAL OUGHT TO HAVE RESTORED THE MATTER TO THE CIT (A) WI TH THE DIRECTION TO HIM TO COMPLY WITH SUB-RULE (3) OF RULE 46A. IN OUR OPINIO N AND WITH RESPECT, THE ERROR COMMITTED BY THE TRIBUNAL IS THAT IT PROCEEDED TO M IX UP THE POWERS OF THE CIT (A) UNDER SUB- SECTION (4) OF SECTION 250 WITH THE POWERS VESTED IN HIM UNDER RULE 46A.' COMMENTING UPON THE ORDER OF THE ITAT TH EIR LORDSHIPS FURTHER HELD THAT 'THE TRIBUNAL ERRED IN ITS INTERPRETATION OF T HE PROVISIONS OF RULE 46A VIS-- VIS SECTION 250(4). ITS VIEW THAT SINCE IN ANY CASE THE CIT (A), BY VIRTUE OF HIS CONTERMINOUS POWERS OVER THE ASSESSMENT ORDER, WAS EMPOWERED TO CALL FOR ANY DOCUMENT OR MAKE ANY FURTHER ENQUIRY AS HE THINKS F IT, THERE WAS NO VIOLATION OF RULE 46A IS ERRONEOUS. THE TRIBUNAL APPEARS TO HAVE NOT APPRECIATED THE DISTINCTION BETWEEN THE TWO PROVISIONS. IF THE VIEW OF THE TRIBUNAL IS ACCEPTED, IT WOULD MAKE RULE 46A OTIOSE AND IT WOULD OPEN UP THE POSSIBILITY OF THE ASSESSEES' CONTENDING THAT ANY ADDITIONAL EVIDENCE SOUGHT TO BE INTRODUCED BY ITA NO.- 4373/DEL/2012. RAMIT VOHRA. PAGE 38 OF 39 THEM BEFORE THE CIT (A) CANNOT BE SUBJECTED TO THE CONDITIONS PRESCRIBED IN RULE 46A BECAUSE IN ANY CASE THE CIT (A) IS VESTED WITH CONTERMINOUS POWERS OVER THE ASSESSMENT ORDERS OR POWERS OF INDEPENDENT ENQU IRY UNDER SUB-SECTION (4) OF SECTION 250. THAT IS A CONSEQUENCE WHICH CANNOT AT ALL BE COUNTENANCED.' (D) IN VIEW OF THE FOREGOING, AND RESPECTFULLY FOLL OWING THE AFORESAID PRECEDENTS IN THE CASES OF CIT VS. MANISH BUILDWELL (SUPRA) AND I TO VS. PARDEEPA RANI (SUPRA); WE SET ASIDE THE AFORESAID IMPUGNED APPELLATE ORDER DA TED 29.06.2012 OF LD. CIT(A) WITH THE DIRECTION TO PASS FRESH ORDER. IF THE LD. CIT(A) DECIDES TO ADMIT ADDITIONAL EVIDENCES, HE SHOULD CLEARLY STATE THE SPECIFIC CLA USE(S) OF RULE 46A(1) OF I.T. RULES THAT WOULD APPLY; WHILE RECORDING THE REASONS UNDER RULE 46A(2) OF I.T. RULES. FURTHER, IF THE LD. CIT(A) DECIDES TO ADMIT ADDITIONAL EVIDENCES, REASONABLE OPPORTUNITY PRESCRIBED UNDER RULE 46A(3) OF I.T. RULES MUST BE PROVIDED BY THE LD. CIT(A) TO THE AO. (D.1) IN THE RESULT, THE APPEAL IS PARTLY ALLOWED F OR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 19/09/19. SD/- SD/- (H.S. SIDHU) (ANADEE NATH MI SSHRA) JUDICIAL MEMBER ACCOUNTANT MEMBE R DATED: 19/09/19 (POOJA) COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT ITA NO.- 4373/DEL/2012. RAMIT VOHRA. PAGE 39 OF 39 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER