ACIT, Meerut V. Shri Charan Singh, Meerut

ITA 4435/DEL/2010

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3957 (ITAT-DELHI)
• Duration Of Justice: 7 year(s) 3 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-01-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 07-06-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 05-10-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ASHIMA NEB
• Assessee Lawyers: S KRISHNAN
• Keywords: Opportunity of being heard; Additional evidence; Question of law; Assessment record

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER I.T.A. NO.4435/DEL/2010 A.Y. : 2007-08 ACIT, CIRCLE-I, MEERUT VS. SH. CHARAN SINGH, 208, WEST END ROAD, MEERUT, UP (ASSESSEE) (RESPONDENT) REVENUE BY : MS. ASHIMA NEB, SR. DR ASSESSEE BY : SH. S. KRISHNAN, ADV. ORDER PER H.S. SIDHU : JM THE REVENUE HAS FILED THE APPEAL AGAINST THE IMPUGNED ORDER DATED 30.7.2010 OF THE LD. CIT(A), MEERUT RELEVANT T O ASSESSMENT YEAR 2007-08. 2. THE GROUNDS RAISED IN THE REVENUE S APPEAL REA D AS UNDER:- 1. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LA W IN DELETING THE ADDITION OF RS 88,96,603/- MADE BY T HE AO ON ACCOUNT OF DISALLOWANCE OF 50% UNEXPLAINED/UNPROVED SUNDRY CREDITORSWITHOUT 2 APPRECIATING THE FINDINGS OF THE AO THAT ONLY 10 CRE DITORS OF HIS OWN CHOICE WERE PRODUCED BY THE ASSESSEE BEF ORE THE AO WHEREAS THE AO HAD ASKED THE ASSESSEE TO PRODUCE ONE OUT OF EVERY TEN CREDITORS OUT OF TOTAL 2 08 CREDITORS? MOREOVER, THE CONFIRMED COPIES OF ACCOUNTS FIELD BY THE ASSESSEE WERE FOUND SIGNED BY ONLY TWO OR THREE PERSONS. IN THE CIRCUMSTANCE IT CANNOT BE HELD TH AT ALL THE SUNDRY CREDITORS ARE GENUINE. 2. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LA W IN DELETING THE ADDITION MADE BY THE AO BY APPLYING NET PROFIT RATE AT 8% OF GROSS CONTRACT RECEIPTS WITHOUT APPRECIATING THE FACTS THAT THE EXPENSES CLAIMED BY T HE ASSESSEE WERE NOT FULLY SUPPORTED BY THE PROPER BILLS AND VOUCHERS. ALL THE BILLS AND VOUCHERS WERE PRODUCED BY THE ASSESSEE WERE SELF MADE OR UNSIGNED. IN THE CIRCUMSTANCES IT CANNOT BE TREATED THAT ALL THE EXPENSE S WERE INCURRED BY THE ASSESSEE FOR BUSINESS PURPOSE. EVEN IT CANNOT BE TREATED THAT ALL THE EXPENSES WERE ACTUALLY INCURRED BY THE ASSESSEE. 3 3. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE IT CAN BE HELD THAT SINCE THE BOOKS OF ACCOUNTS ARE AUDITED AND THE TRANSACTIONS MADE BY THE ASSESSEE ARE ENTERED THEREIN, THEREFORE ALL THE ENTRIES ARE GENUINE AND AL L THE EXPENSES CLAIMED BY THE ASSESSEE HAVE BEEN INCURRED BY THE ASSESSEE FOR BUSINESS PURPOSE ONLY IN SPITE OF T HE FACT THAT PROPER BILLS AND VOUCHERS WERE NOT PRODUC ED BY THE ASSESSEE? 4. IN THE FACTS & CIRCUMSTANCES OF THE CASE, THE ORDER OF THE LD. CIT(A) MAY BE SET ASIDE AND THAT OF THE AO RESTORED ? 3. SUBSEQUENTLY THE DEPARTMENT HAS ALSO RAISED THE FOLL OWING ADDITIONAL GROUNDS OF APPEAL:- 1. WHETHER THE CIT(A) HAS ERRED IN LAW IN ADMITTING F RESH EVIDENCE BASED ON DATE FOR SUBSEQUENT ASSESSMENT YEA R ON ISSUE OF BOGUS SUNDRY CREDITORS, IN VIOLATION OF THE PROVISIONS OF RULE 46A OF THE I.T. RULES, 1962. 2. WHETHER THE CIT(A) HAS ERRED IN LAW IN DELETING TH E ADDITION OF RS. 25.49 LACS WHICH INCLUDED THE RETURN ED INCOME OF RS. 17.75 LAKHS DECLARED BY THE ASSESSEE AND ADDITION OF RS. 7.74 LACS MADE BY THE AO ON ACCOUNT OF 4 ESTIMATION OF NET PROFIT @8% OF GROSS RECEIPTS, THUS A LSO ALLOWING THE RELIEF OF RETURNED INCOME. 3. THAT THE APPELLANT CRAVES LEAVE TO ADD, MODIFY AN D / OR DELETE ANY GROUNDS OF APPEAL. 4. THE FACTS NARRATED BY THE REVENUE AUTHORITIES ARE NOT DISPUTED BY BOTH THE PARTIES, HENCE, THE SAME ARE REPEATED HERE FOR THE SAKE OF BREVITY. 5. AT THE TIME OF HEARING, LD. DR RELIED UPON THE ORD ER OF THE AO AND REITERATED THE CONTENTIONS RAISED IN THE ORIGINAL GROUNDS OF APPEAL AS WELL AS ADDITIONAL GROUNDS OF APPEAL. LD. DR SUBMITTED THAT IT IS SETTLED LAW THAT THE ADDITIONAL GROUND OF APP EAL WHICH ARE LEGAL IN NATURE OR WHICH RAISES QUESTION OF LAW CAN BE TA KEN UP FIRST TIME AT ANY LEVEL OF ADJUDICATION. EVEN THOSE ADDITIONAL GROUND S WHICH ARE BASED ON FRESH EVIDENCES ARE ALSO NORMALLY ADMITTED IF THE A DDITIONAL EVIDENCES ARE FOUND ADMISSIBLE IN ACCORDANCE WITH RULE 29 OF THE ITAT RULES. TO SUPPORT HER CONTENTION, SHE PLACED RELIANCE OF HON BLE SUPREME COURT JUDGEMENT IN THE CASE OF NATIONAL THERMAL POWER COR PORATION LIMITED (1998) 229 ITR 383 (SC). SHE FURTHER STATED THAT IN APPEAL FILED BY THE ASSESSEE, THE LD.CIT(A) HAS DELETED THE ADDITION IN DISPUTE BY ADMITTING FRESH EVIDENCE BASED ON DATA FOR SUBSEQUEN T ASSESSMENT YEAR ON ISSUE OF BOGUS SUNDRY CREDITORS, IN VIOLATION OF THE PROVISIONS OF RULE 46A OF THE I.T. RULES, 1962 AND W ITHOUT PROVIDING 5 PROPER OPPORTUNITY TO THE AO, DESPITE THE FACT THAT NON E OF THE CONDITIONS LAID IN RULE 46A OF THE INCOME TAX RULES, 1962 ARE APPLICABLE TO THE CASE OF THE ASSESSEE. THEREFORE, SH E REQUESTED THAT THE ISSUES IN DISPUTE MAY BE SET ASIDE TO THE FI LE OF THE AO WITH THE DIRECTIONS TO EXAMINE THE ADDITIONAL EVIDENCES FIL ED U/R 46A OF THE I.T. RULES BEFORE THE LD. CIT(A) AND DECIDE THE I SSUES IN DISPUTE DENOVO. 6. ON THE OTHER HAND, LD. COUNSEL FOR THE ASSESSEE RELIE D UPON THE ORDER PASSED BY THE LD. CIT(A) AND STATED THAT AO H AS COMPLETED THE ASSESSMENT IN A HURRY MANNER WITHOUT GIV ING PROPER OPPORTUNITY TO THE ASSESSEE FOR PRODUCING THE DOCUMEN TS AND SUBSTANTIATING HIS CLAIMS. SINCE THE EVIDENCE WERE NOT SUBMITTED BEFORE THE AO, THEREFORE, THESE EVIDENCES WERE FILED BEFORE THE LD. CIT(A) AS ADDITIONAL EVIDENCE. HE REQUESTED THAT THER E IS NO VIOLATION OF ANY CONDITION OF RULE 46A OF THE INCOME TAX RULES, 1962, HENCE, THE ISSUE RAISED BY THE REVENUE IN THE APPEAL WRONGLY ADMISSION OF ADDITIONAL EVIDENCE AND IN ALLOWING TH E APPEAL OF THE ASSESSEE IS NOT CORRECT. HE FURTHER STATED THAT LD. CI T(A) HAS RIGHTLY ALLOWED THE APPEAL OF THE ASSESSEE BY ADMITTIN G FRESH EVIDENCE. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED RECO RDS, ESPECIALLY THE IMPUGNED ORDER. AT THE THRESHOLD, WE FIND THAT THE ADDITIONAL GROUND NO. 6 1 RAISED BY THE ASSESSEE IS LEGAL IN NATURE AND IS SQUARELY COVERED BY THE DECISION OF THE HONBLE SUPREME COURT OF INDIA IN T HE CASE OF NTPC LIMITED 229 ITR 383 (SUPRA), HENCE, THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE ARE PURELY LEGAL GROUNDS AND DO NOT REQU IRE FRESH FACTS WHICH IS TO BE INVESTIGATED AND GOES TO THE ROOT OF THE MAT TER. IN THE INTEREST OF JUSTICE, WE ADMIT THE AFORESAID ADDITIONAL GROUNDS RAISED BY THE ASSESSEE, IN VIEW OF THE CASE LAW OF NTPC LIMITED (SUPRA) AN D PROCEED TO DECIDE THE ADDITIONAL GROUND NO. 1 FIRST. WE FIND THAT LD. CIT(A) ADMITTED ADDITIONAL EVIDENCE/FRESH EVIDENCE BASED ON DATA FO R SUBSEQUENT ASSESSMENT YEAR ON ISSUE OF BOGUS SUNDRY CREDITORS, IN VIOLATION OF THE PROVISIONS OF RULE 46A OF I.T. RULES, 1962 AND EVEN ALSO NOT GIVEN PROPER OPPORTUNITY TO THE AO TO EXAMINE THE SAME, WHICH IS CONTRARY TO LAW, BECAUSE ASSESSEES COUNSEL HAS NOT ESTABLISHED BEFORE US THAT THE AO HAS REFUSED TO ADMIT THE ADDITIONAL EVIDENCE WHICH OUGHT TO BE ADMITTED BY THE AO. ASSESSEES COUNSEL HAS ALSO NOT ESTABLISHED THAT ASSESEE IS PREVENTED BY SUFFICIENT CAUSE FOR P RODUCING THE ADDITIONAL EVIDENCE BEFORE THE AO. AFTER GOING THROUG H THE ASSESSMENT RECORDS, WE HAVE ALSO SEEN THAT AO HAS GI VEN SUFFICIENT OPPORTUNITY TO THE ASSESSEE FOR PRODUCING THE EVIDENC E SUPPORTING THE CLAIM OF THE ASSESSEE, BUT THE ASSESSEE HAS FAILE D TO AVAIL THE SAME AND THE AO HAS COMPETED THE ASSESSMENT AS PER LA W. KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES AS EXP LAINED ABOVE, WE ARE OF THE CONSIDERED VIEW THAT THE ADDITIONAL EVI DENCES FILED 7 BEFORE THE LD. CIT(A) NEEDS TO BE THOROUGHLY EXAMINED BY THE AO AND DECIDE THE ISSUE IN DISPUTE AFRESH BY HIM, UND ER THE LAW, AFTER GIVING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSE SSEE. THEREFORE, WE SET ASIDE THE ISSUES IN DISPUTE TO THE F ILE OF THE AO WITH THE AFORESAID DIRECTIONS. 8. IN THE RESULT, THE REVENUES APPEAL IS ALLOWED FO R STATISTICAL PURPOSES. ORDER PRO NOUNCED ON 11/01/2018. SD/- SD/- [O.P. KANT [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 11/01/2018 COPY FORWARDED TO: - 1. ASSESSEE - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES 8