M/s. RLF Ltd., New Delhi V. ITO, New Delhi

ITA 4595/DEL/2013

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 8932 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 15-01-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 05-08-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIKRAM SAHAY
• Assessee Lawyers: Y K SHARMA
• Keywords: Principle of natural justice; Earning of tax free income; Additional evidence; Question of law
• Section: 143(3); 142(1); 14A; 115JB; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F , NEW DELHI BEFORE SH. H. S. SIDHU, JM & SH. T.S. KAPOOR, AM ITA NO. 4595 /DEL/201 3 : ASSTT. YEAR : 2008 - 2009 M/S RLF LTD., C/O RK K HANNA & CO., CHARTERED ACCOUNTANTS, D - 41, NDSE - II, NEW DELHI - 110049 VS INCOME TAX OFFICER, ITO, WARD 15(1) NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. AAACR0008E ASSESSEE BY : SH. Y . K. SHARMA, CA R EVENUE BY : SH. VIKRAM SAHAY, SR. DR DATE OF HEAR ING: 15 . 0 1.201 5 DATE OF PRONOUNCEMENT: 20. 1.2015 ORDER P ER H.S. SIDHU, JM THIS IS AN APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 21 . 5 .201 3 OF L D. CIT(A) - XVIII, NEW DELHI ON THE FOLLOWING GROUNDS: - (1) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND UNDER THE PROVISIONS OF THE LAW, THE COMMISSIONER HAS ERRED IN UPHOLDING: - A) INVOKING OF THE PROVISIONS OF SECTION 14A OF I.T. ACT READ WITH RULE 8D OF THE INCOME TAX RULES, AND B) DISALLOWANCE OF RS. 9,37,904/ - UNDER THE ABOVE RULE. ITA NO. 4595 /DEL/201 3 2 (2) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN UPHOLDING AN ADDITION OF RS. 6,62,012/ - TO THE INCOME OF THE ASSESSEE COMPANY. (3) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN SUSTAINING A DISALLOWANCE OF 20% OUT OF VARIOUS EXPENSES AMOUNTING TO RS. 34,51,270/ - . (4) ANY OTHER GROUND THAT THE ASSESSEE MAY TAKE WITH PERMISSION. 2. FACTS OF THE CASE IN BRIEF ARE THAT THE RETURN OF INCOME DECLARING A TOTA L INCOME OF RS. NIL AND A BOOK PROFIT U/S. 115JB OF RS. 1,11,215/ - WAS FILED BY THE ASSESEE ON 30.9.2009. THE RETURN WAS PROCESSED U/S. 143(1) OF I.T. ACT, 1961. THE CASE WAS SELECTED FOR COMPULSORY SCRUTINY UNDER CASS NORMS. NOTICE U/S. 143(2) WAS ISSUED ON 11.8.2009, WHICH WAS DULY SERVED UPON THE ASSESSEE. SUBSEQUENTLY, NOTICE U/S. 142(1) OF THE I.T. ACT, 1961 ALONGWITH QUESTIONNAIRE WAS ISSUED TO THE ASSESSEE ON 21.7.2010 WHICH WAS DULY SERVED UPON THE ASSESSEE. IN RESPONSE TO THESE NOTICES, THE REQUIRED DETAILS WERE FILED. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE COMPANY WAS ENGAGED IN THE BUSINESS OF MANUFACTURE AND EXPORTS OF EMBROIDERED FABRICS AND FINANCER. COPY OF PROFIT AND LOSS ACCOUNT, BALANCE SHEET AND SUIT REPORT U/S. 44 AB OF THE I.T. ACT, 1961 WAS FURNISHED BY THE ASSESSEE DURING THE ITA NO. 4595 /DEL/201 3 3 COURSE OF ASSESSMENT PROCEEDINGS. THEREAFTER, THE AO COMPLETED THE ASSESSMENT VIDE ITS ORDER DATED 21.12.2010 AND MADE THE VARIOUS ADDITIONS. 3. AGAINST THE ABOVE ASSESSMENT ORDER DATED 21. 12.2010, THE ASSESSEE APPEALED BEFORE THE LD. CIT, WHO VIDE IMPUGNED ORDER DATED 21.5.2013 HAS UPHELD THE ADDITIONS AND DISMISSED THE APPEAL OF THE ASSESSEE. \ 4. AGGRIEVED WITH THE ORDER OF THE LD. CIT(A) DATED 21.5.2013, ASSESSEE IS IN APPEAL BEFORE US. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT AS THERE WAS NO DIVIDEND INCOME RECEIVED BY THE ASSESSEE, THE PROVISIONS OF SECTION 14A OF THE ACT WERE NOT APPLICABLE AND NO DISALLOW ANCE WAS CALLED FOR. IT WAS FURTHER STATED THAT THERE SHOULD HAVE BEEN A POSITIVE INCOME FOR MAKING THE DISALLOWANCE U/S 14A OF THE ACT R.W. RULE 8D OF THE INCOME TAX RULES, 1962. THE RELIANCE WAS PLACED ON THE FOLLOWING CASE LAW: CIT VS HOLCIM INDIA (P) LTD. I N ITA NOS. 486/2014 AND 299/2014 ORDER DATED 05.09.2014 OF HON BLE DELHI HIGH COURT 5. IN HIS RIVAL SUBMISSIONS THE LD. DR STRONGLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT THE EARNING OF INCOME IS NOT A CRITERIA FOR MAKING THE DISALLOWANCE U/S 14A OF THE ACT AND EVEN IF NO INCOME HAS BEEN EARNED THE ITA NO. 4595 /DEL/201 3 4 DISALLOWANCE HAS TO BE MADE U/S 14A OF THE ACT R.W. RULE 8D OF THE IT RULES. 6 . WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS, ESPECIALLY THE ORDERS OF THE REVEN UE AUTHORITIES AND PAPER BOOK FILED BY THE ASSESSEE CONTAINING PAGES 1 TO 206 HAVING THE DETAILS OF THE ASSESSMENT AS WELL AS APPELLATE RECORDS/ DOCUMENTS. ASSESSEE HAS SUBMITTED THAT THE ADDITION MENTIONED IN GROUND NO. 1 AS AFORESAID IS SQUARELY COVERED BY THE DECISION OF THE HON BLE HIGH COURT OF DELHI VIDE ITS ORDER DATED 5.9.2014 PASSED IN ITA NOS. 486/2014 & 299/2014 IN THE CASE OF CIT VS. HOLCIM INDIA P. LTD. IN FAVOR OF THE ASSESSEE AND AGAINST THE REVENUE. HE FURTHER SUBMITTED THAT AS FAR AS AD DITIONS RAISED VIDE GROUND NO. 2 AND 3 AS AFORESAID IS CONCERNED, THE SAME WAS NOT PROPERLY CONSIDERED BY THE AO AND THE ASSESSEE WAS NOT GRANTED ADEQUATE OPPORTUNITY TO SUBSTANTIATE ITS CLAIM. 7. WE FIND THAT THAT GROUND NO. 1 (A) & (B) IS RELATED TO INVOCATION OF THE PROVISIONS OF SECTION 14A READ WITH RULES 8D OF THE I.T. RULES AND DISALLOWANCE OF RS. 9,37,902/ - UNDER SECTION 14A. WE FIND THAT IN RESPONSE TO THE AO S QUERY IN REGARD TO DISALLOWANCE UNDER SECTION 14A, THE ASSESSEE CLAIMED THAT TH E INVESTMENT OF RS. 2,11,04,488/ - HAD BEEN MADE BY THE COMPANY OUT OF ITS OWN FUNDS, SINCE IT HAD SHARE CAPITAL OF MORE THAN RS. 9.65 CRORES AND RESERVES AND SURPLUS OF RS. 1.63 CRORES. THE COMPANY ALSO CLAIMED THAT THERE HAVE BEEN NO MOVEMENT IN THE INV ESTMENT PORTFOLIO AND THEREFORE, NO ADMINISTRATIVE EXPENSE COULD ITA NO. 4595 /DEL/201 3 5 BE ATTRIBUTED FOR MANAGING THE PORTFOLIO. THE AO DID NOT FIND THE REPLY OF THE ASSESSEE AS ACCEPTABLE AND APPLIED THE PROVISIONS OF SECTION 14A R.W.R. 8D AND MADE A DISALLOWANCE OF RS. 9,3 7,902/ - . WE FIND THAT LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE OBSERVED THAT THE HON BLE BOMBAY HIGH COURT IN THE CASE OF M/S GODREJ & BOYCE MANUFACTURING CO. LTD. VS DCIT REPORTED AT 328 ITR 8 AFTER DWELLING ON THE ABOVE ISSUE IN GREAT DETAILS AND CONSIDERING DECISIONS OF VARIOUS COURTS AND TRIBUNALS ON THE MATTER INCLUDING THAT ITAT, MUMBAI (SPECIAL BENCH) IN THE CASE OF ITO VS. DAGA CAPITAL MANAGEMENT PVT. LTD. (2009) 117 ITD 169. THE HON BLE HIGH COURT HAS ALSO UPHELD THE VALIDITY O F RULE 8D W.E.F. AY 2008 - 09. WE FIND THAT LD. CIT(A) AFTER CONSIDERING THE ABOVE, CONFIRMED THE ADDITION OF RS. 9,37,902/ - MADE BY THE AO. 8 . WE FIND THAT THEIR LORDSHIPS OF THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS HOLCIM INDIA (P) L TD. IN ITA NOS. 486 & 299/2014 VIDE ORDER DATED 05.09.2014 DISMISSED THE APPEAL OF THE REVENUE AND OBSERVED IN PARA 14 AS UNDER: 14. ON THE ISSUE WHETHER THE RESPONDENT - ASSESSEE COULD HAVE EARNED DIVIDEND INCOME AND EVEN IF NO DIVIDEND INCOME WAS EARNED, YET SECTION 14A CAN BE INVOKED AND DISALLOWANCE OF EXPENDITURE CAN BE MADE, THERE ARE THREE DECISIONS OF THE DIFFERENT HIGH COURTS DIRECTLY ON THE ISSUE AND AGAINST THE APPELLANT - REVENUE. NO CONTRARY DECISION OF A HIGH COURT HAS BEEN SHOWN TO US. THE PUNJ AB AND HARYANA HIGH COURT IN ITA NO. 4595 /DEL/201 3 6 COMMISSIONER OF INCOME TAX, FARIDABAD VS. M/S. LAKHANI MARKETING INCL., ITA NO. 970/2008, DECIDED ON 02.04.2014, MADE REFERENCE TO TWO EARLIER DECISIONS OF THE SAME COURT IN CIT VS. HERO CYCLES LIMITED, [2010] 323 ITR 518 AND C IT VS. WINSOME TEXTILE INDUSTRIES LIMITED, [2009] 319 ITR 204 TO HOLD THAT SECTION 14A CANNOT BE INVOKED WHEN NO EXEMPT INCOME WAS EARNED. THE SECOND DECISION IS OF THE GUJARAT HIGH COURT IN COMMISSIONER OF INCOME TAX - I VS. CORRTECH ENERGY (P.) LTD. [2014] 223 TAXMANN 130 (GUJ.). THE THIRD DECISION IS OF THE ALLAHABAD HIGH COURT IN INCOME TAX APPEAL NO. 88 OF 2014, COMMISSIONER OF INCOME TAX (II ) KANPUR, VS. M/S. SHIVAM MOTORS (P) LTD. DECIDED ON 05.05.2014. IN THE SAID DECISION IT HAS BEEN HELD: AS REGAR DS THE SECOND QUESTION, SECTION 14A OF THE ACT PROVIDES THAT FOR THE PURPOSES OF COMPUTING THE TOTAL INCOME UNDER THE CHAPTER, NO DEDUCTION SHALL BE ALLOWED IN RESPECT OF EXPENDITURE INCURRED BY THE ASSESSEE IN RELATION TO INCOME WHICH DOES NOT FORM PART O F THE TOTAL INCOME UNDER THE ACT. HENCE, WHAT SECTION 14A PROVIDES IS THAT IF THERE IS ANY INCOME WHICH DOES NOT FORM PART OF THE INCOME UNDER THE ACT, THE EXPENDITURE WHICH IS INCURRED FOR EARNING THE INCOME IS NOT AN ALLOWABLE DEDUCTION. FOR THE YEAR IN QUESTION, THE FINDING OF FACT IS THAT THE ASSESSEE HAD NOT EARNED ANY TAX FREE INCOME. HENCE, IN THE ABSENCE OF ANY TAX FREE INCOME, THE CORRESPONDING EXPENDITURE COULD NOT BE WORKED OUT FOR DISALLOWANCE. THE VIEW OF THE CIT(A), WHICH HAS BEEN AFFIRMED BY THE TRIBUNAL, HENCE DOES NOT GIVE RISE TO ANY SUBSTANTIAL QUESTION OF LAW. HENCE, THE DELETION OF THE DISALLOWANCE OF RS.2,03,752/ - MADE BY THE ASSESSING OFFICER WAS IN ORDER. 9 . IN THE AFORESAID CASE THEIR LORDSHIPS HAS ALSO CONSIDERED THE DECISIONS OF THE HON BLE PUNJAB AND HARYANA, GUJARAT AND ITA NO. 4595 /DEL/201 3 7 ALLAHABAD HIGH COURT WHICH ARE IN FAVOUR OF THE ASSESSEE. W E, THEREFORE, BY KEEPING IN VIEW THE RATIO LAID D O W N BY THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS HOLCIM INDIA (P.) LTD. ORDER DATED 0 5.09.2014 ARE OF THE CONSIDERED VIEW THAT NO DISALLOWANCE U/S 14A OF THE ACT CAN BE MADE IF THERE IS NO INCOME EARNED. IN THAT VIEW OF THE MATTER WE DELETE THE DISALLOWANCE MADE BY THE AO AND CONFIRMED BY THE LD. CIT(A). THEREFORE, THIS GROUND OF APPEAL IS ALLOWED IN FAVOR OF THE ASSESSEE AND AGAINST THE REVENUE. 10. AS REGARDS ISSUE INVOLVED IN GROUND NO. 2 AND 3 REGARDING ADDITION OF RS. 6,66,012/ - AND THE DISALLOWANCE OF 20% OUT OF VARIOUS EXPENSES AMOUNTING TO RS. 34,51,270/ - . AFTER HEARING BOTH THE PARTIES AND PERUSING THE RECORDS AVAILABLE WITH US ESPECIALLY THE WRITTEN STATEMENT FILED BY THE ASSESSEE AS WELL AS THE ORDER OF THE REVENUE AUTHORITY, WE ARE OF THE VIEW THAT ASSESEE FILED ITS RETURN OF INCOME ON 30.9.2008 AND THE AO ISSUED THE SHOW CAUS E NOTICE AS PER THE ORDER DATED 16.12.2010 REQUIRING THE ASSESSEE TO FILE THE REPLY ON 21.12.2010. THE REQUIREMENT OF THE ASSESSEE HAS BEEN REPRODUCED BY THE AO IN PARAS 4 O F HIS ORDER IS REPRODUCED BELOW FOR THE SAKE OF CONVENIENCE. 4. IN THIS CASE A SHOW CAUSE WAS ISSUED AS PER ORDER SHEET DATED 16.12.2010 AND REQUIRED TO ITA NO. 4595 /DEL/201 3 8 FILE REPLY ON 21.12.2010. THE SHOW CAUSE REPRODUCED AS UNDER: - A) WHY DISALLOWANCE U/S. 14A WILL NOT BE ADDED BACK TO YOUR INCOME. B) AS PER AIR/TDS/CIB INFORMATION YOU HAVE NOT SHOWN PROOF OF INCOME / RECEIPT REGARDING FOLLOWING PARTIES: - I. RO T EX HOSIERY P LTD. 30.11.2007 RS. 6519/ - II. - DO - 21.7.2007 RS. 4375/ - III. - DO - 29.2.2008 RS. 17665/ - IV. PAWAN KUMAR SINGLA 29.2.2008 RS. 56858/ - V. ROTEX HOSIERY P LTD. 31.10.2010 RS. 40380/ - VI. BL INTERNATIONAL 31.12.2007 RS. 54600/ - VII. IVORY CLOTHING P LTD. 5.11.2007 RS. 100370/ - VIII. - DO - 18.12.2007 RS. 4180/ - IX. HOLIDAY 31.8.2008 RS. 14920/ - X. - DO - 31.8.2008 RS. 261464/ - XI. - DO - 31.8.2008 RS. 46690/ - XII. - DO - 31.3. 2008 RS. 4689/ - XIII SHOR SHOT INDIA 31.7.2007 RS. 12516/ - ITA NO. 4595 /DEL/201 3 9 WHY NOT ABOVE AMOUNTS ADDED BACK IN YOUR INCOME. (C) AS PER CONFIRMATION OF THE FOLLOWING PARTIES, THE DIFFERENCE COMES AFTER COMPLISATION: - (I) GTN RS. 1040/ - (II) SHIV GANGA RS . 5999/ - (III) M/S THREAD DEPOT RS. 78979/ - WHY NOT ABOVE AMOUNT ADDED IN YOUR INCOME. PRODUCE BOOKS OF A/C WITH VOUCHERS/BILLS, AND SALE PURCHASE BILLS ETC. 10. THE REPLY BY THE ASSESSEE DATED 21.12.2010 IS AT PAGE NO. 5 VIDE PARA NO. 5 OF THE AO ORDER IS REPRODUCED BELOW, FOR THE SAKE OF CONVENIENCE: - 5. 'THE ASSESSEE FILED THE REPLY VIDE LETTER DATED 21.12.201 WHICH IS REPRODUCED AS UNDER: - 5.1 AS THIS CONNECTION IT IS RESPECTFULLY SUBMITTED THAT THE INVESTMENT OF RS.2, 11,04,488/ - HAS BEEN M ADE BY THE COMPANY OUT OF ITS OWN FUNDS. IT HAS A SHARE CAPITAL OF MORE THAN RS.9.65 CRORES BESIDES RESERVE & SURPLUS OF R.1.63 CRORES. ITA NO. 4595 /DEL/201 3 10 5.2 IT MAY FURTHER BE SUBMITTED THAT THE COMPANY HAS TAKEN LOANS FROM BANKS AND FINANCIAL INSTITUTIONS. THE WORKING CA PITAL TERM LOAN WAS SANCTIONED AND HAS BE EN INVESTED IN ITS FACTORY. SIMILARLY, CASH CREDIT FACILITY HAS ALSO BEEN GRANTED BY THE BANK FOR BUSINESS ACTIVITIES RELATING TO FACTORY. THE OTHER LOANS ARE ALSO CHARGED TO IMPORTED AUXILIARY MACHINERY. SIMILARLY, FIXED DEPOSITS WERE TAKEN LONG TIME AGO FOR FACTORY PURPOSES ONLY. THEREFORE, NO LOAN CAN DIRECTLY OR INDIRECTLY BE ATTRIBUTED TO THE ACTIVITY OF INVESTMENT IN SHARES. THEREFORE, NO ELEMENT OF INTEREST CAN BE ALLOCATED DIRECTLY OR INDIRECTLY FOR EARNING I NCOME FROM INVESTMENT IN SHARES. AS THERE HAS HARDLY BEEN ANY MOVEMENT IN ITS INVESTMENT PORTFOLIO EXCEPT SALE OF SOME DEVELOPMENT BANK SHARES AND VIJAY BANK SHARE, NO AMOUNT OF ADMINISTRATIVE EXPENSE CAN BE ATTRIBUTED FOR MANAGING THE INVESTMENT 'PORT FO LIO . HENCE, THE APPLICABILITY OF THE ITA NO. 4595 /DEL/201 3 11 PROVISIONS OF SECTION 14A OF IT ACT IS COMPLETELY DENIED. 5.3 YOU WERE PLEASED TO GIVE A COPY OF THE AIR EXTRACTS RELEVANT TO THE COMPANY. OUR STAFF HAS BEEN ABLE TO C O - RELATE THE SAME WITH THE BILLS RAISED BY THE COM PANY IN RESPECT OF THE SAID PARTIES. SOME OF THE BILLS RELATE TO THE FINANCIAL YEAR PRECEDING TO THE RELEVANT PREVIOUS YEAR. A CHART GIVING DETAILS AND CORRESPONDING BILLS ARE ENCLOSED. IN CASE OF HOLIDAY EXPORTS, IT MAY BE SUBMITTED THAT - THE COMPANY HAS NOT HAD ANY TRANSACTION WITH THE PARTY DURING THE YEAR UNDER ASSESSMENT. ON ENQUIRY, THE PERSONNEL OF HOLIDAY EXPORTS HAVE INFORMED THAT PERHAPS BY MISTAKE THE PAN NO. OF OUR COMPANY WAS MENTIONED IN THE QUARTERLY RETURNS ELECTRONICALLY UPLOADED/FILED BY THE SAID PARTY. A COPY OF THE E - MAIL FROM THE PARTY IS ENCLOSED. A FORMAL LETTER IF REQUIRED CAN ALSO BE FILED. YOU HAVE ALREADY CROSS VERIFIED OTHER ENTRIES APPEARING IN THE AIR WITH THE RELEVANT ITA NO. 4595 /DEL/201 3 12 RECORDS/DETAILS OF THE COMPANY, SUCH AS CASH BOOK ETC.. 5.4 YOU HAD ALSO REQUIRED THE COMPANY TO EXPLAIN THE DIFFERENCE IN ACCOUNTS BETWEEN THE FOLLOWING PARTIES AND THEIR ACCOUNTS IN OUR BOOKS OF ACCOUNTS. I) SHIV GANGA INDUSTRIES IN THIS CASE YOU WERE PLEASED TO GIVE A COPY OF ACCOUNT OF THE COMPANY IN THE BOOKS OF M/S SHIV GANGA INDUSTRIES, DELHI. A COPY OF THE SAID PARTY S ACCOUNTS IN OUR BOOKS IS ALSO ENCLOSED. DURING THE YEAR WE HAD DEBITED THE PARTY AN AMOUNT OF RS. 852884/ - BEING AMOUNTS IN RESPECT OF BILLS AND FREIGHT CARTAGE AND PETROL. THE PARTY HAS RESPONDED THE ENTRIES AGGREGATING TO RS. 846884/ - , THE DEBIT NOTES OF RS. 1000/ - , RS. 1000/ - AND RS. 4000/ - DATED 14.9.2007, 1.12.2007 AND 16.1.2008 RESPECTIVELY. THIS IS IN CONTINUATION TO OUR EARLIER REPLY DATED 9 TH DECEMBER, 2010 ON THIS POI NT. AS D ESIRED ACKNOWLEDGEMENT FORMS OF THE COMPANY HAVING FILED INCOME TAX RETURNS ITA NO. 4595 /DEL/201 3 13 SHOWING LOSS FOR THE AY 2000 - 01, 2001 - 02, 2002 - 03 AND 2003 - 04 ARE ENCLOSED. FOR AY 2003 - 04 THE DATE FOR FILING OF THE IT RETURN HAD BEEN EXTENDED TO 30.11.2003 VIDE NOTIFI CATION DATED 16.10.2003. COPY ENCLOSED. ALL THE RETURNS HAVE BEEN FILED WITHIN THE PRESCRIBED DUE DATE AND THEREFORE LOSS IS ALLOWED TO BE CARRIED FORWARD. 1 1 . AFTER GOING THROUGH THE REPLY FILED BY THE ASSESSEE, THE AO COMPLETED ASSESSMENT ON 21.12.20 10 U/S. 143(3) OF THE I.T. ACT. WE ARE OF THE OF THE VIEW THAT THE AO COMPLETED THE ASSESSMENT ON 21.12.2010 WHEREAS HE HAS ISSUED THE SHOW CAUSE NOTICE VIDE ORDER DATED 16.12.2010 ASKING THE ASSESEE TO FILE ITS REPLY BY 21.12.2010. WE ARE OF THE VIEW TH AT THE AO HAS NOT GIVEN SUFFICIENT TIME TO THE ASSESSEE TO FILE ITS COMPLETE REPLY ALONGWITH SUPPORTING DOCUMENTS FOR SUBSTANTIATING ITS CLAIM. NO DOUBT THAT ASSESSEE HAS FILED ITS REPLY ON THE DATE OF ASSESSMENT I.E. 21.12.2010, BUT IN OUR OPINION SUFFIC IENT TIME HAS NOT BEEN GRANTED BY THE AO TO THE ASSESSEE FOR SUBSTANTIATING ITS CLAIM, WHICH IS CONTRARY TO THE PRINCIPLES OF NATURAL JUSTICE. SIMILARLY, THE LD. CIT(A) HAS ALSO TAKEN IN A ROUTINE MA NNER THE ADDITIONAL EVIDENCE FILED BY ITA NO. 4595 /DEL/201 3 14 THE ASSESSEE. NO D OUBT THAT AFTER TAKING THE REMAND REPORT FROM THE AO, LD. CIT(A) HAS DECIDED THE ISSUE IN DISPUTE AGAINST THE ASSESSEE. WE ARE NOT COMMENTING UPON THE MERITS OF THE CASE, BECAUSE IT WILL PREJUDICE TO THE MIND OF THE AO WHILE DECIDING THE ISSUE IN DISPUTE FRESH, AS PER LAW. BUT WE ARE OF THE CONSIDERED VIEW THAT AO AS WELL AS LD. CIT(A) HAS NOT GIVEN SUFFICIENT TIME TO THE ASSESSE FOR SUBSTANTIATING ITS CLAIM BEFORE THE REVENUE AUTHORITY. AS STATED BY THE LD. COUNSEL OF THE ASSESSEE THAT ASSESSEE IS I N POSSESSION OF ALL THE DOCUMENTARY EVIDENCE FOR SUBSTANTIATING ITS CLAIM AND HE REQUESTED THE ISSUE INVOLVED IN GROUND NO. 2 AND 3 MAY BE SET ASIDE TO THE FILE OF THE AO, TO DECIDE THE SAME AFRESH, UNDER THE LAW, AFTER GIVING ADEQUATE OPPORTUNITY OF BEIN G HEARD TO THE ASSESSEE. NO OBJECTION HAS BEEN RAISED BY THE LD. DR ON THE REQUEST OF THE ASSESEE. 12. KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT THE ISSUE INVOLVED IN GROUND NO. 2 AND 3 REQUIRE THOROUGH EXAMINAT ION AT THE LEVEL OF THE AO, AFTER PROVIDING ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE. THEREFORE, THE ISSUES RAISED VIDE GROUND NO. 2 AND ITA NO. 4595 /DEL/201 3 15 3 ARE SET ASIDE TO THE FILE OF THE AO DE NOVO, TO DECIDE THE SAME AS PER LAW. 1 3 . IN THE RESULT, APPEAL OF TH E ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOU N CED IN T HE OPEN COURT ON 20 /0 1 / 2015 . SD/ - SD/ - (T.S. KAPOOR) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 20 /0 1 / 2015 * SR BHATNAGAR * COPY FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR