ITO 27(1)(1), NAVI MUMBAI V. AKSHAYA ENGINEERING & CONSTRUCTION, MUMBAI

ITA 4667/MUM/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0897 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-11-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 08-07-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN
• Keywords: Additional evidence
• Section: 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A MUMBAI BEFORE SHRI JOGINDER SINGH (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 4667/MUM/2016 ASSESSMENT YEAR: 2010 - 11 INCOME TAX OFFICER - 27(1)(1), MUMBAI, TOWER NO. 6, 4 TH FLOOR, ROOM NO. 406, VASHI RLY STATION COMPLEX, VASHI, NAVI MUMBAI. VS. M/S AKSHAYA ENGINEERING & CONSTRUCTION D - 802, EVEREST GARDENS CHS LTD., LINK ROAD, GHATKOPAR (E), MUMBAI - 400075. PAN NO. AAPFA2954G APPELLANT RESPONDENT REVENUE BY : MR. V. JUSTIN, DR ASSESSEE BY : NONE DATE OF HEARING : 06/11 /2018 DATE OF PRONOUNCEMENT : 19/11/2018 ORDER PER N.K. PRADHAN, AM THIS IS AN APPEAL FILED BY THE REVENUE . THE RELEVANT ASSESSMENT YEAR IS 2010 - 11. THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISS IONER OF INCOME TAX (APPEALS) - 25 [IN SHORT CIT(A)], THANE AND ARISES OUT OF THE ASSESSMENT COMPLETED U/S143(3) OF THE INCOME TAX ACT 1961, (THE ACT). THOUGH THE CASE WAS FIXED FOR HEAR ING ON 13.03.2018, 19.06.2018, 24.09.2018 AND 06.11.2018, NEITHER THE ASSESSEE NOR ITS AUTHORIZED M/S AKSHAYA ENGINEERING & CONSTRUCTION ITA NO. 4667/MUM/2016 2 REPRESENTATIVE APPEARED BEFORE THE TRIBUNAL ON THE ABOVE DATES. AS THERE IS REPEATED NON - COMPLIANCE BY THE ASSESSEE TO THE NOTICE SENT BY THE REGISTRY FIXING THE CASE FOR HEARING ON THE ABOVE DATES, WE ARE PROCEEDING TO DISPOSE OF THIS CASE ON MERIT. 2. THE GROUNDS OF APPEAL FILED BY THE ASSESSEE READ AS UNDER: 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) IS JUSTIFIED IN DELETING THE ADDIT ION OF UNSECURED LOANS BASED ON THE ADDITIONAL EVIDENCE FURNISHED BEFORE HIM BY THE ASSESSEE, WITHOUT GIVING AN OPPORTUNITY TO THE ASSESSING OFFICER TO EXAMINE THE SAME, IN CONTRAVENTION TO THE JUDGMENTS OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. MCMI LLAN & CO. [33 ITR 182], HON'BLE BOMBAY HIGH COURT IN THE CASE OF SMT. PRABHAVATI S. SHAH VS. CIT [231 ITR 1] AND HON'BLE KERALA HIGH COURT IN THE CASE OF CIT VS. E.D. BENNY [234 TAXMAN802] AND BY NOT FOLLOWING SUB RULE (3) OF RULE 46A OF THE INCOME - TAX RU LES. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) IS JUSTIFIED IN DELETING THE AD - HOC 5% DISALLOWANCE OF EXPENSES, WHEN THERE IS REPEATED FAILURE ON PART OF THE ASSESSEE TO FURNISH THE DETAILS OF THE SAME IN RESPONSE TO THE NOTICES, DURIN G THE ASSESSMENT PROCEEDINGS. 3. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUNDS BE RESERVED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE - FIRM FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR (AY) 2010 - 11 ON 15.10.2010 DECLARING TOTAL INCOME OF RS.58,490/ - . AS RECORDED BY THE ASSESSING OFFICER (AO) , ONLY PART DETAILS WERE FILED BY THE ASSESSEE IN RESPONSE TO NOTICE U/S 142(1) ISSUED ALONG WITH QUESTIONNAIRE. AS THERE WAS NO FURTHER COMPLIANCE BY THE ASSESSEE, THE AO COMPLETED THE M/S AKSHAYA ENGINEERING & CONSTRUCTION ITA NO. 4667/MUM/2016 3 ASSESSMENT ON THE BASIS OF EVIDENCE AVAILABLE ON RECORD AND ARRIVED AT A TOTAL INCOME OF RS.2,64,22,910/ - . 4. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A) . AS MENTIONED BY THE LD. CIT(A) AT PAGE 1 OF HIS ORDER DATED 29.03.2016, NO ONE APPEARED ON BEHALF OF THE ASSESSEE BEFORE HIM. 4.1 THE 4 TH GROUND OF APPEAL BEFORE THE LD. CIT(A) IS AS UNDER: THE AO FAILED TO APPRECIATE THE FACTS THAT WITHIN A SHORT SPA N OF TIME IT IS DIFFICULT TO OBTAIN LOAN CONFIRMATION FROM LENDERS AND MADE AN ADDITION OF RS.21497201, BEING THE LOANS TAKEN DURING THE YEAR FOR THE WANT OF CONFIRMATIONS, HE FURTHER FAILED TO LOOK IN THE DETAILS PROVIDED WHICH IS PART OF THE TAX AUDIT RE PORT AS AN ANNEXURE WHEREIN THE ADDRESS AND PAN NO. OF LENDERS WERE AVAILABLE. THE LD. CIT(A) HELD THAT EXCEPT IN 14 CASES, THE ASSESSEE HAS FILED CONFIRMATIONS FROM THE CREDITORS WITH ADDRESSES AND PAN NOS. HE FURTHER OBSERVED FROM THE COPIES OF ACCOUNT S FILED THAT THE AMOUNTS HAD BEEN RECEIVED AND REPAID THROUGH BANKING CHANNELS ONLY AND THE CHEQUE NUMBERS OF THE AMOUNTS RECEIVED, THE PAYMENTS MADE, HAD ALSO BEEN PROVIDED. ON THE BASIS OF THE ABOVE FACTS THE LD. CIT(A) SUSTAINED ADDITION OF LOANS TO THE EXTENT OF R S.40,88,450/ - OUT OF THE DISALLOWANCE OF RS.2,14,97,201/ - MADE BY THE AO. 4.2 THE LD. CIT(A) ALSO ALLOWED THE 8 TH GROUND OF APPEAL WHICH IS AGAINST THE A D - HOC DISALLOWANCE @ 5% OF EXPENSES OF RS.9,13,05,063/ - MADE BY THE AO . M/S AKSHAYA ENGINEERING & CONSTRUCTION ITA NO. 4667/MUM/2016 4 5. BEFORE US, THE LD. DR SUBM ITS THAT THE LD. CIT(A) HAS VIOLATED THE PROVISIONS OF RULE 46A OF THE INCOME TAX RULES, 1962 (THE RULES) BY NOT PROVIDING AN OPPORTUNITY TO THE ASSESSEE TO VERIFY THE GENUINENESS OF UNSECURED LOANS. THE LD. DR FURTHER SUBMITS THAT THE LD. CIT(A) SHOULD NO T HAVE DELETED THE AD - HOC DISALLOWANCE @ 5% OF THE EXPENSES, WHEN THE ASSESSEE FAILED TO FILE THE DETAILS BEFORE THE AO. 6. WE HAVE HEARD THE LD. DR AND PERUSED THE RELEVANT MATERIALS ON RECORD. THE LD. CIT(A) HAS MENTIONED AT PARA 2 OF HIS ORDER DATED 29. 03.2016 THAT : THERE HAS BEEN NO RESPONSE TO THE NOTICES ISSUED ON VARIOUS DATES FROM THIS OFFICE, HENCE THE APPEAL IS DISPOSED OFF ON THE BASIS OF MATERIALS WHICH ARE AVAILABLE ON RECORD. AS MENTIONED EARLIER THE LD. CIT(A) HAS CONSIDERED THE UNSECURE D LOAN TRANSACTION OF RS.1,74,08,751/ - AS GENUINE AND CONFIRMED THE DISALLOWANCE OF LOANS TO THE EXTENT OF RS.40,88,450/ - . THE LD. CIT(A), HAVING CONSIDERED THE SUBMISSION FILED BY THE ASSESSEE DELETED THE AD - HOC DISALLOWANCE OF RS.45,65,253/ - MADE BY TH E AO. RULE 46A(3) ENJOINS UPON THE FIRST APPELLATE AUTHORITY, IF HE THINKS IT PROPER TO ADMIT ADDITIONAL OR FRESH EVIDENCE, TO ALLOW AND AFFORD A REASONABLE OPPORTUNITY TO THE ASSESSING OFFICER - (I) TO EXAMINE THE EVIDENCE OR DOCUMENT SO PRODUCED BY THE A SSESSEE APPELLANT ; M/S AKSHAYA ENGINEERING & CONSTRUCTION ITA NO. 4667/MUM/2016 5 (II) TO CROSS - EXAMINE ANY WITNESS SO PRODUCED; AND (III) TO PRODUCE ANY EVIDENCE OR DOCUMENT OR ANY WITNESS IN REBUTTAL OF THE ADDITIONAL EVIDENCE SO PRODUCED. UNLESS SUCH AN OPPORTUNITY HAS BEEN ALLOWED TO THE ASSESSING OFFICER, T HE FRESH EVIDENCE SO PRODUCED CANNOT BE TAKEN INTO ACCOUNT BY THE FIRST APPELLATE AUTHORITY. IN THE INSTANT CASE, THE ASSESSEE COULD FILE ONLY PART DETAILS IN RESPONSE TO NOTICE U/S 142(1) ISSUED BY THE AO. AS RECORDED BY THE AO, THE ASSESSEE DID NOT ATT END THE PROCEEDINGS NOR FILED THE RELEVANT DETAILS. IN SUCH A SITUATION, THE LD. CIT(A) SHOULD HAVE FOLLOWED THE PROVISIONS OF RULE 46A(3) AND ALLOWED A REASONABLE OPPORTUNITY TO THE AO TO EXAMINE THE EVIDENCE OR DOCUMENT SO PRODUCED BY THE ASSESSEE DURING THE APPELLATE PROCEEDINGS. HE HAS NOT DONE SO. AS THERE IS A CLEAR VIOLATION OF THE PROVISIONS OF RULE 46A(3) BY THE LD. CIT(A), WE SET ASIDE HIS ORDER AND REMIT THE MATTER TO THE FILE OF THE AO TO MAKE A DE NOVO ORDER, AFTER GIVING REASONABLE OPPORTUNI TY OF BEING HEARD TO THE ASSESSEE. WE DIRECT THE ASSESSEE TO FILE THE RELEVANT DOCUMENTS/EVIDENCE BEFORE THE AO. 7. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 19/11/2018. SD/ - SD/ - ( JOGINDER SINGH ) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER M/S AKSHAYA ENGINEERING & CONSTRUCTION ITA NO. 4667/MUM/2016 6 MUMBAI ; DATED: 19/11/2018 RAHUL SHARMA, SR. P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// ( SR. PRIVATE SECRETARY ) ITAT, MUMBAI