DCIT 9(2)(2), MUMBAI V. CITYGOLD EDUCATION RESEARCH P. LTD, MUMBAI

ITA 4750/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8487 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 15-12-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 20-08-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITTAL
• Assessee Lawyers: VIRAL DOSHI
• Keywords: Unexplained cash credit; Opportunity of being heard; Additional evidence
• Section: 115JB; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C, MUMBAI BEFORE SHRI R.C.SHARMA (AM) AND SHRI RAM LAL NEGI (JM ) ITA NO. 4750/MUM/2015 ASSESSMENT YEAR: 2012-13 THE ACIT - 9(2)(2). ROOM NO. 665A, 6 TH FLOOR, AAYAKAR BHAVAN, M.K.ROAD, MUMBAI- 400 020. VS. CITY GOLD EDUCATION RESEARCH LTD. 317, 3 RD FLOOR, RAHEJA CHAMBERS, FREE PRESS MARG, NARIMAN POINT, MUMBAI- 400 021. PAN: AAFCA5195A (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI. RAJAT MITTAL RESPONDENT BY : SHRI. VIRAL DOSHI DATE OF HEARING: 1 1/01/2017 DATE OF PRONOUNCEMENT: 31/01/20 17 O R D E R PER RAM LAL NEGI, JM THIS APPEAL HAS BEEN PREFERRED BY THE REVENUE AGAIN ST IMPUGNED ORDER DATED 29/05/2015 PASSED BY THE LD. CIT(APPEALS)-16, MUMBAI, FOR THE ASST. YEAR 2012-13, WHEREBY THE LD CIT(A) ALLOWED THE APP EAL PREFERRED BY THE ASSESSEE AGAINST ASSESSMENT ORDER DATED 17/02/2015 PASSED U/S 143 (3) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT). 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE A PRIVATE LIMITED COMPANY, ENGAGED IN THE BUSINESS OF PROVIDING INSTRUCTIONAL AND RESEARCH FACILITIES, CONDUCTING EDUCATIONAL PROGRAMS AND ACQUIRING AGRIC ULTURAL PLOTS AND RELATED ACTIVITIES, FILED ITS RETURN OF INCOME DECLARING LOSS OF RS. 37,30,631/-. THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT AND AFTE R SCRUTINY ASSESSMENT ORDER 2 ITA NO. 4750/MUM/2015 ASSESSMENT YEAR: 2012-13 WAS PASSED ASSESSING THE INCOME OF ASSESSEE AT RS. 30,29,370/- AND BOOK PROFIT U/S 115JB AT RS. (-)41,43,579/- AFTER MAKING DISALLOWANCE OF RS. 67,50,000/- U/S 68 OF THE ACT, CLAIMED BY THE ASSES SEE AS ADVANCE RECEIVED FROM M/S SURYA BUILDERS AND DEVELOPERS. FEELING AGG RIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED FIRST APPEAL BEFORE T HE LD. CIT(A). THE LD. CIT(A) AFTER HEARING THE ASSESSEE ALLOWED THE APPEAL AND D IRECTED THE A.O TO DELETE THE ADDITION MADE ON ACCOUNT OF UNEXPLAINED CASH CREDI T. 3. AGGRIEVED BY THE IMPUGNED ORDER, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL RAISING THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL:- 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW, THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS . 67,50,000/- MADE U/S 68 OF THE I.T.ACT BY THE A.O IGNORING THE FACT THAT ASSESSEE COMPANY HAS NOT FURNISHED BASIC DETAILS LIKE THE LO AN CONFIRMATION AND PAN OF THE LOAN CREDITOR TO PROVE THE GENUINENE SS OF TRANSACTION. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE CIT(A) WAS MISGUIDED IN MAKING FACTUAL INCORREC T FINDING THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE IDE NTITY OF THE CREDITOR STANDS PROVED BY FURNISHING BALANCE CONFIR MATION, NAME & ADDRESS, PAN, LEDGER CONFIRMATION, BANK STATEMENT R EFLECTING RECEIPT OF LOAN WHEREAS THE ASSESSMENT ORDER CLEARLY STATES THAT THE ASSESSEE DID NOT FURNISH CONFIRMATION OF ACCOUNT FR OM LENDER. 4. BEFORE US THE LD. DEPARTMENTAL REPRESENTATIVE (D R) SUBMITTED THAT THE A.O HAS RIGHTLY TREATED THE AMOUNT OF RS. 67,50,000 /-, SHOWN BY THE ASSESSEE AS ADVANCE RECEIVED FROM M/S. SURYA BUILDERS & DE VELOPERS, AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT, AS THE ASSESSEE DID NOT FURNISH BALANCE SHEET AND INCOME TAX RETURN OF THE AFORESAID COMPANY TO P ROVE ITS CREDITWORTHINESS 3 ITA NO. 4750/MUM/2015 ASSESSMENT YEAR: 2012-13 AND GENUINENESS OF THE TRANSACTION, EVEN AFTER GETT ING SUFFICIENT OPPORTUNITY. THE ASSESSEE ALSO FAILED TO PRODUCE STATEMENTS OF A CCOUNTS AND CONFIRMATION ETC. TO SUBSTANTIATE ITS CLAIM. THE LD. DR FURTHER SUBMITTED THAT THE A.O HAS PASSED THE ASSESSMENT ORDER RELYING ON THE JUDGMENT S OF HONBLE DELHI HIGH COURT PASSED IN CIT VS. TITAN SECURITIES, 357 ITR 184, AND IN CIT V S. NAVODAYA CASTLE PVT. LTD. 367 ITR 306 . THE LD. CIT(A) HAS ALLOWED THE APPEAL OF THE ASSESSEE ON THE BASIS OF ADDITIONAL EVIDENCE ADDUCE D BY THE ASSESSEE DURING APPELLATE PROCEEDINGS WITHOUT GIVING NOTICE TO THE ASSESSING OFFICER CONCERNED. 5. ON THE OTHER HAND THE LD. COUNSEL FOR THE ASSESS EE VEHEMENTLY REITERATED THE STAND OF THE ASSESSEE TAKEN BEFORE T HE LD. CIT(A) AND SUBMITTED THAT THE LD. CIT(A) HAS RIGHTLY DELETED THE ADDITIO N MADE BY THE A.O. THE LD. CIT(A) HAS JURISDICTION TO ALLOW THE ADDITIONAL EVI DENCE DURING APPELLATE PROCEEDINGS UNDER RULE 46(A) OF THE INCOME TAX RULE S. MOREOVER, THE CASE OF THE ASSESSEE IS COVERED BY THE JUDGMENT OF GUWHATI HIGH COURT IN THE CASE OF NEMI CHAND KOTHARI VS. CIT (2014) 264 ITR 254 IN WHICH IT HAS BEEN HELD THAT IT IS NOT THE BUSINESS OF THE ASSESSEE TO FIND OUT WHE THER THE SOURCE OR SOURCES FROM WHICH THE CREDITOR HAD AGREED TO ADVANCE THE A MOUNTS WERE GENUINE OR NOT. THE LD. COUNSEL FURTHER SUBMITTED THAT SINCE THE LD. CIT(A) HAS DELETED THE ADDITION IN QUESTION IN ACCORDANCE WITH THE PRI NCIPLES OF LAW LAID DOWN BY THE HONBLE SUPREME COURT AND THE VARIOUS HIGH COUR TS AND ALSO ON THE BASIS OF EVIDENCE ON RECORD, THERE IS NO SCOPE TO FURTHER INTERFERE WITH THE FINDINGS OF THE LD. CIT(A). HENCE, THE APPEAL OF THE REVENUE IS LIABLE TO BE DISMISSED. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PER USED THE MATERIAL PLACED ON RECORD, INCLUDING THE CASES RELIED UPON B Y THE PARTIES BEFORE US AS WELL AS BEFORE THE AUTHORITIES BELOW, IN THE LIGHT OF RESPECTIVE SUBMISSIONS OF THE PARTIES. THE ONLY ISSUE TO BE ADJUDICATED IN TH IS CASE IS WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN DELETING THE 4 ITA NO. 4750/MUM/2015 ASSESSMENT YEAR: 2012-13 ADDITION MADE BY THE AO U/S 68 OF THE ACT BY ADMITT ING THE ADDITIONAL EVIDENCE DURING THE APPELLATE PROCEEDINGS? FACTS ON RECORD R EVEAL THAT THE ASSESSEE HAD CLAIMED THAT IT HAD RECEIVED AN ADVANCE OF RS.67,50 ,000/-FROM M/S SURYA BUILDERS & DEVELOPERS DURING THE FINANCIAL YEAR REL EVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION. THE CLAIM OF THE ASSESSEE WAS REJECTED BY THE AO FOR THE REASONS THAT THE ASSESSEE DID NOT FURNISH THE C ONFIRMATION FROM THE COMPANY CONCERNED AND OTHER REQUIRED DETAILS CALLED FOR. 7. DURING THE APPELLATE PROCEEDINGS THE ASSESSEE SU BMITTED AN APPLICATION FOR PRODUCTION OF ADDITIONAL EVIDENCE UNDER RULE 46 A OF THE INCOME TAX RULES 1962. THE LD. CIT(A) ADMITTED THE ADDITIONAL EVIDEN CE AND CONSIDERING THE SAME ALLOWED THE APPEAL OF THE ASSESSEE. AS POINTED OUT BY THE LD. DR, UNDER RULE 46A THE APPELLANT SHALL NOT BE ENTITLED TO PRO DUCE ANY EVIDENCE BEFORE THE CIT(A) OTHER THAN THE EVIDENCE PRODUCED BEFORE THE ASSESSING OFFICER EXCEPT WHERE THE AO HAS REFUSE TO ADMIT EVIDENCE OR WHERE THE APPELLANT WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING OR WHE RE THE AO HAS MADE THE ORDER APPEALED AGAINST WITHOUT GIVING SUFFICIENT OP PORTUNITY TO ADDUCE EVIDENCE RELEVANT TO ANY GROUND OF APPEAL. 8. IN SMT. PRABHAVATI S SHAHS CASE (1998 231 ITR 1) THE HONBLE JURISDICTIONAL HIGH COURT HAS HELD THAT THAT IF PRI MA FACIE EVIDENCE IS NECESSARY TO EXAMINE THE CLAIM OF THE ASSESSEE, THE CIT(A) SH OULD CONSIDER THE NECESSARY EVIDENCE IN EXERCISE OF POWERS U/S 250(4) OF THE AC T EVEN IF THE CASE OF THE ASSESSEE DOES NOT FALL WITHIN CONDITIONS PRESCRIBED UNDER RULE 46(1) OF THE INCOME TAX RULES. HENCE, IN VIEW OF THE LAW LAID DO WN BY THE HONBLE HIGH COURT, THERE IS NO ILLEGALITY IN ADMITTING ADDITION AL EVIDENCE DURING THE COURSE OF THE APPELLATE STAGE. MOREOVER, THE LD. CIT(A) HA S CO-TERMINUS POWER WITH THAT OF THE A.O TO VERIFY ANY FACT BROUGHT ON REC ORD EVEN BY WAY OF ADDITIONAL EVIDENCE. IN OTHER WORDS, THE LD. CIT(A) SHOULD EIT HER HIMSELF CONDUCT 5 ITA NO. 4750/MUM/2015 ASSESSMENT YEAR: 2012-13 INQUIRY/VERIFICATION QUA THE ADDITIONAL EVIDENCE BR OUGHT ON RECORD AND RECORD HIS FINDINGS AFTER GIVING AN OPPORTUNITY TO THE AO TO REBUT THE SAME OR THE SAME SHOULD BE REFERRED TO THE AO CONCERNED TO EXAM INE THE ISSUE AFRESH IN THE LIGHT OF THE ADDITIONAL EVIDENCE SO ADMITTED. H OWEVER, IT APPEARS THAT IN THE PRESENT CASE NEITHER THE LD. CIT(A) HAS HIMSELF VER IFIED THE FACTS NOR ANY REMAND REPORT WAS OBTAINED FROM THE A.O. HENCE, IN OUR CONSIDERED OPINION THE LD. CIT(A) HAS PASSED THE IMPUGNED ORDER IN VIO LATION OF RULE 46A(3), WITHOUT GIVING AN OPPORTUNITY OF BEING HEARD TO THE AO TO REBUT THE ADDITIONAL EVIDENCE ADDUCED BEFORE HIM. THE HONBLE GUJARAT HI GH COURT IN CIT VS. VALIMOHMED AHMEDBHAI(1982) 134 ITR (GUJ) HAS HELD THAT WHERE ADDITIONAL EVIDENCE IS ADMITTED DURING THE COURSE OF APPEAL, T HE AO SHOULD BE GIVEN AN OPPORTUNITY TO MEET WITH THE ADDITIONAL MATERIAL BY WAY OF CROSS EXAMINATION, COUNTER EVIDENCE AND URGING SUBMISSIONS QUA THE ADD ITIONAL EVIDENCE. IN THE LIGHT OF THE FACTS OF THE PRESENT CASE AND THE PRIN CIPLES OF LAW DISCUSSED ABOVE, WE ARE OF THE CONSIDERED VIEW THAT THE AO SHOULD GE T AN OPPORTUNITY TO EXAMINE THE ADDITIONAL EVIDENCE ADMITTED BY THE LD. CIT(A). WE ACCORDINGLY SET ASIDE THE FINDINGS OF THE LD. CIT(A) AND RESTORE THIS ISSUE T O THE FILE OF THE A.O FOR FRESH ADJUDICATION IN THE LIGHT OF THE ADDITIONAL EVIDENC E ADDUCED BEFORE THE LD. CIT(A), AFTER AFFORDING REASONABLE OPPORTUNITY OF B EING HEARD TO THE ASSESSEE. 9. IN THE RESULT APPEAL FILED BY THE REVENUE FOR A .Y. 2012-13 IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT 31 ST JANUARY, 2017. SD/- SD/- ( R.C.SHARMA ) (RAM LAL NEGI) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED:31/01/2017 6 ITA NO. 4750/MUM/2015 ASSESSMENT YEAR: 2012-13 / 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// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI PRAMILA