ITO, New Delhi V. Shri Sanjay Sawhney, Delhi

ITA 4856/DEL/2015

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 0186 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2019
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2008-2009
• Appeal Filed On: 24-07-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SURENDER PAL
• Keywords: Unexplained cash credit; Unexplained investment; Business income; Depreciation; Opportunity of being heard; Principle of natural justice; Additional evidence; Commercial expediency
• Section: 131; 68; 69; 132; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : F , NEW DELHI BEFORE SHRI BHAVNESH SAINI , JUDICIAL M EMBER AND SH RI O.P. KANT , ACCOUNTANT MEMBER ITA NO .4856 /DE L/ 2015 ASSESSMENT YEAR : 2008 - 09 INCOME TAX OFFICER, WARD - 34(3), CIVIC CENTRE, NEW DELHI VS. SHRI SANJAY SAWHNEY, C - 83, ASHOK VIHAR, PHASE - I, DELHI PAN : ABNPS4554P (APPELLANT) (RESPONDENT) APPELLANT BY SHRI SURENDER PAL, SR.DR RESPONDENT BY SHRI SACHIN JAIN, CA ORDER PER O.P. KANT, A .M. : THIS APPEAL BY THE R EVENUE IS DIRECTED AGAINST ORDER DATED 20/03/2015 PASSED BY THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) - 41, NEW DELHI [IN SHORT THE LD. CIT(A) ] FOR ASSESSMENT YEAR, 2008 - 09 RAISING FOLLOWING GROUNDS: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN : (I) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN THE LAW, THE LD.CIT( A) ERRED IN DELETING THE ADDITION OF RS. 11,26,672/ - ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S 68 OF THE I.T. ACT,196T'AS THE ASSESSEE HAD FAILED TO FURNISH ANY DOCUMENTARY EVIDENCE TO DATE OF HEARING 13.03.2019 DATE OF PRONOUNCEMENT 25.03.2019 2 ITA NO. 4856/DEL/2015 VALIDATE HIS CLAIM DURING ASSESSMENT PROCEEDINGS, THEN WHERE DOES QUEST ION OF VIOLATION OF PRINCIPLE OF NATURAL JUSTICE ARISE. (II) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.35,00,918/ - ON ACCOUNT OF UNEXPLAINED INVESTMENT U/S 69 OF THE I.T. ACT, 1961, WHEREAS THE ASSESSEE DURING ASSESSMENT AS WELL AS REMAND PROCEEDINGS HAD FAILED TO FURNISH COMPLETE DOCUMENTARY EVIDENCE IN SUPPORT OF HIS CLAIMS. (III) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ER RED IN DELETING THE ADDITION OF RS. 17,265/ - INTEREST PAID ON BANK BORROWINGS WHICH WERE NOT USED FOR THE PURPOSE OF BUSINESS AS THE ASSESSEE HAD MADE INTEREST FREE ADVANCES WHICH WERE NOT FOR THE PURPOSE OF BUSINESS ACTIVITY. (IV) WHETHER ON THE FACTS A ND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 77,830/ - ON ACCOUNT OF EXPENSES BEING PERSONAL IN NATURE IGNORING THE FACT THE THERE IS A POSSIBILITY OF PERSONAL USE OF TELEPHONE AND VEHICLES WHICH C ANNOT BE RULED OUT. (V) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.90,02,000/ - ON ACCOUNT OF LONG TERM CAPITAL GAIN OVERLOOKING THE. FACT THE ASSESSEE HAD FAILED TO DISCHAR GE HIS ONUS IN RESPECT OF CLAIM AS LAWFUL AND VALID AND ALSO FAILED TO PROVE THAT THE LAND SOLD WAS GENUINELY AGRICULTURAL LAND DURING THE ASSESSMENT PROCEEDINGS. ALSO, WHETHER THE LD. CIT(A) WAS RIGHT IN NOT APPRECIATING THE FACT THAT MERELY BY STATING TH AT THE RECEIPTS ARE ON ACCOUNT OF SALE PROCEEDS OF AGRICULTURAL LAND WITHOUT DOCUMENTARY EVIDENCE DOES NOT CONSTITUTE DISCHARGE OF ONUS ON THE PART OF ASSESSEE. THE APPELLANT RESERVES HIS RIGHT TO ADD. AMEND OR ALTER THE GROUNDS OF APPEAL ON OR BEFORE TH E DATE; THE APPEAL IS FINALLY HEARD FOR DISPOSAL. 2. B RIEFLY STATED FACTS OF THE CASE ARE THAT AN MEMORANDUM OF UNDERSTANDING (MOU) RELATING TO TRANSACTIONS OF PURCHASE AND SALE OF SHARES OF M/S SR RESORTS PRIVATE LIMITED WAS SEIZED DURING THE COURSE OF SEARCH ACTION UNDER SECTION 132 OF THE INCOME - TAX A CT, 1 961 (IN SHORT THE A CT ) CARRIED OUT ON 19/02/2009 AT THE PREMISES OF KOUTONS GROUP OF CASES. THE NAME OF THE ASSESSEE WAS APPEARING AS ONE OF THE 4 SELLERS 3 ITA NO. 4856/DEL/2015 MENTIONED IN MOU. IN THE COURSE OF POST SEARCH PROCEEDING, UNDER PR OCEEDING OF SECTION 131 OF THE ACT , THE ASSESSEE MADE A DECLARATION OF UNDISCLOSED INCOME ON ACCOUNT OF THE LONG - TERM CAPITAL GAIN EARNED. CONSEQUENT TO ABOVE INCRIMINATING MATERIAL BELONGING TO THE ASSESSEE SEIZED, A NOTICE UNDER SECTION 153C OF THE A CT WAS ISSUED ON 25/02/2010 CALLIN G FOR RETURN OF INCOME, BUT , NO COMPLIANCE WAS M ADE ON THE PART OF THE ASSESSEE . AGAIN ANOTHER NOTICE UN DER SECTION 142 (1)(II) OF THE A CT WAS ISSU ED AND SERVED UPON THE ASSESSEE . IN COMPLIANCE, THE ASSESSEE FILED A COPY OF THE ACKNOWLEDGEMENT OF THE RETU RN OF INCOME FILED ORIGINALLY DECLARING TOTAL INCOME OF RS.8,90, 760/ - AND SUBMITTED TO TREAT THE SAID RETURN OF INCOME AS RETURN IN RESPO NSE TO NOTICE UNDER SECTION 153C OF THE A CT . THEREAFTER, NOTICE UNDER SECTION 143(2) OF THE A CT WAS ISSUED AND SERVED U PON THE ASSESSEE. AFTER CONSIDERING SUBMISSION OF THE ASSESSEE, THE ASSESSMENT WAS COMPLETED UNDER SECTIO N 143 (3) READ WITH SECTION 153C OF THE A CT MAKING FOLLOWING ADDITIONS: (A) UNEXPLAINED CASH CREDIT IN CAPITAL ACCOUNT OF PROPRIETARY CONCERN RS. 11,26 ,672/ - (B) DISALLOWANCE OF INTEREST ON BORROWED CAPITAL NOT USED FOR THE PURPOSE OF BUSINESS RS. 17,265/ - (C) DISALLOWANCE FOR PERSONAL USE OUT OF TELEPHONE, REPAIR, INTEREST ON CAR LOAN, DEPRECIATION, CONVEYANCE ETC RS. 77,830/ - (D) SALE OF ALLEGED AGRICULTURE LAND HELD AS LONG - TERM CAPITAL GAIN RS. 90,02,000/ - . (E ) UNEXPLAINED INVESTMENT IN PURCHASE OF THE LAND RS. 35,00,918/ - 2.1 BEFORE THE LD. CIT(A), THE ASSESSEE CHALLENGED MERIT OF ADDITIONS AS WELL AS LEGAL GROUNDS. THE LEGALITY OF THE REASSESSMEN T PROCEEDINGS UNDER SECTION 15 3C OF THE ACT, WAS 4 ITA NO. 4856/DEL/2015 CHALLENGED ON TWO GROUNDS. FIRSTLY, ON THE GROUND OF NO SATISFACTION RECORDED BY THE ASSESSING OFFICER FOR INITIATIN G PROCEEDINGS UNDER SECTION 153C OF THE A CT; S ECONDLY, ON THE GROUND THAT NO INC RIMINATING MATERIAL WAS FOUND DURING THE SEARCH . THE LD. CIT(A) DISMISSED THE LEGAL GROUNDS RAISED BY THE ASSESSEE, HOWEVER ON MERIT OF ADDITION, HE ALLOWED THE APPEAL O F THE ASSESSEE. AGGRIEVED, THE R EVENUE IS IN APPEAL BEFORE THE T RIBUNAL RAISING THE GRO UNDS IS REPRODUCED ABOVE. AS PER RECORD, NO APPEAL OR CROSS OBJECTION HAS BEEN FILED BY THE ASSESSEE. 3. BEFORE US , THE LD. COUNS EL OF THE ASSESSEE REFERRED TO R ULE 27 OF THE ITAT R ULES AND RAISED ADDITIONAL GROUND SUBMITTING THAT NO INCRIMINATING DOCUMENT WAS FOUND EXCEPT ONE MOU AND THAT TOO WAS NOT SIGNED BY THE ASSESSEE , THUS , IN ABSENCE OF ANY INCRIMINATING MATERIAL QUA THE ASSESSMENT YEAR UNDER CONSIDERATION, TH E PROCEEDINGS UNDER SECTION 153C OF THE A CT ARE INVALID. THE LD. COUNSEL ALSO SUBMI TTED THAT NO SATISFACTION UNDER SECTION 153C OF THE A CT WAS RECORDED BY THE ASSESSING OFFICER OF THE SEARCH ED PERSON. IN SUPPORT OF THE CONTENTION THE LD. COUNSEL RELIED ON THE DECISION OF THE T RIBUNAL IN THE CASE OF JASJIT SINGH IN IT A NO. 14 36/D EL/2012 , FOR ASSESSMENT YEAR, 2009 - 10. ACCORDING TO THE LEARNE D COUNSEL , SH . JASJIT SINGH IS ONE OF THE CO - SELLER OF MOU O F THE SALE OF THE SHARES OF M/S. SR R ESORT PVT. LTD., ALONG WITH THE ASSESSEE. 4. THE LD. DR OBJECTED RAISING OF THE ADDITIONAL GROUND WITHOU T FILING ANY APPLICATION UNDER R ULE 27 OF THE ITA T R ULES. THE LD. DR SUBMITTED THAT THE ASSESSEE IS REQUIRED TO FOLLOW THE DUE PROCEDURE LAID DOWN IN ITAT RULES. ACCORDINGLY, HE OBJECTED TO RAISING OF ADDITIONAL GROUND BY THE LD. COUNSEL OF THE ASSESSEE. ON THE ISSUE OF NO SATISFACTION NOTE D BY THE ASSESSING OFFICER OF 5 ITA NO. 4856/DEL/2015 THE SEARCHED PERSON, THE LEARNE D DR SUBMITTED THAT IN THE INSTANT CASE , THE A SSESSING OFFICER OF THE SEARCHED PERSON AND OTHER PERSON BEING THE SAME, THE ASSESSING OFFICER WAS NOT REQUIRED TO S EPARATELY RECORD SATISFACTION AS THE A SSESSING OFFICER OF THE SEARCHED PERSON. IN SUPPORT OF THE CONTENTION, THE LD. DR REPLIED ON THE DECISION OF THE HON BLE DELHI HIGH COURT IN THE CASE OF PCIT VS SHEETAL INTERNATIONAL PRIVATE LIMITED (2017 - TIOL - 1355 - HC - DEL - IT), WHEREIN IT IS HELD THAT TH E PROCEEDINGS UNDER SECTION 15 3C OF THE A CT CANNOT BE INVALIDATED, MERELY BECAUSE THE A O OF THE SEARCHED PERSON, WHO WAS ALSO THAT OF THE ASSESSEE, DID NOT RECORD HIS SATI SFACTION NOTE. 5. WE HAVE HEARD THE PARTIES ON THE ISSUE OF ADDITIONAL GRO UND RAISED BY WAY OF REFERRING RULE 27 OF THE ITAT R ULES. WE FIND THAT NO APPLICATION HAS BEEN FILED BY THE ASSESSEE UNDER R ULE 27 OF THE ITA T R ULES FOR RAISING THE LEGAL GROUND CHA LLENGING THE VALIDITY OF TH E PROCEEDINGS UNDER SECTION 15 3C OF THE A CT. IN OUR OPINION, T HE PARTIES TO THE APPEAL ARE REQUIRED TO FOLLOW DUE PROCEDURE LAID DOWN IN THIS REGARD UNDER R ULE 27 OF THE IT AT RULES, WHICH READS AS UNDER: RESPONDENT MAY SUPPORT ORDER ON GROUNDS DECIDED AGAINST HIM. 27. THE RESPONDENT, THOUGH HE MAY NOT HAVE APPEALED, MAY SUPPORT THE ORDER APPEALED AGAINST ON ANY OF THE GROUNDS DECIDED AGAINST HIM. 6. S INCE THE ASSESSEE HAS NOT FILED ANY SUCH APPLICATION, THE APPELLANT , I.E. , THE R EVENUE CANNOT BE PUT TO SURPRISE BY THE RESPONDENT. ACCORDINGLY, THE REQUEST OF LD. COUNSEL OF THE ASSESSEE WAS REJECTED. THEREAFTER , THE PARTIES WERE REQUESTED TO ADDRESS ON THE GROUNDS RAISED IN THE APPEAL BEFORE US. SINCE, WE 6 ITA NO. 4856/DEL/2015 HAVE NOT ADMITTED ADDI TIONAL GROUND RAISED BY THE ASSESSEE, WE ARE NOT ADJUDICATING THE ISSUE RAISED IN THOSE ADDITIONAL GROUNDS. 7. THE GROUND NO. 1 OF THE APPEAL RELATES TO ADDITION OF RS. 11,26,672/ - . THIS AMOUNT WAS FOUND CREDITED IN THE CAPITAL ACCOUNT OF THE PROPRIETARY CO NCERN OF THE ASSESSEE , NAMELY , M/S SANJAY P LASTIC I NDUSTRIES. THE CONTENTION OF THE ASSESSING OFFICER IS THAT THE ASSESSEE FAILED TO EXPLAIN SOURCE OF THE CREDIT OF THIS AMOUNT IN HIS BOOKS OF ACCOUNTS. BEFORE THE LD. CIT(A) , THE ASSESSEE CONTENDED THAT CR EDIT OF THE SAID AMOUNT IN BANK ACCOUNT OF THE PROPRIETARY CONCERN WAS BY WAY OF TRANSFER OF EQUAL AMOUNT FROM THE SAVING BANK ACCOUNT OF THE ASSESSEE. THE SOURCE OF SUCH SUM IN THE SAVING ACCOUNT WAS EXPLAINED BY THE ASSESSEE AS BY WAY OF SALE OF AGRICUL TURAL LAND AND OTHER OFFICE PREMISES AMOUNTING TO RS. 1,15,27,000 / - AND RS. 36,00,000 / - RESPECTIVELY. THE LD. CIT(A) WAS OF THE VIEW THAT THIS AMOUNT WAS SUFFICIENT TO FINANCE THE COMPLETE A DDITION OF RS.11,26, 672/ - IN THE CAPITAL ACCOUNT OF M/S SANJAY PLASTIC INDUSTRIES. THE LD. CIT(A) HELD THAT NO OPPORTUNITY OF BEING HEARD WAS PROVIDED TO THE ASSESSEE AND THUS THE ADDITION MADE WAS HIGHLY UNJUSTIFIED AND ARBITRARY AND TOTALLY AGAINST THE PRINCIPLE OF NATU RAL JUSTIC E AND BAD IN LAW. THE R REVENUE IN ITS GROUNDS HAS CHALLENGED THIS FINDING OF THE LD. CIT(A) THAT ADDITION WAS MADE IN VIOLATION OF PRINCIPLE OF NATURAL JUSTICE. 7.1 BEFORE US, THE LD. DR SUBMITTED THAT BEFORE THE ASSESSING OFFICER NO EXPL ANATION AS TO THE CREDIT OF RS.11,26, 672/ - IN THE CAPITAL ACCOUNT WAS GIVEN BY THE ASSE SSEE. BUT BEFORE THE LD. CIT(A), THE ASSESSEE EXPLAINED FOR THE FIRST TIME THAT MONEY WAS TRANSFERRED FROM THE SAVING ACCOUNT OF THE ASSESSEE, HOWEVER NO OPPORTUNITY WAS PROVIDED BY THE L D. CIT(A) TO THE ASSESSING 7 ITA NO. 4856/DEL/2015 OFFICER TO REBUT OR VERIFY THIS CLAIM OF THE ASSESSEE. ON THE CONTRARY, THE LD. COUNSEL OF THE ASSESSEE RELIED ON ORDER OF THE LD. CIT(A) AND SUBMITTED THAT THE ASSESSEE HAS ALREADY EXPLAINED THE SOURCE OF THE MONEY IN DISPUTE CR EDITED IN THE CAPITAL ACCOUNT OF THE PROPERTY CONCERN AND THUS THE LD. CIT(A) HAS RIGHTLY DELETED ADDITION. 7.2 WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE ISSUE IN DISPUTE IN THIS GROUND IS IN RESPECT OF CREDIT OF R S. 11,26,672/ - IN THE CAPITAL ACCOUNT OF THE PROPRIETARY CONCERN OF THE ASSESSEE. BEFORE THE ASSESSING OFFICER , NO EXPLANATION WAS FILED BY THE ASSESSEE. BUT BEFORE THE LD. CIT(A) , THE ASSESSEE HAS EXPLAINED THE SAME AS TRANSFERRED FROM THE SAVING ACCOUNT O F THE ASSESSEE , WHERE THE MONEY WAS AVAILABLE BY WAY OF SALE OF AGRICULTURAL LAND AND OTHER PREMISES. IN OUR OPINION FOR EXPLAINING THE NATURE AND SOURCE OF THE CREDIT IN THE CAPITAL ACCOUNT, THE ASSESSEE WAS REQUIRED TO SUBSTANTIATE WHETHER AMOUNT EQUIVAL ENT TO OR MORE THAN RS.11,26, 672/ - WAS AVAILABLE IN THE SAVING ACCOUNT AS ON THE DATE OF CREDIT OF THE SAME IN BANK ACCOUNT OF THE PROPRIETARY CONCERN. IF THE BALANCE IS AVAILABLE IN THE SAVING BANK ACCOUNT AND THE MONEY HAS BEEN TRANSFERRED FROM SAVING BAN K ACCOUNT TO THE BANK ACCOUNT OF THE PROPRIETARY CONCERN THAN SOURCE OF THE AMOUNT WILL STAND EXPLAI NED. THE ONLY GRIEVANCE OF THE R EVENUE IS THAT THE MATERIAL RELIED UPON BY THE LD. CIT(A) WAS IN THE NATURE OF THE ADDITIONAL EVIDENCE AND THE ASSESSING OFF ICER SHOULD HAVE BEEN PROVIDED OPPORTUNITY TO REBUT OR VERIFY THE SAME. IN THE IMPUGNED ORDER, THE LD. CIT(A) HAS NOWHERE MENTION ED THAT DOCUMENTARY EVIDENCE SUPPORTING THIS CLAIM OF THE ASSESSEE WERE FORWARDED TO THE ASSESSING OFFICER AND ANY COMMENT WAS PROVIDED BY THE 8 ITA NO. 4856/DEL/2015 ASSESSING OFFICER . IN VIEW OF THE AFORESAID FACTS AND CIRCUMSTANCES, WE FEEL IT APPROPRIATE TO RESTORE THIS ISSUE FOR VERIFICATION BY THE ASSESSING OFFICER AND DECIDE IN ACCORDANCE WITH LAW. THE ASSESSEE IS DIRECTED TO PRODUCE ALL RELEVANT DOCUMENTARY EVIDENCE IN SUPPORT OF ITS CLAIM BEFORE THE ASSESSING OFFICER. IF ON VERIFICATION OF THE SAVI NG BANK ACCOUNT OF THE ASSESSEE , THE CONTENTION OF TRANSFER OF MONEY OF RS.11,26, 672/ - FROM SAVING ACCOUNT TO THE CURRENT ACCOUNT OF PROPRIETARY CONCERN IS VERIFIED, THEN NO ADDITION IS REQUIRED ON THIS ACCOUNT . THE GROUND OF THE APPEAL IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 8. THE GROUND NO. 2 RELATE TO ADDITION OF RS. 35,00,918/ - . DURING ASSESSMENT PROCEEDING, THE ASSESSING OFFICER OBSERVED IN COME OF RS.99,082/ - ON SALE OF THE PROPERTY BY THE ASSESSEE IN THE YEAR UNDER CONSIDERATION. THIS PROPERTY WAS SHOWN TO HAVE BEEN PURCHASED FOR RS.35,00,918/ - . THE ASSESSING OFFICER ASKED ABOUT THE DATE OF THE PURCHASE OF SAID PROPERTY AND SOURCE OF INVES TMENT. ACCORDING TO THE ASSESSING OFFICER , THE ASSESSEE FAILED TO EXPLAIN THE SOURCE OF INVESTMENT AS WELL AS TO FILE DOCUMENTARY EVI DENCE SUPPORTING THE INVESTMENT . BEFORE THE LD. CIT(A) , THE ASSESSEE FILED DETAILS OF INVESTMENT ALONG WITH AN AFFIDAVIT, CLAIMING THAT THE INVESTMENT WAS MADE PARTIALLY THROUGH BANK ACCOUNT OF PROPRIETARY CONCERN , M/S SANJAY PLASTIC INDUSTRIES, WHOSE ACCOUNTS WERE DULY AUDITED AND AUDIT REPORT ALONG WITH THE BALANCE SHEET AND PROFIT AND LOSS ACCOUNT WAS DULY SUBMITT ED BEFORE THE ASSESSING OFFICER . FURTHER, REMAINING PART OF PAYMENT WAS MADE FROM BANK ACCOUNT OF M/S KATYANI C ONSTRUCTION ON BEHALF OF THE ASSESSEE. ACCORDING TO THE ASSESSEE , THE CHEQUE NUMBER AND AMOUNT OF PAYMENT MADE BY THE KATYANI 9 ITA NO. 4856/DEL/2015 C ONSTRUCTION WAS DULY PR OVIDED IN THE AFFIDAVIT SUBMITTED. THE LD. CIT(A) FORWARDED THE EXPLANATION AND THE DOCUMENTS IN THE FORM OF ADDITIONAL EVIDENC ES FILED BY THE ASSESSEE UNDER RULE 46A OF I NCOME T AX RULES, 1962 , TO THE ASSESSING OFFICER. BEFORE THE ASSESSING OFFICER, THE AS SESSEE SUBMITTED THAT ALL THE PAYMENTS WERE MADE THROUGH BANKING CHANNEL, EXPLAINED THE MODE AND SOURCE OF PAYMENT AND LEDGER ACCOUNT OF KATYANI C ONSTRUCTION ALONG WITH AFFIDAVIT OF THE ASSESSEE AS THE RELEVANT DOCUMENTS FOR PURCHASE AND SALE OF THE PRO PERTY WERE NOT TRACEABLE BY THE ASSESSEE DESPITE OF HIS BEST EFFORTS . THE ASSESSING OFFICER IN THE REMAND REPORT DATED 29/02/2012 SUBMITTED THAT RELEVANT DOCUMENTS ARE NOT FURNISHED BY THE ASSESSEE. THE LD. CIT(A) HOWEVER WAS OF THE VIEW THAT ASSESSING OF FICER MISUNDERSTOOD THE EXPLANATION OF THE ASSESSEE. THE LD. CIT(A) IS OF THE VIEW THAT THE ASSESSING OFFICER HAS NOT QUESTIONED THE GENUINENESS OF THE DETAILS AND DOCUMENTS AS PROVIDED DURING THE COURSE OF ASSESSMENT PROCEEDING AND AGAIN AS ADDITIONAL EVI DENCE IN THE APPELLATE PROCEEDINGS. THE LD. CIT(A) RELYING ON THE DECISION OF THE CIT VS. ASHWANI GUPTA 322 ITR 396 (DELHI) AND COMMISSIONER OF CUSTOMS VS. M/S TAYO ENGINEERING INDIA LIMITED , MANU/SC/3625/2006 HELD THAT THE ASSESSEE WAS NOT PROVIDED AN OPP ORTUNITY TO REBUT THE EVIDENCE USED AGAINST IT WHICH IS AGAINST THE PRINCIPLE OF NATURAL JUSTICE. 8.1 BEFORE US , THE LD. DR SUBMITTED THAT BEFORE THE ASSESSING OFFICER, THE ONUS WAS ON THE ASSESSEE TO EXPLAIN THE SOURCE OF INVESTMENT AND THE ASSESSEE FAILED TO FILE ANY EXPLANATION IN SUPPORT OF THE SOURCE OF INVESTMENT. THUS , THE FINDING OF THE LD. CIT(A) THAT ASSESSEE WAS NOT PROVIDED AN OPPORTUNITY TO REBUT THE EVIDENCE USED AGAINST IT, IS TOTALLY BASELESS AND WITHOUT 10 ITA NO. 4856/DEL/2015 APPRECIATION OF THE FACTS AVAILA BLE BEFORE HIM. ACCORDING TO HER, IT IS THE LD. CIT(A) WHO HAS VIOLATED THE PRINCIPLE OF NATURAL JUSTICE AS DESPITE OBJECTION OF THE ASSESSING OFFICER IN REMAND PROCEEDING THAT NO DOCUMENTS WERE MADE AVAILABLE TO HIM FOR HIS COMMENT, HE ALLOWED THE APPEAL IN VIOLATION OF THE PROVISIONS OF RULE 46A OF INCOME TAX R ULES. THE LD. DR SUBMITTED THAT THE DECISION IN THE CASE OF COMMISSIONER OF CUSTOMS VS . TAYO ENGINEERING INDIA LTD. (SUPRA) R ELIED UPON BY THE ASSESSEE, THERE WAS REQUIREMENT OF ISSUE OF SHOW CAUSE NOTICE SPECIFICALLY, WHICH IS NOT SO IN ASSESSMENT PROCEEDING , THUS, THE SAID DECISION CANNO T BE RELIED IN THE INSTANT CASE . ON THE ISSUE OF WHETHER ADDITION COULD B E MADE UNDER SECTION 69 OF THE A CT, THE LEARNE D DR SUBMITTED THAT THE ASSESSEE HAD NOT DISC HARGE D BURDEN AS REGARD TO THE SOURCE FROM WHICH THE INVESTMENT HAS BEEN MADE AND THEREFORE THE ASSESSING OFFICER WAS JUSTIFIED IN TREATING THE INVESTMENT IN PROPERTY AS UNEXPLAINED INVE STMENT UNDER SECTION 69 OF THE A CT. IN SUPPORT OF THE CONTENTION , THE LD. DR RELIED ON NUMBER OF DECISIONS CITED IN THE WRITTEN SUBMISSION FILED INCLUDING DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF R . MALLIKA VS . CIT (2017 ) 79 TAXMANN.COM 117 (SC). THE LEARNE D DR SUBMITTED THAT ASSESSEE MAY BE DIRECTED TO FILE ALL THE EVIDENCE BEFORE THE ASSESSING OFFICER AND THEN ISSUE MAY BE DECIDED IN ACCORDANCE WITH LAW . 8.2 ON THE CONTRARY, THE LEARNED COUNSEL OF THE ASSESSEE FILED A PAPER BOOK CONTAINING PAGES 1 TO 45. HE RELIED ON THE FINDING OF THE LD. CIT(A) ON THE ISSUE IN DISPUTE AND SUBMITTED THAT THE ASSESSING OFFICER IGNORED THE EXPLANATION IN SUPPORT OF MODE AND SOURCE OF PAYMENT ETC . FILED WITH HIM IN REMAND PROCEEDING. THE LEARNED COUNSEL REFERRED TO PAG E 27 OF THE PAPER - BOOK , WHICH IS A 11 ITA NO. 4856/DEL/2015 COPY OF THE AFFIDAVIT FILED BY THE ASSESSEE AND PAGE 28 OF THE PAPER - BOOK , WHICH IS A COPY OF LEDGER ACCOUNT OF PEARLS DEVELOPER L IMITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE, TO WHOM THE SAID PROPERTY WAS SOLD . ACCORD ING TO THE LEARNED COUNSEL PROVISION OF SECTION 69 ARE NOT APPLICABLE IN T HE CASE AS PROPERTY WAS DULY RECORDED IN THE BOOKS OF ACCOUNTS. THE LD. COUNSEL PROVIDED DETAIL OF PAYMENT MADE FOR PURCHASE OF THE PROPERTY. 8.3 WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE ASSESSING OFFICER OBSERVED INCOME (SHORT - TERM CAPITAL GAIN) OF RS.99,082/ - ON SALE OF THE PROPERTY AND ASKED THE ASSESSEE TO EXPLAIN THE SOURCE OF PURCHASE PRICE OF THE PROPERTY. ACCORDING TO THE ASSESSING O FFICER, NO EXPLANATION IN SUPPORT OF INVESTMENT OR PURCHASE PRICE WAS SUBMITTED BEFORE HIM. THE CONTENTION S OF THE ASSESSEE ARE THAT ALL DETAILS WERE FURNISHED BEFORE THE ASSESSING OFFICER AND SALES WAS DULY ACCEPTED BY HIM. BEFORE US , THE LD. COUNSEL HAS PROVIDED DETAILS OF THE PAYMENT FOR THE PURCHASE OF THE PROPERTY IN QUESTION AS UNDER: DETAILS OF PAYMENTS MADE FOR PURCHASE OF PROPERTY: CH NO. 948131 RS.4,65,725/ - CH NO. 948130 RS.4,65,725/ - CH NO 948129 RS.4,00,000/ - CH NO. 948128 RS.4 ,00,000/ - PAYMENT BY KATYANI CONSTRUCTIONS TOTAL RS.35,00,918/ - 8.4 THE ONLY ISSUE IN DISPUTE IS THAT THE ASSESSING OFFICER IS CLAIMING THAT NO DOCUMENT IN SUPPORT OF PURCHASE AGREEMENT OF THE PROPERTY WAS PRODUCED BEFORE HIM IN REMAND PROCEEDING. THE CONTENTION OF THE ASSESSEE THAT SOURCE OF PAYMENT FROM BANK 12 ITA NO. 4856/DEL/2015 ACCOUNT OF T HE PROPRIETARY CONCERN AND FROM KATYANI C ONSTRUCTION WAS DULY EXPLAINED DURING REMAND PROCEEDING. IN OUR OPINION, FOR ASCERTAINING WHAT AMOUNT HAS BEEN INVESTED IN PURCHASE OF THE PROPERTY, FIRST OF ALL, THE PURCHASE DEED OR AGREEMENT IS REQUIRED TO ENSU RE WHAT AMOUNT HAS BEEN MENTIONED IN THAT PURCHASE DEED OR AGREEMENT. ONCE , THE AMOUNT AND MODE OF PAYMENT MENTIONED IN THE PURCHASE DEED IS ASCERTAINED, THEN THE SOURCE OF PAYMENT EXPLAINED BY THE ASSESSEE AS ABOVE CAN ONLY BE VERIFIED. IN THE AFFIDAVIT F ILED BY THE ASSESSEE , WHICH IS AVAILABLE ON PAGE 27 OF THE PAPER BOOK , REGARDING THE SOURCE AND MODE OF THE PAYMENT, THE ASSESSEE SUBMITTED AS UNDER : THAT I HAD SOLD OUT THE PROPERTY FOR RS.3600000.00 OF PREAL INFRASTRUCTURE WHICH COST TOME RS.3500918.00. THE SALES CONSIDERATION HAS BEEN RECD. VIDE CHEQUE NO.446204 OF RS.1600000 & CH. 446203 OF RS.20000000/ - , WHEREAS THE PAYMENT HAS BEEN MADE THROUGH THE M/S SANJAY PLASTIC INDS. VIDE CHEQUE NO.948131, 948130, 948129, 948128 OF RS.465725, 465725, 400000 & 400000 RESPECTIVELY & THE BALANCE PAYMENT OF RS.1731450/ - WAS MADE BY THE KATYANI CONSTRUCTION ON OUR BEHALF IN THE INTER PARTY ADJUSTMENT ACCOUNT. THE RELEVANT DOCUMENTS FOR SALES & PURCHASE HAS BEEN NOT TRACE ABLE BY ME DESPITE OF MY BEST EFFORTS. (EMPHASIS SUPPLIED EXTERNALLY BY US) 8.5 O N PERUSAL OF THE ABOVE SUBMISSION, IT IS CLEAR THAT THE ASSESSEE DID NOT PROVIDE PURCHASE AND SALE AGREEM ENT IN RESPECT OF THIS PROPERTY. THE LEDGER ACCOUNT OF M/S P EARL D EVELOPERS LTD ., ALSO SHOWS TRANSACTION OF RS. 17,69,468/ - AS AGAINST CLAIM OF SALE PROCEED OF RS.36,00,000 / - . IN VIEW OF NO DOCUMENTS PROVIDED IN SUPPORT, THE ASSESSING OFFICER OBJECTED TO ADMISSION OF THE ADDITIONAL EVIDENCES. THE RELEVANT PART OF REMAND R EPORT, WHICH IS 13 ITA NO. 4856/DEL/2015 AVAILABL E ON PAGE 29 OF THE PAPER - BOOK , WHEREIN HE PROVIDED MANY OPPORTUNITIES TO THE ASSESSEE , IS REPRODUCED AS UNDER : 2. IN THIS CONNECTION IT IS SUBMITTED THAT IN THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE FILED THREE COPIES OF SALE DEEDS FOR RS. 2625000/ - , RS. 7032000/ - & RS. 1345000/ - . IN RESPECT OF SALE DEEDS OF RS. 7023000/ - & RS. 1345000/ - PHOTOCOPIES SUBMITTED WERE NOT CONTAINING PHOTOCOPY OF REVERSE SIDE OF THE DOCUMENTS. ONLY PHOTOCOPIES OF OBVERSE WERE SUBMITTED. IT I S FURTHER SUBMITTED THAT NO CERTIFICATE FROM PATWARI AS STATED IN THE APPLICATION FILED BEFORE YOUR GOODSELF WAS SUBMITTED. IT IS PERTINENT TO MENTIONED THAT IN PARA '6 OF THE REPLY DATED 15 - 12 - 7010, IT HAS BEEN SUBMITTED ON BEHALF OF THE ASSESSEE THAT T HE RELEVANT DOCUMENTS FOR SALE & PURCHASE HAS NOT BEEN TRACEABLE BY THE ASSESSEE DESPITE OF HIS BEST EFFORTS.' IN THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE WAS OFFERED VARIOUS OPPORTUNITIES TO SUBMIT INFORMATION CALLED FOR ON 29 - 11 - 2010, 03 - 12 - 2010 AND 09 - 12 - 2010 BUT NO SUPPORTING DOCUMENTS WERE FURNISHED. IN VIEW OF THE ABOVE THE VERSION OF THE ASSESSEE IS NOT CORRECT THAT THE ORDER PAST BY THIS OFFICE WAS AGAINST FACTS. 3. IN VIEW OF THE ABOVE ADDITIONAL EVIDENCE SUBMITTED BY THE ASSES SEE MAY NOT BE ADMITTED IN THE COURSE OF APPELLATE PROCEEDINGS. 8.6 IN OUR OPINION, THE LD. ASSESSING OFFICER WAS JUSTIFIED IN OBJECTING IN THE REMAND REPORT THAT NO DOCUMENT IN SUPPORT OF PURCHASE AND SALE OF THE PROPERTY WERE PROVIDED TO HIM. THE LD. CIT(A) AFTER ADMITTING THE ADDITIONAL EVIDENCES, WAS REQUIRED TO PROVIDE SUFFICIENT OPPORTUNITY TO THE ASSESSING OFFICER TO REBUT THE ADDITIONAL EVIDENCES. THE LD. CIT(A) HAS FAILED T O FOLLOW THE PROVISIONS OF THE RULE 46A(3) OF THE INCOME T AX R ULES, WHIC H READS AS UNDER: [ PRODUCTION OF ADDITIONAL EVIDENCE BEFORE THE [ DEPUTY COMMISSIONER (APPEALS) ] [ AND COMMISSIONER (APPEALS) ] . 46A. (1) . 14 ITA NO. 4856/DEL/2015 (2) . (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 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 WITNESS IN REBUTTAL OF THE ADDITIONAL EVIDENCE PRODUCED BY THE APPELLANT. 8.7 THE HON BLE DELHI HIGH COURT IN THE CASE OF CIT VS MANISH BUILDWELL PRIVATE LIMITED (245 CTR 397) (D ELHI) HAS ALSO HELD THAT AFTER AD MITTING THE ADDITIONAL EVIDENCES BY THE LD. CIT(A), THE ASSESSING OFFICER SHOULD BE PROVIDED OPPORTUNITY TO REBUT THOSE ADDITIONAL EVIDENCES. 8.8 IN VIEW OF THE ABOVE, WE ARE OF THE OPINION THAT THE LD. CIT(A) HAS ALLOWED THE ISSUE IN DISPUTE WITHOUT FOLLO WING THE PROVISIONS OF RULE 4 6A OF THE RULE AND , THEREFORE , WE FEEL IT APPROPRIATE TO RESTORE THE ISSUE - IN - DISPUTE TO THE FILE OF THE ASSESSING O FFICER FOR DECIDING THE ISSUE A FRESH, WITH THE DIRECTION TO THE ASSESSEE TO PRODUCE ALL THE DOCUMENTARY EVIDENCE RELIED IN SUPPORT OF ITS CLAIM , BEFORE THE ASSESSING OFFICER. TH OUGH THE ISSUE OF DEALING WITH R U LE 4 6A SHOULD HAVE BEEN IN NORMAL COURSE RESTORED TO THE LD. CIT(A), BUT WE HAVE ALREADY RESTORE D THE ISSUE IN DISPUTE INVOLVING G ROUND NO. 1 TO THE A SSESSING O FFICER, THUS TO AVOID PROCEEDINGS AT MULTIPLE LEVEL, WE HAVE RESTORED THIS ISSUE ALSO TO THE FILE OF THE ASSESSING OFFICER. THE GROUND OF THE APPEAL IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 9. THE GROUND NO. 3 RELATES TO DISALLOWANCE OF RS. 17,265 / - OUT OF THE INTEREST PAID ON BANK BORROWINGS, WHICH ACCORDING TO THE ASSESSING OFFICER WERE NOT USED FOR THE PURPOSE OF THE BUSINESS. THE ASSESSING OFFICER NOTICED THA T INTEREST - FREE ADVANCES OF 15 ITA NO. 4856/DEL/2015 RS. 41,19,468 / - I.E. WHOLE OF THE MONEY BORROWED FR OM BANK WERE ADVA NCED TO PARTIES INCLUDING M/S R ELIANCE LIC LTD . AND M/S KATYANI C ONSTRUCTION C OMPANY AND ASSESSEE FAILED TO PROVE THAT THE FUNDS BORROWED FROM THE BANKS HAD BEEN UTILIZED FOR BUSINESS PURPOSES. BEFORE THE LD. CIT(A) , THE ASSESSEE REFERRED TO THE BALANCE SHEET AND SUBMITTED THAT HE HAS TAKEN CC (CASH CREDIT) LIMIT FROM THE BANK AND LOAN WAS PROVIDED AGAINST THE SECURITY OF THE STOCK OR DEBTORS. ACCORDING TO THE AS SESSEE , THERE WAS A STOCK OF RS.4,59, 663/ - AND DEBTORS OF RS.39,61, 009/ - AND THE ASSESSEE ALSO BROUGHT IN A DDITIONAL PERSONAL FUNDS OF RS.11,26, 672/ - IN THE CAPITAL ACCOUNT, WHICH WAS USED TO FINANCE THE ADVANCES GIVEN FOR THE PURPOSE OF THE BUSINESS. IN VIEW OF THE OBSERVATION THE LD. CIT(A) HELD THE ASSESSING OFFICER RESPONSIBLE FOR MAKING ADDITION WITHOUT PROVIDING ANY OPPORTUNITY TO THE ASSESSEE AND IN VIOLATION OF THE PRINCIPLE OF NATURAL JUSTICE. THE LD. CIT(A) HELD THAT BORROWED MONEY WAS USED FOR BUSINESS PURPOSES AND DELETED THE ADDITION. 9.1 BEFORE US , THE LD. DR SUBMITTED THAT NO EXPLANATION OR EVIDENCE TO SUPPORT WAS SUBMITTED EITHER BEFORE THE ASSESSING OFFICER OR BEFORE THE LD. CI T(A) THAT ADVANCES MADE TO M/S R E LIANCE LIC LTD AND M/S KATYANI C ONSTRUCTION C OMPANY WAS FOR THE PURPOSE OF THE BUSINESS. 9.2 THE LEARNED COUNSEL OF THE ASSESSEE, ON THE OTHER HAND REFERRED TO PAGE 32 OF THE PAPER BOOK , WHICH IS A COPY OF THE BALANCE SHEET AS ON 31/03/2008 AND SUBMITTED THAT CLOSING STOCK OF RS. 4, 59,663/ - AND SUNDRY DEBTORS OF RS. 39,61,009/ - ARE APPEARING IN THE BALANCE SHEE T, WHICH INDICATE THAT FUND BORROWED FROM THE BANK WERE UTILIZED FOR THE PURPOSE OF THE BUSINESS. 16 ITA NO. 4856/DEL/2015 9.3 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE ISSUE IN DISPUTE IS WHETHER THE FUND BORROWED WAS UTILIZED FOR THE P URPOSE OF THE BUSINESS. IF THE SAME IS UTILIZED FOR THE PURPOSE OF THE BUSINESS, THEN THE INTEREST AGAINST THE SAID BORROWING IS ALLOWED AND , IF THE SAID FUNDS HAVE BEEN UTILIZED FOR PURPOSES OTHER THAN BUSINESS, THEN INTEREST ON SUCH BORROWED FUND CANNOT BE ALLOWED AGAINS T BUSINESS INCOME. ON PAGE 35 OF THE PAPER - BOOK , THE LIST OF SUNDRY DEBTORS AMOUNTING TO RS. 39,61,009/ - IS APPEARING . THE SA I D LIST INCLUDE R ELIANCE LIC LTD . AND KATYANI CONSTRUCTION C OMPANY. THE ASSESSING OFFICER HAS QUESTIONED PARTICULAR LY THE AMOUNT OF RS. 31,00,000/ - ADVANCED TO RELIANCE LIC COMPANY L IMITED AND RS.10,19,468/ - ADVANCED TO KATYANI C ONSTRUCTION. DESPITE THE SPECIFIC QUERIES RAISED, THE ASSESSEE HAS NOT SUBMITTED AS FOR WHAT PURPOSES THESE ADVANCES WERE MADE, WHETHER IT WAS ADVANCE D FOR PURCHASE OR WHETHER ANY SALES WERE MADE TO THESE PARTIES AND PAYMENT FROM THEM WAS DUE. DURING THE FIRST APPELLATE PR OCEEDING ALSO, NO SUCH DETAILS WA RE PROVIDED. EVEN BEFORE US, ALSO EXCEPT THE CLAIM THAT BORROWED FUNDS WERE UTILIZED FOR THE PURPOSE OF THE BUSINESS, NO DETAIL ABOUT THE MONEY ADVANCED TO R ELIANCE LIC COMPANY LIMITED AND M/S KATYANI C ONSTRUCTION COMPANY WERE PROVIDED. ON THE PERUSAL OF THE BALANCE SHEET AVAILABLE ON PAGE 32 OF THE PAPER BOOK , WE FIND THAT ASSESSEE HAS T AKEN SECURED LOAN FROM PUNJAB AND SINDH B ANK, T HE CLOSING BALANCE OF WHICH IS RS. 4,51,255/ - AND THERE ARE UNSECURED LOAN OF RS. 15,72,100/ - . AS IT IS NOT CLEAR FROM THE SUBMISSION FILED BY THE ASSESSEE BEFORE THE LOWER AUTHORITIES OR BEFORE US A S HOW THE LO AN FUND RECEIVED FROM BANK AND UNSECURED LOAN WAS UTILIZED FOR THE PURPOSE OF THE BUSINESS. IN 17 ITA NO. 4856/DEL/2015 THE BALANCE SHEET, THERE IS NO COMPARISON OF THE EARLIER YEARS, WHICH COULD INDICATE THE INVESTMENT MADE DURING THE YEAR OR MONEY ADVANCED DURING THE YEAR. IN VI EW OF THE ABOVE FACTS AND CIRCUMSTANCES, WE FEEL IT APPROPRIATE TO RESTORE THIS ISSUE ALSO TO THE FILE OF THE ASSESSING OFFICER FOR COMPLETE VERIFICATION OF WHETHER THE LOANS HAVE BEEN UTILIZED FOR THE PURPOSE OF THE BUSIN ESS OR HAVE BEEN DIVERTED TO NON - B USINESS PURPOSES. THE ASSESSEE IS DIRECTED TO PROVIDE ALL DETAILS OF THE LOAN SANCTION LETTER, DETAIL OF DISBURSEMENT OF THE LOAN AND ULTIMATE USE TOWARDS STOCK OR DEBTORS ALONG WITH DOCUMENTARY EVIDENCES. THE ASSESSEE SHALL BE AFFORDED ADEQUATE OPPORTUNIT Y OF BEING HEARD. ACCORDINGLY , THE GROUND OF THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 9.4 THE GROUND NO. 4 RELATES TO DISALLOWANCE OF RS. 77,830/ - AT THE RATE OF 25% OUT OF THE EXPENSES CLAIMED ON TELEPHONE, VEHICLE REPAIR, INTEREST AND CAR LOAN, D EPRECIATION ON CAR AND CONVEYANCE. ACCORDING TO THE ASSESSING OFFICER , PERSONAL USE UNDER THESE HEAD CANNOT BE RULED OUT. THE LD. CIT(A) DELETED THE ADDITION MAINLY ON THE GROUND THAT DISALLOWANCE WAS MADE ON AD - HOC BASIS AND ASSESSING OFFICER HAS NOT POIN TED OUT ANY DEFECT THAT THE SAID EXPENSES ARE OF NO COMMERCIAL EXPEDIENCY. 9.5 WE HAVE HEARD BOTH THE P ARTIES ON THE ISSUE IN DISPUTE. ACCORDING TO THE LD. DR , THE ASSESSEE IS AN INDIVIDUAL AND RUNNING A PROPRIETARY BUSINESS AND IN SUCH A SITUATION PERSON AL USE OF TELEPHONE, CAR ETC CANNOT BE RULED OUT UNTIL AND UNLESS THE ASSESSEE PROVES OTHERWISE BY WAY OF CALL DETAILS AND LOGBOOK OF THE CAR MAINTAINED ON DAY TO DAY BASIS, WITH THE ASSESSEE HAS NOT DONE SO. ACCORDING TO THE ASSESSEE , THE DISALLOWANCE AT THE RATE OF 25% OF THE TOTAL EXPENSES, IS WITHOUT ANY BASIS AND ON THE BASIS 18 ITA NO. 4856/DEL/2015 OF SURMISES AND CONJECTURES. WE FIND THAT THE ASSESSEE HAS NOT ESTABLISHED EITHER FROM THE CALL DETAILS OF THE TELEPHONE OR MOBILE THAT ALL THE EXPENSES INCURRED ON TELEPHONE ARE FOR THE BUSINESS PURPOSE. SIMILARLY, THE ASSESSEE HAS NOT PRODUCE D ANY LOGBOOK OF THE CAR TO DEMONSTRATE THAT IT WAS USED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF THE BUSINESS AND NO PERSONAL USE WAS TAKEN. IN CASE OF SUCH DISALLOWANCE ON ACCOUNT OF PERSO NAL USE, THE ONUS IS ON THE ASSESSEE TO PRODUCE THE DESIRED DOCUMENTS OF DETAILS OF USE OF THE VEHICLES OR TELEPHONE , MAINTAINED IN DAY - TO - DAY COURSE, OTHERWISE ONLY COURSE LEFT WOULD BE TO ESTIMATE THE DISALLOWANCE ON THE BASIS OF A SMALL SAMPLE FOR A WEE K OR A MONTH AND THEN EXTRAPOLATE THE SAME FOR THE ENTIRE YEAR. SINCE WE HAVE ALREADY RESTORED OTHER GROUNDS OF THE APPEAL TO THE ASSESSING OFFICER FOR DECIDING A FRESH, WE FEEL IT APPROPRIATE TO RESTORE THIS ISSUE ALSO TO THE FILE OF THE ASSESSING OFFICER FOR ASCERTAINING NON - BUSINESS PURPOSES USE OF THE TELEPHONE OR CAR OR CONVEYANCE ON THE BASIS OF DOCUMENTARY EVIDENCES. THE GROUND OF THE APPEAL IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 10. THE NEXT G ROUND RELATE TO ADDITION OF RS. 90,02,000/ - MADE BY THE ASSESSING OFFICER TREATING THE SALE OF AGRICULTURAL LAND RESULTING INTO LONG - TERM CAPITAL GAIN. THE ASSESSING OFFICER O BSERVED SALE OF PROPERTY OF RS.1,15,27,000/ - WHICH WAS ACQUIRED BY THE ASSESSEE AT RS.25, 25,000/ - RESU LTING INTO CAPITAL GAINS OF RS. 90, 02, 000/ - , WHICH THE ASSESSEE CLAIMED AS EXEMPT BEING SALE CONSIDERATION RECEIVED ON SALE OF AGRICULTURAL LAND. THE ASSESSING OFFICER HAS NOTED THAT SALE DEEDS AMOUNTING TO RS. 1 , 10, 02,000/ - (RS. 13,45,000 + 70,32,000 + 26,25,000) WERE ONLY PRODUCED. A CCORDING TO THE ASSESSING OFFICER NO DOCUMENTARY EVIDENCE SUPPORTING THAT THE LAND WAS SITUATED BEYOND A DISTANCE OF 8 KM S 19 ITA NO. 4856/DEL/2015 OF MUNICIPAL LIMIT LIMIT NOR ANY AGRICULTURAL INCOME FROM THE SAID LAND WAS SHOWN IN EARLIER YEARS IN THE RETURN OF INCOME. THUS , HE TREATED THE AMOUNT OF RS. 90,02,000/ - AS LONG - TERM CAPITAL GAIN LIABLE TO BE TAXED. BEFORE THE LD. CIT(A), THE ASSESSEE EXPLAINED THAT HE HAS TAKEN ACTUAL SALE CONSIDERATION OR THE CIRCLE RATE, WHICHEVER IS HIGHER FOR THE PURPOSE OF COMPUTING CAPITAL GAINS AND THUS THERE IS A DIFFERENCE BETWEEN THE SALE CONSIDERATION FOR THE PURPOSE OF COMPUTING CAPITAL GAINS AND ACTUAL SALE CONSIDERATION RECEIVED. ON THE ISSUE OF THE CLAIM OF AGRICULTURAL LAND, THE ASSESSEE SUBMITTED THAT SALE DEED AND CERTIFICATE OF THE PA TWARI CERTIFYING THAT THE SAID LAND WAS AGRICULTURAL LAND AND SITUATED OUTSIDE 8 KM OF THE MUNICIPAL LIMIT WERE FILED. THE LD. CIT(A) ALSO OBSERVED THAT AGRICULTURAL INCOME WAS SHOWN IN THE RETURN OF INCOME FILED IN RESPO NSE TO NOTICE UNDER SECTION 15 3C OF THE A CT AND TAKEN INTO ACCOUNT FOR THE RATE PURPOSES. IN REMAND PROCEEDING, THE ASSESSING OFFICER SUBMITTED THAT PHOTO COPY OF REVERSE SIDE OF THE SALE DEED WAS NOT PRODUCED BEFORE HIM. THE LD. CIT( A) ON THE BASIS OF THE PATWARI C ERTIFICATE AND THE AGRICULTURAL INCOME REPORTED IN RETURN FILED IN RESPONSE TO NOTICE UNDER SECTION 150 3C, HELD THE SALE OF LAND AS AGRICULTUR AL INCOME UNDER SECTION 2(1A)(C ) OF THE A CT. 10.1 BEFORE US, THE LEARNE D DR SUBMITTED THAT IN THE ORIGINAL RETURN OF INCOME FILED N O AGRICULTURAL INCOME WAS REPORTED AND MERELY MENTIONING IN THE RETURN FILED IN RESPONSE TO THE NOTICE UNDER SECTION 15 3C , THE ASSESSEE CANNOT JUSTIFY THE AGRICULTURAL INCOME IN HIS HANDS . THE LD. DR ALSO SUBMITTED THAT CERTIFICATE OF THE PATWARI AVAILABLE ON PAGE 43 TO 45 OF THE PAPER - BOOK , DOES NOT BEAR ANY SEAL OF THE PATWARI OR NAME OF THE PERSON WHO SIGNED . THE LEARNED DR FURTHER SUBMITTED THAT LD. CIT(A) HIMSELF SHOULD 20 ITA NO. 4856/DEL/2015 HAVE CARRIED OUT INQUIRIES ON THE ISSUE RATHER THAN BLINDLY ADMITTING THE CLAIM OF THE ASSESSEE WITHOUT VERIFYING . ACCORDING TO THE LD. DR , AS THERE BEING VIOLATION OF PROVISIONS OF RULE 46A OF I NCOME T AX R ULES , THE ISSUE ALSO NEED S TO BE RESTORE D TO THE FILE OF THE A SSESSING OFFICER FOR DECIDING A FRESH. 10.2 ON THE CONTRARY , THE LEARNE D COUNSEL RELIED ON THE FINDING OF THE LD. CIT(A) AND SUBMITTED THAT ALL THE DOCUMENTS WERE DULY FILED BEFORE THE ASSESSING OFFICER IN ASSESSMENT PROCEEDING AS WELL AS REMAND PROCEEDING AND THEREFORE THE LD. CIT(A) IS JUSTIFIED IN DELETING THE ADDITION. 10.3 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE ISSUE IN DISPUTE IN THE GROUND RAISED IS WHETHER THE LAND WHICH WAS SOLD BY THE ASSESSEE, WAS AGRICULTURAL LAND IN TERMS OF THE PROVISIONS OF THE ACT. THE ASSESSEE WAS REQUIRED TO PROVE THAT LAND WAS SITUATED BEYOND 8 KM S . FROM THE MUNICIPAL LIMIT AND AGRICULTURAL ACTIVITY WAS CARRIED OUT BY THE ASSESSEE ON THE SAID LAND. BEFORE US , THE ASSESSEE HAS REFERRED PAGES 43 TO 45 OF THE PAPER BOOK , WHICH ARE HANDWRI TTEN CERTIFICATE ISSUED BY THE PATWARI ( LAND R EVENUE A UTHORITY). WE AGREE WITH THE OBSERVATION OF THE LEARNE D DR THAT T HE HANDWRITTEN CERTIFICATE IS NOT BEARING ANY SEAL OR NAME OF THE PATWARI OR THE PERSON WHO HAS ISSUED THE CERTIFICATE. THE LEARNE D COUNS EL HAS ALSO NOT PRODUCE D THE ORIGINAL RETURN OF INCOME FILED FOR THE EARLIER YEARS TO ESTABLISH THAT AGRICULTURAL INCOME WAS OFFERED FOR RATE PURPOSES IN THOSE RETURNS . THE ASSESSING OFFICER OBJECTED ADMITTING OF THE ADDITIONAL EVIDENCES, HOWEVER , THE LD. CIT(A) ADMITTED THE EVIDENCES AFTER G IVING HIS REASONING . BUT THE LD. CIT(A) WAS REQU IRED TO MAKE COMPLIANCE OF THE R ULE 46A(3) OF THE I NCOME TAX R ULES, 1962 AND PROVIDE OPPORTUNITY TO THE 21 ITA NO. 4856/DEL/2015 ASSESSING OFFICER TO REBUT THOSE EVIDENCES AS HELD BY THE HON BLE D ELHI HIGH COURT IN THE CASE OF MANIS H BUILDWELL PRIVATE L IMITED (SUPRA). IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, WE FEEL IT APPROPRIATE TO RESTORE THIS ISSUE TO THE FILE OF A SSESSING OFFICER FOR DECIDING A FRESH, WITH THE DIRECTION TO THE ASSESSEE TO PRODUCE ALL THE NECESSARY DOCUMENTARY EVIDENCE IN SUPPORT OF ITS CLAIM. THE ASSESSEE SHALL BE AFFORDED ADEQUATE OPPORTUNITY OF BEING HEARD. THE GROUND OF THE APPEAL IS , ACCORDINGLY , ALLO WED FOR STATISTICAL PURPOSES. 11. IN THE RESULT, THE APPEAL OF THE R EVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUN CED IN THE OPEN COURT ON 25 TH MARCH, 201 9 . SD/ - SD/ - [ BHAVNESH SAINI ] [O.P. KANT] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 25 TH MARCH , 2019 . RK / - [D.T.D.S] COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR ASST. REGISTRAR, ITAT, NEW DELHI