ITO, New Delhi V. M/s. Nidhi Builders (I) Pvt. Ltd., New Delhi

ITA 5094/DEL/2011

• Counselvise Citation: 509420114 RSA 2011
• Duration Of Justice: 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 28-05-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 15-11-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RA J TANDON
• Assessee Lawyers: KRISHAN KANT
• Keywords: Source of fund; Additional evidence
• Section: 43B; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E : NEW DELHI) SHRI RAJPAL YADAV, JUDICIAL MEMBER AND BEFORE SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.5094/DEL./2011 (ASSESSMENT YEAR : 2008-09) ITO, WARD 13 (2), VS. M/S. NIDHI BUILDERS (I) PV T. LTD., NEW DELHI. B 2/1-B, SAFDARJANG ENCLAVE, MAIN AFRICA AVENUE ROAD, NEW DELHI 110 029. (PAN : AABCN4091J) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI KRISHAN KANT, ADVOCATE REVENUE BY : SHRI RAJ TANDON, CIT DR ORDER PER B.C. MEENA, ACCOUNTANT MEMBER : THIS APPEAL FILED BY THE REVENUE EMANATES FROM THE ORDER OF CIT (APPEALS)-XVI, NEW DELHI DATED 21.07.2011 FOR THE A SSESSMENT YEAR 2008- 09. THE GROUNDS OF APPEAL TAKEN BY THE REVENUE AR E AS UNDER :- 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS AL LOWING RELIEF OF RS.13,82,914/- TO THE ASSESSEE U/S 43B WI THOUT APPRECIATING THE FACTS OF THE CASE THAT THE ASSESSE E FAILED TO ESTABLISH EVIDENCE BEFORE THE ASSESSING OFFICER. 2. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS DEL ETING ADDITION OF RS.2,62,81,720/- BY ACCEPTING ADDITIONA L EVIDENCE FROM SYNDICTE BANK WITHOUT AFFORDING ASSESSING OFFI CER OPPORTUNITY TO EXAMINE. ITA NO.5094/DEL./2011 2 3. THE LD. CIT(A) HAS ERRED IN ALLOWING RELIEF TO T HE ASSESSEE BY ACCEPTING ADDITIONAL EVIDENCE FURNISHED BY GM, S YNDICATE BANK WITHOUT GIVING ANY OPPORTUNITY TO THE ASSESSIN G OFFICER EXAMINE THE SAME. 4. THE APPELLANT CRAVES TO BE ALLOWED TO ADD ANY FRESH GROUNDS OF APPEAL AND/OR DELETE OR AMEND ANY OF THE GROUNDS OF APPEAL. 2. THE ASSESSEE IS A CIVIL CONTRACTOR AND DURING TH E YEAR, TWO MAJOR PROJECTS, I.E. R.R. HOSPITAL PROJECT AND KABUL LINE PROJECT WERE TAKEN UP BY THE ASSESSEE. 3. AT THE TIME OF THE HEARING, LD. DR SUBMITTED THA T THERE IS A VIOLATION OF I.T. RULE 46A IN RESPECT OF DELETING BOTH THE ADDIT IONS OF RS.13,82,914/- U/S 43B AND RS.2,62,81,720/- ON ACCOUNT OF INTEREST. T HE LD. DR SUBMITTED THAT THE CIT (A) HAS GRANTED THE RELIEF TO THE ASSESSEE WITHOUT GIVING OPPORTUNITY TO THE ASSESSING OFFICER TO REBUT ON THE ADDITIONAL EVIDENCE SUBMITTED BEFORE HIM. LD. DR ALSO RELIED ON THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. MANISH BUILDWELL PVT. LTD. REPORTED IN 204 TAXMAN 106 (DELHI). 4. ON THE OTHER HAND, THE LD. AR OBJECTED TO IT AND PLEADED THAT THE CIT (A) HAS EXERCISED THE POWERS CONFERRED U/S 250 (4) OF THE INCOME-TAX ACT, 1961 BY ISSUING SUMMONS TO THE BANK. FURTHER, THE ASSESSEE HAS ONLY SUBMITTED COPIES OF THE BANK STATEMENT AND THE CERT IFICATE OF THE BANK. THEREFORE, THESE SHOULD NOT BE TREATED AS ADDITIONA L EVIDENCE. ITA NO.5094/DEL./2011 3 5. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE. AFTE R HEARING BOTH THE SIDES IN DETAIL, WE FIND THAT ASSESSEE HAD SUBMITTED VARI OUS ADDITIONAL EVIDENCES BEFORE CIT (A). CIT (A) HAD NOT GIVEN ANY FINDINGS UNDER WHICH EXCEPTION OF RULE 46A THESE EVIDENCES WERE ADMITTED. IN OUR CONSIDERED VIEW, THERE IS A CLEAR VIOLATION OF RULE 46A. FURTHER ASSESSING O FFICER HAS NOT BEEN PROVIDED AN OPPORTUNITY WITH REGARD TO THESE EVIDEN CES. HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. MA NISH BUILD WELL (P.) LTD, CITED SUPRA, HAS HELD AS UNDER :- SINCE THE COMMISSIONER (APPEALS) HIMSELF REFERS TO RULE 46A AND HAS ALSO ADMITTED THAT THE CONFIRMATION LETTERS ADDUCED BY THE ASSESSEE BEFORE HIM WERE TECHNICALLY FRESH EVID ENCE, IT IS NOT POSSIBLE TO ACCEPT THE PLEA OF THE ASSESSEE THAT TH E COMMISSIONER (APPEALS), IN EXAMINING THE CONFIRMATION LETTERS, W AS EXERCISING HIS INDEPENDENT POWERS OF ENQUIRY UNDER SUB-SECTION (4) OF SECTION 250. IT IS TRUE THAT THE COMMISSIONER (APPE ALS), AS FIRST APPELLATE AUTHORITY, HAS CO-TERMINOUS POWERS OVER T HE SOURCES OF INCOME CONSTITUTING THE SUBJECT-MATTER OF THE ASSES SMENT, EXCEPT THE POWER TO TACKLE NEW SOURCES OF INCOME NOT CONSI DERED BY THE ASSESSING OFFICER, AND CAN DO WHAT THE ASSESSING OF FICER CAN DO AND CAN DIRECT THE ASSESSING OFFICER TO DO WHAT HE HAS FAILED TO DO, BUT IN THE INSTANT CASE, THE COMMISSIONER (APPE ALS) DID NOT EXERCISE THIS RIGHT. THIS POWER, WHICH IS RECOGNIZE D IN SUB- SECTION (4) OF SECTION 250, HAS TO BE EXERCISED BY THE COMMISSIONER (APPEALS) AND THERE SHOULD BE MATERIAL ON RECORD TO SHOW THAT HE, WHILE DISPOSING OF THE APPEAL, HAD DIRECTED FURTHER ENQUIRY AND CALLED FOR THE CONFIRMATION LET TERS FROM THE ASSESSEE EVEN IN RESPECT OF RECEIPT OF MONIES FROM CUSTOMERS BY WAY OF CHEQUES. RULE 46A IS A PROVISION WHICH IS IN VOKED, ON THE OTHER HAND, BY THE ASSESSEE WHO IS IN AN APPEAL BEFORE THE COMMISSIONER (APPEALS). ONCE THE ASSESSEE INVOKES R ULE 46A AND PRAYS FOR ADMISSION OF ADDITIONAL EVIDENCE BEFO RE THE COMMISSIONER (APPEALS), THEN THE PROCEDURE PRESCRIB ED IN THE SAID RULE HAS TO BE SCRUPULOUSLY FOLLOWED. THE FACT THAT SUB- SECTION (4) OF SECTION 250 CONFERS POWERS ON THE CO MMISSIONER (APPEALS) TO CONDUCT AN ENQUIRY AS HE THINKS FIT, W HILE DISPOSING OF THE APPEAL, CANNOT BE RELIED UPON TO CONTEND THA T THE ITA NO.5094/DEL./2011 4 PROCEDURAL REQUIREMENTS OF RULE 46A NEED NOT BE COM PLIED WITH. IF SUCH A PLEA OF THE ASSESSEE IS ACCEPTED, IT WOUL D REDUCE RULE 46A TO A DEAD LETTER BECAUSE IT WOULD THEN BE OPEN TO EVERY ASSESSEE TO FURNISH ADDITIONAL EVIDENCE BEFORE THE COMMISSIONER (APPEALS) AND, THEREAFTER, CONTEND THAT THE EVIDENC E SHOULD BE ACCEPTED AND TAKEN ON RECORD BY THE COMMISSIONER (A PPEALS) BY VIRTUE OF HIS POWERS OF ENQUIRY UNDER SUB-SECTION ( 4) OF SECTION 250. THIS WOULD MEAN IN TURN THAT THE REQUIREMENT O F RECORDING REASONS FOR ADMITTING THE ADDITIONAL EVIDENCE, THE REQUIREMENT OF EXAMINING WHETHER THE CONDITIONS FOR ADMITTING THE ADDITIONAL EVIDENCE ARE SATISFIED, THE REQUIREMENT THAT THE AS SESSING OFFICER SHOULD BE ALLOWED A REASONABLE OPPORTUNITY OF EXAMI NING THE EVIDENCE, ETC., CAN BE THROWN TO THE WINDS, A POSIT ION WHICH IS WHOLLY UNACCEPTABLE AND MAY RESULT IN UNACCEPTABLE AND UNJUST CONSEQUENCES. THE FUNDAMENTAL RULE WHICH IS VALID I N ALL BRANCHES OF LAW, INCLUDING INCOME-TAX LAW, IS THAT THE ASSESSEE SHOULD ADDUCE THE ENTIRE EVIDENCE IN HIS POSSESSION AT THE EARLIEST POINT OF TIME. THIS ENSURES FULL, FAIR AND DETAILED ENQUIRY AND VERIFICATION. IT IS FOR THE AFORESAID REASON THAT RULE 46A STARTS IN A NEGATIVE MANNER BY SAYING THAT AN APPELLANT BEFORE THE COMMI SSIONER (APPEALS) SHALL NOT BE ENTITLED TO PRODUCE BEFORE H IM ANY EVIDENCE, WHETHER ORAL OR DOCUMENTARY, OTHER THAN T HE EVIDENCE ADDUCED BY HIM BEFORE THE ASSESSING OFFICER. AFTER MAKING SUCH A GENERAL STATEMENT, EXCEPTIONS HAVE BEEN CARVED OU T THAT IN CERTAIN CIRCUMSTANCES IT WOULD BE OPEN TO THE COMMI SSIONER (APPEALS) TO ADMIT ADDITIONAL EVIDENCE. THEREFORE, ADDITIONAL EVIDENCE CAN BE PRODUCED AT THE FIRST APPELLATE STA GE ONLY WHEN CONDITIONS STIPULATED IN THE RULE 46A ARE SATISFIED AND A FINDING IS RECORDED. THE CONDITIONS PRESCRIBED IN RULE 46A MUST BE SHOWN TO EXIST BEFORE ADDITIONAL EVIDENCE IS ADMITT ED AND EVERY PROCEDURAL REQUIREMENT MENTIONED IN THE RULE HAS TO BE STRICTLY COMPLIED WITH SO THAT THE RULE IS MEANINGFULLY EXER CISED AND NOT EXERCISED IN A ROUTINE OR CURSORY MANNER. A DISTINC TION SHOULD BE RECOGNIZED AND MAINTAINED BETWEEN A CASE WHERE THE ASSESSEE INVOKES RULE 46A TO ADDUCE ADDITIONAL EVIDENCE BEFO RE THE COMMISSIONER (APPEALS) AND A CASE WHERE THE COMMISS IONER (APPEALS), WITHOUT BEING PROMPTED BY THE ASSESSEE, WHILE DEALING WITH THE APPEAL, CONSIDERS IT FIT TO CAUSE OR MAKE A FURTHER ENQUIRY BY VIRTUE OF THE POWERS VESTED IN H IM UNDER SUB- SECTION (4) OF SECTION 250. IT IS ONLY WHEN HE EXER CISES HIS ITA NO.5094/DEL./2011 5 STATUTORY SUO MOTO POWER UNDER THE ABOVE SUB-SECTIO N, THAT THE REQUIREMENTS OF RULE 46A NEED NOT BE FOLLOWED. ON T HE OTHER HAND, WHENEVER THE ASSESSEE, WHO IS IN APPEAL BEFOR E HIM, INVOKES RULE 46A. IT IS INCUMBENT UPON THE COMMISSI ONER (APPEALS) TO COMPLY WITH THE REQUIREMENTS OF THE RU LE STRICTLY. IN THE INSTANT CASE, THE COMMISSIONER (APPEALS) HAS OBSERVED THAT THE ADDITIONAL EVIDENCE SHOULD BE ADMITTED BEC AUSE THE ASSESSEE WAS PREVENTED BY ADDUCING THEM BEFORE THE ASSESSING OFFICER. THIS OBSERVATION TAKES CARE OF CLAUSE (C) OF SUB-RULE (1) OF RULE 46A. THE OBSERVATION OF THE COMMISSIONER (A PPEALS) ALSO TAKES CARE OF SUB-RULE (2) UNDER WHICH HE IS R EQUIRED TO RECORD HIS REASONS FOR ADMITTING THE ADDITIONAL EVI DENCE. THUS, THE REQUIREMENTS OF SUB-RULES (1) AND (2) OF RULE 4 6A HAVE BEEN COMPLIED WITH. HOWEVER, SUB-RULE (3) WHICH INTERDIC TS THE COMMISSIONER (APPEALS) FROM TAKING INTO ACCOUNT ANY EVIDENCE PRODUCED FOR THE FIRST TIME BEFORE HIM UNLESS THE A SSESSING OFFICER HAS HAD A REASONABLE OPPORTUNITY OF EXAMINI NG THE EVIDENCE AND REBUT THE SAME, HAS NOT BEEN COMPLIED WITH. THERE IS NOTHING IN THE ORDER OF THE COMMISSIONER (APPEAL S) TO SHOW THAT THE ASSESSING OFFICER WAS CONFRONTED WITH THE CONFIRMATION LETTERS RECEIVED BY THE ASSESSEE FROM THE CUSTOMERS WHO PAID THE AMOUNTS BY CHEQUES AND ASKED FOR COMMENTS. THUS, TH E END RESULT HAS BEEN THAT ADDITIONAL EVIDENCE WAS ADMITT ED AND ACCEPTED AS GENUINE WITHOUT THE ASSESSING OFFICER F URNISHING HIS COMMENTS AND WITHOUT VERIFICATION. SINCE THIS IS AN INDISPENSABLE REQUIREMENT, THE TRIBUNAL OUGHT TO HA VE RESTORED THE MATTER TO THE COMMISSIONER (APPEALS) WITH THE D IRECTION TO HIM TO COMPLY WITH SUB-RULE (3) OF RULE 46A. THE ER ROR COMMITTED BY THE TRIBUNAL IS THAT IT PROCEEDED TO M IX UP THE POWERS OF THE COMMISSIONER (APPEALS) UNDER SUB-SECT ION (4) OF SECTION 250 WITH THE POWERS VESTED IN HIM UNDER RUL E 46A. THE TRIBUNAL SEEMS TO HAVE OVERLOOKED SUB-RULE (4) OF R ULE 46A WHICH ITSELF TAKES NOTE OF THE DISTINCTION BETWEEN THE POWERS CONFERRED BY THE COMMISSIONER (APPEALS) UNDER THE S TATUTE WHILE DISPOSING OF THE ASSESSEE'S APPEAL AND THE PO WERS CONFERRED UPON HIM UNDER RULE 46A. THE TRIBUNAL ERR ED IN ITS INTERPRETATION OF THE PROVISIONS OF RULE 46A VIS-A- VIS SECTION 250(4). ITS VIEW THAT SINCE IN ANY CASE THE COMMISS IONER (APPEALS), BY VIRTUE OF HIS CO-TERMINOUS POWER OVER THE ASSESSMENT ORDER, WAS EMPOWERED TO CALL FOR ANY DOC UMENTS OR MAKE ANY FURTHER ENQUIRY AS HE THINKS FIT, THERE WA S NO VIOLATION ITA NO.5094/DEL./2011 6 OF RULE 46A IS ERRONEOUS. THE TRIBUNAL APPEARS TO H AVE NOT APPRECIATED THE DISTINCTION BETWEEN THE TWO PROVISI ONS. IF THE VIEW OF THE TRIBUNAL IS ACCEPTED, IT WOULD MAKE RUL E 46A OTIOSE AND IT WOULD OPEN UP THE POSSIBILITY OF THE ASSESSE ES' CONTENDING THAT ANY ADDITIONAL EVIDENCE SOUGHT TO BE INTRODUCE D BY THEM BEFORE THE COMMISSIONER (APPEALS) CANNOT BE SUBJECT ED TO THE CONDITIONS PRESCRIBED IN RULE 46A BECAUSE IN ANY CA SE THE COMMISSIONER (APPEALS) IS VESTED WITH COTERMINOUS P OWERS OVER THE ASSESSMENT ORDERS OR POWERS OF INDEPENDENT ENQUIRY UNDER SUB-SECTION (4) OF SECTION 250. THAT IS A CON SEQUENCE WHICH CANNOT AT ALL BE COUNTENANCED. FOR THE ABOVE REASON, THE TRIBUNAL WAS NOT RIGHT IN LAW IN HOLDING THAT SINCE THE COMMISSIONER (APPEALS) POSSE SSES CO- TERMINUS POWERS OVER THE ASSESSMENT APART FROM APPE LLATE POWERS, THERE WAS NO VIOLATION OF RULE 46A COMMITTE D BY HIM. THE ISSUE RELATING TO THE ADDITION MADE UNDER SECTI ON 68 IS RESTORED TO THE COMMISSIONER (APPEALS) WHO WOULD CO MPLY WITH THE REQUIREMENTS OF RULE 46A AND TAKE A FRESH DECIS ION ON THE MERITS OF THE ADDITIONS IN ACCORDANCE WITH LAW. CONSIDERING ALL THESE FACTS AND CIRCUMSTANCES, WE S ET ASIDE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER TO BE DECIDED DE NOVO. AS SESSEE HAS LIBERTY TO FILE DOCUMENTS BEFORE ASSESSING OFFICER . 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON THIS 31 ST DAY OF MAY, 2012. SD/- SD/- (RAJPAL YADAV) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : THE 31 ST DAY OF MAY, 2012 TS ITA NO.5094/DEL./2011 7 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-XVI, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.