DCIT,C.C-1(3),KOL, Kolkata V. M/s. Navin Construction & Credit Pvt. Ltd, Kolkata

ITA 526/KOL/2023

• Counselvise Citation: [2023] 100 COUNSELVISE.COM (IT) 6482 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-10-2023
• Appeal Filed By: Department
• Order Result: PartlyAllowed
• Bench Allotted: C
• Next Hearing Date: 23-08-2023
• Assessment Year: 2016-2017
• Appeal Filed On: 25-05-2023
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ABHIJIT DATTA
• Keywords: Unexplained cash credit; Principle of natural justice; Additional evidence
• Section: 68; 142(1); 14A; 195; 250; 251; 143(2); 64

Judgement Text

| आयकर अपीलीय अिधकरण ᭠यायपीठ, कोलकाता | IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, KOLKATA BEFORE DR. MANISH BORAD, HON’BLE ACCOUNTANT MEMBER & SHRI SONJOY SARMA, HON’BLE JUDICIAL MEMBER I.T.A. No. 526/Kol/2023 Assessment Year: 2016-17 Deputy Commissioner of Income Tax, Central Circle – 1(3), Kolkata Vs M/s. Navin Construction & Credit Pvt. Ltd. 12, Government Place East Dalhousie Kolkata- 700069 [PAN : AAACN9084E] अपीलाथᱮ/ (Appellant) ᮧ᭜ यथᱮ/ (Respondent) Assessee by : Shri Akkal Dudhewala, A.R. Revenue by : Shri Abhijit Datta, Sr. D/R सुनवाई कᳱ तारीख/Date of Hearing : 24/08/2023 घोषणा कᳱ तारीख /Date of Pronouncement: 16/10/2023 आदेश/O R D E R PER DR. MANISH BORAD, ACCOUNTANT MEMBER : The above captioned appeal is directed at the instance of the revenue against the order of the National Faceless Appeal Centre, (hereinafter the “ld. CIT(A)”) dt. 24/03/2022, passed u/s 250 of the Income Tax Act, 1961 (“the Act”) for the Assessment Year 2016-17. 2. The revenue has raised the following grounds of appeal:- "1. Whether on the facts and circumstances of the case, the CIT(A) erred in law in deleting the addition of Rs. 15,19,57,145/- made u/s 68 of the I.T Act. 1961 without going into merits of the case and the facts that creditworthiness of both the loan creditors could not be proven as there was no rational of the fund received by both the companies and in turn transferred the fund in the form of unsecured loan to the assessee company who is the ultimate beneficiary. Whether on the facts and circumstances of the case, the CIT(A) erred in taking into consideration the additional evidence regarding unsecured loan as produced by the assessee without allowing the reasonable opportunity to the AO in violation of Rule 46A(1) read with 46A(3) of the Income Tax Rule 1962. 2 I.T.A. No. 526/Kol/2023 Assessment Year: 2016-17 M/s. Navin Construction & Credit Pvt. Ltd. 2. Whether on the facts and circumstances of the case, the CIT(A) erred in law in deleting the addition of Rs. 15,82,117/- made on account of non- genuine loss on Future & Option ignoring the facts that genuineness of the transaction could not be proven. Whether on the facts and circumstances of the case, the CIT(A) erred in taking into consideration the additional evidence regarding loss on Future & Option as produced by the assessee without allowing the reasonable opportunity to the AO in violation of Rule 46A(1) read with 46A(3) of the Income Tax Rule 1962. Whether on the facts and Circumstances of the case, Ld. CIT(A) in its order while admitting the additional evidences observed that assessment has made without giving sufficient opportunity to the assessee on the other CIT(A) has dismissed the assessee*s grounds of appeal that assessment made in violation of natural justice, which is contradictory and established that order of CIT(A) is erroneous.” 3. Facts in brief are that the assessee is a Non-banking Financial Company (NBFC) and declared income of Rs. 3,08,78,020/- in the e- return filed for Assessment Year 2016-17 on 13/10/2016. Case selected for complete scrutiny under CASS followed by validly serving of notice u/s 143(2) and 142(1) of the Act. The ld. Assessing Officer observed that the assessee has raised unsecured loan of Rs.15,19,57,145/- which included Rs.11,17,02,637/- from M/s. Super Diamond Nirman Pvt. Ltd. (SDNPL) and Rs.4,02,54,508/- from M/s. Babcock Borsig Limited (BBL). The assessee furnished certain details only in respect of the unsecured loan from SDNPL but failed to file any detail for the other cash creditor. So far as the cash credit from SDNPL is concerned, the ld. Assessing Officer wanted to examine the source of source for which necessary information could not be furnished by the assessee. The ld. Assessing Officer concluded the assessment by making addition for 15,19,57,145/- u/s 68 of the Act. The ld. Assessing Officer also observed that the assessee has claimed future and option loss at Rs.15,82,117/- but in the absence of any detail filed by the assessee, the same was disallowed and 3 I.T.A. No. 526/Kol/2023 Assessment Year: 2016-17 M/s. Navin Construction & Credit Pvt. Ltd. added back to the income. Disallowance was also made u/s 14A of the Act at Rs. 39,63,129/-. Income assessed at Rs.18,83,80,411/-. 3.1. Aggrieved the assessee preferred appeal before the Id. CIT(A) and succeeded on the issues raised in the instant appeal by the revenue. 4. Aggrieved the revenue is now in appeal before this Tribunal and in both the grounds it has been commonly stated that the Id. CIT(A) did not allow reasonable opportunity to the Assessing Officer to examine the additional evidence filed by the assessee and thus there is a violation of Rule 46A(1) and 46A(3) of the Income Tax Rules, 1962 (hereinafter 'the Rules 7 ). The Id. D/R also submitted that the assessee has failed to explain the nature and source of the alleged unsecured loan of Rs. 15,19,57,145/- and similarly genuineness of the future and option loss has also not been proved. 4.1. On the other hand, the Id. Counsel for the assessee vehemently argued referring to the details paper books Volume I containing 67 pages, Volume II containing 64 pages and Volume III containing 195 pages and also referred to the judicial paper book wherein the assessee has relied on several decisions. It was submitted that the loans have been taken from the group concerns and complete documents have been filed to explain the identity and creditworthiness of the cash creditors and genuineness of the transactions and prayer made to confirm the finding of the Id. CIT(A). 5. We have heard rival contentions and perused the material placed before us. 6. Addition u/s 68 of the Act for unexplained unsecured loan and disallowance of future and option loss is in dispute before us. The Id. 4 I.T.A. No. 526/Kol/2023 Assessment Year: 2016-17 M/s. Navin Construction & Credit Pvt. Ltd. D/R apart from challenging the findings of the Id. CIT(A) on merit has mainly contended that various additional evidence were filed before the Id. CIT(A) but the Assessing Officer was not provided any reasonable opportunity nor any remand report was called for. So far as the issue of unexplained cash credit u/s 68 of the Act is concerned, we notice that the alleged amount constitutes unsecured loan of Rs.11,17,02,637/- from SDNPL and Rs.4,02,54,508/- from BBL. No details were filed by the assessee with regard to BBL but certain details were filed with respect of the loan from SDNPL. During the course of appellate proceedings, assessee took a ground that assessment has been made in violation of principles of natural justice and that the assessee furnished various details for the first time before the Id. CIT(A). From perusal of the impugned order, we notice that the Id. CIT(A) has admitted the additional evidence but has not called for any remand report and the reasoning given by the Id. CIT(A) is that Section 250(4) of the Act provides that the Commissioner (Appeals), before disposing an appeal, may make or cause to be made, any further enquiry as he thinks fit and the power to make further enquiry under this provision would include the power to admit further evidence. 6.1. Rule 46A of the Income Tax Rules, 1962, reads as follows:- "46A. (1) The appellant shall not be entitled to produce before the Joint Commissioner] (Appeals) or, as the case may be, the Commissioner (Appeals), any evidence, whether oral or documentary, other than the evidence produced by him during the course of proceedings before the Assessing Officer, except in the following circumstances, namely: — (a) where the Assessing Officer has refused to admit evidence which ought to have been admitted; or (b) where the appellant was prevented by sufficient cause from producing the evidence which he was called upon to produce by the Assessing Officer; or 5 I.T.A. No. 526/Kol/2023 Assessment Year: 2016-17 M/s. Navin Construction & Credit Pvt. Ltd. (c) where the appellant was prevented by sufficient cause from producing before the Assessing Officer any evidence which is relevant to any ground of appeal; or (d) where the Assessing Officer has made the order appealed against without giving sufficient opportunity to the appellant to adduce evidence relevant to any ground of appeal. (2) No evidence shall be admitted under sub-rule (1) unless the l[Joint Commissioner] (Appeals) or, as the case may be, the Commissioner (Appeals) records in writing the reasons for its admission. (3) The l[Joint 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. (4) Nothing contained in this rule shall affect the power of the l[Joint Commissioner] (Appeals) or, as the case may be, the Commissioner (Appeals) to direct the production of any document, or the examination of any witness, to enable him to dispose of the appeal, or for any other substantial cause including the enhancement of the assessment or penalty (whether on his own motion or on the request of the Assessing Officer) under clause (a) of sub-section (1) of section 251 or the imposition of penalty under section 271." 7. Now, from perusal of sub-Section (1) of Rule 46A, we notice that four circumstances are mentioned under which if the case of the assessee falls then no evidence whether oral or documentary can be admitted by the Id. CIT(A) without allowing reasonable opportunity to the Assessing Officer. We notice that during the course of assessment proceedings, the Id. Assessing Officer gave sufficient opportunity to the assessee and various details have been filed but they were not complete. This is evident from the fact that the additional evidence were filed for the first time before the Id. CIT(A). We, thus find that the Id. Assessing Officer gave sufficient opportunity to the assessee but he refrained from filing complete details before the Assessing Officer as called for to his satisfaction and, therefore, none of the above four 6 I.T.A. No. 526/Kol/2023 Assessment Year: 2016-17 M/s. Navin Construction & Credit Pvt. Ltd. circumstances as mentioned in Rule 46A (1) of the Rules is satisfied in the instant case. 8. Now, under these given facts and circumstances when the additional evidence have been filed for the first time before the Id. CIT(A) who certainly has co-terminus power to that of the Assessing Officer but he ought to have taken note of the fact that it is the Assessing Officer who has to file the appeal on behalf of the department against the order of the Id. CIT(A). Now, unless and until, the Id. Assessing Officer gets reasonable opportunity to examine such additional evidence and to submit a remand report in connection thereto, the finding of the Id. CIT(A) cannot be considered to be justified. Sub-Rule (3) of Rule 46A clearly provides that before taking into account any evidence produced under sub-Rule (1), the Assessing Officer has to be allowed reasonable opportunity to examine the evidence or documents or to cross-examine the witnesses produced by the appellant. The Assessing Officer is entitled to this right failing which, the impugned proceedings are in violation of principles of natural justice. 8.1. So far as the issue of claim of future and option loss is concerned, the fact remains the same that the assessee did not file any details before the Id. Assessing Officer and filed the same for the first time before the ld. CIT(A) and the ld. CIT(A) has made violation of Rule 46A(1) and 46A(3) of the Rules, in the case of the assessee. 9. Thus, in view of the above discussion and on finding that there is clear violation of Rule 46A(1) and 46A(3) of the Rules at the end of the ld. CIT(A) by way of admitting additional evidence without giving reasonable opportunity to the Assessing Officer, we deem it fit to 7 I.T.A. No. 526/Kol/2023 Assessment Year: 2016-17 M/s. Navin Construction & Credit Pvt. Ltd. restore both the issues raised on merit to the file of the ld. CIT(A) for afresh adjudication to be carried out after providing complete additional evidence to the Assessing Officer which were filed for the first time before the ld. CIT(A) and also to call for remand report so that the ld. Assessing Officer can carry out the proceedings provided under Rule 46A(3) of the Rules and then to proceed in accordance with law. Needless to mention that the assessee shall also be provided sufficient opportunity of filing all necessary evidence in support of its claim. 10. In the result, appeal of the revenue is allowed for statistical purposes. Order pronounced in the Court on 16 th October, 2023 at Kolkata. Sd/- Sd/- (SONJOY SARMA) (DR. MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER Kolkata, Dated 16/10/2023 *SC SrPs आदेश कᳱ ᮧितिलिप अᮕेिषत/Copy of the Order forwarded to : 1. अपीलाथᱮ / The Assessee 2. ᮧ᭜यथᱮ / The Respondent 3. संबंिधत आयकर आयुᲦ / Concerned Pr. CIT 4. आयकर आयुᲦ)अपील (/ The CIT(A)- 5. िवभागीय ᮧितिनिध ,आयकर अपीलीय अिधकरण, कोलकाता/DR,ITAT, Kolkata, 6. गाडᭅ फाई/ Guard file. आदेशानुसार/ BY ORDER TRUE COPY Assistant Registrar आयकर अपीलीय अिधकरण ITAT, Kolkata