DCIT, New Delhi V. M/s. MKR Construction Pvt. Ltd., Delhi

ITA 5285/DEL/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3976 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 3 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-01-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 08-06-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 29-09-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Business expenditure; Search and seizure; Additional evidence
• Section: 143(3); 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER I.T.A. NO.5285/DEL/2014 A.Y. : 2009-10 DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-03, NEW DELHI ROOM NO. 355, 3 RD FLOOR, JHANDEWALAN EXTENSION, NEW DELHI 110 055 VS. M/S MKR CONSTRUCTION PRIVATE LIMITED, 2042, KATRA TOBACOO, KHARI BAOLI, DELHI 110 006 (PAN: AADCM6195J) (ASSESSEE) (RESPONDENT) REVENUE BY : MS. RACHNA SINGH, CIT(DR) ASSESSEE BY : SH. NARENDRA ARORA, CA ORDER PER H.S. SIDHU : JM THE REVENUE HAS FILED THE APPEAL AGAINST THE IMPUG NED ORDER DATED 30.7.2014 OF THE LD. CIT(A)-I, NEW DELH I RELEVANT TO ASSESSMENT YEAR 2009-10. 2. THE GROUNDS RAISED IN THE REVENUE S APPEAL REA D AS UNDER:- 1. THAT THE CIT(A) ERRED IN LAW AND ON FACTS OF THE C ASE IN ADMITTING THE ADDITIONAL EVIDENCE UNDER RULE 46A OF T HE INCOME TAX RULES, 1962. 2 2. THE CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN ALLOWING THE APPEAL OF THE ASSESSEE BY HOLDING THAT TH E PROPER OPPORTUNITY WAS NOT GIVEN TO HIM FOR PRODUCING DOCUMENTS TO THE SATISFACTION OF THE AO. 3. (A) THE ORDER OF THE CIT(A) IS ERRONEOUS AND NOT TE NABLE IN LAW AND ON FACTS. (B) THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY / ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF THE HEARING OF THE APPEAL. 3. THE BRIEF FACTS OF THE CASE ARE THAT A SEARCH AND SEIZURE OPERATION WAS CARRIED OUT U/S. 132 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED AS THE ACT) IN MEHTA GROUP OF CASES ON 30.6.2009. THE ASSESSEE WAS ALSO COVERED IN THE SE ARCH. NOTICE U/S. 153A OF THE ACT WAS ISSUED ON 13.4.2010, IN RES PONSE TO WHICH THE ASSESSEE FILED A LETTER STATING THAT THE RETU RN FILED ON 15.12.2011, DECLARING INCOME OF RS. 2,89,93,100/-, BE TREATED AS RETURN IN RESPONSE TO THE SAID NOTICE. FURTHER NOTICE U /S. 143(2) /142(1) OF THE ACT ALONGWITH QUESTIONNAIRE WAS ISSUED ON 20.6.2011, 02.11.2011 AND 22.11.2011. THE INCOME OF THE ASSESSEE WAS ASSESSED AT AN INCOME OF RS. 5,19,42,6 40/- AFTER MAKING ADDITIONS / DISALLOWANCE VIDE ORDER DATED 29.1 2.2011 3 PASSED U/S. 143(3) R.W.S. 153A OF THE ACT. AGAINST TH E ASSESSMENT ORDER, THE ASSESSEE APPEALED BEFORE THE LD. CIT(A), W HO VIDE HIS IMPUGNED ORDER DATED 30.7.2014 BY ADMITTING THE AD DITIONAL EVIDENCE U/R. 46A HAS ALLOWED THE APPEAL OF THE ASS ESSEE. AGGRIEVED WITH THE IMPUGNED ORDER DATED 30.7.2014 , THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 4. AT THE TIME OF HEARING, LD. DR RELIED UPON THE ORD ER OF THE AO AND REITERATED THE CONTENTIONS RAISED IN THE GROUNDS OF APPEAL. LD. DR SUBMITTED THAT ASSESSE HAS NOT FILED ANY EVIDENC E SUPPORTING HIS EXPLANATION BEFORE AO AND THE AO HAS RIGHTLY MADE THE ADDITION IN DISPUTES AND COMPLETED THE ASSESSMENT. SHE FURTHER STATED THAT IN APPEAL FILED BY THE ASSESSEE, THE LD. CIT(A) HAS DELETED THE ADDITION IN DISPUTE BY WRONGLY ACCEPTING THE ADDITIONAL EVIDENCES UNDER RULE 46A OF THE INCOME TAX RULES, 1962, DESPIT E THE FACT THAT NONE OF THE CONDITIONS LAID IN RULE 46A OF THE INCOME TAX RULES, 1962 ARE APPLICABLE TO THE CASE OF THE ASSESSEE. SH E FURTHER STATED THAT LD. CIT(A) HAS WRONGLY ALLOWED THE APPEAL OF THE ASSESSEE BY HOLDING THAT THAT THE PROPER OPPORTUNITY WAS NOT GIVEN TO HIM FOR PRODUCING DOCUMENTS TO THE SATISFACTION OF THE AO AND DELETED THE ADDITION IN DISPUTE. THEREFORE, SHE REQUESTED THAT THE ISSUES IN DISPUTE MAY BE SET ASIDE TO THE FILE OF THE LD. CIT(A ) WITH THE DIRECTIONS TO GIVE PROPER OPPORTUNITY TO THE AO TO EXA MINE THE 4 ADDITIONAL EVIDENCES FILED BY THE ASSESSEE BEFORE T HE LD. CIT(A) AND THEN DECIDE THE ISSUE IN DISPUTE AFRESH, AS PER LAW, AFTER GIVING OPPORTUNITY TO THE ASSESSEE FOR SUBSTANTIATING HIS CAS E. 5. ON THE OTHER HAND, LD. COUNSEL FOR THE ASSESSEE RE LIED UPON THE ORDER PASSED BY THE LD. CIT(A) AND STATED THAT AO HA S COMPLETED THE ASSESSMENT IN A HURRY MANNER WITHOUT GIV ING PROPER OPPORTUNITY TO THE ASSESSEE FOR PRODUCING THE DOCUMEN TS AND SUBSTANTIATING HIS CLAIMS. SINCE THE EVIDENCE WERE NOT SUBMITTED BEFORE THE AO, THEREFORE, THESE EVIDENCES WERE FILED BEFORE THE LD. CIT(A) AS ADDITIONAL EVIDENCE WHICH WAS SENT TO THE AO FOR REMAND REPORT, WHO DID NOT EXAMINE AND ONLY OBJECTED THE SAM E. HE REQUESTED THAT THERE IS NO VIOLATION OF ANY CONDITION OF RULE 46A OF THE INCOME TAX RULES, 1962, HENCE, THE ISSUE RAISED BY THE REVENUE IN THE APPEAL WRONGLY ADMISSION OF ADDITIONAL EVIDENCE AND IN ALLOWING THE APPEAL OF THE ASSESSEE BY HOLDING TH AT THE PROPER OPPORTUNITY WAS NOT GIVEN TO HIM FOR PRODUCING DOCUM ENTS TO THE SATISFACTION OF THE AO SHE FURTHER STATED THAT LD. CIT(A) HAS WRONGLY ALLOWED THE APPEAL OF THE ASSESSEE BY HOLDING THAT THAT THE PROPER OPPORTUNITY WAS NOT GIVEN TO HIM FOR PRODUCIN G DOCUMENTS TO THE SATISFACTION OF THE AO MAY BE REJECTED BY DISMIS SING THE APPEAL OF THE REVENUE. 5 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECO RDS ON THE ISSUE INVOLVED IN GROUND NO. 1 & 2 RAISED BY THE REVENUE REGARDING THE ADMISSION OF ADDITIONAL EVIDENCE DURI NG THE APPELLATE PROCEEDINGS UNDER RULE 46A OF THE INCOME TAX RULES, 1962 AND WRONGLY ALLOWED THE APPEAL OF THE ASSESSEE BY HOLDI NG THAT PROPER OPPORTUNITY WAS NOT GIVEN TO HIM FOR PRODUCING DOCUM ENTS TO THE SATISFACTION OF THE AO. FOR THE SAKE OF CONVENIENCE, WE ARE REPRODUCING HEREUNDER THE RULE 46A OF THE INCOME TAX RULES, 1962 AS UNDER:- PRODUCTION OF ADDITIONAL EVIDENCE BEFORE THE [DEPUT Y COMMISSIONER (APPEALS)] [AND COMMISSIONER (APPEALS) ]. 46A. (1) THE APPELLANT SHALL NOT BE ENTITLED TO PRODUC E BEFORE THE [DEPUTY COMMISSIONER (APPEALS)] [OR, AS T HE 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 AD MIT EVIDENCE WHICH OUGHT TO HAVE BEEN ADMITTED ; OR (B) WHERE THE APPELLANT WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING THE EVIDENCE WHICH HE WAS CALLE D UPON TO PRODUCE BY THE [ASSESSING OFFICER] ; OR 6 (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 T O THE APPELLANT TO ADDUCE EVIDENCE RELEVANT TO ANY GROUND OF APPEAL. (2) NO EVIDENCE SHALL BE ADMITTED UNDER SUB-RULE (1) UNLESS THE [DEPUTY COMMISSIONER (APPEALS)] [OR, AS T HE CASE MAY BE, THE COMMISSIONER (APPEALS)] RECORDS IN WRITING THE REASONS FOR ITS ADMISSION. (3) THE [DEPUTY COMMISSIONER (APPEALS)] [OR, AS THE CASE MAY BE, THE COMMISSIONER (APPEALS)] SHALL NOT TA KE INTO ACCOUNT ANY EVIDENCE PRODUCED UNDER SUB-RULE (1) UNLESS THE 8[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 PRODUCE D BY THE APPELLANT. (4) NOTHING CONTAINED IN THIS RULE SHALL AFFECT THE P OWER OF THE [DEPUTY COMMISSIONER (APPEALS)] [OR, AS THE CA SE MAY BE, THE COMMISSIONER (APPEALS)] TO DIRECT THE PRODUCTION OF ANY DOCUMENT, OR THE EXAMINATION OF ANY 7 WITNESS, TO ENABLE HIM TO DISPOSE OF THE APPEAL, OR F OR ANY OTHER SUBSTANTIAL CAUSE INCLUDING THE ENHANCEMENT O F 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 IMPOSI TION OF PENALTY UNDER SECTION 271.] 6.1 AFTER GOING THROUGH THE ORDER PASSED BY THE REVEN UE AUTHORITIES AS WELL AS THE CONDITION AS LAID DOWN U NDER RULE 46A OF THE INCOME TAX RULES, 1962, AS REPRODUCED ABOVE, WE FIND THAT THE ASSESSEE IS IN THE BUSINESS REAL ESTATE, MAINLY IN PURCHASE AND SALE OF LAND. THE ASSESSEE HAD ADVANCED ABOUT RS. 27 CROR E TO VARIOUS LAND OWNERS/ AGRICULTURISTS IN DIFFERENT AREAS AROUN D NCR FOR PURCHASE OF LAND. SUCH ADVANCE IS TERMED AS BAYANA , AND DEALERS WELL SUCH AGREEMENTS TO PROSPECTIVE BUYERS/ INVESTORS AT A PREMIUM, EARNING INCOME AND AVOIDING ANY FURTHER INV ESTMENT. THIS IS A USUAL PRACTICE IN THE TRADE. OUT OF THE SAID AMOU NT OF RS. 27 CRORE, AN AMOUNT OF RS. 2,29,49,543/- WAS ADVANCED TO THIRTY DIFFERENT PARTIES, WITH WHOM THE AGREEMENT DID NOT MA TERIALIZE. THE ASSESSEE HAS CLAIMED THIS AMOUNT AS BUSINESS EXPENSES /LOSS. THE AO FOR THE REASONS STATED IN PARA NO. 7 OF THE ASSESSM ENT ORDER, DISALLOWED THE CLAIM OF THE ASSESSEE STATING, INTER ALIA, THAT ALL AGREEMENTS WERE NOT PRODUCED BY THE ASSESSEE. WE FUR THER NOTE THAT DURING THE APPELLATE PROCEEDINGS, AN APPLICATI ON U/R. 46A OF 8 THE RULES WAS MOVED ON 11.3.2014 WHICH WAS FORWARDED TO THE REVENUE FOR THE COMMENTS, INCLUDING ON THE MERIT OF THE EVIDENCE PRODUCED. IN THE REPLY DATED 09.5.2014, THE AO HAS STA TED BEFORE MAKING THE ADDITION PROPER OPPORTUNITIES WAS GIVEN TO THE ASSESSEE TO FURNISH THE DETAILS / GENUINENESS OF THE TRANSACTION S FOR WHICH THE ASSESSEE COMPANY FAILS TO PRODUCE THE SAME BEFOR E THE AO. IT WAS FURTHER MENTIONED THAT THE ASSESSEE COMPANY ALSO FURNISHED FRESH EVIDENCE IN THE SHAPE OF AGREEMENT TO WHOM WITH THE TRANSACTION WAS MADE, SUCH EVIDENCE WERE NEVER PRODUC ED BY THE ASSESSEE BEFORE THE AO. DESPITE THAT THE ASSESSEE HAS FILED THE FRESH EVIDENCE UNDER RULE 46A OF THE I.T. RULES, 19 62. SINCE THE ASSESSEE, FAILS TO PROVE THE GENUINENESS OF THE TRANSA CTION BEFORE THE AO, FRESH EVIDENCE MAY NOT BE ENTERTAINED AT THIS STAGE. FRESH EVIDENCE ONLY BE ENTERTAINED WHERE NO PROPER OPPORTUN ITY WAS GIVEN TO THE ASSESSEE. HENCE, THE FRESH EVIDENCE MAY N OT BE ENTERTAINED AND APPEAL OF THE ASSESSEE DESERVE TO BE C ONFIRMED. AFTER PERUSING THE RECORDS, WE ARE OF THE CONSIDERED OPINION THAT NO EXPLANATION HAS BEEN GIVEN BY THE ASSESSEE WITH REG ARD TO TRANSACTION BEFORE THE AO AND AO HAS NO ALTERNATIVE EX CEPT TO COMPLETE THE ASSESSMENT AS PER LAW AND HENCE, HE COMP LETED THE ASSESSMENT. AGGRIEVED WITH THE ORDER OF THE ASSESSMEN T ORDER DATED 28.12.2011, ASSESSEE FILED THE APPEAL, WHO VIDE HIS IMPUGNED 9 ORDER DATED 30.7.2014 HAS DELETED THE ADDITION IN DISPUTE ON THE BASIS OF THE ADDITIONAL EVIDENCES FILED BY THE ASSESS EE WHICH HAS BEEN CHALLENGED BY THE REVENUE BEFORE US. IN VIEW OF THE ABOVE, WE ARE ALSO OF THE VIEW THAT THE ACTION OF THE LD. CI T(A) IN ADMITTING THESE ADDITIONAL EVIDENCES IS CONTRARY TO THE CONDITION S AS LAID DOWN UNDER RULE 46A OF THE INCOME TAX RULES, 1962, BECAUSE ASSESSEES COUNSEL HAS NOT ESTABLISHED BEFORE US THAT THE AO HAS REFUSED TO ADMIT THE ADDITIONAL EVIDENCE WHICH OUGHT T O BE ADMITTED BY THE AO. ASSESSEES COUNSEL HAS ALSO NOT ESTABLISH ED THAT ASSESEE IS PREVENTED BY SUFFICIENT CAUSE FOR PRODUCING THE ADDITIONAL EVIDENCE BEFORE THE AO. AFTER GOING THROUGH THE ASS ESSMENT RECORDS, WE HAVE ALSO SEEN THAT AO HAS GIVEN SUFFICI ENT OPPORTUNITY TO THE ASSESSEE FOR PRODUCING THE EVIDENCE SUPPORTING THE CLAIM OF THE ASSESSEE, BUT THE ASSESSEE HAS FAILED TO AVAIL THE SAME AND THE AO HAS COMPETED THE ASSESSMENT AS PER LAW. KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES AS EXPLAINED ABOVE, WE A RE OF THE CONSIDERED VIEW THAT THE ADDITIONAL EVIDENCES FILED BE FORE THE LD. CIT(A) NEEDS TO BE THOROUGHLY EXAMINED BY HIM, AFTER OBTAINING THE DETAILED REMAND REPORT FROM THE AO AND THEN ADMIT THE SA ME, IF NECESSARY, AND THEN DECIDE THE ISSUES IN DISPUTE AFR ESH, UNDER THE LAW, AFTER GIVING ADEQUATE OPPORTUNITY OF BEING HEA RD TO THE 10 ASSESSEE. THEREFORE, WE SET ASIDE THE ISSUES IN DIS PUTE TO THE FILE OF THE LD. CIT(A) WITH THE AFORESAID DIRECTIONS. 7. IN THE RESULT, THE REVENUES APPEAL IS ALLOWED FO R STATISTICAL PURPOSES. ORDER PRO NOUNCED ON 11/01/2018. SD/- SD/- [O.P. KANT [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 11/01/2018 COPY FORWARDED TO: - 1. ASSESSEE - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES 11