DCIT, New Delhi V. M/s Gandhi Vidya Mandir, Rajasthan

ITA 5713/DEL/2010

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7372 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 10 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 16-10-2014
• Assessment Year: 2001-2002
• Appeal Filed On: 16-12-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SATPAL SINGH
• Assessee Lawyers: VK SABHARWAL
• Keywords: Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: C NEW DELHI BEFORE SHRI G. D. AGRAWAL, VICE - PRESIDENT AND SHRI C. M. GARG, JUDICIAL MEMBER I.T.A .NO. - 5713 /DEL/201 0 (ASSESSMENT YEAR - 2001 - 02 ) DCIT , VS. M/S GANDHI VIDYA MANDIR, C.C.5, SARDARSHAHAR (RAJASTHAN) ROOM NO. 361, 3 RD FLOOR, ARA 331403 JAHANDEWALAN, NEW DELHI PAN:AA ATG1797N (APPELLANT) (RESPONDENT) REVENUE BY: - SH. SATPAL SINGH , SR. DR ASSESSEE BY: - SH. V. K. SABHARWAL , ADV. ORDER PER C. M. GARG, JM. THIS APPEAL OF THE REVENUE HAS BEEN PREFERRED AGAINST THE ORDER OF CIT (APPEALS) - I , NEW DELHI , VIDE DATED 2 2 .0 9 .201 0 IN APPEAL NO. 2 3/ 0 8 - 0 9 FOR THE ASSESSMENT YEAR 2001 - 02 . THE REVENUE HAS RAISED AS MANY AS SIX GROUNDS IN THIS APPEAL. 2. AT THE OUTSET , WE ARE TAKING UP LEGAL GROUND NO. 2 FOR ADJUDICATION AS A FLAG - SHIP GROUND WHICH ARE READS AS UNDER: 2. THE LD. CIT(A) HAS ERRED IN ADMITTING THE ADDITIONAL EVIDENCE WHILE IGNORING THE PROVISIONS OF RULE 46A OF INCOME TAX RULES SPECIALLY IN LIGHT OF THE FACTS THAT SUFFICIENT OPPORTUNITIES WERE PROVIDED TO THE ASSESSEE. 2 3. WE HAVE HEARD ARGUMENT OF BOTH THE SIDES AND CAREFULLY PERUSED THE RELEVANT MATERIAL PLACED ON RECORD. THE LD. DEPARTMENTAL REPRESENTATIVE (DR) POINTED OUT THAT THE LD. CIT(A) IN PARA 3 OF THE IMPUGN ED ORDER ADMITTED THE ADDITIONAL EVIDENCE OF THE ASSESSEE BY OBSERVING THAT THE ASSESSEE WAS NOT GIVEN SUFFICIENT OPPORTUNITY TO PRODUCE THE ADDITIONAL EVIDENCE AT THE TIME OF ASSESSMENT PROCEEDINGS AND THE ADDITIONAL EVIDENCE PRODUCE D BY TH E ASSESSEE WAS RELEVANT AND VITAL FOR DECIDING THE ISSUES INVOLVED IN THE FIRST APPEAL. 4. THE LD. DR FURTHER DRAWN OUR ATTENTION TOWARDS PARAGRAPH NO. 6(D) AT PAGE 12 OF THE IMPUGN ED ORDER AND SUBMITTED THAT THE LD. CIT(A) ERRED IN OBSERVING THAT THE ASS ESSING OFFICER S IS SILENT ON THE ISSUE OF THE ADDITIONAL EVIDENCE AND THE LD. CIT(A) WAS NOT JUSTIFIED IN CONCLUDING THAT THE AO HAS NOTHING TO SAY IN THIS REGARD. THE LD. DR PRAYED THAT THIS IS A CLEAR VIOLATION OF RULE 46A OF THE INCOME TAX RULES, 1962 THEREFORE, THE CASE SHOULD BE RESTORED TO THE FILE OF LD. CIT(A) FOR FRESH ADJUDICATION AFTER COMPLYING WITH THE RELEVANT RULES IN THIS REGARD. 5. THE LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT THE LD. CIT(A) PROPERLY FOLLOWED RULE 46A OF THE INCOME TAX RULES, BECAUSE THE LD. CIT(A) CALLED REMAND REPORT FROM THE AO, AND THE AO OBJECTED TO THE ADMISSIBILITY OF ADDITIONAL EVIDENCE BUT DID NOT MAKE ANY COMMENT ON THE MERITS OF THE ADDITIONAL EVIDENCE, THEREFORE, THE LD. CIT(A) RIGHTLY HELD THAT THE AO HAS N OTHING TO SAY ON THE ADDITIONAL EVIDENCE. THE LD. COUNSEL FOR THE ASSESSEE SUPPORTED THE IMPUGN ED ORDER. 3 6. ON CAREFUL CONSIDERATION OF ABOVE, AT THE OUTSET , WE TAKE COGNIZANCE OF THE DECISION OF HON BLE JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF C IT VS. MANISH BUILDWELL PVT. LTD. VIDE DATED 15.11.2011 IN ITA NO. 928/2011 WHEREIN HELD AS UNDER: A DISTINCTION SHOULD BE RECOGNIZED AND MAINTAINED BETWEEN A CASE WHERE THE ASSESSEE INVOKES RULE 46A TO ADDUCE ADDITIONAL EVIDENCE BEFORE THE CIT (A) AND A CASE WHERE THE CIT (A), 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 HIM UNDER SUB - SECTION (4) OF SECTION 250. IT IS ONLY WHEN HE EXERCISES HIS STATUTORY SUO MOTO POWER UNDER THE ABOVE SUB - SECTION THAT THE REQUIREMENTS OF RULE 46A NEED NOT BE FOLLOWED. ON THE OTHER HAND, WHENEVER THE ASSESSEE WHO IS IN APPEAL BEFORE HIM INVOKES RULE 46A, IT IS INCUMBENT UPON THE CIT (A) TO COMPLY WITH THE REQUIRE MENTS OF THE RULE STRICTLY. 24. IN THE PRESENT CASE, THE CIT (A) HAS OBSERVED THAT THE ADDITIONAL EVIDENCE SHOULD BE ADMITTED BECAUSE THE ASSESSEE WAS PREVENTED BY ADDUCING ITA NO.928/2011 PAGE 29 OF 31THEM BEFORE THE ASSESSING OFFICER. THIS OBSERVATION T AKES CARE OF CLAUSE (C) OF SUB - RULE (1) OF RULE 46A. THE OBSERVATION OF THE CIT (A) ALSO TAKES CARE OF SUB - RULE (2) UNDER WHICH HE IS REQUIRED TO RECORD HIS REASONS FOR ADMITTING THE ADDITIONAL EVIDENCE. THUS, THE REQUIREMENT OF SUB - RULES (1) AND (2) OF RU LE 46A HAVE BEEN COMPLIED WITH. HOWEVER, SUB - RULE (3) WHICH INTERDICTS THE CIT (A) FROM TAKING INTO ACCOUNT ANY EVIDENCE PRODUCED FOR THE FIRST TIME BEFORE HIM UNLESS THE ASSESSING OFFICER HAS HAD A REASONABLE OPPORTUNITY OF EXAMINING THE EVIDENCE AND REBU T THE SAME, HAS NOT BEEN COMPLIED WITH. THERE IS NOTHING IN THE ORDER OF THE CIT (A) TO SHOW THAT THE ASSESSING OFFICER WAS CONFRONTED WITH THE 4 CONFIRMATION LETTERS RECEIVED BY THE ASSESSEE FROM THE CUSTOMERS WHO PAID THE AMOUNTS BY CHEQUES AND ASKED FOR C OMMENTS. THUS, THE END RESULT HAS BEEN THAT ADDITIONAL EVIDENCE WAS ADMITTED AND ACCEPTED AS GENUINE WITHOUT THE ASSESSING OFFICER FURNISHING HIS COMMENTS AND WITHOUT VERIFICATION. SINCE THIS IS AN INDISPENSABLE REQUIREMENT, WE ARE OF THE VIEW THAT THE TRI BUNAL OUGHT TO HAVE RESTORED THE MATTER TO THE CIT (A) WITH THE DIRECTION TO HIM TO COMPLY WITH SUB - RULE (3) OF RULE 46A. IN OUR OPINION AND WITH RESPECT, THE ERROR COMMITTED BY THE TRIBUNAL IS THAT IT PROCEEDED TO MIX UP THE POWERS OF THE CIT (A) UNDER SU B - SECTION (4) OF SECTION 250 WITH THE POWERS VESTED IN HIM UNDER RULE 46A. THE TRIBUNAL SEEMS TO HAVE OVERLOOKED SUB - RULE(4) OF RULE 46A WHICH ITSELF TAKES NOTE OF THE DISTINCTION BETWEEN THE POWERS CONFERRED BY THE CIT (A) UNDER THE STATUTE WHILE DISPOSI NG OF THE ASSESSEE S APPEAL AND THE POWERS CONFERRED UPON HIM UNDER RULE 46A. THE TRIBUNAL ERRED IN ITS INTERPRETATION OF THE PROVISIONS OF RULE 46A VIS - - VIS SECTION 250(4). ITS VIEW THAT SINCE IN ANY CASE THE CIT (A), BY VIRTUE OF HIS CONTERMINOUS POWERS OVER THE ASSESSMENT ORDER, WAS EMPOWERED TO CALL FOR ANY DOCUMENT OR MAKE ANY FURTHER ENQUIRY AS HE THINKS FIT, THERE WAS NO VIOLATION OF RULE 46A IS ERRONEOUS. THE TRIBUNAL APPEARS TO HAVE NOT APPRECIATED THE DISTINCTION BETWEEN THE TWO PROVISIONS. IF TH E VIEW OF THE TRIBUNAL IS ACCEPTED, IT WOULD MAKE RULE 46A OTIOSE AND IT WOULD OPEN UP THE POSSIBILITY OF THE ASSESSEES CONTENDING THAT ANY ADDITIONAL EVIDENCE SOUGHT TO BE INTRODUCED BY THEM BEFORE THE CIT (A) CANNOT BE SUBJECTED TO THE CONDITIONS PRESCR IBED IN RULE 46A BECAUSE IN ANY CASE THE CIT (A) IS VESTED WITH CONTERMINOUS POWERS OVER THE ASSESSMENT ORDERS OR POWERS OF INDEPENDENT ENQUIRY UNDER SUB - SECTION (4) OF SECTION 250. THAT IS A CONSEQUENCE WHICH CANNOT AT ALL BE COUNTENANCED. 5 7. IN VIEW OF ABOVE , TURNING TO THE FACTUAL MATRIX OF THE PR ESENT CASE, WE OBSERVE THAT THE LD. CIT(A) CALLED REMAND REPORT FROM THE AO WHO OBJECTED TO THE ADMISSIBILITY OF THE ADDITIONAL EVIDENCE. THE LD. CIT(A) HAS CONSIDERED THE CAUSE S H O WN BY THE ASSESSEE , WHICH PREVENTED THE ASSESSEE TO SUBMIT THE ADDITIONAL EVIDENCE BEFORE THE AO , AND ADMITTED THE ADDITIONAL EVIDENCE FOR CONSIDERATION. BUT AT THE SAME TIME WE ALSO OBSERVE THAT THE LD. CIT(A) HAS NOT CALLED COMMENTS OF THE AO AND HAS NOT PROVIDED AN OPPORT UNITY TO EXAMINE AND VERIFY THE ADDITIONAL EVIDENCE SO SUBMITTED BY THE ASSESSEE DURING THE FIRST APPELLATE PROCEEDINGS AS PER PROVISIONS OF RULE 46A OF THE INCOME TAX RULES. HENCE, WE ARE INCLINED TO HOLD THAT THE LD. CIT(A) GROSSLY ERRED IN FOLLOWING THE RULE 46A OF THE INCOME TAX RULES WHILE CONSIDERING ADDITIONAL EVIDENCE AND GRANTED RELIEF FOR THE ASSESSEE. P L E A S E S E E D E C I S I O N O F H O N B L E H I G H C O U R T O F D E L H I I N T H E C A S E O F C I T V S . M A N I S H B U I L D W E L L P V T . L T D . D A T E D 1 5 . 1 1 . 2 0 1 1 I N I T A N O . 9 2 8 / 2 0 1 1 . 8. AS WE HAVE ALREADY APPROVED THE OBSERVATIONS OF THE LD. CIT(A) THAT THE ASSESSEE WAS NOT GIVEN SUFFICIENT OPPORTUNITY TO PRODUCE ADDITIONAL EVI DENCE AT THE TIME OF ASSESSMENT PROCEEDINGS, THEREFORE, WE FIND IT JUST AND PROPER TO MEET THE ENDS OF JUSTICE TO RESTORE THE ENTIRE CONTROVERSY AND ISSUE OF FRAMING OF ASSESSMENT TO THE FILE OF AO FOR FRESH ADJUDICATION WITH A DIRECTION THAT THE AO SHALL DECIDE THE ISSUE DE NOVO AFRESH AFTER AFFORDING DUE OPPORTUNITY OF HEARING FOR THE ASSESSEE AND WITHOUT BEING PREJUDICE D BY THE EARLIER ASSESSMENT AND 6 IMPUGN ED ORDER. ACCORDINGLY , GROUND NO. 2 OF THE REVENUE IS DEEMED TO BE ALLOWED FOR STATISTICAL PURPOSES . GROUND NOS. 3, 4 & 5 OF THE REVENUE 9. GROUND NO. 1 & 6 OF THE REVENUE ARE OF GENERAL IN NATURE WHICH DO NOT REQUIRE ANY ADJUDICATION. SINCE BY THE EARLIER PART OF THIS ORDER, WE HAVE RESTORED ENTIRE CASE TO THE FILE OF AO FOR DE NOVO ADJUDICATION AND FOR FRAMING OF FRESH ASSESSMENT THEREFORE, OTHER MAIN GROUNDS OF THE ASSESSEE DID NOT SURVIVE FOR ADJUDICATION ON MERITS AND WE DISMISS THE SAME WITHOUT ANY DETAILED ADJUDICATION. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS DEEMED TO BE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 2 9 /10/2014. S D / - S D / - ( G. D. AGRAWAL ) (C. M. GARG) VICE - PRESIDENT JUDICIAL MEMBER DATED: 2 9 /10/2014 *AK VERMA* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR