ACIT (AO) Circle-3(1), Etah V. M/s J.C.Enterprises Pvt. LTd, Etah

ITA 63/AGR/2011

• Counselvise Citation: 6320314 RSA 2011
• Duration Of Justice: 1 year(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 14-03-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 28-02-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: NAVIN GARGH
• Keywords: Opportunity of being heard; Principle of natural justice; Period of limitation; Source of fund; Additional evidence; Reasonable cause; Assessment record
• Section: 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER & SHRI A. L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 63/AGRA/2011 ASST. YEAR : 2006-07 D.C.I.T., CIRCLE 3(1), VS. M/S. J.C. ENTERPRISES PVT. LTD., ETAH. VARDHMAN HOUSE, RAILWAY ROAD, ETAH. (PAN : AABCJ 4602 R) ITA NO. 64/AGRA/2011 ASST. YEAR : 2006-07 M/S. J.C. ENTERPRISES PVT. LTD., VS. D.C.I.T., CI RCLE 3(1), VARDHMAN HOUSE, ETAH. RAILWAY ROAD, ETAH. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI WASEEM ARSHAD, SR. DR ASSESSEE BY : SHRI NAVIN GARGH, ADVOCATE DATE OF HEARING : 14.03.2012 DATE OF PRONOUNCEMENT : 23.03.2012 ORDER PER BHAVNESH SAINI, J.M. : BOTH THE CROSS APPEALS ARE DIRECTED AGAINST THE OR DER OF LD. CIT(A), GHAZIABAD DATED 03.12.2010 FOR THE ASSESSMENT YEAR 2006-07. 2. THE REVENUE HAS PREFERRED THE APPEAL ON THE FOLL OWING GROUNDS : ITA NO. 63 & 64/AGRA/2011 2 1. THE LD. C.I.T. (APPEALS) HAS ERRED IN LAW IN DE CIDING THE APPEAL RELYING ON THE VERY ADDITIONAL EVIDENCE AND SUBMISSION, ADMISSION OF WHICH WAS HELD TO BE REJECTED BY HIM. 2. THE LD. C.I.T. (APPEAL)S ORDER IS PERVERSE AS HIS FINDING ON ADMISSIBILITY OF EVIDENCE AND THEN RELYING ON SAME EVIDENCE IS CONTRADICTORY. 3. THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN ITS A PPEAL. HOWEVER, THE LD. COUNSEL FOR THE ASSESSEE DID NOT PRESS GROUND NO. 7 .1 AND 7.2. THESE GROUNDS OF APPEALS OF THE ASSESSEE ARE, THEREFORE, DISMISSED B EING NOT PRESSED. THE REMAINING GROUNDS NOS. 1 TO 6 OF APPEAL OF THE ASSESSEE READ AS UNDER : 1. BECAUSE IN ANY VIEW THE IMPUGNED ASSESSMENT ORD ER PASSED WITHOUT SERVICE OF NOTICE U/S. 143(2) DATED 23.10.2 007 IS WRONG, ILLEGAL, PERVERSE, VITIATED AND AGAINST THE FACTS A ND LAW OF THE CASE, AND IS LIABLE TO BE QUASHED. 2. BECAUSE IN ANY VIEW THE ASSESSMENT ORDER PASSED U/S. 144 OF THE INCOME-TAX ACT IN THE PECULIAR FACTS OF THE CAS E IS ARBITRARY, WRONG AND ILLEGAL AND CONFIRMED BY LD. C.I.T. (A). 3. BECAUSE WITHOUT PREJUDICE TO AFORESAID GROUND T HE REJECTION OF DETAILS AND EVIDENCES BY THE LD. C.I.T. (A) FURN ISHED U/R 46A IS UNJUST, WRONG, ILLEGAL AND AGAINST THE PRINCIPLES O F NATURAL JUSTICE OF BEING HEARD. 4. BECAUSE IN ANY VIEW THE ADDITION CONFIRMED BY T HE LD. C.I.T. (A) OF RS.4,71,000/- OF UNSECURED LOAN, U/S. 69A IS HIGHLY UNJUST, WRONG, ILLEGAL AND AGAINST THE FACTS AND LAW OF THE CASE. 5. BECAUSE IN ANY VIEW THE ADDITION CONFIRMED BY L D. CIT(A) OF RS.29,19,184/- OF COMPLETE SUNDRY CREDITORS AS PER AUDITED BALANCE SHEET U/S. 69A IS HIGHLY UNJUST, WRONG, ILLEGAL AND AGAINST THE FACTS AND LAW OF THE CASE. ITA NO. 63 & 64/AGRA/2011 3 6. BECAUSE IN ANY VIEW THE ADHOC ADDITION CONFIRME D BY LD. CIT(A) OF RS.1,10,300/- OF 10% OF DIRECT EXPENSES ( 11,03,653/-) IS HIGHLY UNJUST, WRONG, ILLEGAL AND AGAINST THE FACTS AND LAW OF THE CASE. 4. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSE SSEE IS A COMPANY AND FILED ITS RETURN OF INCOME ON 29.11.2006 DECLARING LOSS OF (- ) RS.4,07,771/-. THE CASE WAS SELECTED FOR SCRUTINY. THE NOTICES U/S. 143(2)/142( 1) DATED 23.10.2007 WERE ISSUED AND SERVED UPON THE ASSESSEE FIXING THE DATE OF HEA RING FOR 13.11.2007. THE ASSESSEE DESPITE SERVICE OF NOTICES, DID NOT ATTEND THE PROCEEDINGS BEFORE THE AO AND NO REPLY WAS FILED. AGAIN STATUTORY NOTICES DAT ED 03.04.2008 WERE SERVED UPON THE ASSESSEE, BUT AGAIN, AFTER SERVICE OF THE NOTIC E, THERE WAS NO COMPLIANCE MADE BY THE ASSESSEE. AFTER CHANGE OF JURISDICTION, THE AO AGAIN ISSUED STATUTORY NOTICES AND POSTAL AUTHORITIES RETURN THE NOTICES FOR THE D ATE FIXED ON 19.09.2008 WITH THE REMARKS NOT MET. INSPECTOR WAS, THEREFORE, DIRECT ED TO SERVE THE NOTICE UPON THE ASSESSEE BY AFFIXTURE FOR FIXING THE DATE OF HEARIN G FOR 16.10.2008. HOWEVER, ON 15.10.2008, A LETTER WAS RECEIVED FROM MR. SANJAY J AIN, DIRECTOR OF THE ASSESSEE, IN WHICH HE HAS RAISED SOME DOUBTS ON THE NOTICES AND ASSESSMENT YEAR IN QUESTION. HIS CONFUSION WAS CLARIFIED ON TELEPHONE AND HE WAS REQUESTED TO MAKE COMPLIANCE OF THE STATUTORY NOTICE ON 16.10.2008, B UT AGAIN ON THE DATE FIXED, NOBODY ATTENDED THE PROCEEDINGS DESPITE SERVICE. SU MMONS U/S. 131 WAS ISSUED AND SERVED ON THE ASSESSEE FOR THE DATE OF HEARING OF ASSESSMENT PROCEEDINGS ON 04.11.2008. ON 04.11.2008, MR. SANJAY JAIN, DIRECTO R OF THE ASSESSEE COMPANY ITA NO. 63 & 64/AGRA/2011 4 SPOKE ON TELEPHONE AND REQUESTED FOR ADJOURNMENT AN D THE CASE WAS ADJOURNED FOR 20.11.2008. ON 20.11.2008, WRITTEN SUBMISSION WAS R ECEIVED FROM SHRI SANJAY JAIN, DIRECTOR OF THE ASSESSEE, IN WHICH HE REQUEST ED FOR ADJOURNMENT FOR TWO MONTHS DUE TO HIS ILL HEALTH AND GETTING TREATMENT AT DELHI. HE SOUGHT ADJOURNMENT UPTO THE LAST WEEK OF JAN, 2009. SINCE IT WAS A TIM E BARRED MATTER, THE ASSESSEE WAS GIVEN TIME UPTO 04.12.2008. HOWEVER, NO COMPLIANCE WAS MADE. THEREFORE, THE AO PROCEEDED TO PASS EX PARTE ASSESSMENT ORDER U/S. 144 OF THE IT ACT. THE AO ON MERIT FOUND THAT THE THERE IS INCREASE IN SHARE CAPITAL IN A SUM OF RS.41,50,000/-. IN THE ABSENCE OF ANY DETAILS, ADDITION WAS ACCORDI NGLY MADE. FURTHER THE ASSESSEE RECEIVED LOAN OF RS.4,71,000/- FROM ONE OF ITS DIRE CTORS, SMT. PRATIBHA DEVI JAIN. IN ABSENCE OF ANY CONFIRMATION OF LOAN, ADDITION WAS, ACCORDINGLY, MADE. THE AO FURTHER FOUND THAT SUNDRY CREDITORS HAVE BEEN SHOWN AT RS.29,19,184/- AND IN ABSENCE OF ANY DOCUMENT OR EVIDENCE ON RECORD, ADDI TION OF RS.29,19,184/- WAS MADE. LASTLY, EXPENSES WERE DISALLOWED AT 10% AND A DDITION OF RS.1,10,300/- WAS MADE. 5. ALL THE ADDITIONS WERE CHALLENGED BEFORE THE LD. CIT(A). THE ASSESSEE MADE WRITTEN SUBMISSION WHICH IS REPRODUCED IN THE APPEL LATE ORDER. THE ASSESSEE DENIED TO HAVE RECEIVED NOTICE U/S. 143(2) DATED 23.10.200 7. FOR SERVICE OF FURTHER NOTICE THROUGH AFFIXTURE, THE ASSESSEE EXPLAINED THAT SINC E SANJAY JAIN, ONE OF THE DIRECTORS WAS SUFFERING AND GETTING TREATMENT AT DELHI, THERE FORE, HE COULD NOT ATTEND THE ITA NO. 63 & 64/AGRA/2011 5 PROCEEDINGS BEFORE THE AO. IT WAS EXPLAINED THAT SI NCE NO NOTICE U/S. 143(2) WAS SERVED WITHIN THE PERIOD OF LIMITATION, THEREFORE, THE ASSESSMENT MAY BE ANNULLED. THE ASSESSEE ALSO MADE ALLEGATIONS AGAINST THE OFFI CERS OF REVENUE DEPARTMENT IN THE WRITTEN SUBMISSION BY CHALLENGING THE REPORT OF POSTAL AUTHORITIES RETURNING BACK THE NOTICE AT THE SUBSEQUENT STAGE BECAUSE THE ASSESSEES OFFICE CUM RESIDENCE OF THE DIRECTOR IS ADJACENT TO THE INCOME-TAX OFFIC E, ETAH AND THE DEPARTMENT WAS RUNNING TAX HELP CENTRE FROM THE SAME BUILDING. IT WAS SUBMITTED THAT SINCE THE REVENUE DEPARTMENT OFFICERS WERE NOT HAVING GOOD TE RMS BECAUSE THE ASSESSEE WANTED TO GET HIS PREMISES VACATED WHERE TAX HELP C ENTRE WAS BEING RUN, THEREFORE, THE SERVICE OF NOTICE THROUGH INSPECTOR WAS FORGED ONE. ON MERIT ALSO, THE ASSESSEE SUBMITTED THAT SHARE CAPITAL WAS RECEI VED IN A SUM OF RS.41,50,000/- FROM TWO DIRECTORS, NAMELY MR. SANJAY JAIN AND MRS. VIBHA JAIN, WHO ARE ASSESSED TO TAX AND HAVE EXPLAINED THEIR CREDITWORTHINESS AL SO. CONFIRMATION WAS ALSO FILED. THE ASSESSEE, THEREFORE, PRAYED THAT THESE EVIDENCE S MAY BE ADMITTED U/R. 46A AS ADDITIONAL EVIDENCES. THE ASSESSEE ALSO RELIED UPON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. LOVELY EXPORT PVT. LTD., 319 ITR (ST.)5 (SC). REGARDING ADDITION OF 4,71,000/- IT WAS SUBMITTED T HAT THE UNSECURED LOAN WAS RECEIVED IN THE PRECEDING ASSESSMENT YEAR. AS SUCH, NO ADDITION COULD BE MADE BECAUSE THE AMOUNT WAS NOT RECEIVED IN THE YEAR UND ER CONSIDERATION. THE ASSESSEE SOUGHT ADMISSION OF ADDITIONAL EVIDENCES ON RECORD U/R. 46A BY FILING COPIES OF ACCOUNT AND CONFIRMATION FROM THE PARTY. AS REGARDS ADDITION OF RS.29,19,184/-, IT ITA NO. 63 & 64/AGRA/2011 6 WAS EXPLAINED THAT THERE WERE LIABILITIES TOWARDS C ST ETC. AND THE AO HAS TAKEN UP THE FIGURES WRONGLY BECAUSE THE AMOUNT IN QUESTION PERTAIN TO TWO PARTIES, NAMELY, BHAWANI TECHNO CHEM AND MAHAVEER CHEMICALS. THEREFO RE, ADDITION WAS MADE IN CONFUSION. FOR DISALLOWANCE OF EXPENSES, IT IS EXPL AINED THAT ADHOC ADDITIONS HAVE BEEN MADE. THE DETAILED SUBMISSION OF THE ASSESSEE IS REPRODUCED IN THE APPELLATE ORDER AND IS NOT REPRODUCED FOR THE SAKE OF BREVITY . THE LD. CIT(A) CALLED FOR THE REMAND REPORT FROM THE ASSESSING OFFICER WITH REGAR D TO SERVICE OF NOTICE, IN WHICH THE AO REITERATED THAT THE NOTICE U/S. 143(2) DATED 23.10.2007 HAS BEEN ISSUED THROUGH SPEED POST AND SERVED UPON THE ASSESSEE AND LATER ON OTHER NOTICES WERE ALSO SERVED UPON THE ASSESSEE. THE LD. CIT(A), CONS IDERING THE EXPLANATION OF THE ASSESSEE AND THE MATERIAL ON RECORD, ALLOWED THE AP PEAL OF THE ASSESSEE PARTLY. HIS FINDINGS IN PARAS 6 & 7 OF THE APPELLATE ORDER ARE REPRODUCED AS UNDER : 6- THE SUBMISSIONS OF THE LEARNED AR HAVE BEEN CON SIDERED. I HAVE ALSO CONSIDERED THE FACTS BROUGHT OUT BY THE A O THE ASSESSMENT ORDER AS WELL AS IN THE REMAND REPORT. THE CASE WAS ALSO DISCUSSED WITH THE LEARNED AR ORALLY ON 02.12.2010. AFTER DIS CUSSION WITH THE LEARNED AR AND ALSO HAVING CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS, MY CONCLUSIONS/OBSERVATIONS ON THE ISS UES TAKEN IN APPEAL ARE AS UNDER : 6.1- I FIND THAT THERE HAS BEEN PROPER SERVICE OF N OTICE IN THIS CASE. THIS IS CLEAR FROM THE REMAND REPORT REPRODUCED ABO VE. I MUST CLARIFY THAT THE CONTENTIONS OF THE AO HAVE BEEN PERSONALLY VERIFIED BY ME BY PERUSING THE ASSESSMENT RECORDS. THESE EVIDENCES RE GARDING SERVICE OF NOTICE THROUGH SPEED POST, WERE PERUSED BY ME; B UT THE SAME WERE ALSO SHOWN BY ME TO THE COUNSEL ON 02.12.2010 AND T HE COUNSEL HAD NOTHING MUCH TO SAY FURTHER. ITA NO. 63 & 64/AGRA/2011 7 6.1(A) THUS, I HOLD THAT THERE WAS PROPER SERVICE O F NOTICE IN THIS CASE. IN SUCH BACK DROP, THE USE OF LANGUAGE IN THE SUBMI SSIONS BY THE APPELLANT RAISING ALLEGATION ON THE INTENTION OF IT O AND INSPECTOR IS REALLY UNFORTUNATE AND REGRETTABLE. IT IS APPARENT THAT THE ASSESSEE, RATHER THAT PERFORMING ITS LAWFUL DUTIES, REVELS IN PICKING UP AVOIDABLE LITIGATION AND ALSO MAKING NASTY ALLEGATIONS. THE A SSESSEE IS ADVISED NOT TO FOLLOW SUCH ATTITUDE IN FUTURE. THE DIRECTOR SHRI SANJAY JAIN HAS ALSO MADE AN AFFIDAVIT, WHICH IS APPARENTLY FALSE W ITH WRONG INTENTION, IN VIEW OF THE DISCUSSIONS MADE ABOVE. 6.1(B) I HOLD THAT THE ASSESSMENT ORDER U/S 144 IS FULLY VALID BECAUSE THE AO HAD BEEN LEFT WITH NO OPTION BUT FINALIZE TH E ASSESSMENT U/S 144 OF THE ACT. 6.2 ONCE THE ASSESSMENT ORDER MADE U/S 144 IS UPHEL D; THE QUESTION ARISES WHETHER THE DETAILS AND EVIDENCES N OW FURNISHED DURING APPELLATE PROCEEDINGS ARE ADMISSIBLE OR NOT? 6.2(A) IN RESPECT OF ADMISSION OF FRESH EVIDENCES, IT IS TRUE THAT AN APPELLATE AUTHORITY CAN RECEIVE ADDITIONAL EVIDENCE FROM EITHER SIDE FOR A FAIR DECISION ON ALL RELEVANT MATERIALS, BUT THE NORMAL EXPECTATION IS THAT ALL THE EVIDENCE SHOULD BE AVAI LABLE EVEN AT THE FIRST STAGE. IT IS FOR THIS REASON THAT CONDITIONS ARE PRESCRIBED FOR ADMISSION OF EVIDENCE IN APPEAL STAGE. RULE 46A LIS TS THE CIRCUMSTANCES, WHERE EVIDENCE COULD NOT BE FILED BE FORE THE ASSESSING OFFICER DUE TO NON-AVAILABILITY OF SUFFICIENT OPPOR TUNITY OR OTHERWISE PREVENTED BY SUFFICIENT CAUSE, SO THAT SUCH CAUSE M UST BE INDICATED, WHILE FILING FRESH EVIDENCE. THE RULE FURTHER PROVI DES THAT THE FIRST APPELLATE AUTHORITY SHOULD RECORD REASONS FOR ADMIT TING SUCH EVIDENCE AT APPEAL STAGE AND GIVES AN OPPORTUNITY FOR THE AS SESSING OFFICER TO MET SUCH ADDITIONAL EVIDENCE. THE NEED FOR FOLLOWIN G THIS PROCEDURE WAS POINTED OUT IN HAJI LAL MOHD. BIRI WORKS V. CIT [2005] 275 ITR 496 (ALL.). THIS PROCEDURE IS REQUIRED TO BE RIGIDL Y FOLLOWED BY THE FIRST APPELLATE AUTHORITY. WHERE ADDITIONAL EVIDENCE IS SOUGHT TO BE RELIED U PON, THE ASSESSEE IS EXPECTED UNDER RULE 46A TO GIVE EXPLANA TION AS TO WHY IT COULD NOT BE FILED BEFORE THE ASSESSING OFFICER. TH E USUAL REASON IS NORMALLY THAT THE ASSESSING OFFICER HAD NOT GIVEN T HE ASSESSEE AN OPPORTUNITY BEFORE DRAWING HIS FINAL CONCLUSION. BU T WHERE NO REASON AT ALL IS GIVEN OR EXPLANATION IS NOT BACKED BY FAC TS ON RECORD, THE RULE ITA NO. 63 & 64/AGRA/2011 8 MAY WELL BE INVOKED AND SUCH ADDITIONAL EVIDENCE SH UT OUT AS WAS POINTED OUT IN CIT V. RANJIT KUMAR CHOUDHURY [2007] 288 ITR 179 (GAUHATI). 6.2(B) SINCE THE ASSESSEE FAILED TO ADDUCE DETAILS AND EVIDENCES DURING ASSESSMENT PROCEEDINGS WITHOUT ANY REASONABLE CAUSE ; THE DETAILS AND EVIDENCES FURNISHED NOW ARE REJECTABLE, IN PRINCIPL E. 6.2(C) HOWEVER, TAKING A LENIENT VIEW, I WOULD PROC EED TO CONSIDER DETAILS AND EVIDENCES TO THE EXTENT WHICH CAN BE AC CEPTED WITHOUT ANY FURTHER VERIFICATION OR WHICH COULD HAVE BEEN POSSI BLE TO BE ASCERTAINED EVEN BY AO FROM CROSS VERIFICATION OF C ERTAIN MATERIAL ON RECORDS OR ASSESSMENT RETURNS. A- REGARDING ADDITION OF RS.41,50,000/- THESE ARE THE INCREASE IN SHARE CAPITAL IMPLYING T HAT THE TWO DIRECTORS, NAMELY, SHRI SANJAY JAIN AND MRS. VIBHA JAIN, HAVE CONTRIBUTED ADDITIONAL AMOUNT DURING THE YEAR. THEI R CONFIRMATIONS HAVE BEEN FILED DURING APPELLATE PROCEEDINGS. MOREO VER, THESE ADDITIONAL SHARE CAPITAL CONTRIBUTIONS ARE VERIFIAB LE FROM THE RECORDS OF SHRI SANJAY JAIN AND SMT. VIBHA JAIN. BOTH THE T WO DIRECTORS CAN BE SAID TO HAVE CREDITWORTHINESS. HOWEVER, THE SOUR CE OF FUNDS REMAINS NOT FULLY EXPLAINED. IN VIEW OF ABOVE, I HOLD THAT THE ADDITION OF RS.4 1,50,000/- (WHICH WAS ADDED US 69A BUT SHOULD HAVE BEEN ADDED U/S68) IS TO BE DELETED SUBJECT TO AO TAKING REMEDIAL MEASURE OR CA USING TO TAKE REMEDIAL MEASURE IN THE HANDS OF SHRI SANJAY JAIN A ND SMT. VIBHA JIAN SO THAT THE SOURCE OF FUNDS IN RESPECT OF THES E SHARE CAPITAL AMOUNTS ARE VERIFIED IN DEPTH. (RELIEF : RS.41,50,000/-) B- REGARDING ADDITION OF RS.4,71,000/-: WITH REGARD TO ADDITION OF RS.4,71,000/- (WHICH WA S ADDED U/S 69A BUT SHOULD HAVE BEEN ADDED U/S 68) BEING UNEXPL AINED LOAN FROM SMT. PRATIBHA DEVI JAIN, THE SAME APPEARS TO BE JUS TIFIED. THE CONFIRMATION FILED FROM THE CREDITOR AT THIS APPELL ATE CANNOT BE ADMITTED FOR THE REASON STATED IN PRECEDING PARA OF THIS ORDER. THOUGH SMT. PRATIBHA DEVI JAIN IS STATED TO BE MOTHER OF D IRECTOR SHRI SANJAY JAIN, THE SAME IS NOT SUFFICIENT TO PROVE THE IDENT ITY AND CREDITWORTHINESS OF THE SAID CREDITOR. THE AO COULD NOT HAVE OKAYED SUCH LOAN WITHOUT HAVING CONFIRMATION AND OTHER DET AILS/EVIDENCE, ITA NO. 63 & 64/AGRA/2011 9 NECESSARY TO ESTABLISH GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF THE CREDITOR. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CAS E, THIS ADDITION OF RS.4,71,000/- IS SUSTAINED. C- REGARDING ADDITION OF RS.29,19,184/- : APPARENTLY, THESE WERE CLOSING BALANCES OF THE SUN DRY CREDITORS AS APPEARING IN THE BALANCE SHEET. THE AO DID NOT K NOW WHICH ARE THE CREDITORS INVOLVED; WHAT ARE THEIR NAMES AND ADDRES SES AND HOW THESE ARE GENUINE. THIS IS SO BECAUSE THE ASSESSEE MADE NO COMPLIANCE BY FURNISHING ANY DETAILS AND EVIDENCES OR EVEN PRODUC ING BOOKS OF ACCOUNTS. IN VIEW OF THIS, I FIND THAT THE AO HAD N O OPTION BUT TO TREAT THESE SUNDRY CREDITORS AS NON-GENUINE. PURCHASES AN D SALES WERE ALSO UNVERIFIABLE AND HENCE ALSO THESE BALANCES COULD NO T BE EXAMINED AND VERIFIED, WHICH THE AO WOULD HAVE DONE HAD THE ASSE SSEE FURNISHED FULL DETAILS. THE ADDITION OF RS.29,19,184/- IS, THEREFORE, UPHE LD. 7. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. 6. THE LD. DR SUBMITTED THAT ONCE THE LD. CIT(A) RE FUSED TO ADMIT THE ADDITIONAL EVIDENCES U/R. 46A, HE SHOULD NOT HAVE D ELETED THE ADDITION ON RELYING UPON THE SAME EVIDENCES WITHOUT CALLING FOR THE REM AND REPORT OF AO ON MERIT. SUCH ADDITIONAL EVIDENCES, WHICH ARE NOT ADMITTED, SHOULD NOT HAVE BEEN TAKEN FOR CONSIDERATION. THE LD. DR ALSO SUBMITTED THAT THE A O HAS RIGHTLY PASSED EX PARTE ASSESSMENT ORDER BECAUSE THE ASSESSEE DID NOT COMPL Y WITH THE STATUTORY NOTICES U/S. 143(2) SERVED UPON THE ASSESSEE WITHIN THE PER IOD OF LIMITATION. THE LD. DR, HOWEVER, SUBMITTED THAT THE MATTER ON MERITS REQUIR ES RECONSIDERATION BECAUSE THE LD. CIT(A) GAVE CONTRADICTORY FINDING ON ADMISSION OF THE ADDITIONAL EVIDENCE AND ITA NO. 63 & 64/AGRA/2011 10 HE HAS NO OBJECTION IF THE MATTER IS REMANDED TO TH E FILE OF LD. CIT(A) FOR RECONSIDERATION. 7. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSES SEE REITERATED THE SUBMISSIONS MADE BEFORE THE LD. CIT(A) AND SUBMITTED THAT NO NO TICE U/S. 143(2) DATED 23.10.2007 WAS SERVED UPON THE ASSESSEE. THEREFORE, PROCEEDINGS SHOULD BE ANNULLED. HE SUBMITTED THAT DUE TO ABOVE REASON, TH E ASSESSEE COULD NOT MAKE COMPLIANCE BEFORE THE LD. CIT(A). THEREFORE, HE SHO ULD HAVE ADMITTED THE ADDITIONAL EVIDENCE AT THE APPELLATE STAGE. HE RELI ED UPON THE DECISION OF ITAT, DELHI BENCHES IN THE CASE OF ITO VS. JITENDRA MEHRA , 53 ITD-396. 7.1 ON MERITS, THE LD. COUNSEL FOR THE ASSESSEE SUB MITTED THAT THE MATTER MAY BE REMANDED TO THE FILE OF LD. CIT(A) FOR RECONSIDERAT ION AND THAT GROUND NO. 6 OF THE ASSESSEES APPEAL REGARDING DISALLOWANCE OF EXPENSE S HAS NOT BEEN DECIDED BY THE LD. CIT(A). THE LD. COUNSEL FOR THE ASSESSEE ALSO R EFERRED TO PB (B-8) AND ADMITTED THAT THE ADDRESS OF THE NOTICE ISSUED TO THE ASSESS EE WAS CORRECT. HE HAS RELIED UPON THE FOLLOWING DECISIONS : (I). ACIT VS. VINDHYA TELELINKS LTD., 13 SOT 233 ( JAB.)(TM) (II). CIT VS. CEBON INDIA LTD., 184 TAXMAN 290 (P& H) (III). CIT VS. HOTLINE INTERNATIONAL P. LTD., 296 ITR 333(DEL). ITA NO. 63 & 64/AGRA/2011 11 8. THE LD. DR IN THE REJOINDER REFERRED TO THE LETT ER WRITTEN BY THE ASSESSEE TO THE AO AT THE ASSESSMENT STAGE (B-3 & B4) TO SHOW T HAT ASSESSEES DIRECTOR HAS NOT DISPUTED THE SERVICE OF NOTICE U/S. 143(2) BEFORE T HE AO AT THE ASSESSMENT STAGE. THE LD. DR SUBMITTED THAT SINCE SERVICE OF NOTICE I S NOT DENIED AT THE ASSESSMENT STAGE BY THE ASSESSEE, THEREFORE, THERE IS NO INFIR MITY IN THE ORDER OF THE LD. CIT(A) IN HOLDING THAT PROPER SERVICE WAS MADE UPON THE AS SESSEE WITHIN THE PERIOD OF LIMITATION. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND THE MATERIAL ON RECORD. WE DECIDE ALL THE GROUNDS OF CROSS APPEALS ISSUE-WISE AS UNDER : ISSUE NO. 1 10. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT STATUTORY NOTICE U/S. 143(2) DATED 23.10.2007 WAS NOT SERVED UPON THE ASSESSEE A ND RAISED GROUND NO. 1 IN THIS REGARD. WE, HOWEVER, DO NOT AGREE WITH THE CONTENTI ON OF THE LD. COUNSEL FOR THE ASSESSEE IN THIS REGARD. THE AO HAS SPECIFICALLY ME NTIONED IN THE ASSESSMENT ORDER THAT STATUTORY NOTICE U/S. 143(2) DATED 23.10.2007 WAS ISSUED AND SERVED UPON THE ASSESSEE FIXING THE DATE OF HEARING FOR 13.11.2007. THERE IS NO DISPUTE BY THE ASSESSEE THAT ALL THE STATUTORY NOTICES WERE SENT A T THE CORRECT ADDRESS OF THE ASSESSEE. COPY OF ONE OF SUCH NOTICE IS FILED AT PA GE B-8 OF THE PAPER BOOK AND THE LD. COUNSEL FOR THE ASSESSEE ALSO ADMITTED THAT THE NOTICE HAS BEEN SENT AT THE CORRECT ADDRESS OF THE ASSESSEE. THE AO IN THE REMAND REPOR T ALSO CONFIRMED THAT NOTICE ITA NO. 63 & 64/AGRA/2011 12 DATED 23.10.2007 WAS SENT THROUGH SPEED POST AND WA S SERVED UPON THE ASSESSEE. THE LD. CIT(A) ALSO DISCUSSED THE ISSUE WITH THE LD . COUNSEL FOR THE ASSESSEE AT THE APPELLATE STAGE AND GONE THROUGH THE RECORD AND THE REMAND REPORT OF THE AO. THE LD. CIT(A) ON PERSONAL VERIFICATION OF THE ASSESSME NT RECORD FOUND THAT THESE EVIDENCES REGARDING SERVICE OF NOTICE THROUGH SPEED POST ARE AVAILABLE ON RECORD. THE SAME EVIDENCE OF SENDING THE NOTICE THROUGH SPE ED POST WAS ALSO SHOWN TO THE ASSESSEES COUNSEL AT THE APPELLATE STAGE AND THE C OUNSEL OF THE ASSESSEE HAD NOTHING TO SAY FURTHER BEFORE THE LD. CIT(A). FINDI NG OF FACT RECORDED BY THE LD. CIT(A) IN PARA 6 & 6.1 HAVE NOT BEEN REBUTTED BEFOR E US THROUGH ANY EVIDENCE OR MATERIAL ON RECORD. IT WOULD, THEREFORE, PROVE THAT THE ASSESSEES REPRESENTATIVE HAS ACCEPTED THE SERVICE OF NOTICE UPON THE ASSESSEE WI THIN THE PERIOD OF LIMITATION AND AS SUCH, THERE WAS NO FURTHER OBJECTION RAISED BEFO RE THE LD. CIT(A). IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE IS A COMPANY AND, AS SUCH , IS A LEGAL ENTITY. THE DIRECTOR OF THE ASSESSEE COMPANY FILED TWO LETTERS BEFORE THE A O AT ASSESSMENT STAGE SEEKING ADJOURNMENT, BUT IN NONE OF THE LETTERS (B-3 & B-4) , THE ASSESSEE DENIED TO HAVE RECEIVED STATUTORY NOTICE U/S. 143(2) WITHIN THE PE RIOD OF LIMITATION. SHRI SANJAY JAIN, ONE OF THE DIRECTORS OF THE ASSESSEE FILED AF FIDAVIT BEFORE THE LD. CIT(A), IN WHICH HE HAS MERELY STATED THAT THE AFORESAID NOTIC E DATED 23.10.2007 IS NOT SERVED UPON HIM. HE HAS NEVER MADE ALLEGATION IN THE AFFID AVIT THAT STATUTORY NOTICE WAS NOT RECEIVED BY ANY OTHER DIRECTOR OF THE COMPANY O R ANY OF THE EMPLOYEES OF THE ASSESSEE COMPANY. THEREFORE, DENIAL OF THE ASSESSEE AT THE LATER STAGE APPEARS TO BE ITA NO. 63 & 64/AGRA/2011 13 AFTER THOUGHT. IT IS ALSO NOT IN DISPUTE THAT THE R EGISTERED COVER SENT TO THE ASSESSEE THROUGH SPEED POST, CONTAINING STATUTORY NOTICE, DI D NOT RETURN BACK TO THE REVENUE DEPARTMENT. THEREFORE, THERE IS A PRESUMPTION AGAIN ST THE ASSESSEE THAT THE NOTICE HAS BEEN SERVED UPON THE ASSESSEE WITHIN THE PERIOD OF LIMITATION. THE FINDING GIVEN IN THE ASSESSMENT ORDER AND THE IMPUGNED ORDE R REGARDING SERVICE OF THE STATUTORY NOTICE UPON THE ASSESSEE HAS NOT BEEN REB UTTED BY THE ASSESSEE THROUGH ANY EVIDENCE OR MATERIAL ON RECORD. NO EFFORTS HAVE BEEN MADE BY THE ASSESSEE TO OBTAIN ANY CERTIFICATE FROM THE POSTAL AUTHORITIES TO SHOW THAT STATUTORY NOTICE WAS NOT SERVED UPON THE ASSESSEE. IT MAY AGAIN BE NOTED HERE THAT THE ASSESSEES COUNSEL AGREED BEFORE THE LD. CIT(A) THAT PROPER NOTICE WAS SENT TO THE ASSESSEE THROUGH SPEED POST AND NO FURTHER ARGUMENTS HAVE BEEN MADE IN THIS REGARD. CONSIDERING THE FACTS NOTED ABOVE, IT IS CLEAR THAT THE STATUTO RY NOTICE WAS SERVED UPON THE ASSESSEE WITHIN THE PERIOD OF LIMITATION AND THE AS SESSEE HAS NOT PRODUCED ANY EVIDENCE TO REBUT THE FINDINGS OF THE AUTHORITIES B ELOW. THE AFFIDAVIT FILED BY ONE OF THE DIRECTORS OF THE ASSESSEE COMPANY WOULD NOT SER VE ANY PURPOSE. 11. HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. MADHSY FILMS P. LTD., 301 ITR 69 (DELHI) HELD HELD, ALLOWING THE APPEAL, THAT THERE WAS NOTHING ON RECORD TO SHOW THAT THE NOTICE DATED OCTOBER 23, 2002 DISPATC HED ON OCTOBER 25, 2002, BY SPEED POST WAS UNDELIVERED OR RECEIVED BACK. UNDER THE NORMAL CIRCUMSTANCES, A PRESUMPTION WOULD LIE THAT THE NOTICE HAD REACHED THE ASSESSEE WITHIN 2 OR 3 DAYS. THOUGH THE PRESUMPTION ITA NO. 63 & 64/AGRA/2011 14 UNDER THE SECTION IS REBUTTABLE, IN THE ABSENCE OF PROOF TO THE CONTRARY, THE PRESUMPTION OF PROPER SERVICE OR EFFECTIVE SERV ICE OF NOTICE WOULD ARISE. SINCE THE ENVELOPE CONTAINING THE NOTICE HAD NOT BEEN RECEIVED BACK BY THE DEPARTMENT, THERE WAS A PRESUMPTION THA T IT HAD REACHED THE ASSESSEE WHICH WAS NOT REBUTTED BY THE ASSESSEE BY FILING AN AFFIDAVIT. THEREFORE, NOTICE ISSUED UNDER SECTION 1 43(2) OF THE ACT WAS SERVED ON THE ASSESSEE WITHIN THE PRESCRIBED PERIOD . 11.1 HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS . SHANKER LAL VED PRAKASH, 300 ITR 243 (DELHI) HELD HELD, ALLOWING THE APPEAL, THAT THE NOTICES UNDER SECTION 143(2) WERE UNDISPUTEDLY DISPATCHED ON AUGUST 25, 1 998; THE ASSESSEE HAD ACQUIESCED TO THE STATEMENT THAT THIS ENVELOPE HAD REACHED CIVIL LINES POST OFFICE ON THE NEXT DAY ITSELF. AUGUST, 2 5, 1998, FELL ON A TUESDAY. DESPITE THE ASSERTION THAT THE ENVELOPE HA D REACHED THE CIVIL LINES POST OFFICE ON AUGUST 26, 1998, IT WOULD BE F AIR FOR THE COURT TO PRESUME THAT A LOCAL LETTER WOULD REACH THE ADDRESS EE WITHIN THREE DAYS, I.E., FRIDAY AUGUST 28, 1998. IT WAS CONTENDE D THAT THE ASSESSEE WAS NOT DUTY-BOUND TO APPEAR BEFORE THE ASSESSING O FFICER SINCE THE NOTICE WAS RECEIVED BEYOND THE PERIOD OF LIMITATION . THIS ASSUMES THAT THE ASSESSEE WAS AWARE OF THE LEGAL PROVISIONS ON T HAT DATE OR SOON THEREAFTER PRESUMABLY AFTER TAKING LEGAL ADVICE. IN BOTH CONTINGENCIES IT WOULD HAVE BEEN NORMAL FOR HIM TO ADDRESS A COMM UNICATION TO THE ASSESSING OFFICER FORTHWITH OR AT LEAST WITHIN A MO NTH TO THE EFFECT THAT PROPOSED PROCEEDINGS HAD BEEN RENDERED LEGALLY INEF FICACIOUS. THE ASSESSEE COULD ALSO HAVE OBTAINED A CERTIFICATE FRO M THE POSTAL DEPARTMENT SINCE HE WAS FULLY AWARE OF THE IMPORTAN CE OF THE DATE OF DELIVERY. THE ASSESSEE HAD FAILED TO DISCHARGE THE BURDEN WHICH SHIFTED TO HIM IMMEDIATELY ON HIS ASSERTION THAT HE HAD RECEIVED THE NOTICE ON A PARTICULAR DATE. THEREFORE, THE NOTICE WAS NOT BARRED BY LIMITATION. 12. CONSIDERING THE FACTS OF THE CASE IN THE LIGHT OF ABOVE DECISION, THE DECISIONS CITED BY THE LD. COUNSEL FOR THE ASSESSEE WOULD NOT SUPPORT THE CASE OF THE ASSESSEE. THE DECISION IN THE CASE OF MADHSY FILMS P. LTD (SU PRA) IS DIRECTLY ON THE POINT ITA NO. 63 & 64/AGRA/2011 15 AGAINST THE ASSESSEE. IN VIEW OF THE ABOVE DISCUSSI ON, WE HOLD THAT THE NOTICE U/S. 143(2) DATED 23.10.2007 HAS BEEN SERVED UPON THE AS SESSEE WITHIN THE PERIOD OF LIMITATION. THIS ISSUE IS, THUS, DECIDED AGAINST TH E ASSESSEE. ACCORDINGLY, GROUND NO. 1 OF APPEAL OF THE ASSESSEE IS DISMISSED. ISSUE NO. 2 13. THE ASSESSEE ON GROUND NO.2 CHALLENGED THE EX PARTE ASSESSMENT ORDER U/S. 144 OF THE IT ACT. THE FINDINGS GIVEN IN THE ASSESS MENT ORDER THAT STATUTORY NOTICES WERE SERVED UPON THE ASSESSEE AND NO COMPLIANCE WAS MADE BY THE ASSESSEE WOULD PROVE THAT THE AO CORRECTLY PROCEEDED EX PARTE AGAINST THE ASSESSEE. EVEN THE DIRECTOR OF THE ASSESSEE COMPANY WROTE TWO LETTERS TO THE AO AT THE ASSESSMENT STAGE AND ALSO REQUESTED FOR ADJOURNMENT, BUT NO CO MPLIANCE OF NOTICES HAVE BEEN MADE. SINCE THE ASSESSMENT WAS GOING TO BE TIME BAR RED, THEREFORE, THE AO RIGHTLY PROCEEDED EX PARTE AGAINST THE ASSESSEE. GROUND NO.2 OF APPEAL OF THE ASSESSEE HAS NO MERIT AND IS DISMISSED. THE ISSUE NO.2 IS, ACCOR DINGLY, DECIDED AGAINST THE ASSESSEE. ISSUE NO. 3 14. THIS ISSUE SHALL DECIDE THE REMAINING GROUNDS N OS. 3 TO 6 OF THE APPEAL OF ASSESSEE AND GROUND NO. 1 & 2 OF THE APPEAL OF THE REVENUE. IT IS NOT IN DISPUTE THAT AT THE ASSESSMENT STAGE, THE ASSESSEE DID NOT FILE ANY EVIDENCE TO CLARIFY THE INCREASE IN THE SHARE CAPITAL, UNEXPLAINED CASH CRE DITS AND UNEXPLAINED SUNDRY CREDITORS. THE AO, ACCORDINGLY MADE THE ADDITIONS. THE DISALLOWANCE OF PART OF THE ITA NO. 63 & 64/AGRA/2011 16 EXPENSES WERE ALSO MADE IN THE ABSENCE OF PRODUCTIO N OF BOOKS OF ACCOUNT AND OTHER DETAILS AND SINCE THE EXPENDITURES WERE NOT V ERIFIABLE, THEREFORE, THE AO MADE THE ADDITION. HOWEVER, AT THE APPELLATE STAGE, THE ASSESSEE MADE ALLEGATIONS AGAINST THE OFFICERS OF THE REVENUE DEPARTMENT TO S HOW THAT PREMISES OF THE ASSESSEE WAS USED BY THE DEPARTMENT FOR RUNNING TAX HELP CENTRE AND SINCE IT WAS GOT VACATED, THEREFORE, THE RELATIONS BETWEEN THE A SSESSEE AND THE DEPARTMENT WERE NOT CORDIAL. THE ASSESSEE FILED ADDITIONAL EVIDENCE BEFORE THE LD. CIT(A) DUE TO ABOVE REASONS. FOR PROCEEDING EX PARTE AGAINST THE ASSESSEE, IT IS ALSO SUBMITTED THAT SINCE THE MAIN DIRECTOR OF THE ASSESSEE WAS U NDERGOING TREATMENT, THEREFORE, HE COULD NOT ATTEND THE PROCEEDINGS AT THE ASSESSME NT STAGE. THE ASSESSEE FILED CONFIRMATION FROM THE DIRECTORS FOR INCREASE OF SHA RE CAPITAL ALONG WITH SUPPORTING DOCUMENTS TO SHOW THAT SHARE CAPITAL WAS GENUINELY RECEIVED AND COULD NOT BE TREATED AS UNEXPLAINED. RELIANCE WAS ALSO PLACED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF LOVELY EXPORTS (SUPRA) . FURTHER, CONFIRMATION FROM SMT. PRATIBHA JAIN AND OTHER DOCUMENTS WERE FILED T O SHOW THAT THE CREDITS WERE RECEIVED IN THE PRECEDING YEAR. REGARDING GENUINE S UNDRY CREDITORS, IT WAS EXPLAINED THAT DUE TO CONFUSION, ADDITION HAS BEEN MADE AGAINST THE ASSESSEE. FOR DISALLOWANCE OF EXPENSES, IT WAS PRAYED THAT ADHOC ADDITION HAS BEEN MADE BUT THE LD. CIT(A) DID NOT DECIDE THIS GROUND IN THE APPELL ATE ORDER. RULE 46A OF THE IT RULES PROVIDES AS UNDER : ITA NO. 63 & 64/AGRA/2011 17 PRODUCTION OF ADDITIONAL EVIDENCE BEFORE THE DEPU TY COMMISSIONER (APPEALS) AND COMMISSIONER (APPEALS). 46A. (1) THE APPELLANT SHALL NOT BE ENTITLED TO PRODUC E BEFORE THE DEPUTY COMMISSIONER (APPEALS) OR, AS THE CASE MAY B E, 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 ADMI T EVIDENCE WHICH OUGHT TO HAVE BEEN ADMITTED ; OR (B) WHERE THE APPELLANT WAS PREVENTED BY SUFFICI ENT CAUSE FROM PRODUCING THE EVIDENCE WHICH HE WAS CALLED UPO N TO PRODUCE BY THE ASSESSING OFFICER ; OR (C) WHERE THE APPELLANT WAS PREVENTED BY SUFFICI ENT CAUSE FROM PRODUCING BEFORE THE ASSESSING OFFICER ANY EVI DENCE WHICH IS RELEVANT TO ANY GROUND OF APPEAL ; OR (D) WHERE THE ASSESSING OFFICER HAS MADE THE ORD ER APPEALED AGAINST WITHOUT GIVING SUFFICIENT OPPORTUNITY TO TH E 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 THE CASE MAY B E, THE COMMISSIONER (APPEALS) RECORDS IN WRITING THE REASO NS FOR ITS ADMISSION. (3) THE DEPUTY COMMISSIONER (APPEALS) OR, AS THE C ASE MAY BE, THE COMMISSIONER (APPEALS) SHALL NOT TAKE INTO ACCOUNT ANY EVIDENCE PRODUCED UNDER SUB-RULE (1) UNLESS THE ASSESSING OF FICER 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 W ITNESS IN REBUTTAL OF THE ADDITIONAL EVIDENCE PRODUCED BY THE APPELLAN T. (4) NOTHING CONTAINED IN THIS RULE SHALL AFFECT THE POWER OF THE DEPUTY COMMISSIONER (APPEALS) OR, AS THE CASE MAY BE, THE COMMISSIONER ITA NO. 63 & 64/AGRA/2011 18 (APPEALS) TO DIRECT THE PRODUCTION OF ANY DOCUMENT, OR THE EXAMINATION OF ANY WITNESS, TO ENABLE HIM TO DISPOS E OF THE APPEAL, OR FOR ANY OTHER SUBSTANTIAL CAUSE INCLUDING THE ENHAN CEMENT OF THE ASSESSMENT OR PENALTY (WHETHER ON HIS OWN MOTION OR ON THE REQUEST OF THE ASSESSING OFFICER) UNDER CLAUSE (A) OF SUB-SECT ION (1) OF SECTION 251 OR THE IMPOSITION OF PENALTY UNDER SECTION 271. 15. IN THE ABOVE RULE, CERTAIN CONDITIONS HAVE BEEN PROVIDED AND IN CASE THE ASSESSEE IS ABLE TO SATISFY THE LD. CIT (A) ON SUCH CONDITIONS, THE ADDITIONAL EVIDENCES COULD HAVE BEEN ADMITTED BY THE LD. CIT(A ) BY RECORDING THE REASONS FOR THEIR ADMISSION IN WRITING. IT IS FURTHER DIRECTED THAT THE LD. CIT(A) SHALL NOT TAKE INTO CONSIDERATION ANY ADDITIONAL EVIDENCE PRODUCED UNLESS THE AO HAS BEEN ALLOWED A REASONABLE OPPORTUNITY TO EXAMINE THESE E VIDENCES OR DOCUMENTS OR TO CROSS EXAMINE THE WITNESSES. IT APPEARS FROM THE AP PELLATE ORDER THAT THE LD. CIT(A) CALLED FOR THE REMAND REPORT FROM THE AO BUT THE RE MAND REPORT REPRODUCED IN THE APPELLATE ORDER CONTAINED DETAILS OF ISSUE OF NOTIC E U/S. 143(2) OF THE IT ACT. THE ORDER OF THE LD. CIT(A) WITH REGARD TO THE ADDITION AL EVIDENCES AND DELETION OF PART OF THE ADDITION HAS BEEN REPRODUCED ABOVE. THE LD. CIT(A) IN PARA 6.2(B) OF THE APPELLATE ORDER DID NOT ADMIT THE ADDITIONAL EVIDEN CES FILED IN THIS REGARD BY THE ASSESSEE. HOWEVER, THE LD. CIT(A) AFTER TAKING SUCH A VIEW AGAINST THE ASSESSEE, TOOK A LENIENT VIEW IN PARA 6.2(C) AND PROCEEDED TO CONSIDER THE DETAILS OF EVIDENCES ON MERITS EVEN WITHOUT VERIFICATION OBTAI NED FROM THE AO. THUS, THE LD. CIT(A) PASSED A CONTRARY ORDER. THE LD. CIT(A) ONCE REJECTED THE REQUEST OF THE ASSESSEE FOR ADMISSION OF THE ADDITIONAL EVIDENCE A T THE APPELLATE STAGE, HE WOULD ITA NO. 63 & 64/AGRA/2011 19 BECOME FUNCTUS OFFICIO TO PROCEED TO CONSIDER SUCH ADDITIONAL EVIDENCES WHICH HAD NOT BEEN ADMITTED BY HIM. HOWEVER, THE LD. CIT(A) S TRANGELY AND AGAINST ALL PRINCIPLES OF LAW, CONSIDERED THE ADDITIONAL EVIDEN CES ON MERITS AS AGAINST GIVING FINDINGS AGAINST THE REVENUE. FURTHER, THE LD. CIT( A) VIOLATED THE PROVISIONS OF RULE 46A BY NOT GIVING OPPORTUNITY TO THE AO TO EXA MINE SUCH ADDITIONAL EVIDENCES ON MERITS. THEREFORE, THE ORDER OF THE LD . CIT(A) IN CONSIDERING THE ADDITIONAL EVIDENCE AFTER REJECTION OF THE ADMISSIO N OF ADDITIONAL EVIDENCE, CANNOT BE SUSTAINED IN LAW. THE DEPARTMENT IS, THEREFORE, JUSTIFIED IN FILING THE DEPARTMENTAL APPEAL ON THE ABOVE TWO GROUNDS OF APP EAL CHALLENGING THE ORDER OF THE LD. CIT(A) FOR CONSIDERING THE ADDITIONAL EVIDE NCES AND THEIR ADMISSIBILITY, WHICH HAS BEEN REJECTED FOR CONSIDERATION. HOWEVER, THE ASSESSEE HAS ALSO RAISED GROUND NO.3 THAT THE LD. CIT(A) SHOULD NOT HAVE REJ ECTED THE ADMISSIBILITY OF ADDITIONAL EVIDENCE U/R. 46A OF THE IT RULES, WHICH PROVIDE CERTAIN CONDITIONS IN WHICH THE LD. CIT(A) COULD HAVE ADMITTED THE ADDITI ONAL EVIDENCES. THE ASSESSEE EXPLAINED THAT DUE TO PREMISES OF THE ASSESSEE WHER E THE DEPARTMENT WAS RUNNING TAX HELP CENTRE WAS GOT VACATED, THE DEPARTMENTAL O FFICERS BECAME ANNOYED. FURTHER IT IS EXPLAINED THAT ONE OF THE DIRECTORS O F THE COMPANY WAS UNDERGOING TREATMENT AND AS SUCH COULD NOT ATTEND THE ASSESSME NT PROCEEDINGS AND FILE REQUIRED DETAILS. THE SAME SUBMISSION OF THE ASSESS EE IS SUPPORTED BY THE LETTER OF ASSESSEE FILED BEFORE THE AO DATED 20.11.2008 (BP-B -4), IN WHICH THE DIRECTOR EXPLAINED THAT SINCE DUE TO SLIP DISC, HE HAD TO RU SH FOR DELHI FOR TREATMENT, ITA NO. 63 & 64/AGRA/2011 20 THEREFORE, HE WAS UNABLE TO EVEN MOVE FROM THE BED. THE LETTER IS SUPPORTED BY MEDICAL CERTIFICATE. THE SAME EXPLANATION IS ALSO G IVEN IN THE AFFIDAVIT OF THE DIRECTOR FILED BEFORE THE LD. CIT(A) FOR VACATION O F THE PROPERTY OF ASSESSEE BY THE REVENUE DEPARTMENT. THESE FACTS WOULD SUPPORT THE C ASE OF THE ASSESSEE THAT THE ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE FROM PRO DUCING THE EVIDENCE AT THE ASSESSMENT STAGE BEFORE THE AO. SINCE THOSE FACTS W ERE PLEADED BEFORE THE LD. CIT(A) IN THE WRITTEN SUBMISSIONS IN APPEAL, THE LD . CIT(A) SHOULD HAVE REGARD TO RULE 46A IN THIS REGARD AND SHOULD HAVE ADMITTED TH E ADDITIONAL EVIDENCE, CONSIDERING THE CIRCUMSTANCES EXPLAINED BY THE ASSE SSEE. THE LD. COUNSEL FOR THE ASSESSEE ALSO RELIED UPON THE DECISION OF ITAT DELH I BENCH IN THE CASE OF JITENDRA MEHRA (SUPRA) IN WHICH THE TRIBUNAL CONSIDERED THE PROVISIONS OF SECTION 250(4) ENJOYED BY THE LD. CIT(A) BY DIRECTING FURTHER ENQU IRY THROUGH THE AO AND THE TRIBUNAL OBSERVED THAT WHERE FRESH EVIDENCES ARE AV AILABLE AND THE ASSESSEE IS IN A POSITION TO PRODUCE THE SAME, THERE IS NO REASON WH Y THE FIRST APPELLATE AUTHORITY SHOULD NOT EXAMINE THE SAME ON MERITS AND PASS APPR OPRIATE ORDER. THE ASSESSEE WITH REGARD TO INCREASE IN SHARE CAPITAL EXPLAINED BEFORE THE LD. CIT(A) THAT THE ISSUE IS COVERED BY THE HONBLE SUPREME COURT DECIS ION IN THE CASE OF LOVELY EXPORT (SUPRA). WITH REGARD TO UNEXPLAINED CASH CRE DIT U/S. 68 OF RS.4,71,000/-, THE ASSESSEE EXPLAINED THAT SAME WAS RECEIVED IN THE PR ECEDING ASSESSMENT YEAR. FURTHER, IT WAS EXPLAINED THAT THE ADDITION IS MADE WITHOUT PROPER APPRECIATION OF EVIDENCES. THEREFORE, CONSIDERING THE FACTS AND CIR CUMSTANCES NOTED ABOVE, WE ARE ITA NO. 63 & 64/AGRA/2011 21 OF THE VIEW THAT THE LD. CIT(A) SHOULD NOT HAVE REJ ECTED THE ADMISSION OF THE ADDITIONAL EVIDENCES AT THE FIRST APPELLATE STAGE. IN VIEW OF THE EXPLANATION GIVEN ABOVE BY THE ASSESSEE, IN OUR OPINION, THE ASSESSEE WOULD HAVE AN ARGUABLE CASE AND FOR DOING SUBSTANTIAL JUSTICE BETWEEN THE PARTI ES, THE LD. CIT(A) SHOULD NOT HAVE REFUSED TO ADMIT THE ADDITIONAL EVIDENCES ON T HIS ISSUE. WE ACCORDINGLY, SET ASIDE THE ORDER OF THE LD. CIT(A) AND DIRECT HIM TO ADMIT ADDITIONAL EVIDENCES U/R. 46A OF THE IT RULES. FURTHER, THE LD. CIT(A) WITHOU T GIVING OPPORTUNITY TO THE AO, DELETED THE ADDITION OF RS.41,50,000/- ON ACCOUNT O F INCREASE IN SHARE CAPITAL. SUCH A VIEW OF THE LD. CIT(A) IS NOT SUSTAINABLE IN LAW. ON OTHER ISSUES, THE LD. CIT(A) CONFIRMED THE ADDITIONS WITHOUT CONSIDERING THE ADD ITIONAL EVIDENCES. THEREFORE THE ORDER OF THE LD. CIT(A) CANNOT BE SUSTAINED IN LAW. DISALLOWANCE OF EXPENSES IS NOT DECIDED BY THE LD. CIT(A), WHICH HAVE TO BE DEC IDED BY HIM ON MERITS. CONSIDERING THE ABOVE DISCUSSION, WE SET ASIDE THE ORDER OF THE LD. CIT(A) ON THE ISSUE CONSIDERED ABOVE ON GROUND NO. 1 & 2 OF THE D EPARTMENTAL APPEAL AND GROUND NO. 3 TO 6 OF THE ASSESSEES APPEAL AND REST ORE THESE ISSUES TO THE FILE OF LD. CIT(A) WITH THE DIRECTION TO RE-DECIDE THE ABOVE IS SUE ON MERIT BY ADMITTING THE ADDITIONAL EVIDENCE, AS DIRECTED ABOVE. THE LD. CIT (A) SHALL REFER ALL THE ADDITIONAL EVIDENCES TO THE AO FOR FILING THE REMAND REPORT AN D HIS COMMENTS. THE LD. CIT(A), THEREAFTER, SHALL DECIDE ALL THE GROUNDS ON MERITS BY GIVING REASONABLE SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESS EE AS WELL AS THE AO. IN THE RESULT, GROUND NO. 1 & 2 OF THE DEPARTMENTAL APPEAL AND GROUNDS NOS. 3 TO 6 OF ITA NO. 63 & 64/AGRA/2011 22 ASSESSEES APPEAL ARE ALLOWED FOR STATISTICAL PURPO SES. THIS ISSUE IS ACCORDINGLY DISPOSED OF IN TERMS ABOVE. NO OTHER POINT IS ARGU ED OR PRESSED. 16. IN THE RESULT, THE DEPARTMENTAL APPEAL IS ALLOW ED FOR STATISTICAL PURPOSES AND APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATIS TICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (A.L. GEHLOT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE ASSISTANT REGISTRAR TRUE COPY