Shri Bhanwarlal G.Sharma, Ahmedabad V. The ACIT, Circle-12, Now Circle- 6(1), Ahmedabad

ITA 728/AHD/2016

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1446 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 30-05-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 23-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B P K
• Assessee Lawyers: GAURAV MEHTA
• Keywords: Business income; Depreciation; Principle of natural justice; Additional evidence; Reassessment proceedings
• Section: 143(3); 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH AHMEDABAD BEFORE SHRI R. P. TOLANI, JM, & SHRI MANISH BORA D, AM. ITA NO.728/AHD/2016 ASST. YEAR: 2007-08 BHANWARLAL G. SHARMA, B-85, NETAJINAGAR, NEAR AMBAJI TEMPLE, MEGHANINAGAR, AHMEDABAD. VS. ACIT, CIRCLE-12, NOW CIRCLE 6(1), AHMEDABAD. APPELLANT RESPONDENT PAN AJQPS 4134E APPELLANT BY SHRI GAURAV MEHTA, AR RESPONDENT BY SHRI B.P. K. PANDA, SR.DR DATE OF HEARING: 30/5/2016 DATE OF PRONOUNCEMENT: 10/6/2016 O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER . THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF LD. CIT(A)-VI, AHMEDABAD DATED 26.2.2016 IN APPEAL NO.C IT(A)-6/24/13- 14 PASSED AGAINST ORDER U/S 143(3) R.W.S. 254 OF TH E IT ACT, 1961 (IN SHORT THE ACT) FOR ASST. YEAR 2007-08 FRAMED ON 28. 2.2013 BY ACIT, CIRCLE-12, AHMEDABAD. 2. BRIEFLY STATED FACTS OF THE CASE AS CULLED OUT F ROM THE RECORDS ARE THAT THE ASSESSEE IS AN INDIVIDUAL HAVING INCOM E FROM SALARY, INCOME FROM HOUSE PROPERTY AND INCOME FROM OTHER SO URCES. RETURN ITA NO. 728/AHD/2016 ASST. YEAR 2007-08 2 OF INCOME WAS FILED ON 30.3.2009 DECLARING TOTAL IN COME AT RS.80,840/-. THE CASE WAS SELECTED FOR SCRUTINY ASS ESSMENT AND NOTICE U/S 143(2) OF THE ACT WAS ISSUED ON 27.4.200 9. ASSESSMENT WAS COMPLETED ON 16 TH DECEMBER, 2009 AFTER MAKING ADDITION OF RS.12,19,854/-. ON APPEAL BEFORE LD. CIT(A), ASSESS EE GOT PART RELIEF VIDE ORDER DATED 3.11.2010. AGGRIEVED, ASSESSEE PRE FERRED APPEAL AGAINST THE ORDER OF LD. CIT(A) DATED 3.11.2010 BEF ORE THE TRIBUNAL ON A SINGLE ISSUE TOWARDS THE DISALLOWANCE OF DEPRECIA TION AND OTHER EXPENSES AT RS.11,86,221/- CLAIMED U/S 57(III) OF T HE ACT TOWARDS EARNING MISCELLANEOUS INCOME FOR SETTLING LAND DISP UTES AT RS.6,55,000/-. HOWEVER, CO-ORDINATE BENCH ALLOWED T HE APPEAL FOR STATISTICAL PURPOSES AND REMITTED THE MATTER BACK T O THE FILE OF LD. ASSESSING OFFICER FOR GIVING OPPORTUNITY TO THE ASS ESSEE TO ESTABLISH THE GENUINENESS OF INCOME EARNED. 3. THEREAFTER ASSESSMENT PROCEEDINGS WERE INITIATED WITH RESPECT TO DIRECTIONS OF THE TRIBUNAL U/S 143(3) R.W.S. 254 OF THE ACT AND THE LD. ASSESSING OFFICER AGAIN MADE THE DISALLOWANCE OF RS.11,86,221/- ON THE BASIS OF OBSERVATION THAT ASSESSEE COULD NOT FILE ANY REPLY ESTABLISHING THE NEXUS BETWEEN THE MISCELLANEOUS IN COME OF RS.6,55,000/- IN THE USE OF MERCEDESE CAR FOR THE P URPOSE OF SUCH EARNING INCOME AS WELL AS THE EXPENSES CLAIMED AND FRAMED ASSESSMENT U/S 143(3) R.W.S. 254 OF THE ACT. LD. CI T(A) DISMISSED THE APPEAL OF THE ASSESSEE VIDE HIS ORDER DATED 26.2.20 16 BY NOT ENTERTAINING ADDITIONAL EVIDENCES FILED BY THE ASSE SSEE ON ACCOUNT OF CARELESSNESS ON THE PART OF ASSESSEE BY OBSERVING A S UNDER :- ITA NO. 728/AHD/2016 ASST. YEAR 2007-08 3 DECISION : 8. I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDER , SUBMISSION OF THE APPELLANT, REMAND REPORT AND REJOINDER OF THE APPEL LANT. THE BRIEF FACTS IS THAT IN THIS CASE ORIGINAL ASSESSMENT U/S. 143(3) WAS CO MPLETED ON 25-11-2010 AND SINCE NO DETAILS AND EVIDENCE OF EXPANSES INCUR RED WERE FILED -THEREFORE THE SAME WERE DISALLOWED. IN THE APPEAL, THE CIT(A) HELD THAT THE APPELLANT COULD NOT ESTABLISHED NEXUS BETWEEN THE EXPENSES CL AIMED AND THE BUSINESS ACTIVITY THEREFORE THE DISALLOWANCE WAS CONFIRMED, 8.1 THE APPELLANT FILED APPEAL BEFORE THE HON'BLE I TAT AND THE HON'BLE ITAT HELD THAT SINCE THE A.R. CLAIMED THAT ASSESSEE IS I N A POSSESSION OF SEVERAL DOCUMENTS TO ESTABLISH GENUINENESS OF THE CLAIM THE REFORE IN THE INTEREST OF JUSTICE, THE HON'BLE ITAT REMITTED BACK THE MATTER TO THE FILE OF THE AO WITH THE DIRECTION TO CONSIDER THE ISSUE AFRESH AND PASS PRO PER ORDER AS PER LAW AND MERIT AFTER EXAMINING OF RELEVANT DOCUMENT. THE ASS ESSEE IS ALSO DIRECTED TO COOPERATE WITH THE REVENUE FOR THE SPEEDY DISPOSAL OF THE CASE. 8.2 DURING THE RE-ASSESSMENT PROCEEDINGS, THE AO NO TED IN PARA NO. 2 THAT THE APPELLANT HAS FAILED TO PROVE THE IDENTITY OF T HE PERSONS FROM WHOM MISCELLANEOUS INCOME WAS RECEIVED AND ALSO NOTED TH AT NO PROOF AND EVIDENCES THAT SUCH INCOME WAS RECEIVED EITHER THRO UGH BANKING CHANNEL OR CASH THUS FAILED TO FURNISH GENUINENESS OF THE BUSI NESS ACTIVITY. 8.3 THUS THE AO FINALLY NOTED THAT ASSESSEE HAS FAI LED TO PROVE THE NEXUS BETWEEN MISC. INCOME OF RS. 6,55,000/- AND THE USE OF THE MERCEDES CAR FOR THE PURPOSE OF EARNING OF SUCH INCOME AS WELL AS EXPENS ES CLAIMED. THEREFORE THE EXPENSES CLAIMED OF RS. 11,86,221/- WAS DISALLOWED. 8.4 THUS IT IS SEEN INSPITE OF VARIOUS OPPORTUNITIE S PROVIDED TO THE APPELLANT IN THE ORIGINAL ASSESSMENT PROCEEDINGS, ORIGINAL FIRST APP ELLATE PROCEEDINGS AND SECOND ASSESSMENT PROCEEDINGS THE APPELLANT COULD NOT FILE EVIDENCES AND SUPPORTING DOCUMENT NEEDED TO ESTABLISH THE NEXUS BETWEEN THE EXPENSES INCURRED AND THE INCOME. THE HON'BLE ITAT HAS GIVEN SPECIFIC DIRECTI ON TO THE APPELLANT TO SUBMIT THE DOCUMENT IN THE ASSESSMENT PROCEEDINGS. HOWEVER , THE APPELLANT DID NOT HONOUR THE DIRECTION AND DID NOT SUBMIT THE DOCUMEN T AND EVIDENCES BEFORE THE A.O. DURING THE RE-ASSESSMENT PROCEEDINGS. 8.5 HOWEVER THE APPELLANT HAS FILED ADDITIONAL EVID ENCES DURING THE CURRENT APPELLATE PROCEEDINGS WHICH WERE FORWARDED TO THE A ,O. FOR COMMENTS. THE AO HAS OBJECTED AND SUBMITTED THAT THE SAME MAY NOT BE ACCEPTED AS THE APPELLANT COULD NOT DEMONSTRATE COMPELLING SITUATION OR CIRCU MSTANCES WHICH HAVE PREVENTED HIM TO FILE THESE EVIDENCE BEFORE THE A.O . IN SECOND ROUND OF ITA NO. 728/AHD/2016 ASST. YEAR 2007-08 4 ASSESSMENT PROCEEDING. THE AO SUBMITTED THAT PRODUC ING AFFIDAVIT IN SUPPORT OF HIS CONTENTION IS AN AFTERTHOUGHT AND SHOULD NOT BE ACCEPTED. 8.6 I HAVE CAREFULLY CONSIDERED THE FACTUAL POSITIO N, REMAND REPORT OF THE AO AND REJOINDER OF THE APPELLANT. IT IS SEEN THAT THE APP ELLANT COULD NOT SUBMIT OR EXPLAIN ANY CIRCUMSTANCE WHICH PREVENTED HIM TO FILE THE EV IDENCES BEFORE THE AO IN THE SECOND REASSESSMENT PROCEEDINGS THEREFORE THERE IS NO JUSTIFICATION OF ACCEPTING THESE EVIDENCES AT APPELLANT STAGE NOW. 8.7 THE ADDITIONAL EVIDENCE IS GOVERNED BY RULE 46A OF I.T. RULES, 1962 WHICH IS AS UNDER:- '(L)THE APPELLANT SHALL NOT BE ENTITLED TO PRODUCE BEFOR E THE (DEPUTY COMMISSIONER(APPEALS) {OR THE CASE MAY BE, THE COMMISSIONER OF (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 SUFFICIE NT CAUSE FROM PRODUCING THE EVIDENCE WHICH HE WAS CALLED UPON TO PRODUCE BY THE (ASSESSING OFFICER); OR C. WHERE THE APPELLANT WAS PREVENTED BY SUFFICI ENT CAUSE FROM PRODUCING BEFORE THE (ASSESSING OFFICER) ANY EVIDENCE WHICH IS RELEVANT TO ANY GROU ND OF APPEAL OR; D. WHERE THE (ASSESSING OFFICER) HAS MADE THE O RDER APPEALED AGAINST WITHOUT GIVING SUFFICIENT OPPORTUNITY TO THE APPELLANT TO ADDUCE EVIDENCE REL EVANT 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 BE, THE COMMISSIONER (APPEALS)} REC ORDS IN WRITING THE REASONS FOR ITS ADMISSION. (3) THE {DEPUTY COMMISSIONER (APPEALS)} {OR, AS THE CASE MAY BE, THE COMMISSIONER (APPEALS)} SHALL NOT TAKE INTO ACCOUNT ANY EVIDENCE PRODUCED UNDER S UB-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 WITN ESS IN REBUTTAL OF THE ADDITIONAL EVIDENCE PRODUCED BY THE APPELLANT. (4) NOTHING CONTAINED IN THIS RULE SHALL AFFECT THE POWER OF THE {DEPUTY COMMISSIONER (APPEALS)} {OR, AS THE CASE MAY BE, THE COMMISSIONER (APPEALS) } TO DI RECT 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 ENHANCEMENT OF THE ASSESSMENT OR PENA LTY (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 PENAL TY U/S.271).' 8.8 I HAVE GIVEN CAREFUL CONSIDERATION TO THE REQUE ST OF THE APPELLANT AND THE COMMENTS OF THE A.O. AND I AM OF THE CONSIDERED VIE W THAT APPELLANT WAS NOT PREVENTED BY ANY SUFFICIENT CAUSE FROM PRODUCING TH E EVIDENCE WITHIN THE MEANING OF SUB CLAUSE (B) AND (C) OF SUB RULE I OF RULE 46A OF THE L.T. RULES, ITA NO. 728/AHD/2016 ASST. YEAR 2007-08 5 1962 HOWEVER IT APPEARS THAT THE APPELLANT ACTED DE LIBERATELY, CARELESSLY AND DID NOT AVAIL THE OPPORTUNITY OF SUBMITTING EVIDENC E BEFORE THE A.O. EVEN DURING THE SECOND ROUND OF THE ASSESSMENT PROCEEDIN G ALSO. THEREFORE ADDITIONAL EVIDENCE IS NOT ADMITTED AND APPEAL IS D ECIDED ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. 8.9 THE APPELLANT FURTHER RELIED ON THE DECISION OF THE HON'BLE ITAT IN HIS OWN CASE IN A.Y. 2008-09 HOWEVER IT IS SEEN THAT THE HO N'BLE ITAT HAS GIVEN RELIEF TO THE APPELLANT ONLY ON THE BASIS OF DIFFERENT FAC TS INVOLVED. IT IS OBVIOUS FROM THE ADMISSION OF THE AR OF THE APPELLANT HIMSELF BE FORE THE HON'BLE I.T.A.T. IN A.Y. 2008-09 WHICH WAS REPRODUCED IN PARA 8 OF THE ORDER THAT THE FACTS IN A.Y. 2007-08 WERE DIFFERENT FROM THE A.Y. 2008-09 A ND MUCH STRONGER FOOTING AGAINST THE APPELLANT. THE SAME IS REPRODUCED AS UN DER - 'B. THE ID. AR IN THE REJOINDER SUBMITTED THAT IN A Y 2007-08, THE SALARY EXPENSES WAS NOT ALLOWED BY AO BUT IN THE YEAR UNDER CONSIDERATION I T HAS BEEN ALLOWED AND THEREFORE, THERE IS SLIGHT CHANGE IN THE FACTS AND ON THE CONTRARY THE CASE OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION IS ON A MUCH STRONGER FOOTING BECAUSE SALARY AND PART OF THE EXPENSES HAVE BEEN ALLOWED BY A.O.' 8.10 THEREFORE THE FINDING IN A.Y. 2008-09 IS NOT A PPLICABLE IN THE APPEAL UNDER CONSIDERATION. IN VIEW OF THE ABOVE FACTUAL A ND LEGAL DISCUSSION, I AM OF THE VIEW THAT THE APPELLANT HAS NOT FULFILLED HIS DUTY AND DID NOT DISCHARGE ONUS AND HAS NOT SUBMITTED ANY DETAILS OR EVIDENCES BEFORE THE AO TO ESTABLISH THE GENUINENESS OF THE INCOME EARNE D AND NEXUS OF THE EXPENDITURE INCURRED WITH THE SAME. THE AO HAS SPEC IFICALLY MENTIONED IN THE REASSESSMENT ORDER THAT IN SPITE OF SPECIFIC SH OW CASE AND OPPORTUNITY GIVEN TO THE APPELLANT, NO DETAIL WAS SUBMITTED TIL L THE COMPLETION OF THE ASSESSMENT TO PROVE THE GENUINENESS OF THE INCOME E ARNED AND TO ESTABLISH THE NEXUS BETWEEN THE MISCELLANEOUS INCOM E OF RS. 6,55,000/- AND THE EXPENDITURE OF RS. 11,86 F 221/-. 8.11 IT IS FACT THAT THE APPELLANT HAS NOT DISCHARG E ITS ONUS EITHER IN THE ORIGINAL ASSESSMENT PROCEEDINGS OR IN THE FIRST APP ELLATE PROCEEDINGS OR IN THE REASSESSMENT PROCEEDINGS THOUGH HE WAS SPECIFIC ALLY DIRECTED BY THE HON'BLE ITAT TO COOPERATE AND SUBMIT ADDITIONAL EVI DENCES IF HAVING DURING THE REASSESSMENT PROCEEDINGS AS APPELLANT CLAIMED B EFORE THE HON'BLE ITAT. IN -SPITE OF VARIOUS OPPORTUNITIES GIVEN THE APPELLANT COULD NOT ESTABLISH THE NEXUS BETWEEN THE EXPENDITURE AND INC OME EARNED. THEREFORE THE DEPRECIATION AND INSURANCE EXPENSES, REPAIRS AND MAINTENANCE OF THE MOTOR CAR IS NOT ALLOWABLE EXPEN DITURE UNDER THE HEAD OF BUSINESS INCOME. 8.12 I AM OF THE VIEW THAT THE APPELLANT IS ENTITLE D TO GET DEDUCTION OF DIRECT EXPENSES U/S. 57(3) OF THE ACT BUT FOR THAT PURPOSE , THE APPELLANT HAS TO ITA NO. 728/AHD/2016 ASST. YEAR 2007-08 6 PROVE THE NEXUS BETWEEN THE INCOME EARNED AND EXPEN DITURE INCURRED. IT IS FACT THAT THE APPELLANT COULD NOT PROVE THAT HE WAS INVOLVED IN ANY BUSINESS ACTIVITY AND THE DEPRECIATION AND OTHER EXPENSES WE RE INCURRED TO EARN THE BUSINESS INCOME. THUS THE APPELLANT COULD NOT PROVE THE NEXUS SO FAR EVEN IN THE SECOND ROUND OF APPEAL ALSO. THEREFORE THE S AME IS NOT ALLOWABLE EITHER FROM THE BUSINESS INCOME OR FROM THE INCOME FROM OTHER SOURCES U/S. 57(3) OF THE I.T. ACT. THUS THE DISALLOWANCE O F EXPANSES OF RS. 11,86,221/- IS UPHELD. THE GROUND IS DISMISSED. 4. AGGRIEVED, ASSESSEE IS NOW IN APPEAL BEFORE THE TRIBUNAL IN THE SECOND ROUND. 5. LD. AR SUBMITTED THAT DURING THE COURSE OF ASSES SMENT PROCEEDINGS U/S 143(3) R.W.S.254 OF THE ACT WHICH W AS FRAMED ON 28.2.2013, LETTER DATED 7.1.2013 WAS ISSUED BY LD. ASSESSING OFFICER REQUESTING THE ASSESSEE TO SUBMIT OR REPRODUCE NECE SSARY DOCUMENTS IN COMPLIANCE TO ORDER OF THE TRIBUNAL IN ITA NO.28/AHD/2011 DATED 4.11.2011. ASSESSEE SUBMITTED REPLY ON 30.1.2013 WHICH IS VERIFIABLE FROM THE ACKNOWLEDGEM ENT RECEIPT PLACED AT PAGE 8 OF THE PAPER BOOK. THEREAFTER ON 1 5.2.2013 A FINAL NOTICE WAS GIVEN BY LD. ASSESSING OFFICER TO ESTABL ISH THE NEXUS BETWEEN THE MISCELLANEOUS INCOME OF RS.6,55,000/- A ND THE USE OF MERCEDESE CAR FOR THE PURPOSE OF EARNING SUCH INCOM E AS WELL AS THE EXPENSES AS MENTIONED BELOW :- 1. DEPRECIATION RS.9,41,725/- 2. INSURANCE EXPENSES RS.1,25,596/- 3. SALARY EXPENSES RS. 66,000/- 4. VEHICLE REPAIR & MAINTENANCE EXPENSES RS. 52, 900/- -------------------------- RS.11,86,221/- ITA NO. 728/AHD/2016 ASST. YEAR 2007-08 7 IN RESPONSE TO NOTICE DATED 15.2.2013 ASSESSEE FILE D A LETTER DATED 5 TH MARCH, 2016 ENCLOSING THEREWITH AFFIDAVITS OF NATV ARBHAI NARAYANBHAI PATEL AND JILUBHA V. DHANDHAL TOWARDS M ISCELLANEOUS INCOME EARNED AND OTHER INFORMATION RELATING THERET O. LD. AR FURTHER SUBMITTED THAT IN BETWEEN THE LETTER OF LD. ASSESSI NG OFFICER DATED 15.2.13 REQUIRING DOCUMENTS TO BE SUBMITTED LATEST BY 21.2.13 AND THE ASSESSEES REPLY DTD. 5 TH MARCH, 2013 ASSESSMENT WAS COMPLETED U/S 143(3) R.W.S 254 OF THE ACT ON 28.2.13 DUE TO W HICH THESE EVIDENCES COULD NOT BE ADJUDICATED ON MERIT BY LD. ASSESSING OFFICER AND THEN BY LD. CIT(A). LD. AR FURTHER SUBMITTED TH AT THE CLAIM OF DEPRECIATION ON CAR AND OTHER ASSETS WAS ALLOWED TO THE ASSESSEE IN ASST. YEAR 2005-06 WHEN THE MISCELLANEOUS INCOME WA S SHOWN UNDER THE HEAD BUSINESS INCOME AND FURTHER REFERRED TO THE DECISION OF THE CO-ORDINATE BENCH IN ITA NO.941/AHD/2012 FOR ASST. YEAR 2008-09 VIDE ORDER DATED 13/8/2015 IN THE CASE OF A SSESSEE WHEREIN THE EXPENSES OF RS.11,14,338/- CLAIMED U/S 57(III) OF THE ACT WHICH INCLUDED DEPRECIATION ON CAR WAS ALLOWED. THE LD. A R FURTHER SUBMITTED THAT ASSESSEE PROVED BEYOND DOUBT THE GEN UINENESS OF THE RECEIPTS AS WELL AS INCURRENCE OF EXPENSES FOR EARN ING SAID INCOME AND THEREFORE, DISALLOWANCE MADE BY LD. ASSESSING O FFICER AT RS.11,86,221/- DESERVES TO BE DELETED. 6. ON THE OTHER HAND, LD. DR SUPPORTED THE ORDERS O F LOWER AUTHORITIES. ITA NO. 728/AHD/2016 ASST. YEAR 2007-08 8 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. THROUGH THIS APPEAL ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL :- 1. THE LD. CIT APPEALS -6, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN PASSING APPELLATE ORDER DATED 26/02/2016 FOR A.Y. 2007-08 I N THE CASE OF APPELLANT BY NOT ACCEPTING THE ADDITIONAL EVIDENCES IN VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. 2. THE LD. CIT(A) HAS FURTHER STATED WRONG FACTS IN HI S ORDER IN PARA NO.8.4 THAT THE APPELLANT DID NOT HONOUR THE DIRECTION OF THE HON.ITAT AND DID NOT SUBMIT THE DOCUMENTS AS THE REQUIRED DOCUMENTS WERE DULY SUBMITTED BEFORE THE AO. 3. THE LD. CIT(A) ERRED IN LAW AND ON FACTS BY CONFIRM ING DISALLOWANCE OF DEPRECIATION AND OTHER EXPENSES OF RS.11,86,221/-. WHEN THE SOURCE OF THE INCOME WAS PROVED AS PER THE DIRECTIONS OF THE HON' BLE ITAT. 4, THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR WITHDRAW ANY OF THE GROUNDS OF APPEAL ON OR BEFORE OF THE FINAL HEARING OF APPE AL. 8. GROUND NOS. 1 RELATES TO NON-ACCEPTANCE OF ADDIT IONAL EVIDENCES. FROM GOING THROUGH THE ASSESSMENT AND AP PELLATE PROCEEDINGS IN SECOND ROUND, WE OBSERVE THAT IN THE FIRST ROUND WHEN THE MATTER TRAVELLED UPTO THE TRIBUNAL IT WAS REMIT TED BACK TO THE ASSESSING OFFICER VIDE ORDER DATED 4.11.11 AND THE FIRST LETTER. PURSUANT THERETO BY LD. ASSESSING OFFICER COMMENCED ASSESSMENT PROCEEDINGS U/S 143(3) R.W.S. 254 OF THE ACT BY ISS UING LETTER DT.7.1.13 AND THEN ON 15.2.13. THE LATEST DATE BY WHICH ASSES SEE WAS REQUIRED TO FILE NECESSARY DOCUMENTS WAS FIXED FOR 21.2.13 V IDE SECOND LETTER DATED 15.2.13 ISSUED BY LD. ASSESSING OFFICER BUT S URPRISINGLY ASSESSEE COULD FILE NECESSARY DOCUMENTS ON 5 TH MARCH 2013. WE FAIL TO UNDERSTAND THAT ASSESSEE WAS HAVING SUFFICIENT T IME TO COLLECT ITA NO. 728/AHD/2016 ASST. YEAR 2007-08 9 NECESSARY EVIDENCES AND DOCUMENTS SINCE THE DATE OF ORDER OF THE TRIBUNAL I.E. 4.11.11 AND ALMOST AFTER 14 MONTHS HE WAS CALLED BY THE LD. ASSESSING OFFICER TO FURNISH THE NECESSARY DOCU MENTS THEN IT WAS ON THE PART OF ASSESSEE TO FILE ALL SUCH PAPERS IN THE VERY FIRST HEARING BUT HE COULD NOT MAKE IT. 9. WE OBSERVE THAT THE ASSESSEE MISERABLY FAILED TO FURNISH NECESSARY DOCUMENTS TO PROVE THE GENUINENESS OF THE MISCELLANEOUS INCOME EARNED WITHIN THE TIME LIMIT GIVEN BY LD. AS SESSING OFFICER, BUT CERTAINLY AFTER THE COMPLETION OF ASSESSMENT PROCEE DINGS U/S 143(3) R.W.S. 254 OF THE ACT ON 28.2.13 IT IS EVIDENCED TH AT ASSESSEE FURNISHED NECESSARY DOCUMENTS ON 5 TH MARCH, 2013. BUT LD. CIT(A) DID NOT ENTERTAIN THESE DOCUMENTS. 10. WE FURTHER OBSERVE THAT CO-ORDINATE BENCH IN IT A NO.28/AHD/2011 IN THE CASE OF ASSESSEE WHEN THE MAT TER CAME UP BEFORE THE TRIBUNAL IN THE FIRST ROUND, THE ISSUE W AS REMITTED BACK TO THE FILE OF LD. ASSESSING OFFICER FOR EXAMINING THE GENUINENESS OF INCOME EARNED BY OBSERVING AS UNDER :- 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE MATERIALS BEFORE US. FROM THE PAPER BOOK CONTAINING 1 TO 17 PAGES NO EVI DENCE CAN BE DRAWN THAT THE ASSESSEE WAS CARRYING ON ANY BUSINESS. THE LEDGER ACCOUNT SI MPLY STATES THAT THE ASSESSEE HAS RECEIVED IN AGGREGATE CASH OF RS. 6,55,000/- ON VAR IOUS DATES. THE ASSESSEE HAS NOT ESTABLISHED THE SOURCE OF SUCH GENERATION OF CASH A S TO FROM WHOM IT WAS RECEIVED AND FOR WHAT REASON. NO AGREEMENT OR CONFORMATION OR ACKNOW LEDGEMENT FROM THE PAYEE WAS BROUGHT ON RECORD BY THE ASSESSEE TO ESTABLISH THE NATURE OF INCOME OF THE ASSESSEE. THE APPREHENSION OF THE REVENUE THAT THESE INCOME COULD ALSO HAVE BEEN RESULTED FROM EXTORTIONS ETC., WHICH ARE LARGELY PREVALENT IN REA L ESTATE TRANSACTIONS CANNOT BE SIMPLY OVERRULED IN PARTICULAR WHEN NO EVIDENCE IS BROUGHT ON RECORD BY THE ASSESSEE TO PROVE HIS CLAIM THAT THE INCOME HAD RESULTED FROM RESOLVI NG OF DISPUTES IN REAL ESTATE ITA NO. 728/AHD/2016 ASST. YEAR 2007-08 10 TRANSACTIONS FALLING UNDER THE HEAD INCOME FROM BU SINESS AND PROFESSION. SECTION 37(1) OF THE ACT., HAS SPECIFICALLY BARED ANY CLAIM OF EX PENDITURE INCURRED BY THE ASSESSEE FOR ANY PURPOSE WHICH IS AN OFFENCE OR PROHIBITED BY LA W. THE LD. CIT(A) HAS RIGHTLY POINTED OUT THAT THE ASSESSEE MIGHT HAVE CARRIED ON WITH SO ME BUSINESS ACTIVITY DURING THE EARLIER YEARS HOWEVER FOR THE RELEVANT ASSESSMENT YEAR NO N EXUS BETWEEN THE INCOME GENERATED AND THE ACTIVITY CONDUCTED IS ESTABLISHED. HOWEVER, SINCE THE LD. A.R. CLAIMS THAT THE ASSESSEE IS IN POSSESSION OF SUFFICIENT DOCUMENTS T O ESTABLISH ITA NO. 28-AHD-11 6 HIS CLAIM THAT HE WAS IN RECEIPT OF GENUINE PAYMENTS RE CEIVED FOR RESOLVING DISPUTES IN REAL ESTATE TRANSACTION, IN THE INTEREST OF JUSTICE, WE HEREBY REMIT BACK THE MATTER BACK TO THE FILE OF THE LD.AO WITH THE DIRECTIONS TO CONSIDER T HE ISSUE AFRESH AND PASS APPROPRIATE ORDER, AS PER LAW AND MERIT, AFTER EXAMINING ALL RE LEVANT DOCUMENTS. THE ASSESSEE IS ALSO DIRECTED TO COOPERATE WITH THE REVENUE FOR THE SPEE DY DISPOSAL OF THE CASE. 11. FROM GOING THROUGH THE DECISION OF THE TRIBUNAL , WE UNDERSTAND THE MAIN IMPETUS IN THIS OBSERVATION WAS THE GENUIN ENESS OF INCOME. THE ADDITIONAL EVIDENCES IN THE FORM OF AFFIDAVITS ISSUED BY NATVARBHAI NARAYANBHAI PATEL AND JILUBHA V. DHANDHA L CONFIRMING THE TOTAL PAYMENT OF RS.6,55,000/- MADE TO THE ASSE SSEE ARE VERY CRUCIAL TO SATISFY THE OBSERVATION OF THE CO-ORDINA TE BENCH. WE ARE, THEREFORE, OF THE VIEW THAT AS THE ASSESSEE HAS SUB MITTED THE NECESSARY DOCUMENTS TO PROVE THE GENUINENESS OF INC OME POST ASSESSMENT PROCEEDINGS U/S 143(3) R.W.S. 254 OF THE ACT BUT MUCH BEFORE THE DATE OF HEARING BEFORE LD. CIT(A) IN THE SECOND ROUND, WE DIRECT THE LD. CIT(A) TO ADMIT THESE ADDITIONAL EVI DENCES AND GET A REMAND REPORT FROM THE ASSESSING OFFICER AS PER RUL E-46A OF THE IT RULES AND FRAME FRESH APPELLATE ORDER. ACCORDINGLY, WE REMIT BACK THE MATTER TO THE FILE OF LD. CIT(A). HENCE THIS GR OUND OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 12. GROUND NO.2 IS GENERAL, WHICH NEEDS NO ADJUDICA TION. ITA NO. 728/AHD/2016 ASST. YEAR 2007-08 11 13. NOW WE TAKE UP GROUND NO.3 OF THE APPEAL WHEREI N ASSESSEE IS AGGRIEVED BY THE ACTION OF LD. CIT(A) FOR CONFIRMIN G THE DISALLOWANCE OF RS.11,86,221/-. WE OBSERVE THAT ASSESSEE HAS SHO WN INCOME OF RS.6,55,000/- UNDER THE HEAD INCOME FROM OTHER SOUR CES TOWARDS THE INCOME EARNED FOR SETTLING OF LAND DISPUTES AND HAS CLAIMED EXPENSES AT RS.11,86,221/- FOR EARNING THE MISCELLA NEOUS INCOME OF RS.6,55,000/-. THIS EXPENDITURE OF RS.11,86,221/- H AS BEEN INCURRED TOWARDS FOLLOWING :- 1. DEPRECIATION RS.9,41,725/- 2. INSURANCE EXPENSES RS.1,25,596/- 3. SALARY EXPENSES RS. 66,000/- 4. VEHICLE REPAIR & MAINTENANCE EXPENSES RS. 52, 900/- -------------------------- RS.11,86,221/- 14. WE OBSERVE THAT IN THE DECISION OF CO-ORDINATE BENCH THE BASIC IMPETUS WAS MADE TOWARDS THE SOURCE OF INCOME OF RS .6,55,000/- AND THE ASSESSEE WAS REQUIRED TO FURNISH SUFFICIENT DOCUMENTS TO PROVE THE GENUINENESS OF THE INCOME EARNED FOR RESO LVING DISPUTES IN REAL ESTATE TRANSACTIONS. 15. WE FURTHER OBSERVE THAT IN THE CASE OF ASSESSEE FOR ASST. YEAR 2008-09 SIMILAR ISSUE CAME UP BEFORE THE TRIBUNAL I N ITA NO.941/AHD/2012 WHEREIN VIDE ITS ORDER DATED 13.8.2 015 CLAIM OF ASSESSEE FOR EXPENDITURE U/S 57(III) OF THE ACT WAS ALLOWED IN THE ABSENCE OF ANY FINDING OF LD. ASSESSING OFFICER AS NON-GENUINE EXPENSES BY OBSERVING AS UNDER :- 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. ON PERUSING THE COMPUTATION OF INCOME PLACED ON RECORD, WE FIND THAT IN THE COMPUTATION OF INCOME ITA NO. 728/AHD/2016 ASST. YEAR 2007-08 12 AGAINST THE INCOME EARNED BY THE ASSESSEE, THE ASSE SSEE HAD CLAIMED AGGREGATE EXPENSES OF RS.12,25,495/- OUT OF WHICH SOME OF THE EXPENSES AGGREGATING TO RS.1,11,157/- HAS BEEN ALLOWED BY THE AO AND THE REMAINING EXPENSES O F RS.11,14,338/- HAVE BEEN DISALLOWED. CONSIDERING THE FACT THAT ONLY PART OF THE EXPENSES HAVE BEEN DISALLOWED UNDER SECTION 57(III) AND IN THE ABSENCE OF ANY FIN DING OF THE AO THAT THE REMAINING EXPENSES INCURRED BY THE ASSESSEE ARE NON-GENUINE, WE ARE OF THE VIEW THAT THE DISALLOWANCE OF PART OF THE EXPENDITURE IS UNCALLED FOR. CONSIDERING THE AFORESAID FACTS, WE ARE OF THE VIEW THAT THE CLAIM OF EXPENDITURE CA NNOT BE DISALLOWED AND ACCORDINGLY ALLOW THE GROUND OF ASSESSEE. 16. IN THE GIVEN FACTS AND CIRCUMSTANCES AND AS PER OUR DISCUSSION MADE ABOVE, WE ARE OF THE VIEW THAT IN THIS APPEAL TWO ISSUES WERE TO BE EXAMINED FIRSTLY THE GENUINENESS OF THE MISCELL ANEOUS INCOME EARNED BY THE ASSESSEE AND SECONDLY ABOUT THE EXPEN SES CLAIMED U/S 57(III) OF THE ACT. AS FAR AS THE FIRST ISSUE I S CONCERNED, WE HAVE ALREADY DECIDED IN PARA 10 ABOVE WHEREIN WE HAVE DI RECTED THE LD. CIT(A) TO ADMIT THE ADDITIONAL EVIDENCES SUBMITTED BY ASSESSEE SUPPORTING THE MISCELLANEOUS INCOME EARNED AND AS F AR AS THE SECOND IS CONCERNED WE ARE NOT ADJUDICATING HERE BE CAUSE IT WILL DEPEND ON THE APPELLATE ORDER TO BE FRAMED BY LD. C IT(A) AFTER EXAMINING THE FIRST ISSUE. HOWEVER, WE HAVE REFERRE D TO THE DECISION OF THE CO-ORDINATE BENCH IN THE CASE OF ASSESSEE FO R ASST. YEAR 2008-09 WHEREIN A FINDING HAS BEEN GIVEN ABOUT THE ALLOWABILITY OF EXPENDITURE U/S 57(III) OF THE ACT. IN THE LIGHT OF THIS DECISION, WE DIRECT LD. CIT(A) TO ADJUDICATE THE SECOND ISSUE ALSO RELA TING TO CLAIM OF EXPENDITURE AT RS.11,86,221/-. IN THE RESULT, WE AL SO REMINT BACK THE ISSUE RAISED IN GROUND NO.3 TO THE FILE OF LD. CIT( A). ITA NO. 728/AHD/2016 ASST. YEAR 2007-08 13 17. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH JUNE, 2016 SD/- SD/- (R.P. TOLANI) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER DATED 10/6/2016 MAHATA/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, AHMEDABAD 1. DATE OF DICTATION: 8-9/06/2016 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 9/06/2016 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: __________ 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK:1 0/6/16 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: