Shri Mansukh N. Patel, Ahmedabad V. The Deputy Commissioner of Income Tax, Central Circle-2(1), Ahmedabad

ITSSA 176/AHD/2017

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 2920 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 4 month(s) 28 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 06-09-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 29-06-2022
• Assessment Year: 2013-2014
• Appeal Filed On: 09-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Additional evidence; Reasonable cause; Set aside
• Section: 132; 144; 142(1); 153A; 143(2)

Judgement Text

आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरणआयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण, अहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठअहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठ ‘B’ अहमदाबाद। अहमदाबाद।अहमदाबाद। अहमदाबाद। IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, AHMEDABAD ] ] BEFORE SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND SMT. MADHUMITA ROY, JUDICIAL MEMBER, JUDICIAL MEMBER IT(S)A No.173 to 176/Ahd/2017 Assessment Year : 2010-11 to 2013-14 Mansukh N. Patel D-104, Green City Opp: Science City, Sola Ahmedabad 380 060. PAN: ABUPH 1893 F Vs. DCIT, Cent.Cir.2(1) Ahmedabad. 0 अपीलाथ / (Appellant) यथ /(Respondent) Assessee by : Shri Isani Varis V. Advocate Revenue by : Shri Alokkumar, CIT-DR स ु नवाई क तार ख/Date of Hearing : 30/06/2022 घोषणा क तार ख /Date of Pronouncement: 07/09/2022 आदेश/O R D E R PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER The above four appeals relate to the same assessee contesting the common order passed by the ld.Commissioner of Income-Tax(A)- 6, Ahmedabad [hereinafter referred to as “ld.CIT(A)”] dated 19.1.2017 under section 250(2) of the Income Tax Act, 1961 ("the Act" for short) pertaining to above four assessment years. 2. At the outset, both the parties stated that these appeals are with respect to assessments framed u/s 153A of the Act subsequent to search action conducted at the premises of the assessee and additions were made exparte in all the cases relating to unexplained investments and expenditure etc. The plea of the assessee with IT(S)A No.173 to 176/Ahd/2017 2 respect of all the appeals were stated to be identical. In view of this, we proceed to dispose of all the appeals by a common order. 3. Brief facts of the case are that a search action under section 132 of the Act was carried out in the group cases of “Dev” in financial year 2012-13. Search warrant of authorization under section 132 was issued in name of assessee, Shri Mansukh Narshibhai Patel on 28.1.2013 and executed on 29.1.2013 for B/35, Kendriya Vihar, Inside Sun City, Bopal, Ahmedabad. Thereafter, assessment proceeding was initiated under section 153A of the Act for the impugned year. Notice issued under section 153A was returned with remark “not known’ / Thereafter notice under section 153A was served through affixure; but nobody attended office even after 15 days’ time given in the notice under section 153A. Thereafter, 144-notice was issued for best judgment and served through affixure, but no reply was received as on the date of the order. Accordingly, the AO proceed to assess income of the assessee ex parte making addition on various counts and computing income as under: Returned income Assessed Income Asst.Year 2010-11 NIL Rs.1,16,03,000 Asst.Year 2011-12 Rs.7,43,870 Rs.9,67,66,554/- Asst.Year 2012-13 Nil Rs.2,75,03,476/- Asst.Year 2013-14 Nil Rs.3,55,70,000/- 4. Primarily, huge additions were made on account of unexplained investment in land, unexplained expenditure, unexplained capital of assessee, unexplained brokerage income, and all additions were made in the absence of any details submitted by the assessee in the assessment proceedings ,the assessment being IT(S)A No.173 to 176/Ahd/2017 3 framed under section 144 read with section 153A of the Act. When the matter was carried in appeal before the ld.CIT(A) the assessee sought to file additional evidences with respect to various additions made in support of his claim/contentions against the said additions/disallowances, but the additional evidences were not admitted by the ld.CIT(A) and the additions were sustained. Aggrieved by the same, the assessee has come up in appeal before the Tribunal. 5. Before us the assessee has raised several grounds in all the years involved. But there is one common ground permeating in all the appeals, in relation to the ld.CIT(A)’s refusal to admit additional evidences filed before him. Since adjudication of this ground will effect the adjudication of the remaining grounds raised by the assessee challenging the merits of the additions made, we shall first deal with this ground raised by the assessee. 6. For the sake of brevity we reproduce the ground in this regard in assessee’s appeal for Asst.Year 2010-11 as under: “1. That the ld.CIT(A) erred in law and on the facts of the case in not admitting the additional evidences.” 7. The argument of the ld.counsel for the assessee was that he had demonstrated reasonable cause for not filing these evidences before the AO. The ld.counsel for the assessee pointed out that it is clearly evident that the assessee had not participated in the assessment proceedings at all. It is evident from the assessment order and also from the facts noted by the ld.CIT(A). He pointed out that the reasons for not attending assessment proceedings was that he had shifted from the address where search was conducted to another place, while all the notices relating to the assessment IT(S)A No.173 to 176/Ahd/2017 4 proceedings were sent at the address where search was conducted , the address being B-35, Kendriya Vihar, Inside Sun City, Bopal, Ahmedabad. He referred to the assessment order pointing out this fact stated therein. He stated that after the search he had shifted to other place viz. D-104, Green City, Opp: Science City, Science City Road, Sola, Ahmedabad. The ld.counsel for the assessee contended that this fact is corroborated by the fact that the new address was mentioned in the Form No.35 of the appeal filed before the CIT(A), at which address the appellate order was passed and the ld.CIT(A) was therefore very much aware of this fact. He therefore stated that having not received notices for the assessment conducted, the assessee had been unable to participate in the same, and furnish all the evidence in support of his pleadings, and therefore, the evidences now being sought to be filed by the assessee needed to be admitted, and the ld.CIT(A) therefore erred in rejecting the same. 8. The ld.DR on the other hand pointed out that the ld.CIT(A) had given a detailed finding while not admitting additional evidence by pointing out that when the assessee came in appeal before the ld.CIT(A) it was evident that he had received the assessment order as also notice of demand which were served at the old address. Having received these documents, he very well had received other notices also, and therefore, there was no merit in the assessee’s plea that he has shifted to the new address and was not aware of the assessment proceedings going on and therefore, he was precluded from producing necessary evidences before the AO. He further drew our attention to the ld.CIT(A) order stating that even in the remand proceedings the assessee had failed to respond to summons issued to him which showed the consistent non-cooperative attitude of the assessee. The ld.DR therefore stated that the ld.CIT(A) was right in IT(S)A No.173 to 176/Ahd/2017 5 holding that the assessee had not given sufficient cause for not adducing evidence before the AO, and for not participating in the assessment proceedings, and therefore, had rightly rejected admission of the evidences. In this regard, he drew our attention to para 5.3 to 5.7 and 5.8 to 5.13 of the CIT(A)’s order as under: “5.3 I have carefully examined the assessment order, additional evidences, remand report and rejoinder submitted by the appellant. Before deciding the grounds of appeal, the issue of admission of additional evidence needs to be decided. The provisions related to additional evidence are governed by Rule 46A of IT. Rules, 1962 the same is reproduced as under:- "(l)The appellant shall not be entitled to produce before 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 sufficient cause from producing the evidence which he was called upon to produce by the (Assessing Officer); or 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 Deputy Commissioner (Appeals)} {or, as the 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 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. IT(S)A No.173 to 176/Ahd/2017 6 (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 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 subsection 1 of section 251 or the imposition of penalty u/s.271)." 5.4 In view of the provision of Rule 46A, the facts of the appeal under consideration are required to be analyzed. The brief facts of the issue is that a search u/s. 132 of the IT Act was conducted in the case of Shri Nayan Gondalia and Shri Mansukh N. Patel on 05-02-2013 and 29.01.2013 respectively in connection with a search conducted in Dev group of cases. A locker no. 34 with Kotak Mahindra Bank, Shivranjani Branch, Ahmedabad was also searched/executed on 06-02-2013. Thereafter the case of the appellant and Mansukh N. Patel along with Dev Group of cases were centralized with the DOT, Central Circle-2(l), Ahmedabad. 5.5 It is observed that the AO issued notice u/s. 153A to Shri Nayan Gondalia and Shri Mansukh N. Patel at the address of search conducted however in both cases nobody was found at the given address during the assessment proceedings. However after the search both Shri Nayan Gondalia and Shri Mansukh N. Patel left the premise without informing the change of address to the IT Department though they were very well aware that the departmental proceedings and search assessment was pending at that time. The appellant has not explained why the address was changed and why intimation was not given to the department. It is also not known whether the above premise/residence was owned by him and whether he sold the same. No such information has been filed by the appellant in the prayer u/Rule 46A of the IT Rules. Since the intimation of change of residence/address was not given to the AO or IT Department, therefore the AO issued the notice u/s 153A r.w.s. 143(2) at the last known address of Nayan Gondalia and Shri Mansukh N Patel i.e. B/15 and B/35, Kendriya Vihar, Inside Sun City, Bopal, Ahmedabad. Since none was found therefore the notices were served by the affixture at the last known address. The AO again issued show cause u/s 144 r.w.s. 153A on the last known address through affixture since none attended therefore completed the assessment on the basis of material available on record. 5.6 During the appellate proceeding the appellant raised the ground of appeal with respect to addition made by the AO but did not object service of the notices either in the ground of appeal or in the written submission. Therefore it appears that the appellant has made some arrangement to receive the notices and received the notices issued by the AO. The appellant in prayer for admission of additional evidence merely mentioned that he did not receive the notice due to change in address however he did not clarify that why change of address intimation was not given to the department. The appellant has not filed any factual details and evidence of old and new address to .substantiate the change of address theory. There is no evidence on record to prove that the appellant left old residence shifted to new residence. It is noticed from the form no. 35 filed with the appeal memo that IT(S)A No.173 to 176/Ahd/2017 7 the appellant mentioned 05.06.2015 as date of service of assessment order and demand notice. This shows that the assessment order and demand notice served at the last known address were received by the appellant. Since the appellant has received the assessment order and demand notice on 05.06.2015, served at the last known address, therefore it is presumed that notices u/s 153A, 143(2), 142(1) and 144 of the Act would have also been received by him thus the contention of the appellant is not tenable that the notices were not received by him. It is further observed that the appellant has participated in the appellate proceedings, raised ground of appeal on merit and contested the issues on merits only. The appellant has not objected authorities and jurisdiction of the AO on ground of irregularity in service of notice or legality or invalidity or illegality of service of said notice either during the assessment proceeding or during the appellate proceeding before the undersigned. 5.7 Considering the above I am of the view that the appellant received the notices u/s 143(2)/ 153A/ 142(1) of the IT Act even after change of the address therefore service of notice u/s 143(2)/ 153A/ 142(1) of the IT Act served by affixture is found valid. Non submission or non appearance before the AO shows non cooperation of the appellant. It is settled position of law that service of notices by affixture is a valid service and subsequent assessment made is also valid assessment. ..... .... .... ..... 5.8 It is further noted from the remand report that during the remand proceedings, the AO issued summon to the appellant at the given address D-104, Green city, Opp. Science City, Science City Road, Sola, Ahmedabad in connection with proceedings in the case of Smt. Niyati Sanket Shah and Shri Sanket Shah. The AO also issued letter dated 09.12.2016 to the appellant to to appear on 14.12.2016. However the appellant also chose not to attend the proceedings before the AO. Therefore the AO concluded that the assessee is habitually non-complier and on the pretext of change of address did not receive the notices and did not appear before the AO. It is interesting to note that Shri Mansukh Patel and Shri Nayan Gondalia is residing in the same house as in the form no. 35 and prayer for admission of additional evidence both appellant has mentioned the same address i.e. D-104, Green City, Opp. Science City, Sola, Ahmedabad. 5.9 The appellant in rejoinder has submitted that since the CIT(A) do not have power to set aside the appeal therefore the additional evidence may be admitted and relied on 2 case laws. However facts and circumstances in the above cases are different and distinguishable from the appeal under consideration. In the case of CIT Vs. Tax Hindered India Pvt. Ltd. 239 CTR 263 the Hon'ble jurisdictional High Court and in the case of CIT Vs. Virgin Securities & Credits Pvt. Ltd 332 ITR 396 the Hon'ble Delhi High Court held that if first time the assessee was prevented by sufficient cause and therefore could not file the evidence before the AO than such evidence can be admitted. However in the case of the appellant there is no cause at all, the appellant changed the address suo-moto thus deliberately did not attend and deliberately did not file any evidence before the AO during assessment proceeding. IT(S)A No.173 to 176/Ahd/2017 8 5.10 In the rejoinder the appellant also contended that during the remand proceeding, the AO had not given any opportunity to him to appear before him in connection with the additional evidence as the AO issued summon u/s. 131 to the appellant in connection with Niyati Sanket Shah and Sanket Shah a related case and that cannot be treated as opportunity given to the appellant. However the appellant has not explained why he did not appeared before the AO on 24.12.2016 in response to letter dated 09.12.2016. Therefore the contention of the appellant is absolutely vague and not tenable and rather proves perpetual non compliance and co- operation of the appellant with the IT Department. The conduct of the appellant is sufficient to establish that the appellant deliberately avoided the attendance before the AO and deliberately chosen not to appear before the AO either in his own proceeding or any other income tax proceedings in some other case where his attendance is required by summon u/s 131 of the IT Act. 5.11 Rule 46A clearly mentions that the appellant is not entitled to produce any evidence whether orally or documentary other than the evidence produced by him during the assessment proceedings. The provisions further clearly states that only in exceptional circumstances, the appellant is allow to file the additional evidence if the AO had refused to admit the evidence or the appellant was prevented by sufficient cause from producing the evidences before the AO or the AO has passed the order without giving opportunity to the appellant. However in case of the appellant none of the exceptional circumstances exists as it is established beyond doubt that the appellant has deliberately not attended the assessment proceeding and there was no exceptional circumstances which prevented him from filing the above evidence before the AO. It is undisputed fact that the appellant has not given any details or intimation of change of address to the AO though he was fully well aware that assessment u/s 153A of the IT Act has to be completed by the AO in connection with the search conducted in his case. 5.12 In the prayer for admission of additional evidence the appellant submitted that due to change in address he could not receive the notices and he did not have any regular accountant so evidence could not be filed before the AO as reasons were beyond of his control. Thus it is evident that contention of the appellant is absolutely vague factually incorrect hence not tenable. 5.13 Considering the above facts and discussion I am of the considered view that appellant was not prevented by any sufficient cause from appearing before the AO and producing the evidence during the assessment proceeding. However as discussed supra, it is contrary situation of deliberate non compliance by the appellant. The appellant shifted his address without informing the IT Department and thus deliberately did not attend the assessment proceeding though he was fully aware that the assessment proceeding in connection of search u/s 132 of the IT Act was pending in his case. Therefore it is held that the additional evidence filed by the appellant within the meaning of sub clause (b) and (c) of sub Rule 1 of Rule 46A of the IT. Rules, 1962 is not admissible hence rejected.” IT(S)A No.173 to 176/Ahd/2017 9 9. We have heard the rival contentions. The issue before us is, whether the ld.CIT(A) was right in refusing to admit additional evidences filed by the assessee before him for the reason that the assessee had been unable to adduce sufficient cause for not producing the same before the AO. The admission of additional evidences by the Ld.CIT(A) is strictly governed by Rule 46A of the Income Tax Rules, 1962. The conditions and circumstances set out therein in which the additional evidences can be entertained by the Ld.CIT(A) are as under: “46A. (1) The appellant shall not be entitled to produce before the [Deputy 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 (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. 10. As is evident from the above, the circumstances set out therein are primarily to the end and purpose that where parties to a litigation had proper opportunity to produce all evidences at the proper stage but failed to avail that opportunity they could not be enabled to have a further innings by asking for the appellate authority to allow additional evidences to be adduced at that stage. What is to be seen while admitting additional evidences is whether sufficient reasonable cause had been given by the assessee for not producing the same before the assessing officer. IT(S)A No.173 to 176/Ahd/2017 10 11. In the present case it is an admitted fact and not disputed that the assessee had shifted his residence from where he was subjected to search action to another place. It is also not denied that all the notices for assessment conducted were being issued at his old address. Therefore, it reasonable to believe that since the assessee was not available at the old address, he did not receive notices of the assessment at all. 12. The reason with the Ld.CIT(A) believing that sufficient opportunity had been given to the assessee during assessment proceedings which he failed to avail, we find, is based not on facts but on mere presumptions. The Ld.CIT(A) has presumed that since the assessee had responded to the assessment order framed and demand notice served on him at the old address, by way of filing appeal in time to the ld.CIT(A), and further the fact that he had not challenged that the assessment order has been passed without due service of notice to the assessee, he must have received the notices of hearing during assessment also . 13. Considering that we are on the issue of sufficient reason with the assessee for not filing evidences before the AO so as to admit the same in appellate proceedings with the sole objective to meet the ends of justice and enable a fair assessment being done, surely the reason for not entertaining the evidences cannot be based on presumptions more particularly when the facts demonstrate existence of sufficient cause for not producing the evidences before the AO. Merely because the assessee responded to the assessment order and demand notice raised on him at the old address, though it implies that the assessee in some way had made arrangements to IT(S)A No.173 to 176/Ahd/2017 11 receive the same from the old address well in time to enable him to file appeal before the ld.CIT(A), this inference cannot be stretched to receipt of notices of hearing in assessment proceedings so as to deny him the right to adduce evidences before the Ld.CIT(A). When the fact is that he was not available at the address where notices were served , presuming that he had made arrangements to receive all notices and other communications served at the old address so as to denying him the right to admit additional evidences , is grossly unfair and goes against the very principles of affording fair hearing in a trial to parties concerned . 14. The contention of the ld.CIT(A) that the assessee was habitually non-cooperative is also of no relevance. If at all, it is the assessee to whom entire prejudice is caused by way of the assessment order passed. Additions to the tune of crores of rupees have been made in all four years involved, and non-cooperation by the assessee will not be of any benefit to the assessee at all. 15. In the present case where best judgment assessment has been framed since the assessee did not participate in the assessment proceedings at all, resulting in additions made to its income running into crores of rupees in all the years involved and the assessee has explained his reason for non attendance which has not been found to be false by the Revenue, the additional evidences filed by the assessee ought to have been admitted by the Ld.CIT(A) for a fair and rational assessment to be made. The purpose of exparte assessment is not to penalize the assessee and all attempts should be made by the appellate authority to render the best judgment assessment a fair proceeding and the assessment order as a consequence a rational one. IT(S)A No.173 to 176/Ahd/2017 12 16. Considering over all facts and circumstances’, therefore, we hold that the ld.CIT(A) has erred in not admitting additional evidence filed by the assessee. Additional evidences are admitted by us, and all the appeals are restored back to the ld.CIT(A) to be adjudicated considering additional evidence filed by the assessee. 17. In the result, all the appeals of the assessee are allowed in above terms for statistical purposes. Order pronounced in the Court on 7 TH September, 2022 at Ahmedabad. Sd/- Sd/- (MADHUMITA ROY) JUDICIAL MEMBER (ANNAPURNA GUPTA) ACCOUNTANT MEMBER Ahmedabad, dated 07/09/2022