SCRAFT PRODUCTS PVT LTD,NEW DELHI V. ACIT CIRCLE-22(2), NEW DELHI

ITA 2697/DEL/2019

AI Insights

Scraft Products Pvt. Ltd. appealed against the order of the Commissioner of Income Tax (Appeals)-8, New Delhi, which had confirmed additions made by the Assessing Officer under Sections 68 and 69 of the Income Tax Act, 1961, pertaining to unexplained cash credit and unexplained expenditure, respectively. The assessee argued that the CIT(A) erred in rejecting additional evidence that could substantiate their claims, citing a lack of opportunity to present these documents during the original assessment due to time constraints. The Departmental Representative contended that the additional documents did not meet the exceptional circumstances required for admission under Rule 46A of the Income Tax Rules, 1962. The Tribunal found merit in the assessee's argument and remanded the case for a fresh assessment with the new evidence.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 633027 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-06-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MAHESH KUMAR
• Assessee Lawyers: RAKESH GUPTA; SOMIL
• Keywords: Additional evidence; Unexplained cash credit; Unexplained expenditure; Principle of natural justice
• Section: 147; 148

Judgement Text

"1 ITA No. 2697/Del/2019 Scraft Products Pvt. Ltd. Vs. ACIT IN THE INCOME TAX APPELLATE TRIBUNAL DELHI (DELHI BENCH ‘G’ NEW DELHI) BEFORE SHRI YOGESH KUMAR U.S., JUDICIAL MEMBER AND SHRI MANISH AGARWAL, ACCOUNTANT MEMBER ITA No. 2697/DEL/2019 (A.Y. 2010-11) Scraft Products Pvt. Ltd. D-28, South Extension Part-1, New Delhi PAN: AALCS4578F Vs. ACIT Circle-22(2) New Delhi Appellant Respondent Assessee by Dr. Rakesh Gupta, Advocate, Shri Somil Aggarwal, Advocate and Shri Deepesh Garg, Advocate Revenue by Sh. Mahesh Kumar, CIT (DR) Date of Hearing 27/05/2025 Date of Pronouncement 13/06/2025 ORDER PER YOGESH KUMAR, U.S. JM: The present appeal is filed by the Assessee against the order of the Commissioner of Income Tax (Appeals)-8, New Delhi [‘Ld. CIT(A)’ for short] dated 19/02/2019 pertaining to Assessment Year 2010-11. 2. Brief facts of the case are that, the Assessee filed return of income declaring loss of Rs. 2,93,40,641/- and the same was accepted u/s 143(1) of the Income Tax Act, 1961 ('Act' for short). The case of the Assessee was reopened u/s 147 r.w. Section 148 of the Act after recording reasons for reopening. Assessment order came to be passed on 31/12/2017 under Section 147/143(3) of the Act by making additions of Rs. 7,58,44,000/- u/s 68 of the Act on account of 2 ITA No. 2697/Del/2019 Scraft Products Pvt. Ltd. Vs. ACIT unexplained cash credit and Rs. 15,16,880/- u/s 69 of the Act on account of unexplained expenditure. Aggrieved by the assessment order dated 31/12/2017, the Assessee preferred an Appeal before the Ld. CIT(A). The Ld. CIT(A) vide order dated 19/12/2019, dismissed the Appeal filed by the Assessee. Aggrieved by the order of the Ld. CIT(A) dated 19/12/2019, the Assessee preferred the present Appeal. 3. The Ld. Assessee's Representative vehemently submitted that, the Ld. CIT(A) has committed grave error for rejecting the additional evidence filed by the Assessee which is in violation of principals of natural justice. Further submitted that, the Ld. CIT(A) ought to have admitted the additional evidence and should have deleted the additions made by the A.O., thus, sought for allowing the Appeal. 4. Per contra, the Ld. Departmental Representative submitted that, the additional documents can be admitted only in exceptional circumstances mentioned in the Rule 46A of the Income tax Rules 1962 and no such exceptional circumstances available to the Assessee, therefore the application has been rightly rejected and additions have been confirmed by the CIT (A). Thus in relying on the orders of the Lower Authorities sought for dismissal of the Appeal. 3 ITA No. 2697/Del/2019 Scraft Products Pvt. Ltd. Vs. ACIT 5. We have heard both the parties and perused the material available on record. During the first appellate proceedings, the Assessee has filed certain additional evidences under Rule 46A of the Income Tax Rules, 1962 contending that the Assessee was prevented from producing those documents before the A.O. due to paucity of time. The Ld. CIT(A) has rejected the application and has not admitted the additional evidence and consequently dismissed the Appeal by confirming the additions made by the A.O. 6. It is the specific case of the Assessee before the CIT(A) while filing the additional evidence that, the Assessee has produced all the details/document as required by the A.O. and the Assessee was under a bona-fide belief that the documents/evidence placed on record were substantially sufficient and which will satisfy the Ld. A.O., however, for Assessee’s surprise, the additions were made. Therefore, the Assessee made further efforts to get evidences which could not be arranged during the assessment proceedings due to paucity of time as the assessment order has been passed taking into consideration that the matter was getting time barred. The Assessee has produced the documentby way of additional evidence to prove the identity, creditworthiness and genuineness of the transaction after making extensive efforts and regular fellow ups from the parties. 4 ITA No. 2697/Del/2019 Scraft Products Pvt. Ltd. Vs. ACIT 7. Considering the above facts and circumstances and in view of the fact that the additional evidences filed by the Assessee are being crucial and will go to the root of the matters in deciding the lis, we are of the considered opinion, that the Ld. CIT(A) ought to have admitted the additional documents and should have decided the Appeal on merits. Accordingly, we direct the Ld. CIT(A) to admit the additional evidence filed by the Assessee and decide the issue involved inthe Appeal afresh after considering the additional documents produced by the Assessee. Thus, we allow Ground No. 4 of the Assessee. 8. Since, we have allowed the Ground No. 4 and remanded the matter to the file of the Ld. CIT(A) for deciding the Appeal afresh, other grounds of Appeal require no adjudication and the same are kept open. 9. In the result, the Appeal of the Assessee is partly allowed for statistical purpose. Order pronounced in the open court on 13th June, 2025 Sd/- Sd/- (MANISH AGARWAL) (YOGESH KUMAR U.S.) ACCOUNTANT MEMBER JUDICIAL MEMBER Date:- 13.06.2025 R.N, Sr.P.S* 5 ITA No. 2697/Del/2019 Scraft Products Pvt. Ltd. Vs. ACIT Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTR ITAT, NEW DELHI "