ITO, New Delhi v. M/s. Multiplex Capital Ltd, New Delhi

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : E : NEW DELHI BEFORE SHRI I.P. BANSAL JUDICIAL MEMBER AND SHRI K.G. BANSAL ACCOUNTANT MEMBER ITA NO.3885/DEL/2009 ASSESSMENT YEAR : 2004-05 INCOME TAX OFFICER WARD 5 (4) NEW DELHI. VS. M/S MULTIPLEX CAPITAL LTD. 100/28 RAJPUR SECTOR-9 ROHINI DELHI 85. PAN : AAACM1761B CO NO.356/DEL/2009 (ITA NO.3885/DEL/2009) ASSESSMENT YEAR : 2004-05 M/S MULTIPLEX CAPITAL LTD. 100/28 RAJPUR SECTOR-9 ROHINI DELHI 85. PAN : AAACM1761B INCOME TAX OFFICER WARD 5 (4) NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI AJAY WADHWA CA REVENUE BY : SHRI.G.S. SAHOTA SR. DR ORDER PER I.P. BANSAL JUDICIAL MEMBER THE APPEAL IS FILED BY THE REVENUE AND CROSS OBJEC TIONS BY THE ASSESSEE. BOTH ARE DIRECTED AGAINST THE ORDER OF THE CIT (A) DATED 2 ND JULY 2009 FOR ASSESSMENT YEAR 2004-05. GROUNDS OF APPEAL READ AS UNDER:- 1. THE ORDER OF THE LD. CIT (A) IS ERRONEOUS AND CONTRARY TO FACTS & LAW. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN ITA NO.3885/DEL/2009 CO NO.356/DEL/2009 2 LAW THE LD. CIT (A) HAS ERRED IN DELETING THE ADDI TION OF RS.8 12 580/- BEING THE PRIOR PERIOD EXPENSES. 2.1. THE CIT (A) DID NOT APPRECIATE THE FACT THAT THE ASSESSEE WAS AWARE OF HIS LIABILITY IN RESPECT OF S EBI TURNOVER TAX IN THE YEARS OF ACCRUAL. 3. ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CAS E AND IN LAW THE LD. CIT (A) ERRED IN DELETING THE ADDITION OF RS.1 44 756/- BEING THE PENALTY LEVIED BY NSE. 4. THE LD. CIT (A) DID NOT APPRECIATE THE FACT TH AT THE PENALTY IS LEVIED BY THE NSE FOR DISABLEMENT OF TRADING TER MINAL DUE TO MARGINAL VIOLATION OF EXCHANGE. GROUNDS OF CROSS OBJECTIONS READ AS UNDER:- 1. THERE IS NO MERIT IN THE GROUND TAKEN BY THE ASS ESSING OFFICER THAT THE LD. CIT (A)-VIII NEW DELHI ERRED IN DELETING THE ADDITION OF RS.8 12 580/- BEING PRIOR PERIOD EX PENSES. 2. THE LD. CIT (A) IS PERFECTLY JUSTIFIED IN DELET ING THE ADDITION OF RS.8 12 580/- BY HOLDING THAT THE SAME IS OTHERW ISE ALLOWABLE ON PAYMENT BASIS U/S 43B OF THE INCOME-TA X ACT 1961. 3. THERE IS NO MERIT IN THE GROUND TAKEN BY THE AS SESSING OFFICER THAT THE LD. CIT (A) ERRED IN DELETING THE ADDITION OF RS.1 44 756/- BEING PENALTY LEVIED BY NSE. 4. THE LD. CIT (A) IS PERFECTLY JUSTIFIED IN DELET ING THE ADDITION OF RS.1 44 756/- BY HOLDING THAT THE SAME IS COMPEN SATORY IN NATURE RATHER THAN AGAINST ANY OFFENCE PROHIBITED B Y LAW. 5. THE LD. CIT (A) HAS ERRED IN NOT ADMITTING THE ADDITIONAL EVIDENCE FILED UNDER RULE 46A OF INCOME-TAX RULES 1962 IN RESPECT OF PURCHASE OF COMPUTER SYSTEMS HARDWARE A ND VSATS SERVICE EQUIPMENTS ETC. THEREBY DENYING WITH APPRECIATION AVAILABLE ON THESE ASSETS. 6. THE LD. CIT (A) HAS ERRED IN UPHOLDING THE ACTI ON OF A.O. IN DISALLOWING OF DEPRECIATION ON RS.9 000/- BEING ANN UAL MAINTENANCE CHARGES WHICH IS FULLY ALLOWABLE AS REV ENUE EXPENDITURE BUT WRONGLY CAPITALIZED. 7. THE LD. CIT (A) HAS ERRED IN DIRECTING THE A.O. TO DISALLOW DEPRECIATION ON 3 VSAT WHICH WERE PURCHASED DURING THE ITA NO.3885/DEL/2009 CO NO.356/DEL/2009 3 PERIOD RELEVANT TO THE ASSESSMENT YEAR UNDER CONSID ERATION AND WERE PUT TO USE FOR LESS THAN 180 DAYS. 8. THAT THE LD. CIT (A) HAS ERRED IN DIRECTING THE ASSESSING OFFICER TO DISALLOW DEPRECIATION ON COMPUTER SYSTEM PURCHASED AND INSTALLED DURING THE YEAR UNDER CONSI DERATION AND WERE PUT TO USE FOR LESS THAN 180 DAYS. 9. THAT THE LD. CIT (A) HAS ERRED IN DIRECTING THE A.O. TO DISALLOW DEPRECIATION ON COMPUTER SOFTWARE PURCHASE D FROM M/S R.A.C. TECHNOLOGIES FOR RS.33 000/- ON 09.01.20 04. 10. THAT THE LD. CIT (A) HAS ERRED IN UPHOLDING T HE ACTION OF A.O. IN WORKING OF RS.71 000/- U/S 68 OF THE INCOME -TAX ACT 1961 BEING MARGIN MONEY RECEIVED FROM CLIENTS NAME LY ANITA AGGARWAL BHAVNA JAIN AND SONALI SACHDEVA. REVENUES APPEAL 2. GROUND NO.1 IS GENERAL IN NATURE THEREFORE NEE D NO ADJUDICATION. 3. IN GROUND NO.2 AND 2.1 THE GRIEVANCE OF THE REV ENUE IS AGAINST DELETION OF ADDITION OF RS.8 12 580/-. THE ASSESSING OFFICE R HAS DISCUSSED THIS ISSUE IN PARA 3 OF THE ASSESSMENT ORDER. THE SAID AMOUNT RE PRESENTED PAYMENT MADE TO SEBI DURING THE YEAR UNDER CONSIDERATION WHICH IS D EBITED ON PAID BASIS. THE ASSESSING OFFICER HAS DISALLOWED THE SAID SUM ON T HE GROUND THAT THE SAID AMOUNT PAID BY THE ASSESSEE DOES NOT RELATE TO THE YEAR UNDER CONSIDERATION. ACCORDING TO THE ASSESSING OFFICER THE SAID LIABIL ITY OF THE ASSESSEE WAS CRYSTALISED IN EARLIER YEARS AND THEREFORE THE SA ME CANNOT BE ALLOWED DURING THE YEAR UNDER CONSIDERATION EVEN IF IT IS PAID IN THE YEAR UNDER CONSIDERATION. LD. CIT (A) HAS DELETED THE DISALLOWANCE ON THE GROUND THAT EVEN IF IT IS HELD THAT SUCH CHARGES ARE NOT ALLOWABLE ON ACCRUAL BASIS BU T THEY ARE ALLOWABLE ON PAYMENT BASIS U/S 43B IRRESPECTIVE OF METHOD OF ACC OUNTING FOLLOWED BY THE ASSESSEE AND FOR THIS PURPOSE LD. CIT (A) HAS REL IED UPON THE DECISION OF ITAT MUMBAI IN THE CASE OF ITO VS. SURESH CHAND JAIN 10 2 TTJ 907 (MUM) IN WHICH SUCH CHARGES WERE HELD TO BE COVERED BY THE PROVISI ONS OF SECTION 43B AND HE ALSO REFERRED TO THE DECISION OF HYDERABAD ITAT IN THE CASE OF CIT VS. GMR ITA NO.3885/DEL/2009 CO NO.356/DEL/2009 4 HOLDINGS COMPANY 6 DTR 401 (HYD) WHERE SIMILAR AMO UNT OF SEBI TURNOVER FEE WAS HELD ALLOWABLE U/S 43B. IT HAS BEEN MADE CLEAR IN THE ORDER OF CIT (A) THAT THE SAID AMOUNT DOES NOT CONTAIN ANY INTEREST COMPO NENT AS THE ENTIRE SUM PAID IS PRINCIPAL AMOUNT AND FOR THIS PURPOSE HE HAS REF ERRED TO THE LETTER ISSUED BY NATIONAL STOCK EXCHANGE DATED 23 RD AUGUST 2002 AND THE UNDERTAKING GIVEN BY THE ASSESSEE COMPANY DATED 24 TH AUGUST 2002. 4. AFTER NARRATING THE FACTS LD. DR RELIED UPON TH E ORDER OF THE ASSESSING OFFICER. HE SUBMITTED THAT IT HAS BEEN HELD BY CIT (A) THAT THE TURNOVER FEES PAID BY THE ASSESSEE DURING THE CURRENT FINANCIAL YEAR P ERTAINED TO THE EARLIER YEAR AND IF IT IS SO THEN ACCORDING TO MERCANTILE SYSTEM O F ACCOUNTING THE ASSESSEE CANNOT CLAIM THE SAID EXPENDITURE IN THE YEAR UNDER CONSIDERATION. 5. ON THE OTHER HAND RELYING ON THE ORDER OF CIT ( A) IT WAS SUBMITTED BY LD. AR THAT EVEN IF THE SAID TURNOVER FEE PERTAINED TO EARLIER YEAR BUT ACCORDING TO SECTION 43B IT WAS TO BE ALLOWED IN THE YEAR IN WHI CH THE SAID AMOUNT WAS PAID AND FOR THIS PURPOSE HE RELIED UPON THE DECISIONS RELIED UPON BEFORE THE CIT (A) AND THUS HE SUBMITTED THAT THE ORDER OF CIT (A) O N THIS ISSUE MAY BE UPHELD. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS IN THE LIGHT OF THE MATERIAL PLACED BEFORE US. THE TURNOVER FEES HAS B EEN CLAIMED BY THE ASSESSEE ON THE BASIS OF ACTUAL PAYMENT MADE DURING THE YEAR THOUGH THE SAME RELATED TO EARLIER YEARS. LD. CIT (A) HAS ALLOWED THE RELIEF TO THE ASSESSEE ON THE GROUND THAT SUCH CLAIM OF THE ASSESSEE WAS ADMISSIBLE UNDE R THE PROVISIONS OF SECTION 43B ACCORDING TO WHICH ANY TAX OR FEES PAID BY THE ASSESSEE THOUGH PERTAINED TO EARLIER YEAR SHALL BE ALLOWED IN THE YEAR OF ACTUAL PAYMENT. FOR SUCH PURPOSE LD. CIT (A) HAS REFERRED TO THE TWO DECISIONS; ONE OF M UMBAI BENCHES AND THE OTHER OF HYDERABAD BENCHES. LD. DR WAS NOT ABLE TO BRING TO OUR NOTICE ANY CONTRARY DECISION AND LD. AR OF THE ASSESSEE STATED THAT ACC ORDING TO HIS INFORMATION THERE IS NO CONTRARY DECISION. IN THIS VIEW OF THE SITUATION AS THE VIEW TAKEN BY ITA NO.3885/DEL/2009 CO NO.356/DEL/2009 5 THE CIT (A) IS BASED ON THE DECISION OF TWO BENCHES OF THE TRIBUNAL WE SEE NO INFIRMITY IN THE DELETION MADE BY CIT (A) THEREFOR E WE DISMISS THESE GROUNDS. 7. APROPOS GROUND NO.3 AND 4 WHICH RELATE TO DELETI ON OF ADDITION OF RS.1 44 756/-. THIS ISSUE HAS BEEN DISCUSSED BY TH E ASSESSING OFFICER IN PARA 7 OF THE ASSESSMENT ORDER. ACCORDING TO THE ASSESSEE THE SAID AMOUNT WAS IN THE NATURE OF FINANCIAL CHARGES LEVIED BY NSE TOWARDS E XPOSURE MARGIN AND THEREFORE DID NOT RELATE TO ANY VIOLATION OF LAW. A LETTER FROM GLOBE CAPITAL MARKET DATED 17 TH AUGUST 2006 WAS FILED WHEREIN AS PER CLAUSE 3 IT WAS WRITTEN THAT AS PER EXCHANGE REQUIREMENT THAT EVERY DISABLE MENT OF TRADING TERMINAL DUE TO INITIAL MARGIN VIOLATION EXCHANGE IMPOSES A PEN ALTY OF RS.5 000/- FOR EACH OCCASION ON INCREMENTAL BASIS. THE ASSESSING OFFIC ER REFERRING TO THE SAID LETTER OBSERVED THAT THE LETTER IN ITSELF WAS EVIDENT TO T HE FACT THAT THE AMOUNT PAID BY THE ASSESSEE WAS IN THE NATURE OF PENALTY IMPOSED B Y NSE AND IN THE CIRCUMSTANCES THE SAID AMOUNT WAS DISALLOWED. THI S ISSUE HAS BEEN DISCUSSED BY THE CIT (A) IN PARA 6 TO 6.4.3. TO CONTEND THAT SUCH AMOUNT PAID BY THE ASSESSEE COULD NOT BE TREATED TO BE IN THE NATURE O F PENALTY. THE ASSESSEE HAD PLACED RELIANCE ON THE FOLLOWING DECISIONS:- I) ITO VS. GDR SHARE AND STOCK BROKING SERVICES LTD . 88 TTJ (CAL) 352. II) MASTER CAPITAL SERVICES LTD. VS. DCIT 108 TTJ 3 89 (CHD) III) CHANDRAKANT KANTILAL SHAH VS. ACIT 9 SOT 717 (MUM). 8. CONSIDERING THESE DECISIONS LD. CIT (A) HAS OBS ERVED THAT FROM THE CERTIFICATE SUBMITTED BY THE ASSESSEE DATED 17 TH AUGUST 2006 FROM GLOBE CAPITAL MARKET LTD. IT WAS APPARENT THAT THE SAID AMOUNT WA S IMPOSED FOR DEFAULT IN INITIAL MARGIN VIOLATION AND SUCH PAYMENT CANNOT BE TREATED TO BE A PAYMENT MADE IN AN OFFENCE WHICH IS PROHIBITED BY ANY LAW AND FOR THAT PURPOSE RELYING ON THE AFOREMENTIONED DECISIONS THE CIT (A) HAS GRANTED T HE RELIEF TO THE ASSESSEE. THE DEPARTMENT IS AGGRIEVED HENCE IN APPEAL. ITA NO.3885/DEL/2009 CO NO.356/DEL/2009 6 9. LD. DR AFTER NARRATING THE FACTS RELIED UPON THE ORDER OF ASSESSING OFFICER. 10. ON THE OTHER HAND RELYING ON THE ORDER OF CIT (A) IT WAS SUBMITTED BY LD. AR THAT LD. CIT (A) IS RIGHT IN DELETING A SUM OF R S.1 44 756/-. HE SUBMITTED THAT IN ADDITION TO THE DECISIONS RELIED UPON BY LD. CIT (A) THE ASSESSEE IS ALSO PLACING RELIANCE ON THE DECISION IN THE CASE OF CLA SSIC SHARE AND STOCK BROKING SERVICES LTD. VS. DCIT 11 SOT 377 (MUM). 11. WE HAVE HEARD BOTH THE PARTIES AND THEIR CONTEN TIONS HAVE CAREFULLY BEEN CONSIDERED. THE AMOUNT PAID BY THE ASSESSEE IS FOR DEFAULT IN INITIAL MARGIN VIOLATIONS. THIS ISSUE WAS CONSIDERED BY THIS TRIB UNAL IN THE CASE OF CLASSIC SHARES AND STOCK BROKING SERVICES LTD. VS. DCIT 11 SOT 377 (MUM) WHEREIN THE VIOLATION FINE (MARGIN) HAS BEEN CONSIDERED TO BE IN THE NATURE OF PENALTY. THE RELEVANT PORTION OF THE SAID DECISION IS REPROD UCED BELOW:- 10 . SECOND GROUND RELATES TO DELETION OF ADDITION OF R S. 4 75 335 BEING PENALTY CHARGED BY NATIONAL STOCK EXCHANGE. 10.1 THE ASSESSING OFFICER HAS DISALLOWED A SUM OF RS. 4 75 335 BEING PENALTY DEBITED TO PROFIT & LOSS ACCOUNT BY H OLDING THE SAME IS IN VIOLATION OF THE PROVISIONS OF ACT AND ACCORD INGLY THE SAME IS NOT ALLOWABLE AS TAX. THE CIT(A) DELETED THE ADDITI ON BY HOLDING THAT THE PENALTY CHARGES WHICH WERE CHARGED BY THE NATIONAL STOCK EXCHANGE WERE ON ACCOUNT OF THE FOLLOWING REASONS : - AUCTION SHORT DELIVERY CHARGES - DELIVERY MARGIN PAY-IN-SHORTAGE BAD DELIVERY CHARGES INTEREST ON AFORESAID CHARGES VIOLATION FINES (MARGIN) THE PENALTY WAS CHARGED BY NSE ON THE ABOVE SHORTCO MINGS AND THE SHORTCOMINGS ARE SUCH WHICH CAN BE STATED THAT THEY WERE IN VIOLATION OF THE PROVISIONS OF LAW. WHILE DELETING THE ADDITION THE CIT(A) HAS ALSO TAKEN INTO CONSIDERATION VARIOUS CA SE LAWS RELIED UPON BY THE LD. COUNSEL FOR THE ASSESSEE BEFORE HIM . 10.2 WE HAVE SEEN THE FINDINGS OF THE CIT(A) AND FO UND THAT THE CIT(A) WAS JUSTIFIED IN ALLOWING THE GROUND OF THE ASSESSEE. THE FINDINGS OF THE CIT(A) ARE GIVEN AT PARA 6.6 OF HIS ORDER WHICH ARE AS UNDER : ITA NO.3885/DEL/2009 CO NO.356/DEL/2009 7 I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE APPELLANT AND FACTS ON RECORD. THE APPELLANT WAS A MEMBER OF NSC AND THE NSE DID LEVY VARIOUS CHARGES FOR CONTRACTUAL VIOLATION. THE TAX AUDIT REPORT POI NTED OUT THAT THE PAYMENT OF RS. 4 75 335 WAS MADE ON ACCOUN T OF PENALTY OR FINE CHARGED BY NATIONAL STOCK EXCHAN GE OF INDIA LIMITED DURING THE COURSE OF BUSINESS FOR VARIOUS DEFAULTS LIKE VIOLATION OF GROSS EXPOSURE L IMIT SHORT DELIVERY FUNDS SHORTAGE SHORTAGE OF MARGIN MONEY DELAY IN BAD DELIVERY AND OTHER MISC. CHARGE S AND THE ASSESSEE HAD SUBMITTED THAT THESE ESSENTIAL PAYMENTS FOR VIOLATION FOR VARIOUS CONTRACTUAL OBLI GATION PARTICULARLY VIOLATION FOR VARIOUS LIMITS SET BY TH EM THE APPELLANT HAD BASICALLY SUBMITTED THAT THE NATURE O F EXPENSES WOULD SHOW THAT THE EXPENDITURE INVOLVED WAS NOT FOR ANY PURPOSE WHICH WAS AN OFFENSE OR WHI CH WAS PROHIBITED BY LAW. IT WAS ALSO ARGUED THAT AS P ER THE EXPLANATION GIVEN IN THE CIRCULAR NO. 772 DATE D 23- 12-1998 EXPLAINING THE PROVISIONS OF EXPLANATION TO SECTION 37(1) THE ABOVE EXPENDITURE WAS NOT THE CATEGORY OF EXPENDITURE WHICH WOULD BE HIT BY THE MISCHIEF OF THE SAID SECTION. ALTERNATIVELY IT WAS ARGUED THAT THE PAYMENT ARE LARGELY COMPENSATORY IN NATURE CHARGED BY THE SSE FOR CERTAIN DEFAULT AND BASICALL Y TO COMPENSATE THE NSE FOR THE LOSS INVOLVED IN THE PROCESS AS THE TRANSACTION INVOLVED FINANCIAL DEALI NG. ON THAT BASIS IT WAS ARGUED THAT THE PAYMENT BEING FOR THE PURPOSE OF THE VIOLATION OF CONTRACTUAL OBLIGAT ION IS PART AND PARCEL OF TRANSACTIONS WHICH ARE ARISING O UT OF ORDINARY COURSE OF BUSINESS AND HAS TO BE ALLOWED A S ROUTINE EXPENDITURE INCIDENTAL TO CARRYING ON OF TH E BUSINESS UNDER SECTION 37(1). IN THIS CONNECTION IT HAS BEEN FURTHER ARGUED THAT THIS IS A NORMAL OCCURRENC E IN THE NSE WHERE THERE IS DELAY AND VIOLATIONS ETC. W HICH ARE ROUTINE FOR WHICH THE APPROPRIATE COMPENSATION WAS PROVIDED AND THIS PAYMENT IS PART OF THE SAME AND I S THE REGULAR BUSINESS EXPENDITURE WHICH IS ALLOWABLE AS IN ANY OTHER CASE. CONSIDERING THE ENTIRETY OF THE SITUATION THE NATURE OF PRACTICES AND THE GROUND REALITIES AND THE FACT THAT THE SAID EXPENDITURE WA S NOT HIT BY MISCHIEF OF EXPLANATION TO SECTION 37(1) AS DISCUSSED EARLIER I AM OF THE VIEW THAT THE DISALL OWANCE HAS TO BE DELETED. IN THE RESULT APPELLANTS PLEA A S PER GROUND OF APPEAL NO. 5 SUCCEEDS. ITA NO.3885/DEL/2009 CO NO.356/DEL/2009 8 10.3 NEITHER THE FINDINGS OF THE CIT(A) COULD NOT B E CONTROVERTED BY THE LD. DEPARTMENTAL REPRESENTATIVE NOR ANY OTHER M ATERIAL WAS BROUGHT ON RECORD TO ESTABLISH OTHERWISE. THEREFORE IN VIEW OF THE REASONING GIVEN BY THE LD. CIT(A) WE CONFIRM HIS O RDER ON THIS ISSUE. 12. IN THIS VIEW OF THE SITUATION AS NO CONTRARY D ECISION HAS BEEN BROUGHT TO OUR NOTICE WE FIND THAT THERE IS NO INFIRMITY IN T HE ORDER OF THE CIT (A) ON THIS ISSUE. THEREFORE ON THIS ISSUE THE ORDER OF CIT ( A) IS UPHELD AND THESE GROUNDS OF THE REVENUE ARE DISMISSED. CROSS OBJECTIONS 13. LD. AR DID NOT PRESS GROUND NOS.1 TO 9 STATING THAT GROUND NO.1 TO 4 WERE ONLY SUPPORTING THE ORDER OF THE CIT (A) AND GROUND NO.5 TO 9 ARE NOT PRESSED HENCE THE ONLY GROUND SURVIVING FOR CONSIDERATION IS GROUND NO.10. THIS GROUND RELATES TO AN ADDITION OF RS.71 000/- RELATED TO T HREE CASH CREDITS EXISTING IN THE BOOKS OF ACCOUNT OF THE ASSESSEE IN THE NAME OF THR EE PERSONS THE DETAILS OF WHICH ARE AS FOLLOWS:- 1) MS AMITA AGGARWAL - RS.25 000/- 2) MS BHAWNA JAIN - RS.11 000/- 3) MS SONIA SACHDEVA - RS.40 000/- 14. THE ASSESSEE DID NOT SUBMIT ANY EVIDENCE AND TH E LETTER SENT BY THE ASSESSING OFFICER U/S 133 (6) WERE NOT COMPLIED WIT H. THEREFORE THE ASSESSING OFFICER ADDED A SUM OF RS.71 000/- TO THE INCOME OF THE ASSESSEE AS UNEXPLAINED CASH CREDITS. BEFORE CIT (A) THE ASSES SEE SOUGHT TO SUBMIT ADDITIONAL EVIDENCES BY MAKING AN APPLICATION FOR A DMISSION OF THOSE EVIDENCES UNDER THE PROVISIONS OF RULE 46A OF INCOME-TAX RULE S 1962. LD. CIT (A) HAS ALSO CALLED FOR REMAND REPORT WHICH HAS BEEN SUBMIT TED BY ASSESSING OFFICER VIDE LETTER DATED 21 ST MAY 2009. THE ASSESSING OFFICER OBJECTED THE ADM ISSION OF EVIDENCE ON THE GROUND THAT THE ASSESSEE WAS GIV EN SUFFICIENT OPPORTUNITY. ITA NO.3885/DEL/2009 CO NO.356/DEL/2009 9 LD. CIT (A) HAS DECLINED TO ADMIT THE ADDITIONAL EV IDENCES SUBMITTED BY THE ASSESSEE VIDE PARA 4.2 OF THE IMPUGNED ORDER. THE ASSESSEE SOUGHT TO SUBMIT THE COPIES OF MARGIN ACCOUNT TRADING ACCOUNT INDI VIDUAL CLIENT FORM PAN AND ADDRESS ETC. OF THESE THREE PERSONS. THE CIT (A) HAS DECLINED TO ADMIT THOSE EVIDENCES AS PER FOLLOWING OBSERVATIONS IN PARA 4.4 :- IN VIEW OF THE ABOVE AND THE POSITION OF THE LAW DISCUSSED IN PARA 3.3.2 ABOVE I AM OF THE CONSIDERED OPINION TH AT THE ADDITIONAL EVIDENCE BROUGHT ON RECORD BY THE APPELLANT COMPANY ON THIS ISSUE CANNOT BE ADMITTED IN EITHER OF THE SUB-CLAUSES (A) OR (B) OR (C) OF RULE 46A(1) AND THE MATTER IS BEING DECIDED ON MERI TS OF THE CASE WITHOUT RECOURSE TO SUCH ADDITIONAL EVIDENCE. 15. IT WAS SUBMITTED BY LD. AR THAT DUE TO THE DEAT H OF FINANCIAL DIRECTOR THE ASSESSEE COULD NOT SUBMIT ALL THESE EVIDENCES THOUG H THEY WERE IN THE POSSESSION OF THE ASSESSEE AND THUS HE SUBMITTED THAT LD. CIT (A) WAS REQUIRED TO TAKE INTO CONSIDERATION THOSE ADDITIONA L EVIDENCES AND FOR THIS PURPOSE HE RELIED UPON THE DECISION IN THE CASE OF MRS. ARUNA JAIN VS. DCIT 21 SOT 218 TO CONTEND THAT NATURAL JUSTICE REQUIRED TH AT ADDITIONAL EVIDENCES SHOULD HAVE BEEN ADMITTED BY CIT (A). 16. ON THE OTHER HAND LD. DR RELIED UPON THE ORDER OF THE CIT (A) WHEREIN IT HAS BEEN HELD THAT THE ASSESSEE COULD NOT JUSTIFY H IS CASE FOR ADMISSION OF THE ADDITIONAL EVIDENCE. 17. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTI ONS IN THE LIGHT OF THE MATERIAL PLACED BEFORE US. THE ASSESSEE HAD STATED A REASONABLE CAUSE FOR NON- SUBMISSION OF EVIDENCE. IN THIS VIEW OF THE SITUATI ON WE ARE OF THE OPINION THAT RULE OF NATURAL JUSTICE REQUIRE THAT THOSE EVIDENCE SHOULD HAVE BEEN CONSIDERED BY THE CIT (A). THEREFORE TAKING INTO ACCOUNT THE RULE OF NATURAL JUSTICE WE CONSIDER IT JUST AND PROPER TO RESTORE THIS ISSUE T O THE FILE OF ASSESSING OFFICER WITH A DIRECTION TO GIVE THE ASSESSEE A REASONABLE OPPORTUNITY OF HEARING TO PROVE THE GENUINENESS OF CASH CREDITS AND THEREAFTER RE-A DJUDICATE THIS ISSUE IN ACCORDANCE WITH LAW. WE DIRECT ACCORDINGLY. ITA NO.3885/DEL/2009 CO NO.356/DEL/2009 10 18. FOR STATISTICAL PURPOSES GROUND NO.10 OF THE CR OSS OBJECTIONS IS TREATED TO BE ALLOWED. 19. IN THE RESULT THE APPEAL FILED BY THE DEPARTME NT IS DISMISSED AND THE CROSS OBJECTIONS FILED BY THE ASSESSEE ARE PARTLY A LLOWED FOR STATISTICAL PURPOSES. THE ORDER PRONOUNCED IN THE OPEN COURT ON 09.04.20 10. SD/- SD/- [K.G. BANSAL] [I.P. BANSAL] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED 09.04.2010. DK COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT TRUE COPY BY ORDER DEPUTY REGISTRAR ITAT DELHI BENCHES