ITO, New Delhi v. Sh Naveen Arora,, New Delhi

ITA 792/DEL/2012 | 2007-2008
Pronouncement Date: 29-04-2014 | Result: Partly Allowed

Appeal Details

RSA Number 79220114 RSA 2012
Assessee PAN ACCPA6922H
Bench Delhi
Appeal Number ITA 792/DEL/2012
Duration Of Justice 2 year(s) 2 month(s) 12 day(s)
Appellant ITO, New Delhi
Respondent Sh Naveen Arora,, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 29-04-2014
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted E
Tribunal Order Date 29-04-2014
Date Of Final Hearing 18-03-2014
Next Hearing Date 18-03-2014
Assessment Year 2007-2008
Appeal Filed On 16-02-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E : NEW DELHI) BEFORE SHRI I.C. SUDHIR JUDICIAL MEMBER AND SHRI B.C. MEENA ACCOUNTANT MEMBER ITA NO.791/DEL./2012 (ASSESSMENT YEAR : 2007-08) ITO WARD 39 (4) VS. SHRI MOHINDER KUMAR ARORA NEW DELHI. 9270/6 MULTANI DHANDA PAHARGANJ NEW DELHI 110 055. (PAN : ACCPA6922H) ITA NO.792/DEL./2012 (ASSESSMENT YEAR : 2007-08) ITO WARD 39 (4) VS. SHRI NAVEEN ARORA NEW DELHI. 9134/4 MULTANI DHANDA PAHARGANJ NEW DELHI 110 055. (PAN : ABPPA0939E) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI R.K. CHAUHAN ADVOCATE REVENUE BY : SMT. NIDHI SRIVASTAVA CIT DR SHRI KEYUR PATEL SENIOR DR ORDER PER B.C. MEENA ACCOUNTANT MEMBER : BOTH THESE APPEALS FILED BY THE REVENUE EMANATE FRO M THE ORDER OF CIT (A)-XXVIII NEW DELHI BOTH DATED 22.12.2011 FOR THE ASSESSMENT YEAR 2007- 08. IN BOTH THESE APPEALS THE GROUNDS ARE SAME EX CEPT THE DIFFERENT IN ITA NO.791 & 792/DEL./2012 2 FIGURES THEREFORE BOTH THESE APPEALS ARE BEING DI SPOSED OFF BY THIS COMMON ORDER. 2. IN THE GROUND NO.1 IN BOTH THE APPEALS THE ISSU E INVOLVED IS DELETING THE ADDITION MADE BY THE ASSESSING OFFICER AFTER ESTIMA TING THE GROSS PROFIT @ 3% AFTER ADMITTING THE ADDITIONAL EVIDENCES IN THE FOR M OF BOOKS OF ACCOUNTS AND WITHOUT GIVING AN OPPORTUNITY TO THE ASSESSING OFFI CER TO EXAMINE THE SAME UNDER RULE 46A OF THE INCOME-TAX RULES 1962. 3. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE. THE CIT (A) HAS CALLED THE REPORT FROM ASSESSING OFFICER. THE ASSESSING OFFIC ER HAS SENT THE REPORT ONLY WITH REGARD TO THE ADMISSIBILITY OF THE ADDITIONAL EVIDENCES. HE HAS NOT GIVEN ANY REPORT WITH REGARD TO THE MERITS OF THE DOCUMEN TS. IN THE ADMISSIBILITY WE FIND THAT ASSESSEE HAD A GROUND TO ADMIT THE ADD ITIONAL EVIDENCES. THEREFORE WE HOLD THAT THE CIT (A) HAS RIGHTLY ADM ITTED THE ADDITIONAL EVIDENCES. HOWEVER AFTER ADMITTING THE ADDITIONAL EVIDENCES THE CIT (A) WAS UNDER THE OBLIGATION TO PROVIDE AN OPPORTUNITY TO THE ASSESSING OFFICER ON THE MERITS OF THE DOCUMENTS WHICH HAS NOT BEEN D ONE. SUCH ISSUE HAS BEEN DEALT BY THE HON'BLE JURISDICTIONAL HIGH COURT IN T HE CASE OF CIT VS. MANISH BUILD WELL (P.) LTD REPORTED IN 204 TAXMAN 106 AN D HON'BLE HIGH COURT HAS HELD AS UNDER :- SINCE THE COMMISSIONER (APPEALS) HIMSELF REFERS TO RULE 46A AND HAS ALSO ADMITTED THAT THE CONFIRMATION LETTERS ADDUCED BY THE ASSESSEE BEFORE HIM WERE TECHNICALLY FRESH EVID ENCE IT IS NOT POSSIBLE TO ACCEPT THE PLEA OF THE ASSESSEE THAT TH E COMMISSIONER ITA NO.791 & 792/DEL./2012 3 (APPEALS) IN EXAMINING THE CONFIRMATION LETTERS W AS EXERCISING HIS INDEPENDENT POWERS OF ENQUIRY UNDER SUB-SECTION (4) OF SECTION 250. IT IS TRUE THAT THE COMMISSIONER (APPE ALS) AS FIRST APPELLATE AUTHORITY HAS CO-TERMINOUS POWERS OVER T HE SOURCES OF INCOME CONSTITUTING THE SUBJECT-MATTER OF THE ASSES SMENT EXCEPT THE POWER TO TACKLE NEW SOURCES OF INCOME NOT CONSI DERED BY THE ASSESSING OFFICER AND CAN DO WHAT THE ASSESSING OF FICER CAN DO AND CAN DIRECT THE ASSESSING OFFICER TO DO WHAT HE HAS FAILED TO DO BUT IN THE INSTANT CASE THE COMMISSIONER (APPE ALS) DID NOT EXERCISE THIS RIGHT. THIS POWER WHICH IS RECOGNIZE D IN SUB- SECTION (4) OF SECTION 250 HAS TO BE EXERCISED BY THE COMMISSIONER (APPEALS) AND THERE SHOULD BE MATERIAL ON RECORD TO SHOW THAT HE WHILE DISPOSING OF THE APPEAL HAD DIRECTED FURTHER ENQUIRY AND CALLED FOR THE CONFIRMATION LET TERS FROM THE ASSESSEE EVEN IN RESPECT OF RECEIPT OF MONIES FROM CUSTOMERS BY WAY OF CHEQUES. RULE 46A IS A PROVISION WHICH IS IN VOKED ON THE OTHER HAND BY THE ASSESSEE WHO IS IN AN APPEAL BEFORE THE COMMISSIONER (APPEALS). ONCE THE ASSESSEE INVOKES R ULE 46A AND PRAYS FOR ADMISSION OF ADDITIONAL EVIDENCE BEFO RE THE COMMISSIONER (APPEALS) THEN THE PROCEDURE PRESCRIB ED IN THE SAID RULE HAS TO BE SCRUPULOUSLY FOLLOWED. THE FACT THAT SUB- SECTION (4) OF SECTION 250 CONFERS POWERS ON THE CO MMISSIONER (APPEALS) TO CONDUCT AN ENQUIRY AS HE THINKS FIT W HILE DISPOSING OF THE APPEAL CANNOT BE RELIED UPON TO CONTEND THA T THE PROCEDURAL REQUIREMENTS OF RULE 46A NEED NOT BE COM PLIED WITH. IF SUCH A PLEA OF THE ASSESSEE IS ACCEPTED IT WOUL D REDUCE RULE 46A TO A DEAD LETTER BECAUSE IT WOULD THEN BE OPEN TO EVERY ASSESSEE TO FURNISH ADDITIONAL EVIDENCE BEFORE THE COMMISSIONER (APPEALS) AND THEREAFTER CONTEND THAT THE EVIDENC E SHOULD BE ACCEPTED AND TAKEN ON RECORD BY THE COMMISSIONER (A PPEALS) BY VIRTUE OF HIS POWERS OF ENQUIRY UNDER SUB-SECTION ( 4) OF SECTION 250. THIS WOULD MEAN IN TURN THAT THE REQUIREMENT O F RECORDING REASONS FOR ADMITTING THE ADDITIONAL EVIDENCE THE REQUIREMENT OF EXAMINING WHETHER THE CONDITIONS FOR ADMITTING THE ADDITIONAL EVIDENCE ARE SATISFIED THE REQUIREMENT THAT THE AS SESSING OFFICER SHOULD BE ALLOWED A REASONABLE OPPORTUNITY OF EXAMI NING THE EVIDENCE ETC. CAN BE THROWN TO THE WINDS A POSIT ION WHICH IS WHOLLY UNACCEPTABLE AND MAY RESULT IN UNACCEPTABLE AND UNJUST CONSEQUENCES. THE FUNDAMENTAL RULE WHICH IS VALID I N ALL BRANCHES OF LAW INCLUDING INCOME-TAX LAW IS THAT THE ASSESSEE SHOULD ADDUCE THE ENTIRE EVIDENCE IN HIS POSSESSION AT THE ITA NO.791 & 792/DEL./2012 4 EARLIEST POINT OF TIME. THIS ENSURES FULL FAIR AND DETAILED ENQUIRY AND VERIFICATION. IT IS FOR THE AFORESAID REASON THAT RULE 46A STARTS IN A NEGATIVE MANNER BY SAYING THAT AN APPELLANT BEFORE THE COMMI SSIONER (APPEALS) SHALL NOT BE ENTITLED TO PRODUCE BEFORE H IM ANY EVIDENCE WHETHER ORAL OR DOCUMENTARY OTHER THAN T HE EVIDENCE ADDUCED BY HIM BEFORE THE ASSESSING OFFICER. AFTER MAKING SUCH A GENERAL STATEMENT EXCEPTIONS HAVE BEEN CARVED OU T THAT IN CERTAIN CIRCUMSTANCES IT WOULD BE OPEN TO THE COMMI SSIONER (APPEALS) TO ADMIT ADDITIONAL EVIDENCE. THEREFORE ADDITIONAL EVIDENCE CAN BE PRODUCED AT THE FIRST APPELLATE STA GE ONLY WHEN CONDITIONS STIPULATED IN THE RULE 46A ARE SATISFIED AND A FINDING IS RECORDED. THE CONDITIONS PRESCRIBED IN RULE 46A MUST BE SHOWN TO EXIST BEFORE ADDITIONAL EVIDENCE IS ADMITT ED AND EVERY PROCEDURAL REQUIREMENT MENTIONED IN THE RULE HAS TO BE STRICTLY COMPLIED WITH SO THAT THE RULE IS MEANINGFULLY EXER CISED AND NOT EXERCISED IN A ROUTINE OR CURSORY MANNER. A DISTINC TION SHOULD BE RECOGNIZED AND MAINTAINED BETWEEN A CASE WHERE THE ASSESSEE INVOKES RULE 46A TO ADDUCE ADDITIONAL EVIDENCE BEFO RE THE COMMISSIONER (APPEALS) AND A CASE WHERE THE COMMISS IONER (APPEALS) WITHOUT BEING PROMPTED BY THE ASSESSEE WHILE DEALING WITH THE APPEAL CONSIDERS IT FIT TO CAUSE OR MAKE A FURTHER ENQUIRY BY VIRTUE OF THE POWERS VESTED IN H IM UNDER SUB- SECTION (4) OF SECTION 250. IT IS ONLY WHEN HE EXER CISES HIS STATUTORY SUO MOTO POWER UNDER THE ABOVE SUB-SECTIO N THAT THE REQUIREMENTS OF RULE 46A NEED NOT BE FOLLOWED. ON T HE OTHER HAND WHENEVER THE ASSESSEE WHO IS IN APPEAL BEFOR E HIM INVOKES RULE 46A. IT IS INCUMBENT UPON THE COMMISSI ONER (APPEALS) TO COMPLY WITH THE REQUIREMENTS OF THE RU LE STRICTLY. IN THE INSTANT CASE THE COMMISSIONER (APPEALS) HAS OBSERVED THAT THE ADDITIONAL EVIDENCE SHOULD BE ADMITTED BEC AUSE THE ASSESSEE WAS PREVENTED BY ADDUCING THEM BEFORE THE ASSESSING OFFICER. THIS OBSERVATION TAKES CARE OF CLAUSE (C) OF SUB-RULE (1) OF RULE 46A. THE OBSERVATION OF THE COMMISSIONER (A PPEALS) ALSO TAKES CARE OF SUB-RULE (2) UNDER WHICH HE IS R EQUIRED TO RECORD HIS REASONS FOR ADMITTING THE ADDITIONAL EVI DENCE. THUS THE REQUIREMENTS OF SUB-RULES (1) AND (2) OF RULE 4 6A HAVE BEEN COMPLIED WITH. HOWEVER SUB-RULE (3) WHICH INTERDIC TS THE COMMISSIONER (APPEALS) FROM TAKING INTO ACCOUNT ANY EVIDENCE PRODUCED FOR THE FIRST TIME BEFORE HIM UNLESS THE A SSESSING ITA NO.791 & 792/DEL./2012 5 OFFICER HAS HAD A REASONABLE OPPORTUNITY OF EXAMINI NG THE EVIDENCE AND REBUT THE SAME HAS NOT BEEN COMPLIED WITH. THERE IS NOTHING IN THE ORDER OF THE COMMISSIONER (APPEAL S) TO SHOW THAT THE ASSESSING OFFICER WAS CONFRONTED WITH THE CONFIRMATION LETTERS RECEIVED BY THE ASSESSEE FROM THE CUSTOMERS WHO PAID THE AMOUNTS BY CHEQUES AND ASKED FOR COMMENTS. THUS TH E END RESULT HAS BEEN THAT ADDITIONAL EVIDENCE WAS ADMITT ED AND ACCEPTED AS GENUINE WITHOUT THE ASSESSING OFFICER F URNISHING HIS COMMENTS AND WITHOUT VERIFICATION. SINCE THIS IS AN INDISPENSABLE REQUIREMENT THE TRIBUNAL OUGHT TO HA VE RESTORED THE MATTER TO THE COMMISSIONER (APPEALS) WITH THE D IRECTION TO HIM TO COMPLY WITH SUB-RULE (3) OF RULE 46A. THE ER ROR COMMITTED BY THE TRIBUNAL IS THAT IT PROCEEDED TO M IX UP THE POWERS OF THE COMMISSIONER (APPEALS) UNDER SUB-SECT ION (4) OF SECTION 250 WITH THE POWERS VESTED IN HIM UNDER RUL E 46A. THE TRIBUNAL SEEMS TO HAVE OVERLOOKED SUB-RULE (4) OF R ULE 46A WHICH ITSELF TAKES NOTE OF THE DISTINCTION BETWEEN THE POWERS CONFERRED BY THE COMMISSIONER (APPEALS) UNDER THE S TATUTE WHILE DISPOSING OF THE ASSESSEE'S APPEAL AND THE PO WERS CONFERRED UPON HIM UNDER RULE 46A. THE TRIBUNAL ERR ED IN ITS INTERPRETATION OF THE PROVISIONS OF RULE 46A VIS-A- VIS SECTION 250(4). ITS VIEW THAT SINCE IN ANY CASE THE COMMISS IONER (APPEALS) BY VIRTUE OF HIS CO-TERMINOUS POWER OVER THE ASSESSMENT ORDER WAS EMPOWERED TO CALL FOR ANY DOC UMENTS OR MAKE ANY FURTHER ENQUIRY AS HE THINKS FIT THERE WA S NO VIOLATION OF RULE 46A IS ERRONEOUS. THE TRIBUNAL APPEARS TO H AVE NOT APPRECIATED THE DISTINCTION BETWEEN THE TWO PROVISI ONS. IF THE VIEW OF THE TRIBUNAL IS ACCEPTED IT WOULD MAKE RUL E 46A OTIOSE AND IT WOULD OPEN UP THE POSSIBILITY OF THE ASSESSE ES' CONTENDING THAT ANY ADDITIONAL EVIDENCE SOUGHT TO BE INTRODUCE D BY THEM BEFORE THE COMMISSIONER (APPEALS) CANNOT BE SUBJECT ED TO THE CONDITIONS PRESCRIBED IN RULE 46A BECAUSE IN ANY CA SE THE COMMISSIONER (APPEALS) IS VESTED WITH COTERMINOUS P OWERS OVER THE ASSESSMENT ORDERS OR POWERS OF INDEPENDENT ENQUIRY UNDER SUB-SECTION (4) OF SECTION 250. THAT IS A CON SEQUENCE WHICH CANNOT AT ALL BE COUNTENANCED. FOR THE ABOVE REASON THE TRIBUNAL WAS NOT RIGHT IN LAW IN HOLDING THAT SINCE THE COMMISSIONER (APPEALS) POSSE SSES CO- TERMINUS POWERS OVER THE ASSESSMENT APART FROM APPE LLATE POWERS THERE WAS NO VIOLATION OF RULE 46A COMMITTE D BY HIM. THE ISSUE RELATING TO THE ADDITION MADE UNDER SECTI ON 68 IS ITA NO.791 & 792/DEL./2012 6 RESTORED TO THE COMMISSIONER (APPEALS) WHO WOULD CO MPLY WITH THE REQUIREMENTS OF RULE 46A AND TAKE A FRESH DECIS ION ON THE MERITS OF THE ADDITIONS IN ACCORDANCE WITH LAW. KEEPING IN VIEW OF THE RATIO LAID DOWN BY THE HON'B LE DELHI HIGH COURT IN THE CASE OF CIT VS. MANISH BUILDWELL PVT. LTD. CITED S UPRA WE FIND IT APPROPRIATE TO RESTORE THE APPEAL TO THE FILE OF THE CIT (A) TO BE DECIDED AFTER GIVING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSING OFFICER WITH REGARD TO THE ADDITIONAL EVIDENCES ADMITTED BY HIM. THEREFORE W E RESTORE THE ISSUE IN GROUND NO.1 IN BOTH THE APPEALS TO THE FILE OF THE CIT (A). GROUND NO.1 IS THUS ALLOWED FOR STATISTICAL PURPOSES. 4. IN THE GROUND NO.2 IN BOTH THE APPEALS THE ISSU E IS DELETING THE ADDITION BY ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED CASH CREDIT BY ADMITTING THE ADDITIONAL EVIDENCES IN THE FORM OF REPAYMENT SCHED ULE AND LEDGER ACCOUNTS DESPITE THE FACT THAT THE ASSESSEE WAS NOT PREVENTE D FROM PRODUCING THE ABOVE DOCUMENTS AND ANY REASONABLE CAUSE AS PER THE PROVI SIONS OF RULE 46A OF THE INCOME-TAX RULES. 5. WE HAVE HEARD BOTH THE SIDE SON THE ISSUE. AFTE R HEARING WE FIND THAT IN THE INTEREST OF JUSTICE AND EQUITY THE CIT (A) HAS RIGHTLY ADMITTED THE ADDITIONAL EVIDENCES WHICH WERE NOT AVAILABLE WITH THE ASSESSEE AS ALL THE LOAN SCHEDULES WERE THIRD PARTY DOCUMENTS AND THE ASSESS EE COULD NOT PRODUCE THE SAME IN TIME. IN THE SECOND REMAND REPORT ON THE A DDITIONAL EVIDENCES FILED BY THE ASSESSEE WE FIND THAT THE ENTRIES IN THE BO OKS OF ACCOUNTS OF THE ITA NO.791 & 792/DEL./2012 7 ASSESSEE WERE COMPLETELY EXPLAINED BY THE DOCUMENTS . THE REMAND REPORT OF THE ASSESSING OFFICER ITSELF SHOWS THAT HE WAS NOT HAVING ANY FURTHER GRIEVANCE WITH REGARD TO THE AMOUNT FOR WHICH THE A DDITION WAS MADE AS HE HAS RETURNED THE DETAILS SUBMITTED BY ASSESSEE AND SENT BACK FOR THE PERUSAL. THEREFORE WE FIND NO FAULT IN THE ORDER OF THE CIT (A) IN DELETING THIS ADDITION. ACCORDINGLY GROUND NO.2 IN BOTH THE APP EALS IS DISMISSED. 6. GROUND NOS.3 & 4 IN BOTH THE APPEALS ARE GENERAL IN NATURE AND DOES NOT REQUIRE ANY ADJUDICATION HENCE DISMISSED. 7. IN THE RESULT BOTH THE APPEALS FILED BY THE REV ENUE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON THIS 29 TH DAY OF APRIL 2014. SD/- SD/- (I.C. SUDHIR) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 29 TH DAY OF APRIL 2014 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A) XXVIII NEW DELHI 5.CIT(ITAT) NEW DELHI. AR ITAT NEW DELHI.