SHRI VIDYASAGAR B. SINGH,,BARODA vs. THE INCOME TAX OFFICER-WARD-2(6),, BARODA

Brief facts of the case are that the assessee has filed his return of income electronically on 31.3.2011 declaring total income at Rs.10,47,110/-. His case was selected for scrutiny assessment and notice under section 143(2) was issued and served upon the assessee. The ld.AO has passed an assessment order under section 143(3) on 4.3.2013. He made three additions viz. –

Dissatisfied with order of the ld.AO assessee carried the matter in appeal before the ld.CIT(A). It was contended by the assessee that during the assessment proceedings, he was unable to lay his hand on the relevant evidence. Therefore, an application was moved for seeking permission to lead additional evidence. The ld.CIT(A) rejected the contentions of the assessee on the ground that so far as addition of Rs.11,32,500/- is concerned, the assessee has agreed for this addition before the AO and therefore prevented the AO to make further inquiry. Therefore, the assessee cannot take this issue in appeal. With regard to the labour and wages payment, the ld.CIT(A) concurred with the AO.

Before us, the assessee has raised three grounds of appeal along with additional grounds. In the first three grounds, ground no.3 is general grounds of appeal on which no specific finding is required to be recorded. In ground no.2, the assessee has pleaded that the ld.CIT(A) has erred in confirming addition of Rs.2,50,000/- which was added by the AO out of wages and salary expenses.

It emerges out from the record that the assessee has claimed an expenses of Rs.91,04,857/- towards wages and labour charges. On an adhoc basis, the ld.AO disallowed Rs.2,50,000/-. The AO was of the view that the assessee failed to produce complete month-wise details of salary payment. At the time of

In ground no.1, the grievance of the assessee is that the ld.CIT(A) has erred in confirming the addition of Rs.11,32,500/-. Qua this ground of appeal other additional grounds taken by the assessee are relevant. In the additional ground, the assessee has pleaded that the ld.CIT(A) has not entertained application made under Rule 46A of the Income Tax Rules. The ld.counsel for the assessee submitted that, before the ld.CIT(A) an application to seek permission to adduce additional evidence was filed. The assessee has annexed his affidavit and contended that on account of certain dispute with M/s.Rishi Construction, a partnership firm, he could not produce relevant evidence. However, before the ld.CIT(A) in order to demonstrate the source of capital contribution, he has contended that a sum of Rs.5,07,500/- was taken as a loan in personal capacity and Rs.6,25,000/- was withdrawn from the firm where the assessee is a partner. The ld.counsel for the assessee further contended that the assessee has filed PAN, copy of the bank statement, copy of partnership deed, acknowledgement of income-tax return along with computation statement and other details. On the strength of these details, it could be demonstrated that the assessee has sufficient sources, out of which it could be proved that capital was introduced by the assessee.

On the other hand, the ld.DR relied on the orders of the Revenue authorities. He contended that once the assessee has

We have duly considered rival contentions and gone through the record carefully. There is no doubt that before the ld.AO the assessee was unable to produce any evidence demonstrating source of funds available for introduction of capital. He agreed for the addition before the AO. But in the statement of facts filed before the ld.CIT(A) he indicated the source of funds and also pleaded that on account of certain unavoidable circumstances, he could not produce these details. He has demonstrated that there was a dispute with partners in the partnership firm and he could not get the detils showing withdrawals from the firm. It is true that admission made by the assessee before the AO could make the case against him, because by admitting certain facts, he prevented the AO to make investigation. But if it is demonstrated that such admission was on account of misconception of law or misconstruction of facts or under some coercion, then on the basis of such admission, addition ought not to be made. There might be some negligence at the end of the assessee while conducting the proceedings before the AO, but punishment in the shape of tax liability on the addition of Rs.11.00 lakhs plus, is disproportionate to negligence committed by the assessee. He has sought to produce relevant details for explaining source, thus, the ld.CIT(A) in the interest of justice, ought to have exercised power available under sub-clause (4) of Rule 46A of the Income Tax Rules and ought to have permitted the assessee to produce those evidences. The assessee has demonstrated as to why he agreed for the addition, because he was not having requisite details from the

In the result, appeal of the assessee is partly allowed for statistical purpose.