NOVATECH PROJECTS (INDIA) LTD.,MUMBAI vs. CIT (APPEALS)-2, MUMBAI

PER OM PRAKASH KANT, AM

(Appeal) has erred in confirming addition of Rs. (Appeal) has erred in confirming addition of Rs. (Appeal) has erred in confirming addition of Rs. 53,50,000/ 53,50,000/- under section 68 of the IT Act. 1961. under section 68 of the IT Act. 1961. The Appellant prays that the Hon'ble Commissioner The Appellant prays that the Hon'ble Commissioner The Appellant prays that the Hon'ble Commissioner of Income of Income-Tax (Appeal) be directed to delete the Tax (Appeal) be directed to delete the addition addition made On account of unexplained money made On account of unexplained money under 69A of the Act. under 69A of the Act.

I or withdraw all or any of the Grounds of Appeal I or withdraw all or any of the Grounds of Appeal herein and to submit such statements, documents herein and to submit such statements, documents herein and to submit such statements, documents and papers as may be considered necessary either and papers as may be considered necessary eithe and papers as may be considered necessary eithe at or before the appeal hearing. at or before the appeal hearing.

2. At the outset, the Ld At the outset, the Ld. Counsel of the assessee prayed . Counsel of the assessee prayed for admission of the additional evidence admission of the additional evidence under Rules 29 of the ITAT under Rules 29 of the ITAT Rules, 1963 in respect of additions sustained by the Ld. CIT(A) in in respect of additions sustained by the Ld. CIT(A) in in respect of additions sustained by the Ld. CIT(A) in terms of section 68 of the Ac terms of section 68 of the Act. The Ld. Counsel submitted out of 16 The Ld. Counsel submitted out of 16 parties for whom the Ld. AO made addition, 5 parties were held by parties for whom the Ld. AO made addition, 5 parties were held by parties for whom the Ld. AO made addition, 5 parties were held by the Ld. CIT(A) as complied to 133(6) of the Act and accordingly the Ld. CIT(A) as complied to 133(6) of the Act and accordingly the Ld. CIT(A) as complied to 133(6) of the Act and accordingly addition in respect of 5 parties was deleted. Regarding the addition in respect of 5 parties was deleted. Regarding the addition in respect of 5 parties was deleted. Regarding the remaining, 11 parties remaining, 11 parties, the assessee has collected all the information assessee has collected all the information and filed an additional evidence and seeks to admit the same as and filed an additional evidence and seeks to admit the same as and filed an additional evidence and seeks to admit the same as additional evidence. additional evidence. The relevant finding of the Ld. CIT(A) on the The relevant finding of the Ld. CIT(A) on the issue-in-dispute is reproduced as under: dispute is reproduced as under:

“6.2.1 “6.2.1 On careful consideration of the remand report mand report it is observed that during the course of remand it is observed that during the course of remand it is observed that during the course of remand proceedings the appellant had submitted details of proceedings the appellant had submitted details of proceedings the appellant had submitted details of unexplained unsecured loans out of which only the unexplained unsecured loans out of which only the unexplained unsecured loans out of which only the 3 Novatech Projects (India) Ltd. following parties could submit the details as called following parties could submit the details as called following parties could submit the details as called for by the AO: for by the AO:

Sr. No. Name of the Party Name of the Party Amount of Reply Reply Loans received date received date 1. Shri Jagdish Bhatija Shri Jagdish Bhatija ₹1,00,000/- 02.12.2016 02.12.2016 2. Seth Capital Seth Capital ₹20,00,000/- 28.11.2016 28.11.2016 3. Shri Shyam G Jeswani Shri Shyam G Jeswani ₹10,00,000/- 29.11.2016 29.11.2016 ₹ 6,05,000/- 4. S B Talreja S B Talreja 21.12.2016 21.12.2016 ₹2,50,000/- 5. Firoz Abdul Wahid Khan Firoz Abdul Wahid Khan 17.12.2016 17.12.2016 ₹39,55,000/- Therefore, the urisecured loans to the extent of Rs. Therefore, the urisecured loans to the extent of Rs. Therefore, the urisecured loans to the extent of Rs. 39,55,000/ 39,55,000/- only could be verified. Further, one of only could be verified. Further, one of the party, namoly M/s Khemchand Chawla (IUF). the party, namoly M/s Khemchand Chawla (IUF). the party, namoly M/s Khemchand Chawla (IUF). from whom the appellant claimed to have received from whom the appellant claimed to have received from whom the appellant claimed to have received unsecured loan of Rs. 5,00, unsecured loan of Rs. 5,00,000/-, vide its letter , vide its letter dated 06.12.2016 denied providing any loan to the dated 06.12.2016 denied providing any loan to the dated 06.12.2016 denied providing any loan to the appellant during the year under consideration. appellant during the year under consideration. appellant during the year under consideration. 6.2.2 On receipt of the remand report from the AO, a 6.2.2 On receipt of the remand report from the AO, a 6.2.2 On receipt of the remand report from the AO, a copy thereof was handed over to the appellants for copy thereof was handed over to the appellants for copy thereof was handed over to the appellants for comments. In the rejoinder the L comments. In the rejoinder the Ld. AR merely stated d. AR merely stated that the requisite details were provided to the AQ, that the requisite details were provided to the AQ, that the requisite details were provided to the AQ, thus the appellant has discharged the onus of thus the appellant has discharged the onus of thus the appellant has discharged the onus of identifying the loan providers. Further the appellant identifying the loan providers. Further the appellant identifying the loan providers. Further the appellant stated that in a situation of credit squeeze by the stated that in a situation of credit squeeze by the stated that in a situation of credit squeeze by the bank, the loans were arranged th bank, the loans were arranged through a broker rough a broker and relied upon various case laws to support its and relied upon various case laws to support its and relied upon various case laws to support its claim. 6.2.3 After considering the above facts and to 6.2.3 After considering the above facts and to 6.2.3 After considering the above facts and to ascertain the genuineness of these unsecured loans, ascertain the genuineness of these unsecured loans, ascertain the genuineness of these unsecured loans, the AR was required to furnish credible documents the AR was required to furnish credible documents the AR was required to furnish credible documents such as current confirmed copies of such as current confirmed copies of ledger accounts, ledger accounts, for the relevant years i.e. year in which unsecured for the relevant years i.e. year in which unsecured for the relevant years i.e. year in which unsecured 4 Novatech Projects (India) Ltd. loans borrowed and ill the years in which the same loans borrowed and ill the years in which the same loans borrowed and ill the years in which the same were repaid, highlighting the details of loans were repaid, highlighting the details of loans were repaid, highlighting the details of loans received, tax deducted, tax deposited in the received, tax deducted, tax deposited in the received, tax deducted, tax deposited in the government account, interest income declared by government account, interest income declared government account, interest income declared these creditors, loan repaid, source and mode of these creditors, loan repaid, source and mode of these creditors, loan repaid, source and mode of repayments of loans, purpose of loans borrowed repayments of loans, purpose of loans borrowed repayments of loans, purpose of loans borrowed and their deployments, bank statements of creditors and their deployments, bank statements of creditors and their deployments, bank statements of creditors and appellant, highlighting the relevant entries and appellant, highlighting the relevant entries and appellant, highlighting the relevant entries regarding loans advanced, loans received, interest regarding loans advanced, loans received, interest regarding loans advanced, loans received, interest paid / credited, loans repaid / received back, / credited, loans repaid / received back, / credited, loans repaid / received back, balance sheets, P&L A/Cs, audit reports of the balance sheets, P&L A/Cs, audit reports of the balance sheets, P&L A/Cs, audit reports of the appellant and creditors for years till these entries appellant and creditors for years till these entries appellant and creditors for years till these entries have been squared up and was also asked to have been squared up and was also asked to have been squared up and was also asked to produce creditors for verification. In compliance, in- produce creditors for verification. In compliance, in produce creditors for verification. In compliance, in spite of giving spite of giving several opportunities of being heard, several opportunities of being heard, the AK could not furnish the above details, in the AK could not furnish the above details, in the AK could not furnish the above details, in respect of unsecured loans of Rs. 53,50,000/- (Rs. respect of unsecured loans of Rs. 53,50,000/ respect of unsecured loans of Rs. 53,50,000/ 93,05,000 93,05,000 - Rs. Rs. 39,55,000) 39,55,000) during during appellate appellate proceedings, in the required manner and also failed proceedings, in the required manner and also failed proceedings, in the required manner and also failed to produce these parties to produce these parties for verification, for the for verification, for the reasons best known to him.” reasons best known to him. 2.1 We note that the Ld. CIT(A) has duly recorded that We note that the Ld. CIT(A) has duly recorded that We note that the Ld. CIT(A) has duly recorded that the assessee could not furnish assessee could not furnish details in respect of unsecured loans of details in respect of unsecured loans of ₹53,50,000/-. Before us, the Ld. Counsel of the assessee has filed . Before us, the Ld. Counsel of the assessee has filed . Before us, the Ld. Counsel of the assessee has filed the details containing confirmation, bank statement, income ails containing confirmation, bank statement, income ails containing confirmation, bank statement, income-tax acknowledgement etc. other details and submitted that those acknowledgement etc. other details and submitted that acknowledgement etc. other details and submitted that evidence might be admitted and evidence might be admitted and issue-in-dispute may be restored dispute may be restored back to the file of the Assessing Officer for deciding afresh and the back to the file of the Assessing Officer for deciding afresh and the back to the file of the Assessing Officer for deciding afresh and the 5 Novatech Projects (India) Ltd. assessee shall extend due cooperation including production of the see shall extend due cooperation including production of the see shall extend due cooperation including production of the parties if required so by the Assessing Officer. parties if required so by the Assessing Officer.

4.1 Further, Reliance in this reg Reliance in this regards is placed upon the decision of ards is placed upon the decision of the Hon°bi Bombay High Court in the case of Braganza the Hon°bi Bombay High Court in the case of the Hon°bi Bombay High Court in the case of Construction (P.) Ltd. v. ACIT (2020) 116 taxmann.com 11 Construction (P.) Ltd. v. ACIT (2020) 116 taxmann.com 11 Construction (P.) Ltd. v. ACIT (2020) 116 taxmann.com 11 where it was held that, ITAT does have the power to permit where it was held that, ITAT does have the power to permit where it was held that, ITAT does have the power to permit production of additional evidence if there exists s production of additional evidence if there exists sufficient reason to ufficient reason to do so. The Tribunal is duty bound to consider the application seeking do so. The Tribunal is duty bound to consider the application seeking do so. The Tribunal is duty bound to consider the application seeking leave to produce additional evidence at the appellate stage. Since the leave to produce additional evidence at the appellate stage. Since the leave to produce additional evidence at the appellate stage. Since the same has not been done in the present case, the High Court same has not been done in the present case, the High Court same has not been done in the present case, the High Court remanded the matter back to the Trib remanded the matter back to the Tribunal to dispose unal to dispose-off the application of assessee for producing additional evidence before the application of assessee for producing additional evidence before the application of assessee for producing additional evidence before the Tribunal before passing any order. Tribunal before passing any order. 4.2 Further, in this regard, reliance is placed in case of Further, in this regard, reliance is placed in case of Further, in this regard, reliance is placed in case of CIT v. Text Hundred India Pt Ltd. Text Hundred India Pt Ltd. - Delhi HC - ITA No. 2077.2061, ITA No. 2077.2061, 2065/2010 which had held that the reason which had held that the reason which was given by the which was given by the assessee in support of its plea for admission of additional evidence assessee in support of its plea for admission of additional evidence assessee in support of its plea for admission of additional evidence was that the assessee could not produce these records before the was that the assessee could not produce these records before the was that the assessee could not produce these records before the lower authorities due to non lower authorities due to non-retrievability of e-mail on the mail on the date because of technological difficulties. This reason was specifically because of technological difficulties. This reason was specifically because of technological difficulties. This reason was specifically mentioned in the application filed. No reply to this application was mentioned in the application filed. No reply to this application was mentioned in the application filed. No reply to this application was filed refuting this averment, though the departmental representative filed refuting this averment, though the departmental representative filed refuting this averment, though the departmental representative had opposed the admission of the additional e had opposed the admission of the additional evidence. The ground vidence. The ground pleaded by the assessee was not confronted. In this backdrop, the pleaded by the assessee was not confronted. In this backdrop, the pleaded by the assessee was not confronted. In this backdrop, the Tribunal looked into the entire matter and arrived at a conclusion that Tribunal looked into the entire matter and arrived at a conclusion that Tribunal looked into the entire matter and arrived at a conclusion that the additional evidence was necessary for deciding the issue at the additional evidence was necessary for deciding the issue at the additional evidence was necessary for deciding the issue at hand. It is, thus, clear that the hand. It is, thus, clear that the Tribunal found the requirement of the Tribunal found the requirement of the 7 Novatech Projects (India) Ltd. said evidence for proper adjudication of the matter and in the interest said evidence for proper adjudication of the matter and in the interest said evidence for proper adjudication of the matter and in the interest of substantial cause. Rule 29 of the Income Tax (Appellate Tribunal) of substantial cause. Rule 29 of the Income Tax (Appellate Tribunal) of substantial cause. Rule 29 of the Income Tax (Appellate Tribunal) Rules categorically permits the Tribunal to allow such documents to Rules categorically permits the Tribunal to allow such documents to Rules categorically permits the Tribunal to allow such documents to be produced for any substantial cause. ed for any substantial cause. 4.3 Further Ahmedabad ITAT in case of Further Ahmedabad ITAT in case of Vatsal Navnitlal Parikh Vatsal Navnitlal Parikh v. ITO (ITA No. 182/Ahd/2019) 182/Ahd/2019) dt. 21.02.2022 concluded that dt. 21.02.2022 concluded that "We find that additional evidences are produced for the first time "We find that additional evidences are produced for the first time "We find that additional evidences are produced for the first time before the Tribunal. These documents before the Tribunal. These documents were not filed before the lower were not filed before the lower authorities during assessment proceedings due to family disputes. authorities during assessment proceedings due to family disputes. authorities during assessment proceedings due to family disputes. Therefore, in the interest of justice, we deem it fit to remand the Therefore, in the interest of justice, we deem it fit to remand the Therefore, in the interest of justice, we deem it fit to remand the matter back to the file of the 10. matter back to the file of the 10. The Id.AO shall look into the record, The Id.AO shall look into the record, documents and other evidences produced by the assessee, and er evidences produced by the assessee, and er evidences produced by the assessee, and thereafter pass a fresh speaking order in accordance with law, after thereafter pass a fresh speaking order in accordance with law, after thereafter pass a fresh speaking order in accordance with law, after providing reasonable opportunity to the assessee. Needless to say, providing reasonable opportunity to the assessee. Needless to say, providing reasonable opportunity to the assessee. Needless to say, the assessee shall cooperate with the AO by providing the details the assessee shall cooperate with the AO by providing the details the assessee shall cooperate with the AO by providing the details required by the 10 for completion of de the 10 for completion of de novo with this direction, we ith this direction, we dispose of the appeal of the assessee" dispose of the appeal of the assessee" 4.4 As the assessee could not file the basic document for As the assessee could not file the basic document for As the assessee could not file the basic document for discharging his onus u/s 68 of the Act due to non-cooperation of discharging his onus u/s 68 of the Act due to non discharging his onus u/s 68 of the Act due to non the relevant parties and now, the assessee is willing to cooperate sessee is willing to cooperate and produce the parties if so required by the Assessing Officer. the parties if so required by the Assessing Officer. the parties if so required by the Assessing Officer. Therefore, in the interest of substantial justice, we admit these Therefore, in the interest of substantial justice, we admit these Therefore, in the interest of substantial justice, we admit these additional evidences filed by the a additional evidences filed by the assessee and restore ssessee and restore the matter back to the Ld. Assessing Of back to the Ld. Assessing Officer for deciding afresh in accordance ficer for deciding afresh in accordance 8 Novatech Projects (India) Ltd. with law. It is needless to mention the assessee shall be afforded with law. It is needless to mention the assessee shall be afforded with law. It is needless to mention the assessee shall be afforded adequate opportunity of being heard. The grounds of appeal of the adequate opportunity of being heard. The grounds of appeal of the adequate opportunity of being heard. The grounds of appeal of the aasessee are allowed for statistical purposes. aasessee are allowed for statistical purposes.

5. In the result, the appeal filed b In the result, the appeal filed by the assessee is allowed for y the assessee is allowed for statistical purposes.