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Income Tax Appellate Tribunal, MUMBAI BENCH “G” MUMBAI
Before: SHRI OM PRAKASH KANT & SHRI RAHUL CHAUDHARY
PER OM PRAKASH KANT, AM This appeal by the Revenue is directed against order dated 31/01/2019 passed by the Ld. Commissioner of Income-tax (Appeals)-20, Mumbai [in short ‘the Ld. CIT(A)’] for assessment year 2015-16, raising following grounds:
M/s GRD Steel Industries Limited M/s GRD Steel Industries Limited 2 ITA No. 1918/Mum/2019
Whether on the facts and in circumstances of the case and in Whether on the facts and in circumstances of the case and in Whether on the facts and in circumstances of the case and in law, the ld. CIT(A) has erred in giving relief to the assessee law, the ld. CIT(A) has erred in giving relief to the assessee law, the ld. CIT(A) has erred in giving relief to the assessee with respect to the payment of Rs.89 lakhs merely on the with respect to the payment of Rs.89 lakhs merely on the with respect to the payment of Rs.89 lakhs merely on the basis that the payments were made from the assessee's basis that the payments were made from the assessee's basis that the payments were made from the assessee's account in Bharat Co account in Bharat Co-operative Bank and that this operative Bank and that this contention is not rebutted by the AO without appreciating contention is not rebutted by the AO without appreciating contention is not rebutted by the AO without appreciating the facts that the AO had made addit the facts that the AO had made addition because alleged ion because alleged source of the in source of the investment remained unexplained? 2. "Whether on the facts and in circumstances of the case and "Whether on the facts and in circumstances of the case and "Whether on the facts and in circumstances of the case and in law, the ld. CIT(A) has erred in accepting the claim of the in law, the ld. CIT(A) has erred in accepting the claim of the in law, the ld. CIT(A) has erred in accepting the claim of the assessee assessee assessee that that that the the the balance balance balance amount amount amount payable payable payable of of of Rs.1,64,31,900/ Rs.1,64,31,900/- was adjusted against the amount due from was adjusted against the amount due from Satra Group Companies without ap Satra Group Companies without appreciating the facts that preciating the facts that the Hon'ble Bombay High Court while disposing the petition the Hon'ble Bombay High Court while disposing the petition the Hon'ble Bombay High Court while disposing the petition no.1236 of 2015 held that " it is not possible to accept the no.1236 of 2015 held that " it is not possible to accept the no.1236 of 2015 held that " it is not possible to accept the petitioner's version that the purchase price for goods is petitioner's version that the purchase price for goods is petitioner's version that the purchase price for goods is payable by both the companies notwithstanding their payable by both the companies notwithstanding their payable by both the companies notwithstanding their liability to pay the liability to pay the purchase price for the shop ? 3. Whether on the jacts and in circumstances of the case and in Whether on the jacts and in circumstances of the case and in Whether on the jacts and in circumstances of the case and in law, the Id. CIT(A) has erred in giving relief to the assessee law, the Id. CIT(A) has erred in giving relief to the assessee law, the Id. CIT(A) has erred in giving relief to the assessee without appreciating the facts that all the properties of without appreciating the facts that all the properties of without appreciating the facts that all the properties of Satra Plaza were mortga Satra Plaza were mortgaged with India Infoline Finance Ltd ged with India Infoline Finance Ltd and that in the NOC issued by FL for executing the sale and that in the NOC issued by FL for executing the sale and that in the NOC issued by FL for executing the sale agreement, the condition mentioned was that the payment agreement, the condition mentioned was that the payment agreement, the condition mentioned was that the payment of Rs.1,64,31,900/ of Rs.1,64,31,900/- was to be deposited in the Escrow was to be deposited in the Escrow account Satra Plaza in Aris Bank before 14.01.2015 and the account Satra Plaza in Aris Bank before 14.01.2015 and account Satra Plaza in Aris Bank before 14.01.2015 and said condition has not been met by the assessee which said condition has not been met by the assessee which said condition has not been met by the assessee which indicates clearly that the investment to that extent has not indicates clearly that the investment to that extent has not indicates clearly that the investment to that extent has not been recorded in the been recorded in the books of the assessee?
M/s GRD Steel Industries Limited M/s GRD Steel Industries Limited 3 ITA No. 1918/Mum/2019
Briefly stated fa acts of the case are that the assessee company s of the case are that the assessee company was engaged in the busines was engaged in the business of trading in Iron and and Steel. For the relevant assessment year, relevant assessment year, the assessee filed return of income on filed return of income on 18/09/2015 declaring total income of 18/09/2015 declaring total income of ₹15,55,630/ 630/-, which was further revised to ₹ ₹11,75,630/- on 26/10/2015. The return of on 26/10/2015. The return of income filed by the assessee income filed by the assessee was selected for scrutiny and statutory was selected for scrutiny and statutory notices under the Income Income-Tax Act, 1961 (in short , 1961 (in short ‘the Act’) were issued and complied with. In the assessment completed under issued and complied with. In the assessment completed under issued and complied with. In the assessment completed under section 143(3) of the section 143(3) of the Act on 29/12/2017, the Assessing Officer Assessing Officer made certain additions/ made certain additions/disallowances. On further appeal, the Ld. allowances. On further appeal, the Ld. CIT(A) allowed part relief to the assessee. Aggrieved with the relief CIT(A) allowed part relief to the assessee. Aggrieved with the relief CIT(A) allowed part relief to the assessee. Aggrieved with the relief allowed, the Revenue Revenue is before the Tribunal by way of raising the is before the Tribunal by way of raising the grounds as reproduced above. grounds as reproduced above.
2.1 In support of ground No. In support of ground No. 1 (One) the Ld. DR refe DR referred to Para 3.4 to 3.8 of the assessment order and para 4.3.3 of Ld. CIT(A) and 3.4 to 3.8 of the assessment order and para 4.3.3 of Ld. CIT(A) and 3.4 to 3.8 of the assessment order and para 4.3.3 of Ld. CIT(A) and submitted that during remand proceeding the submitted that during remand proceeding the Ld. Assessing Officer Assessing Officer
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objected admission of additional evidences including copy of bank objected admission of additional evidences including copy of bank objected admission of additional evidences including copy of bank statement of the assessee maintained with B statement of the assessee maintained with Bharat Co harat Co-operative Bank. The Ld. CIT(A) though admitted the said additional evidence, Bank. The Ld. CIT(A) though admitted the said additional evidence, Bank. The Ld. CIT(A) though admitted the said additional evidence, however did not obtain comments of the however did not obtain comments of the Assessing Officer Assessing Officer on the said additional evidence. The said additional evidence. The Ld. DR submitted that in view of the DR submitted that in view of the decision of the Hon’ble Delhi High Cour decision of the Hon’ble Delhi High Court in the case of t in the case of Manish Build Well Private Limited Well Private Limited ITA No. 928/2011, the Ld. CIT(A) was Ld. CIT(A) was required to call for comments of the required to call for comments of the Assessing Officer Assessing Officer after admitting the additional evidence admitting the additional evidence, if no such comments are given if no such comments are given along with the objections raised along with the objections raised, for admitting the additional tting the additional evidence.
The Ld. counsel of the assessee on the other hand relied on the of the assessee on the other hand relied on the order of the Ld. CIT(A) and submitted that Ld. CIT(A) has duly order of the Ld. CIT(A) and submitted that Ld. CIT(A) has duly order of the Ld. CIT(A) and submitted that Ld. CIT(A) has duly verified the source of payments in respect of the purchase of the verified the source of payments in respect of the purchase of the verified the source of payments in respect of the purchase of the property and therefore no ad property and therefore no addition is warranted on the dition is warranted on the presumption basis.
M/s GRD Steel Industries Limited M/s GRD Steel Industries Limited 5 ITA No. 1918/Mum/2019
We have heard rival submission We have heard rival submissions of the parties and perused of the parties and perused the relevant material on record. The issue in dispute raising the relevant material on record. The issue in dispute raising the relevant material on record. The issue in dispute raising in ground, is related to investment in property namely office B1006 at is related to investment in property namely office B1006 at is related to investment in property namely office B1006 at Cello Height, Goregaon (Mumbai). The as Goregaon (Mumbai). The assessee purchased this sessee purchased this property vide agreement dated 04/07/2014 for a consideration of agreement dated 04/07/2014 for a consideration of agreement dated 04/07/2014 for a consideration of ₹2,39,00,000/-, payment of which was explained as , payment of which was explained as , payment of which was explained as ₹1,50,00,000/- out of the loan received from out of the loan received from M/s India Bulls Housing Ltd India Bulls Housing Ltd., which was paid on 01/07/2014 to the seller party. As regard to the was paid on 01/07/2014 to the seller party. As regard to the was paid on 01/07/2014 to the seller party. As regard to the remaining amount of remaining amount of ₹89,00,000/- the assessee submitted that the assessee submitted that same was paid on 27/06/2014 and source of the same was same was paid on 27/06/2014 and source of the same was same was paid on 27/06/2014 and source of the same was explained as out of the unsecured loan taken from two parties explained as out of the unsecured loan taken from two parties explained as out of the unsecured loan taken from two parties namely M/s Anupam Stockbroking Private Limited and Sh Sandeep s Anupam Stockbroking Private Limited and Sh Sandeep s Anupam Stockbroking Private Limited and Sh Sandeep Didwani (i.e. Director .e. Director of the assessee-company). Regarding the loans company). Regarding the loans received from these two parties, the received from these two parties, the Assessing Officer Assessing Officer rejected the contention of the assessee in view of part of the loans received a contention of the assessee in view of part of the loans received a contention of the assessee in view of part of the loans received after
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the date of the payment of 27/06/2014 to the seller party. The the date of the payment of 27/06/2014 to the seller party. The the date of the payment of 27/06/2014 to the seller party. The
relevant finding of the relevant finding of the Assessing Officer is reproduced as under: is reproduced as under:
“3.5 The AR has submitted the ledger copies of both the The AR has submitted the ledger copies of both the The AR has submitted the ledger copies of both the Unsecured Loans giving parties and on perusal of the same it is s Unsecured Loans giving parties and on perusal of the same it is s Unsecured Loans giving parties and on perusal of the same it is seen that the amount received M/s Anupam Stock Broking Pvt Ltd are as that the amount received M/s Anupam Stock Broking Pvt Ltd are as that the amount received M/s Anupam Stock Broking Pvt Ltd are as follow: Rs. 16,00,000/ follow: Rs. 16,00,000/- received on 02.07.2014, Rs. 15,00,000/ received on 02.07.2014, Rs. 15,00,000/- received on 03.07.2014 and Rs.55,00,000/ received on 03.07.2014 and Rs.55,00,000/- received on 14.07.2014. received on 14.07.2014. Further seen that the said amounts received in July have Further seen that the said amounts received in July have Further seen that the said amounts received in July have been repaid in March 2015. Hence there are no loans of M/s Anupam repaid in March 2015. Hence there are no loans of M/s Anupam repaid in March 2015. Hence there are no loans of M/s Anupam Stock Broking Put Ltd in the books of the assessee for 31.03.2015. Stock Broking Put Ltd in the books of the assessee for 31.03.2015. Stock Broking Put Ltd in the books of the assessee for 31.03.2015. Further the amount of Rs. 89,00,000/ Further the amount of Rs. 89,00,000/- has been paid on 27.06.2014 has been paid on 27.06.2014 and the first amount received from M/s Anupam Stock Broki and the first amount received from M/s Anupam Stock Broki and the first amount received from M/s Anupam Stock Broking Pt Ltd is on 02.07.2014 and hence the claim of the AR that the source Ltd is on 02.07.2014 and hence the claim of the AR that the source Ltd is on 02.07.2014 and hence the claim of the AR that the source for Rs. 89,00,000/ for Rs. 89,00,000/- is partly from amount received from M/s is partly from amount received from M/s Anupam Stock Broking Pt Ltd cannot be accepted. Anupam Stock Broking Pt Ltd cannot be accepted.
3.6 Similarly on perusal of the ledger account of the Shri Similarly on perusal of the ledger account of the Shri Similarly on perusal of the ledger account of the Shri Sandeep Didwani Sandeep Didwania in the books of the assessee company it is noted a in the books of the assessee company it is noted that the amount of Rs. 15,40,000/ that the amount of Rs. 15,40,000/- have been received on have been received on 30.05.2014 Rs. 4,95,000/ 30.05.2014 Rs. 4,95,000/- received on 12.07.2014, Rs. 2,75,000/ received on 12.07.2014, Rs. 2,75,000/- on 12.09.2014, Rs. 9,50,000/ 12.09.2014, Rs. 9,50,000/- on 30.09.2014, Rs. 4,60,000/ on 30.09.2014, Rs. 4,60,000/- on 09.10.2014, Rs. 4,40 09.10.2014, Rs. 4,40,000/- on 11.10.2014, Rs. 3,20,000/ on 11.10.2014, Rs. 3,20,000/- on 10.11.2014, Rs. 24,35,000/ 10.11.2014, Rs. 24,35,000/- on 26.03.2015 and Rs. 78,400/ on 26.03.2015 and Rs. 78,400/- on 28.03.2015. It is further seen that all the loans received from Shri 28.03.2015. It is further seen that all the loans received from Shri 28.03.2015. It is further seen that all the loans received from Shri Sandeep Didwania have been squared off before 13.02.2015 and no Sandeep Didwania have been squared off before 13.02.2015 and no Sandeep Didwania have been squared off before 13.02.2015 and no loan of the said dire loan of the said director are as on 31.03.2015. Further the amount ctor are as on 31.03.2015. Further the amount of Rs.89,00,000/ of Rs.89,00,000/- has been paid on 27.06.2014 and the first amount has been paid on 27.06.2014 and the first amount
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received from Shri Sandeep Didwania is on 30.05.2014 of received from Shri Sandeep Didwania is on 30.05.2014 of received from Shri Sandeep Didwania is on 30.05.2014 of Rs.15,4,00,000/ Rs.15,4,00,000/- only and hence the claim of the AR that the source only and hence the claim of the AR that the source for Rs. 89,00,000/ for Rs. 89,00,000/- is partly from amount received from Shri from Shri Sandeep Didwania can Sandeep Didwania cannot be accepted.” 4.1 The Assessing Officer Assessing Officer further found that in addition to the further found that in addition to the payment to the seller, the assessee also incurred following payment to the seller, the assessee also incurred following payment to the seller, the assessee also incurred following expenses/investment during the year in relation to t expenses/investment during the year in relation to the property: he property:
Particulars Amount (in ₹) Stamp Duty Registration of the property Stamp Duty Registration of the property 12,25,000/- Society maintain and other expenses Society maintain and other expenses 7,78,960/- Interest on loans of ₹1,50,00,000/ ₹1,50,00,000/- for purchase of the property 12,66,560/- which was capitalized Payment towards purchase of shop No. 61, Satra Plaza, Vashi towards purchase of shop No. 61, Satra Plaza, Vashi Stamp Duty Registration of the property (shop No. 61, Satra Stamp Duty Registration of the property (shop No. 61, Satra 10,23,800/- Plaza, Vashi) Total 43,94,320/- 4.2 In response to the queries raised, the assessee explained that In response to the queries raised, the assessee explained that In response to the queries raised, the assessee explained that ultimate source of the paymen ultimate source of the payment was business profit during the year. t was business profit during the year. The Assessing Officer Assessing Officer found that during the year asses found that during the year assessee has shown only profit of ₹6,32,686/ 686/-, therefore he rejected the contention of , therefore he rejected the contention of the assessee of source of payment out of business profit. The the assessee of source of payment out of business profit. The the assessee of source of payment out of business profit. The Assessing Officer accordingly made addition of accordingly made addition of ₹89,00,000/ 00,000/-.
M/s GRD Steel Industries Limited M/s GRD Steel Industries Limited 8 ITA No. 1918/Mum/2019
4.3 Before the Ld. CIT(A) the assessee submitted that it had Before the Ld. CIT(A) the assessee submitted that it had Before the Ld. CIT(A) the assessee submitted that it had sufficient credit balance in its bank account maintained with Bharat sufficient credit balance in its bank account maintained with Bharat sufficient credit balance in its bank account maintained with Bharat co-operative bank and produced the bank account for the period operative bank and produced the bank account for the period operative bank and produced the bank account for the period from 23/06/2014 to from 23/06/2014 to 28/06/2014 as additional evidence 28/06/2014 as additional evidence. The Ld. Assessing Officer objected admissibil objected admissibility of the additional evidence, ity of the additional evidence, however, the Ld. CIT(A) admitted the additional evidence and he Ld. CIT(A) admitted the additional evidence and he Ld. CIT(A) admitted the additional evidence and thereafter deleted the addition observing as under: thereafter deleted the addition observing as under:
ival submissions. The appellant is “4.4.1 I have considered the r 4.4.1 I have considered the rival submissions. The appellant is maintaining regular books of accounts. It is not the AO's case that maintaining regular books of accounts. It is not the AO's case that maintaining regular books of accounts. It is not the AO's case that the investments in question are not reflected in the appellant's the investments in question are not reflected in the appellant's the investments in question are not reflected in the appellant's books of accounts. In the course of assessment proceedings, the AO books of accounts. In the course of assessment proceedings, the AO books of accounts. In the course of assessment proceedings, the AO requested the appella requested the appellant to furnish the source of the investments. nt to furnish the source of the investments. The AO has failed to appreciate that generally speaking it is not The AO has failed to appreciate that generally speaking it is not The AO has failed to appreciate that generally speaking it is not possible to relate any specific payment to any specific receipt in case possible to relate any specific payment to any specific receipt in case possible to relate any specific payment to any specific receipt in case of a company. As long as the investments and the corresponding of a company. As long as the investments and the corresponding of a company. As long as the investments and the corresponding payments are reflected in the books of accounts, the source of reflected in the books of accounts, the source of payments are to be treated as explained. payments are to be treated as explained. Therefore, the AO ought to Therefore, the AO ought to have given finding as to whether the payments were reflected in have given finding as to whether the payments were reflected in have given finding as to whether the payments were reflected in the books of accounts or not. Therefore, the manner in which the AO books of accounts or not. Therefore, the manner in which the AO books of accounts or not. Therefore, the manner in which the AO approached the issue roached the issue is, in my view, is not correct. 4.4.2 In the course of the appellate proceedings, the appellant has In the course of the appellate proceedings, the appellant has In the course of the appellate proceedings, the appellant has established that the established that the payment of Rs. 89 lakhs was reflected in the payment of Rs. 89 lakhs was reflected in the
M/s GRD Steel Industries Limited M/s GRD Steel Industries Limited 9 ITA No. 1918/Mum/2019
appellant's bank account in Bharat co appellant's bank account in Bharat co-operative Bank. As mentioned abov mentioned above, the bank statement was sent to the AO thereby e, the bank statement was sent to the AO thereby giving him a chance to rebut the appellant's contention. The AO has chance to rebut the appellant's contention. The AO has chance to rebut the appellant's contention. The AO has not been able to rebut the not been able to rebut the appellant's contention (though he raised appellant's contention (though he raised objection to the admission of the additional objection to the admission of the additional evidence). Therefore, in evidence). Therefore, in my view, the addition made is not sustainable. Accordingly, I direct y view, the addition made is not sustainable. Accordingly, I direct y view, the addition made is not sustainable. Accordingly, I direct the AO to delete the addition. In the result ground of appeal No. 1 is the AO to delete the addition. In the result ground of appeal No. 1 is the AO to delete the addition. In the result ground of appeal No. 1 is allowed.” 4.4 Before us the Ld. Ld. Departmental Representative has relied on Departmental Representative has relied on the decision of the the decision of the Manish Buildwell Private Limited (supra) Private Limited (supra), wherein the Hon’ble Delhi High Court has held that after admitting wherein the Hon’ble Delhi High Court has held that after admitting wherein the Hon’ble Delhi High Court has held that after admitting the additional evidence, the Ld. CIT(A) is required to provide the additional evidence, the Ld. CIT(A) is required to provide the additional evidence, the Ld. CIT(A) is required to provide opportunity to the Assessing Officer Assessing Officer for giving his comment on the for giving his comment on the merit of the additional evidence. merit of the additional evidence. The relevant finding of the Hon’ble The relevant finding of the Hon’ble Delhi High Court is reproduced as under: Delhi High Court is reproduced as under:
“24. In the present case, the CIT (A) has observed that the In the present case, the CIT (A) has observed that the In the present case, the CIT (A) has observed that the additional evidence should be admitted because the assessee was additional evidence should be admitted because the assessee was additional evidence should be admitted because the assessee was prevented by adducing them before the assessing officer prevented by adducing them before the assessing officer prevented by adducing them before the assessing officer. This observation takes care of clause (c) of sub observation takes care of clause (c) of sub-rule (1) of Rule 46A. The rule (1) of Rule 46A. The observation of the CIT (A) also takes care of sub observation of the CIT (A) also takes care of sub-rule (2) under rule (2) under which he is required to record his reasons for admitting the which he is required to record his reasons for admitting the which he is required to record his reasons for admitting the additional evidence. Thus, the requirement of sub additional evidence. Thus, the requirement of sub-rules (1) and (2) es (1) and (2)
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of Rule 46A have been complied with. However, sub of Rule 46A have been complied with. However, sub-rule (3) which rule (3) which interdicts the CIT (A) from taking into account any evidence interdicts the CIT (A) from taking into account any evidence interdicts the CIT (A) from taking into account any evidence produced for the first time before him unless the Assessing Officer produced for the first time before him unless the Assessing Officer produced for the first time before him unless the Assessing Officer has had a reasonable opportunity of examining t has had a reasonable opportunity of examining the evidence and he evidence and rebut the same, has not been complied with. There is nothing in the rebut the same, has not been complied with. There is nothing in the rebut the same, has not been complied with. There is nothing in the order of the CIT (A) to show that the Assessing Officer was order of the CIT (A) to show that the Assessing Officer was order of the CIT (A) to show that the Assessing Officer was confronted with the confirmation letters received by the assessee confronted with the confirmation letters received by the assessee confronted with the confirmation letters received by the assessee from the customers who paid the amounts by che from the customers who paid the amounts by cheques and asked for ques and asked for comments. Thus, the end result has been that additional evidence comments. Thus, the end result has been that additional evidence comments. Thus, the end result has been that additional evidence was admitted and accepted as genuine without the Assessing Officer was admitted and accepted as genuine without the Assessing Officer was admitted and accepted as genuine without the Assessing Officer furnishing his comments and without verification. Since this is an furnishing his comments and without verification. Since this is an furnishing his comments and without verification. Since this is an indispensable requirement, we are of t indispensable requirement, we are of the view that the Tribunal he view that the Tribunal ought to have restored the matter to the CIT (A) with the direction ought to have restored the matter to the CIT (A) with the direction ought to have restored the matter to the CIT (A) with the direction to him to comply with sub to him to comply with sub-rule (3) of Rule 46A. In our opinion and rule (3) of Rule 46A. In our opinion and with respect, the error committed by the Tribunal is that it with respect, the error committed by the Tribunal is that it with respect, the error committed by the Tribunal is that it proceeded to mix up the powers of proceeded to mix up the powers of the CIT (A) under sub section (4) section (4) of Section 250 with the powers vested in him under Rule 46A. The of Section 250 with the powers vested in him under Rule 46A. The of Section 250 with the powers vested in him under Rule 46A. The Tribunal seems to have overlooked sub Tribunal seems to have overlooked sub-rule(4) of Rule 46A which rule(4) of Rule 46A which itself takes note of the distinction between the powers conferred by itself takes note of the distinction between the powers conferred by itself takes note of the distinction between the powers conferred by the CIT (A) under the st the CIT (A) under the statute while disposing of the assessee’s atute while disposing of the assessee’s appeal and the powers conferred upon him under Rule 46A. The appeal and the powers conferred upon him under Rule 46A. The appeal and the powers conferred upon him under Rule 46A. The Tribunal erred in its interpretation of the provisions of Rule 46A vis Tribunal erred in its interpretation of the provisions of Rule 46A vis Tribunal erred in its interpretation of the provisions of Rule 46A vis- à-vis Section 250(4). Its view that since in any case the CIT (A), by vis Section 250(4). Its view that since in any case the CIT (A), by vis Section 250(4). Its view that since in any case the CIT (A), by virtue of his conterminous powers over the assessment order, was conterminous powers over the assessment order, was conterminous powers over the assessment order, was empowered to call for any document or make any further enquiry empowered to call for any document or make any further enquiry empowered to call for any document or make any further enquiry as he thinks fit, there was no violation of Rule 46A is erroneous. The as he thinks fit, there was no violation of Rule 46A is erroneous. The as he thinks fit, there was no violation of Rule 46A is erroneous. The Tribunal appears to have not appreciated the distinction between Tribunal appears to have not appreciated the distinction between Tribunal appears to have not appreciated the distinction between the two provisions. If the view of the Tribunal is accepted, it would o provisions. If the view of the Tribunal is accepted, it would o provisions. If the view of the Tribunal is accepted, it would make Rule 46A otiose and it would open up the possibility of the make Rule 46A otiose and it would open up the possibility of the make Rule 46A otiose and it would open up the possibility of the
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assessees’ contending that any additional evidence sought to be assessees’ contending that any additional evidence sought to be assessees’ contending that any additional evidence sought to be introduced by them before the CIT (A) cannot be subjected to th introduced by them before the CIT (A) cannot be subjected to th introduced by them before the CIT (A) cannot be subjected to the conditions prescribed in Rule 46A because in any case the CIT (A) is conditions prescribed in Rule 46A because in any case the CIT (A) is conditions prescribed in Rule 46A because in any case the CIT (A) is vested with conterminous powers over the assessment orders or vested with conterminous powers over the assessment orders or vested with conterminous powers over the assessment orders or powers of independent enquiry under sub powers of independent enquiry under sub-section (4) of Section 250. section (4) of Section 250. That is a consequence which cannot at all be countenanc That is a consequence which cannot at all be countenanced. ed. 25. For the above reasons, we answer the substantial questions For the above reasons, we answer the substantial questions For the above reasons, we answer the substantial questions of law framed in paragraph 21 above, in favour of the Revenue and of law framed in paragraph 21 above, in favour of the Revenue and of law framed in paragraph 21 above, in favour of the Revenue and against the assessee. The issue relating to the addition of Rs. against the assessee. The issue relating to the addition of Rs. against the assessee. The issue relating to the addition of Rs. 1,61,67,600/- made under Section 68 of the Act is restored made under Section 68 of the Act is restored to the CIT (A) who shall comply with the requirements of Rule 46A and CIT (A) who shall comply with the requirements of Rule 46A and CIT (A) who shall comply with the requirements of Rule 46A and take a fresh decision on the merits of the addition in accordance take a fresh decision on the merits of the addition in accordance take a fresh decision on the merits of the addition in accordance with law.” 4.4 We find that in the instant case , the copy of the bank statement We find that in the instant case , the copy of the bank statement We find that in the instant case , the copy of the bank statement was not available before the was not available before the Assessing Officer for his comment on for his comment on merit, which is evident from the observation of the Ld. CIT(A) in , which is evident from the observation of the Ld. CIT(A) in , which is evident from the observation of the Ld. CIT(A) in para 4.3.2 of the impugned order wherein he has observed as under: para 4.3.2 of the impugned order wherein he has observed as under: para 4.3.2 of the impugned order wherein he has observed as under:
“4.3.2 The copy of the bank statement was sent as required under The copy of the bank statement was sent as required under The copy of the bank statement was sent as required under Rule 46A of the Income Rule 46A of the Income Tax Rules, 1962. The AO was requested to Rules, 1962. The AO was requested to comment on the admissibility of the new comment on the admissibility of the new evidence. In response, the A evidence. In response, the A submitted that the appellant has not stated what prevented it submitted that the appellant has not stated what prevented it submitted that the appellant has not stated what prevented it from producing the bank statement at the time of assessment producing the bank statement at the time of assessment producing the bank statement at the time of assessment proceedings and therefore, proceedings and therefore, the additional evidence was not he additional evidence was not admissible. In the course of the appellate proceedings the AR of In the course of the appellate proceedings the AR of In the course of the appellate proceedings the AR of
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the appellant submitted that the AO did not call for the bank the appellant submitted that the AO did not call for the bank the appellant submitted that the AO did not call for the bank statement specifically; that the appellant was under the statement specifically; that the appellant was under the statement specifically; that the appellant was under the impression that the source of the fund ha impression that the source of the fund had been satisfactorily d been satisfactorily explained to the AO explained to the AO.” (emphasize supplied externally) (emphasize supplied externally) 4.5 In view of the above, following the finding of the Hon’ble Delhi In view of the above, following the finding of the Hon’ble Delhi In view of the above, following the finding of the Hon’ble Delhi High Court(supra), we feel it appropriate to restore this issue back High Court(supra), we feel it appropriate to restore this issue back High Court(supra), we feel it appropriate to restore this issue back to the file of the Ld. CIT(A) for deciding f the Ld. CIT(A) for deciding afresh after compliance of fresh after compliance of Rule 46A of Income Income-Tax Rules, 1962 for providing adequate Tax Rules, 1962 for providing adequate opportunity of being heard to the opportunity of being heard to the Assessing Officer. The ground . The ground No. 1 (One) of the appeal of the of the appeal of the Revenue is accordingly allowed for accordingly allowed for statistical purposes.
The ground No ound No. 2 of the appeal relates to addition of . 2 of the appeal relates to addition of ₹1,64,31,900/-made under section 6 made under section 69B of the Act pertaining to a property purchased from M/s Satra properties (India) Ltd. The f property purchased from M/s Satra properties (India) Ltd. The f property purchased from M/s Satra properties (India) Ltd. The facts qua the issue in dispute are that the assessee entered into an qua the issue in dispute are that the assessee entered into an qua the issue in dispute are that the assessee entered into an agreement for purchase of the property from M/s Satra properties agreement for purchase of the property from M/s Satra properties agreement for purchase of the property from M/s Satra properties (India) Ltd for a consideration of (India) Ltd for a consideration of ₹1,65,51,900/- -but during the
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previous year corresponding to the assessment year under previous year corresponding to the assessment year under previous year corresponding to the assessment year under consideration the assessee paid deration the assessee paid ₹1,00,000/- to M/s Satra to M/s Satra Properties (India) Ltd. The Assessing Officer Assessing Officer noticed that remaining amount noticed that remaining amount was not shown in the balance sheet in the balance sheet as liability to be paid and as liability to be paid and therefore asked the assessee accordingly. The assessee submitted therefore asked the assessee accordingly. The assessee submitted therefore asked the assessee accordingly. The assessee submitted that there was a dispute between the assessee that there was a dispute between the assessee and the said builder M/s Satra Properties (India) Ltd M/s Satra Properties (India) Ltd. and because of which no further and because of which no further payment had been made. In support of its claim of dispute, the payment had been made. In support of its claim of dispute, the payment had been made. In support of its claim of dispute, the assessee filed a copy of the order o assessee filed a copy of the order of the Hon’ble Bombay Hi f the Hon’ble Bombay High Court, details of which are mentioned in the order of the details of which are mentioned in the order of the lower lower authorities. According to the assessee, it made According to the assessee, it made certain sales of the goods to the sales of the goods to the said builder and payment of which was due to the assessee and said builder and payment of which was due to the assessee and said builder and payment of which was due to the assessee and therefore the balance payment against the pro therefore the balance payment against the property was not paid to perty was not paid to the said builder. The the said builder. The Assessing Officer was not satisfied with the was not satisfied with the submission of the assessee and according to him submission of the assessee and according to him, , assessee must have paid the payment from unconfirmed sources and therefore he have paid the payment from unconfirmed sources and therefore he have paid the payment from unconfirmed sources and therefore he
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held the remaining amount of the conside held the remaining amount of the consideration of the property ration of the property amounting to ₹1,64, 64,31,900/-as unexplained investment as unexplained investment, not disclosed in the books of the books of accounts in terms of section 6 accounts in terms of section 69B of the Act.
Before the Ld. CIT(A) the assessee filed certified copies of the Before the Ld. CIT(A) the assessee filed certified copies of the Before the Ld. CIT(A) the assessee filed certified copies of the account of M/s Satra properties (I Satra properties (India) Ltd. and and M/s Satara Properties Private Limited in its books of accounts as an additional Properties Private Limited in its books of accounts as an additional Properties Private Limited in its books of accounts as an additional evidence, which were forwarded to the evidence, which were forwarded to the Assessing Officer Assessing Officer. The Assessing Officer however objected that said however objected that said ledger ledger accounts were unconfirmed and self generated do unconfirmed and self generated document. The relevant observation cument. The relevant observation of the Ld. CIT(A) are as under: of the Ld. CIT(A) are as under:
“5.3.3 Regarding the observation of the AO that the appellant did 5.3.3 Regarding the observation of the AO that the appellant did 5.3.3 Regarding the observation of the AO that the appellant did not record the value of not record the value of the property in its books of accounts for the the property in its books of accounts for the period 2014-15, the AR of the appellant 15, the AR of the appellant contended that even if the even if the entry is passed in the books of accounts, it will not affect the entry is passed in the books of accounts, it will not affect the entry is passed in the books of accounts, it will not affect the income because the asset is a capital account. because the asset is a capital account. 5.3.4 In the course of the appellate proceedings, the appellant was 5.3.4 In the course of the appellate proceedings, the appellant was 5.3.4 In the course of the appellate proceedings, the appellant was requested to furnish requested to furnish certified copies of Satra Properties India certified copies of Satra Properties India Ltd. and Satra Properties Pvt. Ltd. in its books for and Satra Properties Pvt. Ltd. in its books for previous year 2014 previous year 2014- 15. In response, the appellant furnished the ledgers for P.Y.2014 15. In response, the appellant furnished the ledgers for P.Y.2014 15. In response, the appellant furnished the ledgers for P.Y.2014-15
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and also P.Y. 2015 and also P.Y. 2015-16. The ledgers for P.Y. 2015-16 constitute 16 constitute additional evidence. As additional evidence. As required under Rule 46A of the Ince Tax the Ince Tax Rules, 1962, the copies of those ledgers were sent Rules, 1962, the copies of those ledgers were sent to the AO. The AO to the AO. The AO was requested to furnish his comments on the admissibility of the was requested to furnish his comments on the admissibility of the was requested to furnish his comments on the admissibility of the ledgers for the P.Y. 2015 ledgers for the P.Y. 2015-16 and also on the allowability of the 16 and also on the allowability of the appellant's claim with appellant's claim with reference to those ledgers. In response, the edgers. In response, the AO submitted that the said ledger is AO submitted that the said ledger is unconfirmed and is self unconfirmed and is self generated document which has no evidentially value. generated document which has no evidentially value.”
6.1 The Ld. CIT(A) after admitting of the additional evidence The Ld. CIT(A) after admitting of the additional evidence The Ld. CIT(A) after admitting of the additional evidence including certified copies of accounts of the Builder including certified copies of accounts of the Builder including certified copies of accounts of the Builder in the books of the assessee, allowed the ground of the appeal of the assessee, the assessee, allowed the ground of the appeal of the assessee, the assessee, allowed the ground of the appeal of the assessee, observing as under:
5.4.1 I have considered the rival contentions. I find that the AO has have considered the rival contentions. I find that the AO has have considered the rival contentions. I find that the AO has stated that amount of stated that amount of Rs.1,64,31,900/- has been paid from has been paid from unconfirmed sources. unconfirmed sources. 5.4.2 The appellant's contention that the sale consideration payable The appellant's contention that the sale consideration payable The appellant's contention that the sale consideration payable to Satra Properties to Satra Properties India Ltd, and Satra Properties Development India Ltd, and Satra Properties Development Pvt. Ltd. was subsequently adjusted against the Pvt. Ltd. was subsequently adjusted against the debit balance in debit balance in their (Satra Properties India Ltd. and Satra Properties Developm their (Satra Properties India Ltd. and Satra Properties Developm their (Satra Properties India Ltd. and Satra Properties Development Pvt. Ltd.) account is acceptable. I Ltd.) account is acceptable. I do not find anything unusual in do not find anything unusual in adjustment of the amount adjustment of the amount payable against outstanding amount payable against outstanding amount receivable.
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5.4.3 In the assessment order, the AO has stated that the appellant In the assessment order, the AO has stated that the appellant In the assessment order, the AO has stated that the appellant had taken possession had taken possession of the property during the relevant previous the relevant previous year. In the course of the appellate year. In the course of the appellate proceedings, the appellant proceedings, the appellant stated that the possession of the property was actually taken stated that the possession of the property was actually taken stated that the possession of the property was actually taken after 31.03.2015. In this context, the AO by this office letter dated 31.03.2015. In this context, the AO by this office letter dated 31.03.2015. In this context, the AO by this office letter dated 04.01.2019, was 04.01.2019, was requested to furnish certified copies of evidences on certified copies of evidences on the basis of which the he has the basis of which the he has concluded that the appellant had concluded that the appellant had taken possession of the property during the P.Y.2014 taken possession of the property during the P.Y.2014 taken possession of the property during the P.Y.2014-15. In response, the AO by his letter dated 22.01.2019 relied on the response, the AO by his letter dated 22.01.2019 relied on the response, the AO by his letter dated 22.01.2019 relied on the observation of High Court's observation of High Court's order dated 10.08.2017 wherein the d 10.08.2017 wherein the Hon'ble High Court has observed as under: Hon'ble High Court has observed as under:
"However, it is pertinent to note that the petitioners concedes that it "However, it is pertinent to note that the petitioners concedes that it "However, it is pertinent to note that the petitioners concedes that it is in possession is in possession of the Office No.61 at Satra Plaza.
5.4.4 I find that the Hon'ble High Court's dated 10.08.2017 and, 5.4.4 I find that the Hon'ble High Court's dated 10.08.2017 and, 5.4.4 I find that the Hon'ble High Court's dated 10.08.2017 and, therefore, the observation therefore, the observation was valid on that date. Therefore, the AO was valid on that date. Therefore, the AO erred in presuming that the appellant had taken erred in presuming that the appellant had taken possession of the possession of the property during the P.Y.2014 property during the P.Y.2014-15.
5.4.5 In any case, the AO has not brought any material on record to 5.4.5 In any case, the AO has not brought any material on record to 5.4.5 In any case, the AO has not brought any material on record to rebut the contenti rebut the contentions of the appellant that the balance of the appellant that the balance consideration for the premise remained unpaid as at consideration for the premise remained unpaid as at 31.03.2015 31.03.2015 and was subsequently adjusted against amount receivable from and was subsequently adjusted against amount receivable from and was subsequently adjusted against amount receivable from Satra Properties Satra Properties India Ltd. and Satra Properties Development Pvt. India Ltd. and Satra Properties Development Pvt. Ltd. I, therefore, hold that Ltd. I, therefore, hold that the addition is not sustainable. not sustainable. Accordingly, I direct the AO to delete the addition of Accordingly, I direct the AO to delete the addition of Accordingly, I direct the AO to delete the addition of Rs.1,64,31,900/ Rs.1,64,31,900/-.”
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6.2 Thus we find that the Ld. CIT(A) has concluded that balance find that the Ld. CIT(A) has concluded that balance find that the Ld. CIT(A) has concluded that balance consideration for the property which was unpaid as on 31/03/2015 consideration for the property which was unpaid as on 31/03/2015 consideration for the property which was unpaid as on 31/03/2015 has been subsequen has been subsequently adjusted against amount receivable from tly adjusted against amount receivable from M/s Satra Properties M/s Satra Properties (India) Ltd. and M/s Satra Property Satra Property Development Private Limited. Development Private Limited.
We find that the We find that the Ld. Assessing Officer objected to the objected to the unconfirmed and self generated evidences submitted by the unconfirmed and self generated evidences submitted by the unconfirmed and self generated evidences submitted by the assessee for admitting as additional evidence. In our opinion, the Ld. for admitting as additional evidence. In our opinion, the Ld. for admitting as additional evidence. In our opinion, the Ld. CIT(A) has not complied the conditions of Rule 46A of Income Tax CIT(A) has not complied the conditions of Rule 46A of Income Tax CIT(A) has not complied the conditions of Rule 46A of Income Tax Rules, 1962 as explained by the Hon’ble Delhi High Court in the case 1962 as explained by the Hon’ble Delhi High Court in the case 1962 as explained by the Hon’ble Delhi High Court in the case of Manish Build Well Well Private Limited (supra), which we have Private Limited (supra), which we have already discussed while adjudicating the ground already discussed while adjudicating the ground No. 1 No. 1 (One) of this appeal. In the circumstances, we restore this issue back to the file o appeal. In the circumstances, we restore this issue back to the file o appeal. In the circumstances, we restore this issue back to the file of the Ld. CIT(A) for deciding a the Ld. CIT(A) for deciding afresh after providing adequate providing adequate opportunity of being heard to the opportunity of being heard to the Assessing Officer as well as to the as well as to the assessee. The assessee is required to file certified copy of assessee. The assessee is required to file certified copy of assessee. The assessee is required to file certified copy of ledger
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account of the two parties namely M/s Satra Properties (India) Ltd account of the two parties namely M/s Satra Properties (India) Ltd account of the two parties namely M/s Satra Properties (India) Ltd. and M/s Satra Property Development Private Limited and also and M/s Satra Property Development Private Limited and also and M/s Satra Property Development Private Limited and also certified copy of ledger account of the a certified copy of ledger account of the assessee in their books of ssessee in their books of accounts, so as to verify the adjustment of amount receivable from accounts, so as to verify the adjustment of amount receivable from accounts, so as to verify the adjustment of amount receivable from these two parties by the assessee against the payment which was by the assessee against the payment which was by the assessee against the payment which was due to be paid by the assessee towards purchase consideration of due to be paid by the assessee towards purchase consideration of due to be paid by the assessee towards purchase consideration of the property. The ground the property. The ground No. 2 of the appeal of the appeal of the Revenue is accordingly allowed for statistical purposes. accordingly allowed for statistical purposes.
In the result, the appeal of the In the result, the appeal of the Revenue is allowed for statistical is allowed for statistical purposes.
Order pronounced in the open Court on ounced in the open Court on 14/06/2022. /06/2022. Sd/- Sd/- (RAHUL CHAUDHARY RAHUL CHAUDHARY) (OM PRAKASH KANT OM PRAKASH KANT) JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 14/06/2022 Dragon Legal/Rahul Sharma, Sr. P.S. Copy of the Order forwarded to Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. The CIT(A)- 4. CIT
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DR, ITAT, Mumbai 6. Guard file. BY ORDER, //True Copy// (Sr. Private Secretary Sr. Private Secretary) ITAT, Mumbai ITAT, Mumbai