ITO, JAIPUR vs. DEBOCK BUILDERS PVT. LTD., JAIPUR

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR Jh fot; iky jko] U;kf;d lnL; ,oa Jh foØe flag ;kno] ys[kk lnL; ds le{k BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM vk;dj vihy la-@ITA No. 297/JP/2016 fu/kZkj.k o"kZ@Assessment Year : 2011-12 cuke Income Tax officer, Debock Builders Pvt. Ltd. Vs. Ward- 3(5), 51, Lohiya Colony, 200 ft. Jaipur. Byepass Vaishali Nagar, Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AACCD 5275 B vihykFkhZ@Appellant izR;FkhZ@Respondent vk;dj vihy la-@ITA No. 305/JP/2016 fu/kZkj.k o"kZ@Assessment Year : 2011-12 cuke Debock Builders Pvt. Ltd. Income Tax officer, Vs. 51, Lohiya Colony, 200 ft. Ward- 3(5), Byepass Vaishali Nagar, Jaipur. Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AACCD 5275 B vihykFkhZ@Appellant izR;FkhZ@Respondent

fu/kZkfjrh dh vksj ls@ Assessee by : Shri Vikash Rajvanshi (C.A.) jktLo dh vksj ls@ Revenue by : Shri P.R. Meena (Addl.CIT) lquokbZ dh rkjh[k@ Date of Hearing : 06/02/2018 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 19/03/2018 vkns'k@ ORDER

PER: VIJAY PAL RAO, J.M. These cross appeals are directed against the order dated 25.01.2016 of CIT (A), Jaipur for the assessment year 2011-12.

ITA No. 297& 305/JP/2016 ITO vs. Debock Builders Pvt. Ltd.

purchase, land development and sale of plots. The assessee filed his

return of income on 31.03.2012 declaring loss of Rs. 7,39,003/-. The

AO issued notice u/s 143(2) of the Act for scrutiny assessment as well

as notice u/s 142(1) asking the assessee to furnish various records and

documents. The assessee failed to comply with the notices issued u/s

142(1). Subsequently the AO issued show cause notice dated

06.05.2013 asking the assessee to explain why the penalty should not

be levied u/s 271(1)(b) of the Act. Since, there was no compliance

despite penalty u/s 271(1)(b) was levied the AO finally issued a show

cause notice u/s 144 on 16.12.2013. The AO framed assessment u/s

144 of the Act whereby the income of the assessee was assessed at Rs.

3,31,24,884/- as against loss of Rs. 7.39 lacs. Thus, the AO made

certain disallowances as well as additions including the addition on

account of unrecorded sale to the tune of Rs. 1,50,49,690/-, addition on

account of cash deposit of Rs. 46,17,180/-, addition on account of

unsecured loan of Rs. 1,28,48,704/-. The assessee challenged the

action of the AO before the ld. CIT(A) who had granted part relief to

the assessee in respect of unrecorded sales of Rs. 1,02,04,233/ out of

the total addition of Rs. 1,50,49,690/- made by the AO. The other

ITA No. 297& 305/JP/2016 ITO vs. Debock Builders Pvt. Ltd.

addition/disallowance made by the AO were confirmed by the ld. CIT(A)

except some partial relief. Thus both assessee as well as Revenue are

aggrieved by the impugned order of the ld. CIT(A) and filed these cross

appeals.

“1. Whether on facts and in circumstances of the case and in law the ld. CIT(A) has erred in allowing relief of Rs. 1,02,04,233/- out of addition of Rs. 1,50,49,690/- made by the AO on account of unrecorded sales on the basis of the evidences which were not produced before the AO during the course of assessment proceedings despite providing various opportunities by the A.O. 2. Whether on facts and in circumstances of the case and in law the ld. CIT(A) has erred in admitting additional evidences ignoring the fact that none of the mandatory circumstances mentioned in rule 46A of I.T. Rules 1962 was fulfilled in his case.”

“Ground No. 1. The Ld. A.O. has erred in law as well as in fact in wrongly making assessment u/s 144 inspite of that all information were duly reflected in the audited Financial Statements of the assessee company and Ld. CIT(A) also wrongly held that AO was justified in making assessment u/s 144 of the Act.

Ground No. 2 The Ld. A.O. has erred in law as well as in fact in disallowing Rs. 1,50,49,690/-on account of wrongly considering sales of Rs. 2 crores over and above disclosed sale of Rs. 49,05,310/- .The amount Rs. 2 crores is duly disclosed as security deposit 3

ITA No. 297& 305/JP/2016 ITO vs. Debock Builders Pvt. Ltd.

received from the party and not for sale in the current liabilities. Hence, Ld. A.O. wrongly disallowed the already disclosed security deposit received and CIT (A) deleted the addition of Rs. 1,02,04,233/-but wrongly sustained the addition of Rs. 48,45,457/-

Ground No. 3. The Ld. A.O. has erred in law as well as in fact in wrongly disallowing the unsecured loans of Rs. 1,28,48,704/- which is duly disclosed in the balance sheet and duly confirmed by the unsecured creditors. The unsecured loan was given by the director of the company Mr. Mukesh Kumar Mahawar and was duly confirmed by him. Ld. CIT(A) gave marginal relief of Rs. 4,00,000/- only and sustained addition of Rs. 1,24,80,704/-.

Ground No. 4. The Ld. A.O. has erred in law as well as in fact in wrongly disallowing the depreciation of Rs. 4,32,490/- on the addition to the vehicle which is duly disclosed in the audited Balance Sheet of the company. Ld. CIT(A) has not considered the remand report while making the erroneous additions.

Ground No, 5. The Ld. A.O. has erred in law as well as in fact in wrongly making addition of Rs. 46,17,180/- on account of cash deposits in the current account, which is the genuine cash-in-hand in confirmation with the cash book of the assessee company. Copy of cash book, bank statements was also duly submitted by the assesse company. Ld. CIT(A) did not consider the same and sustained the addition of Rs. 46,17,180/-made by AO.

Ground No. 6. The Ld. A.O. has erred in law as well as in fact in wrongly disallowing Rs.2,09,347/- on account of payment made for 4

ITA No. 297& 305/JP/2016 ITO vs. Debock Builders Pvt. Ltd.

Advertisement and Brokerage u/s 40(a)(ia) for non-deposit of TDS, inspite of that the above amount was duly disclosed by the recipient in their Income Tax return for relevant assessment year. CIT (A) did not consider the submitted and rejected this ground of appeal

Ground No. 7. The Ld. A.O. has erred in law as well as in fact in wrongly making addition of 100/0 of Rs. 70,64,773/- of development expenses amounting Rs. 7,06,477/-, whereas all expenses were capitalized and included in closing stock and not charged as expenditure in P&L Account. Ld. AO did not mention anything in the remand report and did not pay any attention to the facts ld. CIT(A) also did not consider the submission. Ground No. 8 The appellant prays you honor to add, amend or alter all or any of the grounds of the appeal on or before the date of hearing.” 5. Ground No. 1 of the assessee’s appeal is regarding ex-parte

assessment made by the AO u/s 144 of the Act. The ld. AR of the

assessee has submitted that the main Director of the assessee company

Shri Mukesh Kumar Mahawar was suffering from severe chest pain and

continuous pain in his abdomen since last one year. Further, he was

also facing police enquiry and criminal proceeding and only when the

Court has finally given relief in favour of Shri Mukesh Kumar Mahawar

till then the assessee company could not conduct its day to day

ITA No. 297& 305/JP/2016 ITO vs. Debock Builders Pvt. Ltd.

business affairs and also suffered such transaction loss due to

inconvenience and mental trauma face by the Director of the company.

Thus, due to the ill health as well as other inconvenience and suffering

of the Director the assessee was not able to represent before the AO.

Thus, the ld. AR has submitted that when the assessee has explained

the sufficient cause for not appearing before the AO then, the ld. CIT(A)

would have set aside the ex-parte order.

Officer has given more sufficient opportunities and despite various

show cause notices and levy of penalty u/s 271(1)(b) of the Act the

assessee did not appear and comply with the various notices issued by

the AO. Hence, the AO was left with no option but to complete the

assessment ex-parte u/s 144 of the Act. He has further contended that

the ld. CIT(A) has entertained additional evidence and therefore, the

grievance of the assessee was redressed by the ld. CIT(A).

material on record we note that the assessee filed additional evidences

before the ld. CIT(A) which was forwarded to the AO on 16.12.2015 for

obtaining its comments on the submissions and additional evidences

filed by the assessee. The AO filed its remand report on 13.12.2015

ITA No. 297& 305/JP/2016 ITO vs. Debock Builders Pvt. Ltd.

which has been reproduced by the ld. CIT(A) in the impugned order.

The AO has stated in the remand report that the assessee did not

comply with the requisition and show cause notice issued by the AO

despite sufficient opportunities were given and summons issued to the

Director of the assessee u/s 131. The relevant part of the remand

report of the AO as under:-

“Still not complianced. Thereafter some more opportunities were given to the assessee vide no.1849 dated 31.12.2013, on 28.01.2014 and summon was also issued to Shri Mukesh Kumar Mahawar u/s 131 and last final opportunity was give vide letter no.2174 dated 11.02.2014 but not complianced at any time. It means the several opportunities were available before the assessee before a long time ago of the treatment/illness. In the last the order u/s 144/143(2) was passed on 10.03.2014 by the A.O in chair ITO ward 2(2)Jaipur.

It also means that there should be on officer for one case to pass an order. No wait can be possible for the last day of the concerned year in the limitation matter. Also no conflict is revealed between the A/R of the assessee and the A/R as stated wrongly. In such circumstances the another Director may attend the case with another A/R.

Looking the facts and the evidences as are placed before your goodself as an additional evidences are not covered under the provisions of Rule 46A of the I.T. Act 1961 as are not pertained to the year under consideration well as those are 7

ITA No. 297& 305/JP/2016 ITO vs. Debock Builders Pvt. Ltd.

related to the A.Y 2008-09 for the assessee. Rest of the details/information were already by the A.O in chair before passing the order u/s 144 well by comparing the details/information of the audit report and the ITR of the assessee. Thus after going through assessment record as well as material facts and the submissions produced by the assessee at this stage, no reasons observed for consideration /investigation further in the matter as were considered already at the time of assessment proceedings not beyond of audit report and the /TR filed b the assessee , hence I rely upon the findings of the A.O in chair as mentioned in his order. Therefore, I have also the same opinion on the additions made by the A.0 in chair ITO ward 2(2) Jaipur by passing the order u/s 144 on 10.03.2014. No further inquiry is remained balance to be conducted now as all the issues and matter of facts have already been discussed and well determined in the said order earlier.” Thus, it is clear that the Assessing Officer raised the objections against

the additional evidence propose to be filed by the assessee and

submitted that the assessee has again failed to comply with the various

notices and summons issued by the AO. The ld. CIT(A) after

consideration the remand report has held that the sufficient

opportunities were provided by the AO during the assessment

proceedings therefore, the AO was justified in making the assessment

u/s 144 of the Act. We do concur with the finding of the ld. CIT(A) on

the issue that the Assessing Officer provided more sufficient

ITA No. 297& 305/JP/2016 ITO vs. Debock Builders Pvt. Ltd.

opportunities to the assessee and was left with no option but to make

assessment u/s 144 of the Act. Hence, we do not find any error or

illegality in the finding of the ld. CIT(A) quash this issue.

regarding the addition/disallowance made by the AO has considered the

additional evidence filed by the assessee though the said evidence were

not examined by the AO due to non compliance of the assessee to the

notices issued by the AO even in the remand proceedings. Thus, in the

facts and circumstances of the case when both the Revenue as well as

the assessee are aggrieved by the impugned order of the ld. CIT(A) and

the Revenue has raised a specific ground that ld. CIT(A) has considered

the additional evidence without giving an opportunity to the AO and

therefore, there is a violation of Rule 46A of the I.T. Rules 1962 then

without expressing any view on the merit of the other issues we set

aside the matter to the record of the Assessing Officer for deciding the

same after allowing an opportunity to assessee to produce the relevant

evidence and details and also to comply with the notices to be issued by

the AO for further enquiry and investigation of the matter. Hence, we

set aside the orders of the authorities below and remit the matter to the

ITA No. 297& 305/JP/2016 ITO vs. Debock Builders Pvt. Ltd. record of the Assessing Officer for adjudication of the same after considering the evidence and other details to be filed by the assessee. In the result, both the appeals are allowed for statistical purposes. Order pronounced in the open court on 19/03/2018 Sd/- Sd/- ¼fot; iky jko½ ¼foØe flag ;kno½ (Vikram Singh Yadav) (Vijay Pal Rao) ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 19/03/2018. *Santosh. आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. vihykFkhZ@The Appellant- ITO, Ward-3(5),Jaipur. 2. izR;FkhZ@ The Respondent- Debock Builders Pvt. Ltd., Jaipur. 3. vk;dj vk;qDr@ CIT 4. vk;dj vk;qDr@ CIT(A) 5. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत. 6. xkMZ QkbZy@ Guard File {ITA No. 297 & 305/JP/2016} vkns'kkuqlkj@ By order,

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