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Facts
The assessee, an investment company, filed a 'Nil' return for AY 2016-17. During scrutiny, the AO made additions for interest on loans (Rs. 32,72,986/-), treating a short-term loan as bogus (Rs. 5,93,383/-), and a disallowance under Section 14A read with Rule 8D (Rs. 50,040/-), primarily due to the assessee's non-compliance. The CIT(A) dismissed the appeal, refusing to admit additional evidence citing the assessee's evasive approach.
Held
The Tribunal restored the appeal to the AO for fresh adjudication, directing the AO to admit the additional evidence filed by the assessee. Consequently, the additions for interest on loans and bogus short-term loans, totaling Rs. 32,72,986/- and Rs. 5,93,383/-, respectively, were set aside. However, the disallowance of Rs. 50,040/- under Section 14A read with Rule 8D was confirmed as the assessee did not press this ground during arguments.
Key Issues
Admissibility of additional evidence under Rule 46A; validity of additions for interest on loans and bogus short-term loans; and disallowance under Section 14A read with Rule 8D.
Sections Cited
14A, Rule 8D, Rule 46A
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Income Tax Appellate Tribunal, “B” BENCH: KOLKATA
Before: Shri Rajesh Kumar&Shri Pradip Kumar Choubey]
ORDER / आदेश Per Pradip Kumar Choubey, JM: This is the appeal preferred by the assessee against order of Commissioner of Income Tax (Appeal)- NFAC, Delhi (hereinafter referred to as the Ld. CIT(A)] dated 24.08.2024 for AY 2016-17.
Brief facts of the case of the assessee are that the assessee deals in business of investment in shares and securities. During the year under consideration, the assessee filed its original income tax return for AY 2016-17 declaring total income ‘Nil’. The case of the assessee was selected for scrutiny. Notice was issued to the assessee asking Assessment Year: 2016-17 Jiwan Abasan Pvt. Ltd. it to produce and submit certain details to substantiate its return of income. The assessee did not comply with the notices but in response to the show cause notice the AR submitted the document through mail that has been checked by the AO and the AO find that there is a discrepancy as a result of which, an addition of Rs. 32,72,986/- interest on loan and advance given to various parties, amounting to Rs. 59,838/-was calculated as non-verified short term loan treated as bogus loan credited in the account of the assessee and further disallowance u/s 14A read with Rule 8D amounting to Rs. 50,040/-have been added in the income of the assessee.
Aggrieved by the said order, the assessee preferred an appeal before the Ld. CIT(A) wherein also the appeal of the assessee has been dismissed.
Being aggrieved and dissatisfied the present appeal has been preferred by the assessee before us.
The ld. Counsel of the assessee challenges the very impugned order thereby submitting that the AO did not consider the additional evidence produce by the assessee with the written submission though it was duly uploaded through ITBA. The Ld. Counsel submits that the documents which have been uploaded by the assessee are the essential piece of the papers to substantiate the claim of the assessee. The Ld. Counsel submits that the AO should admit the additional evidence as the same was crucial for the disposal of the claim of the assessee. The Ld. Counsel prays that the appeals should be restored into the file of the AO to consider the additional evidence uploaded by the assessee and to pass afresh order. The Ld. A.R filed the audited financial statement of both the companies along with PAN. The Ld. Counsel for the assessee submits that both the companies are active companies and they are filing returns regularly. The Ld. Counsel submits that the documents which has been filed by the assessee by way of additional evidences in fact could not be submitted during the assessment stage. The Ld. Counsel cited the decision passed by the Hon’ble High Court in CIT vs. Virgin Securities and Credits Pvt. Ltd. reported in [2011] 332 ITR 396 and further decision passed in Chandrakant Chanu Bhai Patel 202 Taxman 262 (Del).
Upon hearing the counsel of the respective parties, we perused the order passed by the AO as well as Ld. CIT(A). On perusal of the assessment order, it appears to us that the assessee did not comply with the notice though the notices have been sent via mail and hard copy through postal authority. The assessee was asked to furnish the details of the same in a prescribed format along with supporting documents but the assessee failed to do so. Before the CIT(A) remand report from the AO with respect to the additional evidence under Rule 46A filed by the assessee had been called for. The Ld. CIT(A) after going over the remand report as well as rejoinder filed by the assessee has held thus:
6.1. Having considered the submission/ rejoinder uploaded by the appellant, assessment order , facts of the case and remand report as well as observation of the AO on the evidence submitted by the appellant, I am off the view that this is not a fit case to admit the additional evidence at this stage. As pointed out above in the preceding paras various reasonable opportunities were provided by the AO during the course of assessment proceedings but appellant did not submit the required details and also not mentioned any sufficient cause which prevented the assessee from submitting the same before the AO. Therefore, it is not the case where AO had refused to admit the evidence or supporting documents which ought to have been admitted. Appellant has not submitted anything on record to show that it has been prevented by the sufficient cause to produce or submit the evidence before the AO or no sufficient and reasonable opportunities were given by the AO. From the perusal of record it transpires that the assessee had throughout adopted an evasive approach.
It is pertinent to mention here that in course of argument the Ld. A.R did not press his ground no. 3 relates to the disallowance of Rs. 5,00,410/-read with Section 14A read with Rule 8D(2).
Looking at the order of AO as well as Ld. CIT(A), we find that the additional evidence filed by the assessee had not been admitted by the AO only on this issue that since in spite of giving adequate opportunity, the assessee did not submit anything, hence additional evidence filed by the assessee with written submission at a later stage cannot be accepted. We have given through the cited decision of the assessee and find that Hon’ble Delhi High court has held that the Ld. CIT(A) should admit the additional evidence if he finds the same is crucial for the disposal of the same. The Hon’ble High Court held in the case of Chandrakant Chanu Bhai Patel (supr) that if additional
Keeping in view the submission of the Ld. A.R that additional evidence filed by the assessee are the crucial piece of the documents to substantiate justice, we are inclined to restore the appeal of the assessee before the AO for fresh adjudication after going over the documents placed by the assessee. The AO is directed to consider the additional evidence filed by the assessee by admitting the same and then pass afresh order. Accordingly, the order passed by the Ld. CIT(A) confirmed by the AO on the grounds of addition of Rs. 32,72,986/- addition of Rs. 5,93,383/- to the total income of the assessee keeping short term loan taken as bogus are hereby set aside. So far the disallowance of Rs. 5,00,040/- concerned the same is hereby confirmed as the assessee did not press this ground in course of argument before us. Accordingly, the appeal of the assessee is partly allowed for statistical purposes.
In the result, the appeal filed by the assessee is partly allowed for statistical purposes.
Order is pronounced in the open court on 10th March, 2025
Sd/- Sd/- (Rajesh Kumar/राजेश कुमार) (Pradip Kumar Choubey /�द�प कुमार चौबे) Accountant Member/लेखा सद�य Judicial Member/�या�यक सद�य Dated: 10th March, 2025 SM, Sr. PS Copy of the order forwarded to: 1. Appellant- Jiwan Abasan Pvt. Ltd., 126A, Sarat Bose Road, Minto park, Kolkata-700029 2. Respondent – ITO,Ward-12(2), Kolkata 3. Ld. CIT(A)-NFAC, Delhi 4. Ld. Pr. CIT- , Kolkata 5. DR, Kolkata Benches, Kolkata (sent through e-mail)