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Income Tax Appellate Tribunal, DELHI BENCH: ‘F’: NEW DELHI
Before: SHRI BHAVNESH SAINI & SHRI O.P.KANT
ORDER PER BHAVNESH SAINI, JUDICIAL MEMBER: This appeal by Assessee has been directed against the order of Ld. CIT (Appeals)-6, Kolkata {CIT(A)} dated 31.10.2016 for Assessment Year: 2008-09, challenging the addition of Rs.8,58,00,000/- u/s 68 of the I.T. Act.
Briefly the facts of the case are that AO noted in the assessment order that assessee filed his return of income on 26.03.2009 declaring the total loss of Rs.376/-. The return was processed u/s 143(1) of the I.T. Act.
The assessee derives income from commission, loans & advances and investment in shares. The AO found that assessee had debited preliminary expenses written off due to raising of share capital, which is inadmissible as per provisions of Section 35D of the I.T. Act, which has escaped assessment. The AO therefore, issued notice u/s 148 and subsequently passed order u/s 147/143(3) on 30.04.2010 determining the total income at Rs.19,220/-. The Ld. CIT initiated the proceedings u/s 263 of the I.T.
Act and set aside the re-assessment order with a direction to do the assessment afresh. The AO issued notices to the assessee to explain raising of share capital and in the absence of any explanation/documents, AO made the addition of Rs. 8.58 Crores u/s. 68 of the I.T. Act.
The Ld. CIT(A) noted several dates of hearing, when notice have been issued for hearing of the appeal, however, none appeared on behalf of the assessee. The Ld. CIT(A), therefore, noted that assessee is not interested in prosecuting the appeal. The Ld. CIT(A) in absence of assessee dismissed the appeal of the assessee and confirmed the addition.
We have heard the Ld. Representatives of both the parties and perused the material available on record. The Ld. Counsel for the assessee submitted that Ld. CIT(A) passed the order without giving reasonable Page | 2 opportunity of being heard to the assessee which is in violation of principle of natural justice. He has submitted that since there was a change of address of the assessee, therefore no notices have been served upon the assessee. The assessee has also filed an application for admission of additional evidences under Rule-29 of the ITAT, Rules, 1963.
The assessee, in the aforesaid application has mentioned that AO passed the ex-parte assessment order and Ld. CIT(A) also decided the appeal in absence of the assessee because the assessee shifted to Delhi, and he was accordingly assessed at Delhi. Therefore, no notice have been served upon the assessee, which resulted into both the ex-parte orders. It is also stated that since both the orders have been passed ex-parte therefore, assessee could not produce any documents to prove the identity of the investors their creditworthiness and genuineness of the transactions. Non appearance before the authorities below was beyond the control of assessee. The assessee along with application for admission of additional evidences filed the additional evidences which consists of ITR acknowledgment, application form for issue of equity share, ledger account, confirmation, Board Resolution, audited balance sheet, bank statement of all the investors which are 21 in number. It is therefore, prayed that on perusal of these additional evidences assessee will be able to prove the three ingredients of Section 68 of I.T.Act, therefore, same may be admitted as additional evidences. The Ld. Counsel for the assessee, therefore, submitted that matter may be remanded to the CIT(A) for fresh adjudication of the issue.
On the other hand, Ld. DR also suggested that matter may remanded to the Ld. CIT(A) for decision afresh.
We have considered the rival submissions and perused the material available on record. The Hon’ble Supreme Court in the case of Tek Ram (Dead Trhough LRS.) vs. CIT, 262 CTR 118 and Hon’ble Punjab & Haryana High Court in the case of Mukta Metal Works vs. CIT, 336 ITR 555 held that additional evidences be admitted as relevant and required to be looked into. The Hon’ble Delhi High Court in the cases of CIT vs. Text Hundred India Pvt. Ltd. (2013) 351 ITR 57 and CIT Vs. Virgin Securities and Credits Pvt. Ltd. [2011] 332 ITR 336 held that additional evidences being necessary and crucial for disposal of appeals shall have to be admitted. In the present case the AO had made the addition u/s 68 in absence of assessee. The ld. CIT(A) also confirmed the addition because no evidence have been produced before him. The above additional evidences primafacie Page | 4 explained the identity of the investors, their creditworthiness and genuineness of the transactions in the matter as submitted by the assessee. Since the assessee has shifted to Delhi and there was change of address and the assessee assessed at Delhi, therefore, none of the notices have been served upon the assessee. The explanation of assesse is acceptable that the impugned order have been passed in violation of principle of natural justice. Since the additional evidences goes to the root of the matter, are necessary, relevant and crucial for disposal of the appeal, therefore, we are of the view that additional evidences be admitted.
Further the assessee was prevented by the sufficient cause in not producing these evidences before the authorities below. We, accordingly, admit the additional evidences for disposal of the appeal. Since, the authorities below have no occasion to examine the additional evidences, therefore, matter requires re-consideration at level of the Ld. CIT(A).
Further no opportunities have been given to the assessee to defend the appeal before the CIT(A). We therefore, set aside the order of Ld. CIT(A) and restore the appeal of assessee to his file with a direction to re-decide the appeal of the assessee in accordance with law, by giving reasonable and sufficient opportunities of being heard to the assessee and to the AO.
Assessee is directed to file one set off additional evidences so admitted above before the Ld. CIT(A) for disposal of the appeal. The ld. CIT(A) shall take into consideration the additional evidences filed before him at the time of deciding appeal of assessee.
In the result, the Appeal of the assessee is allowed for statistical purposes.
Order pronounced in the Open Court on 26/02/2020.