Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, DELHI BENCH: ‘D’ NEW DELHI
Before: MS SUCHITRA KAMBLE & SHRI PRASHANT MAHARISHI
PER SUCHITRA KAMBLE, JM These two appeals are filed by the assessee and Revenue against the order of the Commissioner of Income Tax [Appeals]-VIII, New Delhi dated 16.07.2014 for Assessment Years 2010-11.
The Grounds of appeal
are as under:- ITA N o.5093/Del/2014 :
1. On the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax (Appeals) [CIT(A)] is bad both in the eye of law and on facts.
2(i) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming disallowance to the extent of Rs.15,00,000/- on account of payment made to Advance Techno graph Enterprises.
(ii) That the above disallowance has been confirmed on an adhoc figure by indulging into surmises and conjectures without there being any basis for the same.
3(i) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the addition of Rs. 10,00,000/- on account of bogus creditors/bogus purchases.
(ii) That the addition has been made on adhoc figure despite holding the purchases are genuine and without giving any basis for the same. 4(i) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the disallowance of Rs.5,04,495/- made by the AO on account of festival expenses.
(ii) That the disallowance has been confirmed rejecting the contention of the assessee that the expenses have been incurred wholly and exclusively for the purposes of business.
5(i) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the action of the AO in making disallowance of an amount of Rs.56.772/- invoking the provision of Section 14A of the Act.
(ii) That the addition has been confirmed rejecting the contention of the assessee that no exempted income having been incurred, the provisions of Section 14A cannot be invoked.
6. That the appellant craves leave to add, amend or alter any of the grounds of appeal.”
ITA N o.5657/Del/2014 : 1. “Whether on the facts and circumstances of the case & in law, the Ld. CIT(A) erred in admitting the additional evidences filed during the appellate proceedings, ignoring the objection of the Assessing Officer in this regard.? 2. Whether on the facts and circumstances of the case & and in law, the Ld. CIT (A) erred in admitting the additional evidences that were not produced during the assessment proceeding even after giving a finding that the assessment proceedings were concluded in a valid manner and the appellant was provided sufficient time by the AO to represent its case, and the manner in which assessment has been framed is proper and under the principles of natural justice.?
3. Whether on the facts and circumstance of the case & law, the Ld. CIT(A) erred in deleting the disallowance of Rs. 47,64,79,140/- made by the AO on account of section 68 of the I.T. Act.?
4. Whether on the facts and circumstance of the case & in law, the Ld. CIT (A) erred in deleting the disallowance of Rs. 15,02,583/- made by the AO on account of commission paid.”
5. Whether on the facts and circumstance of the case & in law, the Ld. CIT (A) erred in deleting the disallowance of Rs. 31,12,188/- made by the AO on account of prepaid expenses claimed under the head keyman insurance premium.?
6. Whether on the facts and circumstances of the case & in law, the Ld. CIT (A) erred in deleting the disallowance of Rs. 59,22,119/- made by the AO on account of interest paid on interest free advance to sister concerns and relatives and share-holders.?
7. Whether on the facts and circumstance of the case & in law, the Ld. CIT (A) erred in deleting the disallowance of Rs. 1,00,00,000/- made by the AO u/s 68 on account of huge share premium and varying submissions, adoption of colorable and deceitful devices and tax avoidance techniques.?
8. Whether on the facts and circumstance of the case & in law, the Ld. Cit (A) erred in deleting the disallowance of Rs. 1,90,32,050/- made by the AO u/s 68 on account of bogus creditors / bogus purchases.?
Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in confirming the addition of Rs. 15,00,000/- only out of addition of Rs. 2,64,63,562/- made by the AO on account of bogus purchases and giving the relief of Rs. 2,49,63,562/-.?”
The assessee is a company engaged in the business of construction and allied activities for both private and government clients. The original return of the assessee was duly filed on 05.10.2010 declaring an income of Rs.9,25,66,205/-. The notices u/s 143(2) and 142(1) were served to the assessee. In response to the same the AR of the assessee attended the proceedings and filed the information and explanations. The Assessing Officer observed that the performance of assessee company from 2005-06 to 2009-10 shows increase in NP ratio from 2.02% in A.Y. 2005-06 on a turnover of Rs.28,46,44,126/- to 5.67% in A.Y. 2009-10 on a turnover of Rs.1,27,74,05,153/- which is better performance. The Assessing Officer passed order u/s 143(3) on 30.03.2013 assessing the income of the assessee at Rs.63,66,39,120/- and made addition of Rs.54,40,72,909/-.
Being aggrieved by the assessment order, the assessee filed an appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee.
Both the revenue as well as the assessee is in appeal before us.
As regards to Ground No. 1, 2 and 3 of the Revenue’s appeal, the Ld. DR submitted that the CIT(A) has not given any finding as to whether the additional evidences filed during the appellate proceedings before the CIT(A) was admitted or not as no documents or evidences were produced during the assessment proceedings. The Ld. DR submitted that the assessment proceedings were concluded in a valid manner and the assessee was provided sufficient time to represent its case before the Assessing Officer. For Ground Nos. 4, 5, 6, 7, 8 and 9 are concerned; the Ld. DR relied upon the Assessment Order. As regards to assessee’s appeal, the Ld. DR relied upon the Assessment Order.
None appeared during the course of hearing despite giving notices which were duly served upon the assessee.
We are taking up submissions made by the assessee before the CIT(A) as the submission before us.
9. We have heard the Ld. DR and perused all the relevant materials available on record. As regards Ground Nos. 1, 2 and 3 of Revenue’s appeal is concerned, it is pertinent to note that the CIT(A) has admitted the additional evidences, without following the procedure prescribed under Rule 46 of the Income Tax Rule, 1962. The CIT(A) proceeded without calling for remand report from the Assessing Officer. The CIT(A) though has mentioned that few documents were not filed before the Assessing Officer and though called for his comments, did not give opportunity to the Assessing Officer to submit those comments. Merely stating that these documents established the identity, creditworthiness and genuineness will not suffice as the same has to be taken into the context of Section 68 of the Act. Thus, the issue contested by the Revenue needs to be looked into a fresh. Therefore, it will be appropriate to remand back this issue to the file of the CIT(A) for fresh adjudication and further direct to follow the procedure of admission of additional evidence. Needless to say the assessee be given opportunity of hearing by following principle of natural justice. As regards to Ground No. 4 of Revenue’s appeal, here also additional evidence was filed by the Assessee before the CIT(A), therefore, this issue is also remanded back to the file of the CIT(A) for fresh adjudication. As regards to Ground No. 5 of the Revenue’s appeal, the prepaid expenses claimed under the head keyman insurance premium, the CIT(A) has not given a categorical finding but simply stated that as assessee claiming the insurance premium on paid basis since last many years and the same has been allowed accordingly does not establish that the same is rightly claimed by the assessee in this year. This needs to be verified. Therefore, this issue is also remanded back to the file of the CIT(A) for fresh adjudication. As regards to Ground No. 6 of the Revenue’s appeal relating to interest paid on interest free advance to sister concerns and relatives and share-holders, the same was not based on cogent material as only the confirmation of the parties were filed but whether advances was actually for business purpose or not has not been elaborated by the CIT(A) in his order. Therefore, this issue also needs to be remanded back to the file of the CIT(A). As regards to Ground No. 7 of the Revenue’s appeal addition on account of huge share premium, the assessee filed the evidences before the CIT(A) only and not before the Assessing Officer. Merely stating that these documents established the identity, creditworthiness and genuineness will not suffice as the same has to be taken into the context of Section 68 of the Act. Thus, the issue contested by the Revenue needs to be looked into a fresh. Therefore, it will be appropriate to remand back this issue to the file of the CIT(A) for fresh adjudication and further direct to follow the procedure of admission of additional evidence. As regards to Ground No. 8 and 9 of the Revenue’s appeal addition on account of Section 68 relating to bogus creditors/bogus purchases, here also the assessee filed the evidences before the CIT(A) only and not before the Assessing Officer. Merely stating that these documents established the identity, creditworthiness and genuineness will not suffice as the same has to be taken into the context of Section 68 of the Act. Thus, the issue contested by the Revenue needs to be looked into a fresh. Therefore, it will be appropriate to remand back this issue to the file of the CIT(A) for fresh adjudication and further direct to follow the procedure of admission of additional evidence. Needless to say, in all the above issues remanded back to the file of the CIT(A), the assessee be given opportunity of hearing by following principles of natural justice. Hence, appeal filed by the Revenue is partly allowed for statistical purposes.
As regards to assessee’s appeal, Ground No. 1 is general in nature, hence dismissed. As regards to Ground No. 2 (i) and 2(ii) of the Assessee’s appeal, the same is in consonance with the Ground No. 9 of the Revenue’s appeal. We have already remanded back this issue to the file of the CIT(A) for deciding the same afresh. Thus, Ground No. 2(i) and 2(ii) of Assessee’s appeal is partly allowed for statistical purpose. As regards to Ground No. 3 (i) and 3 (ii) of the Assessee’s appeal the same is in consonance with the Ground No. 8 of the Revenue’s appeal. We have already remanded back this issue to the file of the CIT(A) for deciding the same afresh. Thus, Ground No. 3(i) and 3(ii) of Assessee’s appeal is partly allowed for statistical purpose. As regards to Ground No. 4(i) and 4(ii) of the assessee’s appeal addition on account of festival expenses, the CIT(A) has not given any finding at all. This issue needs to be remanded back to the file of the CIT(A). Needless to say, the assessee be given opportunity of hearing by following principles of natural justice. Ground No. 4(i) and 4(ii) is partly allowed for statistical purpose. As regards to Ground No. 5(i) and 5(ii) of the Assessee’s appeal, invoking provision of Section 14A of the Act, the same is not properly dealt by the CIT(A). Thus, Ground No. 5(i) and 5(ii) are remanded back to the file of the CIT(A) for deciding the same afresh. Needless to say, the assessee be given opportunity of hearing by following principles of natural justice. Ground No. 5(i) and 5(ii) are partly allowed for statistical purpose. Hence, appeal of the assessee is partly allowed for statistical purpose.
In result, both the appeals are partly allowed for statistical purposes.
Order pronounced in the Open Court on 17th day of January, 2020.