EVA DEVELOPERS PVT LTD.,DELHI vs. ITO WARD-8(4), NEW DELHI

PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER:

2.0 The brief facts of the case are that the return for the year under consideration was filed showing Nil income. The case was selected for limited scrutiny through CASS with the following reasons:

(i) large increase of unsecured loans during the year (ii) large increase in sundry creditors with respect to turn over as compared to the preceding year. (iii) purchase of property reported in Form-26QB.

2.1 As per the Assessing Officer (AO), initially there was no compliance by the assessee to the notices. Subsequently, one Authorized Representative (AR) did attend the proceedings but the details required by the Assessing Officer were not filed. The Assessing Officer proceeded to frame the assessment u/s 144 of the Income Tax Act, 1961 (hereinafter called as ‘the Act’) and completed the assessment at an income of Rs.24,38,16,570/- after making an addition of Rs.16,57,30,000/- on account of alleged unverifiable credits added back u/s 68 of the Act. Another addition of Rs.7,80,86,567/- was made on account of outstanding liability of the company towards M/s Parsvnath Developers Ltd. as Sundry Creditors which also remained unverifiable because of the non-response to the notice issued u/s 133(6) of the Act.

2.2 Aggrieved, the assessee preferred an appeal before the learned First Appellate Authority. However, here also the assessee did not get any relief and the appeal of the assessee was dismissed, although the learned CIT (Appeals) did admit additional evidences under Rule-46A of the Act.

2.3 The assessee is now before the Tribunal challenging the action of the learned CIT (Appeals) in dismissing the assessee’s appeal and has raised the following grounds of appeal.

“1. That on the facts and circumstances of the case and in law, the CIT(A)-34, New Delhi (hereinafter referred to as CIT(A) was not justified in passing an ex-parte order.

amount was never claimed as expenditure in the assessment year under appeal or earlier assessment years as the appellant company was yet to recognize revenue having not achieved 30% of completion in its real estate project.

3.0 At the outset, the learned Authorized Representative (AR) submitted that the observation of the Assessing Officer that the assessee had not co-operated during the assessment proceedings and had not filed the required documents was incorrect. He drew our attention to the affidavit of the erstwhile Authorized Representative who had appeared from time to time before the Assessing Officer and submitted that this affidavit was dated 22nd of Dec., 2017 i.e. a day immediately after the assessment order was passed. It was submitted that it has been submitted in the affidavit that the said Authorized Representative had attended the assessment proceedings and had also visited the office of the Assessing Officer on 20.12.2017 along with complete submissions and all the documents required to prove the genuineness of the transactions and the creditworthiness of the loans but since the AO was not feeling well, he requested the Authorized Representative (AR) to attend the office on 22.12.2017. However, the assessment was finalized Page | 4 on 21.02.2017 itself which came to be known to the assessee only through the e-mail received from the Income Tax Department. The learned Authorized Representative (AR) submitted that, thus, it is not the case that the assessee did not cooperate in the assessment proceedings but rather it was the case that the assessee was not given the opportunity to file the required documents. The learned Authorized Representative (AR) prayed that in the interest of justice, the Assessing Officer should be directed to re-examine the issues.

4.0 The learned CIT-DR submitted that the learned CIT (Appeals) had given proper opportunity to the assessee by admitting additional evidences under Rule-46A of the Income Tax Rules, 1962 and had also called for remand report from the Assessing Officer, and therefore, no further opportunities should be given to the assessee.

5.0 We have heard the rival submissions and have also perused the material on record. As far as, the addition of Rs.16,57,30,000/- is concerned, it is seen from a perusal of the order of the learned First Appellate Authority that the Assessing Officer (AO) has mentioned in the remand report that only three out of fifteen parties had complied with the notices issued u/s 133(6) of the I.T. Act and, therefore, it was established Page | 5 that the assessee had failed to prove the identity, genuineness and creditworthiness of the transactions in the nature of unsecured loans.

Thereafter, the learned CIT (Appeals) has proceeded to uphold the entire addition. As far as, the addition of Rs.7,80,86,567/- pertaining to Sundry Creditors (M/s Parsvnath Developers Ltd.) is concerned, it is seen that the amount has been added u/s 41(1) of the Act. However, no additional evidences were admitted by the learned CIT (Appeals) in this regard although, the assessee had sought to file copy of registry and ledger account with M/s Parsvnath Developers Ltd. and had submitted that this outstanding liability pertained to outstanding on account of land purchased. Thus, evidently, both the issues were not examined in proper perspective by the learned CIT (Appeals). We also note that there was a sufficient cause for the failure of the assessee to produce the require documents before the Assessing Officer as the assessment was finalized before the appointed date on which the assessee was directed to appear before the Assessing Officer with the required documents.

Therefore, on overall facts of the case and in interest of substantial justice, we restore the issues to the file of the Assessing Officer with the direction to re-examine the issues and pass the assessment order in accordance with law after giving due opportunity to the assessee to present its case. We also direct the assessee to fully co-operate in the assessment proceedings and provide the required information and documentary evidences before the Assessing Officer when called upon to do so failing which the Assessing Officer shall be at liberty to proceed ex- parte qua the assessee and frame the assessment in accordance with law.

6.0 In the final result, the appeal of the assessee stands allowed for statistical purposes.

Order pronounced in the Open Court on 01/01/2020.