EMERGENT VENTURES INDIA PVT. LTD.,,GURGAON vs. ACIT, GURGAON

This appeal by the assessee is directed against order dated 17/02/2016 passed by the learned Commissioner of Income-tax (Appeals)-I, Gurgaon [in short ‘the CIT(A)’] for assessment year 2011-12 raising following grounds:

2. That the learned CIT(A) has gone wrong in not permitting the assessee to file additional evidence under Rule 46A of the Income Tax Rules 1962.

3. According to the Assessing Officer, the assessee was asked to produce books of accounts along with bills/vouchers for verification of the financial affairs and expenses claimed in the profit and loss account. In view of the non-compliance, the Assessing Officer invoked section 145(3) of the Act and rejected the books of accounts and estimated net profit at the rate of 25% of total turnover. The Assessing Officer also made other disallowances and assessed the total income at ₹ 3,16,28,420/-in the assessment order passed on 27.02.2014. 3.1 Aggrieved, the assessee filed details of all expenses claimed and produced complete books of accounts before the Ld. CIT(A) as additional evidences. The Ld. CIT(A) forwarded the additional evidences to the Assessing Officer calling for any objection to the admission of the additional evidences as well as calling for a remand on merit of the addition. The Ld. Assessing Officer objected admission of the additional evidences on the ground that sufficient opportunity was allowed to the assessee, which has not been availed and, therefore, no second inning should be allowed to the assessee. The Ld. CIT(A) in view of the remand report of the Assessing Officer and submission of the assessee, rejected the request of admission of the additional evidence. According to the Ld. CIT(A), the assessee did not fulfil the requirement for admitting additional evidences. The learned CIT(A) observed that for admitting the additional evidences, following circumstances should exist: “a) Where the A. O. has refused to admit evidence which ought to have been admitted; or b) Where the appellant was prevented by sufficient cause from producing the evidence which-he was called upon to produce by the A.O; or c) Where the appellant was prevented by sufficient cause from producing before the A.O. any the evidence which is relevant to arty ground of appeal; or d) Where the A.O. has made the order appealed against without giving sufficient opportunity to the appellant to adduce evidence relevant to any ground of appeal. As far as the circumstances of the case are concerned, it is stated that the assesse was never refused to admit the evidences produced by him nor there certain circumstances which prevented him to produce the evidence which he was called upon as no such communication has been received in this office. Therefore, additional evidences should not be considered in view of the circumstances and Rule 46A of the Income Tax Rules, 1962.”

3.2 The learnedCIT(A) held that none of the circumstances above exists in the case of the assessee and accordingly,he referred to various judicial decisions and declined to admit the additional evidences. 4. Before us, in the grounds raised one of the main grounds is against not admitting additional evidences by the learned CIT(A) under Rule 46A of the Income-tax Rules. The Ld. counsel of the assessing submitted that first three notices issued by the Assessing Officer were not served upon the assessee at all, which were either not issued or issued it wrong address and were written back and were lying in the record file of the assessing officer. It was submitted that the assessee attended the hearing except the last one i.e. 18 to 2014. According to the Ld. counsel the Income-tax authorities are required to comply the principle of natural justice and the learnedCIT(A) might be directed to admit the additional evidences and decide the addition on merit.

5. The Ld. DR, on the other hand, objected to the proposal of the Ld. counsel of the assessee.

6. In the rejoinder, the Ld. counsel of the assessee submitted that even no separate order for not admitting additional evidences was passed by the Ld.CIT(A) and the assessee was not heard on merit of the additions also.

7. We have heard the rival submission of the parties and perused the relevant material on record. The Ld. CIT(A) has not admitted the additional evidences holding that: - the Assessing Officer did not refuse to admit any evidence; - the assessee was not prevented by sufficient cause for producing the evidence, which is relevant to any of the ground of the appeal; and - the Assessing Officer provided sufficient opportunity to the assessee to adduce the evidences

8. Before us, the Ld. counsel of the assessee submitted that first three notices issued by the Assessing Officer were never served upon the assessee and this fact was available on the record of the Assessing Officer. Subsequently, though the Authorised Representative of the assessee attended, however, he could not produce books of accounts and bills and vouchers before the Assessing Officer. He submitted that assessee cannot be faulted for non-seriousness on the part of the Authorised Representative. The Ld. counsel of the assessee has prayed before us that assessee is willing to produce books of accounts along with bills and vouchers for verification of the expenses and thus, one more opportunity may be granted in view of the principle of natural justice. 8.1 We find that as far as non-service of first three notices is concerned, the Ld.DR has also not disputed the finding of the fact. The contention of the Ld. DR has that once, the hearing was attended by the Authorised Representative, he was required to comply the queries raised by the Assessing Officer and was required to produce books of accounts/bill vouchers etc. 8.2 In our opinion, the assessee was prevented from producing the books of accounts, bills and vouchers partly due to non- service of the notices and partly due to non-seriousness on the part of the Authorised Representative dealing with the assessment. In such circumstances, one of the conditions for admitting the additional evidences under Rule 46A of the Income Tax Rules, 1962 is fulfilled by the assessee. In the interest of substantial justice, the assessee should be provided opportunity to produce books of accounts, bills and vouchers etc. for verification of the claim of expenses and should not be punished by way of sustaining the addition without verification. 8.3 Accordingly, we set aside the finding of the learnedCIT(A) and direct him to admit the additional evidences in the form of books of accounts, bills and vouchers and any other documents and decide the additions made by the Assessing Officer on merit.

The grounds of the appeal accordingly allowed for the statistical purposes. 9. In the result, the appeal of the assessee is allowed for the statistical properties. Order is pronounced in the open court on 18th October, 2019.