SUBHASH PARETA,KOTA RAJASTHAN vs. ADDL. CIT, RANGE-1, KOTA, KOTA RAJASTHAN

On the other hand, Ld. DR for the department admits that on remand of the matter by the Appellate Tribunal, when the assessee submitted evidences before Learned CIT(A), the same was forwarded to the Assessing Officer for remand report and submission of remand report in respect thereof, but, as is available from record, said evidences had already been considered by the Assessing Officer and the same could not be termed to be additional evidence, and that is how, the remand report Subhash Pareta, Kota. recommending that the said evidence be not taken into consideration, was considered by Learned CIT(A). The contention is that there being no cogent and convincing evidence in support of the claim of the assessee-appellant, Learned CIT(A) was justified in dismissing the appeal. In this regard, Ld. DR has placed reliance on Rule 46A of the Income Tax Rules, and also on the reasons recorded by the Assessing Officer in the remand report, and by Learned CIT(A) in the impugned order. Discussion 6. Admittedly, when the matter was remanded to Learned CIT(A), under the orders of the Appellate Tribunal, with the directions mentioned above, the assessee submitted an application with the request for admission of additional evidence under Rule 46A.

Vide letter dated 10.05.2024, Learned CIT(A) called for remand report requesting Ld. Additional CIT, Range-2, Kota to submit remand report/specific comments. Learned CIT(A) was also empowered to carryout enquiry, if need be , in respect of the issues involved.

Record reveals that the Assessing Officer submitted report through JCIT(A), Range-2, Kota, and the same came to be forwarded to Learned CIT(A).

As is available from the last paragraph of the remand report, the Assessing Officer had requested that the additional grounds(sic) actually additional evidence, submitted by the assessee, at the time of hearing of the appeal, be not considered. As regards the additional evidence, the Assessing Officer observed in the remand report as under:- “Further, it is also here mentioned that as additional evidences i.e. copy of affidavits furnished by the assessee of the aforesaid persons are merely a self- serving documents prepared on afterthought for cooking up the storey of payment towards site expenses, as the assessee had first received the payments from the aforesaid persons or even there are opening balances standing at the credit some of the aforesaid persons and then repaid the same to the aforesaid persons. In some cases there are only cash receipts. Therefore, these entries in any way cannot be counted as payments made by the assessee for meeting site expenses through these persons.”

As is available from the impugned order passed by Learned CIT(A), a copy of the remand report was made available to the assessee for rejoinder/comments. In response thereto, Ld. AR for the appellant furnished rejoinder/comments before Learned CIT(A) on 22.08.2024 and 11.11.2024. Relevant portion extracted from the said rejoinder as is available in the impugned order reads as under:-

While dealing with the aspect of the additional evidence, Learned CIT(A) observed in para 4.6 of the impugned order as under:- “4.6 Admission of additional evidence:-

As noticed above, Learned CIT(A), without going into any technicality but taking into consideration the directions already issued by the Appellate Tribunal, in the first round of litigation, and in the interest of justice, admitted the additional evidence. In the given situation, the contention raised by ld. DR that the affidavits and documents i.e. ledger account submitted before Learned CIT(A) were actually not additional evidence as the same had already been submitted even before the Assessing Officer, relegates to the back ground.

As is available from the impugned order, the additional evidence consisted of certain affidavits and copies of ledger account.

Learned CIT(A) dealt with the affidavits and copies of the ledger accounts and rejected the same by observing in the manner as under:- “Analysis of the Affidavits:- Onus is on the appellant to have shown and proved that the transactions mentioned in the impounded documents pertaining to site expenses. On perusal of the affidavits submitted by the appellant following defects were noticed:- (i) No documentary evidence as regards identity of the staff/employee was enclosed. (ii) The PAN No. of the assessee was also not mentioned in the affidavit. Even the AADHAR number or Voter ID card number etc. is not mentioned. (iii) Substantiating evidence such as salary slip, Form 16 etc. issued by the appellant to his staff was not enclosed. (iv) No documentary evidence such as employment agreement other agreement is submitted by the appellant in support of his claim that these person are their staff/contractor. (v) There is a mismatch in the name of the person in the affidavit in comparison to the name mentioned in the ledger account as the name mentioned in the ledger account has been stated to be the nickname / alias name only. Example - name mentioned in ledger is "shahsi ji" whereas in the affidavit the name mentioned is "sukhvir suman alias shashi ji". No evidence has been filed regarding the nickname/alias name. (vi) complete address like the house number etc. is not mentioned. The appellant has not filed the evidences regarding the following:-  Evidence regarding employment during the relevant period. Employment agreement, Form 16, bank transactions of salary payment etc.  Evidence regarding working on that site during the relevant period  Evidence regarding role of handling of cash in terms of earlier and later Transaction from the books of accounts  Identification details and documents of these persons Subhash Pareta, Kota.  Evidence regarding giving of the funds as imprest cash for the business expenses  Evidence regarding usage of the given funds for the business Appellant has also not placed on record material to show that similar kind of site expenses transactions were carried out by the appellant with such persons in earlier period. This also shows that these transactions are not regular transactions and are not in the nature of business expenses. The appellant has also not been able to prove:-  For what expense the fund were given.  For what expense and to whom the payments were made  Linkage between the recorded expenses in books with such cash payments. Thus the identity and the genuineness of the affidavits is not proved and the affidavits have been prepared as an engineer document to mislead the proceedings. Therefore, mere submission of affidavit by these persons that they are the staff of the appellant and that the amount received by them was related to site expenses and they have never taken or repaid any loan without establishing the identity and nature of employment cannot be considered. In view of the above discussion is affidavits are found to be colourable devices and are hereby rejected. These affidavits were already on record of the assessing authority and these affidavits have been filed as additional evidences only after the notarization. For illustration, in para (v) on page 4 of the penalty order u/s 271E for the AY 2010- 11 the Id. Jt.CIT has referred and mentioned that these affidavits are mere self- serving documents. Thus these affidavits already stand not accepted and thus rejected by the honourable ITAT when the matter was set aside to the CIT Appeal for fresh adjudication. Ledger Accounts:- (i) Appellant failed to discharge onus casted on him to substantiate that ledger account found during survey are imprest A/c mostly transaction for making payment at sites through authorized person of the firm. (ii) Further on perusal of ledger accounts it is noticed that there is debit and credit entries in round figure which is unlikely in case of site expense.

We have considered the defects pointed out by Learned CIT(A) made basis for rejection of the additional evidence i.e. affidavits and copies of the ledger accounts.

As noticed above, while seeking remand report in respect of the said additional evidence, Learned CIT(A) had empowered Learned Addl. CIT(A) to conduct enquiry, if required and then submit report as regards the issues involved, and as to the admissibility of said evidence under Rule 46A.

As already mentioned above, Learned CIT(A) after going through the remand report in the nature of additional evidence opted to admit the same for considering the facts and circumstances of the case. It is significant to note that the Assessing Officer, empowered to conduct an enquiry, nowhere observed in the remand report that he did not deem to be a fit case to conduct enquiry as regards, the additional evidence. In the given facts and circumstances of the case and the issues involved, the Assessing Officer was required to call upon the assessee to participate in the remand proceedings. Admittedly, the assessee was never called by the Assessing Officer in connection with the remand proceedings, as regards additional evidence. Admittedly, the Assessing Officer never issued any summons or process to Subhash Pareta, Kota. the assessee or deponents whose affidavits were sent by way of additional evidence, by issuing notices. Had the assessee and the deponents, whose affidavits were furnished, been called to participate in the remand proceedings as regards their deposition in the respective affidavit, and as regards the ledger account, only then defects pointed by Learned CIT(A) could gain any significance. By not calling upon the assessee or summoning any of the deponents of the affidavits, it can safely be said to be gross violation of one of the principles of natural justice i.e. non providing of opportunity of being heard. Conclusion 18. In view of the above discussion and the well settled law on the point of providing of reasonable opportunity of being heard, when neither the Assessing Officer, conducting the remand proceedings nor Learned CIT(A), while seized of the appeal, provided opportunity of being heard to the assessee as regards the additional evidence/defects pointed out for rejecting the same, we are of the considered view that the impugned order passed by Learned CIT(A) upholding the penalty order deserves to be set aside.