ESPIRE INFOLABS PVT. LTD.,DELHI vs. ACIT, NEW DELHI

The grounds of appeal

The assessee filed the income tax return declaring income of Rs. 1,31,34,430/- on 30/11/2012. The return was processed u/s 143 (1) of the Income Tax Act, 1961. The case was selected for scrutiny and notice u/s 143 (2) was issued and served upon the assessee. The notice u/s 142(1) of the Act was issued along with the questionnaire and served on the assessee. In response to which the Authorized representative of the assessee, attended from time to time and filed necessary details which were taken on record by the Assessing Officer. The Books of account were called for & examined on test- check basis by the Assessing Officer. During the proceedings when the questionnaire issued to the assessee alongwith notice u/s 142(1), the assessee was specifically asked to furnish following details regarding unsecured loan: (1) confirmation of concerned person (2) copy of return of income along with Balance Sheet (3) Bank Statement of such person. The assessee did not furnish the complete details other than confirmation of the two companies namely (1) M/s Tracon Builders and Developers Private Limited and M/s Jasmine Infratech Private Limited from where unsecured loan was received. Considering the proceeding and the opportunity given to the assessee, the Assessing Officer presumed that the assessee had nothing to submit in this regard. On examination of loan confirmation filed by assessee, the Assessing Officer observed that in both cases confirmation letters are printed from same printer with same fonts and both these confirmation seems to be paper entities operating from the same premises.

Being aggrieved by the Assessment Order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee.

The Ld. AR submitted that the Assessee placed various documents before the Assessing Officer but could not produced ITR and bank statements relating to creditors due to paucity of time, but produced balance sheets of both the companies which depicted the creditworthiness of those companies. The Ld. AR submitted that the Assessing Officer was aware of details of companies, assessed in Delhi, registered address and head officer but no efforts were made by the Assessing Officer to enquire about bank details from the respective companies. The Ld. AR submitted that the assessee filed application under Rule 46A before the CIT(A) and CIT(A) called for remand report on 24.08.2016, but completed the hearing without calling remand report on 27.09.2016. The Ld. AR submitted that the assessee produced bank statement and ITR’s relating to both the parties, but the CIT(A) has not taken cognizance of the same.

The Ld. DR relied upon the Assessment Order and the order of the CIT(A). The Ld. DR also submitted that the assessee was given ample opportunity of filing the documents before the Revenue authorities which the assessee failed to avail at the relevant time, therefore, the addition u/s 68 is just and proper.

We have heard both the parties and perused all the relevant material available on record before us. It is pertinent to note that the documents such as ITR and the bank statement of the parties were not produced before the Assessing Officer but the same was filed before the CIT(A) by making application under Rules 46A of the Income Tax Rules, 1962 by the assessee. The CIT(A) rejected this application solely on the ground that multiple opportunity was granted to the assessee. In fact, the CIT(A) though called for remand report has taken a decision without waiting for the remand report. The Assessing Officer also has not given proper opportunity to the assessee for granting reasonable time to produce those documents at the time of Assessment Proceedings. Thus, principle of natural justice has not been correctly followed by the Revenue authorities. It will be appropriate to admit the additional evidence at this juncture and we are remanding back this issue to the file of the Assessing Officer for verifying the documents produced by the Assessee before the CIT(A) as well as the documents/evidence which was produced at the time of the Assessment Proceedings. Needless to say that the assessee be given opportunity of hearing by following principles of natural justice. The appeal of the assessee is partly allowed for statistical purpose.

As regards the stay application filed by the assessee, since we have decided the appeal, the same becomes infructuous, hence dismissed.

In result, appeal of the assessee is partly allowed for statistical purpose.