ESPIRE INFOLABS PVT. LTD.,DELHI vs. ACIT, NEW DELHI
What did the Tribunal hold?
The Tribunal held that the revenue authorities did not follow the principles of natural justice by not granting sufficient opportunity to the assessee and by deciding the appeal without waiting for a remand report. Therefore, the Tribunal decided to admit the additional evidence and remanded the issue back to the AO for verification.
What were the facts?
The assessee received unsecured loans from two companies, M/s Tracon Builders and Developers Pvt. Ltd. and M/s Jasmine Infratech Pvt. Ltd. The Assessing Officer (AO) made additions under Section 68 for these loans, considering them unexplained credits due to the lack of complete documentation like ITRs and bank statements from the creditors. The assessee also appealed against the rejection of additional evidence filed before the CIT(A).
What were the issues?
Whether the additions made under Section 68 for unsecured loans were justified without proper verification of creditworthiness, and whether the CIT(A) erred in rejecting additional evidence filed under Rule 46A.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH: ‘B’ NEW DELHI
Before: SHRI N. K. BILLAIYA & MS SUCHITRA KAMBLE
Heard together (2 matters)
Read from the judgment's own cause title. This page is filed under one of them.
This appeal and Stay Application are filed by the assessee against the order dated 27/09/2016 passed by CIT (A)-37, New Delhi.
The grounds of appeal
are as under:- “Appeal against the appellate order under Section 250 of the Income Tax Act, 1961 (the Act) for assessment year 2012-13 passed by the Commissioner of Income Tax (Appeals) - 37, New Delhi (hereinafter referred to as ‘Ld. CIT(A)’).
1. Ground No. 1 The Id. Assistant Commissioner of Income Tax, Circle 8(1) (hereinafter referred to as ‘AO”) and Id. CIT(A) have erred in making the additions under section 68 of the Act in respect of the unsecured loan obtained from the assessee from M/s Tracon Builders and Developers Pvt. Ltd. and M/s Jasmine Infratech Pvt. Ltd.
2. Ground No. 2 The Id. CIT(A) has erred on the facts as well as in law in rejecting the additional evidence filed by the Appellant under Rule 46A of the Income tax Rules, 1962 (the Rules) and further erred in holding that there existed no justifiable cogent tenable reason for not availing multiple opportunities granted by the AO during the assessment proceedings. Certain additional documents proposed to be submitted by the applicant through application under Rule 46A. The Id. CIT(A) has completely ignored the legitimacy of the additional documents proposed to be submitted by the appellant, while passing order under section 250 of the Act. Accordingly, the appellant prays before this Court to admit the additional evidence filed before the CIT(A).
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.
M/s Tracon Registered office: Unsecured loan Builders and M/s Espire Infolabs Pvt. Ltd. A-41 Developers Pvt, Ltd Espire Campus, Mohan amount Rs. B-ll/58 MCIE, Cooperative Estate, Mathura 1,17,50,000/- Delhi Mathura Road, New Delhi-110044 Road, New Delhi M/s Jasmine Registered office: Unsecured loan Infratech Pvt. Ltd M/s Espire Infolabs Pvt. Ltd. A- B-ll/100 MCIE 41Espire Campus, Mohan amount Rs. Delhi Mathura Cooperative Estate, Mathura 1,32,50,000/- Road, New Delhi Road, New Delhi-110044
In absence of the submission of any documents to show the creditworthiness of the loan creditors, the Assessing Officer made addition of Rs. 2,50,00,000/- u/s 68 of Income Tax Act as unexplained credits in the books of assessee. The Assessing Officer also made addition on account of disallowance of expenses under Section 14A read with Rule 8D at Rs. 3,15,223/-.
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.
Order pronounced in the Open Court on 2nd April, 2019.
Sd/- Sd/- (N. K. BILLAIYA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 02/04/2019 R. Naheed * Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT
ASSISTANT REGISTRAR ITAT NEW DELHI Date of dictation 19.02.2019 Date on which the typed draft is placed before the 19.02.2019 dictating Member Date on which the typed draft is placed before the Other Member Date on which the approved draft comes to the Sr. PS/PS
Date on which the fair order is placed before the Dictating Member for pronouncement
Date on which the fair order comes back to the Sr. 02.04 .2019 PS/PS Date on which the final order is uploaded on the 02.04 .2019 website of ITAT Date on which the file goes to the Bench Clerk 02.04 .2019 Date on which the file goes to the Head Clerk
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