DCIT, NEW DELHI vs. M/S. MAPLE IT SERVICES PVT. LTD., NEW DELHI

O R D E R PER PRASHANT MAHARISHI, A. M. 1. This is an appeal filed by the revenue against the order of the ld CIT(A)-24, New Delhi dated 30.09.2016 for the Assessment Year 2011-12. 2. The revenue has raised the following grounds of appeal:- “1. Whether in facts and circumstances of the case and in law, the ld CIT(A) is legally justified in admitting additional evidence under Rule 46A of the Income Tax Rules, 1962 (the Rule) even when the case of the assessee did not fall in clause (a) to (d) of Rule 46A of the Rule?

2. Whether in facts and circumstances of the case and in law, the ld CIT(A) is legally justified in deleting the addition of Rs. 2,17,17,417/- on account of unverifiable purchase on the basis of self serving claim of the assessee ignoring a fact that assessee was admittedly engaged in bogus purchase in immediately preceding assessment years (Assessment Year 2009-10 and 2010-11) and had not discharged its initial onus to produce any verifiable evidence in support of its claim of purchases from related parties?

3. The brief facts of the case is that assessee , a company , filed its return of income on 27/9/2011 declaring income of INR 55 2684/– . Several notices were issued to the assessee and there was non-compliance with respect to the several details called for. Therefore, the learned assessing officer proceeded to make the assessment on the basis of the facts available on record. He further mentioned that the assessee is deliberately avoiding substantiating its return of income and claim of various expenses and deductions. In view of this he found that assessee has debited the interest expenditure of INR 1 9492033/– in profit and loss account, in absence of any details he proceeded to disallow 15% of the above amount of Rs. 2923804/–. The assessee has also entered into several transactions of substantial nature of purchase and sales within the group companies. He noted that the assessee has shown purchases of INR 21 7170 4178 and sales of INR 21 7370 6348 from the sister concerns. He further referred that the assessee belongs to Tulip group whose chairman in the statement under section 132 (4) during the course of search made a substantial declaration of Rs 25,00,00,000 on account of bogus purchases. Therefore the learned assessing officer noted that that assessee company has made substantial purchases and sales with group companies for which no details have been filed by the assessee. In absence of any detailed he proceeded to make the addition of 10% of total purchases made from the group companies. Accordingly he made an addition of Rs 21717417/–. Accordingly assessment under section 144 of the income tax act 1961 was passed on 27/3/2014 determining total income of the assessee at Rs 25193905/– against the returned income of INR 5 52684/–.

4. Against the order of the learned AO assessee preferred an appeal before the learned Commissioner of Income Tax (A) – 24, New Delhi. The learned CIT – A passed an order on 30/9/2016 wherein he upheld the disallowance of interest expenditure, however, deleted the disallowance of/addition of 10% of the total purchases. Therefore revenue is in appeal before us against the deletion of 10% of the disallowance of purchase expenses deleted by the learned CIT – A. 5. The learned senior departmental representative vehemently submitted that the learned CIT – A has admitted the additional evidence under rule 46A of the income tax rules even when the assessee’s case did not fall under the any of the exact exceptions provided under that rule. She submitted that the assessee was given enough opportunity before the assessing officer but failed to produce any details before the assessing officer and surprisingly produced all the details before the learned CIT – A. She further referred to para number 4.4.3 of the order of the learned CIT appeal wherein she referred to the various observations made by the assessing officer for examination during the course of remand proceedings. She stated that the assessing officer has vehemently opposed admission of additional evidences.

6. With respect to the disallowance purchases the assessee did not produce details of sales and purchases but merely undertook rotation of sale and purchase the sales and purchases were entirely to the group concerns giving rise to suspicion that it has indulged in bogus transactions to introduce unaccounted income. Further she stated that there is an admission of bogus purchases in the case of the assessee. She stated that this finding of the learned assessing officer has been brushed aside by the learned CIT – A without showing any reason. Therefore she submitted that that the learned CIT appeal in order has faltered on the issue of additional evidences admitted by him without recording the reasons as well as deleting the addition itself.