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Income Tax Appellate Tribunal, DELHI BENCH: ‘D’: NEW DELHI
Before: SHRI N.K BILLAIYA & SHRI KULDIP SINGH
The Appellant, Karan Dyeing Mills (hereinafter referred to as ‘the Assessee’) by filing the present appeal, sought to set aside the impugned order dated 22.12.2014 passed by Ld. CIT(A), Faridabad, qua Assessment Year 2010-11, on the grounds that:-
1. The Ld. CIT(A) erred in not adjudicating Ground no. 2 which read as “ That having regards to the facts and circumstances of the case, Ld. AO has erred in law and on facts by framing the impugned assessment order as per the scheme of provision u/s 143(3) raised by the assessee terming it general in nature ignoring the fact that the ground was specific and went to the root of the case.
Ld. CIT(A) erred in not admitting additional evidences u/r 46A of the Income Tax Rules 1962.
Ld. CIT(A) erred in rejecting the Additional Ground of Appeal
requesting him to consider the history of the assessee before disposing off the appeal.
4. Having regards to the facts and circumstances of the case, Ld. CIT(A) erred in law and on facts in confirming the disallowance of the purchases of fire wood amounting to Rs. 1973579/-
5. Having regards to the facts and circumstances of the case, Ld. CIT(A) erred in law and on facts in confirming the disallowance of the purchase of free flow salt amounting to Rs. 757070.
6. Having regards to the facts and circumstances of the case, Ld. CIT(A) erred in law and on facts in confirming the disallowance of the purchase of cloth and freight thereon amounting to Rs. 1591530/-.
7. Having regards to the facts and circumstances of the case, Ld. CIT(A) erred in law and on facts in confirming the disallowance of the purchase of cloth amounting to Rs. 304500/-.
8. Having regards to the facts and circumstances of the case, Ld.CIT(A) erred in law and on facts in confirming the addition of Rs. 2802202/- on account of undeclared job work receipts.
9. Having regards to the facts and circumstances of the case, Ld. CIT(A) erred in law and on facts in confirming the disallowance of Rs. 115000 being claimed as wages.
10. Having regards to the facts and circumstances of the case, Ld. CIT(A) erred in law and on facts in confirming the disallowance of Rs. 32133/- on account of non business telephone expenses.
11. Having regards to the facts and circumstances of the case, Ld. CIT(A) erred in law and on facts in confirming the disallowance of Rs. 26118 holding pooja expenses not a business expense.
12. Having regards to the facts and circumstances of the case, Ld. CIT(A) erred in law and on facts confirming the addition of Rs. 24945/- on account on unverified general expenses.
Having regards to the facts and circumstances of the case, Ld. CIT(A) erred in law and on facts in confirming the addition of Rs. 9182/- on account of late payment of Employee’s contribution to PF. 14. Having regards to the facts and circumstances of the case, the Ld. CIT(A) erred in law and on facts in confirming the addition of Rs. 94534/- on account of non business vehicle running and maintenance expenses. 15. The assessee craves leave to add, modify, or delete any of the grounds of appeal at the time of/ before the hearing and all the above grounds are without prejudice to each other.
2. Briefly stated the facts necessary for adjudication of the controversy at hand are:- the Assessee is into the business of textile processing (Job Work). During assessment proceedings, assessee has failed to furnish necessary details called for by the Assessing Officer and ultimately AO proceeded to pass the assessment order ex parte on the basis of material made available on record, rejected books of accounts and made best Judgment assessment by making the addition of Rs. 77,32,813/- and assessed the total income at Rs. 90,39,770/-.
3. The assessee carried the matter before the Ld. CIT(A), by way of filing the appeal, who has confirmed the addition, after dismissing the appeal. Feeling aggrieved, the Assessee has come up before the Tribunal by way of filing the present appeal.
We have heard the Ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case.
Undisputedly, during the appellate proceedings, assessee moved an application under Rule 46A of the Income Tax Rules, 1962 (for short the ‘Rules’) which has been rejected by the Ld. CIT(A) on the ground that since ample opportunities have already been given by the AO to the assessee, who has failed to file the requisite details no ground is made out to entertain the additional evidence. It is also not in dispute that AO during the assessment proceedings have issued summon u/s 131 of the Income-tax Act, 1961 (for short the ‘Act’) to M/s Ajanta Enterprises Fire Wood Merchant Link Road, Old Faridabad and M/s Vikas Traders for producing certain documents regarding transactions with the assessee and has relied upon material produced without confronting the same to the assessee. It is also not in dispute that the AO has examined copies of Bills of M/s Balaji Traders, X/3466, Shop No. 12, Aggarwal Market, Gandhi Nagar, Delhi-3, and found discrepancies therein.
In the backdrop of the aforesaid facts and circumstances of the case, we are of the considered view, that the Ld. CIT(A) has treated the findings returned by AO collected by way of issuance of summon u/s 131 of the Act, finding discrepancies therein and in case of letter issued by M/s Vikas Traders held that the signatures affixed on the letter are not matched and that M/s Vikas Traders is reported to be not existed by the Inspector, as a gospel truth. All these findings are damaging to the case of the assessee particularly when taken at its back without affording an adequate opportunity of being heard to the assessee.
The entire case of the AO as well as Ld. CIT(A) is based upon the discrepancies pointed out by the AO as well as confirmed by Ld. CIT(A), which the assessee has requested to explain by moving an application under Rule 46A of the IT Rules, which was rejected by Ld. CIT(A) merely on the ground that ample opportunities have been granted to the Assessee and he has failed to explain the discrepancies pointed out by the AO.
However, we are of the considered view that when the entire evidence has been taken on record by the AO on the back of the Assessee, there was no question of explaining the same by the Assessee.
So, in these circumstances, we are of the considered view that to meet with the ends of justice, the additional evidence sought to be brought on record by the Assessee by moving an application under Rule 46A of the IT Rules, is required to be allowed as the comprehensive material obtained during assessment cannot be made basis for additions without confronting the same to the assessee. Hence, we allow the additional evidence sought to be produced by the Assessee before the Ld. CIT(A) and remand the case back to the AO to decide afresh after providing an opportunity of being heard to the Assessee.
In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 17/7/2018