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Income Tax Appellate Tribunal, DELHI BENCH: ‘C’, NEW DELHI
Before: SH. I.C. SUDHIR & SH. O.P. KANT
ORDER Per O.P. KANT, A.M.: This appeal by the assessee is directed against order dated 15/09/2015 of Ld. Commissioner of Income-tax (Appeals)-9, New Delhi (in short ‘the CIT-A’) for assessment year 2011-12 raising following grounds:
1. The CIT(A) has erred on facts as well as in law in confirming the addition of Rs.34,39,699/- received as advance from client on 29.03.2011 for work done in April to June, 2011 as per bill dated 30.03.2011, copy filed with the CIT(A).
2. The learned CIT(A) is wrong on facts as well as in law in stating that no proof that the above receipts are shown in next year are filed in fact of copy of bill issued for work done from 01.04.2011 to 30.03.2011 for which advance was received.
3. Two letters dated 24.08.2015 and 31.08.2015 sent by the CIT(A) were not delivered to the appellant due to posting of new postman and mistake of Post office for which we have even written to Post Officer. It is prayed that addition of Rs.34.39.699/- may kindly be deleted.
The facts in brief of the case are that the assessee, a private limited company was engaged in the business of development of computer software. For the year under consideration, the assessee filed return of income on 27/08/2011, declaring total income of Rs.1,35,929/-. The case was selected for scrutiny and notice under section 143(2) of the Income-tax Act, 1961 (for short “the Act”) dated 25/09/2012 was issued and duly complied by the assessee. The assessment was completed on 18/03/2014 at total income of Rs.41,13,490/- after making various additions/disallowances including addition of Rs.34,39,699/- on account of advance from debtors. On further appeal, the Ld. CIT-A allowed part relief to the assessee. Aggrieved, the assessee is in appeal before the Tribunal raising the grounds as reproduced above.
In grounds No. 1 and 2 of the appeals, the assessee has challenged addition of Rs.34,39,699/- received as advance from customer. In ground No. 3, the assessee has raised the issue of no proper opportunity allowed by the Ld. CIT-A , while upholding the above addition of Rs. 34, 39, 699/. Thus, all the three grounds of the assessee are related to the single issue of addition of Rs.34,39,699/-. All the grounds being connected, the same were heard together. 4. The Assessing Officer noted an amount of Rs.34,39,699/- as advance from debtors shown under the head current liability and provisions in the schedule forming part of annual accounts statement. The Assessing Officer has further noted that during assessment proceeding the assessee was asked to produce evidence in support of the claim that the amount was advanced from debtors, however, as the assessee failed to file details, and being time barring assessment, he added the amount to the total income of the assessee. Before the Ld. CIT-A the assessee filed ledger account of the party in the books of accounts of the relevant year and submitted that amount in question was received in the month of March, 2011. The assessee further submitted that invoice in respect of the amount has been raised in the first quarter of next financial year i.e from 01/04/2011 to 30/06/2011. The assessee also submitted that it has followed mercantile system of accounting and, therefore, advance could not be treated as income in the relevant year. According to the learned CIT-A, the assessee did not file evidences like details of total receipts, copy of Ledger account of subsequent assessment year and copy of profit and loss account, in support of the claim. The Ld. CIT-A raised a specific query from the Assessing Officer to clarify whether the receipt were shown in the subsequent assessment year’s return of income, however, the Assessing Officer objected that being additional evidence, could not be admitted at the stage of appellate proceedings. The Ld. CIT-A forwarded the comments of the Assessing Officer to the assessee, however, said letter returned unserved on 26/08/2015, with the remark “left”. Again a letter was sent by the Ld. CIT- A on 31/08/2015, which was also received back unserved with the remark as “left”. In view of these facts, the Ld. CIT-A, was of the view that proper opportunity was provided to the assessee and which has not been availed. The Ld. CIT-A relying on the decision of the Hon’ble High Court of Rajasthan in the case of Shimon Gupta Vs. ACIT reported in 274 ITR 179 held that the assessee failed to furnish evidence in support that goods delivered subsequently to the party against whom amount was credited in the books of accounts and shown as amount of advance received and upheld the addition.
5. Before us, the learned counsel of the assessee supporting ground No. 3 submitted that two letters dated 24/08/2015 and 31/08/2015 sent by the Ld. CIT-A were not delivered to the assessee due to the reason that a new postman was posted in the area and due to his mistake, those letters were not served upon the assessee. The learned counsel submitted a copy of correspondence made with the postmaster of concerned area, wherein the postmaster accepted mistake on the part of the postmen in delivery of those letters. The learned counsel filed a paper book containing pages 1 to 12, comprising of the followings:
S. No. PARTICULARS 1. Copy of letter dated 21.09.2015 written to Post office with a note from them 2. Acknowledgment for ITR for Asstt. Year 2012-13 3. Statement of Computation of Assessable Income for the Asstt. Year 2012-13 4. Statement of Profit & Loss A/c. for A.Y. 2012-13 alongwith Schedule 21 “Revenue From Operations”
Copy of ledger related sales accounts for the A.Y. 2012-13 6. Copy of ledger A/c. of M/s. Export Debtor “Ozdocs International Pvt. Ltd.” for A.Y. 2012-13 7. Copy of bill No. 01/11-12/SS/Expert dated 30.06.2011 issued for which the Advance was received on 29.03.2011 8. Copy of Dollar A/c. with 9. Copy of ledger A/c. in dollars for the advance which is received
It was certified in the paper book by the Ld. counsel that above documents were not filed either before the AO or before the Ld. CIT-A in appellate proceedings. The ld. counsel filed an application duly signed by the assessee for admitting the above documents as additional evidence, praying that above evidences are essential for taking proper decision on the issue in dispute and could not be filed with the Ld. CIT-A for no fault on the part of the assessee. The Ld. counsel accordingly, requested that above additional evidences might be taken on record and in view of those evidences the addition might be deleted.
On the contrary, learned Sr. DR opposed the admission of the additional evidences and submitted that if at all those evidences are admitted, the matter might be restored back to the file of the Ld. CIT-A for deciding the issue afresh. In support of the contention, he relied on the decision of the Hon’ble High Court of Madhya Pradesh, in the case of Commissioner of Income Tax Vs. Tollaram Hassomal, reported in (2006) 153 TAXMANN 532 (MP). 8. We have heard the rival submissions and perused the relevant material on record. In the case of Commissioner of Income Tax Vs. Tollaram Hassomal (supra), the assessee raised four additional grounds in the nature of legal grounds for the first time before the Tribunal, which were not raised before the Ld. CIT-A and decided the issue without restoring the matter to the Ld. CIT-A. In the circumstances, the Hon’ble High Court held that matter should have been remanded to the learned CIT-A. The finding of the Hon’ble High Court is reproduced as under:
“7. In our considered view, therefore, the Tribunal having permitted the assessee to raise four additional grounds treating them to be legal grounds in appeal for the first time, should have set aside the order of CIT (Appeals) and remanded the case to the CIT (Appeals) for deciding the appeal by CIT (Appeals) afresh on all the issues including on those four grounds raised by the assessee in the appeal before the Tribunal rather than to decide the same merits for the first time by themselves and set aside the order of CIT (Appeals) as also the assessment order. Had the case been remanded by the Tribunal, the CIT (Appeals) would have been in a position to examine the issue for the first time in relation to those four grounds which he did not decide for want of any attack on those grounds initially in the first round. It cannot be disputed that CIT (Appeals) had jurisdiction to examine those four grounds had it been raised before him in appeal even in the first round. We thus cannot subscribe to the approach and the manner in which the Tribunal allowed the assessee to raise additional grounds in appeal for the first time and then deciding the appeal on those grounds by not only setting aside of the order of CIT (Appeals) but even proceeding to annul the order of Assessing Officer also. Such approach is neither legal, nor proper. It only exhibits the anxiety of the Tribunal to decide the appeal on merits even on those points which did not arise for decision out of the order of CIT (Appeals). In other words, instead of concentrating or the issues already decided by the CIT (Appeals), the Tribunal only concentrated on those grounds which had not been taken before CIT (Appeals) and then answered them in favour of assessee by completely annulling the whole assessment. There would have been no prejudice caused to either party if the case had been remanded to CIT (Appeals) and once the prayer to raise additional grounds was allowed by the Tribunal in favour of assessee. When a litigant has a right to seek adjudication on a particular point from one more authority [as in this case CIT (Appeals)] and again acquire a right to reiterate the challenge before the higher appellate authority (such as Tribunal) in case if the challenge is decided against the first appellate authority, then in such event, there is no justifiable reason as to why a litigant is deprived of such an opportunity. We, therefore, do not agree to such approach resorted to by the Tribunal and hence, we set aside the impugned order?”
On perusal of the above decision, we find that the facts in the instant case are slightly different. In the present case, the issue was duly dealt by the Ld. CIT-A, however, due to the mistake on the part of the postman, the letter addressed by the Ld. CIT-A to the assessee seeking clarification, could not be delivered to the assessee and due to that, the Ld. CIT-A decided the issue against the assessee in absence of any documentary evidence showing that the assessee had already issued invoice in subsequent year, corresponding to the advance received in the relevant year. In the additional evidences filed before us, the assessee has produced copy of export invoices issued to M/s. Ozdocs International Pty. Ltd., Australia, on 30/06/2011, which is duly stamped by the authorities of Software Technology Park of India. The assessee has also produced Ledger account of the party for relevant assessment year as well as in subsequent assessment year.
In view of the facts that due to the mistake on the part of Postman, the letters issued by the Ld. CIT-A could not be delivered to the assessee and, therefore, the assessee could not submit the evidences supporting the claim that export invoices have been issued in subsequent assessment year corresponding to the advance from the debtor party, the assessee was prevented from submitting those evidences before the Ld. CIT-A. Accordingly, we admit these additional evidences. Since neither the Assessing Officer nor the Ld. CIT-A, got opportunity to examine these documents, in the interest of justice, we feel it appropriate to restore the issue to the file of the Assessing Officer to decide afresh in the light of the documents submitted by the assessee before us. The assessee is directed to produce copy of all the above documents before the Assessing Officer, and then Assessing Officer shall decide the issue in accordance with law. The grounds of appeal
of the assessee are accordingly allowed for statistical purpose.
11. In the result, appeal of the assessee is allowed for statistical purposes. The decision is pronounced in the open court on 26th May, 2017.