DY. COMMISSIONER OF INCOME TAX-5(2)(1), MUMBAI, DY. COMMISSIONER OF INCOME TAX, AAYAKAR BHAVAN, CHURCHGATE, MUMBAI vs. JSW JAIGARH PORT LIMITED, BANDRA(EAST)

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28.03.2013 , total los total loss was determined at Rs.2,67,37,780/ 37,780/-. In the assessment, the Assessing Officer made disallowance firstly, of assessment, the Assessing Officer made disallowance assessment, the Assessing Officer made disallowance Rs.6,94,43,326/- for depreciation @ 5% on the bills which were not for depreciation @ 5% on the bills which were not for depreciation @ 5% on the bills which were not produced during the assessment proceedings amounting to Rs. produced during the assessment proceedings amounting to produced during the assessment proceedings amounting to and secondly , disallowance of Rs.63,16,668/ 138,88,66,528/- and disallowance of Rs.63,16,668/- for the income out of trial run not shown in the profit and loss account. the income out of trial run not shown in the profit and loss account. the income out of trial run not shown in the profit and loss account. 4. On further appeal, the Ld. CIT(A) deleted both the additions. On further appeal, the Ld. CIT(A) deleted both the additions. On further appeal, the Ld. CIT(A) deleted both the additions. Aggrieved, the Revenue is in appeal before the Tribunal raising the Aggrieved, the Revenue is in appeal before the Tribunal raising the Aggrieved, the Revenue is in appeal before the Tribunal raising the grounds as reproduced above. s as reproduced above. 5. As far as ground No As far as ground Nos. 1 & 2 of the appeal of the Revenue of the appeal of the Revenue are concerned, the Revenue is mainly aggrieved with the Revenue is mainly aggrieved with the Revenue is mainly aggrieved with admission of additional evidence additional evidence by the ld CIT(A) invoking Rule 46A of the invoking Rule 46A of the Income-tax Rules, 1962 (in short ‘the Rules’) tax Rules, 1962 (in short ‘the Rules’). The facts in brief qua . The facts in brief qua the issue in dispute are that during the assessment proceedings, the issue in dispute are that during the assessment proceedings, the issue in dispute are that during the assessment proceedings, the assessee could not produce the assessee could not produce bills of Rs. 138,88,66,528/ 138,88,66,528/- in respect of fixed assets and therefore, the Assessing Officer assets and therefore, the Assessing Officer assets and therefore, the Assessing Officer disallowed deprecation @ 5% on those bills allowed deprecation @ 5% on those bills , which was worked out which was worked out to Rs.6,94,43,326/-. During the appellate proceedings before the . During the appellate proceedings before the . During the appellate proceedings before the Ld. CIT(A), the assessee Ld. CIT(A), the assessee filed those bills and vouchers in the form of filed those bills and vouchers in the form of additional evidence along with application under Rule 46A of the additional evidence along with application under Rule 46A additional evidence along with application under Rule 46A Rules for admitting Rules for admitting those additional evidence. The Ld. CIT(A) additional evidence. The Ld. CIT(A) forwarded those additional evidence to the file of the Assessing forwarded those additional evidence to the file of the Assessing forwarded those additional evidence to the file of the Assessing Officer under the procedure laid down under Rule 46A of the Rules. Officer under the procedure laid down under Rule 46A of the Rules. Officer under the procedure laid down under Rule 46A of the Rules. The Ld. Assessing Officer in his remand report though examined The Ld. Assessing Officer in his remand report though The Ld. Assessing Officer in his remand report though

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and verified the bills and verified the bills, however submitted that those additional however submitted that those additional evidence should not be admitted for the reason that the assessee evidence should not be admitted for the reason that the assessee evidence should not be admitted for the reason that the assessee failed to produce those bills and vouchers during the course of the failed to produce those bills and vouchers during the course of the failed to produce those bills and vouchers during the course of the assessment proceedings. The Ld. CIT(A) however, admitted the assessment proceedings. The Ld. CIT(A) however, ad assessment proceedings. The Ld. CIT(A) however, ad additional evidence submitted by the assessee and deleted the additional evidence submitted by the assessee and deleted the additional evidence submitted by the assessee and deleted the additional observing as under: additional observing as under:

“The Assessing Officer has examined additional evidences submitted in The Assessing Officer has examined additional evidences submitted in The Assessing Officer has examined additional evidences submitted in the form of 13 box files that were not submitted at the time of assessment the form of 13 box files that were not submitted at the time of assessment the form of 13 box files that were not submitted at the time of assessment proceedings and after detailed verification of such invoices the A.O stated ings and after detailed verification of such invoices the A.O stated ings and after detailed verification of such invoices the A.O stated that the same is found correct and acceptable. But without specifying any that the same is found correct and acceptable. But without specifying any that the same is found correct and acceptable. But without specifying any reasons the AO has requested the CIT( appeals) not to give relief to the reasons the AO has requested the CIT( appeals) not to give relief to the reasons the AO has requested the CIT( appeals) not to give relief to the assessee based on the additional evidenc assessee based on the additional evidences submitted. This sounds es submitted. This sounds illogical where as one side is accepting the correctness of the evidences illogical where as one side is accepting the correctness of the evidences illogical where as one side is accepting the correctness of the evidences and at the same time requesting not to give relief. and at the same time requesting not to give relief. From the remand report submitted by the AO it can be clearly understood From the remand report submitted by the AO it can be clearly understood From the remand report submitted by the AO it can be clearly understood that the AO has accepted the cor that the AO has accepted the correctness of the claim and no negative rectness of the claim and no negative inference was drawn and hence disallowance of Rs.6,94,43,326/ inference was drawn and hence disallowance of Rs.6,94,43,326/ inference was drawn and hence disallowance of Rs.6,94,43,326/- being 5% of the capitalisation amount is not in accordance with the provisions 5% of the capitalisation amount is not in accordance with the provisions 5% of the capitalisation amount is not in accordance with the provisions of the Act and hence the, same is deleted. Ground of appeal filed by the of the Act and hence the, same is deleted. Ground of appeal filed by the of the Act and hence the, same is deleted. Ground of appeal filed by the assessee is allowed. essee is allowed.” 6. We have heard rival submission of the parties and perused the We have heard rival submission of the parties and perused the We have heard rival submission of the parties and perused the relevant material on record. The only objection of the Revenue is relevant material on record. The only objection of the Revenue is relevant material on record. The only objection of the Revenue is that those additional evidence that those additional evidences should not have been admitted by should not have been admitted by the Ld. CIT(A), being admitted in contrav , being admitted in contravention of provisions of Rule ention of provisions of Rule 46A of the Rules. For ready ref 46A of the Rules. For ready reference, the Rule 46A of the Ru erence, the Rule 46A of the Rules is reproduced as under: reproduced as under:

“46A. Production of additional evidence before the Deputy “46A. Production of additional evidence before the Deputy “46A. Production of additional evidence before the Deputy Commissioner (Appeals) and Commissioner (Appeals). Commissioner (Appeals) and Commissioner (Appeals). (1)The appellant shall not be entitled to produce before the Deputy The appellant shall not be entitled to produce before the Deputy The appellant shall not be entitled to produce before the Deputy Commissioner (Appeals) or, as the case may be, the Commissioner Commissioner (Appeals) or, as the case may be, the Commissioner Commissioner (Appeals) or, as the case may be, the Commissioner (Appeals), any evidence, whether oral or documentary, other than the (Appeals), any evidence, whether oral or documentary, other than the (Appeals), any evidence, whether oral or documentary, other than the evidence produced by him during the course of proceedings before the dence produced by him during the course of proceedings before the dence produced by him during the course of proceedings before the Assessing Officer, except in the following circumstances, namely : Assessing Officer, except in the following circumstances, namely : Assessing Officer, except in the following circumstances, namely :-

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(a)where the Assessing Officer has refused to admit evidence where the Assessing Officer has refused to admit evidence where the Assessing Officer has refused to admit evidence which o which ought to have been admitted ; or (b)where the appellant was prevented by sufficient cause from where the appellant was prevented by sufficient cause from where the appellant was prevented by sufficient cause from producing the evidence which he was called upon to produce by producing the evidence which he was called upon to produce by producing the evidence which he was called upon to produce by the Assessing Officer ; or the Assessing Officer ; or (c)where the appellant was prevented by sufficient cause from where the appellant was prevented by sufficient cause from where the appellant was prevented by sufficient cause from producing before the Assessing Officer any evidence which is producing before the Assessing Officer any evidence which is producing before the Assessing Officer any evidence which is relevant to any ground of appeal ; or relevant to any ground of appeal ; or (d)wher where the Assessing Officer has made the order appealed e the Assessing Officer has made the order appealed against without giving sufficient opportunity to the against without giving sufficient opportunity to the against without giving sufficient opportunity to the appellant to adduce evidence relevant to any ground of appellant to adduce evidence relevant to any ground of appellant to adduce evidence relevant to any ground of appeal appeal. (2)No evidence shall be admitted un No evidence shall be admitted under sub-rule (1) unless the Deputy rule (1) unless the Deputy Commissioner (Appeals) or, as the case may be, the Commissioner Commissioner (Appeals) or, as the case may be, the Commissioner Commissioner (Appeals) or, as the case may be, the Commissioner (Appeals) records in writing the reasons for its admission. (Appeals) records in writing the reasons for its admission. (3)The Deputy Commissioner (Appeals) or, as The Deputy Commissioner (Appeals) or, as the case may be, the the case may be, the Commissioner (Appeals) shall not take into account any evidence Commissioner (Appeals) shall not take into account any evidence Commissioner (Appeals) shall not take into account any evidence produced under sub produced under sub-rule (1) unless the Assessing Officer has been rule (1) unless the Assessing Officer has been allowed a reasonable opportunity allowed a reasonable opportunity- (a)to examine the to examine the evidence or document or to cross evidence or document or to cross-examine the witness produced by the appellant, or witness produced by the appellant, or (b)to produce any evidence or document or any witness in rebuttal to produce any evidence or document or any witness in rebuttal to produce any evidence or document or any witness in rebuttal of the additional evidence produced by the of the additional evidence produced by the appellant. appellant. (4)Nothing contained in this rule shall affect the power of the Deputy Nothing contained in this rule shall affect the power of the Deputy Nothing contained in this rule shall affect the power of the Deputy Commissioner (Appeals) or, as the case may be, the Commissioner Commissioner (Appeals) or, as the case may be, the Commissioner Commissioner (Appeals) or, as the case may be, the Commissioner (Appeals) to direct the production of any document, or th (Appeals) to direct the production of any document, or the examination of e examination of any witness, to enable him to dispose of the appeal, or for any other any witness, to enable him to dispose of the appeal, or for any other any witness, to enable him to dispose of the appeal, or for any other substantial cause including the enhancement of the assessment or substantial cause including the enhancement of the assessment or substantial cause including the enhancement of the assessment or penalty (whether on his own motion or on the request of the Assessing penalty (whether on his own motion or on the request of the Assessing penalty (whether on his own motion or on the request of the Assessing Officer) under clause (a) of sub Officer) under clause (a) of sub-section (1) of section 251 or the imposition ection (1) of section 251 or the imposition of penalty under section 271. of penalty under section 271.” 6.1 Before us the Ld. counsel for the assessee the Ld. counsel for the assessee submitted that due to submitted that due to time taken for photocopying of time taken for photocopying of voluminous records of voluminous records of bills and vouchers containing containing 13 box files, same could not be produced , same could not be produced during the course of the assessment proceedings during the course of the assessment proceedings, h , however, same were produced before the Ld. CIT(A) were produced before the Ld. CIT(A). In our opinion the rule . In our opinion the rule 46A(1)(d) of the Rules take care of such a situation and therefore, 46A(1)(d) of the Rules take care of such a situation and therefore, 46A(1)(d) of the Rules take care of such a situation and therefore,

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the ld CIT(A) is justified in admit the ld CIT(A) is justified in admitting the evidences. Further, we are of the opinion that when the Assessing Officer himself as verified when the Assessing Officer himself as verified when the Assessing Officer himself as verified those bills and vouchers and found to be correct those bills and vouchers and found to be correct, in the interest of in the interest of substantial justice objection to additional evidence is not as per substantial justice objection to additional evidence is not substantial justice objection to additional evidence is not terms of Rule 46A. Therefore, we do not find any infirmity in the A. Therefore, we do not find any infirmity in the A. Therefore, we do not find any infirmity in the order of the Ld. CIT(A) on the issue in dispute and accordingly, we order of the Ld. CIT(A) on the issue in dispute and accordingly order of the Ld. CIT(A) on the issue in dispute and accordingly uphold the same. The ground No uphold the same. The ground Nos. 1 and 2 of the appeal of the . 1 and 2 of the appeal of the Revenue are accordingly dismissed. accordingly dismissed. 7. The ground No. 3 of the appeal of th The ground No. 3 of the appeal of the assessee relate to e assessee relate to addition of Rs.63,16,688/ addition of Rs.63,16,688/- in respect of birth hire income which in respect of birth hire income which have been deleted by the Ld. CIT(A). have been deleted by the Ld. CIT(A). 7.1 We have heard rival submission of the parties and perused the We have heard rival submission of the parties and perused the We have heard rival submission of the parties and perused the relevant material on record. relevant material on record. We find that assessee has earned tota We find that assessee has earned total birth birth hire hire income income of of Rs.1,28,57,298/ Rs.1,28,57,298/-, out out of of income income of of Rs.63,16,688/- was earned during the course of the trial run and earned during the course of the trial run and which was adjusted against trial adjusted against trial run expenditure or or netted against entire cost of fixed assets/capital work in progress. But according entire cost of fixed assets/capital work in progress. But accordin entire cost of fixed assets/capital work in progress. But accordin to the Assessing Officer this income of Rs.63,16,688/- was not to the Assessing Officer this income of Rs.63,16,688/ to the Assessing Officer this income of Rs.63,16,688/ reflected in the profit and loss account and therefore, he added to reflected in the profit and loss account and therefore, he added to reflected in the profit and loss account and therefore, he added to the returned income of the assessee. The Ld. CIT(A) has deleted the the returned income of the assessee. The Ld. CIT(A) has deleted the the returned income of the assessee. The Ld. CIT(A) has deleted the addition holding that the birth hire charges during the trial run addition holding that the birth hire charges during the addition holding that the birth hire charges during the operation to the tune of Rs.63,16,688/ operation to the tune of Rs.63,16,688/- has already been offered by has already been offered by the assessee. We agree with the finding of the Ld. CIT(A) and do not the assessee. We agree with the finding of the Ld. CIT(A) and do not the assessee. We agree with the finding of the Ld. CIT(A) and do not find any infirmity in the same as the income during the trial run find any infirmity in the same as the income during the trial run find any infirmity in the same as the income during the trial run

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has gone to reduce the cost of the assets to reduce the cost of the assets and thus directly income and thus directly income stand offered to tax. The ground No. 3 of the appeal of the Revenue stand offered to tax. The ground No. 3 of the appeal of the Revenue stand offered to tax. The ground No. 3 of the appeal of the Revenue is accordingly dismissed. is accordingly dismissed.

“Ground No. 2:

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This ground pertain to adhoc disallowance of Rs.4,57,884/ This ground pertain to adhoc disallowance of Rs.4,57,884/ This ground pertain to adhoc disallowance of Rs.4,57,884/- which is 10% of the CSR expenses claimed by the assessee during the year under of the CSR expenses claimed by the assessee during the year under of the CSR expenses claimed by the assessee during the year under consideration. The Assessing Officer in his order while making consideration. The Assessing Officer in his order consideration. The Assessing Officer in his order while making while making disallowance at the r disallowance at the rate of 10% has stated that it is not possible to ate of 10% has stated that it is not possible to ascertain whether entire amount of Rs.45,78,842/ ascertain whether entire amount of Rs.45,78,842/- has been expanded has been expanded towards Corporate Social Responsibility expenses, of the assessee towards Corporate Social Responsibility expenses, of the assessee towards Corporate Social Responsibility expenses, of the assessee company and further has stated that this disallowance is being made company and further has stated that this disallowance is being made company and further has stated that this disallowance is being made following the stand taken for AY 2011 wing the stand taken for AY 2011-12. The Assessing Officer has not 12. The Assessing Officer has not drawn the basis to arrive at such conclusion and has not found any drawn the basis to arrive at such conclusion and has not found any drawn the basis to arrive at such conclusion and has not found any invalid/inadmissible documentary evidences. The Assessing Officer is invalid/inadmissible documentary evidences. The Assessing Officer is invalid/inadmissible documentary evidences. The Assessing Officer is duty bound to bring out detailed facts on record befo duty bound to bring out detailed facts on record before modifying the re modifying the taxable income. Adequate materials should have been gathered and taxable income. Adequate materials should have been gathered and taxable income. Adequate materials should have been gathered and placed on record on to established that it warrants upwards modification placed on record on to established that it warrants upwards modification placed on record on to established that it warrants upwards modification of the taxable profit. Based on the facts available on record, it is observed of the taxable profit. Based on the facts available on record, it is observed of the taxable profit. Based on the facts available on record, it is observed that the Assessing Offi that the Assessing Officer had not pointed out any non-genuine entries in genuine entries in the books of accounts of the assessee and has not established that any the books of accounts of the assessee and has not established that any the books of accounts of the assessee and has not established that any particular expenditure has not been wholly and exclusively incurred for the particular expenditure has not been wholly and exclusively incurred for the particular expenditure has not been wholly and exclusively incurred for the purpose of business. Further, the AO has not found any exp purpose of business. Further, the AO has not found any exp purpose of business. Further, the AO has not found any expenditure to be bogus or fictitious. Hence, the addition made by the Assessing Officer is bogus or fictitious. Hence, the addition made by the Assessing Officer is bogus or fictitious. Hence, the addition made by the Assessing Officer is considered unwarranted and the same is deleted. Grounds of appe considered unwarranted and the same is deleted. Grounds of appe considered unwarranted and the same is deleted. Grounds of appeal of this issue stand allowed”. this issue stand allowed”. 11.1 We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. We find that ute and perused the relevant material on record. We find that ute and perused the relevant material on record. We find that that the Assessing Officer has made ad that the Assessing Officer has made ad-hoc disallowance @ 10% hoc disallowance @ 10% Corporate Social Responsibility (C orporate Social Responsibility (CSR) expenses on the ground that expenses on the ground that it was not possible it was not possible to ascertain whether the entire amount of to ascertain whether the entire amount of Rs.45,78,842/- had been expanded towards Corporate Social had been expanded towards Corporate Social had been expanded towards Corporate Social Responsibility expenses. Under the scrutiny process, it is the Responsibility expenses. Under the scrutiny process, it is the Responsibility expenses. Under the scrutiny process, it is the responsibility of the Assessing Officer to verify the bills and responsibility of the Assessing Officer to verify the bills and responsibility of the Assessing Officer to verify the bills and vouchers of the expenses if he was having any doubt, but he cannot vouchers of the expenses if he was having any doubt vouchers of the expenses if he was having any doubt be permitted to make ad tted to make ad-hoc disallowance without verifying the hoc disallowance without verifying the genuineness of the expenses. In our opinion, the Ld. CIT(A) is genuineness of the expenses. In our opinion, the Ld. CIT(A) is genuineness of the expenses. In our opinion, the Ld. CIT(A) is justified in deleting the said ad justified in deleting the said ad-hoc disallowance. We do not find hoc disallowance. We do not find any infirmity in the order of the Ld. CIT(A) in deleting the any infirmity in the order of the Ld. CIT(A) in deleting the any infirmity in the order of the Ld. CIT(A) in deleting the disallowance following the binding precedent on the issue in ce following the binding precedent on the issue in ce following the binding precedent on the issue in

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dispute. The ground No. 2 of the appeal of the Revenue is dispute. The ground No. 2 of the appeal of the Revenue is dispute. The ground No. 2 of the appeal of the Revenue is accordingly dismissed. accordingly dismissed.

Order pronounced in the open Court on nounced in the open Court on 30/04/2024. /04/2024. Sd/ Sd/- Sd/- (RAHUL CHAUDHARY RAHUL CHAUDHARY) (OM PRAKASH KANT OM PRAKASH KANT) JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 30/04/2024 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. BY ORDER, BY ORDER, //True Copy// (Assistant Registrar) (Assistant Registrar) ITAT, Mumbai ITAT, Mumbai