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Income Tax Appellate Tribunal, DELHI BENCH ‘F’ NEW DELHI
Before: SHRI I.C. SUDHIR & SHRI L.P. SAHU
ORDER
Per L.P. Sahu, Accountant Member:
This is an appeal filed by the Revenue against the order of ld. CIT(A) XXIV, New Delhi dated 29.11.2011 for the assessment year 2008-09 on the following grounds : “
1. On the facts and circumstances of the case, the CIT(A) erred in deleting the addition of Rs.37,12,823/- being unexplained cash credit u/s. 68 of the I.T. Act, 1961.
2. On the facts and circumstances of the case, the CIT(A) erred accepting self serving documents and corroborated or examined during the assessment proceedings.
3. Set aside the order of the CIT(A) and restore the matter back to the AO to reexamine fresh evidence in a holistic manner.
2. The brief facts of the case are that the assessee is a firm providing security services to various clients, from which it declared receipts of Rs.5,82,485/- and declared net profit of Rs.42,592/-. The return of income was filed on 28.09.2008 declaring income of Rs.42,592/-. A perusal of the balance sheet submitted by the assessee, the AO noticed that the assessee had declared sundry creditors of Rs.39,62,823/-, the details of which are as under: Sh. Dharam Veer Rajasthan Rs.3,00,000/- Sh.Neelesh Kumar Dwarka, N.D. Rs.3,00,000/- Sh. Surendra Kumar Punjab Rs.5,20,000/- Smt. Girja Thakur Jharkhand Rs.3,60,000/- Sh.Rajender Sharan Rajasthan Rs.4,80,000/- Sh. Pradeep Kumar Thakur Bihar Rs.5,10,000/- Smt. Damyanti Haryana Rs.4,60,000/- Sh. G.P. Rai Jharkhand Rs.3,80,000/- Sh. Amandeep Dwarka N.D. Rs.2,50,000/- EMD(Earnest Money from Guard) Rs.4,02,823/- Rs.39,62,823/- The AO asked the assessee to explain the source of credits shown in the names of various persons, along with mode of payment received, their creditworthiness and confirmations. The assessee in response filed confirmations from the above persons except one Shri Amandeep & regarding earnest money deposit. On perusal of the confirmations, the AO observed that the above confirmations submitted by the assessee itself show that the assessee had received the amounts in cash from the above persons, but no source of cash received, their creditworthiness etc. was furnished except Sh. Amandeep Singh who gave the loan of Rs.2,50,000/- by way of account payee cheque on 03.08.2007. The AO, therefore, made addition of Rs.37,12,823/- (39,12,823 – 2,50,000) to the total income of the assessee u/s. 68 of the IT Act.
3. The assessee carried the matter before the ld. First appellate authority and submitted additional evidences in the shape of copy of confirmations along with addresses, copy of affidavits deposing the payments made by each creditor as well as identity proofs, i.e., Voter I. cards or driving license of the creditors and prayed for admission of the same u/r 46A of the Act. The ld. CIT(A) called for the remand report on the said additional evidences from the AO, who in turn stated only on the admissibility of additional evidences that the evidences are covered under the provisions of Rule 46A. Having received the remand report, the ld. CIT(A), after relying on the additional evidence and decisions of various High Courts, deleted the addition of Rs.37,12,823/- vide impugned order. Aggrieved by this order, the Revenue is in appeal before the Tribunal.
During the course of hearing, the ld. DR argued that the ld. CIT(A) was not justified in deleting the addition without examining the merits of the additional evidences laid before him. The AO in the remand report has given his comments only on the admissibility of additional evidences in terms of Rule 46A, but no comments have been made on the merits of such evidences produced before the ld. AIT(A), as no sufficient time was given to the AO to examine the same or to make proper enquiry from the alleged creditors. The remand report was sought from the AO within 10 days from the date of receipt of said evidences and most of the creditors were located outside Delhi. Therefore, the ld. Assessing Authority had no opportunity to examine the additional evidences on merits by way of any enquiries from the creditors. It was submitted that the evidences so laid were self serving evidences and the same cannot be relied upon unless they are examined on merits. It was submitted that the impugned amount has been received by the assessee in cash and no bank statements of the alleged creditors were furnished in order to examine their creditworthiness. It was also submitted, that the ld. CIT(A) having coterminous powers of Assessing Officer, has also not made any enquiry before relying upon or verifying the additional evidences placed by assessee.
The ld. AR, on the other hand, relying upon the order of the first appellate authority, submitted that the assessee has discharged its initial onus that lay upon it by furnishing documentary evidences in the form of confirmations, affidavits, I/D cards of the creditors, their affidavits etc., on admissibility of which the AO has made no adverse comments in the remand report. Therefore, if the AO has not been able to discharge the onus that was shifted upon him, no addition could be made u/s. 68 of the Act. It was submitted that the amount of Rs.37,12,823/- was a trade credit which were received as a result of expansion of firm’s business by opening new branches in different locations. The money received from various persons are on account of agency contract to be entered into with the said parties and the same is duly confirmed by the creditors in their affidavits. It was submitted that the assessee has produced details of Rs.4,02,823/- in respect of earnest money deposit from various security guards in cash. This deposit bears no interest and usually refunded to the guards on leaving their employment. He, therefore submitted that the ld. CIT(A) has passed a reasoned order which needs no interference.
We have considered the rival submissions and have perused the entire material available on record. From the facts narrated above, there is not dispute between the parties on the issue of admissibility of additional evidences laid by assessee before the first appellate authority. The grievance of the Revenue has been that the addition has been deleted by the first appellate authority without examining/verifying the authenticity/merits of the evidences so produced before him. It is not in dispute that the assessee has received the payment of Rs.37,12,823/- in cash as deposit by alleged creditors and alleged security guards, as noted above, in contravention of section 269SS of the IT Act. Therefore, it was incumbent upon the first appellate authority to verify and make an enquiry about the additional evidence submitted by the assessee before allowing the claim of the assessee. The first appellate authority is legally empowered to make any enquiry as he thinks fit as contemplated u/s. 250(4) of the Act. As held in various judicial pronouncements, the scope of powers of first appellate authority is coterminous with that of the Income tax Officer and he can do what the Income-tax Officer can do or he can direct the AO to do what he failed to do. However, in the instant case the ld. CIT(A) has not exercised its discretionary powers judiciously. It is born out from the record, that no bank statements of the alleged creditors have been produced by assessee in additional evidence to verify the source of deposits. The confirmations filed before the AO were not complete. The cash receipts issued by assessee, as submitted before the CIT(A) for alleged security amounts from the guards do not contain the addresses of any such security guards and therefore, this evidence was also not open for verification. The column of address is lying blank in each of these receipts. The affidavits of alleged creditors submitted are in the same language and the source of deposits deposed therein have not been verified in any case by the first appellate authority. We have also examined the remand report dated 24.10.2011 and we find that this report has been given in response to letter of CIT(A) dated 19.09.11 which was received by AO 13.10.2011. This fact supports the contention of the Revenue that only 10 days’ time given to the AO which was insufficient to verify the evidences from the creditors, which are mostly located out of Delhi. A perusal of assessment order also reveals that due to repeated transfer of case to various other jurisdictions, the case ultimately came to the present jurisdiction on 24.11.2010, notice u/s. 143(2) was issued on 25.11.2010 and the case was going to be time barred on 31.12.2010. This event also speaks that the AO at that point of time also did not got sufficient time verify the creditors etc. In these peculiar facts of the case, we, therefore, think it proper to restore the matter to the file of ld. CIT(A) to decide the appeal afresh after making proper enquiry on the additional evidence placed before him either himself or through Assessing Officer, before deciding the allowability of assesse’s claim.
Needless to say, both the parties shall be given reasonable opportunity of being heard. The assessee is also directed to cooperate with the Revenue authorities. Accordingly, the appeal of the assessee is allowed for statistical purposes.
In the result, the appeal of the Revenue is allowed for statistical purposes. Order pronounced in the open court on 22.07.2016.