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Income Tax Appellate Tribunal, BENCH “I”, MUMBAI
Before: SHRI D.KARUNAKARA RAO & SHRI PAWAN SINGH
Revenue by : Saurabh Kumar Rai -DR Assessee by : None Date of hearing : 21.02.2017 Date of Pronouncement : 01.03.2017 Order Under Section 254(1) of Income Tax Act PER PAWAN SINGH, JM: 1. This appeal by revenue under section 253 of Income Tax Act is directed against the order of Commissioner (Appeals) dated 18.03.014 for Assessment Year 2007-08. The revenue has raised following grounds of appeal:
(i) Whether on the facts and in the circumstances of the case and in law, the learned CIT(A) was right in deleting the disallowance of expenses to the extent of Rs.69,92,000/- without appreciating the fact, that no details furnished by the assessee before AO to prove the genuineness of the expenses during the course of assessment proceedings. Without prejudice to the above, if any fresh evidence has been furnished during appeal proceeding for the first time without giving a opportunity of examining the same to the AO, the same has been admitted in contravention of Rule 46A of IT Rules. (ii) On the facts and in circumstances of the case and in law, the learned CIT(A) erred in giving relief on account of bad debts of Rs. 1,81,80,000/-to the assessee without appreciating that the fact that assessee has failed to discharge it’s onus or proving that amount has actually been written off against as no supporting evidence or documents supporting the claim of bad debts was produced by the assessee during the course of assessment proceeding. (iii) On the facts and in the circumstances of the case law, the learned CIT(A) erred in giving relief to the assessee without bringing anything on record in support of the fact that amount had actually became bad and consequently written off in the accounts of the assessee. Without prejudice to the above, if any fresh evidence has been furnished during appeal proceeding for the first time without giving opportunity of examining to the same to the AO, the same has been admitted in violation of Rule 46A of IT Rules. (iv) The appellant prays that the order of Commissioner (Appeals) on the above grounds be set aside to the file of AO or confirm the order of AO.
The brief facts of the case are that for the relevant assessment year, the assessment order under section 143(3) read with section 147 was passed on 10 December 2010. The assessing officer while passing assessment order besides the other disallowance, disallowed provisions for bad debts of Rs.1,82,80,000/-, disallowed the loss account sale of motor car of Rs. 5,73,000/- and further disallowed the expenses of Rs. 76,00,000/-. On appeal before Commissioner (Appeals) the all these disallowances were deleted. Thus, aggrieved by the order of Commissioner (Appeals) the revenue has filed present appeal before us.
This appeal came up for hearing on 21st February 2017. None appeared on behalf of assessee despite waiting for sufficient time. We have noticed that all notices sent to the assessee were returned back unserved. On 05.01.2017 it was directed that the assessee be served through DR. The ld DR submits that the notice for the hearing of the appeal for 21.02.2017 has been duly served on the respondent /assessee. As none appeared on behalf of assessee, we proceeded to hear the ld DR for revenue and to decide the appeal on the basis of the material available on record. We have heard Leonard AR further revenue and the learned and AR for assessee and perused the material available on record. The learned DR for the revenue argued that the learned Commissioner (Appeals) during the first appellate proceeding accepted the additional evidence filed by assessee in support of expenses without giving opportunity to the AO to make his comment. The ld CIT (A) allowed the claim of expanses on the basis of the additional evidence. The Ld DR for the revenue further argued that other disallowance of bed debt was also deleted by the ld Commissioner (Appeals) on the basis of details filed during the appellate proceeding only, without giving the opportunity to the Assessing Officer. The learned DR for revenue argued that the order passed by Ld Commissioner (Appeals) may be set aside on all the grounds of appeal
or it may be restored to the file of AO for consideration afresh.
4. We have considered the contention of learned and therefore revenue and perused the material available on record. The ground No.1 relates to the deleting the disallowance of expenses of Rs. 69,92,000/-. The ld DR for the revenue argued that ld CIT(A) allowed the relief to the assessee on furnishing additional evidence during the first appellate proceedings. The ld CIT(A) allowed the additional evidence in defiance of Rule 46A of Income Tax Rules.
5. We have considered the submissions of the ld DR for the revenue and perused the order of ld CIT(A). We have seen that during the first appellate stage ld CIT(A) asked the assessee to file details of expenses ( per para 4.3). After examining the details of expenses, the disallowance on account of loss on sale of Motor Car was confirmed. Out of other remaining disallowance on account of expenses ld CIT(A) concluded that Rs. 50.00 expenses is incurred in cash, which cannot be verified by corroborating evidence and sustained the disallowance of Rs. 5.00 lakhs on estimate basis. We have noticed that the ld CIT(A) not referred the details of expenses to the Assessing Officer for his comments. The evidence filed by assessee was relied by ld CIT(A) without bringing the same in the notice of Assessing officer. Thus the ld CIT(A) violated the provisions of Rule 46A of Income Tax Rules 1963. Thus, considering that the ld CIT(A) considered the additional evidence in violation of Rule 46A, hence we set-aside the order for sustaining the partial disallowance of expenses and restore the ground of appeal to the file of Assessing Officer to consider the additional evidence afresh and decide the claim of expenses in accordance with law. Needless to order that Assessing Officer shall provide opportunity of hearing to the assessee before deciding the issue.
6. The ground No.2 relates to the disallowance of bed debts. The assessing officer while framing assessment order under section 143(3) read with section 147 made the disallowance of bed debts of Rs. 1,82,80,000/- holding that during the assessment proceeding the assessee has neither produce the documentary