ITO WD 22(3)(1), NAVI MUMBAI vs. BHNDU HATWAR, NAVI MUMBAI

आदेश / O R D E R PER JASON P BOAZ (A.M): This appeal by Revenue is directed against the order of the CIT(A)- 33, Mumbai dated 17/12/2012 for A.Y.2009-10. 2. The facts of the case, briefly, are as under:- 2.1. The assessee, engaged in business as fruit dealer / wholesaler, filed his return of income for A.Y.2009-10 on 30/09/2009 declaring total income of Rs.6,91,443/-. The case was taken up for scrutiny and the assessment was completed u/s.143(3) of the Income Tax Act, 1961 (in short ‘the Act’) vide order dated 26/12/2011, wherein the income of the assessee was determined at Rs.3,47,13,380/- in view of the following additions / disallowances:-

3.1. Revenue being aggrieved by the order of CIT(A) – 33, Mumbai dated 17/12/2012 for A.Y.2009-10 has preferred this appeal, raising the following grounds:-

1) On the facts and in the circumstance of the case, the Ld CIT(A) erred in Deleting the additions made u/s. 40(a)(i) for an account of Rs.41,22,540/- Being transport charges which are bellow Rs.20,OOO/ - and holding that the Provisions of Sec.194C are not applicable. The assessee has not produced Any proof for transport charges paid except some random names.

2) The appellant prays that the order of the CIT(A) on the above grounds be reversed and that of the Assessing Officer be restored.

3.) The appellant craves leave to amend or alter any grounds or add a new ground which may be necessary.

3.2. This case was fixed for hearing on number of occasions, but none was present for the assessee nor was any adjournment sought by the assessee. On a couple of occasions, when the Bench did not function, the adjournment dates were intimated by display on the notice boards. Even issue of notice for hearing by Registered AD did not evoke any response from the assessee. The learned DR for Revenue, however, was present and ready to argue the case of Revenue. In view of these circumstances, as narrated above, we are of the considered opinion that the assessee is not serious about pursuing this appeal and therefore, proceed to dispose off this appeal ex-parte with the assistance of the learned DR for Revenue and the material on record.

3.3. The learned DR was heard in respect of the grounds raised at Sr.No.1 to 3 which challenge the order of the learned CIT(A) deleting the disallowance of Rs.41,22,540/- made u/s. 40(a)(ia) of the Act in respect of transport charges below Rs.20,000/- by holding that the provisions of Section 194C of the Act are not applicable. According to the learned DR, the said disallowance was made by the AO as the assessee has not produced any proof of transport charges paid to truck owners except some random names of drivers. The learned DR drew our attention to para 3.1 of the impugned order of the learned CIT(A) wherein the assessee in submission has, inter alia, stated that ‘the Assessing Officer’ (‘AO’) had disallowed the entire transportation charges of Rs.41,22,540/- debited due to want of evidence, ‘This requirement came to our notice only on receiving the assessment order dated 26/12/2011. We have accordingly compiled the details and are submitting the same herewith.’ According to the learned DR, it is clear from the averments of the assessee itself that no evidence was filed before the AO and that fresh evidence / material on this issue was admittedly brought on record before the learned CIT(A) and she acted thereon to allow the assessee relief, without allowing the AO opportunity to rebut the said fresh evidence. This, the learned DR contends, is in gross violation of the principles of natural justice and as per the requirements laid down in Rule 46A (3) of the I.T.

Rules 1962 (i.e. the Rules) and on this short point itself the impugned order of the learned CIT(A) on this issue should be vacated and the matter set aside to his file for fresh adjudication after affording the AO adequate opportunity of being heard in the matter for rebuttal of the additional evidence admittedly filed by the assessee before the learned CIT(A).

3.4.1. We have heard the learned DR for Revenue and perused and carefully considered the material on record. We have perused para 3.1 of the impugned order of the learned CIT(A) and find that it is recorded therein that the disallowance of Rs.41,22,540/- u/s.40(a)(ia) of the Act was made by the AO in view of the inability of the assessee to produce any evidence / proof of transport charges. We also find that the assessee has submitted that to fulfil such requirement which it came to know after the order of assessment was passed on 26/12/2011, details in this regard have been compiled and are being filed before the CIT(A). The relevant portion at para 3.1 of the impugned order is extracted hereunder:-

“3.1. During the appellate proceedings appellant has submitted as under:-

The assessee was questioned at the time of summon on 23/12/2011 to submit the details of transport charges paid owner wise. It is quite likely that the assessee failed to understand the question. It is the practice in his business to maintain a photocopy of PAN and R.C. book of transporter for his records.

3.4.2. In our view Rule 46A of the Rules has a direct hearing on the controversy and therefore, it would be relevant to extract the same.

Rule 46A reads as under:-

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

(a) where the [Assessing Officer) has refused to admit evidence which ought to have been admitted; or (b) where the appellant was prevented by sufficient cause from producing the evidence which he was called upon to produce by the [Assessing Officer) ; or (c) where the appellant was prevented by sufficient cause from producing before the [Assessing Officer) any evidence which is relevant to any ground of appeal; or (d) where the [Assessing Officer) has made the order appealed against without giving sufficient opportunity to the appellant to adduce evidence relevant to any ground of appeal.

(2) No evidence shall be admitted under sub-rule (1) unless the [Deputy Commissioner (Appeals)) [or, as the case may be, the Commissioner (Appeals)] records in writing the reasons for its admission.

(3) The [Deputy Commissioner (Appeals)} [or, as the case may be, the Commissioner (Appeals)] shall not take into account any evidence produced under sub-rule (1) unless the [Assessing Officer) has been allowed a reasonable opportunity-

(a) to examine the evidence or document or to cross-examine the witness produced by the appellant, or (b) to produce any evidence or document or any witness in rebuttal of the additional evidence produced by the appellant. (4) Nothing contained in this rule shall affect the power of the [Deputy Commissioner (Appeals)} [or, as the case may be, the Commissioner (Appeals)) to direct the production of any document, or the examination of any witness, to enable him to dispose of the appeal, or for any other substantial cause including the enhancement of the assessment or penalty (whether on his own motion or on the request of the [Assessing Officer)) under clause (a) of sub-section (1) of section 251 or the imposition of penalty under section 271] 3.4.3. In the light facts of the case as narrated above and the provisions of Rule 46A of the IT Rules (supra) we concur with the averments of the learned DR for Revenue that it is only an appeal that the assessee had in fact compiled and filed fresh / additional evidence in respect of payment of transport charges, not filed before the AO, which the learned CIT(A) took on record and without either admitting them as required under Rule 46(2) of the Rules or allowing the AO adequate opportunity to examine and rebut the same as required under Rule 46(3) of the Rules, allowed the assessee’s appeal. In our considered view, these actions of the learned CIT(A) are in gross violations of the principles of natural justice as required to be complied with by Rule 46(3) of the Rules. We therefore set aside the order of the learned CIT(A) on the issue of deletion of the disallowance made by the AO u/s. 40(a)(ia) of the Act and restore the matter to the file of the learned CIT(A) to consider and adjudicate on the issue afresh, in accordance with law, after affording the AO adequate opportunity of examining and rebutting the fresh evidence, put forth by the assessee in appellate proceedings before the first appellate authority. The assessee may also be heard in the matter if so required. We hold and direct accordingly. Consequently, the grounds 1 to 3 raised by Revenue are not being adjudicated on merits and Revenue’s appeal is treated as allowed for statistical purposes as indicated above.

Order pronounced in the open court on 11/01/2017.