ALLEN LABORATORIES LTD.,KOLKATA vs. ITO, WARD-10(2), KOLKATA

The instant appeal filed by the assessee pertaining to the Assessment Year (in short ‘AY’) 2018-19 is directed against the order passed u/s 250 of the Income Tax Act, 1961 (in short the ‘Act’) by ld. Commissioner of Income- tax (Appeals)-NFAC, Delhi [in short ld. ‘CIT(A)’] dated 05.02.2024 arising out of the assessment order framed u/s 143(3)/144B of the Act dated 13.12.2019. 1.1. The brief facts of the case of the appellant are that the assessee being a company, filed its return of income for AY 2018-19 on 17.09.2018 declaring total income of Rs. 1,23,25,350/-. The return of income was processed u/s I.T.A. No.: 663/KOL/2024 Assessment Year: 2018-19 Allen Laboratories Ltd. 143(1) of the Act with an adjustment of Rs. 14,33,889/-. Subsequently, the case was selected for scrutiny and during the proceeding it is observed from information available that the assessee company has entered into a sale agreement with M/s. Rajlakshmi Marketing Pvt. Ltd. (in short ‘RMPL’) for sale of its properties. It is a case of the assessee that the assessee entered into development agreement on 11.11.2012/25.04.2013 with RMPL to develop all their piece and parcel of land area measuring 2 Bighas 00 Cottahs 01 Ghittacks and 28 Sq. Ft. situated at Mouza Krishnapur, PS. Baguiati, Kolkata in the sharing ratio of 48% of constructed area up to G+3 storied level of building attributed respectively to the owners in proportion to the land owned by each of the owners together with undivided proportionate share in the land attributable respectively and 42% of the constructed area above G+3 storied level of the building attributable respectively. The information also received that as per the copy of registered buyback agreement dated 16.03.2016 for sale of its share of developed property mentioned above, the company sole developed portion of its share area measuring 13417 Sq. Ft. for consideration of Rs. 3,47,92,500/- @ 2500 per Sq. Ft. including five parking places of Rs. 2.50 Lakh each to RMPL and it is further explained that on the said amount, the company paid capital gain tax and filed return of income for AY 2017-18. Based on the above information a notice u/s 133(6) of the Act was issued to RMPL calling for details with reference to property. It is alleged that RMPL filed a reply stating that as per the agreement, it handed over certain properties and the properties mentioned in the as enumerated above were not sold by it. Since RMPL has denied having sold the above properties, the Assessing Officer (hereinafter referred to as ld. 'AO') asked specifically from the assessee to produce explanation with reference to sale of properties. It is further case of the assessee that on verification of the information available on ITBA portal, there was no compliance from the assessee and accordingly, ld. AO assumed that the company has no explanation. Accordingly, the assessment is proposed to complete treating sale consideration received on sale of above properties totalling to Rs. 1,38,72,700/- as short-term capital gain. It is also in the assessment order that the assessee has also been specifically asked to produce the complete details of manufacturing defect and Page 2 of 6 I.T.A. No.: 663/KOL/2024 Assessment Year: 2018-19 Allen Laboratories Ltd. GST difference claim of Rs. 61,64,436/- debited to profit and loss account for which also there is no explanation from the assessee and accordingly, the same has been disallowed and brought into tax. The said order has been challenged by the assessee before the ld. CIT(A) wherein also the case of the assessee has been dismissed. Being aggrieved and dissatisfied with the impugned order, the present appeal has been preferred. 1.2. The ld. Counsel for the assessee challenges the impugned order thereby submitting that ld. CIT(A) was not justified in proceeding in haste without providing reasonable opportunity to explain clarification which is sought vide letter dated 27.12.2023. He has further challenged that ld. CIT(A) was not justified in confirming the addition of Rs. 1,38,72,700/- made under the head ‘short-term capital gain’. The ld. Counsel for the assessee further argued that appellant has filed several books of papers before ld. CIT(A) and asked him to admit it as according to him the papers which were sought to be filed by the assessee were and are the essential piece of evidence for just decision of the case. The prayer of the ld. Counsel for the assessee is that ld. CIT(A) has erred in disallowing the assessee to brought the papers by way of additional evidence only on this ground that appellant/assessee has no reasonable explanation that why not the same could not be filed before ld. AO. Ld. Counsel for the assessee herein before us, filed an affidavit thereby submitting that the notice issued u/s 142(1) of the Act dated 30.03.2021 issued by the ld. AO in course of assessment proceedings could not be complied as the entire country at the relevant time was under the grip of COVID pandemic and the staff of the company were not attending the office. The sole submission of the ld. Counsel for the assessee is that he should be given an opportunity to place the entire papers before ld. CIT(A) to place his case as all the papers are the essential piece of evidence. 1.3. The ld. D/R supports the impugned order.

The sole argument of the ld. Counsel for the assessee is that the appellant should be given an opportunity to place his entire evidence which Page 3 of 6 I.T.A. No.: 663/KOL/2024 Assessment Year: 2018-19 Allen Laboratories Ltd. has been refused by the ld. CIT(A) in the course of appellate proceedings. As per the submission of the counsel that all the papers are relevant for the just decision of the case. In this context, we have perused the order of ld. CIT(A) and find that before ld. CIT(A) the assessee has submitted paperbook which is as follows: Sl. No. Nature of Documents Annexure Page No. A. Petition of Condonation of delay along with A 1 to 9 annexures B Re:Ground No. 2 1. Copy of Development Agreement and PDA dated B1 10 to 28 25.04.2013 with Developer 2. Copy of Development Agreement and PDA dated B2 29 to 75 25.04.2013 with Developer 3. Copy of Buy back Agreement for sale B3 76 to 82 4. Possession Certificate dated 01.02.2018 issued by B4 83 to 84 the Developer 5. ITR Acknowledgment, final account and Tax Audit C 85 to 99 Report for the relevant assessment year along with Possession Certificate 6. (a) Copy of Assessment Order dated 20.04.2023 (AT D1 100 to 116 2017-18) (b) Copmputation of Income (AY 2017-18) along with D2 117 to 143 allocation sheet at details of payment received from Developer 7. Re: Ground No. 3 Debit Notes, indemnity Bonds, Final accounts of the parties:- 1. Allen Healthcare Co.Ltd E1 121 to 143 1. Allen’s Industries limited E2 143A to 153 1. Emmars Perk Allen Pvt Ltd E3 153A to 170 2.1. We have perused the ld. CIT(A)’s order and find that ld. CIT(A) has refused the above papers filed by the assessee by stating thus: “8.4 However, there is no compliance from the appellant in response to the above notice. Therefore, it is evident that the appellant has no explanation with regard to justification for non-submission of information / documents before the assessing officer, since the appellant had not given such justification though specifically called for as such, the information submitted before the first appellant authority becomes additional evidence as per rule 46A of the Income Tax rules, 1962. In the absence separate application under Rule 46A of Income Tax Rules, 1962 and also in the absence of justification with regard to submission of additional evidence before the first appellate authority with regard to additional evidence, which were not submitted before the assessing officer, the additional evidence submitted before the first appellant authority, is not acceptable. In this regard, let us examine the following case laws.”