PEGASYSTEMS WORLDWIDE INDIA PRIVATE LIMITED ,HYDERABAD vs. DY. COMMISSIONER OF INCOME TAX , CIRCLE-16(2), HYDERABAD

Brief facts of the case are that the assessee is a company engaged in the business of IT enabled services and BPO service providers. For the assessment year 2014-15, it filed the return of income on 28/11/2014 declaring total income of Rs.18,19,58,620/-. The assessment was completed by learned Assessing Officer under section 143(3) r.w.s. 92CA(3) & 144C(1) of the Act, making an addition of Rs. 26,94,06,427/-.

Feeling aggrieved by the order of learned Assessing Officer, the assessee is now in appeal before us on as many as 17 grounds, but at the time of arguments learned AR submitted that the assessee is not pressing ground number 1 to 12 and 14. Further ground number 15 to 17 are related to penalty and cannot be decided in this quantum appeal. In the circumstances, what remains to be adjudicated in this appeal is ground number 13 relating to the disallowance of depreciation, which we shall now proceed to adjudicate hereunder.

In context to the ground No.13, the learned Assessing Officer made an addition of Rs. 28,40,640/- on the ground that the assessee failed to produce corresponding bills and vouchers of the additions made during the year to the fixed assets on which the depreciation has been claimed. Relevant para of the order of Learned assessing officer is reproduced as under : “5. During the year under consideration, the assessee has made addition to fixed assets and claimed depreciation accordingly. The assessee was asked to produce bills and invoices to substantiate the claim on depreciation of the fixed assets which were added during the year. However, the assessee cold not produce bills and vouchers of the following assets to the extent of which is given below:

Learned DRP also did not consider the claim of the assessee on the ground that the assessee failed to furnish any evidence relating to the purchase of fixed assets and no explanation was given. Learned DRP, however, failed to consider the submission of the assessee that the invoices were included as a part of the submissions, on the other hand, recorded the assessee did not file any petition to receive the additional evidence. On that ground learned DRP declined to consider the invoices said to have been submitted by the assessee along with the written submissions.

Learned AR submitted that the learned Assessing Officer passed the order without providing proper opportunity. Learned AR further submitted that the assessee does not stand to gain by allowing the appeal to be disposed of without any documentary evidence being produced and it is only due to the reasons beyond the control of the assessee, the assessee could not produce the documents. He further submitted that given an

Per contra, learned DR placed heavy reliance on the orders of the authorities below, and submitted that sufficient opportunity has already been given by the authorities, but the assessee failed to avail the same. He opposed grant of further opportunity to the assessee.

We have gone through the record in the light of the submissions made on either side. It could be seen from the orders of the authorities that the assessee failed to produce before the learned Assessing Officer the corresponding bills and vouchers of the additions made during the year to the fixed assets on which the depreciation have been claimed, which resulted in passing the orders without consideration thereof. It is not in dispute that the assessee produced the invoices as a part of its written submissions before the learned DRP, but the learned DRP refused to look into such material stating that no petition to receive the additional evidence accompanied the vouchers.

It is the submission on behalf of the assessee that Rule 46A of the Income Tax Rules, 1962 (“the Rules”) stipulates that the assessee shall not be entitled to produce before the Commissioner(Appeals) any evidence, oral or documentary other than the evidence that was produced before the learned Assessing Officer, and there is no legal bar to receive the additional evidence by the learned DRP, if it is produced as a part of the written submissions.

Be that as it may, it is a fact that the assessee does not stand to gain by not producing such document, without any valid reasons or unless it was beyond his control. Now that the assessee is ready to produce all such documentary evidence in support of his contentions and get the matter disposed of on merits. The highest that would happen by allowing an opportunity to the assessee is that a cause would be decided on merits. With this view of the matter, we are of the view that fresh opportunity should be given to the assessee and, accordingly, we set aside the impugned order and restore the issue to the file of the learned Assessing Officer for passing a fresh order on merits on considering the vouchers that will be produced by the assessee and after affording the opportunity of being heard. Grounds of appeal are answered accordingly.

In the result, appeal of the assessee is treated as allowed for statistical purposes. Order pronounced in the open court on this the 19th day of March, 2024. Sd/- Sd/- (RAMA KANTA PANDA) (K. NARASIMHA CHARY) VICE PRESIDENT JUDICIAL MEMBER Hyderabad, Dated: 19/03/2024