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Income Tax Appellate Tribunal, IN THE INCOME TAX APPELLATE TRIBUNAL
Before: SHRI G.C. GUPTA & SHRI SHRI PRASHANT MAHARISHI SHRI SHRI
PER G.C. GUPTA PER G.C. GUPTA, VP PER G.C. GUPTA PER G.C. GUPTA , VP , VP : , VP This appeal by the Revenue for the assessment year 2006-07 is directed against the order of learned CIT(A)-XXI, New Delhi dated 15th September, 2010.
The grounds of appeal of the Revenue are as under:-
“The ld.CIT(A) has erred on facts and in law by deleting addition of Rs.25,82,476/- made u/s 44AD of the Act, by relying on the Delhi High Court decision in the case of CIT Vs. Dev Music Lighting (P) Ltd. And by admitting additional evidence ignoring that (i) The case of the assessee is distinguishable on facts from the case of CIT Vs Dev Music Lighting (P) Ltd. 316 ITR 209 (Del) since the details and documents admitted by the ld.CIT(A) are not mere certificates but are important document very much pertinent to understand the nature of 2 ITA-5449/Del/2010 business as well as to decide the issue as held by the ld.CIT(A) himself in his order at page 3.
(ii) The tax audit report in form 3CD is not a mere certificate but an exhaustive report on various aspects of the assessee’s business and health arrived at after audit of its affairs.
(iii) In the facts of the case, the additional details and documents furnished by the assessee during the appellate proceedings should have been sent to the AO for remand report since the same were not furnished by the assessee during the assessment proceedings despite adequate opportunity.
(iv) The conditions laid down for admitting additional evidence u/s Rule 46A are not satisfied in this case.”
Learned DR submitted that the learned CIT(A) has accepted additional evidence in the form of various details and documents which were not sent to the Assessing Officer by the CIT(A) for remand report and, therefore, this is a clear case of violation of Rule 46A by admitting additional evidence.
Learned counsel for the assessee submitted that the provision of Section 44AD of the Act was wrongly invoked in this case as the turnover of the assessee for the relevant year was much more than the limit of `40 lakhs laid down u/s 44AD of the Act. He relied on the order of the learned CIT(A).
We have heard the rival submissions and have perused the order of the Assessing Officer and the learned CIT(A). We find that the Assessing Officer has made the addition by applying a flat net profit rate of 8% on the turnover of the assessee by invoking the special provisions of Section 44AD of the Act. We find that the provisions of Section 44AD could be invoked only when the turnover of the assessee was less than `40 lakhs in a particular accounting period. In this case
3 ITA-5449/Del/2010 before us, the assessee’s gross contract receipts were to the tune of `4.26 crores and, therefore, we hold that there was no justification for invoking the provisions of Section 44AD of the Act and applying a flat rate of 8% as net profit on the gross turnover of the assessee.
However, we find that the assessee was non-cooperative at the time of its assessment before the Assessing Officer and assessment was framed u/s 144 of the Act. The assessee has not filed the requisite details before the Assessing Officer. The details and documents were furnished by the assessee before the CIT(A) and the CIT(A) failed to send the same to the Assessing Officer for the remand report or for getting the comments of the Assessing Officer. In these facts of the case, we are of the view that the order of learned CIT(A) is not sustainable in law and, accordingly, we set aside the order of the learned CIT(A) to his file with the direction to pass a de novo appellate order in accordance with law after giving opportunity to both the sides. The assessee shall be at liberty to file any evidence in support of its case before the CIT(A) and the CIT(A) is directed to give opportunity to the Assessing Officer to file its remand report on the evidence which may be relied upon by the assessee and to give his comments thereon and the learned CIT(A) shall pass the appellate order on the issues before him. We direct accordingly.
In the result, the appeal of the Revenue is allowed for statistical purposes. Decision pronounced in the open Court on 5th October, 2015.