What did the Tribunal hold?

The Tribunal held that the assessee violated Rule 46A by submitting details of expenses for the first time before the CIT(A). Therefore, the matter was set aside and remanded back to the AO for fresh consideration.

The assessee capitalized revenue expenses of Rs. 1,90,04,580/- incurred on Project Edexcel in its original return. It later revised the return to claim these expenses as deductible. The assessee failed to provide supporting bills and vouchers to the Assessing Officer (AO).

What were the issues?

Whether the CIT(A) was justified in allowing the deduction of expenses based on evidence submitted for the first time before him, violating Rule 46A of the ITAT Rules.

ACIT vs M/S. Planet Edu Pvt. Ltd., Gurgaon | ITAT Delhi 2015

Income Tax Appellate Tribunal, DELHI BENCHES : F : NEW DELHI

Before: SHRI R.S. SYAL, AM & MS. SUCHITRA KAMBLE, JM

For Appellant: Shri Sanjay Sood, CA

For Respondent: Shri Rajesh Kumar Kedia, Sr. DR

Pronounced: 30.09.2015

ORDER

PER R.S. SYAL, AM:

This appeal by the Revenue arises out of the order dated 22.2.2012 passed by the CIT (A) in relation to the assessment year 2009-10.

The only grievance raised in this appeal is against the deletion of addition of Rs.1,90,04,580/-.

Briefly stated, the facts of the case are that the assessee filed return declaring income of Rs.83,47,980/-. A revised return was filed declaring loss of Rs.95,59,969/-. The return was revised for claiming expenditure of Rs.1,90,04,580/- incurred on Project Edexcel, which was capitalized at the time of filing the original return. In support of this deduction, the assessee submitted that it had, in an effort to show improved results to shareholders/potential investors, etc., allocated various revenue costs such as salary, rent and communication expenses, etc. to Edexcel Project and treated the same as part of fixed assets in the balance sheet, whereas these were actually revenue expenses deductible in full. On being called upon to produce ledger account and relevant bills and vouchers in support of these expenses, the assessee did not tender the same. This resulted into disallowance of Rs.1.90 crore. The ld. CIT(A) deleted the addition.

We have heard the rival submissions and perused the relevant material on record. It is observed that the assessee has made a case before the AO that a sum of Rs.1.90 crore represented revenue expenses which were capitalized by it in its balance sheet by means of window design to show a better profit to its shareholders and other stakeholders.

On being called upon to substantiate its claim, no details of such expenses, bills and vouchers, etc. were filed before the AO. However, the ld. CIT(A) has deleted this addition on the basis of certain details filed before him for the first time. This position has been admitted by the ld. AR. In our considered opinion this is a fit case of violation of Rule 46A. We, therefore, set aside the impugned order and send the matter back to the file of the AO for considering the deductibility or otherwise of expenses of Rs.1.90 crore afresh as per law, after allowing a reasonable opportunity of being heard to the assessee.

In the result, the appeal is allowed for statistical purposes.

The order pronounced in the open court on 30.09.2015.

ACIT, GURGAON vs. M/S. PLANET EDU PVT. LTD., GURGAON

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