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IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER ITA No. 87/Srt/2020 (Assessment Year: 2015-16) (Hearing in Physical Court) Virendra Manakchand Begani (HUF), I.T.O., 3-B, Shubh Laxmi Appt., City Light Ward-1(3)(4), Vs. Road, Surat-395007, Surat. Surat. PAN No. AAIHV 4669 N Appellant/ assessee Respondent/ revenue
Appellant represented by Shri Sapnesh Sheth, CA Respondent represented by Shri Vinod Kumar, Sr.DR Date of hearing 07/07/2022 Date of pronouncement 07/07/2022 Order under Section 254(1) of Income Tax Act PER: PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by the assessee is directed against the order of learned Commissioner of Income Tax (Appeals)-2, Surat (in short, the ld. CIT(A) dated 05/02/2020 for the Assessment year (AY) 2015-16. The assessee has raised following grounds of appeal: “1. On the facts and circumstances of the case as well as law on the subject, the learned Commissioner of Income Tax (Appeals) has erred in confirming the action of assessing officer in making addition of Rs. 1,51,220/- on account of disallowance of consultancy expenses. 2. On the facts and circumstances of the case as well as law on the subject, the learned Commissioner of Income Tax (Appeals) has erred in confirming the action of assessing officer in making addition of Rs. 12,16,000/- as unexplained investment.
ITA No.87/Srt/2020 Virendra Manakchand Begani (HUF) Vs ITO 3. On the facts and circumstances of the case as well as law on the subject, the learned Commissioner of Income Tax (Appeals) has erred in not admitting additional evidences filed by assessee even though same goes to the root of the issue and clearly proves the genuineness of assessee’s contention. 4. It is therefore prayed that above addition made by assessing officer and confirmed by Commissioner of Income Tax (Appeals) may please be deleted. 5. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal.”
At the outset of hearing, the ld. Authorised Representative (AR) of the assessee submits that during the assessment, the assessee could not furnish certain evidence due to reason beyond his control. However, before the ld. CIT(A), the assessee filed application for admission of additional evidence under Rule 46A of the Income Tax Rules, 1962 (in short, the Rules). The ld. CIT(A) called the remand report of the Assessing Officer. The Assessing Officer in his remand report objected for admission of additional evidence though the evidence was considered by Assessing Officer and is furnished the remand report. The ld. CIT(A) despite seeking remand report has not admitted the additional evidence, resultantly the addition made by Assessing Officer on account of consultancy expenses as well as unexplained investment was upheld. The ld. AR of the assessee submits that the assessee has a good case on merit and is likely to succeed, if the additional evidence is admitted and consider on merit. The ld. AR of the assessee submits that he has already placed on record copy
ITA No.87/Srt/2020 Virendra Manakchand Begani (HUF) Vs ITO of remand report furnished by the Assessing Officer and his reply in the form of rejoinder. 3. The ld. AR submits that the additional evidence before the ld. CIT(A) consists of document relating to addition of consulting expenses paid to Narendra Begani, i.e. acknowledgement of return of income alongwith computation of income for A.Y. 2015-16, balance sheet and profit and loss account for the year ended 31/03/2015, consultancy expense ledger from assessee’s books of account. The other documents relates to the addition of unexplained investment relating to investor Shri Virendra M Begani, Ujaladevi V Begani and Nikhil Begani, which consist of acknowledgement of their ITR with income alongwith computation of income for A.Y. 2015- 16, Aadhar card copy, Union Bank of India bank statement for A.Y. 2015- 16 and their account confirmations. The additional evidences are material bearing on the issues on which the addition was made by the Assessing Officer. The ld AR of the assessee prayed that the additional evidences may be admitted and the issue may be considered on merit. 4. On the other hand, the ld. Sr. DR for the revenue submits that before the Assessing Officer, the assessee has not filed any evidence despite availing more than sufficient opportunity. Before the ld. CIT(A), the assessee failed to disclose reasonable cause as required under Rule 46A of the Rules, thus the additional evidence was not admitted by the ld. CIT(A). The ld. Sr.DR 3
ITA No.87/Srt/2020 Virendra Manakchand Begani (HUF) Vs ITO submits that mere seeking of remand report/comment of Assessing Officer could not entitle the assessee ipso facto for admission of additional evidence particularly when the assessee failed to disclosed reasonable cause for admission of such additional evidences. 5. In rejoinder submission, the ld. AR of the assessee submits that the Tribunal has wide enough power to admit the additional evidence and to consider the case on merit. To support his submission, the ld. AR of the assessee relied upon the following case laws: (i) Smt. Prabhavati S. Shah Vs CIT (1998) 231 ITR 0001/148 CTR 0192 (ii) Vishnu Kumar Gupta Vs CIT (1983) 143 ITR 0069/(1982) 10 Taxman 0309. 6. We have considered the rival submissions of both the parties and have gone through the orders of the lower authorities carefully. We find that the Assessing Officer during the assessment made addition of consultancy expenses by taking a view that the assessee was requested to submit details of consultancy expenses and that the assessee has not made compliance for providing details of consultancy expenses. It is noted by the Assessing officer that the assessee has not incurred any consultancy expenses in preceding year. There exist no change in the business of the assessee. The assessee is having share broking account with M/s Axis Securities Limited and the said expenses has not been paid to this firm.
ITA No.87/Srt/2020 Virendra Manakchand Begani (HUF) Vs ITO Thus, in such circumstances and inability of assessee to submit any detail with regard to consultancy expenses of Rs. 1,51,220/- was disallowed and added to the total income of assessee. The Assessing Officer also made addition on account of unexplained investment of Rs. 12,16,000/- by taking a view that the assessee has made investment of Rs. 1,75,000/- on 19/04/2014 and Rs. 10,40,000/- on 02/05/2014 with M/s Axis Securities Limited. The assessee submitted that said investment has been made through unsecured loans from the relatives of Karta of assessee HUF. The Assessing Officer held that on perusal of balance sheet of assessee HUF for 31/3/2014 and balance sheet for 31/03/2015 it has been shown that the assessee has taken new unsecured loan from Shri Nikhil Begani at Rs. 5,06,000/-, Ujaladevi Begani at Rs. 9,50,000/- and Virendra Begani Rs. 3,00,000/-. The assessee was asked to submit sources of investment made of Rs. 12.16 lacs by issuing various notices which were also served upon the assessee but the assessee failed to comply. Therefore, the Assessing Officer made addition as unexplained investment and added the same to the total income of assessee. 7. Before the ld. CIT(A), the assessee alongwith his submission filed additional evidence alongwith application for admission of additional evidence. We find that on the additional evidence, the remand report of Assessing Officer was obtained. The Assessing Officer furnished his 5
ITA No.87/Srt/2020 Virendra Manakchand Begani (HUF) Vs ITO remand report though objected to the admission of additional evidence on the ground that sufficient opportunities was given to the assessee to file evidences, the assessing officer has not refused the evidence and that there is nothing on record which suggest that the assessee was prevented by sufficient cause in filing the evidences. 8. The ld. CIT(A) after considering the remand report, not admitted the additional evidence by taking view that the assessee has not shown sufficient cause for preventing in filing the evidence and that the reason of Diwali Festival was pleaded, but no reason of non-compliance was given. Resultantly the addition on account of consultancy expenses and unexplained investment was upheld. Before us, the ld. AR of the assessee vehemently submitted that the additional evidence of assessee consists of consultancy expenses ledger from assessee’s books and the account confirmation, bank statement and copy of Aadhar card of lenders. In our view, the additional evidence filed by the assessee has link and have direct relevancy with the issues raised by assessee, therefore, considering the fact that the assessee sought indulgence of the first appellate authority for seeking admission of additional evidence and the same was not accepted on the ground that no reason for not filing the evidence was shown. However, keeping in view the principal of natural justice, and that additions were made solely for the want of evidence, which was ultimately 6
ITA No.87/Srt/2020 Virendra Manakchand Begani (HUF) Vs ITO filed before ld CIT(A) and the evidences has direct bearing on the issues raised in the appeal, we admit the evidences furnished by the assessee before the ld. CIT(A). Considering the fact that we have accepted/admitted the additional evidence, therefore, the Ground No. 3 raised by the assessee is allowed. Keeping in view that we have allowed ground No. 3, hence, remaining grounds of appeal on the merits of both the additions is restored back to the file of ld. CIT(A) to decide the issue afresh after considering the evidence furnished before him and to pass the order in accordance with law. 9. In the result, this appeal of assessee is allowed for statistical purposes only. Order pronounced in the open court on 07th July, 2022 at the time of hearing of this appeal. Sd/- Sd/- (Dr. ARJUN LAL SAINI) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Surat, Dated: 07/07/2022 *Ranjan Copy to: 1. Assessee – 2. Revenue - 3. CIT(A) 4. CIT 5. DR 6. Guard File By order
Sr.Private Secretary, ITAT, Surat 7