SERCON INDIA PRIVATE LIMITED,NEW DELHI vs. ITO, WARD-23(1), NEW DELHI

This appeal filed by the Assessee against the order of Learned Commissioner of Income Tax (Appeals)-28 New Delhi [“Ld. CIT(A)”, for short], dated 15/05/2018 for Assessment Year 2014-15.

There is a delay of 141 days in filing the present Appeal. The assessee filed an affidavit contending that, ‘there have been no operations of the Company since last five years, the Company came to know about passing of the order impugned only on 12/03/2021 when the e-mail was received from the Department about the penalty proceedings u/s 271 (1)(c) of the Act. The person in charge of Company’s affair at Mumbai tried to contact the Assessee's Representative at Delhi, but he could not succeed due to their non co-operation.

Brief facts of the case as per the order of the CIT(A) are that, “the return of income was filed by assessee on 27.11.2014 declaring Nil income and book profit u/s 115JB of Rs. 1,82,44,316/-. The assessee company has claimed to be engaged in the business of providing services in the field of advertisement, publicity, promotion, event management, marketing consultancy, etc. During the assessment proceedings, it was observed by AO that the assessee has shown gross receipts/sales at Rs. 22,10,98,000/- against which, it has claimed operating and administrative expenses of Rs. 13,07,57,000/-. To verify the genuineness of these expenses, AO asked the assessee to produce the complete set of books of account along with bills and vouchers. However, despite of Sercon India Pvt. Ltd. vs. ITO giving several opportunities, assessee could file ledger accounts only of various expenses in soft copy. Since the AO could not examine the nature and reasonableness and allowability of the said expenses in absence of books of account and supporting documents, he, therefore, to plug the leakage or any gap of such expenditure and to protect the interest of revenue, disallowed the 10% of operating and administrative expenses of Rs. 13,07,57,000/- which amounted to Rs. 1,30,75,700/- and added back to the income of the assessee.

Aggrieved by the assessment order dated 31/12/2016, the assessee preferred an Appeal before the CIT(A), the Ld. CIT(A) vide order dated 15/05/2018 dismissed the Appeal filed by the assessee. Aggrieved by the order of the CIT(A), the assessee preferred the present Appeal on the grounds mentioned above.

The assessee had also filed an application for additional evidence under Rule 29 of the Income Tax (Appellate Tribunal) Rules, 1963, contending that the Company was not in a position to gather all the relevant documents and papers for being submitted before the Assessing Officer as required by the A.O. at the time of assessment proceedings and before the CIT(A) at the time of appellate proceedings, therefore, the same have not been considered by the authorities in the respective proceedings. Further contended that, with the help and support of an Employee of the Group Company, the assessee could gather some records which have been submitted as additional evidence, which supports the claim of the Assessee. Therefore, the Assessee's Representative sought for admitting the additional evidence by allowing the application.

The Ld. Departmental Representative relying on the orders of the Lower Authorities sought for dismissal of the Appeal and also objected for admission of additional evidence.

We have heard both the parties and perused the material available on record. During the year under consideration, the assessee shown gross receipt/sales at Rs. 22,10,98,000/- against which the assessee claimed operating and administrative expenses of Rs. 13,07,57,000/-. On perusal of the various heads of expenditures, the A.O, was of the opinion that the assessee had claimed huge amount under various heads which needs to be verified by way of bills/vouchers and their justification for claim through books of accounts and supportive documentary evidences. The A.O. asked the assessee Page 5 of 8

It is the case of the assessee that the books of account and records of the assessee company were being maintained at New Delhi and due to closer of activities of the assessee company, the employees of the Company left the service and on account of which there was a communication gap between the Assessee's Representative and the Company in connection with submission of documents during the assessment proceedings and also during the appellate proceedings. Further, the assessee company was not in a position to gather all the documents and submit the same before the authorities which resulted in making the addition by the A.O. Further contended that, the assessee with the help and support of the Employees from Group Companies, now able to gather some records which were produced as additional evidence. In support, an affidavit dated 21/02/2023 has been furnished by Sh. Ankit Dogra, Director of the Assessee Company wherein averments have been made detailing the circumstances in which appropriate and complete records could not be produced before the Assessing Officer in the course of assessment. There is Sercon India Pvt. Ltd. vs. ITO neither rebuttal and nor any material lead by the respondent-Revenue to assail the averments made in the affidavit.

The assessee had not produced the complete books of accounts along with bills and vouchers and other documentary evidence to substantiate the claim of the assessee before the A.O. or before the CIT(A) and it is the case of the Assessee that the Assessee could not produce the documents due to non availability of the same to the Assessee at that point of time. It is quite evident that the material referred by the assessee company is relevant to correctly determine the tax liability of the Assessee. Since the Assessee has produced the documents before the Tribunal along with an Application filed by the Assessee under Rule 29 of Income Tax (Appellate Tribunal Rules, 1963) as additional evidence, in the facts and circumstances of the case, we allow the Application filed by the Assessee under Rule 29 of Income Tax (Appellate Tribunal Rules, 1963), as the Lower authorities had no opportunity to verify the documents produced along with the said application, without commenting anything on the merit of the case, we admit the additional documents produced by the Assessee and restore the matter to the file of the A.O. with a direction to consider the documents produced by the assessee and adjudicate the issues after giving opportunity of being heard to the assessee. Accordingly, we partly allow the appeal filed by the assessee.