TaxTMI 
TaxTMI 
2014 (5) TMI 116
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.... account of unexplained investment in property, violating the Rule 46A of the Income Tax as the Additional evidence were filed by the assessee before the Appellate Authority which were never submitted before the AO during assessment proceedings. 4. In directing the AO to treat the income of Rs.95,000/- as agriculture income violating the Rule 46A of the Income tax as the Additional evidence were filed by the assessee before the Appellate Authority which were never submitted before the AO during assessment proceedings. 5. In accepting the sweeping submissions of the assessee which does not stand supported by evidence on record of the Assessing Officer, and in accepting self serving documents not corroborated or examined during assessment proceedings the thus denying opportunity of holistic examination to the AO, during assessment proceedings. 6. Set aside the order of the CIT(A) and restore the matter beck to the AO to re-examine fresh evidence in a holistic manner." 2. The assessee in support of the impugned order has also filed cross-objection on the following grounds:- "1. On the facts and circumstances of the case, the Commissioner of Income Ta x(Appeals) [CIT(A)] has erred....
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.... on behalf of the assessee that he could not be represented before the AO on account of illness of his ITP/Accountant. Accordingly petition for admission for fresh evidence relatable to the additions was moved. The CIT(A) admitted the said evidence after obtaining a Remand Report from the AO. Considering the evidence most of the additions made were deleted by the First Appellate Authority barring the addition made on account of deductions claimed under Chapter VIA resulting in confirming the denial of benefit of Rs.96,463/- which was directed to be verified based on the evidence to be produced by the assessee before the AO. 5. Aggrieved by this the Revenue is in appeal on the above mentioned grounds. Since, in the CO filed by the assessee the challenge is posed to the reopening it was a common stand of the parties that this may be first addressed at the outset. 5.1. In terms of the above stand of the parties, Ld. AR leading the arguments invited attention to copy of the reasons recorded placed at Paper Book page 16. The same is extracted hereunder for ready-reference:- " Information in respect of investment amounting to Rs.99,00,000/- for purchase of property (office of Sub-Regi....
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....y of the return within 7 days, the assessee it was stated filed a copy of return on 21st January 2009 copy of the same was placed before the Court. However, before proceeding further it was stated on his own that in all fairness he was duty bound to inform the Court that the assessee had not filed any objections either before the A.O nor before the CIT(A) on the reopening. 6. In the said background, the Ld. Sr. DR stated that in the face of the stated stand of the assessee the CO can be treated as supportive as once no grievance is posed in the assessment proceedings and also before the CIT(A) and here also the ground is argued and then given up as such he would rely on the orders and state that the assessee having participated all along before the CIT(A) without voicing his grievance the cross objection should be dismissed. 6.1. Qua the departmental grounds it was his vehement plea that how is it possible that the assessee could file nothing before the AO supposedly on account of Neurological illness of his accountant. It was his submission that it cannot and should not be believed that simply because one employee was not well consequently the assessee was rendered in capable of....
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..... The appellant submitted that Sh. J. K. Jain was looking after all his accounts and due to his suffering from a neurological disease, he could not prepare the relevant documents for the submission before the A.O. The medical records of Sh. J. K. Jain have been placed by the appellant in the paper book. In the light of the submissions made by the appellant, I am of the opinion that the appellant was prevented by sufficient cause from submitting certain crucial evidences before the A.O during assessment stage. An affidavit of the appellant in this regard has also been placed on record. Accordingly, the admission of additional evidence at appellate stage is allowed." 6.4. The Sr. DR was also required to read out Para 4.3 of the impugned order to show as to how and why the issue should be restored as Remand Reports apparently have been obtained by the CIT(A) himself. The said para is also extracted hereunder for ready reference:- "4.3 A Remand Report was called for from the AO vide letter dated 28/3/2011. The Remand Report was received from the AO vide his letter dated 5/8/2011, in which he basically objected to the admission of additional evidence on various grounds. Since, it was ....
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....l wherein identical grounds have been raised by the Revenue assailing the action of the CIT(A) in deleting the additions based on additional evidences and even the wordings of Ground No. 5 is identically worded as would be evident from page 2 & 3 of the said order. It was submitted that a perusal of these would show that the arguments advanced on behalf of the Department therein were also identically worded. Inviting attention to copy available on record. For ready reference, we reproduce the same from the said order:- 5. " The main grievance of the Revenue is that Ld. CITA() has accepted the additional evidences in violation of Rule 46A. Hence, it has been pleaded by the Ld. Departmental Representative that the matter be remitted to the file of the Ld. AO to re-examine the fresh evidence. Ld. DR further relied upon the decision of Manish Buildwell 245 CTR 397 and Modern Charitable Foundation 335 ITR 105." 7.3. Inviting attention to the said order it was submitted that considering the identical plea the departmental objections were rejected. For ready reference we reproduce the relevant paras:- "5.1 On the other hand, Ld. Counsel of the assessee has submitted that assessee has p....
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.... addition in violation of Rule 46A is devoid of cogency. Under the circumstances, we hold that Ld. A.O has been given proper opportunity by the Ld. CIT(A) to examine the additional evidence. Hence, Ld. CIT(A)'s order on this account cannot be said to be suffering from any shortcoming. The case law relied upon by the Ld. Departmental Representative are not applicable on the facts of the case as the Ld. AO in this case has been given adequate opportunity to examine the additional evidences." 7.4. It was his submission that the arguments on behalf of the Department that the A.O shall now once again look at the evidences cannot be allowed as when the higher authority duly exercising the powers vested upon it by the Statute admits additional evidence in terms of Rule 46A and seeks a remand report specifically on the evidences filed the AO cannot seek to relook at the evidences repeatedly which were made available to him as additional evidence. It was submitted the said stand cannot be accepted. Inviting attention to the impugned order it was pointed out that when the A.O objects to the admission of additional evidence the CIT(A) specifically restored these evidences against overruling ....
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....d by the department however for the sake of completeness he would want his arguments to be specifically taken note of even on merit. 7.7. In the said background elaborating his argument attention qua Ground No-1 was invited to the facts found recorded in para 4.5 of the impugned order. The same it was submitted are supported by paper book page no. 66 which is copy of the ledger account of car purchase. The said page it was submitted is the ledger account addressing the claim of depreciation thereon. Attention was invited to paper book page no. 68 which is a copy of the RC which would show that the car was registered on 28th September 1999 as such it was argued there can be no question of it not having been put to use. Inviting attention to the copy of the ledger paper book page 60 it was his submission that it would shows that there is an opening balance in this account on which the depreciation at the prescribed rate has been charged and none of these documents it was submitted have been assailed by the Revenue. 7.8. Addressing the facts on merits qua Ground No. 2 it was submitted that these are found discussed in Para 4.6 by the CIT(A). Relying on the same it was his submission....
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....s 179 & 180 pages 181 to 188. Copy of the reference before the Deputy Commissioner against the award of compensation and copy of the judgment of District Judge Dwarka Court, New Delhi is at pages 189 to 198 of the paper book and affidavit of Sh.Gopal Das in support of the confirmation and the evidences filed are available at Page 200. None of these documents it was submitted have been assailed and they all have been confronted to the AO. 7.9.2. Similarly, in the case of Satish Kumar, it was his submission that the receipt of 16 lacs is duly confirmed by way of a confirmation letter. Herein also it was submitted that land acquisition payment certificate is placed at pages 205. Similarly, copy of bank passbook, identity proof , copy of cheque receipt is placed at pages 203 to 229 alongwith affidavit of Sh. Satish Kumar. None of these documents also it was argued have been assailed. 7.9.3. Addressing the facts of Sh. Rajeev Vohra it was submitted that the documents qua the loan of 14 lacs from the land acquisition payment along with copy of bank passbook, identity proof, affidavit, copy of cheque etc. documents are all filed at pages 230 to 235 which stand unrebutted by the Revenue.....
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....t was argued that it has no relevance in the present proceedings which are considering the facts of 2006-07 Assessment Year. 9. We have heard the rival submissions and perused the material available on record. On a careful consideration of the same addressing the grievance of the Revenue in admitting fresh evidence at the stage of the First Appellate Authority, we find that the AO issued questionnaire to the assessee on 03.06.2010 which was not responded to. Thereafter further opportunities were given to the assessee which were not availed of and these resulted in passing of the order u/s 144/147. In appeal before the First Appellate Authority, the assessee as per record has pleaded that on account of the serious illness of his Accountant/ITP Sh. J.K.Jain, the relevant documents could not be submitted. Considering the relevant pages of the Paper Book, specific pages 42-62, it is seen that medical evidence of illness dated 22.04.2010 of some treatment on account of fever wherein various tests and medication are prescribed are followed by supporting evidence of some chest Xray dated 23.05.2010 with various follow up treatment /investigation upto 29.01.2011 supported by an affidavit ....
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....s 148 dated 29.1.2010 was issued and served upon the assessee. In response to Shri Mahesh Khatter Chartered Accountant submitted power of attorney and letter dated 22.2.2010 has furnished copy of return of income for assessment year 2006-07 and also submitted that the return already filed may be treated in response to notice u/s 148. On going through the return of income it is noticed that Shri Mahender Pal Paliwal, furnished a belated return on 31.03.2008 by declaring Rs.3,28,230/- plus an agricultural income of rs.95,000/- and claimed a refund of rs.960/- out to TDS of rs.24,239/-. The return was processed u/s 143(1). The A.R. of the assessee submitted letter dated 21.01.2009 addressed to the ITO Ward- 25(4), New Delhi which is reproduced. "The assessee had already filed a letter dated on 21.01.2009 in response to AIR information required in this case for the A.Y.2006-07. Copy of the letter is enclosed herewith. But this reply is not correct, as the computation attached with the return was not accompanied by P&L Account, Balance sheet, TDS Certificate (Copy Annexed). A detailed questionnaire No.-1 dated 03.06.2010 alongwtih notice u/s 142(1) was issued and served. Since the ass....
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....ule 46A, it was observed that the appellant had paid interest on OD account which was not reflected in the P&L A/c. or the B/S. Thus, the AO submitted that since, the OD was not used for business purposes, the interest paid thereon amounting to Rs.3,47,428/- is not allowable. On the other hand, the appellant has claimed that this interest has been paid to the banks on his borrowings from the bank against fixed deposits. The appellant has claimed that the. amount borrowed from the banks against FDRs has been utilized for giving loans on which interest has been earned. The appellant submitted that there is a direct nexus between interest earned on loans given and interest paid on loans taken. He submitted that he had given loans out of bank loans taken, on which he had earned interest of Rs.2,70,000/- and therefore, the interest paid should be allowed as a legitimate expenditure. I have carefully considered the submissions made by both the AO in the Remand Report as well as the appellant in the Rejoinder to the Remand Report. There is merit in the argument of the appellant that he has taken loans from the bank against FDRs on which he has paid interest, and he has utilized these fund....
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....on, documentary evidence regarding compensation, PAN numbers and other ID proofs have been submitted by the appellant and placed on record in the Paper Book. As regards stamp duty paid by the appellant, it has been submitted that this expenditure has been incurred from the regular books of accounts of the appellant out of loans taken by him from his HUF. As regards brokerage paid of Rs.2 lacs, the appellant has submitted that this being a direct transaction, no brokerage has been paid by him on purchase of plots of land and the AO has assumed that the appellant might have paid brokerage on this transaction. The appellant submitted that this addition has been made without any evidence and purely on suspicion. 4.8 I have given careful consideration to the assessment order, the Remand Report and the plethora of evidence placed on record by the appellant. In the light of the overwhelming evidence regarding investment in property made by the appellant and his explanations with documents regarding the source of such investment as well as the source of source thereof, there is no doubt that no addition can be made to the income of the appellant on these issues since, these investments no....
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....the paper book we are not inclined to accept the arguments on behalf of the Revenue seeking a remand for a re-consideration of the additional evidence once again. It is a matter of record that fresh evidence has been confronted to the AO by the CIT(A) as per the requirements under law. It is also evidenced by the impugned order itself that after receiving the objections of the AO who opposed the admission of fresh evidence, the CIT(A) exercising the powers vested in him overruled the objections of the AO and held that the assessee was prevented by a sufficient cause in placing the evidence before the AO. The neurological illness of a chronic diabetic person who was acting as ITP/ Accountant for the assessee and its family members was accepted as a sufficient cause. This finding of the CIT(A) has been upheld by us in the earlier part of this order and is part of this order and is found supported by a finding by the order of a Co-ordinate Bench. However reverting back to the issue at hand it is seen that after admitting the fresh evidence the CIT(A) directed the AO vide letter dated 01.11.2011 to submit his comments on the evidence submitted as the evidence over-ruling the AO's objec....