Appella v. Sh. Daljit Singh Sra

ITA No. 98 of 2017Date of decision: 16.03.2017. Principal Commissioner of Income Tax, Bathinda .... Appella Vs. Sh. Daljit Singh Sra Prop M/s Sra Construction Co. Bathinda ..-.Respondent CORAM: HON’BLE MR. JUSTICE AJAY KUMAR MITTALHON’BLE MR. JUSTICEK RAMENDRA JAIN. Present: |Mr. Denesh Goyal, Senior Standing Counsel for the appellant. Ajay Kumar Mittal,J. 1,The present appeal has been preferred by the appellant-revenueunder Section 260A of the Income Tax Act, 1961 (in short, “the Act’)against the order dated 02.08.2016, Annexure A.5, passed by the IncomeTax Appellate Tribunal, Amritsar Bench, Amritsar (in short, “the Tribunal”)in ITA No. 125(Asr)/2014, for the assessment year 2007-08, claimingfollowing substantial questions of law:-. (1)“Whether on the facts and circumstances of the case and in law,ITAT has erred in directing the CIT(A) to admit additionalevidence without appreciating that no circumstances specifiedunder Rule 46A(1) of the Rules existed and a clear finding inthis regard was recorded by the CIT(A) and the ITAT? ITAT has erred in directing the CIT(A) to admit additionalevidence without appreciating that no circumstances specifiedunder Rule 46A(1) of the Rules existed and a clear finding inthis regard was recorded by the CIT(A) and the ITAT? (11)Whether on the facts and circumstances of the case and in law,the ITAT erred in failing to appreciate that under rule 29 of theIncome Tax Appellate Tribunal Rules, 1963, the parties to theappeal should not be entitled to produce additional evidenceunless the Tribunal, for reasons recorded, may allow suchthe ITAT erred in failing to appreciate that under rule 29 of theIncome Tax Appellate Tribunal Rules, 1963, the parties to theappeal should not be entitled to produce additional evidenceunless the Tribunal, for reasons recorded, may allow such documents to be produced for any substantital cause and that nosuch reasons have been recorded by the ITAT?such reasons have been recorded by the ITAT? (111)Whether on the facts and circumstances of the case and in law,the ITAT erred in setting aside the order of the CIT(A) bydirecting to admit additional evidence to assess the real incomeof the assessee without pointing out any defect in theassessment order as upheld by the CIT(A)?the ITAT erred in setting aside the order of the CIT(A) bydirecting to admit additional evidence to assess the real incomeof the assessee without pointing out any defect in theassessment order as upheld by the CIT(A)? (iv)Whether on the facts and in the circumstances of the case and inlaw, the ITAT erred in holding that real income of the assesseebe assessed in the delivery of justice even though the ITATitself held that the assessee did not cooperate with theAssessing Officer in completion of assessment proceedings andnatural justice already stood delivered?law, the ITAT erred in holding that real income of the assesseebe assessed in the delivery of justice even though the ITATitself held that the assessee did not cooperate with theAssessing Officer in completion of assessment proceedings andnatural justice already stood delivered? (iv)Whether on the facts and in the circumstances of the case and inlaw, the ITAT erred in holding that real income of the assesseebe assessed in the delivery of justice even though the ITATitself held that the assessee did not cooperate with theAssessing Officer in completion of assessment proceedings andnatural justice already stood delivered?law, the ITAT erred in holding that real income of the assesseebe assessed in the delivery of justice even though the ITATitself held that the assessee did not cooperate with theAssessing Officer in completion of assessment proceedings andnatural justice already stood delivered? (v)Whether on the facts and in the circumstances of the case and in|law, the ITAT erred in not taking into consideration thejudgment of Hon’ble High Court of Allahabad in the case ofRam Prashad Sharma Vs. CIT,119 ITR 867 wherein, it washeld that the powers of the Tribunal to admit additionalevidence under Rule 29 were limited and the Tribunal had adiscretion which of course, must be exercised reasonably andthat in the instant case discretion was not exercised reasonably ?law, the ITAT erred in not taking into consideration thejudgment of Hon’ble High Court of Allahabad in the case ofRam Prashad Sharma Vs. CIT,119 ITR 867 wherein, it washeld that the powers of the Tribunal to admit additionalevidence under Rule 29 were limited and the Tribunal had adiscretion which of course, must be exercised reasonably andthat in the instant case discretion was not exercised reasonably ?(v1)Whether on the facts and in the circumstances of the case and inlaw, the ITAT is correct in directing the CIT(A) to admitadditional evidence even though the learned ITAT itself gaveclear finding “that no doubt assessee did not cooperate with theAssessing Officer in completion of assessment proceedings”,ignoring that the assessee’s case did not fall under any of theconditions to be met by an application made under Section 250of the Income Tax Act, 1961?law, the ITAT is correct in directing the CIT(A) to admitadditional evidence even though the learned ITAT itself gaveclear finding “that no doubt assessee did not cooperate with theAssessing Officer in completion of assessment proceedings”,ignoring that the assessee’s case did not fall under any of theconditions to be met by an application made under Section 250of the Income Tax Act, 1961? 2.A few facts relevant for the decision of the controversy involvedaS narrated in the appeal may be noticed. A survey under Section 133A ofthe Act was carried out at the business premises of the assessee on07.03.2007. The assessee surrendered additional income ofY40,00,000/- . 2.A few facts relevant for the decision of the controversy involvedaS narrated in the appeal may be noticed. A survey under Section 133A ofthe Act was carried out at the business premises of the assessee on07.03.2007. The assessee surrendered additional income ofY40,00,000/- . The assessee filed his return of income on 30.10.2007 declaring an incomeoftY39,52,746/-. The case was taken up for scrutiny and was assessed underSection 144 of the Act, vide order dated 11.12.2009 at an income of|e1,16,40,700/- plus agricultural income of|d3,90,000/- . During the course of|assessment proceedings, the assessee failed to produce books of account,bills and vouchers for examination inspite of being given variousopportunities to do so. The Assessing Officer made assessment underSection 144 of the Act and adopted net profit rate of 7.47% on grossturnover of the assessee i.e. the rate which was declared by the assessee inthe immediate preceding previous year. The Assessing Officer observed thatthe assessee leased out his 13 acres of agricultural land at the rate of|Y30,000/- per acre per year and the amount was credited to his capitalaccount. Hence, the Assessing Officer added the agricultural income of<3,90,000/- to the returned income for rate purposes. Further, deduction ofY1,00,000/- claimed by the assesssee under Chapter VIA of the Act wasdisallowed in the absence of any evidence. Aggrieved, thereby, the assesseefiled an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)]..The assessee also filed an application under Section 250 of the Act read withRule 46A of the Income Tax Rules, 1962 (in short, “the Rules). The saidapplication was not admitted by the CIT(A) holding that the assessee wasgiven various opportunities to produce books of account and thus his casewas not covered under Rule 46A of the Rules. Vide order dated 22.03.2013,Annexure A.2, the CIT(A) dismissed the appeal. Still not satisfied, theassessee filed an appeal before the Tribunal. Vide order dated 23.05.2014,Annexure A.3, the Tribunal dismissed the appeal filed by the assessee beingdefective one. Thereafter, the assessee filed a miscellaneous applicationbefore the Tribunal. The Tribunal recalled its previous order vide order dated 11.03.2016, Annexure A.4, in miscellaneous application No.18(Asr)/2015. Thereafter, the Tribunal vide its order dated 02.08.2016,Annexure A.5, in the main appeal directed the CIT(A) to admit additionalevidence and decide the case afresh after affording reasonable opportunity to’the assessee of being heard by holding that to deliver natural justice despitethe non-co-operative attitude of the assessee towards assessmentproceedings, real income was to be assessed. Hence, the instant appeal bythe appellant-revenue. onWe have heard learned counsel for the appellant-revenue. _ 4The matter was examined by the Tribunal in detail on the basis|of the entire material available on record. It was noticed by the Tribunal thatthe assessment was completed under Section 144 of the Act as the assesseedid not cooperate in assessment proceedings. On account of sickness of theassessee, he wanted to file additional evidence under Rule 46A of the Rulesbefore the CIT(A). In his affidavit dated 04.03.2010, the assessee had evenstated that he had undergone heart surgery. In the first week of December,2009, he got himself examined from the hospital at Mohali where thedoctors advised him bed rest. In view of this factual position books ofaccount, bills/vouchers etc could not be produced by the assessee. It hasbeen recorded by the Tribunal that no doubt the assessee did not cooperatewith the Assessing Officer in completion of the assessment proceedings andthat the books of account etc were not produced inspite of opportunity butthe said evidence might have been relevant for the calculation of the realincome of the assessee. The Tribunal keeping in view the overall facts andcircumstances of the case rightly directed the CIT(A) to admit additionalevidence and decide the case afresh after affording reasonable opportunity to the assessee of being heard. The relevant findings recorded by the Tribunal read thus:-. “We have heard the rival parties and have gone through the material|placed on record. We find that it is an undisputed fact that assessmentin this case has been completed under Section 144 of the Act as the}assessee did not cooperate in assessment proceedings. It is also a factthat before learned CIT(A) the reason for non appearance before theAssessing Officer was explained to be sickness of assessee and|assessee wanted to file additional evidence under Rule 46A of theRules. However, the learned CIT(A) did not agree with the contention|of assessee and did not admit the additional evidence by holding asplaced on record. We find that it is an undisputed fact that assessmentin this case has been completed under Section 144 of the Act as the}assessee did not cooperate in assessment proceedings. It is also a factthat before learned CIT(A) the reason for non appearance before theAssessing Officer was explained to be sickness of assessee and|assessee wanted to file additional evidence under Rule 46A of theRules. However, the learned CIT(A) did not agree with the contention|of assessee and did not admit the additional evidence by holding as under. “From the perusal of the assessment order, it is found that the|AO at no stage refused to admit any evidence which ought to|have been admitted. It is also found that during the period 18-09-2008 to 08-12-2009 eight opportunities were afforded to the|appellant for production of books of account and bills/vouchers|of expenses but the same were not produced. The contention of|the appellant that the details of various accounts were submitted|during assessment proceedings has no force because in the)absence of books of account, the same could not verified by the)Assessing Officer. In his affidavit dated 04.03.2010, the)appellant has stated that about two years back he had undergoneheart surgery and in the first week of December, 2009, he again|got himself examined from Mohali where the doctors advised|him bed rest and for that matter, necessary compliance regardingproduction of account books and bills/vouchers etc could not bemade. This, circumstance also does not help the appellantbecause even prior to December, 2009, the Assessing Officer|had specifically asked him to produce the books of account and_other records which he did not comply. In such circumstances, it cannot be said that the appellant was prevented by sufficient)cause from producing the evidence which was called upon to)produce by the Assessing Officer. Further be that as it may, the)appellant could very well ask the Accountant or his counsel or)any other A/R for making compliance for producing the accountbooks but he did not do so. Again, the Assessing Officer vide his|report No. ACIT/Circle-I/BTI/2010-11/172 dated 03.05.2010|has also objected the admission of additional evidence by the|appellant because ample opportunity to produce the account|books and other bills/vouchers was afforded during assessment|proceedings which was not availed of. The sequence of events|and circumstances lead to an irresistible conclusion that the|appellant intentionally avoided to produce books of account and_other bills/vouchers so that the shortcomings in the accountsmay not come to the notice of the Assessing Officer. As| mentioned above, sufficient opportunity was afforded to the)appellant but he did not avail of it. In this view of the matter, the application of the appellant under Section 250 of the Act read)with Rule 46A of the Income Tax Rules cannot be entertained|and the same is rejected.” mentioned above, sufficient opportunity was afforded to the)appellant but he did not avail of it. In this view of the matter, the application of the appellant under Section 250 of the Act read)with Rule 46A of the Income Tax Rules cannot be entertained|and the same is rejected.” In view of the above facts and circumstances, we find that no doubt|assessee did not cooperate with the Assessing Officer in completion ofassessment proceedings but the fact remains that in the delivery ofjustice the real income of assessee has to be assessed and that too afterhearing the assessee. The learned CIT(A) has not commented upon|the nature of evidence filed under Rule 46A of the Act. Such evidence|might have been relevant for the calculation of real income of theassessee, therefore, in view of the substantial justice, we direct thelearned CIT(A) to admit additional evidence and decide the caseafresh after affording a reasonable opportunity to the assessee of beingheard. 5.|No illegality or perversity has been shown by the learned|counsel for the appellant-revenue in the findings of fact recorded by the |Tribunal, warranting interference by this Court. Thus, no substantialquestion of law arises. Consequently, the appeal stands dismissed. It is,however, clarified that the Assessing Officer shall complete the assessmentexpeditiously, preferably within three months from the date of receipt of acertified copy of this order. The assessee shall cooperate with the AssessingOfficer. March 16, 2017| Whether speaking/reasoned Whether reportable (Ajay Kumar Mittal) Judge (Ramendra Jain) Judge Yes/NoYes.