M/S Motia Constructions Limited, Chandigarh Delhi Highway, Naczirakpur v. Commissioner Of Income Tax, Kitchlu Nagar, Ludhiana

Income Tax Appeal No. 267 of 2015 1 IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH. Income Tax Appeal No. 267 of 2015Date of Decision: 10.9.2015 M/s Motia Constructions Limited, Chandigarh Delhi Highway, NACZirakpur. ..Appellant versus Commissioner of Income Tax, Kitchlu Nagar, Ludhiana .Respondent CORAM:HON'BLE MR. JUSTICE RAJIVE BHALLA HON'BLE MS. JUSTICE NAVITA SINGHPresent:Mr. Ravi Shankar, Advocate, for the appellant.RAJIVE BHALLA,J. The appellant challenges order dated 21.1.2015 passedby the Income Tax Appellate Tribunal (for short “the Tribunal”)dismissing an appeal relating to an assessment year 2004-05. Counsel for the appellant submits that pursuant to asearch and seizure on 25.2.2009 under Section 132, of the IncomeTax Act, 1961 (hereinafter referred to as “the Act”), the AssessingOfficer, passed an assessment order, dated 22.12.2010 addingdevelopment expenses, as the appellant could not furnishdocumentary evidence. The appeal filed by the appellant wasdismissed by the Commissioner of Income Tax (Appeal)-1, Ludhianaon the same ground but at the time of filing of the appeal before theTribunal, the appellant was able to trace relevant vouchers and,therefore, filed an application for additional evidence for producing Income Tax Appeal No. 267 of 2015 2 the vouchers before the Tribunal. The Tribunal has, however, rejectedthe application for additional evidence as well as the appeal bydoubting the authenticity of the vouchers. Counsel for the appellantfurther submits that the vouchers were in possession of Shri PawanBansal, a Director, who resigned from company on 02.01.2009 alongwith two other Directors Shri Kewal Bansal and Smt. Pinky Bansal.Shri Pawan Bansal was managing the affairs of the company andwas in possession of the vouchers. The appellant could not producethe vouchers either before the Assessing Officer or before theCommissioner of Income Tax (Appeal) but produced them before theTribunal. The application for additional evidence and the appealhave been dismissed by doubting the authenticity of the vouchersand holding that the story put-forth by the appellant appears to be anafter thought. The finding recorded by the Tribunal is clearlyincorrect and gives rise to the following substantial questions of law:- “iWhether on the facts and in the circumstance of thecase ITAT is justified in declining to admit the additionalevidence and in declining to remand the matter to AO forverification and proper enquiry, ignoring the judgment ofHon'ble Supreme Court in the case of Tek Ram (DeadThrough LRs) Vs. CIT (supra) despite the fact thatappellant was earlier unable being helpless to submit therelevant vouchers before the authorities below? ii.Whether on the facts and in the circumstance of thecase the ITAT is justified in rejecting the prayer of theappellant for admission of the additional evidence with a Income Tax Appeal No. 267 of 2015 3 direction to the AO to verify the genuineness of the saidexpenses ignoring the plea of inability and relevance ofadditional evidence, which decision is against the mandateof the Hon'ble jurisdictional High Court in the case of CITvs. Mukta Metal Works (supra)?” We have heard counsel for the appellant, perused theimpugned order, the order passed by the CIT (Appeals)-1, Ludhiana,the order passed by the Assessing Officer as well as copies of someof the vouchers appended with the appeal but are unable to hold thatthe impugned orders call for any interference or gives rise anysubstantial question of law. Income Tax Appeal No. 267 of 2015 3 direction to the AO to verify the genuineness of the saidexpenses ignoring the plea of inability and relevance ofadditional evidence, which decision is against the mandateof the Hon'ble jurisdictional High Court in the case of CITvs. Mukta Metal Works (supra)?” We have heard counsel for the appellant, perused theimpugned order, the order passed by the CIT (Appeals)-1, Ludhiana,the order passed by the Assessing Officer as well as copies of someof the vouchers appended with the appeal but are unable to hold thatthe impugned orders call for any interference or gives rise anysubstantial question of law. Admittedly, pursuant to search and seizure, under Section132 of the Act, the Assessing Officer called upon the appellant toexplain development expenses of Rs.21,82,240/- but as the appellantcould not produce any documentary evidence to support theseexpenses, the Assessing Officer passed assessment order, underSection 143(2)/153A of the Act disallowing the expenditure ofRs.21,82,240/-. The appellant filed an appeal which was rejected bythe Commissioner of Income Tax (Appeal), by holding that there is noevidence to support the expenditure of Rs.21,82,240/- claimed bythe appellant. The appellant, thereafter, filed an appeal before theTribunal accompanied by an application for additional evidence byappending a large number of vouchers and pleaded that thevouchers were in possession of Shri Pawan Bansal, a Director, whohad resigned on 02.01.2009. The appellant has now been able to Income Tax Appeal No. 267 of 2015 4 the vouchers should be taken into consideration. The Tribunal hasconsidered the application for additional evidence, the vouchersappended with the application and dismissed the appeal by holdingas follows:- “We have considered rival submissions. It is a fact that assessee has expressed inability to furnish anydocumentary evidences and primary vouchers for claimingdeduction on account of development expenses beforeAssessing Officer. The Assessing Officer also recordedthis fact in the order-sheet and ultimately assessee did notproduce any evidence of incurring development expensesfor the purpose of business before the Assessing Officer.The same is the position before ld. CIT (Appeals) andassessee has not produced any evidence before ld. CIT(Appeals) also. Now the assessee has come up with theexplanation of resignation of three of its Directors beforepassing of the assessment order and it is claimed that thevouchers of development expenses were in possession ofthe Director who have resigned from the assesseecompany. However, such fact was never pleaded beforethe authorities below. Therefore, it appears to be the afterthought story made up by the assessee. If thedocumentary evidences in the shape of vouchers ofdevelopment expenses were in power and possession ofother Directors who have resigned, nothing had preventedassessee from explaining these facts before authorities Income Tax Appeal No. 267 of 2015 5 Income Tax Appeal No. 267 of 2015 5 below. Further, ongoing through the voluminous PaperBooks which contain the ledger account and copies of thevouchers, we notice that none of the vouchers throughwhich development expenses are stated to have beenpaid by assessee, have been signed on behalf of theassessee. The vouchers are not approved by theassessee company and no details have been mentionedas to how these payments were made for businesspurpose of the assessee and whether the same havebeen approved by and on behalf of the assesseecompany. In the absence of any signature on thevouchers on behalf of the assessee company, thegenuineness of the vouchers itself is in doubt. Therefore,considering the facts and circumstances above anddiscussion, we are of the view that the additionalevidences in the shape of vouchers should not beadmitted. The request of assessee for admission ofadditional evidence is accordingly rejected.” We find no reason to accept arguments advancedby counsel for the appellant or to hold that the Tribunal hascommitted any error of law in dismissing the application for additionalevidence as well as the appeal. The appellant could have easily toldthe Assessing Officer or the Commissioner of Income Tax (Appeals)- 1, Ludhiana that the vouchers were in possession of another Director Income Tax Appeal No. 267 of 2015 6 vouchers are not signed by and on behalf of the assessee and thereis no evidence as to whether these payments were made forbusiness purposes etc and, therefore, even otherwise, irrelevant.The substantial question of law based upon a judgment of theHon'ble Supreme Court in Tek Ram (dead through LRs) Vs.Commissioner of Income Tax, [2013]357 ITR 133 (SC) ismeaningless as documents produced by the assessee in the saidcase as additional evidence were found to be relevant. Reference toanother judgment of this Court in CIT vs. Mukta Metal Works [2011]336 ITR 555 (P&H) is not tenable as additional evidence produced inthe aforesaid case was held to be necessary for adjudication of thepending lis. Consequently, finding no merit in the appeal and as thesubstantial questions of law framed for adjudication, do not arise forconsideration, the appeal is dismissed. ( RAJIVE BHALLA ) JUDGE 10.9.2015VK ( NAVITA SINGH ) JUDGE