The Commissioner Of Income-Tax, Patiala v. M/S Chittosho Motors, Patiala

Income-tax Appeal No.741 of 2010 **** IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH Income-tax Appeal No.741of 2010 Date of decision: 5.1.2011 The Commissioner of Income-Tax, Patiala ...Appellant Versus M/s Chittosho Motors, Patiala ...Respondent CORAM: HON'BLE MR.JUSTICE ADARSH KUMAR GOEL HON'BLE MR.JUSTICE AJAY KUMAR MITTAL Present: Mr. Tejinder K. Joshi, Advocate for the appellant. **** ADARSH KUMAR GOEL, J ( Oral). 1.This order shall dispose of ITA Nos. 741, 742 and 743 of2010 as it is stated that all the appeals involve common questions.2.Income-Tax Appeal No.741 of 2010 has been preferredby the revenue under Section 260A of the Income Tax Act, 1961(hereinafter referred to as “the Act”) against order dated 18.3.2010passed by the Income Tax Appellate Tribunal, Chandigarh Bench 'B',Chandigarh in C.O.No.2/Chd/2010 raising following substantialquestion of law:- “1)That in facts and circumstances of the case,whether the ITAT is legally justified in confirming theorder of the CIT(A) deleting the addition ofRs.14,00,000/- on a/c of unexplained deposits in the partner's account by admitting additional evidencesin violation of Ruled 46A. 2)That in the facts and circumstances of the case,whether the ITAT is legally justified in confirming theorder of the CIT(A) deleting the addition ofRs.14,00,000/- out of the total addition ofRs.18,00,000/- made by the AO on a/c ofunexplained deposits in the partner's account,without passing a speaking order on the Revenue'sspecific ground that the said admission of additionalevidence was in violation of Rule 46A of the IncomeTax Rules, 1962 and thus erroneous being, also,against the principles of natural justice. 3)That the order passed by the ITAT is perverse as itfailed to test the evidences, put forth by theassessee in the shape of the sale deed, certificatefrom bank and copies of the bank account at theappellate stage, by calling for a report. Also, theveracity/truth of the said evidences had never beentested by any competent authority throughverification.” 3.During the course of assessment, the assessing officermade addition on account of under-valuation of closing stock ofmotor-cycles and spare parts and unexplained deposits in thepartner's account. On appeal, the said addition was partly set aside by the CIT(A) on the basis of additional evidence furnished by theassessee. The said finding has been upheld by the Tribunal. 4.We have heard learned counsel for the appellant. 5.Learned counsel for the appellant fairly stated that ifadditional evidence was validly allowed to be led, the setting aside ofaddition was justified. The only objection is that additional evidenceshould not have been allowed. 6.Reasons for allowing additional evidence given by theCIT(A) are as under:- “2.5I have gone through the assessment record, writtensubmissions filed by the counsel for the assesseeevidence tendered alongwith the same as also thecomments of the A.O. and replication of the counsel forthe assessee. The first issue in this appeal would ariseregarding the admission of the additional evidence. Ithas been explained by the assessee in his writtensubmission that since the partner was lying ill and thetime for the disposal was short the evidence could not befiled in time. This plea of the assessee is apparent fromthe order itself in as much as para 3 thereof at page 3 it isevident that A.O. asked for the source of capitalinvestment in the account of the partner actually on18.11.2008. Although he makes a reference letter dated7.1.2008 but it is too general in nature as the initialinformation was gathered by him at that time. It was explained by the assessee that the partner was ill and thepay-in-slip containing the information as to the source ofdeposit was since lost the information could be suppliedonly after 17.12.2008. 2.6In this scenario, the evidence in the shape of saledeed of land, certificate from bank regarding deposit ofRs.10 lacs as also the copies of the bank account havebeen filed before me in the appellate proceedings. TheA.O. was given due opportunity to rebut the same but hehas just replied that fresh evidence should not beadmitted at the appellate stage. In fact there is specificprovision in Rule 46A providing instances under whichfresh evidence can be entertained. In my view, under thefacts and circumstances of the case the sickness of thepartner is valid reason for not producing the evidenceduring the assessment. The fact that the matter wastaken up in the fag end of the limitation period is alsorelevant. Considering the totality of the circumstances, Iadmit the additional evidence filed by the appellant. Nowconsidering the material on record the source of Rs.14lacs stands duly explained by the sale deed of theagricultural land by the partner of the assessee firm whohas received the sale price and contributed the additionalcapital by account payee cheques only which are dulyreflected in the copy of bank account by the appellant. The only objection on merits by the A.O. is that the dateof introduction of fresh capital of Rs.10 lacs on 20.9.2005is before the execution of the sale deed.” 7.In view of the above explanation, acceptance of whichhas not been shown to be perverse, the view taken by the CIT(A) asupheld by the Tribunal cannot be held to be erroneous. The appealshave to be dismissed. 8.We are of the view that there was no justification for filingthese appeals when even according to the department, the additionwas rightly set aside. The department is not expected to taketechnical plea of additional evidence being considered when suchevidence may advance the interest of justice and show that therewas no justification for addition. 9.A copy of this order be sent to the Chief Commissioner ofIncome-Tax, Chandigarh to take necessary steps to avoid filing ofsuch appeals in future. (Adarsh Kumar Goel) Judge January 05,2011Pka (Ajay Kumar Mittal) Judge