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Judgment
(A) These two appeals have been filed by the Assessees against the separate impugned appellate orders, each dated 27/09/2019 and passed by the learned Commissioner of Income Tax (Appeals)-XXVI, New Delhi [“Ld. CIT(A)”, for short], for Assessment Year 2015-16. Grounds taken in these two appeals are as under:
ITA No.9276/Del/2019
“1. That on the facts and in the circumstances of the case the action of the ld. CIT(A) to confirm the action of the AO to impose penalty u/s. 271D for Rs.7,70,00,000/- is illegal and bad in law.
That on the facts and in the circumstances of the case as there has been no violation of the provisions of Section 269SS the imposition of penalty of Rs.7,70,00,000/- made by the AO u/s 271D and confirmed by the Id. CIT(A) is unjustified, arbitrary and excessive.
That on the facts and in the circumstances of the case the penalty imposed by the AO u/s 271D of Rs.7,70,00,000/- as confirmed by the Id. CIT(A) is without considering the material evidences on record and therefore the penalty order is bad in law.
That the order passed by the A.O. and confirmed by the Id. CIT(A) is arbitrary excessive, illegal and bad in law.
That the above grounds of appeal will be argued in details at the time of hearing and the appellant craves leaves to submit additional grounds of appeal if any and or alter, vary, modify or rectify the statement of facts and grounds of appeal at or before the time of hearing.”
ITA No.9277/Del/2019
“1. That on the facts and in the circumstances of the case the action of the ld. CIT(A) to confirm the action of the AO to impose penalty u/s. 271D for Rs.4,22,62,058/- is illegal and bad in law.
That on the facts and in the circumstances of the case as there has been no violation of the provisions of Section 269SS the imposition of penalty of Rs. 4,22,62,058/- made by the AO u/s 271D and confirmed by the ld. CIT(A) is unjustified, arbitrary and excessive.
That on the facts and in the circumstances of the case the penalty imposed by the AO u/s 271D of Rs. 4,22,62,058/- as confirmed by the Id. CIT(A) is without considering the material evidences on record and therefore the penalty order is bad in law.
That the order passed by the A.O. and confirmed by the Id. CIT(A) is arbitrary excessive, illegal and bad in law.
That the above grounds of appeal will be argued in details at the time of hearing and the appellant craves leaves to submit additional grounds of appeal if any and or alter, vary, modify or rectify the statement of facts and grounds of appeal at or before the time of hearing.”
(A.1) At the time of hearing before us, in these two appeals, Shri Rishi Raju, Advocate, learned Counsel for the assessee appeared on behalf of the assessees and Shri N.C. Swain, learned CIT-DR appeared for Revenue. For the sake of convenience, these two appeals are being disposed off through this consolidated order.
(A.1) From the assessees’ side, a paper book consisting of the following particulars was submitted in the case of M/s Enormous Nivesh Pvt. Ltd.:
SL.
No.
Description
1.
Audit report for Assessment Year (AY) 2014-15
2.
Acknowledged copy of return and Income tax computation
3.
Audit report for AY 2015-16
4.
Ledger account of Visage Equipments Pvt. Ltd. [Financial Year (FY) 2011-12 to 2014-15]
5.
Ledger account of Coral Environment Pvt. Ltd. [ (FY) 2008-09 to 2014-15]
6.
Ledger account of Dahisar Traders Pvt. Ltd.
7.
Ledger account of Manali Properties & Finance Pvt. Ltd.
8.
Order dated 17.9.2014 for amalgamation of Coral and Visage into Dahisar
9.
Assessment Order u/s 143 of Income Tax Act for AY 2015-16
10.
Penalty order u/s 271D of Income Tax Act for AY 2015-16
11.
Written Submissions before CIT(A) and paper book
12.
Copy of the impugned appellate order passed by CIT(A)
13.
RBI Guidelines on restrictions on Companies providing loans
(A.11) Similarly, in the case of Fragment Nivesh Pvt. Ltd, a paper book consisting of the following particulars was submitted from the assessees’s side:
SL.
No.
Description
1.
Acknowledged copy of return and Income tax computation
2.
Audit report for AY 2015-16
3.
Ledger account of Visage Equipments Pvt. Ltd. [Financial Year (FY) 2011-12 to 2014-15]
4.
Ledger account of Coral Environment Pvt. Ltd. [ (FY) 2008-09 to 2014-15]
5.
Ledger account of Dahisar Traders Pvt. Ltd.
6.
Ledger account of Lunni Housing & Developers Pvt. Ltd.
7.
Order dated 17.9.2014 for amalgamation of Coral and Visage into Dahisar
8.
Assessment Order u/s 143 of Income Tax Act for AY
2015-16
9.
Penalty order u/s 27 ID of Income Tax Act for AY 2015-16
10.
Written Submissions before CIT(A)
11 .
Copy of the impugned appellate order passed by CIT(A)
12.
RBI Guidelines on restrictions on Companies providing loans
(A.1.2) The aforesaid paper books filed from the side of the assessees, as referred to in foregoing paragraphs (A.1.1) and (A.1.2) of this order, consisted of, inter alia, additional evidences, which were not filed in the course of proceedings before the Assessing Officer and instead, were filed for the first time in the course of appellate proceedings in the office of the learned CIT(A). In respect of the additional evidences filed during appellate proceedings in the office of the learned CIT(A), the relevant procedure has been prescribed under Rule 46A of Income Tax Rules, which is reproduced as under for the ease of reference:
“46A. (1) The appellant shall not be entitled to produce before the Deputy Commissioner (Appeals) or, as the case may be, the Commissioner (Appeals), any evidence, whether oral or documentary, other than the evidence produced by him during the course of proceedings before the Assessing Officer, except in the following circumstances, namely :—
(a) where the Assessing Officer has refused to admit evidence which ought to have been admitted ; or
(b) where the appellant was prevented by sufficient cause from producing the evidence which he was called upon to produce by the Assessing Officer ; or
(c) where the appellant was prevented by sufficient cause from producing before the Assessing Officer any evidence which is relevant to any ground of appeal ; or
(d) where the Assessing Officer has made the order appealed against without giving sufficient opportunity to the appellant to adduce evidence relevant to any ground of appeal.
(2) No evidence shall be admitted under sub-rule (1) unless the Deputy Commissioner (Appeals) or, as the case may be, the Commissioner (Appeals) records in writing the reasons for its admission.
(3) The Deputy Commissioner (Appeals) or, as the case may be, the Commissioner (Appeals) shall not take into account any evidence produced under sub-rule (1) unless the Assessing Officer has been allowed a reasonable opportunity—
(a) to examine the evidence or document or to cross-examine the witness produced by the appellant, or
(b) to produce any evidence or document or any witness in rebuttal of the additional evidence produced by the appellant.
(4) Nothing contained in this rule shall affect the power of the Deputy Commissioner (Appeals) or, as the case may be, the Commissioner (Appeals) to direct the production of any document, or the examination of any witness, to enable him to dispose of the appeal, or for any other substantial cause including the enhancement of the assessment or penalty (whether on his own motion or on the request of the Assessing Officer) under clause (a) of sub-section (1) of section 251 or the imposition of penalty under section 271.”
(A.2) On perusal of the impugned appellate orders in the case of M/s Enormous Nivesh Pvt. Ltd. as well as in the case of M/s Fragment Nivesh Pvt. Ltd., it is found that the requirements prescribed under Rule 46A(2) and Rule 46A(3) of Income Tax Rules have not been met. Further, there is nothing on record to indicate that Rule 46A(4) of Income Tax Rules was involved. Representatives of both sides, the learned Counsel for the assessee as well as learned CIT-DR for Revenue submitted before us that the issues in dispute in the present two appeals may be restored to the file of the learned CIT(A) with the directions to pass fresh orders in accordance with law after providing reasonable opportunity to the assessees, and after ensuring compliance of Rule 46A of Income Tax Rules with due regard for Rule 46A(2) and Rule 46A(3) of Income Tax Rules.
(A.2.1) In view of the foregoing, and as representatives of both sides are in agreement with this, we set aside the impugned appellate orders of the learned CIT(A) and we restore all the issues in dispute in the present two appeals before us to the file of the learned CIT(A) with the direction to pass denovo orders in accordance with law after providing reasonable opportunity to the assessee, and after ensuring compliance of Rule 46A of Income Tax Rules with due regard for Rule 46A(2) and Rule 46A(3) of Income Tax Rules. All the grounds of appeal in the present two appeals are treated as disposed off in accordance with the aforesaid directions.
(B) For statistical purposes, both the appeals are treated as partly allowed.