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Judgment
PER AMITABH SHUKLA, AM
This appeal filed by the Assessee is directed against the order of Ld. Commissioner of Income Tax (Appeals)-29, New Delhi, dated 04.10.2017 arising out of assessment order dated 20.03.2017 passed under section u/s 143(3) of the Act for the Assessment Year 2013-14. The word ‘Act’ herein this order would mean Income Tax Act, 1961.
The assessee has raised following grounds of appeal:-
1.That the notice issued Us 148 and re-assessment proceeding initiated U/s 147 are bad in law, without jurisdiction and barred by time limitation. The CIT (A) erred in upholding the same.
2.That the reassessment order passed U/s 143(3)/147 by the assessing officer is bad in law, without jurisdiction and barred by time limitation. The CIT (A) erred in upholding the same.
3.That the reason to believe was never framed by the AO and notice issued merely on the basis of information received from ADIT (investigation) is illegal, bad in law and without jurisdiction and without application of mind by the assessing officer. The CIT (A) erred in upholding the same.
4.That no proper statutory approval has been taken by the Assessing officer U/s 151 of the Income Tax Act, 1961, as required. If any approval is taken then the approval is in very mechanical manner without application of mind by the statutory authority hence the proceedings initiated U/s 147/148 is illegal, bad in law and without jurisdiction. The CIT (A) erred in upholding the same.
5.That, the assessing officer has erred in assumption in assuming the jurisdiction on the assessee company as no notice U/s 127 has been issued and served on the assessee company before the transferring its jurisdiction to the special jurisdiction, which is highly arbitrary, bad in law and against the principle of natural justice.
6.That the additions/ disallowances made are illegal, unjust, highly excessive and are not based on any material on record by the Assessing Officer. The total income of the Appellant has been wrongly and illegally computed by the Assessing Officer at Rs.6,95,92,750.00 as against declared at 'NIL INCOME'.
7.That the Assessing Officer has, in view of the facts and circumstances of the case, erred on facts and in law, in making addition/ disallowance of Rs. 6,95,92,750/- on account of share application money treating as accommodation entry on the basis of non compliance of notice U/s 133(6) issued by assessing officer. The addition/ disallowance made is illegal, unjust and without any basis. The CIT (A) erred in upholding the same.
8.The CIT(A) has erred and perverse in giving the findings, which are against the facts and circumstances of the case and purely based on surmises and conjecture. He also ignored the submission and evidences available on record.
9.The CIT(A) has failed to appreciate before upholding the addition made by the assessing officer that the assessee appellant has no control over the alleged share applicants/ share holders because the shares has already buyback by the assessee appellant at the books value from the alleged share holders.
10.That the CIT (A) has erred in upholding the action of the Assessing Officer, in view of the facts and circumstances of the case, without appreciating that the assessment order passed by the assessing officer in haste and without appreciating the documents filed/ available on record, which is against the principle of natural justice.
11.The CIT(A)/Assessing Officer has erred in not providing proper and adequate opportunity of hearing to the Appellant to place the evidence/details on record to substantiate its claim during the assessment proceedings.
12.The additions made and the observations made are unjust, unlawful and based on mere surmises and conjunctures. The additions made cannot be justified by any material on record and are also excessive. The CIT (A) erred in upholding the same.
13.The CIT (A) has failed to appreciate, the explanation given in the evidence produced, material placed that has been made available on record has not been properly considered and judicially interpreted and the same do not justify the additions/ allowances made.
14.The interest under Section 234A, 234B, 234C and 234D has been wrongly and illegally charged as the Appellant could not have foreseen the additions/ disallowances made and could not have included the same in current income for payment of Advance tax. The interest charged under various sections is also wrongly worked out.
The assessee has raised following additional grounds of appeal:-
1.That CIT(A) has erred in law and on facts in failing to properly appreciate and adjudicate upon the application filed by the appellant under Rule 46A of the Income-tax Rules, 1962. The action of the learned CIT(A) in rejecting/ignoring the said application is arbitrary, unjustified, contrary to the provisions of law, and against the facts and circumstances of the case.
2.That CIT(A) has erred in law and on facts in refusing to admit the additional evidence filed by the appellant during the appellate proceedings under Rule 46A of the Income-tax Rules, 1962 and in rejecting the same without properly considering its relevance and evidentiary value. The action of the learned CIT(A) is arbitrary, unjustified, contrary to the provisions of law, and against the facts and circumstances of the case
At the outset, the ld. Counsel for the assessee invited our attention to the additional ground of appeal raised by it contesting the action of the ld. CIT(A) in not admitting evidences under Rule-46A before the Ld. First Appellate Authority. Explaining the brief factual matrix of the case, the ld. Counsel submitted that Return of Income declaring NIL income was filed on 20.09.2013. After considering the post search investigation findings in the case of one Bindal Group of cases, the ld. Assessing Officer made an addition of Rs.6,95,52,750/-in appellants hand on account of unexplained share capital money. The ld. Assessing Officer while making the impugned additions in para-7.3 of his order held the appellant as guilty of deficit compliance. The ld. First Appellate Authority confirmed the Assessing Officer’s findings and sustained the addition.
Heard rival contentions. Material available on records are perused.
The ld. Counsel for the assessee has vehemently argued that it had attempted to introduce fresh evidence under Rule-46A before the Ld. CIT(A), which was rejected for admission. The ld. Counsel has argued that the evidences produced by it were critical for the decision in this case. In support of its contentions, the ld. Counsel has placed voluminous paper book in two volumes before us certifying that the same were placed before the ld. CIT(A). Inviting our attention to page no.380 in paper book volume-2, the appellant has placed a letter in which there is a hand written inscription on the bottom left indicating that application under Rule-46A was filed before the ld. CIT(A). The ld. Counsel accordingly requested that its case may be considered for remission back to ld. CIT(A) for consideration of evidences produced by it.
The ld. CIT-DR Shri Virender Singh, heavily opposed the proposal of the appellant. It was contested that no worthwhile benefit would now be available by remitting the matter to the ld. CIT(A). The ld. DR argued that the ld. Assessing Officer has considered the evidences and made addition in view of non-compliance by parties alleged to have made share capital subscriptions. The ld. CIT-DR argued that all the evidences which were purported to have been introduced through Rule-46A before the Ld. CIT(A) were already before the Assessing Officer and necessary investigation and enquiries were conducted. It was vehemently argued that the decision of Ld. Assessing Officer was, inter alia, based upon non-compliance/deficit compliance by the alleged share application subscribing parties.
Right to defend once case through adequate opportunity of being heard is integral part of natural justice and is available to every litigant. The prescription of law and procedure however deserves to be followed. Rule-46A of the Income Tax Rules reads as under:-
Production of additional evidence before the [Joint Commissioner] (Appeals) and Commissioner (Appeals).
46A. (1) The appellant shall not be entitled to produce before the [Joint 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 [Joint Commissioner] (Appeals) or, as the case may be, the Commissioner (Appeals) records in writing the reasons for its admission.
(3)The Joint 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 [Joint 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….”
We have noted that Hon’ble Courts and tribunals have analyzing the subject postulated that Rule-46A of the Income Tax Rules alludes that an aggrieved tax payer is entitled to introduce any evidences before the ld. First Appellate Authority if they, though demanded, could not be produced before the ld. Assessing Officer for justifiable reasons, or were not demanded and could not be produced or are necessary for the purposes of a judicious adjudication. In the present case, it is evident that the assessee had attempted to introduce certain evidences which were not considered by the ld. CIT(A) before delivering his order. The ld. Counsel for the assessee admitted through paper book certification, that these evidences were provided before the ld. Assessing Officer. We have noted that the non-consideration of the impugned evidences under Rule-46A by the ld. CIT(A) is primarily attributable to the fact that the same set of evidences were provided to the ld. Assessing Officer and he had given his conclusion post examination of the same. The same set of evidences therefore do not qualify as additional evidences within the meanings of Rule-46A(supra). There is nothing on record to suggest that the impugned evidences satisfied need of admission on account of any other reason. It is also not the assessee’s case that these evidences could not be produced by him before the ld Assessing Officer for any justified reasons.
We are therefore of the considered view that the evidences which were produced before the ld. Assessing Officer cannot therefore justifiably form part of additional evidences for admission before the Ld. First Appellate Authority. We are therefore of the considered view that the order of the ld. CIT(A) is standing on firm footing of law and since the same is based upon correct understanding and interpretation of the facts of the case, does not require any interference at this stage. We therefore dismiss the additional ground of appeal raised by the assessee.
As regards the regular grounds of appeal, the assessee has raised grounds of appeal qua legal grounds as well as grounds concerning merits of the addition. As regards, legal grounds of appeal raised by the assessee, inter alia, challenging the jurisdictional insufficiency of the ld. Assessing Officer to pass impugned assessment order, we have noted that the same were contested before ld. CIT(A) and in his order he has extensively and comprehensively deal with the issue before rejecting the same. We have noted that the order of the ld. CIT(A) is based upon correct understanding and interpretation of the facts of the case, does not require any interference at this stage. We wholly confirm the action of the ld. CIT(A) and accordingly dismiss the legal grounds raised by the appellant.
Adverting to the issue challenging merits of the addition, we have noted that the Ld. CIT(A) in para-6 of his order from pages 2 to 6 have extensively and comprehensively deal with the issue before rejecting the same. We have noted that while drawing the impugned conclusions, the ld. CIT(A) has rightly based his decision upon non-compliance/deficit compliance of the share applicants. Thus, we have once again noted that the order of the ld. CIT(A) is based upon correct understanding and interpretation of the facts of the case, does not require any interference at this stage. We therefore wholly confirm the action of the ld. CIT(A) and accordingly dismiss the grounds raised by the appellant challenging the merits of the addition.
In the result, the appeal of the assessee is dismissed.