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2015 (11) TMI 541 - ITAT DELHI

2015 (11) TMI 541 - ITAT DELHI - TMI - Disallowance u/s 14A - CIT(A) deleted the addition accepting additional evidence - Held that:- the instant case, the assessment year involved is prior to AY 2008-09, and the ld. AO has expressed his dissatisfaction with the correctness of the claim of the assessee with regards to the expenditure incurred against exempted income, we are of the opinion that the findings in the case of Maxopp Investment Ltd. vs. CIT (2011 (11) TMI 267 - Delhi High Court) are s .....

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lhi High Court), we are of the opinion that the AO should be given opportunity to verify the additional evidence furnished by the assessee before the ld CIT(A). Accordingly, we direct the ld CIT(A) to forward all the additional evidence to the ld. AO. Decided in favour of revenue for statistical purposes. - ITA No. 4908/Del./2011 - Dated:- 14-10-2015 - Smt. Diva Singh, JM And Sh. O. P. Kant, AM For the Appellant : Sh. J. P. Chandrekar, Sr. DR For the Respondent : Sh. Shashwat Bajpai, Adv. ORDER .....

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e are no such powers available to him under the IT Act. 2. On the facts and circumstances of the case, the Ld. CIT (A) has erred in admitting fresh evidence under Rule 46A even though it was objected by the AO in his remand report. 3. On the facts and circumstances of the case and in law, the Ld: CIT (A) has erred in deleting the disallowance of professional fee expense of ₹ 1,96,85,000/-." 2. Facts in brief as culled out from the orders of the lower authorities are that the assessee .....

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by the assessee out of the profit and loss account, therefore, the ld AO in assessment order, invoking rule 8D of the IT Rules, disallowed interest expenses of ₹ 11,79,500/- out of the interest expenses of ₹ 16,52,364/- claimed in profit and loss account. The ld. AO also observed that the assessee claimed professional fee expenses of ₹ 1,96,85,000/- to three parties namely Jagmandi Finevest Pvt Ltd (Rs.44,91,000/-), Glider Holding Ltd. (Rs.45,09,000/-) and Agrawal Law Associat .....

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tes did not receive any amount during the year. In view of these finding, the ld. AO held that expenses of ₹ 1,96,85,000/- claimed against capital gain were not genuine, and therefore, he disallowed the same. The assessment was completed on 23.12.2009 u/s 143(3) of the Act at total income of ₹ 39,45,03,740/-. 3. Aggrieved, the assessee filed appeal before the learned Commissioner of Income Tax (Appeals) [in short CIT(A) ]. As regards to the addition of disallowance of expenses agains .....

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y directed to furnish the necessary details. For this limited direction, it is relied on the decision of Hon'ble ITAT in the case of Kodak India Ltd vs. ACIT (supra). 4. As regards to the disallowance of professional fees expenses of ₹ 1,96,85,000/-, the assessee submitted additional evidences before the ld. CIT(A), wherein, he claimed that instead of Jagmandti Finevest Pvt. Ltd and Glider Holdings Ltd. services were taken from M/s. Market Share Securities Ltd. and M/s. Gejendra Market .....

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nal fee expenses. Aggrieved, the Revenue has filed the appeal before us. 5. At the time of hearing, in respect of ground No.1, the learned Senior Departmental Representative (in short Sr. DR ) submitted that in view of the amended provisions of the section 251 of the Act, the ld. CIT(A) was not having authority in law to set aside the matter to the ld. AO for adjudication and argued that the disallowance made by the ld. AO may be confirmed. Whereas, the learned Authorised Representative (in shor .....

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s. Matalman Auto P Ltd 336 ITR 0434. However, both the parties were ultimately concurred that issue involved in ground No.1 is covered by the judgement of jurisdictional High Court in the case of Maxopp Investment Ltd. vs. CIT 347 ITR 272 (Delhi), wherein it is held that Rule 8D was inapplicable to the assessment year prior to 2008-09 and the AO shall determine the amount of expenditure incurred in relation to exempted income on the basis of any reasoned and acceptable method. The relevant part .....

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d on an objective analysis and for cogent reasons that the amount of such expenditure as claimed by the assessee is not correct, he is required to determine the amount of such expenditure on the basis of a reasonable and acceptable method of apportionment………………………… 6. In the instant case, the assessment year involved is prior to AY 2008-09, and the ld. AO has expressed his dissatisfaction with the correctness of the claim of t .....

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cient opportunity in this respect. In view of the above directions to the ld. AO, the issue whether the ld. CIT(A) has exceeded his authority in directing the ld. AO to compute disallowance following the decision in the case of Kodak India Ltd vs. ACIT (supra), is in our opinion, rendered merely academic. Accordingly, the ground No.1 of the Revenue is allowed for statistical purpose. 7. In ground No.2, the Revenue has challenged the admitting of additional evidences in respect of professional fe .....

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warded the additional evidences to the AO and therefore compliance of Rule 46A(3) has been made. In support of his claim, the ld AR placed reliance on the judicial pronouncements in the cases of Prabhavati Shah Vs. CIT (1998) 231 ITR 1 (Bom), CIT Vs. Kamlaben Sureshchandra Bhatti (2014) 367 ITR 692(Guj), Electra Jaipur P Ltd Vs. Inspecting ACIT (1988) 26 ITD 236(Del), CIT Vs. Jagjot Singh(2014)41taxman.com423(All), CIT Vs Unique Plastics P Ltd (2015) 60 Taxman.com ( AP& T), Jer Kersi Contrac .....

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(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. 10. A plain reading of the rule 46A(3), makes .....

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e, the assessee vide his letter dated 30-09-2010, addressed to your good self, the assessee has contended that the proforma bills/debit notes of M/s Jagmandri Finvest Pvt. Ltd. and M/s Glider Holdings Ltd. were booked inadvertently instead of booking the expenses in name of M/s Market Shares-Securities Ltd. and M/s Gajendra Marketing Services Ltd. The persons who were handling the affairs committed these errors. Before passing the order u/s 143(3) of the I.T. Act, the then AO provided sufficient .....

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sment proceedings. Now whatever documents have been submitted before your goodself appear to a result of manipulation of documents by the assessee company. 3. As far as the assessee's contention of non asking of documentary regarding payment to M/s Agarwal Law associates Ltd is concerned, it is to inform you that the then A.O had specifically asked the assessee to file documentary proof regarding payment made to M/s Agarwal Law Associates filed any proof in this regard also. Now, the assesse .....

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tstanding. But as per list of creditors filed by the assessee company at the time of assessment (copy enclosed) no amount was due for payment to the company/ firm M/s. Agarwal Law Associates. Therefore, the submission of the assessee company is self contradictory as per the finding given above. 4. In view of the above, the submission filed by the assessee company deserves to be rejected. Additional evidence now produced by the assessee should not be entertained by your good self because the asse .....

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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 to produce by the Assessing Officer; or (c) where the appellant was prevented by sufficient cause from producing the before the Assessing Officer any evidence which is relevant to any groun .....

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ing Officer has been allowed a reasonable opportunity- (a) To examine the evidence or documents or to cross-examine the witness produced by the assessee, or (b) To produce any evidence or documents or any witness in rebuttal of the additional evidence produced by the assessee. (4) nothing contained in this rule shall affect the power of 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 .....

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and (b) the appellant has not given any justification or reasons that he was prevented by sufficient cause from producing the evidence which he was called to produce by the Assessing Officer; and (c) The appellant has not given any justification or reasons that he was prevented by sufficient cause from producing the before the Assessing Officer any evidence which is relevant to any ground of appeal; and (d) The Assessing Officer has made the order appealed against after giving sufficient opportu .....

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Co .v. Commissioner of Income-tax [1968] 68 ITR 708 (BOM.) The High Court of Bombay held that mere fact that the evidence sought to be produced is vital and important does not provide a substantial cause to allow its admission at appellate stage especially when evidence was available to party at initial stage and had not been produced by him. 7.2 In the case of C. Unnikrishnan v. Commissioner of Income-tax [1998] 233 ITR 485 (KER.) the High Court of Kerala observed that there was no evidence tha .....

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07] 162 TAXMAN 257 (GAU.) the High Court of Gauhati held that the appellant is not entitled to produce oral or documentary evidence afresh before appellate authority, as a matter of right. As per sub-rules (1), (2) and (3) of rule 46A, if additional evidence is permitted to be produced, then firstly there must be reasons to be recorded in writing and secondly, reasonable opportunity has to be given to assessing authority-to refute and reject such production and that Rule 46A(4) does net permit t .....

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has refused to admit the evidence. The assessee also has to show alternatively that he was prevented by sufficient cause from producing the evidence before the Assessing Officer. Alternatively further the assessee also has to show its relevance to the grounds of appeal sought to be urged. Lastly, the assessee also has -to establish that the Assessing Officer did not afford him sufficient opportunity in regard thereto. The material on record is abundantly clear that no attempt was made by the as .....

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to reject the application of the assessee for production of any additional evidence. 12. On perusal of the above, it is clear that the ld. AO has not been allowed reasonable opportunity to examine the documents submitted by the assessee. The case laws relied upon by the ld. AR are not relevant in facts of the assessee, whereas the in the facts of the instant case the judgement of jurisdictional High Court in the case of CIT Vs. Manish Builwell Pvt. Ltd. 245 CTR 397 (Del) is squarely applicable , .....

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en complied with. However, sub-rule (3) which interdicts the CIT (A) from taking into account any evidence produced for the first time before him unless the Assessing Officer has had a reasonable opportunity of examining the evidence and rebut the same, has not been complied with. There is nothing in the order of the CIT (A) to show that the Assessing Officer was confronted with the confirmation letters received by the assessee from the customers who paid the amounts by cheques and asked for com .....

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) under sub-section (4) of Section 250 with the powers vested in him under Rule 46A. The Tribunal seems to have overlooked sub-rule (4) of Rule 46A which itself takes note of the distinction between the powers conferred by the CIT (A) under the statute while disposing of the assessee's appeal and the powers conferred upon him under Rule 46A. The Tribunal erred in its interpretation of the provisions of Rule 46A vis-A-vis Section 250(4). Its view that since in any case the CIT (A), by virtue .....

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