9911796707
TMI Blog2018 (12) TMI 132X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant in which it has been stated that the issue of powers of Commissioner (Appeals) had come in appeal under Rule 46A and were specifically raised before the High Court. 'In that view of the matter, in our considered opinion, if indeed such issue was raised specifically before the High Court and it has not been taken into consideration by the High Court by passing the impugned order dated 17.01.2006, the appropriate remedy for the appellant would be to file an application for review of the said order. Accordingly, we permit the appellant to file a review application before the High Court within two weeks from today. If such an application is filed, the same shall be considered in accordance with law without raising the question of limitation." All the questions raised in this appeal are left open to be raised again, if occasion so arises. The Civil Appeal is disposed of with aforesaid observations." 2. In the appeal, under Section 260A, several questions of law were urged. The one relating to additional evidence, read as follows: "Whether in the absence of any ground against admission of additional evidence, the Tribunal was right in law in holding that the CIT(A) wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contention on behalf of the assessee that the assessing officer could not have disregarded the two entries pertaining to loss-making transaction while accepting the other two entries in the books of account relating to profitmaking transactions. The tribunal was, in the circumstances, justified in repelling the contention so raised." 4. By the order of 17 January, 2017, this court had admitted the appeal and clarified that it was confined to the question pertaining to Rule 46A - i.e. whether the ITAT was correct in holding that the Appellate Commissioner was not entitled to consider the evidence of payment to the commission agent. Thus, the present appeal is confined to that question of law. 5. The facts are that the assessee traded in rice. In relation to some of its transactions, the assessee claimed loss. All the transactions of purchase and sale were carried by the assessee through M/s Ramkishan Dass Narender Prakash who acted as commission agent on the assessee's behalf. The Assessing Officer (AO) summoned Shri Ramkishan Dass of the above concern under Section 131 of I.T. Act and recorded his statement. The AO obtained information about parties who had purchased and sold ri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d fact you have proposed to conclude that no rice was purchased by M/s BKAK nor the same was sold by them to M/s RDNP. It is submitted that this allegation is totally baseless. In fact to establish that the purchase of rice were not made by BKAK form the various parties as claimed by them you are requested to please summon M/s BKAK and also M/s RDNP along with their books of accounts. The assessee further requests that the assessee be supplied with the copies of the alleged inquiry report along with the statement of M/s Bhagwati Rice Mills, M/s Amar Rice Mills and Aggarwal Rice Mills to establish that their alleged statements are totally incorrect. In any case it is submitted that it can never be within the exclusive knowledge of the assessee that its commission agent purchased the rice from which source and as to who was the suppliers of the commodity sold. Your reliance on the market rate quoted in the Financial Express is totally misleading. It is submitted that the allegation that the rate of the rice has not fallen in the month of the sale when compared with the price at the time of purchase is also unjustified. It is submitted that it was specially for this purpose that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on with the rates quoted in Financial Express. Complete details of rates quoted in Financial Express was given to the assessed. Since the rates quoted by you is not in confirmation with the rates quoted in Financial Express, your transactions are proposed to be treated as bogus. (d) You have shown sundry creditors of Rs. 74,790, 526/-. In the AY 1991-92 also you were required to file confirmations from these creditors and you have failed to produce/file the same. You are once again requested to file confirmations from these creditors. (e) Please intimate the amounts paid by you to your commission agent M/s. RKDNP till date if any." 10. After considering the explanations given by the assessee, and noting the fact that on several occasions, it did not appear or could not produce the requisite information, the AO added the amounts and brought them to tax. The AO's findings indicated that the purchases said to have been made were at unrealistic prices; the sale too was likewise undervalued. The payments due to the commission agents, were disbelieved. The findings of the AO were appealed against to the CIT (A) who allowed the assessee's request to consider additional evidence and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment year 198889 M/s RKDNP had stated on oath to have got total commission of Rs. 373781/ out of which 3 .50 lakh was obtained from the assessee and M/s Mathur Import Export private limited, sister concern of the assessee. Vide reply to the first question it was stated by Shri Rama Kishen Partner of M/s RKDNP that during the year two companies i.e. the assessee and its sister concern neither paid any price of rice no they issued any cheque and no money was received or paid by cash or by cheque or by draft. When the AO called upon the assessee to furnish details of payment, if any, having been made to M/s RKDNP, the copy of the account was filed by the assessee, which divulged that after the opening balance the debit and credit entries were only in respect of sale and purchase of rice and no payment whatsoever had been shown to have been made or received. Even during the original assessment proceedings assessee could not lead any evidence as to whether the whether any payment was made towards advance or commission. Despite this factual position learning CIT (A) entertained the submissions of the assessee that it had actually made the payment to M/s RKDNP. When the statement of Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vant dates of sale which are different from the rates quoted by the Financial Express and the assessee 's transactions were within those range. The learned CIT (A) admitted this fact, while allowing relief by clearly recording the relevant cuttings from the newspapers were not furnished before him but he was inclined to agree with the contention of the assessee with regard to the rates quoted in the newspapers. We are at a loss to understand how the CIT (A) could have admitted any such contention which was not substantiated with any evidence disregarding the AO's observations which was on based on specific reports. It is further noted, that the AO had held that no commission or advance was paid by the assessee to RKDNP, whereas the CIT (A) held that it was duly shown in the account and the findings of the AO were incorrect. From the perusal of the assessment order will find what the AO had stated in his order is the factum of non-payment of any advance of commission by the assessee to M/s RKDN Pand not the fact that no commission was shown to have become due to them. It becomes more apparent from the assessment order and the statement of Shri Ram Krishna recorded by the AO in w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the assessee to cross examine the parties whose statements were recorded and were used against the assessee. On a specific query raised from the Bench it was stated that the assessee did ask for cross examination of the parties. Reliance was placed on the letter dated 18.3.1992 placed at pages 197 and198 of the paper book. We have pursued the orders of the authorities below and this letter as well. It is seen that the grievance of the assessee even before the tribunal at the first round of proceedings was that the material used against the assessee was not supplied to it for rebuttal. It is obvious from the assessment order in the second round that the assessee made inspection of the file and also obtained photocopies of all relevant documents which are listed as item nos. 1 to 11 on page 11 of the assessment order. After going through the aforesaid letter dated 18.3.92 in entirety we could not find even a single work requesting the AO to allow cross examination of the concerned parties. Even the 4th line of page 15 of the assessment order clearly reveals that the consequence of the enquiries were confronted to the assessee and the photocopies were copies given on 24.8.94. This s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion agent RKDNP for preceding & subsequent years. He noted that in the period from 1.7.86 to 30.6.87 preceding the relevant assessment year 1988-89, the assessee had done extensive trading in rice through the same broker. Thereafter there were purchase and sale in the subsequent year as well. The accounts revealed that all purchases and sales were being adjusted inter se by the agent, and there was an actual payment of `8.25 lacs on 27.8.87 by cheque. The commission agent would credit the account of the appellant with the sale proceeds less their commission and debit the account with purchases plus commission. Ultimately, the net outstanding balance was paid by the assessee to the commission agent through twelve cheques between 22-10-1990 and 29-011991. These clarified that the assessee was a trusted client of the commission agent. If the AO thought that transactions were false on this ground the A.O should have cross examined both, the commission agent and the petitioner, to draw any possible adverse inference. This was not done by the AO. 12. Learned counsel also argued that the CIT(A) noted that the transactions have been accepted by the revenue in the earlier assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellate authority also could do." 16. Counsel argued that Section 250(4) gives wide discretion to the CIT(A) to make such further inquiry as he thinks fit or to direct the AO. to make further inquiry and report the result to him. Rule 46A( 4) enshrines the power when providing that nothing contained in Rule 46A affect the CIT(A)'s power to direct the production of any document or the examination of any witness to enable him to dispose of the appeal. Even Circular no.108 dated 20.3.1973 explaining the amendment pertaining to introduction of Rule 46A echoes the same view. 17. It is argued that the additional evidence produced before the CIT(A) pursuant to his direction stand on a different footing than the new evidences produced before him by the assessee. In the former case, the restriction contained in sub-clause (1) of Rule 46A shall not be applicable and there shall not be any necessity on the part of the CIT(A) to get them subjected to scrutiny by the AO. Counsel also relied on the Bombay High Court decision in Smt. Prabhavati Shah 's (1998) 231 ITR 1 which explained the provisions relating to admission of new evidence before the CIT( A) under Rule 46A of the Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sold. The CIT (A), in the second round, set aside those findings. There were two premises for the appellate order: first, that the CIT (A) differed from the AO with regard to appreciation of evidence: it was held, in the appellate order, that some discrepancies with respect to the supplier's books and the statements by them could not result in such an adverse finding as to reject the assessee's claims as bogus, and two, that the previous years' assessments had showed a consistent pattern with regard to the Revenue's behavior, accepting the assessee's claims regarding the same suppliers and agents. 19. This court is of the opinion that the ITAT's reasoning is not entirely based on the consideration of the fresh evidence under Rule 46-A. It is based on its independent analysis and appreciation of the evidence on record. The assessee's counsel is correct in contending that the powers of the CIT (A) are wide under Section 250 of the Act; that the authority can adduce fresh findings. 20. A close scrutiny of the ITAT's findings - impugned in this case, would reveal that the tribunal took note of the assessee's lapses in replying to the AO's specific queries. It then considered the mate ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
