TMI Blog2019 (10) TMI 901X X X X Extracts X X X X X X X X Extracts X X X X ..... hearing itself. Appeal of the Revenue is allowed for statistical purposes. - ITA No. 954/CHD/2018 - - - Dated:- 31-7-2019 - Smt. Diva Singh, JM And Smt. Annapurna Gupta, AM For the Assessee : Shri Sanjay Sood, CA For the Revenue : Smt.Veena Joshi, CIT-DR ORDER PER DIVA SINGH The present appeal has been filed by the Revenue assailing the correctness of the order dated 26.04.2018 of CIT(A)-2, Jalandhar pertaining to 2010-11 assessment year on the following grounds : 1. Whether on the facts and in circumstances of the case, the Ld. CIT (A) has erred in law in ignoring the provisions of section 68 of the Income Tax Act, 1961 while deleting the addition of ₹ 2.70 crore made on account of share application money. 2. Whether on the facts and in circumstances of the case, the Ld. CIT (A) has erred in law in accepting the additional evidence/ground in violation of Rule 46A of the Income Tax Rules. 3. The Appellant craves leave to add or amend the grounds of appeal on or before is heard and disposed off. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fresh evidences which has been relied upon without confronting the evidences to the AO. It was submitted that this violation of Rules is challenged by the Revenue in the present proceedings. Referring to the order it was her submission that the assessee before the AO admittedly did not file any evidences. Thus, the order passed it was submitted, was not in terms of the Statutory Rules. 3.3 Even otherwise, on merits it was submitted that the CIT(A) has glossed over the issue and not appreciated the true facts. Reference was made to Paper Book page 35 which showed that the share application money as on 31s t March, 2010 had been increased by ₹ 2.70 Crores. Referring to Paper Book page 61, it was submitted that the share application money as on 31s t March,2011 was thereafter shown to be Nil . Accordingly, it was her submission that apparently, some shares, it shows have been allotted as there is an increase in the corresponding figures in share capital as on 31s t March,2011. 3.4 Assailing the order on merits, it was also her submission that if as per the version of the assessee which has been accepted by the CIT(A), cheques were not encashed, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence before the Deputy Commissioner (Appeals) and Commissioner (Appeals)]. Rule 46A Sub-Rule (3) : 1) . 2) . 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 (emphasis supplied) 5.2 In the facts of the present case the said opportunity admittedly has not been provided to the AO. We note that the CIT(A) has not cared to address the requirements of sub rule (1) and (2) of Rule 46A in his order, however, since the prayer of the department as noted is limited to seeking a remand back to the AO which has been accepted by the ld. AR, we are not required to further deliberate on the aspect which is not an is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the year under consideration. AO has stated in the appellant has failed to prove the identity, genuineness and creditworthiness of share application money and therefore, addition was made to the income of the year under consideration. 5.3 The appellant has submitted that addition was made by the AO without verifying and going through the evidence submitted as 4 cheques were received from Sh. Anubhav Aggarwal, director of the company. The details of these cheques are as under: - Date Cheque No. Amount 31.03.2010 478724 100,00,000 31.03.2010 478725 100,00,000 31.03.2010 478726 40,00,000 31.03.2010 478727 30,00,000 Total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted by the Finance Act 2017 to provide for penal consequences for furnishing an incorrect information in any report or a certificate furnished by an accountant under any provisions of this act. It would be relevant to reproduce the provisions of this section, which are as under:- [Penalty for furnishing incorrect information in reports or certificates. 271.J. Without prejudice to the provisions of this Act, where the Assessing Officer or the Commissioner (Appeals), in the course of any proceedings under this Act. finds that cm accountant or a merchant hanker or a registered valuer has furnished incorrect information in any report or certificate furnished under any provision of this Act or the rides made thereunder, the Assessing Officer or the Commissioner (Appeals) may direct that such accountant or merchant banker or registered valuer, as the case may be, shall pay, by way of penalty, a sum of ten thousand rupees for each such report or certificate. Explanation-For the purposes of this section,- (a) accountant means an accountant referred to in the Explanation below sub-section (2) of section 288; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 7.70 Crore to ₹ 14.77 Crore odd, thereby suggesting that possibly shares have been allotted at a premium. The relevant extract of Balance Sheet from the respective pages in the Paper Book relied upon by the ld. CIT-DR are extracted hereunder for the sake of completeness: (Extract of Balance Sheet from Paper Book page 35) MESSERS B.R. SPINNERS PRIVATE LIMITED, LUDHIANA BALANCE SHEET AS ON 31ST MARCH 2010 SOURCES OF FUNDS SCHEDULE No. 31ST MARCH 2010 31ST MARCH No. 2009 SHARE HOLDER'S FUNDS Share Capital ₹ 1 47186500.00 47186500.00 Reserves Surplus 2 94278634.41 90759144.31 Share Application Money 41713500.00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be upheld. The fresh evidences filed on record, it appears have been blindly accepted by the CIT(A) which admittedly have not been confronted to the AO. Accordingly, in the light of the submissions of the parties before the Bench and on a perusal of the material available on record, we find that the ld. CIT(A) in violation of sub-rule (3) of Rule 46A has accepted fresh evidences without providing the Assessing Officer a reasonable opportunity of examining the evidence and rebutting it etc. The statutory mandate to provide the Assessing Officer opportunity to rebut the evidence is not discretionary. The requirement has been considered to be a indispensable requirement by the Delhi High Court in the case of Manish Buildwell 204 Taxman 106 (Delhi) wherein confirmation letters received by the assessee were accepted by the First Appellate Authority as genuine without the Assessing Officer furnishing his comments thereon and without any verification by the said authority. The said conclusion of the CIT(A) on appeal had been upheld by the ITAT. The issue was carried in appeal before the High Court by the Revenue. The Court held that since this is an indispensable requirement, we are of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons. If the view of the Tribunal is accepted, it would make Rule 46A otiose and it would open up the possibility of the assessees contending that any additional evidence sought to be introduced by them before the CIT (A) cannot be subjected to the conditions prescribed in Rule 46A because in any case the CIT (A) is vested with conterminous powers over the assessment orders or powers of independent enquiry under sub-section (4) of Section 250. That is a consequence which cannot at all be countenanced. In the facts of the present case, the fact that fresh evidence has been admitted which has not been confronted to the AO to offer his rebuttal etc. is not disputed by the ld. AR despite a detailed hearing on the issue. Accordingly, to set right this statutory deficit, the issue is remanded back to the file of the AO with the direction to pass a speaking order in accordance with law after giving the assessee a reasonable opportunity of being heard. The assessee in its own interests is advised to participate fully and fairly in the proceedings as in the eventuality of abuse of the trust reposed, it is made clear that the Assessing Officer shall be at liberty to pass an order on the bas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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