Akshay Gupta, New Delhi vs Department Of Income Tax

This appeal, preferred by the revenue is directed against the CIT(A)'s order dated 30-10-2012, relating to A.Y. 2009-10. Following grounds are raised:

1. The Ld. CIT(A)has erred in deleting the addition of Rs.

1,40,24,000/- on account of difference of gross receipts as appeared in 26AS and in P&L account of the assessee in the absence of any reconciliation submitted by the assessee.

2. The Ld. CIT(A)has erred and has violated the Rule 46A of the IT rules 1962 by admitting the additional evidences, which were not submitted before the AO 2 ITA 280/Del/2013 ITO Vs. Akshay Gupta

despite 10 hearing opportunities provided to the assessee."

2. The assessee is an individual and is a service provider, Custom House

Agents. During the year the assessee declared income from business and

income from other sources. He filed its return of income declaring income of

Rs. 9,08,019/-. The AO has observed that it was noticed that there was a

difference in gross receipts declared by the assessee as per TDS certificate -

Rs. 2.02 crores and as per P&L A/c Rs. 61.78 lacs. He, therefore, concluded

that assessee had declared less gross receipts by Rs. 140.24 lacs. He required

the assessee to file reconciliation of receipts as per TDS certificates and

receipts as per P&L A/c. In response the assessee submitted that

reconciliation of TDS was already submitted to Mr. Mukesh. However,

inspite of AO's request, the assessee did not furnish copy of the same. The

AO, after considering the assessee's plea, concluded that assessee had

shown his inability to reconcile the two figures and assessee had never filed

any reconciliation before Mr. Mukesh, AO's predecessor. The AO,

accordingly, made an addition of Rs. 1,40,24,000/-.

2.1. Before ld. CIT(A) the assessee had filed additional evidence with

respect to addition made by AO on account of difference between amount of

receipts shown in P&L A/c and amount of receipt shown in TDS certificate. 3

ITA 280/Del/2013 ITO Vs. Akshay Gupta

The CIT(A), after considering the assessee's contention forwarded the

evidence filed by assessee for AO's comment vide letter dated 17-5-2012.

The AO forwarded his remand report vide letter dated 21-8-2012 and

pleaded for non admission of additional evidence. The ld. CIT(A), however,

admitted the additional evidence and observed in para 8.3 as under:

"8.3. I have gone through the assessment order, copy of submission made by the appellant, remand report submitted by the Assessing Officer and evidences filed by the appellant during the course of appellate proceedings as additional evidence. The appellant had also filed reconciliation statement of receipts shown in the profit & loss account and amount of gross receipts mentioned in TDS certificates/ 26AS. The Assessing Officer had made an addition of Rs. 1,40,24,000/- being the difference between receipts shown by the appellant in Profit & Loss account and amount of gross receipts as mentioned in TDS certificate/ 26 AS in the absence of reconciliation statement by the appellant. The appellant has been consistent in following accrual basis of accounting and his income tax cases for the assessment years 2004-05 and 2006-07 have been completed u/s 143(3) of the Act. The difference between the amount of receipt stated in profit and loss account and in TDS certificates is due to air freight and other expenditure incurred by the appellant on behalf of his clients and there is no accrual of income as the same was on account of reimbursement of expenditure."

2.2. After considering the assessee's submissions, CIT(A) deleted the

addition.

2.3. Aggrieved, the department is in appeal before the ITAT. 4

ITA 280/Del/2013 ITO Vs. Akshay Gupta

3. We have heard both the parties. We find that ld. CIT(A) has

considered the additional evidence for deleting the disallowance. The AO in

the remand report had merely pleaded for non-admission of additional

evidence but did not refer to the merits of the case. The Hon'ble Delhi High

court in the case of Director of Income-tax Vs. Modern Charitable

Foundation has held that if additional evidence has been produced before

CIT(A), then the matter is to be remanded to the AO to verify the

correctness of assessee's plea. In paras 7 & 8 of their decision the Hon'ble

High Court has observed as under:

7. After hearing the counsel for the parties, we are of the opinion that at this stage admission of the additional evidence admitted by the CIT(A) be not interfered with. It is more so when the assessee is a Charitable organization. We may also record the submission of the learned counsel for the respondent that insofar as unsecured loans are concerned, they were paid back in subsequent years, which shows that these were the genuine loans taken by the assessee. At the same time, we find that the CIT (A) after admitting the evidence relied upon the same without any verification. No doubt, the remand report of the AO was called for and it was found that the AO did not go into to the veracity of the same and reproduced some facts from the assessment order. It was because of the reasons that the AO strongly felt that there was lapse on the part of the assessee in not producing the evidence before him when he had been given number of opportunities and therefore, he objected to the admission of the said evidence and did not do any further exercise to verify the same. At the same time, we also find that even the CIT (A) did not go into these documents and simply relied upon these documents and gave benefit to the AO.

Therefore, in order to balance the equities, we are of the 5 ITA 280/Del/2013 ITO Vs. Akshay Gupta

opinion that on one hand, the assessee be permitted to rely upon the additional evidence produced before the CIT (A), at the same time, the AO also be given opportunity to verify these documents.

8. Accordingly, we remit the case back to the AO who shall go into the veracity of these documents. The assessee shall also be entitled to show that the unsecured loans had been repaid. If the assessee is able to explain the donations as well as unsecured loans properly, the AO shall accept the same.

Respectfully following the decision of Hon'ble Delhi High court, we set aside the order of ld. CIT(A) and restore the matter to the file of AO for examining the assessee's claim de novo in accordance with law.

5. In the result, revenue's appeal is allowed for statistical purposes. Order pronounced in open court on 22-04-2015.

Sd/- Sd/- (A.T. VARKEY ) ( S.V. MEHROTRA ) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 22-04-2015. MP: Copy to : 1. Assessee 2. AO 3. CIT 4. CIT(A) 5. DR