Avneesh Kumar Agarwal, Meerut vs Assessee

Income Tax Officer, Vs. Shri Avneesh Kumar Agarwal, Ward- Ward-1(1), R-5/115, Raj Nagar, Ghaziabad. Ghaziabad. PAN : ABQPG5131E. (Appellant) (Respondent)

Cross Objection No.105/Del/2012 No.105/Del/2012 Assessment Year : 2008- 2008-09

Shri Avneesh Kumar Vs. Vs. Income Tax Officer, Agarwal, Ward- Ward-1(1), R-5/115, Raj Nagar, Ghaziabad. Ghaziabad. PAN : ABQPG5131E. (Appellant) (Respondent)

Revenue by : Shri Vikram Sahai, DR. Assessee by : Shri Sanjay Malik, Advocate.

ORDER

PER G.D. AGRAWAL, VP :

The appeal by the Revenue and the cross-objection by the assessee are directed against the order of learned CIT(A), Ghaziabad dated 27th December, 2011 for the AY 2008-09.

2. In the appeal by the Revenue, following grounds have been raised:-

"1. That ld.CIT(A) has erred in law and on facts by deleting the addition of Rs.5,98,540/- without appreciating the fact that the assessee has failed to discharge his onus regarding identity, creditworthiness 2 ITA-1033/D/2012 & CO-105/D/2012

and existence of creditor, in spite of the various opportunities provided to him.

2. That ld.CIT(A) has erred in law and on facts in allowing relief of Rs.6,10,000/- to the assessee without appreciating the facts that the assessee had failed to discharge his onus to prove the creditworthiness of the lenders and genuineness of the transactions.

3. That ld.CIT(A) has erred in law and on facts in allowing relief of Rs.8,72,500/- to the assessee without appreciating the facts that the assessee had failed to submit supportive evidence to prove the source of fresh capital introduced.

4. That ld.CIT(A) has erred in law and on facts by not allowing reasonable opportunity to examine the evidence as per the provisions of Rule 46A(3) of the I.T. Act, 1961.

5. Therefore, the order of the ld.CIT(A) be cancelled and the order of the AO may be restored.

6. The appellant craves leave to modify/amend or add any one or more grounds of appeal."

3. In the cross-objection, the assessee has raised the following grounds:-

"1. That the loan of Rs.80,000/- from Sh. Deepak Tyagi did not involve any element of income chargeable to tax in the hand of the appellant. On facts and in law of the case, the addition of Rs.80,000/- as income from un- explained sources was not warranted and the same deserve to be deleted.

2. That on facts and in law, there was no legal warrant to make any disallowance because of non- maintenance of stock register and alleged not verifiable cash expenses. The addition of Rs.40,000/-, sustained by the ld.CIT(A) deserve to be deleted being not based on any evidence but on surmise and guess."

4. At the time of hearing before us, it was pointed out by the learned DR that in respect of all the three grounds raised by the 3 ITA-1033/D/2012 & CO-105/D/2012

Revenue, learned CIT(A) allowed the relief to the assessee by considering the additional evidences without passing any order for admission of additional evidence. He pointed out from the order of learned CIT(A) that the assessee filed additional evidence before the CIT(A). The CIT(A) forwarded the same to the Assessing Officer and called the remand report. The Assessing Officer objected to the admission of additional evidences. However, the CIT(A) did not consider the Assessing Officer's objection for admission of additional evidence and adjudicated the appeal considering the additional evidence. He submitted that before relying upon the additional evidence, the CIT(A) should have passed some order admitting or rejecting the additional evidence. Since there is no order of admission of additional evidence by the CIT(A), he was wrong in relying upon the additional evidence. He, therefore, submitted that the order of learned CIT(A) should be reversed and that of the Assessing Officer may be restored.

5. Learned counsel for the assessee, on the other hand, pointed out that the Assessing Officer issued notice under Section 142(1) for the first time on 15th December, 2010 fixing the case on 23rd December, 2010 and passed the order on 28th December, 2010. Thus, the assessment was completed without allowing adequate opportunity of being heard to the assessee. Therefore, learned CIT(A) was fully justified in admitting the additional evidences as per the request of the assessee. He was fair enough to admit that in the order of learned CIT(A), there is no mention of the admission of additional evidence. He, however, stated that the CIT(A) called for the remand report and assessee's reply on remand report and thereafter considered the additional evidence which clearly proves that the CIT(A) impliedly admitted the additional evidence. The omission of mentioning one line in the order of learned CIT(A) that "the additional evidence has been admitted" does not mean that the additional evidence has not been 4 ITA-1033/D/2012 & CO-105/D/2012

admitted by him. He, therefore, submitted that the order of learned CIT(A) should be sustained.

6. We have carefully considered the submissions of both the sides and perused relevant material placed before us. Rule 46A of the Income-tax Rules, 1962 reads as under:-

"46A. (1) The appellant shall not be entitled to produce before the Deputy 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 Deputy Commissioner (Appeals) [or, as the case may be, the Commissioner (Appeals)] records in writing the reasons for its admission.

(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 5 ITA-1033/D/2012 & CO-105/D/2012

(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 Deputy 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.]."

7. Sub-rule (2) of Rule 46A clearly mentions that no evidence shall be admitted unless the CIT(A) records in writing the reasons for its admission. Admittedly, there is no recording of reasons by the CIT(A) for admission of additional evidence. Therefore, this matter needs to be set aside to the file of the CIT(A). However, at the time of hearing before us, it was mentioned by the learned counsel that if the order of learned CIT(A) is not sustained and matter is required to be set aside to his file, he requested that it would be appropriate to set aside the matter to the file of the Assessing Officer because adequate opportunity of being heard was not allowed to the assessee by the Assessing Officer. Learned DR submitted that his first request would be to uphold the order of the Assessing Officer but if the matter is to be set aside, then the matter may be sent back to the file of the Assessing Officer because then the additional evidence can be examined by the Assessing Officer.

8. After considering the arguments of both the sides and the facts of the case, in our opinion, it would meet the ends of justice if the orders of authorities below are set aside with reference to all the grounds raised in the appeal filed by the Revenue and the cross- objection of the assessee and the matter is restored to the file of the Assessing Officer. We order accordingly and direct the Assessing 6 ITA-1033/D/2012 & CO-105/D/2012

Officer to allow adequate opportunity of being heard to the assessee. The assessee is also directed to produce all the evidences/explanation before the Assessing Officer. Thereafter, the Assessing Officer will pass the order on all the issues raised in the Revenue's appeal or the assessee's cross-objection afresh in accordance with law.

9. In the result, the appeal of the Revenue and the assessee's cross-objection both are deemed to be allowed for statistical purposes.

Decision pronounced in the open Court on 30th January, 2015.

Sd/- Sd/- (CHANDRA MOHAN GARG) GARG) (G.D. AGRAWAL) AGRAWAL) JUDICIAL MEMBER VICE PRESIDENT

Dated : 30.01.2015 VK.

Copy forwarded to: -

1. Revenue : Income Tax Officer, Ward- Ward-1(1), Ghaziabad.

2. Assessee : Shri Avneesh Kumar Agarwal, R-5/115, Raj Nagar, Ghaziabad.

3. CIT 4. CIT(A) 5. DR, ITAT

Assistant Registrar