Sanjay Matai , Ajmer vs Department Of Income Tax

1 ITA No. 312/JP/2012 The ITO, Ward- 1 (2), Ajmer vs. Shri Sanjay Matai

IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH, JAIPUR

(BEFORE SHRI R.P. TOLANI AND SHRI T.R. MEENA)

ITA No. 312/JP/2012 Assessment year: 2008-09 PAN : ALKPM 9533 D

The ITO vs. Shri Sanjay Matai Ward- 1 (2) Prop. M/s. Metro Wines Ajmer Madar Gate, Ajmer (Appellant) (Respondent)

Department by: Mrs. Neena Jeph Assessee by : None (Written submissions)

Date of Hearing: 08-12-2014 Date of Pronouncement: 09 -01-2015

ORDER PER R.P. TOLANI, JM

This is an appeal filed by the Revenue against the order of the ld.

CIT(A), Ajmer dated 03-01-2012; following grounds are raised:

''1. Accepting addition/fresh evidence under Rule 46A whereas the condition laid down under sub clauses (a),(b),(c) & (d) of sub rule 46A of I.T. Rules 1962 arc not fulfilled.

2. Admitting the additional ground raised by the assessee as required under sub rule (2) of Rule 46A of I.T.A. Rule 1962, without recording it writing the reasons for its admission.

2 ITA No. 312/JP/2012

The ITO, Ward- 1 (2), Ajmer vs. Shri Sanjay Matai

3. Deleting the addition made by the AO for Rs.

5,00,000/- on account of unexplained investment u/s 69A of the I.T. Act 1961, contrary to the detailed examination made by the AO.

4. Deleting the addition of Rs. 5,14,400/- on account of unexplained credit u/s 68 of the I.T. Act , 1961 contrary to the detailed examination made by the AO.

5. Deleting the addition of Rs.75,000/- on account of unexplained credit u/s 68 of the I.T.Act,I961 contrary to the detailed examination made by the AO.

6. Deleting the addition of Rs. 5,14,400/ - & Rs 75,000/- on account of cash credit u/s 68 contrary to the detailed examination made by the AO.

7. Deleting addition of Rs.28,000/- on estimated income from Ganpati Trading through the assessee have shop of Bhang & Opium product in the name of Ganpati Trading.

8. Deleting the addition. of Rs. 2,21,000 / - on a/ c of cash deposit in SB a/c in the name of Metro Filling Station when the assessee failed to prove the transfer of amount from another concern with cogent evidence.

9. Deleting the addition of Rs. 95,400/- on account of Rent payment when the recipient is the existing assessee who did not declare the rent in his return and the assessee failed to prove the actual payment of rent with cogent evidence.''

2.1 None appeared for the assesse, however written submissions are filed,

consequently the appeal of the assessee is disposed off after considering

those written submissions and perusing the materials available on record and

after hearing the ld. DR.

3 ITA No. 312/JP/2012

The ITO, Ward- 1 (2), Ajmer vs. Shri Sanjay Matai

2.2 Brief facts of the case are that the assessee deals in wines and Essar

filling station in the name of Metro Filling Station. The books of account are

claimed to be audited u/s 44AB, according to AO despite enough

opportunities the assessee did not produce physical books of account of its

business; there were variations in the TDS certificates, discrepancies in the

building account and unexplained cash credits were not satisfactorily

explained and other issues were not properly replied. Consequently the

impugned additions were made.

2.3 Aggrieved, the assessee preferred first appeal wherein the application

for admission of additional evidence was filed before ld. CIT(A). It may be

mentioned that during the pendency of first appeal, the AO passed an order

u/s 154 of the Act on 15-02-2011 rectifying a small mistake in respect of

unexplained cash credit was reduced from Rs. 5,44,400/- to Rs. 5,14,400/-.

The ld. CIT(A) admitted the additional evidence by following observations.

''3.1 In this case AO made various additions to the total income on the ground that appellant has not produced the books of account during the course of assessment proceedings . Appellant filed application for fling additional evidence under Rule 46A on 02-08-2011 in which it as requested that :-

''The main reason for not producing the books of account of captioned a is mainly that the assessee maintains records on electronic system, complete cash book, ledger and other records are duly computerized. As 4 ITA No. 312/JP/2012 The ITO, Ward- 1 (2), Ajmer vs. Shri Sanjay Matai

and when any details called for by AO, the copy of that ledger account cash book print etc. were submitted before the AO on records. Even the CD (Electronic Records System) was also submitted as records which was not accepted by AO. Looking to huge and bulky printing of records the physical paper form of records could not be produced before AO.

Since complete books of account on system was subject to Audit and Audit report copy submitted before the AO and no defects therein found.''

3.2 From the perusal of records, it is found that required details were furnished by appellant before AO in the form of printout of various ledger accounts. Since the books of account maintained on computer and are also subject to audit, physical printouts were not produced. However, data was furnished in the form of CD. In such a situation, AO is not justified to draw adverse inference merely on the ground that books were not produced. I therefore, hold that AO completed the assessment without giving adequate opportunity to the appellant to file evidence and the appellant was therefore, allowed to file additional evidence under Rule 46A.

Thereafter the additional evidence was forwarded to the AO calling for

remand report. On the basis of remand report and additional evidence, the ld.

CIT(A) deleted the additions.

2.4 Aggrieved, the Revenue is before us.

2.5 Apropos Revenue's first ground challenging the admission of

additional evidence, the ld. DR contends that the additional evidence has 5 ITA No. 312/JP/2012 The ITO, Ward- 1 (2), Ajmer vs. Shri Sanjay Matai

been admitted by the ld. CIT(A) in utter violation of provisions of Rule 46A

(1) of Income Tax Rules by following reasons.

(i) Admittedly the books of account of the assessee were duly audited. No auditor will prepare and audit report without physical books. Therefore, books were deliberately not produced by the assessee before AO.

(ii) The ld. CIT(A) has held that relevant details were filed by assesse before AO in the form of CD which does not find any reference in the AO's order.

(iii) The statement of facts and grounds of appeal filed by the assessee before the ld. CIT(A) does not refer to filing of any CD in this behalf.

(iv) The AO time and again asked the assessee to produce the books of account and relevant details. Thus sufficient opportunity was provided by the AO to the assesse, in these circumstance additional evidence ought not have been admitted.

(v) The ld. CIT(A) without considering the record properly has given the summary findings that there is no requirement for the assessee to produce physical books when relevant CD is produced.

Reliance is placed by the ld. DR in the case of Manish Buildwell, 245 CTR

397 (Del.) holding that for admission of additional evidence, it is

imperative for ld. CIT(A) to comply with the mandatory provisions of Rule 6 ITA No. 312/JP/2012 The ITO, Ward- 1 (2), Ajmer vs. Shri Sanjay Matai

46A(1). In this case the rule has not been duly complied with, the admission

of additional evidence is not proper. It is pleaded that the admission of

additional evidence being contrary to the statutory provisions of Rule 46A,

the admission thereof and relief granted thereon is untenable.

2.6 We have heard the ld. DR and considering the material available on

record, written submissions and documents filed by the assessee, we find

merit in the arguments of the ld. DR. The ld. CIT(A) has admitted the

additional evidence on following counts.

(i) Adequate opportunity was not given to the assessee.

(ii) Assessee's books of account though audited yet there was

no obligation to produce physical books as long as the same

was produced in CD Form.

In our considered view both the findings of the ld. CIT(A) are not tenable

and not born out from the record. The finding that adequate opportunity of

hearing was not given to the assessee is not correct inasmuch as the AO has

repeatedly asked to produce the relevant record. It does not appear logically

that physical books of account which are duly audited could not be produced

by the assessee and same could be produced in the CD form. There is no

pleading that books of account were lost or destroyed from the assessee. In

our considered view, the admission of additional evidence does not conform 7 ITA No. 312/JP/2012 The ITO, Ward- 1 (2), Ajmer vs. Shri Sanjay Matai

with rule 46(A) and the observations of Hon'ble Delhi High Court in the

case of Manish Buildwell, 245 CTR 397 (supra). In consideration thereof,

we are inclined to set aside the matter back to the file of the ld. CIT(A) to

decide the issue of admission of additional evidence in accordance with law

and the observations made above, after giving opportunity of being heard to

both parties and after verification of the assessment record. Since we have

restored back the matter to the file of the ld. CIT(A), the grounds raised

therein are not decided on merits.

3.0 In the result, the appeal of the revenue is allowed for statistical

purposes .

The order is pronounced in the open Court on 09-01-2015

Sd/- Sd/- (T.R. MEENA) (R.P. TOLANI) ACCOUNTANT MEMBER JUDICIAL MEMBER

Jaipur Dated: 9th JAN. 2015 *Mishra Copy forwarded to:- 1.The ITO, wed 1 (2),Ajmer 2. Shri Sanjay Matai, Ajmer 3. The ld. CIT(A) 4. The ld. CIT By Order 5..The ld. DR 6.The Guard File (IT No. 312/JP/2012)

AR ITAT, Jaipur