Shashi Puri, New Delhi vs Department Of Income Tax

Asstt. Commissioner of VS. Smt. Shashi Puri, Income Tax, A-1/36, Panchsheel Enclave, Central Circle-13, New Delhi Room No. 332, ARA Centre, Jhandewalan Extn., New Delhi AND

I.T.A NO.3379/DEL/2011 (Assessment Year : 2007-08)

Asstt. Commissioner of Smt. Shashi Puri, Legal Income Tax, Heir of Late Sh. Vinay Puri, Central Circle-13, A-1/36, Panchsheel Room No. 332, ARA Enclave, New Delhi Centre, Jhandewalan Extn., New Delhi (PAN: AFWPP8805K

(Appellant) (Respondent)

Appellant by : Shri Sh. Ramesh Chandra, CIT(DR) Respondent by : Shri Sh. V.K. AGGARWAL, ADV. Date of hearing : 19.11.2014 Date of Order : 28.11.2014 2 ITA Nos.3378 & 3379/Del/2011

INTERIM ORDER

These two appeals filed by the Revenue against separate orders of Ld. CIT(A) both dated 06.04.2011 were heard together on the limited issue; as to whether Ld. CIT(A) had erred in admitting additional evidence in violation of Rule 46A. The Revenue has taken this ground of appeal as ground No.2 in both the appeals which reads as under:

"Whether Ld. CIT(A) has erred in admitting evidence under Rule 46A during the course of appellate proceedings, even though the assessee had been given sufficient opportunity during the course of assessment proceedings. "

2. Ld. D.R. while arguing this ground of appeal, invited our attention to the facts of the case and submitted that Ld. CIT(A) has hastened to pass the order by admitting additional evidence without providing proper and sufficient opportunity to the A.O. which was in violation of the provisions of Rule 46A. Ld. D.R. further submitted that in para 2 of Ld. CIT(A)'s order, he has mentioned that application for admission of additional evidence was forward to the A.O. with the direction that if the report was not received then it will be presumed that A.O. had nothing to say on this. It was submitted that Ld. CIT(A) then admitted the additional evidence without waiting for the remand report of A.O. Ld. D.R. relied upon the case law of Manish Build P. Ltd. decided by Hon'ble Delhi High Court which has clearly held that additional evidence has to be admitted only after confronting the same to A.O. It was argued that Hon'ble Delhi High Court in that case had restored the matter to Ld. CIT(A) with a direction to comply with the requirement of Rule 46A and since the requirement of Rule 46A has not been met in the present appeals also, 3 ITA Nos.3378 & 3379/Del/2011

therefore, these appeals need to go back to Ld. CIT(A) for deciding afresh after taking into account the remand report from A.O.

3. Ld. A.R. on the other hand submitted that in the present appeals, the assessee had filed application under Rule 46A as necessary and reasonable opportunity was not provided during assessment proceedings. Ld. A.R. submitted that detailed questionnaire along with notice u/s 142(1) was issued on 23.09.2009 and assessment order was passed on 29.12.2009. It was further submitted that during assessment proceedings, the assessee had filed a letter dated 08.12.2009 wherein A.O. was informed about one crucial aspect with respect to commission income of Mr. Mohit puri the donor in these appeals and it was also submitted that Mr. Mohit the son of donee was also engaged in the business of real estate with M/s. Smart Application Industries Ltd. Inc. Dubai, and confirmation to this effect will be filed shortly. In this respect, Ld. A.R. took us to page 5 of paper book where copy of such letter was placed. It was further submitted that application under Rule 46A consists of only confirmation from M/s. Smart Industrial Equipments, LLC, which in fact was not an additional evidence as this fact was already conveyed to the A.O. vide letter dated 08.12.2009. Without prejudice to the above argument, Ld. A.R. submitted that Ld. CIT(A) vide letter dated 20.01.2011 had forwarded the application for admission of additional evidence to the A.O. but A.O. had not replied the same. In this respect, our attention was invited to para 2 of Ld. CIT(A)'s order. It was further submitted that after admitting additional evidence, copy of written submission dated 10.02.2011 filed by assessee was also forwarded to the A.O. for his comments vide letter dated 04.03.2011 for which also, the A.O. did not reply. In support, Ld. A.R. took us to page 3 of CIT(A)'s 4 ITA Nos.3378 & 3379/Del/2011

order wherein such facts were mentioned. Inviting our attention to LT.A. No. 3379IDe1l2011 in the case of Vi nay Puri, Ld. A.R. submitted that in this case Ld. CIT(A) had given reminder also on 10.02.2011 and 24.02.2011 as mentioned in para 3 of Ld. CIT(A)'s order in LT.A. No. 3379IDe1l2011 and had also forwarded copy of written submissions to which A.O. had not responded. It was submitted that Mr. Vinay Puri had expired and Mrs. Shashi Puri is the legal heir of Vinay Puri. Further, it was submitted that the facts in both the appeals are similar and date of passing the order by A.O. AND Ld. CIT(A) are also the same. It was argued that it was not a case where application for admission of additional evidence was not forwarded to the A.O. Rather, it was a case where A.O. conveniently ignored the direction of Ld. CIT(A) and did not reply to the same even despite reminders. It was submitted that Ld. CIT(A) waited for the remand report of A.O. for about three months after which he passed the order on 06.04.2011 and, therefore, it cannot be said that opportunity was not provided to the A.O. It was submitted that non submission of remand report itself points out that A.O. had nothing to say on these evidences and therefore, Ld. CIT(A) was justified in passing the orders. Ld. A.R. invited our attention to one order passed by Tribunal on dated 13.08.2009 in the case of DDIT Vs Human Care Medical Charitable Trust, New Delhi and it was submitted that in that case also, Ld. CIT(A) had forwarded copy of additional evidence to A.O. but the A.O. did not submit remand report and, therefore, Ld. CIT(A) had decided the matter without remand report and Hon'ble Tribunal had upheld that there was no violation of Rule 46A.

4. Replying to the reliance placed by Ld. D.R. in the case law of Manish 5 ITA Nos.3378 & 3379/Del/2011

Buildwell, Ld. A.R. submitted that the facts in that case were not similar. It was submitted that in that case, Ld. CIT(A) had accepted the additional evidences without forwarding the same to A.O. whereas, in the present appeals, it is an admitted fact that additional evidences along with written submissions of the assessee were forwarded to A.O. and hence, this case law is not applicable whereas the facts and circumstances of the present appeals are similar to the case law relied upon by him.

5. We have heard rival parties and have gone through the material placed on record. Without commenting upon merits of the appeals, the issue of violation of Rule 46A is being decided through this interim order. We note that the facts in both the appeals are similar wherein gifts were sent by one Mr. Mohit Puri to his parents Mr. Vinay Puri & Mrs. Shashi Puri. Mr.Vinay Puri has since expired, Smt. Puri is now assessee in both these appeals one in her individual capacity and one as legal heir. We observe that the A.O. originally issued notice u/s 142(1) on 22.04.2009 and then again after a period of 5 months the A.O. again issued detailed questionnaire on 23.09.2009 and has passed order on 29.12.2009. The A.O. at page 2 of his order has mentioned that no details were furnished by the assessee whereas page 5 is a letter dated 08.12.2009 written to A.O. and received by his office wherein the assessee had submitted certain evidences to prove the creditworthiness of Mohit Puri. In the same letter, the assessee had submitted that another evidence of income of Mr. Puri was not yet available but will be furnished shortly.

6. For the sake of convenience, contents of this letter are reproduced below:

"In respect of above said matter, under instructions of the assessee, it is bring to your kind notice that Mr. Mohit Puri left India for the purpose of employment with M/s. Friend's General Trading FZCO, 6 ITA Nos.3378 & 3379/Del/2011

Dubai on 09.04.2006. A copy of his employment agreement is enclosed. Confirmation from the said employer regarding payment of reimbursements and commission during the period April 2006 to December, 2006 are enclosed. Additionally, the assessee was engaged in the business of real estate brokerage abroad with M/s. Smart Inspection Industrial Equipments LLC, Dubai. A copy of confirmation for the same is awaited and will be furnished shortly."

7. The A.O. without commenting upon this letter held that no details were furnished by the assessee. We further note that the assessee was in fact prevented by sufficient and reasonable cause for not submitting the additional evidence before the A.O. as assessee was asked to furnish supporting evidence on 23.09.2009 and assessment was completed within a short period on 29.12.2009. The high handedness of the A.O. can be judged from the fact that letter dated 08.l2.2009 written by assessee in support of gift does not find mention in the assessment order. Moreover we further note that Ld. CIT(A) had duly forwarded the copy of additional evidence under Rule 46A on 20.01.2011 in both the cases which was followed by reminder dated 10.02.2011 and 24.02.2011 in I.T.A.No. 3379/De1l2011. We further observe that Ld. CIT(A) had forwarded copy of written submissions on 04.03.2011 and 10.02.2011 in I.T.A. No. 3378/Dell2011 and 3379IDe1l2011 respectively to which A.O. did not reply. Therefore, Ld. CIT(A) has passed the order after taking into account the additional evidences on merits. Therefore, these are not the cases where the procedure for accepting additional evidence under Rule 46A was violated. Whereas, these are the cases where A.O. had not submitted remand report within a reasonable period of about 3 months and) that too despite reminders therefore, the Ld. CIT(A) was justified in passing the order after waiting for remand report. The Revenue has taken 7 ITA Nos.3378 & 3379/Del/2011

the ground that Ld. CIT( A) has accepted the additional evidences in-spite of the fact that sufficient opportunities were provided to assessee whereas from assessment order, we do not find any such opportunities. Therefore, the ground taken by Revenue is factually in correct. Moreover we observe that vide letter dated 08.12.2009, the assessee had submitted to A.O. regarding another source of income of Mr. Mohit Puri for which only confirmation was to be filed which could not be filed before A.O. as assessment order was passed on 29.12.2009 and therefore, the same was filed before Ld. CIT(A) as additional evidence.

8. In similar circumstances, ITAT in the case of DDIT Vs Human Care Medical Charitable Trust in I.T.A.No. 2333IDell2009 has held in favour of the assessee by holding as under:

"We have heard the rival contentions and perused the material on record. We find merit in the argument of Ld. Counsel. CIT(A) has validly exercised his power to admit additional evidence under Rule 46A by sending copy thereof to A.O., who instead of commenting on the additional evidence filed, sat on the proceedings. We also find these evidences are filed before A.O. on 26.12.2007 and the same was not considered and the assessment order was passed on the same day. In our view, no violation of Rule 46A can be discerned. In view thereof, we uphold the order of CIT(A)."

9. The case law of Manish Buildwell relied upon by Ld. D.R. is not applicable as in that case, the additional evidences were admitted without confronting to A.O. whereas in the present appeals, the additional evidences were forwarded to A.O. but he did not reply. For the sake of convenience the findings of Hon'ble Delhi High Court in the case of Manish Buildwell are reproduced below:

"24. In the present case, the Cl'T (A) has observed that the additional evidence should be admitted because the assessee was prevented by adducing them before the assessing officer. This 8 ITA Nos.3378 & 3379/Del/2011

observation takes care of clause (c) of sub-rule (1) of Rule 46A The observation of the CIT (A) also takes care of sub-rule (2) under which he is required to record his reasons for admitting the additional evidence. Thus, the requirement of sub-rules (1) and (2) of Rule 46A have been complied with. However, sub-rule (3) which interdicts the CIT(A) from taking into account any evidence produced for the first time before him unless the Assessing Officer has had a reasonable opportunity of examining the evidence and rebut the same, has not been complied with. There is nothing in the order of the CIT (A) to show that the Assessing Officer was confronted with the confirmation letters received by the assessee from the customers who paid the amounts by cheques and asked for comments. Thus, the end result has been that additional evidence was admitted and accepted as genuine without the Assessing Officer furnishing his comments and without verification. Since this is an indispensable requirement, we are of the view that the Tribunal ought to have restored the matter to the CIT(A) with the direction to him to comply with sub-rule (3) of Rule 46A. "

10. Therefore, after analysis of both case laws relied upon by Ld. D.R. and Ld. A.R., we find that the facts and circumstances of the present appeals are similar to the facts and circumstances of case law relied upon by Ld. A.R. Therefore, following above and keeping in view the facts and circumstances of the present appeals, we dismiss ground No.2 of the revenue's appeal. Since, we have decided ground No.2 of the appeals against Revenue, therefore, the cases are needed to be heard on merits.

8. In view of above, Registry is directed to fix these appeals for hearing on 15.l2.2014 at 2.30 P.M. under intimation to both the parties.

9. Order pronounced in the Open Court on 28-11-2014.

Sd./- Sd./- (H. S. SIDHU) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER Date: 28-11-2014 Sp. 9 ITA Nos.3378 & 3379/Del/2011

Copy forwarded to: - 1. Appellant - 2. Respondent - 3. (IT 4. (IT (A) 5. DR,ITAT

TRUE COPY By Order, Assistant Registrar, ITAT, Delhi Benches