Presence of reasonable cause for being unable to file the information is valid to allow appeal

INCOME TAX APPELLATE TRIBUNAL

DELHI BENCH ‘D’: NEW DELHI

BEFORE SHRI R P TOLANI, JUDICIAL MEMBER

AND

SHRI J. S REDDY, ACCOUNTANT MEMBER

ITA No. 4506/Del/2011

Assessment Year: 2007-2008

Jay Prakash

WZ-3,

Asaltpur

Janakpuri

New Delhi

(Appellant)

Vs.

Add. CIT

Range-26

New Delhi

 (Respondent)

Appellant by: Shri Raj Kumar, CA

Respondent by: Sri D. K. Mishra, DR

O R D E R

PER SHRI R. P. TOLANI, J. M.

This is an assessee’s appeal. The following norms are raised at the outset. Learned counsel for the assessee contends that assessee is a civil contractor, regularly assessed tax. During this year 18 creditors having calculated outstanding amount of Rs. 6,56,70,827- as on 31.03.2007. AO asked for their confirmation which could not be filed in time as the same were asked at the fanged of assessment on 27.10.2009. On 17.12.2009 Aseessee’s CA filed an application requesting for adjournment as the requisite information could not be gathered due to some difficulties. As the assessment was getting time barred. AO has passed the order on 13.12.2009.

2. Aggrieved assessee preferred first appeal where application for additional evidence was filed under Rule 46A giving reasons as under:

a) The time allowed was too short.

b) The creditors were not cooperating on account of long outstanding of the loans.

c) The assessee adjudication was recorded because assessment was getting time bar.

3. Thus assessee submitted valid and bona fide reasons for its inability to file the confirmation is assessment, which constitute reasonable cause for being unable to file the information before AO.

4. It is pertinent to observe that assessee’s additional evidence filed under Rule 46A was duly forwarded by CIT(A) to AO for a remand admission report thereon. The AO accordingly initiated enquiry against various persons under section 133(6) and received confirmations from large number of parties confirmation. They confirmed the facts as well as the outstanding payments, remand was submitted by AO to CIT (A). The Copy of the remand report was furnished to assessee which was duly rejoined by the assessee. Despite carrying out such a long exercise for verification of additional evidence, Ld. CIT (A) dismissed the assessee’s appeal on the ground that the additional evidence is not admitted as the assessee was given sufficient opportunities of hearing before Ld. CIT(A) did not comment and appreciate on the valid reasons given by the assessee which constituted reasonable cause in non filing of evidence before AO.

5. Reliance is placed by Ld. Counsel on ITAT order DHANA RAM GARG VS. ITO IN ITA NO 2216/D/2011 BY HON’BLE “B” BENCH DELHI ITAT ORDER DTD 12.08.2011 for consideration that in such circumstances the additional evidence should be admitted by the CIT (A). On merits also it was contended that it was pleaded before CIT(A) as on 04.08.2011 the outstanding balance were reduced to Rs. 2,41,84,215/- and most of the creditors are assessed to income tax. TDS has been deducted, wherever required as per law. The assessee could demonstrate that it had received the civil construction, received of Rs. 8,94,18,900/- and there was no justification in addition of trade creditors under section 68. Alternatively it is pleaded that the issue may be set and restored back to the file of AO.

6. Ld. DR supported the order of lower authorities. We have heard the rival contentions and after perusal the materials available on record and in our considered view the time given by the AO to the assessee during the assessment for filing of confirmation was short. The requirements were communicated to the assessee by letter dated 17.12.2009 and the assessment order is passed on 30.12.2009. The assessee was facing difficulties and getting the requisite compliance, at the same assessment was getting time barred. Therefore, the AO constituted the same without giving further time to the assessee and in these circumstances made there additions.

7. Assessee has a legal remedy for filing application for admission of additional evidence under section 46A by giving valid reasons for the same. CIT (A) undertook the exercise by taking elaborate exercise after forwarding additional evidence to AO for remand reports, who undertook the investigation and further issued notices under section 133 (6) to various parties which is not disputed. Many other parties received the summons and filed the confirmations in this behalf. AOs remand report was supplied to the assessee and his rejoinder was called thereon. Having taken this exercise CIT(A) should have admitted the evidence and brought the proceedings to a logical conclusions. The assessee had reasonable cause for being prevented by a sufficient cause for not filing the information before AO. It was call of natural justice for the CIT (A) to accept the additional evidence. In view of these observations, we hold that the CIT(A) refusal in admitting additional evidence under Rule 46A was unjustified. In view thereof we are inclined to hold that the additional evidence is admitted. We are inclined to set aside the issue back to AO as CIT (A) will again call for remand report of AO and may require further attendance of parties. In the entirety of facts and circumstances of the case we set aside the appeal. Issue raised in this appeal by the assessee back to file of AO to decide the same de novo. After giving assessee an adequate opportunity of being heard along with filing of documents, be required for proper disposal of the matter.

8. In the result, the appeal of the assessee is allowed for statistical purpose.

Order pronounced in the open court on 07 .05.2013.

-Sd- -Sd-

(J. S REDDY) (R P TOLANI)

ACCOUNTANT MEMBER JUDICIAL MEMBER

Dated 07/05/2013

A K Keot

Copy forwarded to

1. Applicant

2. Respondent

3. CIT

4. CIT (A)

5. DR: ITAT

ASSISTANT REGISTRAR