Sending of submission of assessee to AO for remand report is enough to avoid contravention of rule 46A

IN THE INCOME TAX APPELLATE TRIBUNAL

DELHI BENCH “A”, NEW DELHI

BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER

AND

SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER

I.T.A. No. 5409/Del/2010

A.Y.: 2006-07

I.T.O., WARD 2(4),

R.NO. 301, 3RD FLOOR,

CENTRAL REVENUE BUILDING,

NEW DELHI – 110 002

(Appellant)

Vs.

M/S BHAVYA LAKHANI TRADERS &

SUPPLIERS (P) LTD.,

C/O M.C. JAIN & CO.,

4701/21-A, ANSARI ROAD,

DARYA GANJ,

NEW DELHI - 110002

(PAN: AABCB9090R)

 (Respondent)

Assessee by: Ms. Kavita Batra, A.R.

Department by: S h. Prithi Lal, Sr. D.R.

ORDER

PER SHAMIM YAHYA: AM

This appeal by the Revenue is directed against the order of the Ld. Commissioner of Income Tax (Appeals)-V, New Delhi dated 20.9.2010 pertaining to assessment year 2006-07.

2. The grounds raised read as under:-

“i) The Ld. Commissioner of Income Tax (A) has erred on facts and in law in deleting addition of ` 96,65,438/- on account unexplained cash credits as, in contravention of the provisions of Rule 46A reasonable opportunity was not afforded to the Assessing Officer to consider the evidence provided by the assessee as the appellate stage. Reliance is placed on the decision of Hon’ble Kerala High Court in the case of C. Unnikrishanan vs. C.I.T. (233 ITR 485), and ITAT, Delhi in the case of Asian Needless Pvt. Ltd. in I.T.A. No. 3234 to 3237/Del/2009 dated 06.11.2009.

ii) The appellant craves leave for reserving the right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal.”

3. In this case assessment was framed u/s. 144 of the I.T. Act. Assessing Officer held as under:-

“During the year the assessee company had raised unsecured loans of ` 96,65,438/-, the source of which remains unverified in view of the facts that no details with regard to the same is available. Hence, the same are disallowed and added back to the income of the assessee company as cash credit from unexplained sources.”

4. Before the Ld. Commissioner of Income Tax (A), assessee submitted that the administrative and corporate office of the assessee had been shifted to Kolkata, for which a letter dated 6.11.2008 was submitted to the Assessing Officer. Despite the fact, the Assessing Officer sent the notices on the old addresses which was never served to the assessee. Assessee further submitted that assessee had taken a loan of ` 94,50,000/- from M/s Pilot Consultants Ltd. on different dates through banking channels against which an interest of ` 1,95,403/- was paid and TDS of ` 43,848/- was made. Assessee further submitted that a sum of ` 10 lacs was received as loan on 9.3.2006 from Sanjeevni Estate (P) Ltd., against which interest of ` 4295/- was paid. In support of its contention it filed confirmatory letter from the aforesaid two parties, copy of acknowledgement of their returns, copy of bank statements of the above parties and also the copy of a/c of the assessee. Considering the above the Ld. Commissioner of Income Tax (A) observed that due to reasonable cause, assessee could not furnish the evidence before the Assessing Officer. Consequently, the Ld. Commissioner of Income Tax (A) forwarded the new evidence to the Assessing Officer for his remand report. Ld. Commissioner of Income Tax (A) further reproduced the following portion of the remand report.

“As per assessment order, it was noted that the main addition was made on a/c of unverified unsecured loans amounting to ` 96,65,438/-. Therefore, the notice u/s. 133(6) issued to the concerned parties from the assessee was received unsecured loans. The reply of these parties received in this office and placed in the file in which the loan transaction has been shown.”

4.1 Considering the remand report Ld. Commissioner of Income Tax

(A) asked the assessee to file the rejoinder in this regard. Assessee submitted as under:-

“That in response to Assessing Officer’s Remand Report dated 01.9.2010 which was confronted to the appellant on 16.9.2010, it is brought to your kind notice that the Assessing Officer did not point out any material in his Remand Report in support of disallowance of ` 96,65,438/- which might require further clarification from the appellant. On the contrary, the creditors i.e. M/s Pilot Consultants Ltd. and M/s Sanjeevani Estates (P) Ltd. have confirmed the loan given to the appellant and the same has been reported by the Assessing Officer in his remand report.”

4.2 Considering the above, Ld. Commissioner of Income Tax (A) held as under:-

“I have considered the written submissions of Ld. Authorised Representative and perused the assessment order and remand report. I discussed the matter wit the Ld. Authorised Representative very carefully. In find that the Assessing Officer made addition of ` 96,65,438/- (` 1,06,05,219 (-)` 9,40,336/-) on the ground that the aforesaid loans were not substantiated during course of assessment proceedings. I find that these loans of ` 94,50,000/- and ` 10 lacs were taken from M/s Pilot Consultants Ltd. and M/s Sanjeevani Estates (P) Ltd. respectively through banking channels against which the interests were paid and TDS were also made. The confirmatory letters alongwith copy of acknowledgement of ITR and copy of bank account of the creditors and also of the appellant have been filed. Thus these evidences prove the genuineness of the loan taken from the aforesaid creditors. Hence, the provision of 68 of the I.T. Act does not apply in this case. Hence, the provision of 69 of the I.T. Act does not apply in this case, thus the additions of ` 96,65,438/- as made by the Assessing Officer is deleted. The Assessing Officer is directed to send the copy of confirmatory letters of these two creditors to their AOs (A.O. of M/s

Pilot Consultants Ltd. is Circle 10, Kolkata and A.O. of M/s Sajeevani Estates (P) Ltd. is DCIT, Circle 7, Kolkata) for necessary action at their end. Relief of ` 96,65,438/- is allowed.”

5. Against the above order the Revenue is in appeal before us.

6. The only grievance of the Revenue is that Ld. Commissioner of Income Tax (A) has erred in deleting the addition of ` 96,65,438/- on account of unexplained cash credits, in contravention of the provisions of Rule 46A as reasonable opportunity was not afforded to the Assessing Officer to consider the evidence provided by the assessee at the appellate stage.

7. We have heard the rival contentions and perused the records. We find that there is no cogency in the ground raised by the Revenue that Ld. Commissioner of Income Tax (A) has not duly afforded adequate opportunity to the Assessing Officer to consider the submissions and evidences filed before him at the appellate stage. The Ld. Commissioner of Income Tax (A) has duly sent the documents furnished by the assessee at the appellate stage to the Assessing Officer for a remand report. Under the circumstances, there cannot be any issue that Assessing Officer was not provided adequate opportunity in this regard. Ld. Departmental Representative in this regard fairly agreed that the contravention of Rule 46A does not arise in this case, as the Assessing Officer has been provided with adequate opportunity and the remand report obtained from him. In this view of the matter, we do not find any infirmity in the order of the Ld. Commissioner of Income Tax (A). Accordingly, we uphold the same.

8. In the result, the appeal filed by the Revenue stands dismissed.

Order pronounced in the open court on 16/10/2012, upon conclusion of hearing.

Sd/- Sd/-

[A.D. JAIN] [SHAMIM YAHYA]

JUDICIAL MEMBER ACCOUNTANT MEMBER

Date 16/10/2012

“SRBHATNAGAR”

Copy forwarded to: -

1. Appellant

2. Respondent

3. CIT

4. CIT (A)

5. DR, ITAT

TRUE COPY

By Order,

Assistant Registrar,

ITAT, Delhi Benches