Additional evidence having direct bearing on all additions/ disallowance taken on record: ITAT Surat

Narottamprasad Surajdin Pandey Vs ITO (ITAT Surat)

ITAT Surat held that considering the veracity of evidence, additional evidence filed by the assessee is essential and has direct bearing on all the additions/ disallowance, hence, all the additional evidence are taken on record. Accordingly, matter restored back.

Facts- Vide the present appeal, the appellant has contested addition made under section 68 of the Income Tax Act. It is mainly contested the Assessing Officer has not considered the submissions and evidences and CIT(A) confirmed the addition by passing ex-parte order.

Conclusion- Held that considering the veracity of evidence, additional evidence filed by the assessee is essential and has direct bearing on all the additions/ disallowance, hence, all the additional evidence filed by the assesse are taken on record. Further considering the fact that as per contents of assessment order, such evidences were not available before Assessing Officer for his examination, therefore, all three additions/issues are restored back to the file of Assessing Officer with direction to verify the evidences and pass order on all the issues afresh and in accordance with law. Needless to direct that before passing the order, the Assessing Officer shall grant fair and reasonable opportunity of hearing to the assessee. The assessee is also directed to be more vigilant in future and not to cause further delay and seek adjournment without any valid reason and to furnish all the details, his submissions and evidences on various grounds of appeal raised by him, as soon as possible, as filed before this Bench, without any further delay.

FULL TEXT OF THE ORDER OF ITAT SURAT

This appeal by the assessee is directed against the order of the National Faceless Appeal Centre (NFAC),Delhi/learned Commissioner of Income Tax (Appeals), [in short, the ld. CIT(A)] dated 04/03/2024 for the Assessment Year (AY) 2017-18. The assessee has raised following grounds of appeal:

“1. The ld. CIT(A), NFAC has erred and was not just and proper on the facts of the case and in law in confirming the addition of Rs. 7,28,923/- made u/s 68 of the Act.

2. The ld. CIT(A), NFAC has erred and was not just and proper on the facts of the case and in law in confirming the addition of Rs. 2,82,355/- made u/s 68 of the Act on account of Sundry Creditors outstanding.

3. The ld. CIT(A), NFAC has erred and was not just and proper on the facts of the case and in law in confirming the addition of Rs. 9,81,256/- being disallowance of labour wages pertaining to specific persons.

4. Prayer:

4.1 The addition made by the ld. Assessing Officer and confirmed by the ld. CIT(A) may
be kindly deleted.

4.2 Personal hearing may be granted.

4.3 Any other relief that your honours may deem fit may be granted.

5. The appellant craves leave to add, amend, alter or delete any or all of the above grounds of appeals.”

2. Rival submission of both the parties have been heard and record perused. At the outset of hearing, the learned Authorised Representative (ld. AR) of the assessee submits that though the Assessing Officer in his finding recorded that the assessee has not filed any reply in response to show cause notice dated 13/11/2019, yet he passed assessment order under Section 143(3) of the Income Tax Act, 1961 (in short, the Act) on 23/12/2019. The assessee filed c certain details substantiating unsecured loan, sundry creditors as well as on account of labour charges/wages. The assessee was also under process to collect other evidence, in the meanwhile the Assessing Officer passed assessment order. The Assessing Officer has not considered such submissions and evidences, which was filed by the assessee. The ld. CIT(A) confirmed the addition in ex parte order. Though, the ld. CIT(A) also gave his finding on merit, however, the facts remained the same that neither the Assessing Officer nor the ld. CIT(A) has given finding on the basis of evidence filed before Assessing Officer. The assessee is not allowed reasonable and sufficient opportunity. The ld. AR of the assessee while referring para 4 of order of ld. CIT(A) would submit that as per the details given in the said para, first notice of hearing was issued in December, 2020 for making compliance by 05/01/2021, such period was a severe Covid-19 Pandemic. Thereafter, notice was issued on 07/07/2023 for making compliance by 24/07/2023 on which the assessee sought adjournment and thereafter final notice was issued on 21/02/2024 for making compliance by 29/02/2024, thus the ld. CIT(A) given only one effective opportunity. The ld. AR of the assessee submits that though the assessee furnished certain details and evidences before the Assessing Officer to substantiate his claim, yet for abundant caution, the assessee has filed application for admitting additional evidence/such evidence which was filed before the Assessing Officer. The assessee has furnished summary of unsecured loan as on 31/03/2017, audited statement for the year ended on 31/03/2017, copy of Form-26AS and his Bank Statement. The assessee has now filed summary of unsecured loan as on 31/03/2016, audited statement for the year ended on 31/03/2016 (document shown at Serial No 1 &2) and copy ledger account of Sai Enterprises in the books of Mayur Enterprises (proprietorship of assessee) ended on 31/03/2017 and other related evidence which is shown at Serial No. 5 to 12 and 15 to 17 of the paper book. The assessee was under process of filing these documents other details but in the meantime, the assessment order was passed by Assessing Officer. The ld. AR of the assessee submits that all the evidences furnished by assessee are relevant and necessary for effective adjudication of various grounds of appeal/claims made by assessee while filing return of income. The ld. AR of the assessee submits that all these evidences being relevant and though the assessee has furnished part of certain evidences before the Assessing Officer, therefore, the assessee may be allow to file such document and the matter may be adjudicated on the basis of such evidence.

In alternative submission, the ld. AR of the assessee submits that in case, the Bench is of the view that these evidences required verification, specific direction may be given to the Assessing Officer to verify all such evidences and allow appropriate relief to the assessee. The ld. AR of the assessee submits that the assessee has furnished complete details about unsecured loan to prove their identity, creditworthiness and genuineness of transaction. Majority of the loan are availed in earlier year. Similarly, the assessee has also filed ledger account of Sai Enterprises to substantiate the sundry creditor as well as expenditure incurred for labour.

3. On the other hand, the learned Senior Departmental Representative (ld. Sr. DR) for the revenue supported the orders of the lower authorities and would submit that there is a categorical finding of Assessing Officer that the assessee has not filed any evidence in support of unsecured loan, sundry creditor or labour expenses of Rs. 9,81,256/-. Admittedly, no such evidence was filed before the ld. CIT(A), the assessee does not deserve any relief at this stage as the assessee has not discharged his onus. No valid ground is shown/ disclosed by the assessee to allow him to filed such additional evidence. However, in alternative submission, the ld. Sr. DR for the revenue submits that in case, the Bench is of the view that the evidence filed by assessee required consideration, all the issues may be set aside/ restored back to the file of Assessing Officer with direction to verify the evidence and to pass the order afresh.

4. I have considered the submissions of both the parties and perused material available on record. I have also gone through the orders of the lower authorities carefully. Before me, the ld. AR of the assessee also filed application for admission of additional evidence. In the application, the assessee has contended that the assessee has furnished certain evidence to substantiate unsecured loan, audited statement for the year ended 31.03.2017, copy of Form-26AS and his bank statement. Collection of remaining evidence was under process, in the meantime, the assessment order was passed. On perusal of paper book, I find that the assessee has filed details of unsecured loan as on 31/03/2016, audited statement and copy of Form 26AS and bank statement of Allahabad Bank. As per submission of ld. AR of the assessee, other remaining evidences were under process of collection. In the meantime, the assessment order was passed. On perusal of such evidence, I find that the assessee has shown unsecured loan from various parties as shown on page No. 16 of paper book, out of which majority of loans were received in earlier year. The Assessing Officer has identified that the assessee has shown unsecured loan of Rs. 7.28 lacs from various parties. Except one case, in case of Om Sai Enterprises, the assessee has shown unsecured loan of Rs. 19,500/- and from Om Sai Enterprises, there was closing balance of Rs. 1.42 lacs and majority of loan was received in earlier year. Similarly, the assessee has shown ledger account of Om Sai Enterprises on account of sundry creditor. Similarly on account of labour expenses, the assessee has shown expenses/payment of wage to 40 persons. Copy of wage register is placed on record. Considering the veracity of evidence, additional evidence filed by the assessee is essential and has direct bearing on all the additions/ disallowance, hence, all the additional evidence filed by the assesse are taken on record. Further considering the fact that as per contents of assessment order, such evidences were not available before Assessing Officer for his examination, therefore, all three additions/issues are restored back to the file of Assessing Officer with direction to verify the evidences and pass order on all the issues afresh and in accordance with law. Needless to direct that before passing the order, the Assessing Officer shall grant fair and reasonable opportunity of hearing to the assessee. The assessee is also directed to be more vigilant in future and not to cause further delay and seek adjournment without any valid reason and to furnish all the details, his submissions and evidences on various grounds of appeal raised by him, as soon as possible, as filed before this Bench, without any further delay. In the result, the grounds of appeal raised by the assessee are allowed for statistical purposes.

5. In the result, this appeal of assessee is allowed for statistical purposes.

Order announced in open court on 3^rd October, 2024.