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TMI Blog2014 (9) TMI 570X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount etc. before the AO enabling him to finalize the assessment as per law - the requirement of sub-rule (3) of Rule 46A can be met under the given circumstances, if either the CIT(A) is directed to send the additional evidence to the AO by communicating that his threshold objection was not acceptable and he may examine the additional evidence on merits or the matter is restored to the AO with a direction to decide this issue afresh after taking into consideration the additional evidence filed by the assessee before the CIT(A) and allowing a further opportunity to the assessee to lead further evidence, if any - the second course of action is more befitting and time saving as well – thus, the order is set aside and the matter is remitted back to the AO for fresh adjudication for the question of addition u/s 68 – Decided in favour of revenue. Prior paid expenses for sales tax disallowed – Held that:- Following the decision in DCIT Vs Glaxo Smithkline Consumer Healthcare Ltd. [2007 (7) TMI 334 - ITAT CHANDIGARH] - deduction for sales tax or other tax and duty etc. is allowable u/s 43B on payment basis - As the nature of the amount paid by the assessee, being sales tax is not dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... particulars of the share applicants were given. Vide order sheet entry dated 24.10.2008, the assessee was again asked to furnish complete details/proofs of identity/confirmations and copies of Income-tax Returns. Despite several reminders, the assessee failed to furnish such details till the last date of hearing. In the light of these facts, the Assessing Officer made addition of ₹ 95.36 lac u/s 68 of the Act. 5. During the course of first appellate proceedings, the assessee filed additional evidence in the form of names and addresses of the share applicants, PANs, mode of payment of share application money, details of bank of the share applicants and the confirmations. It was requested that the same be admitted under Rule 46A. The ld. CIT(A) sent such evidence to the Assessing Officer requesting him to send the remand report. The Assessing Officer, in remand report submitted vide his letter dated 29.10.2010, requested the ld. CIT(A) not to admit the additional evidence as more than adequate opportunities were granted to the assessee during the course of assessment proceedings, which it failed to avail. In contesting the admission of additional evidence, the Assessing Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e scheduled date and again filed only part details. Neither the books of accounts nor any supporting bills/vouchers were produced before the AO. That is how, the AO finalized the assessment on the basis of whatever little material was available on record and made addition, inter alia, u/s 68 of the Act. It is apparent from the above narration of facts that the Assessing Officer gave countless opportunities to the assessee for submitting the required details so that the assessment may be completed in a proper manner. Except for part compliance made four times in the month of October 2008, the assessee miserably failed to furnish all the relevant details called for by the Assessing Officer. What to talk of furnishing the details, the assessee even did not produce any books of accounts and supporting bill/vouchers. Specifically, qua the addition on account of share application money, the Assessing Officer required the assessee to file confirmations from the persons who had applied for shares along with their addresses, proofs of identity and PAN etc. None of such details were filed except giving a bald list containing only names of such persons. Left with no option, the Assessing Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the Assessing Officer opposed its admission tooth and nail without deliberating upon the merits of such additional evidence. 7.1. Now we turn to the view taken by the AO in the remand report that the additional evidence be not admitted as the prescription of subrule (1) of rule 46A was not satisfied. A perusal of this sub-rule transpires that an assessee can file additional evidence, inter alia, under clause (b) on the ground that he was prevented by sufficient cause from producing the evidence which he was called upon to produce by the Assessing Officer. The ld. CIT(A) has covered the case of the assessee under this clause of rule 46A(1) by holding that it was prevented from filing such evidence including the particulars of share applicants with their addresses and PAN etc. before the AO due to serious differences amongst the directors which paralyzed the entire business during the June 2008 to December 2008. We find that such position stated before the ld. CIT(A) and so accepted by him without any substantiation, runs contrary to what emanates from the assessment order itself. It can be noticed that the assessee filed part details on four occasions during the month of Octobe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e remand report that more than adequate opportunities were granted to the assessee to comply with the requirements and hence there could be no reason to accept that the assessee was prevented by a reasonable cause in producing such evidence called for during the course of assessment proceedings. The remand report has been reproduced on pages 2 and 3 of the impugned order, from which it is manifest that the AO simply objected to the admission of additional evidence in the light of the fact that there was a complete failure on the part of the assessee during the course of the assessment proceedings. He further mentioned that the submission of the details later on would not disapprove the reasons on which the additions were made. It is axiomatic that the sum and substance of the Assessing Officer s remand report is that he strongly objected to the admission of additional evidence for the reasons discussed above and as such had no reason to embark upon the exercise of verifying the correctness of the additional evidence. The ld. CIT(A) rejected the view point of the AO by holding that the prescription of subrule (1) of rule 46-A was fulfilled. Ex consequenti, the additional evidence wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... additional evidence as in his opinion the case was covered under clause (1)(b) of rule 46A(1) and that the Assessing Officer may examine such additional evidence on merits and also produce any evidence or document or any witness in rebuttal of such additional evidence produced by the appellant, if any. By not communicating to the Assessing Officer about the rejection of his request and proceeding to admit the additional evidence without giving any further opportunity to examine the additional evidence on merits, the ld. CIT(A) violated the prescription of sub-rule (3) of Rule 46A. Fulfillment of the mandate of sub-rule (3) is a pre-condition for accepting any additional evidence. The natural corollary is that any fresh evidence accepted in violation of this provision, is liable to be ignored. Since, the ld. CIT(A) failed to give a reasonable opportunity to the AO, in our considered the mandate of sub-rule (3) of rule 46A has not been complied with, thus jeopardizing the admission of the additional evidence. 9. When we consider the entirety of the facts and circumstances of the instant case, it is patently borne out that the assessee intentionally ignored the assessment procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs of CIT(A) are coterminus with those of Assessing Officer inasmuch as he can also do what Assessing Officer can do. Relying on a couple of decisions, he tried to justify the action of the ld. CIT(A) in deleting the addition on appreciation of additional evidence filed before him by arguing that it fell within his domain to admit additional evidence since the appellate proceedings are continuation of the assessment proceedings. This contention, in our considered opinion, is partly correct. There is not and cannot be any dispute about such proposition laid down by the Hon ble Courts. However, the ratio decidendi of such decisions needs to be viewed in the backdrop of the facts which were before the Hon ble Courts and more importantly, the context in which these were made. There can be no gainsaying that the CIT(A) can make an inquiry, which was necessary on the facts of the case, but was not made by the Assessing Officer. But, this proposition cannot be stretched to such an extent so as to substitute assessment proceedings with the appellate proceedings. There is hardly any need to emphasize that it is the prerogative of the Assessing Officer to make an assessment. The assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... broader heads was given without producing any supporting bills/vouchers. Considering these facts, the Assessing Officer made disallowance @ 20% of Marketing expenses, which resulted into an addition of ₹ 37,04,440/-. The ld. CIT(A), on the basis of details furnished before him as additional evidence, came to hold that no disallowance was called for. 14.2. Having heard the rival submissions and perused the relevant material on record, it is observed that the assessee did not furnish supporting bill/vouchers of such expenses before the AO for examination. Since, the ld. CIT(A) has deleted the addition by relying on the additional evidence in contravention of rule 46A(3) [as discussed supra], following the view taken hereinabove, we set aside the impugned order on this score and remit the matter to the file of AO for a fresh adjudication after considering the additional evidence already filed by the assessee or any other fresh evidence as the assessee may like to file before him. 15.1. Ground No. 5 of the appeal is against restricting the addition of foreign travelling expenses amounting to ₹ 11,30,474/- made by the AO to ₹ 2,00,000/-. A sum of ₹ 56,52,3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for taking a fresh decision after allowing a reasonable opportunity of being heard to the assessee in terms of option to put forth any fresh evidence in support of this claim. 18.1. Ground No. 8 of the appeal is against the deletion of addition of ₹ 1,06,436/- made by the A.O by disallowing depreciation claimed on certain additions to the fixed assets. Vide questionnaire dated 22.8.2008, the assessee was asked to furnish photocopies of bills of additions to fixed assets above ₹ 20,000/-. Such details were partly furnished by the assessee. It was observed that no copies of bills of assets purchased, tabulated on last page of the assessment order, were furnished on which depreciation of ₹ 1,06,436/- was claimed. The Assessing Officer disallowed depreciation to this extent. The ld. CIT(A), on appreciation of the details adduced before him for the first time, deleted the addition. 18.2. After considering the rival submissions and perusing the relevant material on record, we find that the facts and circumstances of this ground are mutatis mutandis similar to the grounds discussed above. Following the view taken above on such other grounds, we set aside the impugn ..... X X X X Extracts X X X X X X X X Extracts X X X X
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