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TMI Blog2021 (2) TMI 728X X X X Extracts X X X X X X X X Extracts X X X X ..... the same, and only fairly so, was also raised by the ld. counsel for the assessee, Sh. Bardia. Under the circumstances the delay is condoned, being in fact statutorily provided. We also observe that the appeal is maintainable u/s. 268A; the tax-effect being Rs. 62.19 lacs inasmuch as the tax on the deletion being impugned is at a higher rate. 3.1 The brief facts of the case, in-so-far as are relevant for the purpose of this appeal, are as follows. The assessee, a partnership firm in the business of property development, filed its' return of income for the year on 02/11/2017 at Rs. 72,191, which was subject to the verification procedure under the Act by the Assessing Officer (AO) by the issue of notice u/s.143(2) on 28/9/2018. The AO, during the course of the assessment proceedings observed credits at Rs.. 80,50,000 from one, Smt. Sunita Khatri w/o Sh. S.K. Khatri, partner, accounted for by the assesse as under: * Unsecured loan: Rs.. 30.50 lakhs * Advance against Building: Rs.. 50 lakhs The said creditor, also assessed with him, had sold immovable property for Rs.. 73,62,918 during the relevant year, investing the same in the purchase of another property, claiming exemptio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2016 09.03.2016 22.03.2016 25,00,000/- 25,00,000/- 10,00,000/- Land advance from M/s. Balaji Infrastructure 27.06.2016 50,00,000/- 03.06.2016 27.06.2016 12,50,000/- 12,50,000/- Land advance from M/s. Balaji Infrastructure Total 8050000 85,00,000/- It is utmost important that the entire receipt and payment has been fully recorded in books of account of Smt. Sunita Khatri which were verified by the AO. Thus, the allegation of the AO that meager income has been shown in return of income by Smt. Sunita Khatri has no merit and is therefore, rejected. The AO ought to have considered the receipts of funds which are disclosed in books of account before making any allegation on Smt. Sunita Khatri. As the applicability of amended provisions of section 115BBE of the Act. It is held that the appellant has discharged its onus of proving creditworthiness of Smt. Sunita Khatri, no addition u/s 68 of the Act survived. Therefore, amended provisions of section 115BBE are ant (not) applicable in the case of appellant and the AO is directed to calculate tax at normal applicable tax rates. 4.1.2 The creditor furnished the confirmation regarding investment in appellant fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reason/s for the admission of the documents furnished by the assessee before him for the first time, and which could only be on the satisfaction of the condition/s specified u/r. 46A of the Income Tax Rules, 1962, mandatory in character. In any case, he ought to have, before relying thereon, confronted the same to the AO, seeking his report/comments thereon. On an enquiry by the Bench as to the applicability of r. 46A(4), he would submit that the same is inapplicable in the facts of the case, as it is not a case where the first appellate authority had, in exercise of its' power thereunder, called for or directed the production of any material before him to enable him to dispose of an appeal or for any other substantial cause. The documents relied upon by him were furnished before him by the assessee in substantiation of its' case, and which it ought to have before the assessing authority, whose satisfaction the law contemplates. 4.2 Sh. Bardia would submit that all the documents furnished by the assessee before the ld. CIT(A), though no doubt suo motu, were already on the file of the AO inasmuch as he was, as apparent from the assessment order, also the Assessing Officer of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y to produce evidence or witness in rebuttal of the evidence admitted (r. 46A (3)). The impugned order (IO) is silent on both these aspects, and on which alone it has been assailed before us by the Revenue. There is even no finding by him of the documents furnished before him (refer para 4.1.2 of the IO) as having been furnished before the AO. Rule 46A is mandatory in character. The law in the matter is trite, admitting of no two views. The same, quite clearly, is toward observing the principles of natural justice. This would be more so in a case as the present one as the satisfaction qua the genuineness of a credit, which the law mandates if it is not to be regarded as unexplained and deemed as income u/s. 68, is of the AO, and of no other authority. The purview of an appellate authority, on merits, therefore, is only as to if the AO was, in the given facts and circumstances, i.e., in view of the explanations and evidence furnished before him, justified, or not so, in being not satisfied as to the nature and source of the credit having been proved. The Revenue's case is, in principle, unexceptional. The merits of the case, as afore-noted, is not in question inasmuch as the materia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nuineness of the impugned credits, nature whereof is stated as 'unsecured loan' or 'advance against building' (and not against 'booking' as stated in the IO). Continuing further, sure, some of the materials adduced before the ld. CIT(A) may be with the AO, i.e., in the file of the creditor (Sunita Khatri). That, however, is no reason for the assessee not to furnish the same before it's AO. Rather, to be fair to it, we do not find any reply by the assessee on record to that effect, i.e., stating of any document on the file of the creditor with the AO, to be therefore taken on record in the case of the assessee. To what purpose then, one may ask, the statement that the creditor is assessed with the same AO, who cannot possibly take on record the said documents, even if relevant, for the purpose of establishing the credit/s, nor could possibly be expected to cull out the relevant documents from the files of the other assessees with him? As regards the observation by the AO that the amount realised by the creditor on the sale of immovable property during the year (Rs.. 73.63 lacs) has been invested by her for the purchase of another property, claiming exemption u/s. 54, it is not cle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its source. That is, even if not substantiated, or fully explained, there is no suggestion of the impugned credits as being either unaccounted for or as not genuine, except of course where the genuineness of the agreements/understanding itself is in doubt, of which there is though no whisper. We exclude reference to the quantum here because, admittedly, a part of the sum given to the assessee (Rs..80.50 L) stands received by the creditor during an earlier year, so that the difference in its respect between the AO's statement, based on the creditor's return, and her bank statement, not before him, could be for that reason. The assessee surely ought to have been fair & forthright enough, and clarified these aspects during hearing; rather, before the first appellate authority itself, while even before us the thrust of the arguments by Sh. Bardia, who also represented before the Revenue authorities, was on the merits, canvassing the asssessee's case with reference to the creditor's bank statement, not before the AO, and even as the merits of the adjudication had not been challenged before us, being in fact premature as, as found, the relevant materials, furnished before the ld. CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... casion for him to have considered calling for any of the said documents. Also, as it appears, no inquiry stands made by him with the assessee as to which of those documents were in fact furnished by the assessee before the assessing authority. This, rather, gives rise to the question as to whether it is a case to which r. 46A(4), which is akin to rule 29 of the Income Tax (Appellate Tribunal) Rules, 1963, would, strictly speaking, apply. The same refers to the power conferred under Order 41, Rule 27 of CPC, 1908, law on which is wellsettled, even with reference to the decisions under the Act. The said power, however, having not been invoked by the ld. CIT(A), we do not consider it necessary or proper to dwell thereon. Suffice to state that he ought to have, in the view of the clear mandate of s. 68, recording a clear finding in the matter, required the AO, before whom the burden of proof is required to be discharged by the assessee, to examine the same. Reference here may also be made to Tin Box Co. v. CIT [2001] 249 ITR 216 (SC), explaining that an opportunity before an appellate authority does not substitute that before the assessing authority. The course suggested by us for bei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the instant proceedings, unless of course the same impinges on the nature and source of the credits under reference. Even, therefore, assuming the condition of s. 54(2) as not satisfied for the reason that the sale proceeds of the property stand, as claimed, and as appears to be the case, 'loaned' or 'advanced' to the assessee-firm, it would rather prove the credit on the anvil of s. 68. Again, as it appears to us, it is the 'advance against building' in the assessee's books, which is being at the same time regarded as an investment in property qualifying for exemption u/s. 54, in the hands of the creditor, in whose books the entire amount given to the assessee, whether by way of loan or otherwise, is shown as receivable from to it (PB pg. 48). Which of the two descriptions, i.e., advance or investment, or perhaps both, is 'correct', would only be determined on a perusal of the underlying agreement which, as it now transpires, having been furnished after the close of the hearing, has not been considered by the AO. Our purpose for reference thereto is two-fold. One, that the purchase agreement may not be relevant as the nature of the amounts under reference is stated as 'unsecured ..... X X X X Extracts X X X X X X X X Extracts X X X X
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