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TMI Blog2012 (3) TMI 694X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, the ground is not admitted and, thus, no adjudication is required in this matter. 1.2 Ground nos. 1, 2 and 3 are general in nature to the effect that the impugned order is bad in law, it has been passed without application of mind and that the ld. CIT(Appeals) failed to appreciate that the assessment was framed in a hurried manner without affording sufficient opportunity to the assessee. These grounds have not been pressed before us. Therefore, these grounds are also treated as dismissed. 2. Ground no. 4 consists of 8 sub-grounds. These grounds deal with non-admission of additional evidence filed before the ld. CIT(Appeals). It has been explained to us that ground no. 4 projects the real grievance, namely, that the ld. CIT(Appeals) erred in not admitting additional evidence which was placed before him and such non-admission has resulted in grave miscarriage of justice. The ld. counsel has clubbed ground No. 6.3 with this ground which is to the effect that the ld. CIT(Appeals) grossly erred on facts and in law in not appreciating that appeal for assessment year 2001-02 was also pending before him and in that assessment no disallowance was made from the expenditure i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnished. In respect of trade scheme expenses, the assessee could not furnish addresses of three parties out of 16. The AO considered the facts of the case and submissions made before him. It is mentioned that the accounts are fully computerized and, therefore, getting any information should not be difficult at all. Thus, the explanation that information is not easily accessible was held to be incredible. There were also discrepancies in the figures in some cases in respect of which enquiries were made by the AO. Such discrepancies were reconciled by the assessee. However, due to lack of complete information, expenditure of Rs. 10.00 lakh and above where addresses could not be furnished and 10% of the expenses in other cases were disallowed. 2.2 It is further mentioned that the assessee furnished details of trade scheme expenses, which aggregated to about Rs. 12.6 crore, however, such expenses were earlier shown at about Rs. 11.49 crore. The discrepancy could not be reconciled. Therefore, a further addition of Rs. 1,10,58,759/- was made. The assessee had also not furnished complete details where payments were made of an amount of Rs. 10.00 lakh or above. The AO has furnished t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und of appeal. 3.1 It may be mentioned here that the ld. CIT(Appeals) had obtained the report of the AO, who strongly objected to acceptance of fresh evidence. It was submitted that various opportunities were granted to furnish the details and reconciliation. It was not a case where the assessee was prevented by sufficient cause in furnishing these details but it was a case of adoption of delaying tactics for avoiding investigation. After considering the rival submissions, the ld. CIT(A) came to the conclusion that the name and address of the parties with whom assessee had regular business dealings could have been instantly obtained as the accounts were computerized. The ground that the details had to be obtained from regional offices was merely a ruse as these details ought to have been available with the assessee when the return was filed on 30.11.2000. Thus, the fresh evidence was not taken on record. The appeal of the assessee regarding disallowance from expenses was also dismissed as the assessee could not explain the discrepancies and full details were not furnished. 4. Before us, the ld. counsel referred to the findings in the assessment order and the impugned or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence, the ld. counsel relied on the decision in the case of Smt. Prabhavati S. Shah Vs. CIT, (1998) 231 ITR 1 (Bom.). In this case, the assessee had received loans from two persons. He was asked to file confirmation letters from the creditors but failed to do so. Thereafter, the ITO made some enquiries on his own. The summons issued to the first creditor was returned as it was stated that it was not in existence. In respect of the loan from the second party, he found that the assessee failed to identify the creditor. Thus, the amount of Rs. 1,43,520/-, representing the amount of two loans and interest thereon was added to the total income. Before the AAC, it was contended that the loan was taken by way of a cheque from the first party and, therefore, the ITO should have made enquiries from the bank. In respect of loan from the second party, it was contended that loan was received by way of cheque and the repayment was also made by way of cheque. The assessee also wanted to produce additional evidence in the form of photocopies of the cheques, certificate from the bank to show that the second sum of Rs. 40,000/- was received from the lender, and the bank account. The ld. CIT(Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as stated above and it is for the aforesaid reason that additional evidence was not admitted. Elaborating further, the ld. CIT(Appeals) mentioned on page no. 79 of the impugned order that the information was not such which could have taken months to collect and collate. The names and addresses of the parties are instantly available when the accounts are computerized. The plea that the delay occurred on account of de-centralization of accounts is also not acceptable because these details should have been available with the assessee when accounts were finalized about two and half months ago and the return was filed. The AO had initiated assessment proceedings on 26.02.2002 and a detailed questionnaire was issued on 09.12.2002. The AO required the addresses of the parties so that cross-verification could be made. Finally, as per request of the assessee, the list was pruned to include only those parties who had been paid the sum exceeding Rs. 10.00 lakh. These are big amounts and, therefore, enquiry was necessary. It is argued that the failure to furnish the detail was not on account of any reasonable cause but the assessee did not want to furnish the details for avoiding any enquiry. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d notices and summons u/s 143(2), 142(1) and 131 of the Act. No response was received from the assessee. Therefore, the assessment was completed u/s 144 estimating business income at Rs. 60,000/- from hotel business and Rs. 15,000/- from contract business. Before the ld. CIT(Appeals), the service of notices was admitted but it was contended that the notices were not properly served. However, no attempt was made to place additional evidence on his record. The CIT(Appeals) came to the conclusion that the notice had been properly served. The proof of service was also produced before the Tribunal. Thus, the Tribunal also came to the conclusion that the contention that no opportunity was given to the assessee is baseless. It was contended before the Tribunal that the assessee had produced sales-tax assessment order showing that he was not the person who was running the hotel but it was some one else doing so on his behalf. This evidence was not considered by the AAC. However, the Tribunal did not accept this contention. On a reference, the Hon ble Court mentioned that there is no evidence filed by the assessee on record in respect of improper service of notice. Further, there is no evid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommitted by the Tribunal is that it proceeded to mix up the powers of the CIT (A) under sub- section (4) of Section 250 with the powers vested in him under Rule 46A. The Tribunal seems to have overlooked sub-rule(4) of Rule 46A which itself takes note of the distinction between the powers conferred by the CIT (A) under the statute while disposing of the assessee s appeal and the powers conferred upon him under Rule 46A. The Tribunal erred in its interpretation of the provisions of Rule 46A vis- -vis Section 250(4). Its view that since in any case the CIT (A), by virtue of his conterminous powers over the assessment order, was empowered to call for any document or make any further enquiry as he thinks fit, there was no violation of Rule 46A is erroneous. The Tribunal appears to have not appreciated the distinction between the two provisions. If the view of the Tribunal is accepted, it would make Rule 46A otiose and it would open up the possibility of the assessees contending that any additional evidence sought to be introduced by them before the CIT (A) cannot be subjected to the conditions prescribed in Rule 46A because in any case the CIT (A) is vested with conterminous powers ov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anuary and February, 2003, due to change of management has also not been rebutted by the revenue. The question is whether there was reasonable cause for the assessee which prevented it from filing the details. 7.1 The facts of the case of Smt. Prabhavati S. Shah (supra) are distinguishable, as in that case the AO could have made enquiry from the bank in which loans by way of cheques were deposited. In this case, the AO could not have made proper enquiries in absence of details of all the payees. In the case of K. Ravindranathan Nair (supra), confirmation letters were not entertained by the ld. CIT(Appeals) as none of the conditions of Rule 46A was satisfied. The Hon ble Kerala High Court came to the conclusion that the additional evidence could not have been straightway rejected as the ld. CIT(Appeals) also had power to requisition additional information u/s 250(1). This case can be canvassed at best for restoring the matter to the CIT(Appeals) or the AO for examination of the evidence. Coming to the cases relied upon by the ld. CIT, DR, the facts of Mrs. Jyotsna Suri (supra) are distinguishable. The assessee had taken shifting stands and even claimed immunity from enquiry in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the difference had been reconciled in the additional evidence. The difference occurred because of de-centralization of accounts because of which one account got split into two accounts with effect from 01.07.1999. Since we have restored other grounds regarding verification of expenses to the file of AO, this ground is also restored to his file for fresh decision after giving the assessee a reasonable opportunity of being heard. 8.1 In the result, this ground is also treated as allowed for statistical purposes. 9. It has been submitted before us that ground nos. 6, 7, 8 and 9 also arise on account of lack of address and split up of the account of Manjit Singh Bhatia in two accounts. Following our decision in respect of earlier grounds, these grounds are also restored to the file of the AO for fresh adjudication to be made after giving the assessee a reasonable opportunity of being heard. 9.1 In the result, these grounds are also treated as allowed for statistical purposes. 10. Ground no. 10 is to the effect that the ld. CIT(Appeals) erred in sustaining addition of Rs. 14,60,567/- on account of interest-free loans given to a sister concern. This issue has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t complying with stringent rules and regulations. The policy reveals that each State can manufacture or licence to manufacture specified amount of grain neutral spirit (GNS) from which consumable liquor is manufactured. Whenever a licence is granted for manufacture of GNS, the manufacturing capacity has to be set so that overall limit of the State is not exceeded. A person willing to manufacture Indian Made Foreign Liquor ( IMFL for short) in a particular State has the option to manufacture GNS in that state on its own, it may acquire existing undertaking, it may import GNS and pay import duty etc. or buy GNS from a competitor located in that State. The assessee s utilization of capacity in assessment years 1999-00 and 1998-99 was 63% and 40% respectively. In order to expand in new markets, Seagram India (P) Ltd., the holding company of the assessee-company and SDL acquired a running unit located in Nasik. The advance was made to SDL by the assessee in these circumstances. Therefore, the loan was furnished in the course of business. It was also submitted that the assessee earned net profit of Rs. 12.85 crore and cash profit of Rs. 13.86 crore in this year. Month-wise position of b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... produced its bank account before the lower authorities. In view of this failure, the argument that own funds were available can only be said to be theoretical in nature. The point to be seen is whether the assessee had own funds exceeding the amount of advance to SDL on the respective dates. Since this enquiry could not be made in assessment proceedings, we are of the view that it would be appropriate to restore this matter to the file of the AO. The assessee is directed to produce the bank account before the AO so that an informed decision can be taken. 10.4 Thus, this ground is also treated as allowed for statistical purposes. 11. We now come to the grounds taken by the revenue in its appeal. Ground no. 1 is in respect of disallowance out of trade scheme, marketing expenses and other expenses. The whole issue has been restored to the file of the AO for fresh adjudication after considering the additional evidence filed by the assessee before the ld. CIT(A). Therefore, this ground does not require any further comments from us. 11.1 Thus, this ground is treated as allowed for statistical purpose. 12. Ground no. 2 is to the effect that the ld. CIT(Appeals) err ..... X X X X Extracts X X X X X X X X Extracts X X X X
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