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M/s. Emergent Ventures India Pvt. Ltd., 11th Floor, Vatika Professional Point, Sector-66, Golf Course Extension Road, Gurgaon Vs. ACIT, Range-1, Gurgaon
October, 21st 2019

Referred Sections:
Section 145 (3) and 144 of the Income Tax Act 1961
Section 14A of the Income Tax Act.
Section 40 (a) (i) of the Income tax Act
Section 143(2) of the Income-tax Act, 1961
Section 142(1)

               DELHI BENCH: `C', NEW DELHI


                    ITA No.2459/Del/2016
                   Assessment Year: 2011-12

M/s.    Emergent     Ventures Vs. ACIT,
India Pvt. Ltd.,                  Range-1,
11 th      Floor,      Vatika     Gurgaon
Professional Point, Sector-66,
Golf Course Extension Road,
         (Appellant)                     (Respondent)

           Appellant by     Shri Tarandeep Singh, Adv.
           Respondent by    Shri Raghunath, Sr.DR

                       Date of hearing           28.08.2019
                       Date of pronouncement     18.10.2019



     This appeal by the assessee is directed against order dated
17/02/2016 passed by the learned Commissioner of Income-tax
(Appeals)-I, Gurgaon [in short `the CIT(A)'] for assessment year
2011-12 raising following grounds:
                                                     ITA No.2459/Del/2016

     1.   That the order passed by the learned CIT (A) is arbitrary and based
          on conjectures and surmises.
     2.   That the learned CIT(A) has gone wrong in not permitting the
          assessee to file additional evidence under Rule 46A of the Income
          Tax Rules 1962.

     3.   That the learned CIT (A) did not appreciate the fact that the first
          three alleged notices were not served upon the assessee.

     4.   That the learned Assessing Officer as well as CIT (A) has erred in
          law and on facts of the case arbitrarily and illegally and
          misinterpreted provisions of Income Tax Act and Rules while making
          addition of 2,89,82,566/-

     5.   That the learned AO as well as CIT (A) have gone wrong in
          considering net profit rate at 25% of the turnover without any
          justification or basis.

     6.   That the learned AO as well as CIT (A) have arbitrarily and
          unwarrantedly invoked the provisions of section 145 (3) and 144 of
          the Income Tax Act 1961 without appreciating the issue and failed to
          afford reasonable opportunity of being heard. Thereby breaching the
          natural law of justice.

     7.   Without prejudice to our rights, the learned AO as well as CIT (A)
          have gone wrong in making the following three additions:
          (a) Disallowance of 1353253 under section 14A of the Income Tax
          (b) Disallowance of 5020246 under section 40 (a) (i) of the Income tax
          (c) Disallowance of Rs. 107900000 u/s 366666(1 )(vva) of the
          Income Tax Act.

     8.   That the appellant craves the right to add, alter, amend any or all of
          the grounds of appeal.

2.    Briefly stated facts of the case are that the assessee filed
return of income on 30/09/2011, declaring total income of
Rs.26,45,849/-. The case was selected for the scrutiny and notice
under section 143(2) of the Income-tax Act, 1961 (in short `the
Act') was issued and served upon the assessee, however, none
attended in compliance. The Assessing Officer has noted that, the
                                            ITA No.2459/Del/2016

subsequent notice under section 142(1) along with questionnaire
was also not complied. Subsequently, Authorised Representative
of the assessee attended, however, he also filed part reply of the
queries raised. Various adjustment sought by him were granted,
however, no complaints was made.
3.   According to the Assessing Officer, the assessee was asked
to produce books of accounts along with bills/vouchers for
verification of the financial affairs and expenses claimed in the
profit and loss account. In view of the non-compliance, the
Assessing Officer invoked section 145(3) of the Act and rejected
the books of accounts and estimated net profit at the rate of 25%
of total turnover. The Assessing Officer also made other
disallowances and assessed the total income at  3,16,28,420/-in
the assessment order passed on 27.02.2014.
3.1 Aggrieved, the assessee filed details of all expenses claimed
and produced complete books of accounts before the Ld. CIT(A) as
additional evidences. The Ld. CIT(A) forwarded the additional
evidences to the Assessing Officer calling for any objection to the
admission of the additional evidences as well as calling for a
remand on merit of the addition. The Ld. Assessing Officer
objected admission of the additional evidences on the ground that
sufficient opportunity was allowed to the assessee, which has not
been availed and, therefore, no second inning should be allowed
to the assessee. The Ld. CIT(A) in view of the remand report of the
Assessing Officer and submission of the assessee, rejected the
request of admission of the additional evidence. According to the
Ld. CIT(A), the assessee did not fulfil the requirement for
                                                      ITA No.2459/Del/2016

admitting additional evidences. The learned CIT(A) observed that
for admitting the additional evidences, following circumstances
should exist:
     "a)   Where the A. O. has refused to admit evidence which ought to have
           been admitted; or

     b)    Where the appellant was prevented by sufficient cause from
           producing the evidence which-he was called upon to produce by the
           A.O; or

     c)    Where the appellant was prevented by sufficient cause from
           producing before the A.O. any the evidence which is relevant to arty
           ground of appeal; or

     d)    Where the A.O. has made the order appealed against without giving
           sufficient opportunity to the appellant to adduce evidence relevant to
           any ground of appeal.

           As far as the circumstances of the case are concerned, it is stated
           that the assesse was never refused to admit the evidences produced
           by him nor there certain circumstances which prevented him to
           produce the evidence which he was called upon as no such
           communication has been received in this office. Therefore, additional
           evidences should not be considered in view of the circumstances and
           Rule 46A of the Income Tax Rules, 1962."

3.2 The learnedCIT(A) held that none of the circumstances above
exists in the case of the assessee and accordingly,he referred to
various judicial decisions and declined to admit the additional
4.    Before us, in the grounds raised one of the main grounds is
against not admitting additional evidences by the learned CIT(A)
under Rule 46A of the Income-tax Rules. The Ld. counsel of the
assessing submitted that first three notices issued by the
Assessing Officer were not served upon the assessee at all, which
were either not issued or issued it wrong address and were
written back and were lying in the record file of the assessing
                                              ITA No.2459/Del/2016

officer. It was submitted that the assessee attended the hearing
except the last one i.e. 18 to 2014. According to the Ld. counsel
the Income-tax authorities are required to comply the principle of
natural justice and the learnedCIT(A) might be directed to admit
the additional evidences and decide the addition on merit.
5.     The Ld. DR, on the other hand, objected to the proposal of
the Ld. counsel of the assessee.
6.     In the rejoinder, the Ld. counsel of the assessee submitted
that even no separate order for not admitting additional evidences
was passed by the Ld.CIT(A) and the assessee was not heard on
merit of the additions also.
7.     We have heard the rival submission of the parties and
perused the relevant material on record. The Ld. CIT(A) has not
admitted the additional evidences holding that:
     - the Assessing Officer did not refuse to admit any evidence;
     - the assessee was not prevented by sufficient cause for
       producing the evidence, which is relevant to any of the
       ground of the appeal; and
     - the Assessing Officer provided sufficient opportunity to the
       assessee to adduce the evidences

8.     Before us, the Ld. counsel of the assessee submitted that
first three notices issued by the Assessing Officer were never
served upon the assessee and this fact was available on the
record of the Assessing Officer. Subsequently, though the
Authorised Representative of the assessee attended, however, he
could not produce books of accounts and bills and vouchers
before the Assessing Officer. He submitted that assessee cannot
                                             ITA No.2459/Del/2016

be faulted for non-seriousness on the part of the Authorised
Representative. The Ld. counsel of the assessee has prayed before
us that assessee is willing to produce books of accounts along
with bills and vouchers for verification of the expenses and thus,
one more opportunity may be granted in view of the principle of
natural justice.
8.1 We find that as far as non-service of first three notices is
concerned, the Ld.DR has also not disputed the finding of the
fact. The contention of the Ld. DR has that once, the hearing was
attended by the Authorised Representative, he was required to
comply the queries raised by the Assessing Officer and was
required to produce books of accounts/bill vouchers etc.
8.2 In our opinion, the assessee was prevented from producing
the books of accounts, bills and vouchers partly due to non-
service of the notices and partly due to non-seriousness on the
part   of   the    Authorised   Representative   dealing   with   the
assessment. In such circumstances, one of the conditions for
admitting the additional evidences under Rule 46A of the Income
Tax Rules, 1962 is fulfilled by the assessee. In the interest of
substantial justice, the assessee should be provided opportunity
to produce books of accounts, bills and vouchers etc. for
verification of the claim of expenses and should not be punished
by way of sustaining the addition without verification.
8.3 Accordingly, we set aside the finding of the learnedCIT(A)
and direct him to admit the additional evidences in the form of
books of accounts, bills and vouchers and any other documents
and decide the additions made by the Assessing Officer on merit.
                                             ITA No.2459/Del/2016

The grounds of the appeal accordingly allowed for the statistical
9.     In the result, the appeal of the assessee is allowed for the
statistical properties.
     Order is pronounced in the open court on 18th October, 2019.

             Sd/-                                 Sd/-
(SUDHANSHU SRIVASTAVA)                        (O.P. KANT)
Dated: 18th October, 2019.
Copy forwarded to:
1.     Appellant
2.     Respondent
3.     CIT
4.     CIT(A)
5.     DR

                                            Asst. Registrar, ITAT, New Delhi


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