IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCHES : F : NEW DELHI
BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER
AND
SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER
ITA No.674/Del/2012
Assessment Year : 2008-09
ITO, Vs. Rajesh Kalra,
Ward-19(4), B-16/1, Kewal Park Extension,
Room No.D-217, Vikas Bhawan, Shri Ram Marg, Adarsh Nagar,
New Delhi. New Delhi.
PAN : AIBPK2761P
(Appellant) (Respondent)
Assessee By : Shri V.B. Aggarwal, CA
Department By : Smt. Meenakshi Vohra, Sr. DR
ORDER
PER A.D. JAIN, JUDICIAL MEMBER:
This is Department's appeal for Assessment Year 2008-09 against the
order dated 13.12.2011, passed by the Ld. CIT(A)-XXII, New Delhi, taking the
following grounds of appeal:-
"1. The Ld. CIT (A) has erred in deleting the addition of
Rs.25,26,120/- made by the assessing officer under the head income
from undisclosed sources on account of unexplained deposits in: the
bank account, and giving the relief of Rs.1,91,780/- out of disallowance
of commission expenses, by relying upon the assessee's documents
and ignoring the facts of the case.
2. The Ld. CIT (A) has erred in admitting the fresh evidences,
without calling for any remand report from the assessing officer and
without giving an opportunity to the A.O. to verify the contents of the
additional evidence given by the assessee before the ld. CIT (A).
ITA No.674/Del/2012
3. The Ld. CIT (A) has erred in admitting the fresh evidences, in
contravention of Rules 46A of the Income-tax Rules."
2. The facts as per the record are that the assessee is engaged in the
business of plying goods carriers and also insurance commission agent
business. He has got two trucks for which he has not maintained any books
of account and income from truck business has been offered u/s 44AE of the
IT Act. For insurance commission agent business, the assessee has
maintained books of account and during the year he has shown commission
receipts of ` 6,07,611/-. In the assessment order, the Assessing Officer added
` 25,26,120/- on account of the credit entries appearing in the bank account.
The assessing officer has also disallowed 50% expenses, i.e., ` 2,39,724/- out
of the expenses claimed.
3. While making the addition of ` 25,26,120/-, the AO observed as
follows:-
"From the bank statement, it is seen that there are credit entries
totaling to Rs.31,33,731/- in the savings bank account maintained by
the assessee with Axis Bank and Canara Bank. The assessee was asked
to furnish the source of deposit of cash & cheques of Rs.25,26,120/-
i.e., after reducing the commission receipt of Rs.6,07,611/- shown in
the P&L account. However, despite repeated opportunities provided,
the assessee failed to give any satisfactory reply supported by
documentary evidences like G.R. or any register showing the details of
parties from whom amount received as freight which was deposited in
savings bank accounts. In the absence of any details as called for and
bills & vouchers, the amount of Rs.25,26,120/- is added to the income
of the assessee u/s 68 of the IT Act as income from undisclosed
sources."
4. The ld. Commissioner (Appeals) deleted the above addition made by
the AO, holding as follows:-
"I have considered the submission of the appellant and observation of
the assessing officer. It is seen that during the year in the bank
account of the appellant maintained with Axis Bank and Canara Bank,
there were total credit entries of Rs.31,33,731/-. In the assessment
order, assessing officer gave credit of Rs.6,07,611/- which was shown
as insurance commission receipts and rest of the amount credited in
the bank account was treated as unexplained cash credit u/s 68 of the
IT Act. During the course of appellate proceeding, the appellant had
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ITA No.674/Del/2012
submitted that he has got two trucks and income from these trucks
has been offered u/s 44AE of the IT Act. It is claimed by the appellant
that freight receipts received from following parties for execution of
transportation contracts or transportation of goods were deposited in
the bank account maintained with Axis bank and Canara bank:-
M/s K.L. Rathi Steel Ltd.
M/s Rathi Industries Ltd.
M/s Bansal Cargo Movers Pvt. Ltd.
M/s M.K. Juneja Iron & Steel Pvt. Ltd.
M/s Bhaga Laxmi Oil Mills
M/s Rathi Super Steel Pvt. Ltd.
It is submitted by the appellant that amount received from above
parties by way of cheque as well as cash was credited in the above
mentioned bank accounts. It is also submitted by the appellant that
TDS has been deducted by the above mentioned parties on the
payment of freight and such TDS has been claimed in the return of
income and refund has been allowed by the assessing officer. It is
submitted by the appellant that during the year appellant had received
total freight receipt of Rs.30,50,697/- out of which, some amount was
received in cash, which was given to the driver for incurring
expenditure and majority amount was received by way of cheque
which was credited in the above mentioned bank account of the
appellant. It is claimed by the appellant that the amount of
Rs.25,26,120/- treated by the assessing officer as unexplained was
pertaining to these receipts only. In support of his contention, the
appellant has filed copies of the TDS certificates and details of the
payments received from the above parties. The appellant has also
lgiven details of the amounts received from the parties and credited in
the bank account on a particular date with cheque no. and amount,
which tallies with the credit entries appearing in the bank account.
These details are placed on record. Since the amount of Rs.25,26,120/-
added by the assessing officer was pertaining to freight receipts
received from various parties and TDS on the same has been
deducted, the same cannot be treated as unexplained deposit in the
hands of the appellant. The income pertaining to these freight receipts
has been offered by the appellant u/s 44AE of the IT Act of Rs.84,000/-.
The appellant has filed the copy of computation of income in support of
his contention. The appellant has also filed copies of the registration of
the trucks owned by the appellant. In view of the above stated facts,
the addition made by the appellant of Rs.25,26,120/- was not justified
and same is deleted.
The assessing officer has also disallowed Rs.2,39,720/- out of the
expenses of Rs.4,79,447/- claimed in P&L account. It is mentioned by
the assessing officer that appellant has not given full details of the
expenses during the course of hearing. At the same time, it cannot be
denied that to run business of commission agent appellant needs to
pay commission to sub-agents and various parties to get business. The
appellant has also needs to incur expenses on maintenance of office
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ITA No.674/Del/2012
and vehicles. Therefore, the 50% disallowance made by the assessing
officer was unreasonable. Considering the nature of business of the
appellant, the disallowance is restricted to 10% of the total expenses
which comes to Rs.47,944/-. As a result, the appellant gets a relief of
Rs.1,91,780/-."
5. Before us, the department, by way of Ground Nos.2 and 3, has
contended that the ld. CIT (A) has erred in admitting the fresh evidence filed
by the assessee, without calling for any remand report from the AO and
without giving any opportunity to the AO to verify the contents of such
additional evidence, in violation of Rule 46A of the IT Rules.
6. The ld. Counsel for the assessee, on the other hand, has placed strong
reliance on the order under appeal in this regard.
7. We find that apropos the issue of additional evidence, the relevant
observations of the ld. CIT (A) are as follows:-
"... It is submitted by the appellant that during the year appellant had
received total freight receipt of Rs.30,50,697/- out of which, some
amount was received in cash, which was given to the driver for
incurring expenditure and majority amount was received by way of
cheque which was credited in the above mentioned bank account of
the appellant. It is claimed by the appellant that the amount of
Rs.25,26,120/- treated by the assessing officer as unexplained was
pertaining to these receipts only. In support of his contention, the
appellant has filed copies of the TDS certificates and details of the
payments received from the above parties. The appellant has also
given details of the amounts received from the parties and credited in
the bank account on a particular date with cheque no. and amount,
which tallies with the credit entries appearing in the bank account. ..."
8. From the above, it is quite evident that the ld. CIT (A), while admitting
and using the additional evidence filed by the assessee, did not give any
opportunity of hearing to the AO. No remand report was called for. Nor was
the AO asked to verify the contents of the additional evidence filed by the
assessee. Therefore, the grievance sought to be raised by the department by
way of Ground Nos.2 and 3 is justified and is accepted. The action of the ld.
CIT (A) is in violation of the settled natural justice principle of audi alterem
partem. Accordingly, the matter is remitted to the file of the AO for decision
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ITA No.674/Del/2012
afresh in accordance with the law on considering the additional evidence
filed by the assessee before the ld. CIT (A). The assessee, no doubt, shall be
afforded adequate opportunity of hearing by the AO. The assessee shall
cooperate with the AO in the remand proceedings.
9. In the result, for statistical purposes, the appeal filed by the
department is treated as allowed.
The order pronounced in the open court on 23.05.2014.
Sd/- Sd/-
[SHAMIM YAHYA] [A.D. JAIN]
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated, 23rd May, 2014.
dk
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT (A)
5. DR, ITAT
AR, ITAT, NEW DELHI.
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