Appeal details
Counselvise Citation
[2024] 101 COUNSELVISE.COM (IT) 8034 (ITAT-CHANDIGARH)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
11 month(s) 14 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
31-03-2024
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
B
Next Hearing Date
29-01-2024
Assessment Year
2014-2015
Appeal Filed On
16-04-2023
Judgement Text
आयकर अपील
य अ धकरण,चडीगढ़ यायपीठ , चडीगढ़
IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH
BENCH ‘B’ CHANDIGARH
BEFORE: SHRI A.D.JAIN, VICE PRESIDENT AND
SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER
आयकर अपील सं./ ITA No. 216/CHD/2023
नधारण वष / Assessment Year : 2014-15
M/s Moonlight Properties Pvt. Ltd.,
632, Phase VI, Mohali, Punjab.
बनाम
VS
The ACIT,
Central Circle-II,
Chandigarh.
थायी लेखा सं./PAN /TAN No: AACCM3289L
अपीलाथ/Appellant
यथ/Respondent
नधा रती क ओर से/Assessee by : Shri Nikhil Goyal, Advocate and
Shri Ashok Goyal, C.A.
राजव क ओर से/ Revenue by : Shri Dharam Vir, JCIT, Sr.DR
तार"ख/Date of Hearing : 30.01.2024
उदघोषणा क तार"ख/Date of Pronouncement : 01.04.2024
आदेश/ORDER
PER A.D.JAIN, VICE PRESIDENT
This is assessee's appeal for assessment year 2014-15,
challenging the order dated 28.03.2023 passed by the ld.
CIT(A), confirming disallowance of interest of Rs.75,75,208/-
u/s 36(1)(iii) of the Income Tax Act, 1961 made by the
Assessing Officer.
2. The assessee company had given advance to Shri Harpal
Singh, Director, amounting to Rs.7,80,19,515/-. The AO
ITA 216/CHD/2023
A.Y. 2014-15
2
made disallowance of interest @ 12% of average advance
outstanding, of Rs.6,31,26,735/-, amounting to
Rs.75,75,208/-. The assessee held that there was no nexus
between the advances given and the business of the
assessee. It was held that the assessee did not have
sufficient liquid funds to make advances to the Director;
that this was evident from the fact that the assessee had
raised further loans of Rs.3,75,40,720/- during the year;
that had there been liquid assets with the assessee, need for
taking further loan would not have arisen.
3. By virtue of the impugned order, the ld. CIT(A) has
confirmed the disallowance, bringing the assessee in further
appeal before us.
4. Heard. Before the AO, the assessee had stated that it
had with it share capital of Rs.5,82,57,000/- and
Rs.35,52,38,985/- by way of reserves and surplus, whereas
the advance amount was of Rs.7,80,19,515/-. The AO,
however, did not take into consideration this assertion of the
assessee. The assessee stated that the advance had been
given for business purposes, out of commercial expediency.
The AO, however, held that the assessee could not prove any
ITA 216/CHD/2023
A.Y. 2014-15
3
nexus between the advance given to the Director and the
business of the assessee. The AO also held that no interest
free funds were available with the assessee while making the
advance, and that on the contrary, interest bearing funds
had been borrowed during the year.
5. The ld. CIT(A) has held that the assessee had given
interest free advance to Shri Harpal Singh, Director,
amounting to Rs.7,80,19,515/- as on 31.03.2014, with
opening balance of Rs.4,82,33,955/-; that the assessee had
not explained the business purpose for which the
advance/loan had been given to its Director; that the
assessee had only stated that the loan/advance had been
given to ensure that its business activities were carried out
smoothly; that however, it had not been explained as to how
advancing of the loan would result in carrying out its
business activities smoothly; that the assessee had not
discharged its onus by explaining that the loan had been
given out of business expediency and for business purposes;
that as per the assessee's balance sheet for the year, the
interest free funds had remained more or less static, from
opening balances; that further, the assessee had taken huge
secured loans from banks, on which, interest of
ITA 216/CHD/2023
A.Y. 2014-15
4
Rs.5,00,97,515/- had been debited from the Profit & Loss
Account; that the assessee had not furnished copy of the
bank statement to show availability of funds in the bank
account at the time when the loans were advanced; that so,
it was not possible to ascertain whether the amounts were
advanced out of debit balance or credit balance in the
assessee's bank account; that in the absence of the bank
statement, the assessee's onus for claiming expenditure u/s
36(1)(iii) of the Act, to prove that the borrowed interest
bearing funds had been utilized for business purposes, had
not been discharged; that so, the assessee had not been able
to justify its claim of interest paid, as made in the Profit &
Loss Account; that the assessee had already applied all the
interest free funds available with it in different assets, and
so, no interest free funds were available with it as on the
date of advancing the loans to Shri Harpal Singh, Director;
and that the AO was, therefore, justified in making a
disallowance of interest amounting to Rs.75,75,208/-.
6. The assessee has sought to place on record, by way of
additional evidence, copies of statement of bank account of
the assessee, Annual Tax Statements of the assessee u/s
203AA of the Income Tax Act, in Form 26AS for Financial
ITA 216/CHD/2023
A.Y. 2014-15
5
Year 2013-14, relevant to assessment year 2014-15, i.e., the
year under consideration, ledger of Shri Harpal Singh,
Director in the books of the assessee, Shri Harpal Singh’s
capital account in the books of M/s Synergy Thrislington, in
which, Shri Harpal Singh was a partner, Partnership Deed of
M/s Synergy Thrislington, PAN card of M/s Synergy
Thrislington, and the assessee's balance sheet for Financial
Year 2013-14, relevant to assessment year 2014-15. The
assessee has contended that it was due to multiplicity of
pending tax proceedings that these documents inadvertently
could not be placed before the taxing authorities. It has
been contended that from the Form 26AS (APB II, page 139)
for Financial Year 2013-14, it is evident that the assessee
had received an Income Tax refund of Rs.2,97,85,560/- for
assessment year 2012-13, on 21.12.2013, constituting an
interest free receipt. It has been contended that from the
bank statement of State Bank of India Account
No.30177990423 (APB, page 88), it is available that after
receipt of the aforesaid interest free funds, by way of Income
Tax Refund, of Rs. 2,97,85,560/-, this amount was
immediately transferred to M/s Synergy Thrislington, where
Shri Harpal Singh, Director of the assessee company is a
ITA 216/CHD/2023
A.Y. 2014-15
6
partner. It has been contended that the Partnership Deed
(APB II, page 144) and PAN Card (APB II, page 148) of M/s
Synergy Thrislington are clear in this regard. It has been
contended that the aforesaid transfer of funds occurred in
five installments, each amounting to Rs.50 lacs, and one
instalment of Rs.47,85,560/-, on the same day, as on which
the aforesaid income tax refund of Rs.2,97,85,560/- was
received in the bank account of the assessee. It has been
contended that the assessee's State Bank of India bank
account No. 30177990423 is devoid of drawing power and
maintains a credit balance; and that the interest rate
charged is also ‘zero’. It has further been contended that a
perusal of ledger of “Harpal Singh Capital Account” in the
books of the firm (APB II, page 143) would show that the
interest free funds are being credited in the capital account,
comprising of five installments, as stated earlier, each
amounting to Rs.50 lacs and one instalment of
Rs.47,85,560/-; that from this, it is evident that the
partner’s capital account reflects debits and credits from a
State Bank of India bank account. It has been stated that
since the company and the firm have a common management
and share holding, the firm is considered as a sister concern
ITA 216/CHD/2023
A.Y. 2014-15
7
of the assessee company. It has been stated that the
interest free funds of Rs.2,97,85,560/- were diverted to the
sister concern and the balance of Shri Harpal Singh was
debited by the amount of Rs.2,97,85,560/-, making the total
debit balance in the books of the assessee to be
Rs.7,80,19,515/-.
6.1 It has been contended that the ledger of Shri Harpal
Singh in the books of the assessee makes it evident that
payment was made to the firm on behalf of Shri Harpal
Singh. It has been averred that the taxing authorities have,
thus, erred in treating the transfer of funds to be from
interest bearing funds. It has been contended that a
thorough examination of the ledger within the firm’s books,
under the name of Shri Harpal Singh Capital Account would
establish that the funds, housed within the capital account,
are explicitly earmarked and were utilized for the fulfillment
of the firm’s business requirements, disproving the finding
that the funds were not transferred for business purposes.
It has been contended that the capital account of a partner
in a firm represents the partner’s investment or contribution
to the business; that when a partner introduces capital into
the firm, it is recorded in the capital account to reflect the
ITA 216/CHD/2023
A.Y. 2014-15
8
investment in the business; that this capital is typically
used for the operations and growth of the firm; that
therefore, the authorities below went wrong in disallowing
the interest u/s 36(1)(iii) of the Income Tax Act. It has been
contended that the assessee adhered strictly to the
provisions of Section 36(1)(iii) of the Act and it was justified
in claiming the interest expenditure of Rs.5,00,97,515/- for
the year under consideration. It has been contended that
from the balance sheet (APB II, page 171) of the assessee, it
is patent that the assessee had total interest free funds
available amounting to Rs.41,37,65,985/- at the relevant
time, comprising of share capital of Rs.5,82,57,000/-,
reserves and surplus of Rs.35,52,38,985/- and unsecured
loans of Rs.2,70,000/-. It has been stated that the total
transfer made to the firm during the year under
consideration amounted to Rs.2,97,85,560/-; that the total
debit balance as per the ledger of Shri Harpal Singh in the
books of the assessee was of Rs.7,80,19,515/- as on
31.03.2014 and of Rs.4,82,33,955/- as on 01.04.2013; that
the AO computed the advances made over to Shri Harpal
Singh by an average of the opening balance and the closing
balance, amounting to Rs.6,31,26,735/-; that these funds
ITA 216/CHD/2023
A.Y. 2014-15
9
were transferred by the assessee out of the interest free
funds available with it, amounting to Rs.41,37,65,985/-, as
stated earlier. It has been contended that as such, the ld.
CIT(A) has gone wrong in sustaining the action of the AO in
including the opening balance for computing the total funds
transferred to Shri Harpal Singh.
6.2 Reliance has been sought to be placed on the decision
of the Hon'ble Supreme Court in the case of “S.A. Builders
Ltd. Vs CIT(Appeals), Chandigarh”, [2007] 158 taxman 74
(S.C), in which, it was held that extending loan to subsidiary
company from Cash Credit Account having huge debit
balance would fall under the expression ‘used for the
purpose of business’. It has been contended that in the
assessee's case, the funds were transferred out of the bank
account having credit balance, without any drawing power
and interest liability thereon.
6.3 It has been stated that while following “S.A. Builders”
(supra), the Hon'ble Bombay High Court, in “Vaman
Prestressing Co. (P) Ltd. Vs Addl. Commissioner of Income
Tax” [2023] 154 taxmann.com 325 (Bom), it was held that
the reasons to believe escapement of income recorded in that
ITA 216/CHD/2023
A.Y. 2014-15
10
case were purely on the basis that the petitioner had
advanced borrowed capital to its sister concern and
associate concern without charging any interest and,
therefore, the interest claimed on borrowed capital was not
allowable u/s 36(1)(iii) of the Act; that in “S.A.Builders”
(supra), the Hon'ble Supreme Court was considering an
almost identical situation, wherein, the assessee had
transferred a huge amount of Rs.82 lacs to its subsidiary
company out of the Cash Credit Account of the assessee, in
which, there was a huge debit balance; that the AO had held
that since the assessee had diverted its borrowed funds to
its sister concern without charging any interest,
proportionate interest relating to the said amount out of the
total interest paid to the bank deserved to be disallowed;
that the Hon'ble Supreme Court held that extending such a
loan would fall under the expression “used for purpose of
business”; that it was held that if the amount has been
advanced as a measure of commercial expediency, the
interest on the funds borrowed by the assessee should be
allowed as a deduction u/s 36(1)(iii) of the Act; that it was
held that the petitioner had been granting loans and
advances to its sister and associate concerns from
ITA 216/CHD/2023
A.Y. 2014-15
11
assessment year 2003-04; that it was held that even in
assessment years 2004-05 to 2008-09, the Revenue had not
made any disallowance of interest expenditure in those
years, thereby accepting that the deployment of funds was
for business purpose; that it was held that the disallowance
made for assessment year 2003-04 had been set aside in
appeal by the ld. CIT(A)as well as the ITAT; that it was held
that moreover, there can be no other reason but commercial
expediency for the petitioner to give loans and advances and
capital to ICON; that it was held that the Revenue cannot
justifiably claim to put itself in the armchair of the
businessman, or in the position of the Board of Directors
and assume the role to decide as to how a prudent
businessman should act; and that it was held that the
authorities must not look at the matter from their own point
of view, but that of a prudent businessman.
6.4 It has been contended that in “Kissan Fats Ltd. Vs Dy.
CIT, Central Circle-I, Ludhiana”, [2017] 77 taxmann.com 82
(CHD-Trib), the Tribunal held that if there are sufficient
interest free funds available to the assessee to meet its
investment and, at the same time, the assessee has raised a
loan, it can be presumed that the investments were from the
ITA 216/CHD/2023
A.Y. 2014-15
12
interest free funds available to the assessee; that the Bench
held that where apart from interest bearing borrowed funds,
sufficient interest free own funds were available with the
assessee, a presumption would arise that non business
investments were made out of the same and no interest
expenditure could be presumed to have been incurred by the
assessee for making such investments and that thus, the
disallowance of interest made u/s 36(1)(iii) of the Act was
uncalled for and unjustified; that while holding so, the
Tribunal placed reliance on the decision of the Hon'ble
Punjab & Haryana High Court in the case of “Bright
Enterprises (P) Ltd.”, wherein it was categorically held that
where the funds/reserves were sufficient to cover interest
free advances, the presumption that would arise was that
the investments were made out of interest free funds
generated or available with the company and that their
Lordships were entirely in agreement with the judgement of
the Bombay High Court in “CIT Vs Reliance Utilities and
Power Ltd.”, [2009] 313 ITR 340 (Bom), holding that if there
are interest free funds available, a presumption would arise
that investment would be out of the interest free funds
ITA 216/CHD/2023
A.Y. 2014-15
13
generated or available with the company, if the interest free
funds were sufficient to meet the investment.
7. It has been argued that in “CIT, Jalandhar-I, Jalandhar
Vs Max India Ltd.” [2017] 80 taxmann.com 98 (P&H), it was
found after going through the Cash Flow Statement, that the
company had received interest free share capital from the
issue of shares; that it was held that where the assessee
gave interest free loans to its subsidiaries out of surplus
funds, the disallowance made by the AO u/s 36(1)(iii) of the
Act was to be deleted; that it was held that admittedly, the
assessee company had given interest free loans and
advances amounting to Rs.2297.83 lacs upto the end of the
relevant year, including Rs.704 lacs during the relevant year
to its three subsidiary companies, that the AO did not make
any disallowance in respect of expenditure incurred on
borrowed funds u/s 36(1)(iii) of the Act in relation to interest
free loans and advances given to the said three subsidiary
companies in the earlier years; that after perusing the Cash
Flow Statement of the assessee company for the assessment
year in question, the Tribunal observed that the assessee
company had received substantial proceeds from preferential
issue of share capital, amounting to Rs.99999.98 lacs, that
ITA 216/CHD/2023
A.Y. 2014-15
14
it had also received dividend income of Rs.166.13 Cr from
various investments, that after giving interest free loans of
Rs.7.04 Cr to its subsidiary companies, the assessee was left
with surplus interest free funds of Rs.53.86 Cr, which were
utilized for giving interest free advances and that thus, there
was no nexus of the interest expenditure incurred during the
year with the said loans/advances given to the subsidiary
companies, warranting disallowance u/s 36(1)(iii) of the Act.
8. It has been contended that the ld. CIT(A) has erred in
holding against the assessee by observing that since all the
interest free funds available with the assessee stood already
applied in different assets, they were not available with the
assessee as on the date when the advance was given to Shri
Harpal Singh, Director, and that the assessee could not
establish business purposes for the same. It has been
contended that in the case of “PCIT Vs Malhotra Book
Depot”, [2019] 112 taxmann.com 34 (P&H), the Hon'ble
Supreme Court upheld the decision of the Tribunal, wherein
it was found from the balance sheet that during assessment
year 2010-11, the capital of the assessee company was of
Rs.31,71,64,888/- and the current liabilities and profits
were to the tune of Rs.17,41,39,750/-, totaling to an amount
ITA 216/CHD/2023
A.Y. 2014-15
15
of Rs.49,43,04,638/-, representing non interest bearing
funds available with the assessee. It has been contended
that the Tribunal had held that out of such total available
funds on which no interest was paid by the assessee, the
assessee had advanced a sum of Rs.20,32,60,000/-and that
so, there were sufficient non- interest bearing funds, out of
which, the assessee had advanced funds to/invested funds
in the sister concerns. It has been contended that the
Tribunal had observed that similarly, for assessment year
2012-13, the capital of the firm was of Rs.13,21,61,500/-
and interest free current liabilities were of
Rs.91,37,20,514/-, leading to a total availability of interest
free funds with the assessee, at Rs.104.58 Cr. It has been
contended that the Tribunal observed that for this latter
year, the assessee had made investments in the group
concerns, to the tune of Rs.53.76 Cr, as noted by the AO. It
has been contended that the Tribunal further found that
during the relevant years, the assessee had sufficient
interest free funds to make investment in the group
companies. It has been contended that it was in view of
these findings of the Tribunal that the Hon'ble High Court
held in favour of the assessee, observing that no substantial
ITA 216/CHD/2023
A.Y. 2014-15
16
question of law arose, since the findings recorded by the
Tribunal were not shown to be illegal or perverse.
8.1 It has been submitted that in the case of “Beekons
Industries Ltd. Vs Commissioner of Income Tax”, [2023] 149
taxmann.com 383 (P&H), the Hon'ble High Court set aside
the order passed by the Tribunal and restored that of the ld.
CIT(A), directing the AO to recompute the disallowance as
per the decision in the case of “Hero Cycles”, [2015] 63
taxmann.com 308 (S.C) and that in “Pr. CIT Vs Holy Faith
International (P) Ltd.”, order dated 24.07.2017, passed in IT
Appeal No. 87 of 2017. It was contended that in the scrutiny
proceedings, the assessee had been found to have given
loans and advances amounting to Rs.3,11,22,866/- to its
Directors, relatives of Directors and sister concerns in which
the Directors had substantial interest, without charging any
interest, whereas at the same time, the assessee company
was paying interest on loans taken from banks and other
financial institutions.
8.2 It has been asserted that in the case of “ACIT,
Panchkula Vs Janak Global Resources (P) Ltd.”, [2019] 102
taxmann.com 472 (CHD-TRIB), it was held that where the
ITA 216/CHD/2023
A.Y. 2014-15
17
assessee had sufficient own interest free funds to make
investments, a presumption would arise that the advances
made by the assessee to its sister concerns were out of
interest free funds and, therefore, interest expenses could
not be disallowed u/s 36(1)(iii) of the Act, in the light of the
decision of the Hon'ble Supreme Court in the case of “Hero
Cycles” (supra).
9. The ld. DR, on the other hand, has strongly opposed the
admission of the additional evidence sought to be produced
on record by the assessee. It has been contended that as
available from the order under appeal, the assessee did not
furnish copy of the bank statement in order to show
availability of funds in its bank account as on the dates
when the amounts had been advanced to Shri Harpal Singh,
Director, in order to find out whether the same had been
given out of debit balance or credit balance in the bank
account; that under the provisions of Section 36(1)(iii) of the
Act, it was the assessee's onus to substantiate that the
borrowed funds had been utilized for business purposes
during the year under consideration; that such onus could
have been discharged by furnishing requisite evidence in the
shape of bank statement so as to show how interest bearing
ITA 216/CHD/2023
A.Y. 2014-15
18
funds had been utilized for business purposes, i.e., source of
funds in the bank statement on the dates on which such
advances were given to Shri Harpal Singh, Director; that
such onus had not been discharged by the assessee as it
failed to substantiate the claim made for the interest paid in
the Profit & Loss Account. The ld. DR has contended that as
such, it does not lie in the mouth of the assessee to at this
stage seek production of additional evidence.
10. We have considered the matter in the light of the rival
contentions and the material place on record. We find that
the issue up for consideration is as to whether the claim of
the assessee for deduction under the provisions of Section
36(1)(iii) of the Act has rightly been disallowed by the
authorities below. We find that in order to resolve this
controversy in keeping with the decision of the Hon'ble
Supreme Court in the case of “Hero Cycles” (supra), it is to
be seen as to whether the assessee had availability of
sufficient interest free funds with it, as on the dates on
which funds were advanced by it to Shri Harpal Singh,
Director. It cannot be denied, as also has not been done
before us, that such availability of funds can be ascertained
on documentary evidence, which is proved on record
ITA 216/CHD/2023
A.Y. 2014-15
19
unrebutted. In this scenario, we are of the considered
opinion that the statement of bank account of the assessee
for Financial Year 2013-14, relevant to the year under
consideration, i.e., assessment year 2014-15, the assessee's
Annual Tax Statement in Form 26AS for the year under
consideration, the ledger of Shri Harpal Singh, Director in
assessee's books, the capital account of Shri Harpal Singh,
Director in the books of M/s Synergy Thrislington, the
partnership firm where Shri Harpal Singh was a partner, the
Partnership Deed of M/s Synergy Thrislington, the PAN of
M/s Synergy Thrislington and the assessee's balance sheet
for assessment year 2014-15, are required to be adduced as
evidence, and the Form 26AS would show the veracity of the
assessee's contention that it had received Income Tax refund
on 21.12.2013, as contended. Transfer of such refund to
M/s Synergy Thrislington would also be reflected in the bank
statement. The factum of Shri Harpal Singh, Director, being
a partner in M/s Synergy Thrislington would be evincible
from the Partnership Deed and PAN Card of M/s Synergy
Thrislington. Further, perusal of the bank statement would
also divulge as to whether the funds were given out from the
debit balance or the credit balance in the bank account and
ITA 216/CHD/2023
A.Y. 2014-15
20
would also allow ascertainment of the truthfulness or
otherwise of the assessee's contention that its bank account
is devoid of drawing power and it maintains a credit balance
and that the interest rate charged is ‘zero’. Still further, the
ledger of “Harpal Singh Capital Account” in the books of M/s
Synergy Thrislington would show as to whether indeed
interest free funds were credited in the capital account in
instalments, or not. In fact, the perusal of the partner’s
capital account juxta-posed with the assessee's account
would evince the flow of funds, i.e., debits and credits. The
alleged payment on behalf of Shri Harpal Singh to the firm,
M/s Synergy Thrislington would also be evincible from the
ledger of Shri Harpal Singh in the books of the assessee.
Too, the availability of interest free funds with the assessee
at the relevant time can very well be ascertained from the
balance sheet of the assessee. Since these documents were
not made available by the assessee before either of the
authorities below, finding these documents to be very
material and relevant for adjudicating the matter, as
discussed herein above, we deem it appropriate to restore
the issue to the AO to verify the correctness and authenticity
of these documents, produced for the first time before us
ITA 216/CHD/2023
A.Y. 2014-15
21
and to adjudicate the issue afresh after providing adequate
opportunity of being heard to the assessee.
11. This is entirely in keeping with the decision of the Third
Member of the Tribunal in the case of “Char Bhai Biri Works
Vs ACIT”, 87 ITD 189 (Pune) (TM). Therein, the assessee
filed certain additional evidence before the Tribunal for
consideration. It was stated that some of the papers might
have already been given to the Revenue authorities, but
since details were not available, all those papers should be
treated as additional evidence. Those documents were found
to be very material and relevant for adjudicating the matter.
Since those documents were not available with the AO and
were produced before the Tribunal for the first time, it was
held that the issue was to be restored to the file of the AO to
verify the correctness and authenticity of such documents,
and also to adjudicate the gross profit issue afresh after
providing adequate opportunity to the assessee of being
heard and looking into comparable cases. In the present
case, we are alive to the fact that the best evidence in the
shape of the account statement was not produced by the
assessee before the authorities below. However, as
discussed herein above, we have found the afore-enumerated
ITA 216/CHD/2023
A.Y. 2014-15
22
documents, including the bank statement of the assessee, to
be very material and relevant for adjudicating the matter in
a just and proper manner. It is, therefore, that exercising
our powers under Rule 29 of the ITAT Rules, that we are
ordering all these documents to be adduced in evidence.
11.1 In “Braganza Construction (P) Ltd. Vs ACIT, Circle-
II(1), Panaji”, [2020] 116 taxmann.com 11 (Bom), the
Tribunal had treated a certain amount expended by the
assessee as unexplained expenditure and it had not
considered the assessee's application seeking leave to
produce additional evidence at the stage of appeal. The
Hon'ble High Court held that under Rule 29 of the ITAT
Rules, 1963, the Tribunal does have the power to permit
production of additional evidence before the Tribunal, if the
case for the same is now made out; that this means that the
Tribunal is duty bound to consider the application seeking
leave to produce additional evidence at the appellate stage,
in accordance with law and on its own merits.
11.2 In “Haryana State Roads & Bridges Development
Corporation Ltd. Vs Commissioner of Income Tax,
Panchkula”, [2016] 75 taxmann.com 104 (P&H), the assessee
ITA 216/CHD/2023
A.Y. 2014-15
23
sought to produce a Challan before the Tribunal showing
that payment of tax was deducted at source in the
Government Treasury, but the Tribunal did not permit it to
do so. The Hon'ble High Court held that it was a fit case for
the Tribunal to have exercised its powers under Rule 29 of
the Appellate Tribunal Rules, 1963, requiring the production
of the Challan evidencing the payment of the tax deducted at
source in the Government Treasury; that all that was
required was to direct the authorities to examine whether
the Challan was genuine and whether the amount was paid
into the Government Treasury or not in accordance with law;
that the ends of justice certainly required the same; that
even if the assessee had contended before the AO and the ld.
CIT(A) that the amount was not payable, it would not make
any difference if, in fact, the amount had been paid.
11.3 In “CIT Vsa Salig Ram Prem Nath”, [1989] 45 taxman
322 (P&H), it was held that there can be no manner of doubt
that a Tribunal is vested with the requisite authority and
jurisdiction to admit additional evidence and material in
order to do substantial justice to the parties.
ITA 216/CHD/2023
A.Y. 2014-15
24
12. For the above discussion, in the peculiar facts and
circumstances, as enumerated, the matter is remanded to
the file of the AO to verify the correctness and authenticity
of the documents discussed and to provide adequate
opportunity of hearing to the assessee with regard thereto
and to re-adjudicate the matter. Ordered accordingly.
13. In the result, for statistical purposes, the appeal is
treated as allowed.
Order pronounced on 01.04.2024.
Sd/- Sd/-
(VIKRAM SINGH YADAV) (A.D.JAIN )
ACCOUNTANTMEMBER VICE PRESIDENT
“Poonam”
आदेश क琉 灹ितिलिप अ灡ेिषत/ Copy of the order forwarded to :
1.
अपीलाथ牸/ The Appellant
2. .灹瀄यथ牸/ The Respondent
3. आयकर आयु猴/ CIT
4.
िवभागीय 灹ितिनिध, आयकर अपीलीय आिधकरण, च瀃डीगढ़/ DR, ITAT, CHANDIGARH
5. गाड榁 फाईल/ Guard File
आदेशानुसार/ By order,
सहायक पंजीकार/ Assistant Registrar
