AJAY WADHWA LLB, FCAAJAY WADHWA LLB, FCA AJAY WADHWA AND ASSOCIATES AJAY WADHWA AND ASSOCIATES

A-445 DEFENCE COLONYA-445 DEFENCE COLONYNEW DELHINEW DELHI

Mb 9818653331Mb 981865333141554222 AND 4155424341554222 AND 41554243

Appeal before Commissioner of Appeal before Commissioner of Income-taxIncome-tax

Section 246A – Appealable ordersSection 246A – Appealable orders Section 248 – Appeal by person Section 248 – Appeal by person

denying denying liability to tax liability to tax Section 249 – Form of appeal and Section 249 – Form of appeal and

limitation limitation Section 250Section 250 - Procedure in appeal- Procedure in appeal Section 251 – Powers of CIT(A)Section 251 – Powers of CIT(A)

IssuesIssues Payment of admitted tax – SectionPayment of admitted tax – Section 249(4)249(4)

Unless good and sufficient cause otherwise dismissal Unless good and sufficient cause otherwise dismissal in limine. in limine.

Pending refund/direction of Court to be given effect to Pending refund/direction of Court to be given effect to while calculating tax. Nokia Corporation 292 ITR 22 while calculating tax. Nokia Corporation 292 ITR 22 (Del)(Del)

Tax does not include interest. Manojkumar Tax does not include interest. Manojkumar Beriwal 217 CTR 407 Bom. If law denying remedy-Beriwal 217 CTR 407 Bom. If law denying remedy-courts would save remedy if possible by interpretive courts would save remedy if possible by interpretive process. Tax doesn’t include interest S 2(43). process. Tax doesn’t include interest S 2(43).

Curable defect-Insufficient funds- sufficient causeCurable defect-Insufficient funds- sufficient cause82 TTJ 284 (Ahd).82 TTJ 284 (Ahd).Endeavor Industries 43 SOT 322 HYD- huge refund Endeavor Industries 43 SOT 322 HYD- huge refund due to assessee and he also paid tax after filing of due to assessee and he also paid tax after filing of appeal-adjustment permitted.appeal-adjustment permitted.

2.2. Curing of irregularity – Curing of irregularity – – Appellants Appellants signature – unsigned memo - Rajendra kumar signature – unsigned memo - Rajendra kumar

Maneklal Sheth 213 ITR 715 (Guj), Maneklal Sheth 213 ITR 715 (Guj), – 276 ITR 1 (Del): Rule 45- Memo signed by AR-procedural 276 ITR 1 (Del): Rule 45- Memo signed by AR-procedural

irregularity-curable-liberal interpretation.irregularity-curable-liberal interpretation.

3.3. Power of enhancement Power of enhancement CIT A has no power to enhance by discovering new CIT A has no power to enhance by discovering new source source

of income, not mentioned in return, or of income, not mentioned in return, or considered in asstt, or considered in asstt, or considered by AO.considered by AO.

Sardari Lal 251 ITR 864 (Del) FB, CIT v Union Tyres Sardari Lal 251 ITR 864 (Del) FB, CIT v Union Tyres 240 240 ITR 556 Del,ITR 556 Del, – Net loss converted to profit by rejecting books and estimating Net loss converted to profit by rejecting books and estimating

high GP rate-CIT A sought to enhance by taxing unexplained high GP rate-CIT A sought to enhance by taxing unexplained investment-impermissible. CIT v. Rai Bahadur Hardunoy 66 ITR investment-impermissible. CIT v. Rai Bahadur Hardunoy 66 ITR 443(SC)443(SC)

– Nibheram Daluram 127 ITR 491 Something in AO to show he Nibheram Daluram 127 ITR 491 Something in AO to show he applied mind to subject matter with a view to its taxability or applied mind to subject matter with a view to its taxability or non taxabilitynon taxability

– Base decision: Shapoorji Pallonji Mistry 44 ITR 891 SCBase decision: Shapoorji Pallonji Mistry 44 ITR 891 SC

– Taxing remittances from abroad- 23 SOT 227 CochTaxing remittances from abroad- 23 SOT 227 Coch– AO taxes notional income-CIT A deletes notional AO taxes notional income-CIT A deletes notional

income and disallows expenses – not valid 49 ITD income and disallows expenses – not valid 49 ITD 534 534

4. Inherent power to stay4. Inherent power to stay

Paulsons Litho Works v. ITO (1994) 208 ITR 676 (Mad)Paulsons Litho Works v. ITO (1994) 208 ITR 676 (Mad)

5. Condonation of delay5. Condonation of delay..

Wrong legal advise, compelling reasons, illness….Wrong legal advise, compelling reasons, illness….

Royal Airways – 98 TTJ 665 (Del)/ 98 ITD 259Royal Airways – 98 TTJ 665 (Del)/ 98 ITD 259

Concord of India Insurance Co. 118 ITR 507 (SC)Concord of India Insurance Co. 118 ITR 507 (SC)

law of limitation not to destroy rights of parties, Mst law of limitation not to destroy rights of parties, Mst Katiji 62 CTR 23 SC, Katiji 62 CTR 23 SC,

6. CIT(A) – Decision of Tribunal – binding6. CIT(A) – Decision of Tribunal – binding

Article 141 of Constitution - Doctrine of stare Article 141 of Constitution - Doctrine of stare decisis decision , CIT v. Godavari Devi 113 ITR 589 decisis decision , CIT v. Godavari Devi 113 ITR 589 (Bom).(Bom). ITAT anywhere has to respect High Court though of ITAT anywhere has to respect High Court though of difference state particularly if no contrary decision difference state particularly if no contrary decision of any other High Court against 232 ITR 771 (Del)of any other High Court against 232 ITR 771 (Del) Kamlakshi Finance 1992 Suppl (1) SCC 648Kamlakshi Finance 1992 Suppl (1) SCC 648Eagle Flask Industries 72 ITD 455 PuneEagle Flask Industries 72 ITD 455 PunePrasad & Co 45 TTJ 282 HydPrasad & Co 45 TTJ 282 HydRikhabchand 81 TTJ 964 PuneRikhabchand 81 TTJ 964 Pune

7. Prosecution of appeal7. Prosecution of appeal

(i)(i) Adjournments, power of attorneyAdjournments, power of attorney(ii)(ii) Paper bookPaper book(iii) Written submissions(iii) Written submissions(iv) Additional evidence applications (iv) Additional evidence applications

APPEAL EFFECTAPPEAL EFFECT No appeal against order of CIT A if tax effect 3 No appeal against order of CIT A if tax effect 3

lakhs or less, 10 lakhs or less against Tribunal lakhs or less, 10 lakhs or less against Tribunal order, Rs 25 lakhs or less if appeal against order order, Rs 25 lakhs or less if appeal against order of High Court. Instruction No 3 of 9of High Court. Instruction No 3 of 9thth February February 2011. 2011.

Except where revenue audit objection accepted Except where revenue audit objection accepted by Deptt, prosecution, constitutional validity, by Deptt, prosecution, constitutional validity, CBDT Circular decided against.CBDT Circular decided against.

Binding on tax authorities.Binding on tax authorities. Tax effect excludes interest.Tax effect excludes interest. Applies to pending appeals also and not only Applies to pending appeals also and not only

fresh appeals.fresh appeals.

Admission of additional evidence – Admission of additional evidence – Rule 46ARule 46ARule 46 ARule 46 A

AO refuses to admit, Appellant AO refuses to admit, Appellant prevented by sufficient cause to prevented by sufficient cause to produce evidence called for by AO, produce evidence called for by AO, App prevented by sufficient cause, App prevented by sufficient cause, any evidence relevant to ground of any evidence relevant to ground of appeal and insufficient opportunity.appeal and insufficient opportunity.IInterest of justice – Prabhavati S. Shah 231 nterest of justice – Prabhavati S. Shah 231 ITR 1, 68 TTJ 722 (Rajkot). Bonafide ITR 1, 68 TTJ 722 (Rajkot). Bonafide impression that AO satisfied with reply as impression that AO satisfied with reply as no query raised: HLS Asia 121 TTJ 340 Del.no query raised: HLS Asia 121 TTJ 340 Del.

DRAFT APPLICATIONDRAFT APPLICATION The Hon’ble Commissioner of Income Tax (Appeals) II,The Hon’ble Commissioner of Income Tax (Appeals) II, XXXXXXXXXXXXXX New Delhi.New Delhi.

Sub.:- Sub.:- M/s. ABC Pvt. Ltd. – A.Y.2001-02 – Furnishing of M/s. ABC Pvt. Ltd. – A.Y.2001-02 – Furnishing of Additional Evidence under Rule 46A – Penalty u/s Additional Evidence under Rule 46A – Penalty u/s 271(1) (c).271(1) (c).

May it please Your Honour,May it please Your Honour,

The sole issue in respect of the captioned appeal is the levy The sole issue in respect of the captioned appeal is the levy of penalty u/s 271(1) (c) consequent to the of penalty u/s 271(1) (c) consequent to the surrender/disclosure of a sum of Rs.5 Lacs received from surrender/disclosure of a sum of Rs.5 Lacs received from M/s. XYZ Pvt. Ltd. on account of sale of shares of..l Mills Ltd. M/s. XYZ Pvt. Ltd. on account of sale of shares of..l Mills Ltd. by the appellant company to them. The said shares were by the appellant company to them. The said shares were acquired by the appellant during the course of business and acquired by the appellant during the course of business and the payment for their acquisition was through account the payment for their acquisition was through account payee cheques.payee cheques.

During the course of assessment proceedings the During the course of assessment proceedings the appellant was asked to establish the veracity of appellant was asked to establish the veracity of the said transaction by satisfying the tests of the said transaction by satisfying the tests of Section 68 in respect of the credits from M/s. XYZ. Section 68 in respect of the credits from M/s. XYZ. Since the transaction was one of the numerous Since the transaction was one of the numerous transactions entered into by the appellant transactions entered into by the appellant company and more than seven years had elapsed company and more than seven years had elapsed since the said transaction, the appellant, since the said transaction, the appellant, apprehending that it may not be able to produce apprehending that it may not be able to produce the parties, in its wisdom, decided to offer to tax the parties, in its wisdom, decided to offer to tax the amount of Rs. 5 Lacs received from the said the amount of Rs. 5 Lacs received from the said parties. The said disclosure was made merely to parties. The said disclosure was made merely to buy peace and also to avoid protracted litigation buy peace and also to avoid protracted litigation that would ensue if the appellant was called upon that would ensue if the appellant was called upon to produce the said parties. The appellant so to produce the said parties. The appellant so stated and was also of the bonafide belief that on stated and was also of the bonafide belief that on making the said declaration no penalty making the said declaration no penalty proceedings would be initiated. However penalty proceedings would be initiated. However penalty was initiated and levied on the appellant u/s was initiated and levied on the appellant u/s 271(1)(c ) of the Act. 271(1)(c ) of the Act.

3.3. The appellant had the required documents The appellant had the required documents substantiating the impugned transaction with it and could substantiating the impugned transaction with it and could have filed the same if the A.O. had indicated his intent to have filed the same if the A.O. had indicated his intent to levy penalty for concealment despite the offer/surrender levy penalty for concealment despite the offer/surrender made at the very inception of the reassessment made at the very inception of the reassessment proceedings. Even during the penalty proceedings the proceedings. Even during the penalty proceedings the appellant believed that no penalty would be levied appellant believed that no penalty would be levied considering that the offer to tax was bonafide and without considering that the offer to tax was bonafide and without any finding of the A.O. that the same was false. Besides, no any finding of the A.O. that the same was false. Besides, no enquiry had been made by the A.O. in the assessment enquiry had been made by the A.O. in the assessment proceedings and the surrender/disclosure was accepted proceedings and the surrender/disclosure was accepted without any question or discussion. without any question or discussion.

4. The appellant humbly submits that there was sufficient 4. The appellant humbly submits that there was sufficient cause for the inability of the appellant to furnish the cause for the inability of the appellant to furnish the evidence relating to the entire transactions of Rs. 5 Lacs, evidence relating to the entire transactions of Rs. 5 Lacs, inasmuch as, it was of the bonafide belief that having inasmuch as, it was of the bonafide belief that having offered the entire amount to tax it was not required to file offered the entire amount to tax it was not required to file any supporting documents. Besides, the Ld. A.O. did not any supporting documents. Besides, the Ld. A.O. did not seek any information after the disclosure, both during the seek any information after the disclosure, both during the assessment and the penalty proceedings and hence assessment and the penalty proceedings and hence adequate opportunity was not provided.adequate opportunity was not provided.

It is therefore prayed that the circumstances stated It is therefore prayed that the circumstances stated hereinabove fall within the parameters laid out in Rule 46A and hereinabove fall within the parameters laid out in Rule 46A and the following additional evidence filed may kindly be the following additional evidence filed may kindly be admitted :-admitted :-

Copy of PAN of XYZ Pvt. Ltd establishing Copy of PAN of XYZ Pvt. Ltd establishing the identity.the identity. Copy of acknowledgement of return and Balance SheetCopy of acknowledgement of return and Balance Sheet and Profit and Loss Account of XYZ Pvt. Ltd.and Profit and Loss Account of XYZ Pvt. Ltd. Copy of Affidavit of XYZ Pvt. Ltd confirming the entire Copy of Affidavit of XYZ Pvt. Ltd confirming the entire

transaction.transaction. Copy of Resolution of M/s XYZ Pvt. Ltd.Copy of Resolution of M/s XYZ Pvt. Ltd. Bank statement showing payment for purchase of shares.Bank statement showing payment for purchase of shares. It is submitted that the additional evidence sought to be It is submitted that the additional evidence sought to be

admitted would clearly show that the appellant entered into a admitted would clearly show that the appellant entered into a bonafide transaction of sale against which Account Payee bonafide transaction of sale against which Account Payee Cheques were received and the shares had been purchased by Cheques were received and the shares had been purchased by the appellant through cheque as well. Needless to add that the the appellant through cheque as well. Needless to add that the admission of the said documents would only sub serve the admission of the said documents would only sub serve the interest of justice.interest of justice.

It is further submitted that as per the judgment of the Hon’ble It is further submitted that as per the judgment of the Hon’ble Supreme Court in the case of Mst. Katji, 167 ITR 471 (SC) it was Supreme Court in the case of Mst. Katji, 167 ITR 471 (SC) it was held that the appellate authorities ought to render substantial held that the appellate authorities ought to render substantial justice and should not be fettered be the rules of technical justice and should not be fettered be the rules of technical evidence. The admission of the additional evidence will clearly evidence. The admission of the additional evidence will clearly establish the bona fides of the appellant and will assist Your establish the bona fides of the appellant and will assist Your Honour in rendering substantial justice.Honour in rendering substantial justice.

ADMISSION OF ADDITIONAL ADMISSION OF ADDITIONAL GROUND OF APPEALGROUND OF APPEAL

LETTER IN WRITING GIVING REASONS WHY LETTER IN WRITING GIVING REASONS WHY GROUND NOT TAKEN IN MEMO TO APPEAL.GROUND NOT TAKEN IN MEMO TO APPEAL.

STATE THE GROUND OF APPEAL.STATE THE GROUND OF APPEAL. GIVE CASE LAWS ON ADMISSION OF GIVE CASE LAWS ON ADMISSION OF

ADDITIONL GROUND AT ANY STAGE OF ADDITIONL GROUND AT ANY STAGE OF HEARING-HEARING-NTPC v. CIT 229 ITR 383 NTPC v. CIT 229 ITR 383 (SC).(SC).

OPPORTUNITY TO THE AO TO GIVE HIS OPPORTUNITY TO THE AO TO GIVE HIS COMMENTS ON THE ADDITIONAL GROUND.COMMENTS ON THE ADDITIONAL GROUND.

GROUNDS OF APPEAL AND GROUNDS OF APPEAL AND BRIEF FACTSBRIEF FACTS

To be specific and brief.To be specific and brief. Can give alternative ground without Can give alternative ground without

prejudice.prejudice. Facts need not be very elaborate but Facts need not be very elaborate but

must fill up the column.must fill up the column. Should narrate that detailed Should narrate that detailed

submissions shall be filed at the time submissions shall be filed at the time of hearing before Your Honours.of hearing before Your Honours.

– WRITTEN SUBMISSIONS PREFERABLY BE FILED.

– Start with “May it please Your Honour” or “Dear Sir” Submissions to be ground wise, must state briefly what AO states, counter facts point wise, give case law and explain how it applies to your issue, take copies of judgments reported in CTR, TTJ, SOT and others, give reference of PB folio.

– ANSWER TO QUERY ONLY IF VERY SURE ON FACTS OR LAW.

PAPER BOOKPAPER BOOK PAPER BOOK CONTAINING PLEADINGS AND

EVIDENCES PLACED BEFORE ASSESSING OFFICER, BE FILED. Describe every document well in the PB, number serially, advert attention of CITA to the relevant replies and documents, if PB large bind it spirally, attach all relevant documents filed before the AO on the issue along with written submissions on the subject.

PAST HISTORY-AN IMPORTANT EVIDENCE-BUT TO BE USED CAREFULLY AT THIS STAGE

DETAILS GIVEN IN PAST ASSESSMENT CAN BE MADE PART OF PAPER BOOK

FACTS NOT RECORDED IN THE ORDER OR MENTIONED CONTRARY TO THE RECORD, IN THE ORDER- IMPLICATIONS AND REMEDY.

ADJOURNMENT APPLICATIONS MUST EXPLAIN THE REASONS FOR SEEKING OF ADJOURNMENTS AND WHEREVER POSSIBLE, TO BE SUPPORTED WITH DOCUMENTRY AND CIRCUMSTANTIAL EVIDENCE.

POWERS OF CIT(A)POWERS OF CIT(A)

TO GRANT ADJOURNMENTS  TO SEEK REMAND REPORT TO CONDONE DELAY IN FILING OF TO SEEK ADDITIONAL FACTS AND

EVIDENCES HAVING BEARING ON THE ISSSUE BEFORE HIM

TO EXERCISE POWERS U/S 131 TO PASS ORDER ON ALTERNATE PLEA

TO ADMIT ADDITIONAL GROUND AND DECIDE THE ADDITIONAL GROUND

TO ADMIT ADDITIONAL EVIDENCE TO ENHANCE ASSESSMENT, PENALTY TO STAY DEMAND TO IMPOSE PENALTY IN SPECIFIED

CIRCUMSTANCES TO PASS THE APPEAL ORDER TO RECTIFY APPARENT ERRORS IN THE

ORDER

NO POWER TO DISMISS IN DEFAULT NO POWER TO SET ASIDE THE ORDER OR

RESTORE ISSUE NOT TO BE CONTROLLED BY BOARD’S

DIRECTION LIMITATION PERIOD TO BE OBSERVED FOR

DISPOSAL OF APPEAL AS FAR AS POSSIBLE NO POWER TO DISCOVER NEW SOURCE OF

INCOME