ACIT, CENTRAL CIRCLE- 14, NEW DELHI V. DSC LIMITED , NEW DELHI

ITA 8552/DEL/2019

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 314337 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-05-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURENDER PAL
• Assessee Lawyers: K. SAMPATH
• Keywords: Additional evidence; Corroborative evidences; Assessment record; Bogus
• Section: 153A; 40A(3)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘B’, NEW DELHI Before Sh. Satbeer Singh Godara, Judicial Member & Sh. M. Balaganesh, Accountant Member ITA No. 8552/Del/2019 : Asstt. Year : 2007-08 ITA No. 8553/Del/2019 : Asstt. Year : 2008-09 ACIT, Central Circle-14, New Delhi-110055 Vs DSC Ltd., E-9, 3rd Floor, South Extension- II, New Delhi-110049 (APPELLANT) (RESPONDENT) PAN No. AAACD0003D Assessee by : Sh. K. Sampath, Adv. Revenue by : Sh. Surender Pal, CIT-DR Date of Hearing: 07.04.2025 Date of Pronouncement: 07.05.2025 ORDER Per Satbeer Singh Godara, Judicial Member: These Revenue’s twin appeals ITA Nos. 8552 & 8553/Del/2019, for Assessment Years 2007-08 & 2008-09, arise against the CIT(A)-XXVI, New Delhi’s in case Nos. 10223 & 10240/16-17 dated 22.08.2019, in proceedings u/s 153A/143(3) of the Income Tax Act, 1961 (in short “the Act”), respectively. 2. Heard both the parties at length. Case files perused. 3. It emerges at the outset that the Revenue’s sole identical endeavour herein is to revive the Assessing Officer’s action treating the assessee’s alleged unverifiable purchases of Rs.5,10,25,739/- and Rs.5,78,85,689/-; assessment year wise, ITA Nos. 8552 & 8553/Del/2019 DSC Ltd. 2 respectively, which stand deleted in the CIT(A)’s lower appellate discussion(s). Learned CIT-DR vehemently argues that that CIT(A) herein has erred in law and on facts in deleting the impugned unverifiable purchase addition which deserves to be restored or the same ought to be remanded back since involving admission of additional evidence in violation of rule 46A of the Income Tax Rules. 4. We note in this factual backdrop that the Assessing Officer’s twin assessments herein had been framed u/s 153A of the Act in furtherance to the search carried out in case of M/s DSC group. Both these assessment years 2007-8 and 2008-09 happen to be “unabated” one’s wherein any disallowance or addition could be made based on the contents of the specific seized material only in light of PCIT vs. Abhisar Buildwell Pvt. Ltd. (2023) 454 ITR 212 (SC). There is no indication in the Assessing Officer’s twin assessments to this clinching effect and, therefore, we see no merit in the Revenue’s instant sole substantive ground. Rejected accordingly. 5. The outcome would be hardly any different on merit as well as the CIT(A) has not only granted relief to the assessee based on any additional evidence as his impugned lower appellate discussion reads as follows: ITA Nos. 8552 & 8553/Del/2019 DSC Ltd. 3 “i. The appellant company is a contractor engaged in construction of roads, bridges. It purchased material mainly boulders through M/s JMD Building Material Supplier, who in turn procured the same from smaller suppliers. The detail of purchases made from M/s JMD Building Material Supplier along with copies of invoices issued by the Firm Have been placed at Pages 12 to 55 of the Paper Book. The appellant company has made payments to the said firm as per copy of ledger accounts placed on records. The firm used to acquire boulders from various small suppliers and had been selling to the appellant company. To verily the genuineness of purchases made by the firm, the AO had called for the details which were examined by him. As observed in the Assessment order purchases to the extent of Rs.5,10,25,739/- were considered as unverifiable and accordingly added to the income of appellant company. The observation of the AO in the assessment order is as under: “For the purchases of Rs.5,10,25,739/- for which neither invoice nor khaki were produced, the assessee company vide letter filed on 22/03/2016 again submitted details of purchases made by the firm from various suppliers but with respect of purchases of Rs. 5,10,25,739/- the assessee only furnished ledger account of those suppliers stating that their payments have been made by cheque. The assessee has not been able to produce proper evidence even in the form of invoice or Khaki in respect of these purchases in spite of various opportunities. Thus purchases to the extent of Rs.5,10,25,739/- remain unverified and accordingly a sum of Rs.5,10,25,739/- is added to the income of the assessee company.” ii. It was explained that a search operation was conducted by the Service Tax Dept on 28/01/2008 on M/s JMD Building Material Suppliers and the books of account alongwith all supporting invoices and bills/khak’s etc. were seized by the Central Excise and Customs Department and are still in their custody till date. It was further submitted that M/s JMD Building Material Suppliers had made various requested vide letters dated 03/10/2012, 05/11/2014, 03/01/2015, & 03/05/2016 to release the books of account and other supporting evidences. The AR further explained that all the material purchased from the suppliers had been supplied to the construction site & used in construction. Without the material supplied, construction could not have been carried on. The contractee parties were concessionaire appointed by ITA Nos. 8552 & 8553/Del/2019 DSC Ltd. 4 Govt. Authorities namely NHAI, who in turn made due verification of the quantity & quality of material used in construction at various stages of work in progress & never recorded any adverse facts even during surprise checking. They released the payments only after recording full satisfaction about the quantum & quality of material used by the contractor. The AR explained that the Ld. AO has neither doubted the existence of the suppliers nor held the purchases as bogus, but only unverifiable. The same could not be verified by the AO as the records were not available with the Appellant being in possession of state agencies and this set of reasons are beyond the control of the appellant company. iii. The AR has further submitted an analysis of year wise purchases made by M/s JMD Building Material Suppliers for the F.Y. 2005-06, 2006-07 & 2007-08 with comparative detail of purchases from each party during these years. Details placed at Pages 56 to 88 of the Paper Book. It was submitted that out of purchases of Rs.5,10,25,739/- made from various parties, there is substantially overlapped repeat vendors, that has been accepted by the AO, either in FY 2005-06 or in FY 2007- 08 or in both the years. This analysis was also forwarded to the AO and no adverse comments were made in the remand report. It is clear that the appellant indeed carried out the business activities and procured input material for the same as this fact has not been controverted by the AO. Once this is clear, then the issue of obtaining/procuring the input material becomes a substantive fact. The appellant has shown practical constraints in respect of its inability to furnish the evidences as the same were with another agency. This appraisal of the factual matrix helps in reaching fair and reasonable conclusions. iv. Vide submissions dated 20.03.2019 the appellant company had placed on records copy of order dated 28/02/2019 passed by the Excise and Taxation Officer Faridabad (North) under Haryana Value Added Tax 2003 in the case of M/s JMD Building Material Suppliers for the F.Y. 2006-07. The perusal of the same reveals that the assessing authority had duly assessed the turnover of M/s JMD Building Material Suppliers and levied tax thereon. Further, after allowing input on purchases made the net tax liability/excess input has been determined. It was also emphasize that the entire sales of M/s JMD Building Material Suppliers was made to the appellant company only and was claimed by the AR that once the Revenue Dept had accepted the Purchases and Sales in the case of M/s JMD Building Material Suppliers, then it cannot be said the purchases of appellant company are ITA Nos. 8552 & 8553/Del/2019 DSC Ltd. 5 unverified. It was further requested by the AR that since Purchases/Sales in the case of M/s JMD Building Material Suppliers are accepted by the Department, no adverse view is warranted in the case of appellant and disallowance made on account of unverified purchases is liable to be deleted. v. In view of the foregoing, one is clearly led to the conclusion that the fact that the appellant company had made purchases from JMD Building Material Suppliers, for which invoice was raised by the firm to the company and appellant had made the payment, is unambiguously established. The appellant company was not able to produce part of record relating to purchases made by JMD Building Material Suppliers due to reason that such record was lying with the Director General of Central Excise Intelligence, New Delhi. Now the appellant company has placed on records orders by the Excise and Taxation Officer Faridabad (North), where the sales made by JMD Building Material Suppliers has been accepted and the entire sales by the firm has been made to the appellant company only. Keeping in view the aforesaid facts and circumstances, the addition on this count is directed to the deleted. vi. The AO vide Remand Report dated 10/08/2018 had requested for enhancement of Rs.2,36,50,000/- on account of alleged cash payment in contravention to provisions to section 40A(3) of the IT Act. The AR vide letter dated 14/09/2018 had explained that the issue was already examined during the course of assessment proceedings and it was explained that these payments were not directly made to M/s JMD Building Material Suppliers but in fact were made to various small vendors, incurred at site on behalf of firm and debited to its account. Further it was submitted that the individual amount paid to one vendor at one point of time does not exceed Rs.20,000/-. To substantiate the same on sample basis the appellant had submitted the supporting documents which shows that Rs.3,500/- per Truck I Trip has been paid the drivers to meet out the fuel, loading and unloading and thereafter advance has been set-off fortnightly in parties account and the balance has been settled. The material has been perused and the same is in line with the business practices in view of peculiarities of the appellant business. The assessment record was also called during the course of appellate proceedings, the contention of the AR is acceptable and no further action is warranted. The addition, as recommended, cannot be made as the onus stands discharged duly. ITA Nos. 8552 & 8553/Del/2019 DSC Ltd. 6 vii. The jurisdictional grounds are dismissed as are rendered infructuous. viii. The ground of appeal in respect of initiation is dismissed as it is a consequential ground and there is no prejudice caused at this stage to the appellant.” 6. We thus reject the Revenue’s instant identical substantive ground on merits as well since not carrying any substance. Ordered accordingly. 7. These Revenue’s twin appeals ITA Nos. 8552 & 8553/Del/2019 are dismissed. A copy of this common order be placed in the respective case files. Order Pronounced in the Open Court on 07/05/2025. Sd/- Sd/- (M. Balaganesh) (Satbeer Singh Godara) Accountant Member Judicial Member Dated: 07/05/2025 *Subodh Kumar, Sr. PS* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR "