ITO, New Delhi V. M/s. Telecraft E Solution (P) Ltd., New Delhi

ITA 119/DEL/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3802 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-06-2010
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 08-06-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 08-01-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ANSHUMAN PATNAIK SENIOR
• Keywords: Opportunity of being heard; Additional evidence
• Section: 40A(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : H, NEW DELHI BEFORE SHRI C.L. SETHI, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.119/DEL/2010 (ASSESSMENT YEAR : 2006-07) ITO, WARD 16(2), VS. M/S. TELECRAFT E SOLUTION (P ) LTD., NEW DELHI. B 4/259, SAFDERJUNG ENCLAVE, NEW DELHI. (PAN : AACCT0688E) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI ASHOK KHANDELWAL, CA REVENUE BY : SHRI ANSHUMAN PATNAIK, SENIOR DR O R D E R PER B.C. MEENA, ACCOUNTANT MEMBER : THIS APPEAL BY THE REVENUE IS FILED AGAINST THE ORD ER OF THE CIT (APPEALS)- XIX, NEW DELHI DATED 4.11.2009 FOR THE ASSESSMENT Y EAR 2006-07. THE GROUNDS OF APPEAL READ AS UNDER : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS.8,63,200/- MADE BY THE A.O. ON ACCOUNT OF UNVERIFIED PURCHASES. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, LD. CIT (A) HAS ERRED IN RESTORING BACK THE ISSUE RELATING TO D ISALLOWANCE OF RS.3,20,460/- BEING 5% OF THE TOTAL EXPENSES DISALL OWED BY THE A.O. ON ACCOUNT OF NON-PRODUCTION OF BOOKS ACCOUNT BY TH E ASSESSEE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, LD. CIT (A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS.20,000 /- BEING 20% OF ITA NO.119/DEL/2010 2 RS.1,00,000/- PAID IN CASH IN VIOLATION OF PROVISIO N OF SECTION 40A(3) OF INCOME TAX RULES, 1962. 2. THE ASSESSEE COMPANY ENGAGED IN THE BUSINESS OF OFFICE AUTOMATION AND TELECOM SOLUTION PRODUCT. IN THE FIRST GROUND, THE ISSUE INVOLVED IS REGARDING DELETION OF THE ADDITION OF RS.8,63,200/- MADE BY T HE ASSESSING OFFICER ON ACCOUNT OF UNVERIFIED PURCHASES. 3. LEARNED DR RELIED ON THE ORDER OF ASSESSING OFFI CER. ON THE OTHER HAND, LEARNED AR FOR THE ASSESSEE RELIED ON THE ORDER OF CIT (A). HE SUBMITTED THAT THE CIT (A) HAS ALLOWED THE RELIEF AFTER CONSIDERING AL L THE RELEVANT FACTS REGARDING THE PURCHASES. THE CIT (A) GRANTED RELIEF BY HOLDING A S UNDER :- 8. I HAVE GONE THROUGH THE ASSESSMENT ORDER AND TH E WRITTEN SUBMISSIONS FILED BY THE AR. THE A.O. HAS MENTIONE D IN THE ASSESSMENT ORDER THAT COPIES OF AMCS WERE PROVIDED FOR VERIFICATION. NOTHING ADVERSE AGAINST THE ASSESSEE WAS FOUND. 9. THE ASSESSEE HAD DISCHARGED THE ONUS CAST ON IT TO PROVE THE PURCHASES MADE BY PRODUCING THE PRIMARY DOCUMENTS. THE ASSESSEE HAS CLEARLY EXPLAINED THE UTILIZATION OF PURCHASED MATERIAL BY WAY OF AMCS ENTERED WITH COMPANIES. A SUPERFICIAL VERIFIC ATION HAS BEEN DONE BY THE A.O. AFTER CAREFUL CONSIDERATION OF TH E FACTS AND CIRCUMSTANCES OF THE CASE, THE PURCHASES CANNOT BE CONSIDERED AS NOT GENUINE. ACCORDING, THE ADDITION OF RS.8,63,200/- IS HEREBY DELETED. HENCE GROUND NO.1 IS ALLOWED. 4. AFTER HEARING BOTH THE SIDES, WE FIND THAT THE A SSESSEE HAS MADE TOTAL PURCHASE OF RS.2,23,58,211/-. THE ASSESSEE HAS ALS O PURCHASED MATERIAL WORTH RS.8,63,200/- FROM M/S. TECHNET INFOSYSTEM PVT. LTD . BY BILL NO.4112 AND 4090 DATED 9.3.2006 AND 8.3.2006. THE PAYMENTS FOR THE SE PURCHASES WERE MADE BY ITA NO.119/DEL/2010 3 THE ASSESSEE THROUGH CHEQUES. THE ASSESSEE SUBMITT ED THE BILLS WHICH ALSO CONTAINS DETAILS REGARDING PAN AND VALUE ADDED TAX OF THESE SUPPLIERS. THIS MATERIAL WAS UTILIZED TO MEET THE OBLIGATIONS CASTE D ON ASSESSEE BY AMC WITH THE COMPANIES WITH WHOM THE ASSESSEE ENTERED INTO AMC C ONTRACTS. THEREFORE, THE AMOUNT WAS NOT REFLECTED IN THE CLOSING STOCK. THU S, THE PURCHASED MATERIAL WAS UTILIZED TO MEET THE OBLIGATION FOR THE AMCS ENTERE D INTO BY THE ASSESSEE. IN VIEW OF THIS MATTER, WE FIND THAT CIT (A) HAS RIGHTLY GR ANTED THE RELIEF. HENCE, WE FIND NO MERITS IN THE REVENUES GROUND. THEREFORE, WE D ISMISS THIS GROUND OF APPEAL. 5. THE SECOND GROUND IN THE REVENUES APPEAL IS REG ARDING DELETING THE ADDITION OF RS.3,20,460/- BEING 5% OF THE ADMINISTR ATIVE, SELLING AND OTHER EXPENSES. 6. THE LEARNED DR RELIED ON THE ORDER OF THE ASSESS ING OFFICER. LEARNED AR FOR THE ASSESSEE RELIED ON THE ORDER OF CIT (A). 7. AFTER HEARING THE RIVAL SUBMISSIONS, WE FIND THA T THE ASSESSING OFFICER MADE THE ADDITION FOR NON-PRODUCING THE BOOKS OF AC COUNT. ASSESSING OFFICER HELD THAT THE GENUINENESS OF THE EXPENSES COULD NOT BE V ERIFIED AND DISALLOWED THE 5% OF THE TOTAL EXPENSES CLAIMED UNDER THE HEAD ADMINI STRATIVE, SELLING AND OTHER EXPENSES. THE CIT (A) HAS DECIDED THIS ISSUE AS UN DER :- 12. AFTER GOING THROUGH THE FACTS AND CIRCUMSTANC ES OF THE CASE AND SINCE THE ASSESSEE IS WILLING TO PRODUCE THE BO OKS OF ACCOUNT, THE ISSUE IS SET ASIDE, FOR EXAMINATION OF THE BOOKS OF ACCOUNT AND VOUCHERS IN RESPECT OF THIS EXPENDITURE ONLY. IF T HE A.O. IS SATISFIED WITH THE GENUINENESS OF THE DOCUMENTS, THE ADDITION MAY BE DELETED. ACCORDING, GROUND NO.2 IS ALLOWED IN PRINCIPLE. ITA NO.119/DEL/2010 4 THUS, THE CIT (A) HAS RESTORED THE ISSUE TO THE FIL E OF THE ASSESSING OFFICER. WE ARE ALSO OF THE VIEW THAT IN THE INTEREST OF JUSTIC E AND EQUITY, THIS ISSUE REQUIRES PROPER VERIFICATION AT THE LEVEL OF THE ASSESSING O FFICER WHERE THE ASSESSEE COULD PRODUCE THE BOOKS OF ACCOUNT FOR VERIFICATION. HEN CE, THE DIRECTIONS GIVEN BY THE CIT (A) IN THIS REGARD ARE UPHELD AND THIS GROUND O F REVENUES APPEAL ALSO STANDS DISMISSED. 8. THE THIRD GROUND IN THE REVENUES APPEAL IS AGAI NST THE DELETION OF ADDITION OFRS.20,000/- BEING 20% OF RS.1 LAC PAID IN CASH IN VIOLATION OF PROVISIONS OF SECTION 40A(3) OF THE INCOME-TAX ACT. THIS IS EVID ENT FROM THE SUBMISSION OF ASSESSEE WHICH READ AS UNDER :- WE ARE HEREWITH ATTACHING ALL THE VOUCHERS, PROPER LY AUTHENTICATED, FOR OUR KIND CONSIDERATION, COPIES ENCLOSED (PAGE N OS.115-130) TO SHOW THAT EACH PAYMENT WAS LESS THAN RS.20,000/-. THE CIT (A) GRANTED RELIEF BY HOLDING THAT, AFTER CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE THE DISALLOWANCE IS NOT C ALLED FOR. GROUND NO.3 IS ALLOWED. 9. LEARNED DR RELIED ON THE ORDER OF ASSESSING OFFI CER AND ALSO SUBMITTED THAT THE CIT (A) DELETED THE ADDITION ON THE BASIS OF VOUCHERS SUBMITTED BEFORE HIM WITHOUT PROVIDING OPPORTUNITY TO THE ASSESSING OFFICER IN THIS REGARD. 10. LEARNED AR FOR THE ASSESSEE SUBMITTED THAT THE PROVISIONS OF SECTION 40A(3) ARE NOT ATTRACTED IN THE ASSESSEES CASE AS THE INDIVIDUAL BILLS FOR PURCHASES WERE LESS THAN RS.20,000/-. HE ALSO POINTED OUT TH AT THIS FACT IS ALSO EVIDENT FROM ITA NO.119/DEL/2010 5 PAGE 115 TO 130 OF THE PAPER-BOOK. HE SUBMITTED TH AT THE CIT (A) CONSIDERED THESE FACTS AND DELETED THE ADDITION AND PLEADED TO SUSTAIN THE ORDER OF THE CIT(A). 11. AFTER HEARING BOTH THE SIDES, WE FIND THAT THE CIT (A) GRANTED THE RELIEF BY ADMITTING THE ADDITIONAL EVIDENCE IN THE FORM OF VO UCHERS WHICH ARE PLACED AT PAGES 115 TO 130 OF PAPER BOOK AND THE ASSESSING OF FICER WAS NOT GIVEN OPPORTUNITY IN THIS REGARD. IT IS ADMITTED FACT TH AT NO REMAND REPORT WAS CALLED FOR BY CIT (A) ON THE EVIDENCES SUBMITTED BEFORE HIM. ASSESSEE ITSELF HAD PLEADED BEFORE CIT (A) THAT ASSESSEE WAS NOT PROVIDED PROPE R OPPORTUNITY OF BEING HEARD. THEREFORE, IN THE INTEREST OF JUSTICE AND EQUITY, T HIS ISSUE IS RESTORED TO THE FILE OF THE ASSESSING OFFICER TO DECIDE THE SAME AFTER CONS IDERING THE DETAILS SUBMITTED BEFORE CIT (A) AND PROVIDING OPPORTUNITY OF BEING H EARD TO ASSESSEE. 12. IN THE RESULT, THE APPEAL OF THE REVENUE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON THE 11 TH DAY OF JUNE 2009. SD/- SD/- (C.L. SETHI) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : THE 11 TH DAY OF JUNE, 2009/TS COPY FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. CIT 4. CIT(A)-XIX, NEW DELHI. 5. DR, ITAT. ASSTT.REGISTRAR ITAT, NEW DELHI.