DCIT, New Delhi V. M/s. Graphisads P. Ltd., New Delhi

ITA 1210/DEL/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8121 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 25-02-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 03-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Additional evidence
• Section: 143(3); 133(6)

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C : NEW DELHI BEFORE SHRI H.S.SIDHU , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI , ACCOUNTANT MEMBER I TA NO . 1210/DEL/2014 (ASSESSMENT YEAR: 2005 - 06 ) DCIT, CIRCLE - 12(1), NEW DELHI VS. GRAPHISADS PVT. LTD., R - 300, GREATER KAILASH - 1, NEW DELHI PAN:AAACG2365F (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY: SH. AMIT JAIN, SR. DR DATE OF HEARING 25/02/ 2016 DATE OF PRONOUNCEMENT 29 / 04 /2016 O R D E R PER PRASHANT MAHARISHI , A . M . 1. TH IS IS APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 20 . 12.2013 OF THE LD CIT(A) - X , NEW DE LHI FOR THE ASSESSMENT YEAR 2005 - 06 . 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. WHETHER LD. CIT (A) WAS CORRECT ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW IN DELETING THE ADDITION OF RS.13,13,090/ - ON ACCOUNT OF DISALLOWANCE OUT OF PRODUCTION EXPENSES DESPITE THE FACT THAT THE ASSESSEE COMPANY FAILED TO PROVE THE GENUINENESS' TO THE CONCERNED PARTY? 2. WHETHER LD. CIT (A) WAS CORRECT ON FACT S AND CIRCUMSTANCES OF THE CASE AND IN LAW IN DELETING THE ADDITION OF RS. 78,00,000/ - ON ACCOUNT OF DISALLOWANCE OUT OF OUTDOOR DISPLAY CHARGES DESPITE THE FACT THAT THE ASSESSEE COMPANY FAILED TO PROVE THE GENUINENESS OF THE CONCERNED PARTY. 3. WHETHER LD. CIT (A) WAS CORRECT ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW IN DELETING THE ADDITION OF RS.3,10,177/ - ON ACCOUNT OF DISALLOWANCE OUT OF COMMISSION EXPENSES DESPITE THE FACT THAT THE ASSESSEE COMPANY FAILED TO PROVE THE GENUINENESS OF THE CONC ERNED PARTY? 4. WHETHER LD. CIT (A) WAS CORRECT ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW IN DELETING THE ADDITION OF RS. 23,79,579/ - ON ACCOUNT OF DISALLOWANCE OUT OF BILL PUBLICATION AND OTHER EXPENSES DESPITE THE FACT THAT THE ASSESSEE COMPANY FAILED TO ESTABLISH THE TRANSACTION ? 5. WHETHER LD. CIT (A) WAS CORRECT ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW IN ALLOWING RELIEF ON THE BASIS OF TRANSACTION MADE WITH THE PARTIES IN EARLIER YEARS WITHOUT CONSIDERING THAT PRINCIPLE OF RES PAGE 2 OF 5 JUDIC ATA IS NOT APPLICABLE TO INCOME TAX PROCEEDINGS AND THE ASSESSEE HAD FAILED TO ESTABLISH THE TRANSACTION IN THE CURRENT YEAR. 3. WE HAVE HEARD THE GROUNDS OF THE APPEAL AND LD DR RELIED ON THE ORDERS OF THE LOWER AUTHORITIES WHEREAS DESPITE NOTICE NONE APPE ARED ON BEHALF OF THE ASSESSEE. IN VIEW OF THIS THE MATTER IS DECIDED ON MERITS ON THE DETAILS AVAILABLE ON RECORD. 4. THE APPELLANT IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF ADVERTISING AND FILE ITS RETURN OF INCOME ON 31.10.2005 SHOWING INCOM E OF RS. 10941310/ - . THE ASSESSMENT WAS FRAMED U/S 143(3) OF THE INCOME TAX ACT WHEREIN 10 ADDITIONS DISALLOWANCES WERE MADE AMOUNTING TO RS. 15623754/ - DETERMINING TOTAL INCOME OF RS. 26565064/ - . ASSESSEE PREFERRED APPEAL BEFORE THE LD CIT(A) WHEREIN ALL THE ADDITIONS WERE DELETED. OUT OF THIS REVENUE IS CONTESTING 4 DISALLOWANCES IN APPEAL BEFORE US. 5. THE FIRST GROUND IS AGAINST THE DELETION OF ADDITION OF RS. 1313090/ - OUT OF PRODUCTION EXPENSES. 6. THE BRIEF FACTS OF THE ISSUE ARE THAT THESE EXPENSES WERE INCURRED IN RESPECT OF ONE PARTY M/S. PRINT SHOP. THE 133(6) NOTICES ISSUED BY THE ASSESSING OFFICER RETURNED UNSERVED AND WHEN ENQUIRY WITH ASSESSEE THE CONFIRMATION OF THE PARTY W AS SUBMITTED. HOWEVER, ASSESSEE DID NOT PRODUCE THE ABOVE PARTY AND THEREF ORE DISALLOWANCE WAS MADE. ON APPEAL BEFORE THE LD CIT(A) ASSESSEE SUBMITTED ADDITIONAL EVIDENCE S WHICH WERE BY LD CIT(A) AFTER PROVIDING OPPORTUNITY TO THE LD ASSESSING OFFICER. ON THE BASIS OF THE REMAND REPORT AND AFTER CONSIDERING THE SUBMISSION OF THE LD AR LD CIT(A) DELETED THE ADDITION AS UNDER: - 7.3. AFTER GOING THROUGH THE OBSERVATIONS OF THE A.O., DETAILS IN THE REMAND REPORT, REJOINDER OF THE A.R. OF THE APPELLANT AND HIS SUBMISSIONS THAT M/S PRINT SHOP WAS A REGULAR PARTY EVEN IN A.Y. 2004 - 05 AND 2006 - 07, IT APPEARS THAT SINCE IN THOSE YEARS NO ADVERSE INFERENCE HAD BEEN DRAWN AGAINST M/S PRINT SHOP AND EVEN IN THIS YEAR THE A.O. HAS NOT HELD THAT THE PARTY DID NOT EXIST, THE CONTENTIONS OF THE A.R. OF THE APPELLANT APPEAR TO BE ACCEPTA BLE. IT IS PERTINENT TO NOTE THAT THE SIMILAR NATURE OF PAYMENT WERE MADE TO THE SAME PARTY IN OTHER ASSESSMENT YEARS AND ALSO ACCEPTED BY THE DEPARTMENT U/S 143(3) OF THE I.T. ACT. ACCORDINGLY, KEEPING IN VIEW THE OVERALL CIRCUMSTANCES OF THE CASE AND ALS O THE ARGUMENTS OF THE APPELLANT THAT THERE IS NO ADVERSE INFORMATION BROUGHT ON RECORD BY THE A.O. TO DISPUTE THIS TRANSACTION, THIS CLAIM OF THE APPELLANT DESERVES TO BE ALLOWED. THEREFORE, THIS GROUND OF THE APPELLANT IS TREATED AS ALLOWED. PAGE 3 OF 5 7. LD CIT(A ) HAS DELETED THE ADDITION THAT SIMILAR PRODUCTION EXPENSES OF THE SAME PARTY HAS BEEN ALLOWED BY THE ASSESSING OFFICER IN ASSESSMENT COMPLETED U/S 143(3) OF THE ACT. IN VIEW OF THIS, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD CIT(A) AND THEREFORE GROUND NO. 1 OF THE APPEAL IS DISMISSED. 8. THE SECOND GROUND OF APPEAL IS AGAINST DISALLOWANCE OF RS.78 LACS DELETED BY LD CIT(A) ON ACCOUNT OF OUTDOOR DISPLAY CHARGES. 9. BRIEF FACTS OF THE ISSUE IS THAT THIS AMOUNT IS PAID TO ONE PARTY M/S. CBM INDUSTRIES TO WHOM NOTICE U/S 133(6) WAS SENT BY THE AO AND THE SAME RETURNED UNSERVED. THEREFORE, THE ADDITION WAS MADE. BEFORE THE LD CIT(A) IT WAS SUBMITTED THAT THE ADDITION HAS BEEN MADE BASED ON THE RECONCILIATION STATEMENT, FURTHER, THE ASSESSEE HAS TRANSACTE D WITH THIS PARTY REGULARLY, AND PURCHASES FROM IT ARE ALLOWED YEAR TO YEAR. THEREFORE, THE LD CIT(A) DELETED THE ADDITION. THE LD CIT(A) HAS DELETED THE ADDITION AS UNDER: - 8.3. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE A.R. OF THE APPELLANT HAD S UBMITTED THAT SINCE ADEQUATE OPPORTUNITIES HAD NOT BEEN PROVIDED TO SUBMIT THE COMPLETE DOCUMENTS, THE ADDITIONAL EVIDENCES SHOULD BE CONSIDERED. ACCORDINGLY, THE ADDITIONAL EVIDENCES FILED BY THE APPELLANT WERE CONSIDERED AND THE A.O. WAS ASKED TO EXAMINE THE DOCUMENTS AND PROVIDE A REPORT BY PASSING AN ORDER UNDER RULE 46A DT. 29 - 10 - 2012. THE A.R. OF THE APPELLANT HAD SUBMITTED IN HIS PAPER BOOK AS WELL AS SUBMISSIONS AND REJOINDER PROCEEDINGS, VARIOUS ARGUMENTS WHICH ARE SUMMARIZED AS FOLLOWS: (I) THE A.R. OF THE APPELLANT HAS ARGUED THAT THE A.O. HAS NOT DISPUTED THE IDENTITY AND GENUINENESS OF THE TRANSACTION WITH M/S CBM INDUSTRIES. THE A.R. SUBMITTED THAT THE DISCREPANCY POINTED OUT BY THE A.O. WITH REGARD TO THE TRANSACTIONS WITH M/S CBM INDUSTRIES WERE ONLY ON ACCOUNT OF RECONCILIATION OF THE ACCOUNTS BETWEEN THE PARTY AND THE APPELLANT. IT WAS SUBMITTED BY THE A.R. THAT WHEREAS THE M/S CBM INDUSTRIES WERE MAINTAINING TWO LEDGER ACCOUNTS IN ITS BOOKS OF ACCOUNTS, THE SAME WERE BEING MAINTAINED ONLY IN ONE ACCOUNT WITH THE APPELLANT COMPANY AND THERE WAS GENUINE RECONCILIATION OF ACCOUNTS BETWEEN THE APPELLANT COMPANY AND M/S CBM INDUSTRIES. (II) IT WAS ALSO CLEARLY POINTED OUT THAT M/S CBM INDUSTRIES WAS ONE OF THE PARTIES WITH WHOM REGULAR TRANSAC TIONS WERE BEING CARRIED OUT AND EVEN IN THE SUBSEQUENT ASSESSMENT YEAR THE TRANSACTION WITH M/S CBM INDUSTRIES HAD BEEN ACCEPTED BY THE DEPARTMENT EVEN IF THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE I.T. ACT. IT WAS, THEREFORE, ARGUED BY THE A.R. OF TH E APPELLANT THAT THERE WAS NO CASE FOR DOUBTING THE IDENTITY OF THE PARTY OR GENUINENESS OF THE TRANSACTION. PAGE 4 OF 5 (III) WITH REGARD TO THE RECONCILIATIONS OF THE AMOUNTS, THE A.R. MADE THE FOLLOWING SUBMISSIONS 10. THE LD DR COULD NOT POINT THAT HOW THE ORDER OF THE LD CIT(A) IS ERRONEOUS WHEN IN THE SUBSEQUENT YEARS THE PURCHASES FROM THE SAME PARTY WAS ALLOWED BY THE LD AO IN SCRUTINY ASSESSMENT. FURTHER WHEN IN ANOTHER YEAR IDENTITY AND GENUINENESS OF THE TRANSAC TIONS ARE ACCEPTED HOW THE SAME PARTY CAN BE HELD TO BE INGENUINE IN SUBSEQUENT YEARS. THEREFORE WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD CIT(A) AND HENCE WE CONFIRM HIS FINDING DELETING THE ADDITION OF RS.78 LACS. IN RESULT GROUND NO. 2 OF THE APPEAL OF THE REVENUE IS DISMISSED. 11. GROUND NO. 3 OF THE APPEAL IS AGAINST DISALLOWANCE OF COMMISSION EXPENDITURE OF RS. 310177 / - DELE TED BY THE LD CIT(A). 12. DURING THE YEAR ASSESSEE HAS PAID COMMISSION TO SH. S. K. NATH AND MUKESH GUPTA AND SONS (HUF). AS N OTICE TO BOTH THE PARTIES U/S 133(6) RETURNED BACK UNSERVED LD ASSESSING OFFICER DISALLOWED THIS PAYMENT. BEFORE THE LD CIT(A) LD AR SUBMITTED THAT COMMISSION IS PAID TO THESE PARTIES IN PREVIOUS YEAR ALSO AND SAME WERE ACCEPTED. HE ALSO SUBMITTED THE CONF IRMATION OF THESE PARTIES. AFFIDAVIT IN CASE OF ONE OF THE RECIPIENT WAS ALSO FILED. BASED ON THIS LD CIT(A) DELETED THE ADDITION . THE LD CIT(A) ALSO NOTED THAT THE PAYMENT ARE MADE THROUGH BANKING CHANNELS AND THE TAX AT SOURCE HAS BEEN DEDUCTED THEREFORE IDENTITY OF THESE PARTIES CANNOT BE DOUBTED. BEFORE THE LD CIT(A) ASSESSEE SUBMITTED THE AFFIDAVIT OF THE PARTIES CONFIRMING THE TRANSACTION WHICH IN REMAND REPORT NOT DOUBTED BY THE LD AO. IN VIEW OF THIS WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD CIT(A) IN DELETING THE ADDITION RS. 310177 / - . 13. GROUND NO. 4 OF APPEAL IS AGAINST DELETION OF DISALLOWANCE OF RS. 2379579 / - OUT OF PUBLICATION AND OTHER EXPENSES. 14. LD AO HAS MADE THE ADDITION AS THE AMOUNT IS PAID TO M/S ABP LTD. AND ASSESSEE DID NOT PRO VIDE ANY ADDRESS AND CONFIRMATION OF THIS PARTY. BEFORE THE LD CIT(A) SUBMITTED ADDITIONAL EVIDENCE, OBTAINED REMAND REPORT OF THE AO, AND DELETED THE ADDITION. THE MAIN REASON FOR DELETION OF THE ADDITION WAS THAT THE M/S. ABP IS WELL - ESTABLISHED CORPORAT E ENTITY ENGAGED IN AMRIT BAZAR PATRIKA. THE ASSESSEE SUBMITTED THAT THE COPY OF THE BILL ITSELF SHOWS THE ADDRESS AND THE PURPOSES FOR WHICH THE PAYMENT IS MADE. IN REMAND PAGE 5 OF 5 REPORT LD AO CONFIRMED THAT NOTICE U/S 133(6) WAS ISSUED TO THE ASSESSEE BUT CONFIR MATION WAS NOT RECEIVED. THIS ITSELF SHOWS THAT LD AO HAS WRONGLY STATED THAT ASSESSEE DID NOT PROVIDE ADDRESS OF THE ASSESSEE. DURING THE COURSE OF APPEAL BEFORE THE LD CIT(A) THE CONFIRMATION OF THE PARTY WAS SUBMITTED. FURTHER IT WAS ALSO SHOWN THAT FRO M THE SAME PARTY THERE ARE TRANSACTION IN THE EARLIER YEAR AS WELL AS SUBSEQUENT YEAR FOR WHICH ASSESSMENT ARE COMPLETED U/S 143(3) OF THE ACT. LD CIT(A) HAS ALSO NOTED THAT ASSESSEE HAS ALSO PROVIDED THE PAN NO. OF THE ABOVE PARTY. THEREFORE WE ARE OF THE VIEW THAT BEFORE LD CIT(A) ASSESSEE HAS SUBMITTED THE COMPLETE INFORMATION AND THEREFORE HE HAS DELETED THE DISALLOWANCE. NO INFIRMITY WAS POINTED OUT BY THE LD DR IN THE ORDER OF THE LD CIT(A). IN VIEW OF THIS WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD CIT(A) IN DELETING THE DISALLOWANCE OF RS. 2379579/ - . THEREFORE GROUND NO. 4 OF THE APPEAL IS DISMISSED. 15. GROUND NO. 5 AND 6 OF THE APPEAL ARE GENERAL IN NATURE AND NO ARGUMENTS WERE ADVANCED BEFORE US THEREFORE THEY ARE DISMISSED. 16. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29/ 04 /2016 . - SD/ - - SD/ - ( H.S.SIDHU ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 29 / 04 / 2016 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI