Vipin Gupta, New Delhi V. ITO, New delhi

ITA 1253/DEL/2019

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 3502 (ITAT-DELHI)
• Duration Of Justice: 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Appeal Filed On: 15-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ARCHIT GOYAL
• Keywords: Depreciation; Business expenditure; Principle of natural justice; Reasonable cause
• Section: 142(1); 133(6)

Judgement Text

VIPIN GUPTA VS. ITO / I.T.A.NO.1253/DEL/2019/A.Y.20 15-16 PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER . . /. I.T.A NO.1253/DEL/2019 / ASSESSMENT YEAR:2015-16 VIPIN GUPTA B-19, SHAKTI NAGAR EXTN., NEW DELHI. VS. ITO WARD 34(4) ROOM NO. 713, E-2 BLOCK, CIVIC CENTRE, NEW DELHI. APPELLANT / RESPONDENT PAN NO. AAOPG7646L /ASSESSEE BY SHRI ARCHIT GOYAL, CA /REVENUE BY SHRI PRADEEP SINGH GAUTAM, SR. DR /O R D E R 1. THIS APPEAL FILED BY THE ASSESSEE AGAINST THE IM PUGNED ORDER DATED 22.11.2018 PASSED BY THE LD. CIT(APPEALS)-12, NEW D ELHI IN RELATION TO ASSESSMENT YEAR 2015-16 ON THE FOLLOWING GROUNDS: LD. CIT(A) HAS ERRED IN GIVING FOLLOWING OBSERVATIO NS : 1. THE LD. CIT(A) HAS ERRED IN GIVING A FINDING THAT THE ASSE SSEE HAD ENOUGH TIME TO COLLECT ANY PAPERS IT WANTED TO RELY ON WHEREAS THE RECORD SPEAKS THAT APPELLANT COULD NOT GET THE DESIRED INFORMATION DESPITE FOLLOW UP MADE WITH THE LD. AO. 2. THE LD. CIT(A) HAS ERRED IN OBSERVING THAT THE PROCEEDINGS CANNOT BE KEPT IN ABEYANCE WITHOUT REASONABLE CAUSE WHEREAS THE APPELLANT WAS WAITING FOR INFORMATION FROM THE LD. AO AS PER THE LETTER DATED 20.11.2018 TO MAKE EFFECTIVE REPRESENTATION BEFORE THE LD. CIT(A). 3. THE LD. CIT(A) HAS ERRED IN OBSERVING THAT NO JUST IFIABLE REASON TO ADJOURN THE PROCEEDINGS ON AN UNSUBSTANTI AL BASIS WHEREAS THE COPY OF LETTER WRITTEN TO LD. AO WAS PA RT OF THE LETTER DATED 20.11.2018 GIVEN TO LD. CIT(A) FOR SEE KING VIPIN GUPTA VS. ITO / I.T.A.NO.1253/DEL/2019/A.Y.20 15-16 PAGE 2 OF 6 ADJOURNMENT. 4. THE LD. CIT(A) HAS ERRED IN CONSIDERING ONLY OBSERV ATIONS OF THE LD. AO IN PARA 6 OF THE LD. CIT(A) ORDER WHEREAS SU BMISSION OF THE APPELLANT GIVEN BEFORE THE LD. AO (REPRODUCED B Y ASSESSING OFFICER IN ORDER ALSO) HAS NOT BEEN CONSIDERED AND THEREBY NOT OBSERVING THE PRINCIPLE OF NATURAL JUSTICE. 5. THE LD. CIT(A) HAS ERRED IN OBSERVING THAT THE APP ELLANT IS NOT INTERESTED TO PURSUE THE APPEAL FILED BY HIM WHERE AS THE APPELLANT WAS PURSUING THE APPEAL AND ALSO WAS PURS UING WITH THE LD. AO IN RESPECT OF THE REPLIES RECEIVED AGAIN ST NOTICE ISSUED U/S 133(6) OF THE IT ACT, 1961 BY THE LD. AO . DISALLOWANCE OF COMMISSION EXPENSES 6. THE LD. CIT(A) HAS ERRED IN CONFIRMING THE DISALLOW ANCE OF RS. 20,85,909/- MADE BY THE LD. ASSESSING OFFICER (AO ) IN RESPECT OF COMMISSION EXPENSE. MISUNDERSTANDING THE ASSESSEES NATURE OF BUSINESS 7. THE LD. AO AS WELL AS LD. CIT(A) HAS GROSSLY ERRED IN NOT UNDERSTANDING THE NATURE OF BUSINESS OF THE APPELLA NT BY GIVING A DECISION IN PARA 8.1 THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PROCUREMENT AND SALE OF REFRACTORY BRICKS EVEN THOUGH IT WAS SPECIFICALLY EXPLAINED BY THE APPELLANT IN THE WRITTEN SUBMISSION DATED 12 TH DECEMBER, 2017 MADE BEFORE THE LD. AO. MISINTERPRETATION OF APPELLANTS MAIN SOURCE OF I NCOME 8. THE LD. CIT(A) HAS ERRED IN MENTIONING IN PARA 8.1 THAT THE BRICKS WERE SOLD TO VARIOUS STEEL PLANTS IN INDIA U NDER THE NAME AND STYLE OF M/S VIRA ENTERPRISES WHEREAS THE APPE LLANTS ONLY SOURCE OF INCOME IS RECEIVING COMMISSION FROM M/S T IANJIN NEW CENTURY REFRACTORIES CO. LTD. (HEREINAFTER REFERRED AS TNCR) IN FACILITATING THE SALE THEREOF. EVIDENCE NOT CONSIDERED IN RESPECT OF COMMISSION EX PENSE 9. THE LD. CIT(A) HAS ERRED IN OBSERVING THAT THE APPE LLANT COULD NOT PROVE THE SERVICES RENDERED BY THE AGENTS WHERE AS SUFFICIENT EVIDENCE WAS FURNISHED KEEPING IN VIEW O F THE NATURE OF BUSINESS WHICH INCLUDES EMAIL COMMUNICATION OF A PPELLANT WITH AGENTS. 10. THE LD. CIT(A) HAS ERRED IN CONFIRMING THE OBSERVAT ION OF LD. AO THAT THE BUYERS COULD NOT ACKNOWLEDGE THE SERVIC ES OF AGENTS WHEREAS THE AGENTS PROVIDED SERVICES TO THE APPELLANT IN FACILITATING THE BUSINESS PROCURED FROM SELLER I.E. M/S TNCR. 11. THE LD. CIT(A) HAS ERRED IN MAKING OBSERVATION IN P ARA 8.4 OF HIS ORDER THAT THE APPELLANT COULD NOT PROVE HOW AG ENTS HELPED HIM IN PROCURING THE SALES WHEREAS THE APPELLANT HA S PLACED THE REQUISITE EVIDENCE ON RECORDS. VIPIN GUPTA VS. ITO / I.T.A.NO.1253/DEL/2019/A.Y.20 15-16 PAGE 3 OF 6 RELIANCE ON CASE LAW - DIFFERENT AND DISTINGUISHABLE FROM FACTS OF CASE 12. THE LD. CIT(A) HAS ERRED IN APPLYING THE CASE LAWS IN ITS ORDER WHICH ARE DIFFERENT AND DISTINGUISHABLE FROM THE FA CTS OF THE APPELLANT. DISALLOWANCE OF BUSINESS EXPENSES 13. THE LD. CIT(A) HAS ERRED IN CONFIRMING THE DISALLOW ANCES OF RS. 2,39,801/- MADE BY LD. AO ALLEGING THE SAME FOR PER SONAL PURPOSE IN RESPECT OF BUSINESS PROMOTION, TELEPHONE , CAR MAINTENANCE, CAR DEPRECIATION, PETROL, INTEREST AND TRAVELLING EXPENSES. 2. AT THE TIME OF HEARING, LD. COUNSEL FOR THE ASSE SSEE STATED THAT LD. FIRST APPELLATE AUTHORITY HAS NOT GIVEN SUFFICIENT OPPORTUNITY FOR SUBSTANTIATING HIS CLAIM BEFORE THE LD. FIRST APPEL LATE AUTHORITY IN SPITE OF THE FACT THAT THE ASSESSEE IS HAVING ALL NECESSA RY EVIDENCES FOR SUBSTANTIATING HIS CLAIM IN SUPPORT OF HIS CONTENTI ON. HE HAS ALSO FILED A PAPER BOOK CONTAINING PAGES 1 TO 299 IN WHICH HE HA S FILED: 1. CERTIFIED TRUE COPY OF LETTER DATED 06.08.2018 FILE D BEFORE SH. SURENDER SINGH THE LD. AO FOR SEEKING A COPY OF THE INFORMATION OBTAINED U/S 133(6) FROM THE COMMISSION AGENT AND STEEL PLANT AND A COPY OF ORDER SHEET. 2. APPELLANTS SUBSEQUENT LETTER DATED 15.11.2018 FILE D BEFORE SH. SURENDER SINGH THE LD. AO FOR SEEKING A COPY OF THE INFORMATION OBTAINED U/S 133(6) FROM THE COMMISSION AGENT AND STEEL PLANT AND A COPY OF ORDER SHEET. 3. APPELLANTS LETTER DATED 20.06.2018 FILED BEFORE SH . ANIL KUMAR MISHRA THE LD. CIT(APPEALS) FOR SEEKING ADJOURNMENT ALONG WITH THE POWER OF ATTORNEY. 4. APPELLANTS LETTER DATED 04.09.2018 FILED BEFORE SH . ANIL KUMAR MISHRA THE LD. CIT(A) FOR SEEKING ADJOURNMENT ALONG WITH THE COPY OF LETTER FILED BEFORE LD. AO FOR SEEKING COPY OF DOCUMENTS REFERRED IN ASSESSMENT ORDER. VIPIN GUPTA VS. ITO / I.T.A.NO.1253/DEL/2019/A.Y.20 15-16 PAGE 4 OF 6 5. APPELLANTS LETTER DATED 20.11.2018 FILED BEFORE SH . ANIL KUMAR MISHRA THE LD. CIT(APPEALS) FOR SEEKING ADJOURNMENT ALONG WITH THE COPY OF LETTER FILED BEFORE THE LD. AO FOR SEEK ING COPY OF DOCUMENTS REFERRED IN ASSESSMENT ORDER. 6. COPY OF STATEMENT OF PROFIT & LOSS FOR THE YEAR END ED 31.03.2015. BEFORE THE ASSESSING OFFICER 7. REPLY DATED 24.04.2017 AND 24.05.2017 FILED BEFORE THE LD. AO WITH REFERENCE TO CLAIM OF COMMISSION ALONG WITH TH E NOTICE AND QUESTIONNAIRE ISSUED U/S 142(1) OF THE ACT DATE D 26.08.2016 AND 19.01.2017. 8. REPLY DATED 11.08.2017 AND 12.09.2017 FILED BEFORE THE LD. AO WITH REFERENCE TO CLAIM OF COMMISSION ALONG WITH TH E NOTICE AND QUESTIONNAIRE ISSUED U/S 142(1) OF THE ACT DATE D 31.07.2017. 9. REPLY DATED 14.11.2017 AND 04.12.2017 FILED BEFORE THE LD. AO WITH REFERENCE TO CLAIM OF COMMISSION ALONG WITH TH E NOTICE AND QUESTIONNAIRE ISSUED U/S 142(1) OF THE ACT DATE D 15.09.2017. 10. REPLY DATED 12.12.2017 FILED BEFORE THE LD. AO WITH REFERENCE TO CLAIM OF COMMISSION ALONG WITH THE NOT ICE ISSUED U/S 142(1) OF THE ACT AND SHOW CAUSE NOTICE DATED 0 5.12.2017. 11. REPLY DATED 21.12.2017 FILED BEFORE THE LD. AO WITH REFERENCE TO CLAIM OF COMMISSION ALONG WITH THE NOT ICE ISSUED U/S 142(1) OF THE ACT AND SHOW CAUSE NOTICE DATED 2 1.12.2017. 12(A) REPLIES OF BUYERS FILED BEFORE LD. AO AGAINS T THE NOTICE ISSUED U/S 133(6) OF THE ACT. 12(B) REPLIES OF AGENTS FILED BEFORE LD. AO AGAINS T THE NOTICE ISSUED U/S 133(6) OF THE ACT. 13. E-MAIL COMMUNICATION OF APPELLANT WITH COMMISSI ON AGENTS. VIPIN GUPTA VS. ITO / I.T.A.NO.1253/DEL/2019/A.Y.20 15-16 PAGE 5 OF 6 3. HE REQUESTED THAT ISSUES IN DISPUTE MAY BE SET A SIDE TO THE LD. FIRST APPELLATE AUTHORITY TO DECIDE THE SAME AFRESH AS PER LAW, AFTER GIVING FULL OPPORTUNITY TO THE ASSESSEE. 4. ON THE CONTRARY, LD. DR RELIED UPON THE ORDER PA SSED BY THE LD. FIRST APPELLATE AUTHORITY BUT DID NOT RAISE ANY SER IOUS REJECTION ON THE REQUEST OF THE LD. COUNSEL FOR THE ASSESSEE. 5. I HAVE HEARD THE BOTH PARTIES AND PERUSED THE OR DERS PASSED BY THE REVENUE AUTHORITIES ESPECIALLY THE DOCUMENTARY EVID ENCE FILED BY THE ASSESSEE IN THE SHAPE OF PAPER BOOK CONTAINING PAGE S 1 TO 299 IN WHICH THE ASSESSEE HAS ATTACHED VARIOUS DOCUMENTARY EVIDE NCES FOR SUBSTANTIATING HIS CLAIM. I AM NOT COMMENTING ON T HE DOCUMENTARY EVIDENCE FILED BY THE ASSESSEE IN THE SHAPE OF PAPE R BOOK BUT I AM OF THE CONSIDERED VIEW THAT IN THE INTEREST OF JUSTICE, TH E ISSUES IN DISPUTE REQUIRED RECONSIDERATION AT THE LEVEL OF LD. FIRST APPELLATE AUTHORITY. THEREFORE, IN THE INTEREST OF JUSTICE, I AM SETTING ASIDE THE ISSUE IN DISPUTE TO THE LD. FIRST APPELLATE AUTHORITY TO DEC IDE THE SAME AFRESH AS PER LAW, AFTER GIVING FULL OPPORTUNITY TO THE ASSES SEE AND ALSO TO CONSIDER THE EVIDENCES FILED BY THE ASSESSEE MENTIONED ABOVE . VIPIN GUPTA VS. ITO / I.T.A.NO.1253/DEL/2019/A.Y.20 15-16 PAGE 6 OF 6 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. THE ORDER PRONOUNCED IN THE OPEN COURT ON 02.12.201 9 SD/- (H.S. SIDHU) JUDICIAL MEMBER DATED: 2 ND DECEMBER, 2019 *KAVITA ARORA, SR. PS COPY OF ORDER SENT TO- ASSESSEE/AO/PR. CIT/ CIT (A) / ITAT (DR)/GUARD FILE OF ITAT. BY ORDER ASSISTANT REGISTRAR, ITAT: DELHI BENCHES-DELHI