Handgar Indexport Pvt. ltd, New Delhi V. ITO, New Delhi

ITA 1727/DEL/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0050 (ITAT-DELHI)
• Duration Of Justice: 11 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 1984-1985
• Appeal Filed On: 16-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MONA MOHANTY
• Assessee Lawyers: S P AGGARWAL
• Section: 143(3); 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, IN THE INCOME TAX APPELLATE TRIBUNAL, IN THE INCOME TAX APPELLATE TRIBUNAL, IN THE INCOME TAX APPELLATE TRIBUNAL, NEW DELHI, BENCH C NEW DELHI, BENCH C NEW DELHI, BENCH C NEW DELHI, BENCH C BEFORE SHRI I. P. BANSAL, JUDICIAL MEMBER AND SHRI A K GARODIA, ACCOUTANT MEMBER ITA NO. 1727 /DEL/2010 (ASSESSMENT YEAR 1984-85) HANDGAR INDEXPORT PVT. LTD., VS. I.T.O., WARD 12(3 ), C/O SARDAR JITENDER SINGH, NEW DELHI R-859, NEW RAJINDER NAGAR, NEW DELHI-110060 (APPELLANTS) (RESPONDENTS) PAN / GIR NO. AAACH0791E APPELLANT BY: SHRI S. P. AGGARWAL, CA RESPONDENT BY: SMT. MONA MOHANTY, SR. DR ORDER ORDER ORDER ORDER PER A. K. GARODIA, AM: PER A. K. GARODIA, AM: PER A. K. GARODIA, AM: PER A. K. GARODIA, AM: 1. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A) XXII, NEW DELHI DATED 22.03.2010 FOR THE ASSESSMENT YEAR 2001-02. THE GROUNDS RAISED BY THE ASSESSEE R EAD AS UNDER: 1) THE ORDER OF THE CIT(A) IS NOT SUSTAINABLE IN L AW AND ON FACTS OF THE CASE. 2) ON THE FACTS AND UNDER THE CIRCUMSTANCES OF THE CASE LD. CIT(A) HAS FAILED TO APPRECIATE THAT THE ASSESS MENT ORDER WAS PASSED IN UTTER DISREGARD OF THE DIRECTION OF T HE ITAT GIVEN IN FIRST ROUND OF LITIGATION. 3) ON THE FACTS AND UNDER THE CIRCUMSTANCES OF THE CASE LD. CIT(A) HAS FAILED TO APPRECIATE THAT THE A.O. H AS FAILED TO EXAMINE THE DISALLOWANCE OF FABRICATION EXPENSES AM OUNTING TO ` 5 LACS AFRESH. 4) LD. CIT(A) HAS FURTHER ERRED IN NOT APPRECIATIN G THAT IT IS NOT THE CASE OF THE A.O. THAT THE EXPENSE OF FABRIC ATION WERE BOGUS AT ALL. 5) LD. CIT(A) HAS FURTHER ERRED IN NOT APPRECIATIN G THAT THE A.O. HAS GRANTED OPPORTUNITY TO CROSS EXAMINE THE P ERSONS UPON THE BASIS OF WHOSE STATEMENTS THE DISALLOWANCE OF FABRICATION EXPENSES WERE MADE. 6) ON THE FACTS AND UNDER THE CIRCUMSTANCES OF THE CASE LD. CIT(A) HAS FAILED TO APPRECIATE THAT THE A.O. H AS JUST REITERATED THE PREVIOUS ORDER INSTEAD OF EXAMINING THE ISSUE AFRESH AS PER THE DIRECTION OF THE ITAT. 7) CIT(A) HAS FAILED TO APPRECIATE THAT THE YEAR, I.E. ASSESSMENT YEAR 1983-84, ON THE BASIS OF WHICH THE IMPUGNED ASSESSMENT WAS PASSED STANDS TIME BARRED AND HENCE NO I.T.A. NO. 1727/DEL/2010 2 COGNIZANCE COULD HAVE BEEN TAKEN BY THE I.T.O. OF T HAT YEAR (1983-84) SINCE ALL ISSUES WERE REMAINED UNEXAMINED . 8) ON THE FACTS AND UNDER THE CIRCUMSTANCES OF THE CASE LD. CIT(A) HAS FAILED TO APPRECIATE THE A.O. HAS NO T SUCCESSFULLY DISCHARGED ITS BURDEN IN AS MUCH AS HE HAS FAILED TO ISSUE SUMMONS U/S 131 OF THE ACT TO PERSONS WHOM FABRICATION CHARGES WERE PAID. 2. THE FACTS TILL THE STAGE OF IMPOSITION OF PENALT Y BY THE A.O. ARE NOTED BY LD. CIT(A) IN PARA 4 OF HIS ORDER WHICH IS REPRODUCED BELOW: 4. THE FACTS OF THE CASE ARE THAT THE ORIGINAL ASS ESSMENT WAS COMPLETED BY THE A.O. VIDE ORDER DATED 30.03.19 87. HONBLE CIT(A) VIDE ORDER DATED 22.12.1998 CONFIRME D THE DISALLOWANCES MADE BY THE A.O. VIDE ORDER DATED 22.121.1998. THE APPELLANT AGAINST THE ORDER OF CI T(A) WENT IN APPEAL BEFORE THE HONBLE ITAT, NEW DELHI. THE HONBLE ITAT VIDE ORDER DATED 4.2.2005 VIDE I.T.A. NO. 789/ DEL/1999 RESTORED THE MATTER TO THE FILE OF THE A.O. WITH TH E DIRECTION TO DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW, BY WAY OF A SPEAKING ORDER AFTER GIVING THE APPELLANT AN OPPORT UNITY OF BEING HEARD. ASSESSMENT ORDER U/S 143(3) WAS PASSE D BY THE A.O. ON 24.02.2006. ON THE ISSUE OF DISALLOWANCE M ADE BY THE A.O. UNDER THE HEAD FABRICATION AND PROCESSING CHARGES THE A.O. HAS MADE THE FOLLOWING OBSERVATIONS: THE ASSESSEE COMPANY HAS CLAIMED EXPENDITURE OF ` 21,21,415/- UNDER THE HEAD FABRICATION AND PROCESS ING CHARGES. THE EXPENDITURE HAS BEEN INFLATED AS THE ACTUAL EXPENDITURE IS MUCH LESS. THIS HAS BEEN SUFFICIENT LY PROVED ABOVE. A BRIEF RESUME OF THE FACTS RELIED UPON TO COME TO THE CONCLUSION THAT THE EXPENDITURE ON FABRICATION AND PROCESSING CHARGES OF READY MADE GARMENTS HAD BEEN INFLATED IS GIVEN BELOW: A. NON-AVAILABILITY OF 11 PARTIES TO WHOM FABRICATION CHARGES IN EXCESS OF ` 10,000/- ARE CLAIMED TO HAVE BEEN PAID, ON THE ADDRESS FURNISHED BY THE ASSESSEE . I.T.A. NO. 1727/DEL/2010 3 B. THE ASSESSEES INABILITY/RELUCTANCE TO PRODUCE EVEN A SINGLE PARTY OUT OF THE ABOVE. C. SVS. USMAN KHAN, MOHSIN ALI AND SULEMAN KHAN TO WHOM FABRICATING CHARGES ARE CLAIMED TO HAVE BEEN PAID DURING THE ACCOUNTING PERIOD UNDER CONSIDERATI ON, HAVE CATEGORICALLY STATED THAT THE ASSESSEE COMPANY WAS FORCING THEM TO DO OVER BILLING AND IT WAS RECO VERING AMOUNTS BACK FROM THEM BY WAY OF CASH OR BEARER CHEQUES IN RESPECT OF THE AMOUNTS PERTAINING TO OVE R- BILLING. D. AVAILABILITY OF 3 BEARER CHEQUES SHOWN TO HAVE BEEN ISSUED TO 3 DIFFERENT FABRICATORS IN RESPECT OF PAY MENTS CLAIMED TO HAVE BEEN MADE TO THEM BY DEBITING THE ACCOUNTS OF THE SAID PARTIES, WHICH HAVE BEEN ENCAS HED BY AN EMPLOYEE OF THE ASSESSEE COMPANY SHRI SANJEEV MAITRA. E. THE ASSESSEES INABILITY TO REBUT THE ABOVE EVIDENC E TO PROVE THAT THE EXPENDITURE UNDER THE HEAD FABRICATI ON AND PROCESSING CHARGES WAS NOT INFLATED. AS REGARDS THE QUANTUM OF EXPENDITURE INFLATED BY T HE ASSESSEE UNDER THE HEAD FABRICATION & PROCESSING CHARGES, A FAIR ESTIMATE IS TO BE MADE ON THE BASI S OF THE MATERIAL ON RECORD. FROM THE STATEMENTS OF FABRICATORS, WHO HAVE STATED TO HAVE OVER BILLING W AS TO THE EXTENT OF 1/4 TH TO 1/3 RD OF THE TOTAL AMOUNT; BILLED. EVEN IF BENEFIT OF DOUBT IS GIVEN TO THE ASSESSEE T HAT THE PRACTICE OF GETTING OVER BILLING DONE WAS NOT FOLLO WED WITH ALL THE FABRICATORS OUT OF ` 21.21 LAKHS CLAIMED, WITH REGARD TO A MAJOR PORTION OF THE BILLING SUCH A PRACTICE WOULD HAVE BEEN FOLLOWED. IN RESPECT OF THE PARTIES NOT AVAILABLE ON THE ADDRESS FURNISHED, THE POSSIBILITY OF SOME OF THEM NOT EXISTING AT ALL CANNOT BE RULED OUT. THE VERY FACT THAT HE ASSESSEE HAD BEEN ISSUING BEARER CHEQUES TOWARDS FABRICATION CHA RGES WOULD HAVE TAKEN CARE OF NON-EXISTING PARTIES WITH REGARD TO MAINTAINING THEIR ACCOUNTS IN THE BOOKS OF THE ASSE SSEE. ON I.T.A. NO. 1727/DEL/2010 4 THE BASIS OF THESE FACTS AND ALL THE EVIDENCE AVAIL ABLE ON RECORD, THE MOST FAIR AND JUST ESTIMATE WOULD BE ` 5 LAKHS REPRESENTING AMOUNT FALSELY CLAIMED OUT OF THE TOTA L CLAIM OF ` 21.21 LAKHS. 3. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE CIT(A) BUT WITHOUT SUCCESS AND NOW, THE ASSE SSEE IS IN FURTHER APPEAL BEFORE US. 4. IT IS SUBMITTED BY THE LD. A.R. THAT SIMILAR DIS ALLOWANCE WAS MADE FOR THE FIRST TIME IN ASSESSMENT YEAR 1983-84 AND IN THAT YEAR, THE A.O. DISALLOWED ` 6 LACS OUT OF FABRICATION CHA RGES AND THE ASSESSMENT ORDER IN THAT YEAR WAS FRAMED ON 27.03.1 986. THE ASSESSMENT ORDER FOR THE PRESENT YEAR I.E. ASSESSME NT YEAR 1984-85 WAS FRAMED FOR THE FIRST TIME ON 30.03.1987 AND ON SIMILAR LIENS A DISALLOWANCE OF ` 5 LACS WAS MADE IN THE PRESENT YE AR OUT OF FABRICATION CHARGES ON THE BASIS OF ALLEGED STATEME NT OF ONE FABRICATOR MR. USMAN KHAN ON 10.03.1986 AND 18.03.1 987 RESPECTIVELY. IT IS SUBMITTED BY HIM THAT THE SAID MR. USMAN KHAN FILED AN AFFIDAVIT ON 18,08,1999 BEFORE LD. CIT(A) RETRACTING HIS EARLIER STATEMENT IN APPELLATE PROCEEDINGS FOR ASSE SSMENT YEAR 1983-84. IT IS ALSO SUBMITTED BY HIM THAT STATEMEN T OF MR. USMAN KHAN WAS AGAIN RECORDED ON 9.11.1999 BY THE A.O. DU RING THE ASSESSMENT PROCEEDINGS FOR ASSESSMENT YEAR 1985-86 AND IN THAT STATEMENT, HE CONFIRMED HIS AFFIDAVIT AND RETRACTED EARLIER STATEMENTS. IT IS ALSO SUBMITTED THAT STATEMENTS F ROM OTHER FABRICATORS WERE ALSO RECORDED NOT ONLY FOR THESE T WO ASSESSMENT YEARS BUT FOR SUBSEQUENT ASSESSMENT YEARS ALSO ALON G WITH AFFIDAVIT, WHEREIN NOTHING WAS SAID AGAINST THE ASSESSEE. IT IS ALSO SUBMITTED THAT IN ASSESSMENT YEAR 1983-84, CIT(A) REMANDED TH E MATTER BACK TO THE FILE OF HT A.O. FOR A FRESH DECISION VIDE OR DER 18.04.1988 AND REVENUES APPEAL AGAINST THIS ORDER OF CIT(A) FOR A SSESSMENT YEAR 1983-84 WAS DISMISSED BY THE TRIBUNAL ON 01.06.1992 AS PER I.T.A. NO. 4191/DEL/1988. IT IS ALSO SUBMITTED BEFORE US THAT EVEN AFTER DISMISSING THE APPEAL BY THE TRIBUNAL FOR THE ASSES SMENT YEAR I.T.A. NO. 1727/DEL/2010 5 1983-84, DEPARTMENT DID NOT CARRY OUT THE DIRECTION OF CIT(A) AND NO FRESH ASSESSMENT WAS FRAMED AS PER THE REMAND OF CI T(A) AND HENCE, CASE FOR ASSESSMENT YEAR 1983-84 HAS REACHED FINALITY WITHOUT ANY ADDITION. IT IS ALSO SUBMITTED THAT RE VENUE FILED CASE FOR ASSESSMENT YEAR 1983-84 FOR PROSECUTION U/S 276 C AND THE SAME WAS DISMISSED BY ADDL. CHIEF METROPOLITAN MAGISTRAT E, TIS HAZARI COURT VIDE ORDER 01.02.2010. IT IS SUBMITTED THAT WHEN THE DISALLOWANCE WAS MADE ON THE BASIS OF STATEMENT OF ONE PERSON WHICH HAS BEEN RETRACTED BY HIM BY WAY OF AN AFFID AVIT AND ALSO BY WAY OF SUBSEQUENT STATEMENT IN THE COURSE OF ASSESS MENT PROCEEDINGS FOR ASSESSMENT YEAR 1985-86, THE DISALL OWANCE IN THE PRESENT YEAR SHOULD BE DELETED. HE SUBMITTED THAT THE COPY OF AFFIDAVIT OF SHRI USMAN KHAN IS AVAILABLE ON PAGES 80-81 OF THE PAPER BOOK AND COPY OF HIS SUBSEQUENT STATEMENT ON 9.11.1989 IS AVAILABLE ON PAPER BOOK PAGES 114-122. 5. AS AGAINST THIS, LD. D.R. SUPPORTED THE ORDERS O F AUTHORITIES BELOW. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE FIND THAT THE DISALLOWANCE HAS BEEN MADE BY THE A.O. ON THE BASIS OF ADVERSE STATEMENT OF ONE MR. USMAN KHA N AND THERE IS NO OTHER ADVERSE MATERIAL BROUGHT OUT ON RECORD BY THE A.O. FOR MAKING THE DISALLOWANCE. SIMILAR DISALLOWANCE WAS MADE BY THE A.O. FOR THE FIRST TIME IN ASSESSMENT YEAR 1983-84 AND IN THAT YEAR, THE MATTER WAS REMANDED BACK BY LD. CIT(A) TO THE F ILE OF THE A.O. FOR A FRESH DECISION. BUT NO FRESH ASSESSMENT WAS FRAMED BY THE A.O. IN THAT YEAR AS HAS BEEN DIRECTED BY THE CIT(A ) AS PER THE SUBMISSIONS OF LD. A.R. BEFORE US AGAINST WHICH LD. D.R. HAS RAISED NO OBJECTION. AS PER THE AFFIDAVIT OF SHRI USMAN K HAN DATED 18.08.1987 AVAILABLE ON PAGES 80-81 OF THE PAPER BO OK, IT IS SEEN THAT IT HAS BEEN STATED BY MR. USMAN KHAN IN HIS AF FIDAVIT THAT THE EARLIER STATEMENT WAS OBTAINED BY THE DEPARTMENT BY COERCION. AS PER THE COPY OF THE SUBSEQUENT STATEMENT RECORDED B Y THE A.O. ON I.T.A. NO. 1727/DEL/2010 6 9.11.1989, WHICH IS STATED TO HAVE BEEN RECORDED IN THE COURSE OF ASSESSMENT PROCEEDING FOR ASSESSMENT YEAR 1985-86, IT WAS STATED BY MR. USMAN KHAN THAT HE WAS THREATENED BY THE OF FICERS THAT IF HE DOES NOT GIVE STATEMENT AS REQUIRED BY THE OFFICER, ENTIRE TAX LIABILITY WILL BE IMPOSED ON HIM AND IT WAS ALSO TO LD TO HIM ORALLY BY THE OFFICER THAT IF STATEMENT IS GIVEN BY MR. USMAN KHAN AS REQUIRED BY THE OFFICER, NO TAX WILL BE IMPOSED ON MR. USMAN KHAN. IT HAS BEEN ALSO STATED BY MR. USMAN KHAN THAT THE EARLIER STATEMENT GIVEN BY HIM REGARDING OVERBILLING AND REFUND OF CA SH, IS A WRONG STATEMENT. UNDER THESE FACTS, WE FEEL THAT THE VER Y BASIS OF DISALLOWANCE MADE BY THE A.O. OF ` 5 LACS OUT OF FA BRICATION CHARGES HAS NO LEGS TO STAND IN VIEW OF THIS AFFIDAVIT OF M R. USMAN KHAN AND HIS SUBSEQUENT STATEMENT BEFORE THE A.O. IN THE COU RSE OF ASSESSMENT PROCEEDINGS FOR THE SUBSEQUENT YEAR AND IN THAT YEAR, THE A.O. HAS NOT MADE ANY DISALLOWANCE WHICH MEANS THAT HE HAS ACCEPTED THE STATEMENT OF MR. USMAN KHAN. CONSIDER ING ALL THESE FACTS, WE FEEL THAT THE DISALLOWANCE MADE BY THE A. O. AND CONFIRMED BY THE CIT(A) IS NOT SUSTAINABLE. WE, THEREFORE, D ELETE THE SAME. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. 8. PRONOUNCED IN THE OPEN COURT ON 25 TH MAR., 2011. SD./- SD./- (I. P. BANSAL) (A K GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED:25 TH MAR ., 2011 SP. COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT TRUE COPY: BY ORDER 4. CIT(A) 5. DR DY. REGISTRAR, ITAT, NEW DELHI