A.J INTERNATIONAL , DELHI V. ITO WARD30(1), NEW DELHI

ITA 1734/DEL/2021

AI Insights

The case involves M/s A.J. International, which appealed against the order of the Commissioner of Income-tax (Appeals), National Faceless Appeal Centre, Delhi, which confirmed the Assessing Officer's addition of Rs. 35,00,000 as unexplained cash credit under section 68 of the Income-tax Act, 1961. The assessee argued that the amount was an advance received for the purchase of diamonds, thus a business advance. The lower authorities, however, found the explanations and evidence provided by the assessee insufficient to substantiate the source of the funds. The Tribunal, upon review, noted the lack of independent verification and further inquiry by the lower authorities and remanded the matter back for a fresh assessment.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 108538 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-03-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 31-01-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 22-11-2021
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Additional evidence; Set aside
• Section: 68; 143(3); 133(6)

Judgement Text

1 ITA No. 1734/Del/2021 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “SMC”: NEW DELHI BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER ITA No. _1734/DEL/2021 [Assessment Year: 2015-16 M/s A.J. International, 33, JMD Kohinoor Mall, Masjid Moth, FF-II, New Delhi. PAN- AAWFA6949C Vs Income-tax Officer, Ward-30(1), New Delhi. APPELLANT RESPONDENT Assessee represented by Ms. Dristi Jain, CA Department represented by Ms. Maimun Alam, Sr. DR Date of hearing 01.02.2023 Date of pronouncement 07.03.2023 O R D E R PER KUL BHARAT, JM: This appeal, by the assessee, is directed against the order of the learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, dated 29.09.2021, pertaining to the assessment year 2015-16. The assessee has raised solitary effective ground, which reads as under: “On the facts and in the circumstances of the case the learned CIT(A) was not justified on facts and in law in not accepting the appellant's explanation regarding advance of Rs. 35,00,000/- received in the bank accounts and confirming the Assessing officer's order treating the advance received during the course of business amounting to Rs. 35,00,000/- as unexplained 2 ITA No. 1734/Del/2021 cash credit u/s 68 of the Act. The addition of 35,00,000/- may kindly be deleted or in the alternative suitable relief be allowed.” 2. The facts giving rise to the present appeal are that the assessee filed its return of income on 16.09.2015 declaring taxable income of Rs. 91,490/-. The case was picked up for scrutiny assessment and the assessment u/s 143(3) of the Income-tax Act, 1961, hereinafter referred to as the “Act” was passed on 30.12.2017. Thereby the Assessing officer made addition of Rs. 35,00,000/-, the amount credited into the bank account of the assessee. Aggrieved against this the assessee preferred appeal before the learned CIT(Appeals), who also sustained the addition. Aggrieved, now the assessee is in appeal before this Tribunal. 3. Learned counsel for the assessee submitted that the assessee had stated before the authorities below that the amount deposited into the bank account was out of the advance received for purchase of diamond. Hence, same was business advances. 4. On the contrary, learned DR opposed the submissions and submitted that the assessee could not furnish the relevant evidences relating to the person who had given advance to the assessee. The assessee was required to prove the genuineness of the transaction and creditworthiness of the person who gave advance to the assessee. 3 ITA No. 1734/Del/2021 5. I have heard rival submissions and perused the material available on record. I find that the learned CIT(Appeals0 has decided the issue by observing as under: “5.3.5. On perusal of the aforesaid Rule 46A of the IT Rules and the details & submission filed by the appellant and assessment order passed by the AO, it is noticed that in the present case, - Assessing Officer has not refused to admit evidence which ought to have been admitted, - Appellant was not prevented by sufficient cause from producing the evidence which he was called upon to produce by the Assessing Officer, - Appellant was not prevented by sufficient cause from producing before the Assessing Officer any evidence which is relevant to the ground of appeal - Assessing Officer has made the order appealed against after giving sufficient & ample opportunities to the appellant to adduce evidence relevant to the ground of appeal. 5.3.6. In view of the above discussed facts in detail, in the present fact & circumstances of the case, the provisions under Rule 46A do not permit the CIT(A) to admit the additional evidences submitted by the appellant assessee now during the appellate proceedings. Hence, I do not find any merits in the submission of the appellant assessee to admit the additional evidences, hence additional grounds of appeal of the appellant assessee to admit additional evidences is rejected. 5.3.7. Without prejudice to the above and even on considering the merits of the additional evidences submitted, it is noticed that: - In response to notice u/s 133(6), Mr. Kunai Walia had confirmed to the AO that he had bought diamond from M/s A. J. International, New Delhi for which advance was given to them, however Mr. Kunal Walia had not confirmed the amount of advances given. Further, Mr. Kunal \Na\\a had not furnished the full details asked by the AO vide notice u/s 133(6) of the IT Act about his ITR and nature of business. So, the confirmation submitted by Mr. Kunal Walia cannot be considered as a valid confirmation. - Mr. Pradeep Walia had confirmed the payment made to appellant to the extent of Rs.8,00,000/- and Ms. Hemlata Walia had confirmed the payment made to appellant to the extent of Rs.7,00,000/- towards purchase of diamond jewellary. However, these confirmation do not explain whether these purchases were made by them (Mr. Pradeep & 4 ITA No. 1734/Del/2021 Ms. Hemlatha) for Mr. Kunal. Hence, the payment made by Mr. Pradeep Kumar and Ms. Hemlatha Walia cannot be considered as paid towards purchase in the name of Mr. Kunal Walia. Accordingly, the confirmation submitted by Mr. Pradeep and Ms. Hemlatha had no significance in the present case. - There is no confirmation of payment received of Rs. 20,00,000/- by the appellant assessee. Neither Mr. Pradeep Kumar nor Ms. Hemlata had mentioned anything about the remaining balance of Rs.20,00,000/- in their letter submitted. Further, on perusal of the reply of the Urban Co- operative Bank Ltd. Dehradun dated 26.03.2018 on RTI application dated 03.03.2018 filed by the appellant before Urban Co-operative Bank Ltd. Dehradun for asking name, address & PAN of payer of remaining balance of Rs. 20,00,000/-, it is noticed that the Co-operative bank had denied to provide information sought by the appellant on the ground that Urban Co-operative Bank Ltd. Dehradun does not come under the purview of Right to Information Act 2005 and accordingly, there is no Public Information Officer, appointed in the bank and for this reason the information cannot be provided. Hence, the reply of the RTI application does not explain any sources of payment made of Rs. 20,00,000/-.” 6. There is no dispute that the assessee furnished confirmation in part. The assessee, however, could not furnish confirmation regarding balance amount of Rs. 20,00,000/-. The bank did not provide requisite detail to the assessee. Looking to the facts of the present case that the assessee had explained the source of deposits in bank account, the lower authorities without verifying independently, from the bank and without making further inquiry into the matter, made the impugned addition. Such approach is not justified, under the facts and circumstances of the present case. Therefore, to sub-serve substantial interest of justice, the impugned orders are hereby set aside and the AO is hereby directed to frame the assessment 5 ITA No. 1734/Del/2021 afresh after carrying out the necessary inquiry. The ground raised in the appeal is allowed for statistical purpose. 7. Appeal of the assessee is allowed for statistical purposes. Order pronounced in open court on 7 th March, 2023. Sd/- (KUL BHARAT) JUDICIAL MEMBER *MP* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI