Rakesh Kumar Bhargava, Delhi V. ITO, Ward- 36(2), New Delhi

ITA 1792/DEL/2018

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5789 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2006-2007
• Appeal Filed On: 14-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C P SINGH
• Assessee Lawyers: RAKESH KUMAR BHARGAVA
• Keywords: Opportunity of being heard; Principle of natural justice; Set aside
• Section: 143(3); 133(6); 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER I.T .A. NO. 1792 /DEL/201 8 ASSESSMENT YEAR: 20 1 4 - 1 5 RAKESH KUMAR BHARGAVA, M/S. MPYTRON SYSTEMS, R/O D-186, 1 ST FLOOR, PRASHANT VIHAR, NEW DE LHI. V. ITO, WARD-36(2), NEW DELHI. TAN/PAN: AAGPB 6366G (APP ELL ANT) (RESPONDENT) APP ELL ANT BY: SHRI RAKESH KUMAR BHARGAVA, ASSESSEE RESPONDENT BY: SHRI C.P. SINGH , SR.D.R . DATE OF HEARING: 1 3 09 201 8 DATE OF PRONOUNCEMENT: 11 12 201 8 O R D E R THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE IMPUGNED ORDER DATED 17.11.2017, PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS)-XII, NEW DELHI FOR THE QUANTUM OF ASSESSMENT PASSED U/S.143(3)/254 OF THE IT ACT, FOR THE ASSESSMENT YEAR 2006-07. IN THE GROUNDS OF APPEAL, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THAT THE HONBLE CIT (A) XII HAS IGNORED THE FACT THAT THE APPELLANTS CREDITORS HAVE TWICE CONFIRMED AND VERIFIED THEIR CLAIM BEFORE THE LD. A.O.: (A) FIRSTLY IN NOV./DEC. 2008 (9 NUMBERS) CONFIRMATION SUBMITTED BY ASSESSEE. (B) SECONDLY IN MAY/JUNE 2011 (9 NUMBERS) CONFIRMATION DIRECTLY SUBMITTED BY INDIVIDUAL CREDITORS TO THE LD. A.O. I.T.A. NO.1792/DEL/2018 2 (C) THAT THE LD. A.O. IN HIS VERIFICATION REMAND REPORT DT. 01.11.2017 HAS STATED: THE CONFIRMATION FROM THE ABOVE 9 SUNDRY CREDITORS WERE RECEIVED IN THE OFFICE IN THE MONTHS OF JUNE 2011 VIA SPEED POST, WHICH ARE DULY PLACED IN FILE. IN THE CONFIRMATION, THE CREDITORS HAVE CONFIRMED THE AMOUNT DUE FROM M/S. MAPYTRON SYSTEMS. 2. THAT THE HONBLE CIT(A)XII HAS IGNORED THE FOLLOWING DISCREPANCIES OF LD. ASSESSING OFFICER AND HAD NOT TAKEN INTO AFFECT THESE POINTS WIDE PASSING THE ORDER: (A) THAT THE LD. A.O. HAS NOT CARRIED OUT ANY VERIFICATION OF CONFIRMATIONS FILED OF CREDITORS AS PER THE DIRECTION GIVEN BY THE HONBLE ITAT VIDE ITS ORDER NO. 3432/DEL/2015 (A.Y. 2006-07) DATED 17.09.2015. (B) THAT THE LD. A.O. HAS ALSO CONCEALED IN ALL ASSESSMENT AND REMAND REPORTS, THE FACT THAT THE SUNDRY CREDITORS OF THE ASSESSEE HAD DIRECTLY SENT THEIR CONFIRMATION 85 REPLIES TO THE A.O. IN RESPONSE TO THE A.O.S LETTER. (C) THAT THE LD. A.O. HAD MADE MANY ERRONEOUS STATEMENT IN EX-PARTY ASSESSMENT ORDER DATED 31.08.2016 PASSED U/S 143(3) PASSED BY INCOME TAX OFFICER, WARD 36(2), NEW DELHI, TO PROVE NON COOPERATION BY ASSESSEE (I) NO LETTER OR NOTICE WAS ISSUED BEFORE 04.12.2015. (II) THE FIRST LETTER NO 1097, WITHOUT ANY QUESTIONER, WAS ISSUED ON 04.12.2015, INFORMING ASSESSEE THAT AS PER THE DIRECTION OF ITAT ORDER DATED 17.09.2015, THE CASE IS RE-OPEN AND SUMMONED FOR HEARING ON 09.12.2015 (IN BETWEEN SAT 85 SUN). (III) ASSESSEE ATTENDED ON 09.12.2015 AND INFORMED LD. A.O. THAT THIS LETTER IS RECEIVED TODAY ONLY AT 12 NOON. THE NEW DATE OF HEARING WAS FIXED FOR-08.02.2016. I.T.A. NO.1792/DEL/2018 3 (D) THAT DURING THE RE-OPENED ASSESSMENT PROCEEDINGS THE LD. A.O. MRS. SUNITA GUPTA ISSUED NOTICE DT. 08.02.2016 TO APPEAR ON 14.06.2016. HOWEVER DURING THIS FOUR MONTHS PERIOD THE LD. A.O. GOT TRANSFERRED AND THE LD. A.O. MR. GANESH KUMAR THE NEW A.O. ISSUED FRESH NOTICE ON 23.05.2016 AND SUMMONED THE APPELLANT ON 06.06.2016 AT 3.30 AM. THE ASSESSEE ATTENDED ON 06.06.2016 AND WAS MADE TO SIGN THE NOTE SHEET AND WAS INFORMED THAT A NEW LIST OF REQUIREMENT WILL BE SENT TO HIM. (E) THAT THE LD. A.O. DID NOT SENT ANY LETTER. HOWEVER THE ASSESSEE DID VISITED DEPARTMENT ON FOLLOWING DATES, BUT WAS ALWAYS TURNED BACK HAVING NO REGARDS TO HIS AGE OF 68 YEARS AND HIS MEDICAL CONDITIONS: DATE OF VISIT OF ASSESSEE RESPONSE FROM ITOS OFFICE 14.06.2016 LD. A.O. NOT PRESENTS. STAFF TOLD NO NOTICE HAS BEEN SENT. 21.06.2016 TOLD LD. A.O. GONE ON TRAINING. 06.07.2016 LD. A.O. NOT PRESENTS. STAFF TOLD NO NOTICE HAS BEEN SENT. 12.07.2016 NEITHER LD. A.O. NOR STAFF PRESENT. (F) THAT THE LD. A.O. HAS PASSED THE EX-PARTY ORDER STATING THAT TWO SHOW CAUSE NOTICES DT. 08.07.2016 AND 16.08.2016 WERE SERVED ON ASSESSEE, WHICH WERE NEVER RECEIVED BY ASSESSEE, HOWEVER THE LD. A.O. INTENTIONS HERE ARE DOUBTFUL BECAUSE HE HAS SEND THESE TWO NOTICES ON OLD ADDRESS. WHEREAS, HE HIMSELF HAD MADE EARLIER COMMUNICATION WITH ASSESSEE AT HIS CURRENT ADDRESS AND SENT ALL NOTICES FROM LAST MANY YEARS TO HIS CURRENT ADDRESS. THIS INTENTIONAL STEP TAKEN BY THE LD. A.O. CREATES SUSPENSE WHETHER THESE NOTICES WERE EVER SENT OR NOT, AS THE ASSESSEE WAS VISITING THE LD. A.O.S OFFICE FREQUENTLY AND HAS PROVIDED HIS E-MAIL ID, I.T.A. NO.1792/DEL/2018 4 MOBILE NUMBER ALSO BESIDE HIS CURRENT ADDRESS. 3. THAT WHILE PASSING THE ORDER DATED 17.11.2017 THE LD. COMMISSIONER OF INCOME TAX (APPEAL) XII HAS IGNORED THE FACT THAT ALL THE SUNDRY CREDITORS TO WHOM THE NOTICES WERE SENT PREVIOUSLY IN 2011 BY THE LD. ASSESSING OFFICER HAVE DULY RESPONDED AND ALL THE SUNDRY CREDITORS HAVE CONFIRMED THAT THE APPELLANT HAD MADE THE OUTSTANDING PAYMENT TO THE SAID SUNDRY CREDITORS. 4. THAT THE HONBLE CIT (A) XII HAS IGNORED THE FACT THAT THESE LIABILITIES OF CREDITORS PERTAINS TO THE YEAR 1998 TO 2001 FOR THE PROJECT WORKS CARRIED FOR THE HARYANA GOVERNMENTS HUDA AND DELHI GOVERNMENTS DJB, THROUGH M/S N. B. C. CORPORATION, A GOI UNDERTAKING. (A) THAT THESE GOVERNMENT AGENCIES RELEASED APPELLANTS PAYMENTS IN MARCH 2006 AS PER THE DECISION OF HONBLE HIGH COURT OF DELHI ORDER DATED 04.10.2005 IN CP NO. 181 OF 2004. (B) THAT THE ASSESSEE PAID THESE CREDITORS THEIR DUES FROM THE PAYMENTS SO RECEIVED AFTER 2005-06 ONWARDS, AFTER RECEIVING HIS DUES. (C) THAT THESE FACTS ARE IMPORTANT BECAUSE THE ASSESSEE HAS PRESENTED BEFORE THE MINISTRY OF URBAN DEVELOPMENT HIS LIABILITY TOWARDS THESE CREDITORS VIDE LETTER DATED 10.10.2002 THROUGH MEMBER OF PARLIAMENT, TO MR. ANANT KUMAR, THE THEN MINISTER OF URBAN DEVELOPMENT, GOI. 5. THAT THE ORDER DATED 17.11.2017 AS PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) XII IS CONTRARY TO THE LAW AND FACTS. 6. THAT THE ORDER DATED 17.11.2017 IS NOT MAINTAINABLE AND THE SAME IS LIABLE TO BE SET ASIDE AND THUS, THE ASSESSMENT ORDER DATED 31.08.2016 AS PASSED BY THE LD. ASSESSING OFFICER IS NOT MAINTAINABLE AND THE SAME IS LIABLE TO BE DISMISSED. I.T.A. NO.1792/DEL/2018 5 7. THAT VIDE ORDER DATED 17.11.2017 THE LD. COMMISSIONER OF INCOME TAX (APPEALS) XII HAS ERRED IN DISMISSING THE APPEAL FILED BY THE APPELLANT AND THEREBY UPHOLDING THE ASSESSMENT ORDER 31.08.2016 PASSED BY THE LD. ASSESSING OFFICER. 8. THAT VIDE ORDER DATED 17.11.2017 THE LD. COMMISSIONER OF INCOME TAX (APPEALS) XII HAS WRONGLY HELD THAT THERE IS NOTHING TO SHOW THAT THE CREDITS OF RS. 9,14,560/- FROM 11 CLAIMED SUNDRY CREDITORS WERE GENUINE AND THESE ARE BOGUS, THUS, THE ADDITION OF RS. 9,14,750/- MADE BY THE ASSESSING OFFICER IS HEREBY UPHELD. 9. THAT WHILE PASSING THE ORDER DATED 17.11.2017 THE LD. COMMISSIONER OF INCOME TAX (APPEAL) XII HAS FAILED TO TAKE INTO CONSIDERATION THAT THE CREDIT OF RS. 9,14,560/- FROM 11 CLAIMED SUNDRY CREDITORS DOES NOT PERTAIN TO ASSESSMENT YEAR 2006-07 BUT IS CARRIED FORWARD CREDIT FROM THE FINANCIAL YEAR 1998-99 TO 2001- 2002. 10. THAT WHILE PASSING THE ORDER DATED 17.11.2017 THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - XII HAS FAILED TO TAKE INTO CONSIDERATION THAT THE APPELLANT HAD MADE PAYMENTS TO THE SUNDRY CREDITORS BOTH BY WAY OF CASH AND CHEQUE WHICH IS EVIDENT FROM THE BANK STATEMENTS OF THE APPELLANT AND HAS WRONGLY HELD THAT PAYMENTS HAVE BEEN MADE TO THE SUNDRY CREDITORS IN CASH WHICH ARE NOT ALLOWABLE UNDER THE ACT. 11. THAT WHILE PASSING THE ORDER DATED 17.11.2017 THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - XII HAS NOT TAKEN INTO CONSIDERATION THE DOCUMENTS AND SUBMISSIONS MADE BY THE APPELLANT BOTH AT THE TIME OF THE ASSESSMENT PROCEEDINGS AS WELL AS DURING THE APPELLATE PROCEEDINGS BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - XII. 12. THAT WHILE PASSING THE ORDER DATED 17.11.2017 THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - XII HAS NOT FOLLOWED THE PRINCIPLES OF NATURAL JUSTICE AND NO REASONABLE OPPORTUNITY OF I.T.A. NO.1792/DEL/2018 6 HEARING WAS GIVEN TO THE APPELLANT AND THE SUNDRY CREDITORS. 13. THAT THE PRIMA FACIE CASE AND BALANCE OF CONVENIENCE LIES IN FAVOUR OF THE APPELLANT AND HUGE FINANCIAL LOSS WOULD BE CAUSED TO THE APPELLANT IF IN CASE THE ORDER DATED 17.11.2017 PASSED BY LD. COMMISSIONER OF INCOME TAX (APPEALS) -XII AND ASSESSMENT ORDER DATED 31.08.2016 ARE NOT QUASHED AND SET ASIDE. 14. THAT GRAVE INJUSTICE AND UNDUE HARDSHIP WILL BE CAUSED TO THE APPELLANT IF THE PRESENT APPEAL IS NOT ALLOWED AND THE ORDER DATED 17.11.2017 PASSED BY LD. COMMISSIONER OF INCOME TAX (APPEALS) - XII AND ASSESSMENT ORDER DATED 31.08.2016 BY THIS HONBLE TRIBUNAL. 2. THIS IS THE SECOND ROUND OF PROCEEDINGS IN PURSUANCE OF DIRECTION BY THE TRIBUNAL TO DECIDE THE ISSUE AFRESH WHICH RELATES TO ADDITION ON ACCOUNT OF SUNDRY CREDITORS AGGREGATING TO RS.9,14,750/-. THE ASSESSEE HAD FILED CONFIRMATION FROM ALL THE NINE PARTIES/ SUNDRY CREDITORS AND SAME WAS REJECTED BY THE ASSESSING OFFICER ON THE GROUND THAT LETTERS SENT TO THEM WERE RECEIVED BACK UNSERVED. THE RELEVANT OBSERVATION OF THE TRIBUNAL IN THIS REGARD IS AS UNDER:- 11. KEEPING IN VIEW THE UNDISPUTED FACT THAT THE ASSESSEE HAS PLACED BEFORE ASSESSING OFFICER THE CONFIRMATIONS MADE BY HIS NINE SUNDRY CREDITORS AS REQUIRED U/S.133(6) OF THE ACT, DOCUMENTS RELIED UPON BY THE PARTIES AND SUBMISSIONS MADE BEFORE THE BENCH, WE ARE OF THE CONSIDERED VIEW THAT LD. CIT(A) HAS ERRED IN PASSING THE IMPUGNED ORDER DATED 29.08.2014 IN AFFIRMING THE ADDITION OF RS.9,14,750/- MADE BY THE A.O. VIDE ORDER DATED 16.12.2008 FOR THE FOLLOWING REASONS:- I) THAT BOTH, THE A.O. AS WELL AS LD. CIT(A) BEING JUDICIAL AUTHORITIES, WERE UNDER OBLIGATION TO ADHERE TO THE RULE OF NATURAL JUSTICE BY PROVIDING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE TO I.T.A. NO.1792/DEL/2018 7 PRODUCE NINE SUNDRY CREDITORS WHOSE CONFIRMATIONS HAVE BEEN DULY PLACED ON RECORD DURING ASSESSMENT/REMAND PROCEEDINGS; II) THAT WHEN THE ASSESSEE HAS DISCHARGED ITS ONUS U/S.68 OF THE ACT BY PROVIDING CONFIRMATION LETTER FROM THE SUNDRY CREDITORS, THE ONUS STANDS SHIFTED TO THE A.O. TO CONTROVERT THE SAME BY FRINGING COGENT EVIDENCE ON RECORD, THAT THE SAID PARTIES ARE NOT EXISTING AND THEIR CREDITWORTHINESS AND GENUINENESS IS HIGHLY DOUBTFUL. THE A O HAS RATHER SUMMARILY DISMISSED THE CONFIRMATION LETTERS ON THE SOLE GROUND THAT THE SAME ARE STEREOTYPED AND HAS NEVER GIVEN FINDINGS THAT THE CONFIRMATION FILED BY THE ASSESSEE IN RESPECT OF THE NINE SUNDRY CREDITORS ARE FAKE ONE AND OF NON EXISTING ENTITIES; III) THAT NO DOUBT INSPECTOR, INCOME TAX DEPUTED BY THE A.O. REPORTED THAT M/S. R.K. ENTERPRISES, NATRAJ SANITARY AND VERMA ENGINEERING WORKS ARE NON-EXISTING, BUT THE ASSESSEE HAS NEVER BEEN PROVIDED OPPORTUNITY TO PRODUCE THEM, OR TO FILL THEIR LATEST ADDRESSES BUT OUTRIGHTLY, IGNORED THE CONFIRMATIONS AND BUSINESS TRANSACTIONS SUBMITTED BY THE ASSESSEE; IV) THAT NOTICES SENT TO NINE PARTIES DETAILED AT PAGE 20 OF THE IMPUGNED ORDER ARE SHOWN TO HAVE BEEN RECEIVED BACK UNSERVED BUT THEREAFTER, NO OPPORTUNITY HAS BEEN PROVIDED TO THE ASSESSEE TO PROVIDE THEIR LATEST ADDRESS OR TO PRODUCE THE PARTIES BEFORE THE A.O. NOR ANY EFFORT HAS BEEN MADE TO SERVE THEM THROUGH SUBSTITUTE SERVICE; V) THAT CONFIRMATION FILED BY ASSESSEE PERTAINING TO NINE PARTIES/SUNDRY CREDITORS DETAILED AT PAGE 20 OF THE IMPUGNED ORDER OUGHT NOT TO HAVE BEEN REJECTED MERELY ON THE GROUND THAT THE LETTERS SENT TO THEM BY THE A.O. HAVE BEEN RECEIVED BACK UNSERVED EXCEPT WITH THOROUGH PROBE; VI) THAT IT IS ABUNDANTLY CLEAR FROM THE FACTS ON RECORD THAT A.O. HAS FAILED TO VERIFY CONFIRMATIONS FILED BY THE ASSESSEE RATHER REJECTED THE SAME ON THE BASIS OF CONJECTURES AND SURMISES. I.T.A. NO.1792/DEL/2018 8 12. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, THE IMPUGNED ORDER DATED 29.08.2014 PASSED BY ID. CIT(A) AFFIRMING THE ADDITION OF RS.9,14,750/- MADE BY A.O. VIDE ORDER DATED 16.12.2008 IS NOT SUSTAINABLE IN THE EYES OF LAW, HENCE, HEREBY SET ASIDE. CONSEQUENTLY, THE CASE IS RESTORED TO THE FILE OF A.O. FOR VERIFICATION OF CONFIRMATIONS FILED BY ASSESSEE BY PROVIDING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 3. LD. ASSESSING OFFICER HAS AGAIN REITERATED THE SAME ADDITION ON THE GROUND THAT THE ASSESSEE HAS FAILED TO FURNISH ON RECORD ANY EVIDENCE TO ITS CLAIM ON ACCOUNT OF SUNDRY CREDITORS. IN THE FIRST APPELLATE PROCEEDINGS, THE MATTER WAS REMANDED BACK TO THE ASSESSING OFFICER BY THE LD. CIT (A) TO SUBMIT HIS REPORT. HOWEVER, THE ASSESSING OFFICER STATED THAT AFTER SETTING ASIDE OF THE MATTER TO THE ASSESSING OFFICER, SUFFICIENT OPPORTUNITY WAS GIVEN DURING THE ASSESSMENT PROCEEDINGS. HOWEVER, NO SUCH INFORMATION WAS GIVEN BY THE ASSESSING OFFICER. IN RESPONSE, THE ASSESSEE SUBMITTED THAT ALL THE SUNDRY CREDITORS ARE VERY OLD WHICH MORE THAN 7 TO 9 YEARS WERE. THE ASSESSMENT WAS CARRIED OUT IN THE YEAR 2006- 07 AND NOW MORE THAN 16 TO 19 YEARS HAVE ELAPSED. ALL THE DETAILS OF SUNDRY CREDITORS WERE DISCLOSED IN THE BALANCE SHEETS AND WERE FILED IN THE INCOME TAX RETURN OF THE EARLIER YEARS. APART FROM THAT, ALL THE OLD SUNDRY CREDITORS WERE PAID LATER ON FROM THE PERIOD 01.04.2006 UP TO YEAR 2011. IT WAS ALSO BROUGHT ON RECORD THAT ALL THE SUNDRY CREDITORS HAVE BANK ACCOUNTS AND THE TRANSACTIONS WERE PURELY IN CHEQUE. ACCOUNT STATEMENT SHOWING PAYMENT MADE, BILL WISE DETAILS ETC. OF ALL THE SUNDRY CREDITORS WERE FILED BEFORE THE ASSESSING OFFICER INCLUDING COPY OF PURCHASES BILLS AND VOUCHERS. THE ASSESSEES SUBMISSION IN THIS REGARD HAS BEEN INCORPORATED IN I.T.A. NO.1792/DEL/2018 9 THE IMPUGNED ORDER AT PAGES 13 AND 14. 4. LD. CIT(A) HAS TAKEN NOTE OF THE FACT THAT ASSESSING OFFICER HAS DEPUTED INSPECTOR OF INCOME TAX FOR INQUIRY IN CASES OF SOME OF THE SUNDRY CREDITORS WHICH WERE FOUND TO BE NON EXISTING AT THE ADDRESS GIVEN. FURTHER NOTICES ISSUED U/S. 133(6) WAS ALSO NOT COMPLIED WITH. THE OBSERVATION OF THE LD. CIT (A) IN THIS REGARD READS AS UNDER: 6.12 I HAVE CAREFULLY CONSIDERED ALL THE SURROUNDING FACTS PERTAINING TO THIS CASE AND FIND THAT THE HONBLE ITAT IN THEIR ORDER DATED 17.09.2015 OBSERVED THAT THE LD. ASSESSING OFFICER AS WELL AS CIT(A) BEING JUDICIAL AUTHORITIES WERE UNDER OBLIGATION TO ADHERE TO THE RULE OF NATURAL JUSTICE BY PROVIDING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE TO PRODUCE 9 SUNDRY CREDITORS WHOSE CONFIRMATIONS WERE DULY PLACED ON RECORD DURING ASSESSMENT/REMAND PROCEEDINGS. NOW I FIND THAT THE ASSESSEE HAS BEEN GIVEN AMPLE OPPORTUNITY TO PRODUCE THE SUNDRY CREDITORS WHOSE CONFIRMATIONS WERE PLACED ON RECORD. BUT THE ASSESSEE FAILED TO PRODUCE THESE CREDITORS ON THE GROUND THAT THOSE HAVE BECOME 16 TO 19 YEARS OLD AND NONE OF THEM ARE FOUND AT THE GIVEN ADDRESSES. AGAIN IN PARA 11(III) OF THE ORDER, THE HONBLE ITAT OBSERVED THAT THOUGH INSPECTOR DEPUTED BY THE ASSESSING OFFICER REPORTED M/S RK ENGINEERS, M/S NATRAJ SANITARY AND M/S VERMA ENGINEERING WORKS WERE NON-EXISTING, THE ASSESSEE WAS NEVER GIVEN OPPORTUNITY TO PRODUCE THEM OR TO FILE THEIR LATEST ADDRESSES. NOW ADMITTEDLY, THE ASSESSEE HAS BEEN GIVEN THE OPPORTUNITY TO PRODUCE THE SUNDRY CREDITORS SHOWN BY HIM AND ALSO TO PRODUCE THEIR LATEST ADDRESSES. AS STATED ABOVE, THE ASSESSEE HAS FAILED TO PRODUCE THE SUNDRY CREDITORS AS WELL AS THEIR LATEST ADDRESSES. IN PARA 11 (IV) OF THE ORDER, THE HONBLE ITAT OBSERVED THAT NO OPPORTUNITY HAS BEEN PROVIDED TO THE ASSESSEE TO PRODUCE THE PARTIES BEFORE ASSESSING OFFICER NOR HAS ANY EFFORT BEEN MADE TO SERVE THE NOTICES THROUGH SUBSTITUTE MODES. AS MENTIONED ABOVE, THE APPELLANT HAS HIMSELF FAILED TO LOCATE HIS PARTIES ON THE GIVEN ADDRESSES. THEREFORE, THE DEPARTMENT COULD NOT MAKE ANY EXERCISE TO SERVE THE NOTICES THROUGH ANY OTHER MODE. 6.13 BESIDES THE ABOVE, I HAVE GONE THROUGH ALL THE DOCUMENTS PRODUCED BY I.T.A. NO.1792/DEL/2018 10 THE ASSESSEE AND FIND THAT THE PAYMENTS CLAIMED TO HAVE BEEN MADE TO THE SUNDRY CREDITORS WAS BY WAY OF CASH. HAD THERE BEEN THE PAYMENTS THROUGH BANKING CHANNEL, SOME VERIFICATION COULD HAVE BEEN MADE BY THE ASSESSING OFFICER TO ASCERTAIN THE FACTS. BUT IN THE EVENT OF CASH PAYMENTS NO SUCH VERIFICATION IS POSSIBLE. THE CREDITORS MAY BE OLD IN 2017 BUT WHEN THE ORIGINAL ASSESSMENT PROCEEDINGS WERE GOING ON, THE ASSESSEE HAD ADEQUATE OPPORTUNITY TO PRODUCE THEM BEFORE THE ASSESSING OFFICER AND IN THAT SITUATION THE PLEA OF OLD CREDITORS COULD NOT BE APPLICABLE. THE HONBLE ITAT HAS DIRECTED TO MAKE THOROUGH INQUIRY INTO THE GENUINENESS OF THE CREDITORS AND NOT TO REJECT THE CONFIRMATIONS FILED BY THE ASSESSEE. HERE A VERY PERTINENT QUESTION ARISES, IF 9 OUT OF 11 CREDITORS CONFIRMED THEIR BALANCES BY SENDING THE LETTERS TO THE ASSESSING OFFICER, THEY COULD ALSO BE PRODUCED BEFORE THE ASSESSING OFFICER BY THE ASSESSEE BECAUSE THE IMPLIED INFERENCE IS THAT THE PARTIES WERE AVAILABLE AT THEIR GIVEN ADDRESSES WHEN THEY REPLIED NOTICES OF THE ASSESSING OFFICER. THE DISAPPEARANCE OF ALL THE PARTIES FROM THE GIVEN ADDRESSES RAISES THE DOUBT AS TO THE GENUINENESS OF EXPLANATION OFFERED BY THE APPELLANT. I FIND THAT THE ASSESSING OFFICER, DURING THE REMAND PROCEEDINGS, AFFORDED ONE MORE OPPORTUNITY TO THE ASSESSEE EITHER TO PRODUCE THE CREDITORS OR TO FURNISH THEIR NEW ADDRESSES. BUT THE ASSESSEE HAS OUT RIGHTLY FAILED TO FURNISH ANY SUCH INFORMATION. IN SO FAR AS THE CASES OF M/S JK TUBES AND M/S SLB EXPORT LTD. ARE CONCERNED, THEY THEMSELVES DENIED ANY TRANSACTION WITH THE ASSESSEE. IN VIEW OF THE ABOVE FACTS AND IN THE CIRCUMSTANCES, THE SUNDRY CREDITORS CLAIMED BY THE ASSESSEE CANNOT BE TREATED GENUINE. HENCE, I CONFIRM THE ADDITION MADE BY THE ASSESSING OFFICER AND DISMISS THE GROUNDS TAKEN BY THE APPELLANT IN THIS REGARD. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PERUSED THE RELEVANT FINDINGS GIVEN IN THE IMPUGNED ORDERS AS WELL AS MATERIAL REFERRED TO BEFORE US. HERE THE ADDITION HAS BEEN MADE ON ACCOUNT OF AMOUNT SHOWN UNDER SUNDRY CREDITORS FOR SUMS AGGREGATING TO RS.9,14,750/- AS OUTSTANDING FROM 11 PARTIES, THE DETAILS OF WHICH HAS BEEN GIVEN AT PARAGRAPH 2 OF THE IMPUGNED ORDER. THE ADDITION HAS BEEN MADE ON THE GROUND THAT, FIRSTLY , MOST OF THE SUNDRY CREDITORS HAVE NOT I.T.A. NO.1792/DEL/2018 11 RESPONDED TO THE NOTICES SENT U/S. 133(6); AND SECONDLY , INCOME TAX INSPECTOR DEPUTED FOR INQUIRY FOUND THAT SOME OF THE SUNDRY CREDITORS DID NOT EXIST AT THE GIVEN ADDRESSES. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE IN THE FIRST ROUND OF PROCEEDINGS ITSELF HAS SUBMITTED COPY OF CONFIRMATION FROM THE SUNDRY CREDITORS TO THE ASSESSING OFFICER AND THIS CONFIRMATION LETTER WERE SUBMITTED DIRECTLY BY THEM THROUGH SPEED POST SOMETIME IN MAY 2011, WHEREIN THEY HAVE CONFIRMED THE ACCOUNT OF THE PAYMENT RECEIVED FROM THE ASSESSEE AND THE COPIES OF THE SAME HAVE BEEN SUBMITTED TO THE ASSESSING OFFICER AS WELL AS BEFORE THE LD. CIT (A). ACCOUNT STATEMENT OF ALL THE SUNDRY CREDITORS HAVE BEEN PLACED IN THE PAPER BOOK FROM PAGES 31 TO 41, WHICH SHOWS THAT PAYMENTS HAVE BEEN MADE THROUGH CHEQUE/CASH ALONG WITH BILL DETAILS RIGHT FROM THE FINANCIAL YEARS 1998 TO 2010 AND ALONG WITH THAT, THE ASSESSEE HAS ALSO FILED COPIES OF BILLS FROM THESE PARTIES. THE PAYMENTS TO THE SUNDRY CREDITORS HAVE ALSO BEEN MADE BY THE ASSESSEE IN THE SUBSEQUENT YEARS WHICH DETAIL HAS ALSO BEEN PLACED BEFORE THE AUTHORITIES BELOW. ONCE ASSESSEE HAS FILED THE BILLS ALONG WITH DETAILS OF AMOUNT, CHEQUE NUMBER, BANK ACCOUNT, DETAILS OF ALL THE SUNDRY CREDITORS ALONG WITH CONFIRMATION AND ALSO THE AMOUNT WHICH HAS BEEN PAID BACK TO THEM, THEN SIMPLY BECAUSE SUNDRY CREDITORS AFTER A GAP OF MORE THAN A DECADE COULD NOT RESPOND, THEN IT CANNOT HELD THAT SUNDRY CREDITORS ARE BOGUS OR ARE NOT GENUINE. WE DO NOT FIND ANY MERIT IN SUSTAINING SUCH AN ADDITION. ACCORDINGLY, SAME IS DIRECTED TO BE DELETED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. I.T.A. NO.1792/DEL/2018 12 ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH DECEMBER, 2018. SD/- [AMIT SHUKLA] JUDICIAL MEMBER DATED: 11 TH DECEMBER, 2018 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR ASSISTANT REGISTRAR DATE 1. DRAFT DICTATED ON (DIRECT ON COMPUTER) .12.2018 2. DRAFT PLACED BEFORE AUTHOR .12.2018 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 5. APPROVED DRAFT COMES TO THE SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON 7. FILE COMES BACK TO PS/SR. PS 8. UPLOADED ON 9. FILE SENT TO THE BENCH CLERK 10. DATE ON WHICH FILE GOES TO THE AR 11. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 12. DATE OF DISPATCH OF ORDER.