ACIT, New Delhi V. M/s. Viceroy Car Rentals Pvt. Ltd., Gurgaon

ITA 2256/DEL/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 91319 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 23-06-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 11-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: TARUN SEEM
• Assessee Lawyers: SURESH RAM CHANDANI
• Keywords: Unexplained cash credit
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : H : NEW DELHI BEFORE SHRI I.C. SUDHIR, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ITA NO . 2256/DEL/20 12 ASSESSMENT YEAR: 2008 - 09 ASSTT. COMMISSIONER OF VS. M/S VICEROY CAR RENTALS PVT. LTD., INCOME TAX, CIRCLE - 17(1), PLOT NO. 64 & 65, 1 ST FLOOR, UDYOG NEW DELHI VIHAR, GURGAON, HARYANA. (PAN: AACCV4934D ) (APPELLANT) (RESPONDENT) APPELLANT BY : SH. TARUN SEEM, SR. DR RESPONDENT BY: SH. SURESH RAMCHANDANI, ADV. DATE OF HEARING: 23.06.2015 DATE OF PRONOUNCEMENT: 17.07.2015 ORDER PER INTURI RAMA RAO, A.M. : THIS IS AN APPEAL FILED BY THE REVENUE FOR THE ASSESSMENT YEAR 2008 - 09 AGAINST THE ORDER OF CIT(A), DATED 27.03.2012, RAISING THE FOLLOWING GROUNDS OF APPEAL: I. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) HAS ERRED IN DELE TING AN ADDITION OF RS. 36,86,713/ - MADE ON ACCOUNT OF UNEXPLAINED CREDITORS. II. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) HAS ERRED IN DELETING AN ADDITION OF RS. 21,79,230/ - MADE ON ACCOUNT OF INCREASE IN CREDITORS WHIC H WAS NOT SATISFACTORILY EXPLAINED. III. THE APPELLANT CRAVES FOR RESERVING THE RIGHT TO AMEND, MODIFY, ALTER ADD OR FOREGO ANY GROUND(S) OF APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF APPEAL. 2 2. THE BRIEF FACTS OF THE CASE ARE THAT THE RESPONDENT ASSE SSEE COMPANY IS A COMPANY INCORPORATED UNDER THE PROVISIONS OF COMPANIES ACT, 1956. IT IS ENGAGED IN THE BUSINESS OF RUNNING CAR RENTAL SERVICES. THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008 - 09 WAS FILED ON 15.10.2008 DECLARING AN INCOME OF RS. 6,20,0 90/ - . THIS RETURN WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME - TAX ACT, 1961 (FOR SHORT THE ACT ) AND THE CASE WAS TAKEN UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(2) OF THE ACT VIDE ORDER DATED 16.12.2010 BY MAKING ADDITION OF SUNDRY CREDITORS OF RS. 36,86,713/ - BY HOLDING IT FICTITIOUS AS THE NOTICES ISSUED UNDER SECTION 133(6) OF THE ACT RETURNED UNSERVED AND ALSO MADE A DISALLOWANCE OF RS. 23,93,355/ - FOR OUTSTANDING SUNDRY CREDITORS BY HOLDING THAT THE APPELLANT COULD NOT FURNISH THE DETAILS OF PAYMENTS MADE TO THEM AND FAILED TO ESTABLISH GENUINENESS OF THESE SUNDRY CREDITORS. BEING AGGRIEVED BY THIS ORDER, AN APPEAL WAS PREFERRED BEFORE THE CIT(A). ON APPEAL BEFORE THE CIT(A), AFTER CALLING FOR REMAND REPORT FR OM THE ASSESSING OFFICER, THE CIT(A) HAD DELETED THE ADDITION OF RS. 36,86,713/ - VIDE PARA 8 (PAGES 5 & 6) OF THE ORDER, WHICH READS AS UNDER: I HAVE GONE THROUGH THE ASSESSMENT ORDER AND THE DETAILED WRITTEN SUBMISSIONS FILED BY THE AR IN THIS REGARD. THIS IS THE FIRST YEAR OF THE BUSINESS OF THE ASSESSEE. THE BUSINESS CONSISTS OF HIRING OUT THE VEHICLES OWNED BY THE COMPANY AND PROCURING THE VEHICLES FROM OUTSIDE ON HIRE. DURING THE RELEVANT PREVIOUS YEAR IT OWNED ONLY ABOUT A DOZEN OF VEHICLES WHICH MAINLY COMPRISES OF TATA INDIGO. AS AGAINST THIS MEAGER NO OF VEHICLES THE ASSESSEE HAD MADE A TURNOVER OF RS. 1.65 CRORES IN ONLY 9 TO 10 MONTHS OF OPERATION SINCE COMMENCEMEN T. THE ASSESSEE HAD TO HIRE VEHICLES FROM THE OUTSIDE AS IS THE CUSTOMARY PRACTICE IN THE TRADE. THE VEHICLES ARE HIRED FROM THE 3 VARIOUS STRATA OF OPERATORS RANGING FROM VERY PETTY TO MIDDLE AND HIGH CLASS. SOMETIMES THERE IS IMMEDIATE REQUISITION BY A CLI ENT AND IN ABSENCE OF AVAILABILITY OF VEHICLES WITH THE APPELLANT, IT HAD TO GET HOLD OF EVEN A PETTY DRIVER HAVING A SINGLE OR TWO CABS. THEY DO NOT HAVE THE REQUISITE IDENTITY PROOF OR A BANK ACCOUNT OR A PAN. HOWEVER IN MOST OF THE CASES THE PAYMENTS AR E EITHER THROUGH CHEQUES OR THROUGH DIRECT TRANSFER TO THE BANK ACCOUNTS OF SUCH OPERATORS. THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS REQUIRED THE ASSESSEE TO FURNISH THE DETAILS OF THE DATE AS TO WHEN THE PAYMENTS HAVE BEEN MADE TO ALL OF THE SUN DRY CREDITORS. THE FOLLOWING ARE THE DOCUMENTS FURNISHED TO SUPPORT THE CLAIM OF THE EXPENDITURE: S. NO. NAME OF THE PARTIES AMOUNT DISALOWED DOCUMENTS TO BE CONSIDERED NOT SUBMITTED TO AO 1. MANOR KUMAR 6,69,655.00 A) COPY OF LEDGER ACCOUNT OF MANOJ KUMAR FROM 01.04.2007 TO 31.03.2008. B) COPY OF BANK STATEMENT OF VICEROY CAR RENTALS PVT. LTD. DEPICTING PAYMENTS MADE TO PARTY. 2. BRAHAM PARKASH YADAV 10,06,151.00 A) COPY OF LEDGER ACCOUNT OF BRAHAM PRAKASH YADAV FROM 01.04.2007 TO 31.03.2008. B) COPY OF BANK STATEMENT OF VICEROY CAR RENTALS PVT. LTD. DEPICTING PAYMENTS MADE TO PARTY. 3. YADAV TAXI STAND 14,15,098.00 A) COPY OF LEDGER ACCOUNT OF YADAV TAXI STAND FROM 01.04.2007 TO 31.03.2008. B) COPY OF BANK STATEMENT OF VICEROY CAR RENTALS PVT. LTD. DEPICTING PAYMENTS MADE TO PARTY. 4. KAILASH (REJUVENATE HOLIDAYS AND TOURS) 5,95,809.00 A) COPY OF LEDGER ACCOUNT OF KAILASH (REJUVENATE HOLIDAYS AND TOURS) AT VICEROY CAR RENTALS PVT. LTD. FRO M 01.04.2007 TO 31.03.2008. B) COPY OF BANK STATEMENT OF VICEROY CAR RENTALS PVT. LTD. DEPICTING PAYMENTS MADE TO PARTY TOTAL 36,86,713/ - THE MAIN CONTENTION OF THE AO IS THAT GENUINENESS OF THE HIRE CHARGES/ EXPENDITURE IS/ARE NOT PROVED SINCE NOTICES ISSUED REMAINED UNSERVED IN CERTAIN CASES. THE AR HAS EXPLAINED THAT THE PAYMENT IS MADE THROUGH CHEQUES. I HAVE GONE THROUGH THE LEDGER ACCO UNTS AND THE BANK ACCOUNT THROUGH WHICH THE PAYMENTS WERE MADE. IT IS VERY DIFFICULT TO ACHIEVE A TURNOVER OF RS.1.65 CRORES 4 WITHOUT HIRING THE VEHICLES FROM OUTSIDE IN VIEW OF A FEW NUMBER OF VEHICLES OWNED BY THE APPELLANT COMPANY. AFTER CAREFUL CONSIDER ATION OF THE FACTS OF THE CASE, THE HIRE CHARGES PAID CANNOT BE DISBELIEVED. RELIEF: RS.36,86,713/ - ACCORD INGLY, GROUND NO. 1 IS ALLOWED. 3. SIMILARLY IN RESPECT OF ADDITION OF OUTSTANDING SUNDRY CREDITORS OF RS. 21,79,230/ - , AFTER CONSIDERING THE SUB MISSIONS AND THE EVIDENCE FILED BEFORE HIM, THE CIT(A) DELETED THE ADDITION VIDE PARA 12 (PAGES 9&10) OF THE ORDER WHICH ARE REPRODUCED AS UNDER: 12 . I HAVE GONE THROUGH THE ASSESSMENT ORDER AND THE DETAILED WRITTEN SUBMISSIONS FILED BY THE AR IN THIS REG ARD. THE ASSESSEE HAD SHOWN OUTSTANDING CREDITORS FOR RS.23,93,355/ - IN RESPECT OF HIRE CHARGES AS ON 31.03.2008. THE AO DISBELIEVED THE LIABILITIES TO THE EXTENT OF RS.21,79,230/ - . THE AR IN THESE HAS EXPLAINED THAT THERE IS DOUBLE ADDITION TO THE EXTEN T OF RS.7,29,397/ - SINCE IN CERTAIN CASES THE ENTIRE HIRE CHARGES INCLUDING THE OUTSTANDING BALANCE WERE ALREADY DISALLOWED AS MENTIONED IN THE GROUND NO . 1. THE OTHER CONTENTION OF THE AR IS THAT THE PAYMENTS ARE MADE SOMETIME BY WAY OF CASH AND CERTAIN P AYMENTS ARE MADE THROUGH BANK ACCOUNT. I HAVE GONE THROUGH THE EVIDENCE BROUGHT ON RECORD TO SUPPORT THE OUTSTANDING LIABILITIES. IT IS FURTHER SEEN TH AT THESE OUTSTANDING BALANCES WERE PAID IN THE SUBSEQUENT YEARS WHICH IS NOT DISBELIEVED BY THE AO. AFTER CAREFUL CONSIDERATION OF THE FACTS AND THE SUBMISSIONS OF THE AR AND IN THE LIGHT OF THE FINDINGS ABOUT NATURE OF BUSINESS AS MENTIONED WHILE DEALING WITH GROUND NO. 1, THERE IS NO CASE FOR THE ADDITION OF RS.21,79,230/ - . RELIEF: RS.21,79,230/ - ACCORD IN GLY, GROUND NO. 2 IS ALLOWED . 4. WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF THE LD. CIT(A) SINCE THE ORDER IS BASED ON THE FACTS AND EVIDENCE PRODUCED BEFORE HIM. THE SR. DR DID NOT CONTROVERT THE FINDINGS RECORDED BY THE CIT( A). THEREFORE, THE GROUNDS OF APPEAL FILED BY THE REVENUE ARE DISMISSED. ACCORDINGLY, THE APPEAL FILED BY THE REVENUE IS DISMISSED. 5 5. IN THE RESULT, THE APPEAL IS DISMISSED. THE DECISION IS PRONOUNCED IN THE OPEN COURT ON 1 7 T H JULY , 2015. S D / - S D / - ( I.C. SUDHIR ) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 7 T H JULY , 2015. RK/ - COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI