ACIT Circle-20 (1), V. T.S. Overseas,

ITA 2286/DEL/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3838 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 11 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-05-2010
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 26-05-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 12-06-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MONA MOHANTY
• Assessee Lawyers: S K AGGARWAL
• Keywords: Additional evidence; TDS
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H : NEW DELHI BEFORE SHRI C.L. SETHI, JM AND SHRI R.C.SHARMA, AM ITA NO. 2286/DEL/2008 ASSESSMENT YEAR : 2003-04 ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 20(1), ROOM NO. 308F, VIKAS BHAVAN, NEW DELHI VS. M/S T.S. OVERSEAS, 61, VEER NAGAR, DELHI (PAN: AAAFT 3527D) (APPELLANT) (RESPONDENT) APPELLANT BY : MS. MONA MOHANTY, SR. DR RESPONDENT BY : SHRI S.K. AGGARWAL, CA. ORDER PER R.C.SHARMA, AM : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) DATED 06.02.2008 FOR THE AY 2003-04, IN THE MATTER OF ORD ER PASSED BY THE AO U/S 143(3) OF THE IT ACT, WHEREIN THE FOLLOWING TWO GRO UNDS HAVE BEEN TAKEN BY THE REVENUE. 1. THE CIT(A) ERRED IN LAW AND ON FACTS IN DELETIN G THE ADDITION OF RS. 57,10,487/- MADE BY THE ASSESSING OFFICER ON ACCOUN T OF EXPENDITURE INCURRED ON DESIGN AND SAMPLE, FABRICAT ION AND FINISHING. 2. THE LD. CIT(A) ERRED IN LAW IN ADMITTING AND ENT ERTAINING THE ADDITIONAL EVIDENCE IN CONTRAVENTION OF RULE 46A. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PER USED. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS ENGAGED IN MANUFACTURING A ND EXPORT OF READYMADE GARMENTS. DURING THE COURSE OF SCRUTINY ASSESSMEN T THE AO FOUND THAT THE ASSESSEE CLAIMED FABRICATION EXPENSES OF RS. 65.81 LACS EMBROIDERY EXPENSES OF RS. 41.98 LACS AND SAMPLE CHARGE OF RS. 6.41 LACS. IN ORDER TO VERIFY THE GENUINENESS OF THE EXPENSES CLAIMED, SUMMONS U/S 13 1, DATED 7.02.2006 WAS ISSUED BY THE AO ON THE ADDRESSES PROVIDED BY THE ASSESSEE. THESE PARTIES WERE MENTIONED BY THE AO AT PAGE NO. 2,3 & 4 OF HIS ORD ER. THE AO OBSERVED THAT IN 2 RESPONSE TO THE NOTICES SENT TO THE PARTIES MENTION ED AT PAGE NO. 4, NOTICES CAME BACK UNSERVED WITH THE REMARKS AS NO PERSON FOUND . THE AO GIVEN AN OPPORTUNITY TO THE ASSESSEE TO PROVIDE NEW ADDRESSE S, CONFIRMATION OR TO PRODUCE THE PARTIES FOR VERIFICATION. IN RESPECT OF SOME OF THE PARTIES THE ASSESSEE HAS FILED CONFIRMATION, WHEREIN THE AO FOUND THAT PERMANENT A CCOUNT NUMBER WAS IN RESPECT OF INDIVIDUAL PARTIES WHEREAS SUPPLIERS WER E FIRM, ACCORDINGLY HE DECLINED THE CLAIM OF EXPENSE OF RS. 46,60,963/- IN RESPECT OF PAYMENT MADE TO M/S ANUJ GARMENTS AND M/S SHABNAM GARMENTS. THE AO FURTHER O BSERVED THAT APART FROM THESE, NEITHER ANY CONFIRMATION IN REGARD TO FOLLO WINGS WERE PROVIDED NOR THEY WERE PRODUCED FOR VERIFICATION: S.NO. NAME OF THE PARTIES AMOUNT INVOLVED (RS.) 1. K.K. ENTERPRISES 49,901 2. NISHA CREATION 1,11,946 3. SAKSHI ENTERPRISES 2,82,725 4. RASS CHEMICALS 78,887 5. BASHIR AHMAD 1,06,871 6. UNIQUE ART 1,29,717 7. AMBEY DYING 94,211 8. UMA DESIGN 1,95,266 TOTAL 10,49,524 3. CONTENTION OF THE ASSESSEE WAS THAT ALL THE PART IES ARE GENUINE AND ARE NOT TRACEABLE DUE TO ONE REASON OR THE OTHER, HENCE PAY MENTS MADE TO THESE PARTIES SHOULD NOT BE DISALLOWED. HOWEVER, THE AO DID NO T AGREE WITH THE ASSESSEES SUBMISSION AND DISALLOWED THE EXPENSES OF RS. 67.10 LACS. 4. IN AN APPEAL FILED BEFORE THE CIT(A), THE CIT(A) FOUND THAT ASSESSEE HAS FURNISHED CONFIRMATION WITH REGARD TO PURCHASES MAD E FROM M/S ANUJ GARMENTS AND M/S SHABNAM GARMENTS AND THE CIT(A) FOUND THAT PERMANENT ACCOUNT NUMBER WAS ALLOTTED IN THE NAME OF THE INDIVIDUALS WHO ARE PROPRIETOR OF THESE CONCERNS, THEREFORE, AO HAS WRONGLY OBSERVED THAT W RONG PAN WAS FURNISHED BY THE SUPPLIERS. ACCORDINGLY, HE DELETED THE ADDITIO N WITH REGARD TO PURCHASES MADE FROM THESE TWO PARTIES. WITH REGARD TO OTHER PAYM ENTS THE CIT(A) OBSERVED THAT 3 MOST OF THE PAYMENTS WERE MADE TO THE PARTIES BY AC COUNT PAYEE CHEQUE AND ONLY A VERY MEAGER AMOUNT WAS PAID IN CASH, THEREFORE, G ENUINENESS OF THE PURCHASES WAS DULY ESTABLISHED. 5. AGGRIEVED BY THIS ORDER OF THE CIT(A), REVENUE I S IN FURTHER APPEAL BEFORE US AND ALSO TAKEN A GROUND WITH REGARD TO ADMITTING ADDITIONAL EVIDENCE IN CONTRAVENTION OF RULE 46A. 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND CAR EFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND FORM THE RECORD THAT DISALLOWANCE OF PURCHASES WAS MADE BY THE AO, AS MOST OF THE PARTIE S WERE NOT TRACEABLE AND THE SUMMONS ISSUED TO THEM WERE RETURNED BACK UNSERVED WITH THE REMARKS THAT NO PERSON FOUND. HOWEVER, BEFORE THE CIT(A), THE ASSE SSEE HAS FURNISHED CONFIRMATION OF SOME OF THE PARTIES ON THE PLEA THA T ASSESSEE HAS BEEN ABLE TO TRACE OUT FOUR PARTIES. THE CIT(A) ALSO OBSERVED IN HIS ORDER THAT ASSESSEE HAS FURNISHED A STATEMENT AND OTHER PROOFS WITH REGARD TO SUPPLIE S MADE BY THESE PARTIES AND THE FACT THAT TDS HAS BEEN DEDUCTED FROM THE BILLS WHER EVER APPLICABLE, RAISED BY THESE PARTIES. THE PHOTOCOPIES OF FORM NO. 16-A ISSUED TO THE PARTIES AND COPIES OF FORM NO. 26-C WERE ALSO PLACED BEFORE THE CIT(A) . IT IS UNDISPUTED FACT THAT THESE DOCUMENTS WERE NOT PLACED BEFORE THE AO, NOR THE CIT(A) HAS CALLED FOR ANY REMAND REPORT FROM THE AO BY SENDING THESE DOCUMENT S TO HIM. THUS IT AMOUNTS TO VIOLATION OF RULE 46A, EVEN NO FINDING HAS BEEN GIVEN BY THE CIT(A) WITH REGARD TO VERIFICATION OF THESE DOCUMENTS TO FIND O UT GENUINENESS OF THE PURCHASES. WITH REGARD TO THE PURCHASES MADE FROM M/S ANUJ GAR MENTS AND M/S SHABNAM GARMENTS, WE ARE INCLINED TO AGREED WITH THE OBSERV ATION OF THE CIT(A) TO THE EFFECT THAT SINCE THESE FIRMS ARE PROPRIETOR CONCER NS OF SHRI KISHAN LAL SINGH AND MOHD. SHAKUR, THEREFORE, PAN WERE TO BE ALLOTTED IN THEIR PERSONAL NAME, IN THEIR INDIVIDUAL CAPACITIES AND WHICH WOULD NOT CORROBORA TE WITH THE FIRMS NAME. BUT AT THE SAME TIME, NOT ONLY PAN IS TO BE SEEN, BUT THE GENUINENESS OF TRANSACTION OF PURCHASES AS A WHOLE IS REQUIRED TO BE VERIFIED FOR ALLOWING THE ASSESSEES CLAIM IN RESPECT OF THESE TWO PARTIES. HOWEVER, COPIES OF IN COME TAX RETURNS AND OTHER DETAILS OF THESE PERSONS WERE ALSO FURNISHED BEFORE THE CIT(A), WHICH WERE NOT 4 FILED BEFORE THE AO, NOR THE CIT(A) HAS SENT THE DO CUMENTS FILED BEFORE HIM FOR AOS COMMENTS BEFORE DELETING THE DISALLOWANCE. IN THE INTEREST OF JUSTICE AND FAIR PLAY, THE MATTER IS RESTORED BACK TO THE FILE OF THE AO FOR DECIDING THE ISSUE AFRESH, AFTER GIVING DUE OPPORTUNITY TO THE ASSESSE E. THE ASSESSEE IS ALSO DIRECTED TO FILE ALL THE DOCUMENTS BEFORE THE AO TO SUBSTANT IATE THE GENUINENESS OF EXPENDITURE INCURRED. WE DIRECT ACCORDINGLY. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLO WED FOR STATISTICAL PURPOSES. DECISION PRONOUNCED IN THE OPEN COURT ON 26 TH MAY, 2010. SD/- SD/- (C.L. SETHI) (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 26.05.2010. SRB COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT DEPUTY REGISTRAR 5