M/s. Avishkar Engineers, New Delhi V. DCIT, New Delhi

ITA 2323/DEL/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3481 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 10 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 14-06-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 16-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHIMA NEB SENIOR
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH A : NEW DELHI) BEFORE SHRI B.P. JAIN, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.2323/DEL./2014 (ASSESSMENT YEAR : 2009-10) M/S. AVISHKAR ENGINEERS, VS. DCIT, CIRCLE 19 (1), BG 7, EAST SHALIMAR BAGH, NEW DELHI. NEW DELHI 110 088. (PAN : AAGFA7391E) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K. SAMPATH, ADVOCATE REVENUE BY : SMT. ASHIMA NEB, SENIOR DR DATE OF HEARING : 12.02.2018 DATE OF ORDER : 22.02.2018 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : THE APPELLANT, M/S. AVISHAKAR ENGINEERS (HEREINAFTE R REFERRED TO AS THE ASSESSEE COMPANY) BY FILING TH E PRESENT APPEAL, SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 29.01. 2014 PASSED BY LD. CIT(APPEALS)-XXII, NEW DELHI QUA THE ASSESSMENT YEAR 2009- 10 ON THE GROUNDS INTER ALIA THAT :- 1) THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN MAKING ADDITION OF RS.18,78, 417.00 TO THE RETURNED INCOME IN RESPECT OF PARTIES WHOSE CREDIT BALANCES COULD NOT BE CONFIRMED. ITA NO.2323/DEL./2014 2 2) THAT THE ADDITION OF THE CREDIT BALANCE OF PARTI ES FOR RS.18,78,417.00 BY THE LEARNED COMMISSIONER OF INCO ME TAX (APPEALS) IS BASED CONSUMPTIONS AND SURMISES AN D IGNORING THE APPELLANT'S SUBMISSIONS IN THIS REGARD . 3) THAT IT IS HUMBLY PRAYED TO DELETE THE ADDITIONS OF RS.18,78,417.00 IN RESPECT OF UNCONFIRMED CREDIT BA LANCES OF PARTIES AS MADE BY THE LEARNED COMMISSIONER OF I NCOME TAX (APPEALS). 4) THAT, EVEN OTHERWISE TOO, THE ORDER OF THE LEARN ED COMMISSIONER OF INCOME TAX (APPEALS) MAKING ADDITIO NS OF RS.18.78.417.00 IS BAD IN LAW AND FACTS OF THE CASE . 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICA TION OF THE CONTROVERSY AT HAND ARE : ASSESSEE COMPANY IS INTO THE BUSINESS OF MANUFACTURING OF LPG GAS STOVES THROUGH ASSEMBLING OF PARTS LIKE LPG GAS STOVE BODY, RUBBER TUBING, STOVE AND KNOBS ETC. DURING THE YEAR UNDER ASSESSMENT, THE ASSESSEE COMPANY CLA IMED DEDUCTION U/S 80-IC OF THE INCOME-TAX ACT, 1961 (FO R SHORT THE ACT) TO THE TUNE OF RS.37,69,999/-. DECLINING THE CONTENTIONS RAISED BY THE ASSESSEE COMPANY, ASSESSING OFFICER D ISALLOWED THE DEDUCTION OF RS.37,69,999/- CLAIMED U/S 80-IC OF TH E ACT ON THE GROUND THAT THE ASSESSEE COMPANY IS NOT ENGAGED IN ANY MANUFACTURING ACTIVITIES RATHER ASSESSEE COMPANY IS ASSEMBLING VARIOUS ITEMS VIZ. LPG GAS STOVE BODY, PAN SUPPORTS , BURNER, PIPE ETC. AND THE ASSESSEE COMPANY HAS ALSO ADMITTED TO HAVE NOT MANUFACTURED ANY OF THE ITEMS USED FOR MANUFACTURIN G OF LPG GAS STOVE. ASSESSEE COMPANY HAS ALSO FAILED TO PROVE T HE PURCHASES OF ITA NO.2323/DEL./2014 3 RAW MATERIAL FROM DIFFERENT PARTIES AS THE PARTIES FROM WHOM THE RAW MATERIAL WAS PURCHASED HAS NOT CONFIRMED THE SA ME U/S 133 (6) OF THE ACT. CONSEQUENTLY, AO ASSESSED THE TOTAL IN COME AT RS.38,35,760/-. 3. ASSESSEE CARRIED THE MATTER BY WAY OF FILING APP EAL BEFORE THE LD. CIT (A) WHO HAS RESTRICTED THE ADDITION TO RS.18,78,417/- BY DELETING THE BALANCE ADDITION OF RS.18,91,582/- BY PARTLY ALLOWING THE APPEAL. FEELING AGGRIEVED, THE ASSESSEE HAS CO ME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT APPEAL. 4. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. FROM THE FACTS AND CIRCUMSTANCES OF THE CASE, OR DER PASSED BY THE REVENUE AUTHORITIES BELOW AND THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE COMPANY, THE SOLE QUESTION ARISES F OR DETERMINATION IN THIS CASE IS :- AS TO WHETHER CIT (A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.18,78,417/- MADE BY THE AO BY DRAWIN G ADVERSE INFERENCE THAT THE ASSESSEE COMPANY HAS FAI LED TO PROVE ON RECORD THE CONFIRMATION MADE BY THE SUN DRY CREDITORS REGARDING PURCHASES PARTICULARLY WHEN TRA DING RESULTS HAVE NOT BEEN DISTURBED? ITA NO.2323/DEL./2014 4 6. UNDISPUTEDLY, EXCISE DEPARTMENT HAS INDEPENDENTL Y CONFIRMED THE GOODS HAVING BEEN SOLD AND DELIVERED BY 14 SUPPLIERS DISPUTED BY THE AO. IT IS ALSO NOT IN DI SPUTE THAT SUPPORTING BILLS AND BOOKS OF ACCOUNTS TO PROVE THE SAID PURCHASES WERE PRODUCED BEFORE THE AO WHO HAS PERUSED THE SAM E ON TEST CHECK BASIS. IT IS ALSO NOT IN DISPUTE THAT THE AO HAS NOT REJECTED THE PURCHASES ON GROUND THAT THE GOODS HAVE NOT BEE N RECEIVED BY THE ASSESSEE COMPANY. 7. THE AO HAS PRIMARILY REJECTED THE CONTENTION RAI SED BY THE ASSESSEE COMPANY ON THE GROUND THAT U/S 133 (6) OF THE ACT, CONFIRMATION WAS NOT RECEIVED AND AS SUCH, THE ASSE SSEE COMPANY HAS FAILED TO PROVE THE GENUINENESS OF THE SUNDRY C REDITORS. 8. WHEN TRADING RESULTS HAVE BEEN ACCEPTED BY THE A O AS WELL AS LD. CIT (A), IT IS DIFFICULT TO ACCEPT AS TO HOW THEY HAVE DISPUTED THE INCOME EARNED BY THE ASSESSEE COMPANY. 9. DURING REMAND REPORT, THE ASSESSEE COMPANY RELIE D UPON NUMEROUS DOCUMENTS QUA WHICH THE LD. CIT (A) HAS CA LLED FOR A REMAND REPORT. AFTER RECEIPT OF THE REMAND REPORT, THE LD. CIT (A) DELETED THE ADDITION OF RS.18,91,582/- OUT OF ADDIT ION OF RS.37,69,999/- MADE BY THE AO. CIT (A) CONFIRMED T HE REMAINING ADDITION OF RS.18,78,417/- ONLY QUA TWO PARTIES, NA MELY, PRAKASH TRADING COMPANY FROM WHICH CREDIT OF RS.18,67,037/- HAS BEEN ITA NO.2323/DEL./2014 5 CLAIMED AND M/S. GURU NANAK FABRICATORS FROM WHOM C REDIT OF RS.11,380/- HAS BEEN CLAIMED ON ACCOUNT OF FAILURE OF THE ASSESSEE COMPANY TO FILE CONFIRMATION BY THE AFORESAID PARTI ES. THE REASONS FOR NOT FILING THE CONFIRMATION FROM AFORESAID PART IES AS EXPLAINED BY THE ASSESSEE COMPANY ARE THAT BOTH THE PARTIES H AVE CLOSED THEIR BUSINESS/SHIFTED TO SOME NEW ADDRESS WHICH IS NOT K NOWN TO THE ASSESSEE COMPANY. 10. DURING THE ASSESSMENT PROCEEDINGS, THE AO HAS D ISPUTED THE PURCHASE OF RAW MATERIAL FROM AFORESAID PARTIES. H OWEVER, THE ASSESSEE COMPANY HAVE FILED PURCHASE BILLS PERTAINI NG TO THE AFORESAID TWO PARTIES ALONG WITH GR NOTE OF GOODS D ISPATCHED TO PARWANOO AND ALL THE GOODS PURCHASED AND TRANSFERRE D TO PARWANOO FOR MANUFACTURE WERE DULY CHECKED BY THE EXCISE DEP ARTMENT AT THE HIMACHAL PRADESH BORDER WHO HAVE PASSED THE PUR CHASE BILL AND GR NOTES AFTER BEING DULY SATISFIED AT PARWANOO . ALL THE INVOICES APPROVED BY EXCISE DEPARTMENT WERE ALREADY BEFORE THE AO. FROM THE ACCOUNTS OF THE PURCHASES OF RAW MATE RIAL, IT CAN BE NOTICED THAT THE ASSESSEE HAD ISSUED C-FORMS TO THE PARTIES WHICH PROVED THE SALE AND PURCHASE OF THE RAW MATERIAL. ASSESSEE COMPANY HAS ALSO BROUGHT ON RECORD COPIES OF THE BA NK ACCOUNTS MAINTAINED WITH HDFC BANK THROUGH WHICH ENTIRE PAYM ENT OF RAW ITA NO.2323/DEL./2014 6 MATERIAL HAS BEEN CHANNELIZED. MOREOVER ALL THESE FACTS HAVE BEEN BROUGHT ON RECORD DURING THE ASSESSMENT PROCEEDINGS . 11. THE LD. AR FOR THE ASSESSEE COMPANY RELIED UPON THE DECISION RENDERED BY THE THIRD MEMBER OF THE COORDI NATE BENCH OF THE TRIBUNAL IN ITO VS. ZAZSONS EXPORTS LTD. (2015) 153 ITD 1 (LUCKNOW-TRIB.) AND CONTENDED THAT MERELY ON THE GROUND THAT SUNDRY CREDITORS HAVE NOT BEEN VERIFIED THEY CANNOT BE TREATED AS BOGUS WHEN THERE IS NO DISPUTE WITH REGARD TO THE P URCHASES AND TRADING RESULTS HAVE BEEN ACCEPTED. OPERATIVE PART OF THE DECISION RENDERED BY THE COORDINATE BENCH OF THE TRIBUNAL IS REPRODUCED AS UNDER :- SECTION 68OF THE INCOME-TAX ACT, 1961 - CASH CREDI TS (SUNDRY CREDITORS) - ASSESSMENT YEAR 2005-06 - ASSE SSEE COMPANY WAS CARRYING ON BUSINESS OF EXPORT OF FINIS HED LEATHER AND MANUFACTURE OF SHOE UPPERS AND SHOES - WHILE FRAMING ASSESSMENT, ASSESSING OFFICER REQUIRED ASSE SSEE TO FURNISH COMPLETE LIST OF PERSONS FROM WHOM RAW HIDE S OF GOATS WERE PURCHASED AND FROM WHOM ADVANCE IN SHAPE OF CREDIT HAD BEEN TAKEN BY ASSESSEE AND TO WHOM HUGE AMOUNTS WERE PAYABLE - NOT BEING SATISFIED WITH REP LY GIVEN BY ASSESSEE, ASSESSING OFFICER MADE ADDITION UNDER SECTION 68 ON GROUND THAT ASSESSEE FAILED TO GIVE POSTAL AD DRESS, WHEREABOUTS, CREDITWORTHINESS OF VENDORS AND ALSO C OULD NOT PROVE GENUINENESS OF TRANSACTION - WHETHER MERE NON - VERIFIABILITY OF SUNDRY CREDITORS IPSO FACTO WOULD NOT LEAD TO CONCLUSION THAT SUNDRY CREDITORS WERE BOGUS HELD, YES - WHETHER SINCE ASSESSING OFFICER HAD DRAWN AN ADVERS E CONCLUSION ONLY ON ACCOUNT OF NON-VERIFIABILITY OF SUNDRY CREDITORS BUT THERE BEING NO DISPUTE AS REGARDS PUR CHASES AND TRADING RESULTS HAVING BEEN ACCEPTED, ADDITION MADE UNDER SECTION 68 WAS NOT SUSTAINABLE HELD, YES [P ARAS 15.2 & 15.3] [IN FAVOUR OF ASSESSEE] ITA NO.2323/DEL./2014 7 12. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE AND TH E AFORESAID DECISION RENDERED BY THE COORDINATE BENCH OF THE TR IBUNAL, WE ARE OF THE CONSIDERED VIEW THAT WHEN ALL THE PURCHASES FROM AFORESAID TWO PARTIES HAVE BEEN MADE THROUGH BILLS AND GR NOT ES OF THE GOODS DISPATCHED TO PARWANOO HAVE BEEN DULY VERIFIE D BY THE EXCISE DEPARTMENT AT THE HIMACHAL PRADESH BORDER AN D TRADING RESULTS HAVE NOT BEEN DISPUTED BY THE ASSESSEE AND THE ENTIRE PAYMENTS HAVE BEEN MADE THROUGH BANKING CHANNEL, IT IS DIFFICULT TO ACCEPT THE ORDER PASSED BY THE LD. CIT (A) SO AS TO CONFIRM THE ADDITION OF RS.18,78,417/-. SO, THE ANSWER TO THE AFORESAID QUESTION FRAMED IS ANSWERED IN THE AFFIRMATIVE. 13. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, WE AR E OF THE CONSIDERED VIEW THAT LD. CIT (A) HAS ERRED IN SUSTA INING THE ADDITION OF RS.18,78,417/- CLAIMED AS DEDUCTION/S 8 0-IC OF THE ACT BY THE ASSESSEE COMPANY, HENCE THE SAME IS ORDERED TO BE DELETED. CONSEQUENTLY, THE APPEAL FILED BY THE ASSESSEE COMP ANY IS HEREBY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 22 ND DAY OF FEBRUARY, 2018. SD/- SD/- (B.P. JAIN) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 22 ND DAY OF FEBRUARY, 2018 TS ITA NO.2323/DEL./2014 8 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-XXII, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.