Shri Manoj Kumar, Gurgaon V. ITO, Gurgaon

ITA 2350/DEL/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2914 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 10 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC 1
• Next Hearing Date: 04-10-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 29-04-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V K JIWANI
• Keywords: Opportunity of being heard
• Section: 143(3); 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES SMC : DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA.NO.2350/DEL./2016 ASSESSMENT YEAR 2008-2009 SHRI MANOJ KUMAR, (PROP. SHIVAM CORPORATE & MANAGEMENT SERVICES), SCO-59, SECTOR-56, SHOPPING COMPLEX, HUDA MARKET, GURGAON. PAN AMHPK1137B VS. THE INCOME TAX OFFICER, WARD-1(3), GURGAON. (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI SALIL AGARWAL & SHRI SHAILESH GUPTA, ADVOCATES. FOR REVENUE : SHRI V.K. JIWANI, SR. D.R. DATE OF HEARING : 0 7 .03.2018 DATE OF PRONOUNCEMENT : 21. 03.2018 ORDER THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-1, GURGAON, DATED 25 TH FEBRUARY, 2016, FOR THE A.Y. 2008-2009. 2. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BO TH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE ASSESSEE 2 ITA.NO.2350/DEL./2016 SHRI MANOJ KUMAR (PROP. SHIVA M CORPORATE & MANAGEMENT SERVICES), GURGAON. HAS FILED THE APPEAL ON MANY GROUNDS OF APPEAL. HOW EVER, OUT OF THE SAME, FIVE ISSUES ARISE FOR CONSIDERATION, W HICH ARE DECIDED AS UNDER. ISSUE NO.1 : 3. ASSESSEE CHALLENGED THE ADDITION OF RS.62,890/- OUTSTANDING IN THE NAME OF SUNDRY CREDITOR. 4. THE A.O. MADE THE ADDITION OF RS.62,890/- IN RE SPECT OF OUTSTANDING AMOUNT IN THE NAME OF THE PARTY HARI DEVELOPERS (P) LTD. THE A.O. FOUND THAT THE IMPUGNED AMOUNT WA S SHOWN AS SUNDRY CREDITOR IN THE NAME OF HARI DEVELOPERS ( P) LTD. THE ASSESSEE WAS ASKED TO PROVE THE GENUINENESS OF THE CREDIT, BUT, THE ASSESSEE COULD NOT FILE THE CONFIRMATION FROM T HE CREDITOR. THE A.O. OBTAINED INFORMATION FROM THEIR BOOKS OF A CCOUNT FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. IN WHICH, THE ACCOUNT OF THE ASSESSEE WAS SQUARED-UP FOR HAVING NO BALANC E OUTSTANDING. THE ASSESSEE WAS CONFRONTED WITH THE S AME. THE ASSESSEE SUBMITTED BEFORE THE A.O. THAT THE PARTY H ARI DEVELOPERS (P) LTD., WAS DISPUTED AND WAS NOT READY TO RECONCILE 3 ITA.NO.2350/DEL./2016 SHRI MANOJ KUMAR (PROP. SHIVA M CORPORATE & MANAGEMENT SERVICES), GURGAON. THE ACCOUNT. HOWEVER, THE AMOUNT RECEIVED FROM IT W AS NOT DUE TOWARDS THEM FOR SERVICES PROVIDED, BUT, RECEIVE AS ADVANCE TO PROVIDE SERVICE OR REFUNDABLE ON DEMAND. THE A.O. H OWEVER, DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE ON MERIT AND MADE THE ADDITION. 4.1. THE ASSESSEE SUBMITTED BEFORE LD. CIT(A) THAT AMOUNT WAS OUTSTANDING AGAINST THIS PARTY AT THE EN D OF THE FINANCIAL YEAR. THE ASSESSEE FILED LEDGER ACCOUNT O F THIS PARTY FOR A.Y. 2010-2011 TO SHOW THAT ADVANCE RECEIVED FROM T HIS PARTY HAVE BEEN BOOKED AS INCOME IN A.Y. 2010-2011, ON WH ICH, ASSESSMENT UNDER SECTION 143(3) HAVE BEEN COMPLETED . COPY OF THE ASSESSMENT ORDER DATED 28 TH MARCH, 2013 WAS FILED. THE LD. CIT(A) HOWEVER, DID NOT ACCEPT THE CONTENTION OF TH E ASSESSEE AND CONFIRMED THE ADDITION. 5. AFTER CONSIDERING THE RIVAL SUBMISSIONS, I AM O F THE VIEW THAT THE MATTER REQUIRES RECONSIDERATION AT TH E LEVEL OF THE A.O. LEARNED COUNSEL FOR THE ASSESSEE REFERRED TO R EPLY FILED BEFORE THE LD. CIT(A) AND LEDGER ACCOUNT AND COPY O F THE 4 ITA.NO.2350/DEL./2016 SHRI MANOJ KUMAR (PROP. SHIVA M CORPORATE & MANAGEMENT SERVICES), GURGAON. ASSESSMENT ORDER FOR A.Y. 2010-2011, TO SHOW THAT T HE AMOUNT IN QUESTION HAS BEEN OFFERED TO TAX IN A.Y. 2010-20 11. IF THE SAID AMOUNT IS OFFERED FOR TAXATION IN SUBSEQUENT YEAR, IT WOULD PROVE THE BONAFIDE OF THE ASSESSEE THAT IT WAS AN A DVANCE RECEIVED BY THE ASSESSEE. SINCE THE PARTY DISPUTED THE ADVANCE GIVEN TO THE ASSESSEE, THEREFORE, IT HAS TO BE TAXE D, WHICH, ACCORDING TO THE ASSESSEE, HAVE BEEN OFFERED FOR TA XATION IN SUBSEQUENT YEAR. I, THEREFORE, SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND RESTORE THIS ISSUE TO THE FIL E OF THE A.O. WITH A DIRECTION TO VERIFY THIS FACT OF OFFERING TH E AMOUNT IN QUESTION FOR TAXATION IN A.Y. 2010-2011 AND PASS TH E ORDER ACCORDINGLY BY GIVING REASONABLE, SUFFICIENT OPPORT UNITY OF BEING HEARD TO THE ASSESSEE. THIS GROUND OF APPEAL OF ASS ESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ISSUE NO.2 : 6. THE ASSESSEE CHALLENGED THE ADDITION OF RS.1,25,000/- IN RESPECT OF ADDITION TO CAPITAL ACC OUNT. THE A.O. MADE ADDITION OF RS.8,67,215/- ON ACCOUNT OF AMOUNT 5 ITA.NO.2350/DEL./2016 SHRI MANOJ KUMAR (PROP. SHIVA M CORPORATE & MANAGEMENT SERVICES), GURGAON. INTRODUCED IN CAPITAL ACCOUNT OF ASSESSEE, WHICH IS NOT EXPLAINED. THE ASSESSEE FILED COPY OF THE AUDITED B ALANCE SHEET FOR ASSESSMENT YEAR UNDER APPEAL TO PROVE THAT CAPI TAL INTRODUCED WAS RS.1,25,000/- ONLY, WHICH AMOUNT WAS TRANSFERRED THROUGH THE BANK ACCOUNT OF THE ASSESSE E AND NOT FROM OUTSIDE. THE LD. CIT(A) NOTED THAT ASSESSEE MA DE A CLAIM AT ASSESSMENT STAGE THAT AMOUNT IN QUESTION HAVE BE EN RECEIVED BY THE ASSESSEE FROM HIS FATHER WHICH WAS NOT PROVED. THE LD. CIT(A) HOWEVER, ACCEPTED THAT THE ADDITION TO CAPITAL ACCOUNT IS MADE AT RS.1,25,000/- ONLY. ACCORDINGLY, ADDITION WAS RESTRICTED TO RS.1,25,000/- ONLY. 7. AFTER CONSIDERING THE RIVAL SUBMISSIONS, I AM O F THE VIEW THAT THE MATTER REQUIRES RECONSIDERATION AT TH E LEVEL OF THE A.O. ASSESSEE SUBMITTED BEFORE LD. CIT(A) THAT SOUR CE OF THE CAPITAL INTRODUCED WAS THROUGH THE BANK ACCOUNT OF THE ASSESSEE. COPY OF THE WRITTEN SUBMISSIONS IS FILED IN THE PAPER BOOK. NO FINDING HAVE BEEN GIVEN BY THE AUTHORITIES BELOW AND EVEN THE ASSESSEE HAS NOT REFERRED TO THE BANK STAT EMENT FROM 6 ITA.NO.2350/DEL./2016 SHRI MANOJ KUMAR (PROP. SHIVA M CORPORATE & MANAGEMENT SERVICES), GURGAON. WHICH THE AMOUNT IS TRANSFERRED. THEREFORE, THE ORD ERS OF THE AUTHORITIES BELOW ARE SET ASIDE AND THE MATTER IS R ESTORED TO THE FILE OF THE A.O. WITH A DIRECTION TO RE-DECIDE THIS GROUND ON MERIT, BY GIVING REASONABLE, SUFFICIENT OPPORTUNITY OF BEI NG HEARD TO THE ASSESSEE. ASSESSEE IS DIRECTED TO FILE COPY OF THE BANK ACCOUNT BEFORE A.O, THROUGH WHICH, AMOUNT IS INTROD UCED AS CAPITAL, IN THE ACCOUNT OF THE ASSESSEE. THIS GROUN D IS ALLOWED FOR STATISTICAL PURPOSES. ISSUE NO. 3 : 8. THE ASSESSEE CHALLENGED THE DISALLOWANCE OF 10% OUT OF WAGES CLAIMED AND DIWALI EXPENSES. THE A.O. NOTE D THAT ASSESSEE HAS CLAIMED WAGES OF RS.91,99,353/- IN THE P & L A/C. ASSESSEE SUBMITTED SALARY CHART. THE ASSESSEE WAS A SKED TO FURNISH NAME AND ADDRESSES OF THE PERSONS TO WHOM W AGES HAVE BEEN SHOWN PAYABLE. THE ASSESSEE WAS ASKED TO PRODU CE THE PERSONS FROM SL.NO. 8 TO 27 IN THE LIST OF OCTOBER, 2007 TO WHOM WAGES HAVE BEEN PAID. THE ASSESSEE SUBMITTED THAT W AGES ARE PAID TO VARIOUS WORKERS ENGAGED IN PROVIDING SERVIC ES TO THE 7 ITA.NO.2350/DEL./2016 SHRI MANOJ KUMAR (PROP. SHIVA M CORPORATE & MANAGEMENT SERVICES), GURGAON. PARTIES. COPY OF THE PAYMENT/SALARY SLIP WERE SUBMI TTED. FURTHER, LETTER FROM THE WORKERS WHO WERE STILL WOR KING WITH THE ASSESSEE WERE FILED. A.O. NOTED THAT ASSESSEE HAS F ILED CONFIRMATION OF ONLY 08 PERSONS AS OTHERS HAVE STAT ED TO BE LEFT THE ASSESSEE. THE ASSESSEE, THEREFORE, FAILED TO PR OVE THE GENUINENESS OF THE WAGES PAID. THE ASSESSEE, HOWEVE R, CLAIMED THAT EPF HAVE BEEN PAID TO THE WORKERS BUT IT WAS F OUND THAT EPF AND ESI ARE NOT APPLICABLE TO ALL THE PERSONS A ND THERE ARE PAYMENTS TO THE PERSONS TO WHOM EPF AND ESI DOES NO T APPLY. THE A.O. ACCORDINGLY, REJECTED THE EXPLANATION OF T HE ASSESSEE AND DISALLOWED 10% OF THE EXPENSES UNDER THE HEAD WAGES. 8.1.1. THE ASSESSEE REITERATED THE SAME FACTS BEFO RE THE LD. CIT(A) AND IT WAS SUBMITTED THAT ASSESSEE F ILED SALARY CHART, PF RETURN AND CONFIRMATION OF VARIOUS EMPLOY EES. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PROVIDING MA N POWER SUPPLY SUCH AS GUARDS AND OTHER PERSONNEL ENGAGED B Y THE ASSESSEE ARE NOT PERMANENT, AS SUCH, IT WAS NOT POS SIBLE TO FILE CONFIRMATION OF ALL THE EMPLOYEES. EVERY YEAR INSPE CTION IS 8 ITA.NO.2350/DEL./2016 SHRI MANOJ KUMAR (PROP. SHIVA M CORPORATE & MANAGEMENT SERVICES), GURGAON. CARRIED OUT BY EPF AND ESI DEPARTMENT AND VERIFY TH E EMPLOYEES WHETHER ESI OR EPF IS APPLICABLE TO THEM AT ALL. IT WAS, THEREFORE, SUBMITTED THAT ASSESSEE INCURRED TH E EXPENSES FOR THE PURPOSE OF BUSINESS. THE LD. CIT(A) HOWEVER , REJECTED THE EXPLANATION OF ASSESSEE ON THE SAME REASONING A S GIVEN BY THE A.O. AND CONFIRMED THE ADDITION. 8.2. SIMILARLY, THE A.O. DISALLOWED 10% OUT OF DIW ALI EXPENSES. IT IS NOTED THAT WHEN COMPARED TO THE PRE VIOUS YEAR IN THE CASE OF THE ASSESSEE WHERE GROSS TURNOVER IS ABOUT 70% OF THE CURRENT YEAR, THE DIWALI EXPENSES CLAIMED WA S AT RS.35,000/- ONLY. SO THE ASSESSEE WAS ASKED TO JUST IFY THE CLAIM OF INCREASE IN DIWALI EXPENDITURE IN THIS YEAR. THE ASSESSEE EXPLAINED THAT DIWALI EXPENSES ARE ANNUAL BONUS GIV EN TO THE WORKERS, WHICH IS RECORDED ON THE SALARY SHEET. THE A.O. HOWEVER, DISALLOWED 10% OUT OF THE SAME. THE LD. CI T(A) DISMISSED THIS GROUND OF APPEAL OF THE ASSESSEE. 9. AFTER CONSIDERING THE RIVAL SUBMISSIONS, I AM O F THE VIEW THAT ADDITION IS WHOLLY UNJUSTIFIED. THE NATUR E OF BUSINESS 9 ITA.NO.2350/DEL./2016 SHRI MANOJ KUMAR (PROP. SHIVA M CORPORATE & MANAGEMENT SERVICES), GURGAON. OF THE ASSESSEE IS SUCH THAT THE GUARDS ARE CHANGED TIME TO TIME AND NO PERMANENT PERSONNEL ARE EMPLOYED BY THE ASSE SSEE. THE ASSESSEE PRODUCED THE BOOKS OF ACCOUNT, SALARY CHAR T AND CONFIRMATION OF THE EMPLOYEES, WHO WERE STILL IN TH E SERVICE OF THE ASSESSEE. AN INSPECTION IS ALSO CARRIED-OUT BY EPF AND ESI DEPARTMENT AT THE SAME TIME TO VERIFY THE APPLICABI LITY OF EPF AND ESI TO THE EMPLOYEES. THEREFORE, EXPLANATION OF ASSESSEE SHOULD NOT HAVE BEEN DISBELIEVED BY THE A.O. FURTHE R, DIWALI EXPENSES ARE PAID TO THE EMPLOYEES AS BONUS, WHICH IS AN UNDISPUTED FACT. THEREFORE, MERELY BECAUSE THE TURN OVER WAS LESSER AS COMPARED TO THE EARLIER YEAR, IS NO GROUN D TO REJECT THE EXPLANATION OF ASSESSEE. LEARNED COUNSEL FOR THE AS SESSEE, THEREFORE, RIGHTLY CONTENDED THAT IT IS AN ADHOC AD DITION, WITHOUT POINTING-OUT, AS TO WHICH, OF THE EXPENSES ARE NOT ADMISSIBLE EXPENSES AND ARE NOT RELATED WHOLLY AND EXCLUSIVELY TO THE BUSINESS OF THE ASSESSEE. THEREFORE, THERE IS NO JU STIFICATION TO SUSTAIN THE ADDITION. I, ACCORDINGLY, SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE ENTIRE ADDITION MA DE ON 10 ITA.NO.2350/DEL./2016 SHRI MANOJ KUMAR (PROP. SHIVA M CORPORATE & MANAGEMENT SERVICES), GURGAON. ACCOUNT OF DISALLOWANCE OUT OF WAGES AND DIWALI EXP ENSES. THIS GROUND OF ASSESSEE IS ALLOWED. ISSUE NO.4 : 10. THE A.O. MADE ADDITION OF RS.2,00,159/- AS UNDISCLOSED RECEIPT. THE A.O. HAS MADE THIS ADDITIO N BY MENTIONING OF 04 PARTIES FROM WHOM INFORMATION HAVE BEEN COLLECTED AND ASSESSEE HAS NOT DISCLOSED RECEIPTS F ROM THESE PARTIES. THE NAMES ARE MENTIONED IN THE ORDERS OF T HE AUTHORITIES BELOW. THE A.O. ACCORDINGLY, MADE THE A DDITION OF RS.2,00,159/-. THE ASSESSEE SUBMITTED BEFORE THE LD . CIT(A) THAT ADDITION IS MADE ON ACCOUNT OF DIFFERENCE IN R ECEIPTS AS PER P & L A/C AND RECEIPTS AS PER 26AS. IT WAS SUBMITTE D THAT ASSESSEE HAS SHOWN GROSS RECEIPTS OF RS.1,08,25,776 /- IN THE P & L A/C AND RECEIPTS AS PER FORM 26AS IS RS.1,08,45 ,466/- WHICH IS ALSO MENTIONED IN THE ASSESSMENT ORDER. TH EREFORE, THE DIFFERENCE AS PER 26AS IS ONLY RS.19,690/-. THE A.O . HOWEVER, MADE THE ABOVE ADDITION OF RS.2,00,159/-. NO DOCUME NTARY EVIDENCE OF UNDISCLOSED INCOME WAS FOUND AGAINST TH E ASSESSEE. 11 ITA.NO.2350/DEL./2016 SHRI MANOJ KUMAR (PROP. SHIVA M CORPORATE & MANAGEMENT SERVICES), GURGAON. THE A.O. EXAMINED THE BOOKS OF ACCOUNT AND NO ADVER SE MATERIAL WAS FOUND. THE A.O. HAS TAKEN THE FIGURES FROM FORM 26AS AVAILABLE ON THE SITE OF THE INCOME TAX DEPART MENT, WHICH IS STATEMENT RELEVANT TO TAX DEDUCTED AND TAX PAID AND STATEMENT OF INCOME. AS SUCH, RECEIPTS OF THE ASSES SEE CANNOT BE INCREASED. LD. CIT(A), HOWEVER, DISMISSED THIS G ROUND OF APPEAL OF ASSESSEE. 11. AFTER CONSIDERING THE RIVAL SUBMISSIONS, I AM OF THE VIEW THAT THE MATTER REQUIRES RECONSIDERATION AT TH E LEVEL OF THE ASSESSING OFFICER. A.O. HAS MENTIONED THE FIGURES A S PER BOOKS OF ACCOUNT OF THE ASSESSEE AND AS PER FORM 26AS IN THE ASSESSMENT ORDER, IN WHICH, APPARENTLY THE DIFFEREN CE WOULD BE RS.19,690/- ONLY AS CLAIMED BY ASSESSEE. THE A.O. H OWEVER, HAS MADE THE ADDITION OF RS.2,00,159/- IN RESPECT OF 04 PARTIES FROM WHOM INFORMATION WAS RECEIVED UNDER SECTION 133(6) OF THE I.T. ACT. LEARNED COUNSEL FOR THE ASSESSEE CORRECTLY SUB MITTED THAT THE DETAILS SUBMITTED IN FORM 26AS IS, STATEMENT RE LATING TO TAX DEDUCTED AND TAX PAID. IT HAS NO CONNECTION WITH TH E INCOME 12 ITA.NO.2350/DEL./2016 SHRI MANOJ KUMAR (PROP. SHIVA M CORPORATE & MANAGEMENT SERVICES), GURGAON. GENERATED BY THE ASSESSEE. THE ASSESSEE ALSO SUBMIT TED BEFORE A.O. THAT ASSESSEE HAS RECEIVED TDS CERTIFICATES FR OM THE PARTIES WHICH APPARENTLY HAVE NOT BEEN EXAMINED BY THE A.O. THE ASSESSEE DENIED RECEIPT OF ANY SUCH AMOUNT FROM THE 04 PARTIES. THEREFORE, IN SUCH CIRCUMSTANCES, THE A.O. SHOULD HAVE EXAMINE THE CONCERNED PARTIES IN ORDER TO FIX THE L IABILITY OF THE ASSESSEE. THESE FACTS, THEREFORE, SHOW THAT THE MAT TER REQUIRES RECONSIDERATION AT THE LEVEL OF THE A.O. I ACCORDIN GLY, SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND RESTORE THI S ISSUE TO THE FILE OF THE A.O. WITH A DIRECTION TO RE-DECIDE THIS ISSUE BY GIVING REASONABLE, SUFFICIENT OPPORTUNITY OF BEING HEARD T O THE ASSESSEE. THIS GROUND OF THE ASSESSEE IS ALLOWED FO R STATISTICAL PURPOSES. ISSUE NO.5 : 12. ASSESSEE CHALLENGED THE ADDITION OF RS.1,96,99 0/- MADE BY A.O. IN RESPECT OF EMPLOYEES SHARE OF PF CO NTRIBUTION RECEIVED BY ASSESSEE AND DEPOSITED BEFORE FILING OF THE RETURN OF INCOME. 13 ITA.NO.2350/DEL./2016 SHRI MANOJ KUMAR (PROP. SHIVA M CORPORATE & MANAGEMENT SERVICES), GURGAON. 13. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THA T ASSESSEE RAISED THIS GROUND BEFORE LD. CIT(A) ON GR OUND NO.1.3 WHICH HAVE NOT BEEN DECIDED BY THE LD. CIT(A). 14. IN THIS VIEW OF THE MATTER, I DIRECT THE LD. C IT(A) TO DECIDE THIS GROUND OF APPEAL OF THE ASSESSEE AS PER LAW BY GIVING REASONABLE, SUFFICIENT OPPORTUNITY OF BEING HEARD T O THE ASSESSEE. THIS GROUND OF THE ASSESSEE IS ALLOWED FO R STATISTICAL PURPOSES. 15. IN THE RESULT, APPEAL OF ASSESSEE IS PARTLY AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- (BHAVNESH SAINI) DELHI, DATED 21 ST MARCH, 2018 JUDICIAL MEMBER VBP/- COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. CIT(A) CONCERNED 4. CIT CONCERNED 5. D.R. ITAT SMC BENCH, DELHI 6. GUARD FILE. 14 ITA.NO.2350/DEL./2016 SHRI MANOJ KUMAR (PROP. SHIVA M CORPORATE & MANAGEMENT SERVICES), GURGAON. // BY ORDER // ASSISTANT REGISTRAR : ITAT DELHI BENCHES : DELHI.