Uniword Telecom Ltd., New Delhi V. Addl. CIT, New Delhi

ITA 2417/DEL/2012

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5746 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 1 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 28-06-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 21-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Gift; Depreciation; Additional evidence; Revised return
• Section: 133(6); 37(1); 80G; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D, NEW DELHI BEFORE SH. G.D. AGRAWAL, PRESIDENT AND SH. SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 2417/DEL/2012 (ASSESSMENT YEAR: 2008-09) UNIWORD TELECOM LTD. C/O. SATISH AGGARWAL & ASSOCIATES, CA, 4/5, ASAF ALI ROAD NEW DELHI VS. ACIT RANGE-18 NEW DELHI PAN : AAACU5105D ITA NO. 2660/DEL/2012 (ASSESSMENT YEAR: 2008-09) ACIT CIRCLE-18(1), ROOM NO. 211A, C.R.BUILDING NEW DELHI VS. UNIWORD TELECOM LTD. H-58, HIMALAYA HOUSE, KASTURBA GANDHI MARG, CONNAUGHT PLACE NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. SATISH AGGARWAL, SH. DHARENDER KR., CA REVENUE BY : SH. AMIT JAIN, SR. DR DATE OF HEARING : 23.04.2018 DATE OF PRONOUNCEMENT : 27 .06 .2018 O R D E R PER BENCH : ITA NO. 2417/DEL/2012 IS ASSESSEES APPEAL AGAINST ORDER DATED 20/08/2012 PASSED BY THE LD. CIT(A)-XXI, NEW 2 ITA NO.2417, 2660/DEL/2012 (UNIWORD TELECOM LTD.) DELHI FOR ASSESSMENT YEAR 2008-09 WHEREAS ITA NO. 2660/DEL/2012 IS THE DEPARTMENTS CROSS APPEAL FOR THE SAME YEAR. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE RETURN OF INCOME WAS FILED DECLARING TOTAL INCOME OF RS. 4,79,98,210/- WHICH WAS PROCESSED U/S 143(1) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). THE CASE WAS SELECTED FOR SCRUTINY THEREAFTER REVISED RETURN OF INCOME WAS FILED DECLARING INCOME AT RS. 68,21,192/ -. DURING THE RELEVANT PREVIOUS YEAR, THE ASSESSEE COMPANY WAS ENGAGED IN MANUFACTURE AND TRADING OF TELEPHONE PRODUCTS AND PARTS AS WELL AS IN THE BUSINESS OF MANUFACTURE OF PUBLIC ADDRESS SYSTEM. THE ASSESSMENT WAS COMPLETED AT AN INCOME OF RS. 5,72,12,950/- AFTER MAKING THE FOLLOWING ADDITIONS/DISALLOWANCES I) BILL DISCOUNTING CHARGES RS. 2,73,33,202/- II) INCOME CLAIMED WHO HAVE NOT ACCRUED DURING THE YEAR RS. 2,17,86,841/- 3 ITA NO.2417, 2660/DEL/2012 (UNIWORD TELECOM LTD.) III) DISALLOWANCE OUT OF PURCHASE RS. 6,32,969/- IV) ROC FEES RS. 25,000/- V) DISALLOWANCE OUT OF RENT RATES AND TAXES RS. 2,27,50 0/- VI) GIFT ITEMS INCLUDED IN VEHICLE RUNNING EXPENSES RS. 1,22,300/- VII) DISALLOWANCE OUT OF DEDUCTION CLAIMED U/S 80G OF THE ACT RS. 2,29,500/- VIII) DISALLOWANCE OUT OF REPAIRS AND MAINTENANCE RS. 34,450/-. 3. AGGRIEVED THE ASSESSEE APPROACHED THE LD. FIRST APPELLATE AUTHORITY WHO GAVE PARTIAL RELIEF TO THE ASSES SEE AND NOW THE ASSESSEE IS IN APPEAL BEFORE THE ITAT CHALLENGING THE CONFIRMATION OF ADDITION OF RS. 2,17,86,841/- WHICH RELATES TO INCOME WHICH AS PER TH E ASSESSEE HAS NOW ACCRUED DURING THE YEAR. THE DEPARTMEN T IS IN APPEAL CHALLENGING A DELETION OF ADDITION IN RESPE CT OF BILL DISCOUNTING CHARGES AMOUNTING TO RS. 2,73,23,202 /-, DISALLOWANCE OUT OF PURCHASE AMOUNTING TO RS. 6,32,96 9/- AND DELETION OF ADDITION AMOUNTING TO RS. 2,27,500/- I N 4 ITA NO.2417, 2660/DEL/2012 (UNIWORD TELECOM LTD.) RESPECT OF RENT RATES AND TAXES. THE GROUNDS TAKEN BY BOTH THE PARTIES ARE AS UNDER :- ITA NO. 2417/DEL/2012 1. THE ORDER OF THE LEARNED CIT(A) XXI IS ARBITRAR Y, BIASED, BAD IN LAW AND IN CIRCUMSTANCES AND FACTS O F THE CASE WITH RESPECT TO ADDITIONS SUSTAINED BY HIM. 2. THAT THE LEARNED CIT(A) HAS GROSSLY ERRED IN CONFIRMING THE ADDITION OF RS. 2,17,86,841/- MADE B Y THE ASSESSING OFFICER ON INCORRECT APPRECIATION OF THE FACTS ON THE ISSUE AND IN HOLDING THAT THE AFORESAID INCOME ACCRUED TO THE APPELLANT DESPITE THE DEBTOR MAKING A COUNTE R CLAIM AGAINST THE APPELLANT. ITA NO. 2660/DEL/2012 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LEARNED CIT(A) ERRED IN DELETING THE ADD ITION OF RS. 2,73,23,202/- DISALLOWED BY THE AO ON ACCOUNT O F PAYMENT OF DISCOUNT CHARGES WITHOUT APPRECIATING TH AT THE ASSESSEE DID NOT PROVE THE INCURRING SUCH EXPENSES DURING THE COURSE OF ASSESSMENT EVEN THOUGH ENOUGH OPPORTUNITIES WERE PROVIDED FOR THIS PURPOSE. 11,9 4,988/- MADE U/S 40(A)(IA) OF THE INCOME TAX ACT FOR NON DE DUCTION OF TAX AT SOURCE OUT OF PROFESSIONAL CHARGES. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LEARNED CIT(A) ERRED IN DELETING THE ADD ITION OF RS. 6,32,969/- MADE AS BOGUS PURCHASES SINCE THE PA RTY 5 ITA NO.2417, 2660/DEL/2012 (UNIWORD TELECOM LTD.) FROM WHICH THE ALLEGED PURCHASES WERE MADE FAILED T O RESPOND TO NOTICE U/S 133(6) OF THE INCOME TAX ACT, 1961 AND ASSESSEE OFFERED NO EXPLANATION FOR THIS LAPSE. 2.1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LEARNED CIT(A) ERRED IN ADMITTING FRESH EVIDENCE DURING THE COURSE OF APPELLATE PROCEEDINGS, WITHOUT ANY EXPLANATION ON THE PART OF THE ASSESSEE AS TO WHY T HE SAME COULD NOT BE PRODUCED/REPLIED TO BY THE CONCER NED PARTY. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LEARNED CIT(A) ERRED IN DELETING THE ADD ITION OF RS. 6,32,969/- MADE AS DISALLOWANCE OUT OF EXPENSES UNDER THE HEAD RENT RATES AND TAXES. 4. THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT THE ASSESSEE COMPANY HAS BEEN REGISTERED AS A SICK INDUSTRIAL COMPANY U/S 15 OF SICK INDUSTRIAL COMPANIES (SPECIAL PROVISIONS) ACT, 1985. IT WAS SUBMITTED THAT THE RETU RN OF INCOME WAS REVISED BY THE ASSESSEE TO CLAIM AN EXPENDITURE OF RS. 2,73,33,202/- TOWARDS DISCOUNTING CHARGES PAID TO GLOBAL TRADE FINANCE PVT. LTD. (NOW KNO WN AS SBI GLOBAL FACTORS LTD.) AND FOR REFERSAL OF INCOME O F RS. 6 ITA NO.2417, 2660/DEL/2012 (UNIWORD TELECOM LTD.) 2,17,86,841/- WHICH HAD BEEN REFLECTED AS DUE FROM M/ S. ACTARIS INDUSTRIES (INDIA) PVT. LTD. IT WAS ALSO SUBMIT TED THAT THE RETURN WAS REVISED TO CLAIM CORRECT AMOUNT OF DEPRECIATION WHICH WAS RS. 2,64,60,685/- AS AGAINST RS. 3,44,03,708/- AS CLAIMED ORIGINALLY. THE LD. AUTHORISE D REPRESENTATIVE SUBMITTED THAT THE DEPARTMENT WAS CHALLENGING THE DELETION OF ADDITION WITH RESPECT TO BILL DISCOUNTING CHARGES PAID TO M/S. GLOBAL TRADE FINANCE LT D WHO ARE ATTENTION TO THE DETAILS OF THE BILL DISCOUNTI NG CHARGES AS REPRODUCED BY THE ASSESSING OFFICER AT PAGE 5 OF THE ASSESSMENT ORDER AND SUBMITTED THAT THE AO HAD NOT ACCEPTED THE CLAIM OF DISCOUNTING / FACTORING CHARGES O N THE GROUND THAT THE ADDRESS OF M/S. GLOBAL TRADE FINANC E LTD. HAD NOT BEEN FURNISHED BEFORE THE AO AND THEREFO RE IN ABSENCE OF PROPER ADDRESS VERIFICATION OF THE DETAILS / TRANSACTIONS WAS NOT POSSIBLE. THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT THE LD. CIT(A) DELETED THE 7 ITA NO.2417, 2660/DEL/2012 (UNIWORD TELECOM LTD.) DISALLOWANCE BY OBSERVING THAT THE EXPENDITURE ON DISCOUNTING CHARGES HAD DIRECT NEXUS WITH THE BUSINES S OF THE ASSESSEE COMPANY AND THAT IT MET THE REQUIREMENTS FOR ALLOWANCE AS EXPENDITURE U/S 37(1) OF THE ACT. THE LD. AUTHORISED REPRESENTATIVE ALSO SUBMITTED THAT THE REVE NUE IS CONTESTING THE DELETION BY THE LD. CIT(A) ON THE GROUND THAT THE LD. CIT(A) HAD ADMITTED ADDITIONAL EVIDENCE. IT WAS SUBMITTED THAT THE LD. CIT(A) HAD ADMITTED ADDITIONAL EVIDENCE VIDE PARA 2.2 AND 2.3 OF THE IMPUGNED ORDER A FTER SENDING A COPY OF THE PAPER BOOK CONTAINING ADDITIONAL EVIDENCES TO THE ASSESSING OFFICER IN REMAND PROCEEDI NGS. THE LD. AUTHORISED REPRESENTATIVE ALSO SUBMITTED THAT THE AO HAD NOT CONDUCTED ANY FURTHER INQUIRY DURING THE REMAND PROCEEDINGS. THE LD. AUTHORISED REPRESENTATIVE ALS SUBMITTED THAT BOTH BEFORE THE LD. CIT(A) AS WELL AS T HE AO, THE ASSESSEE HAD EXPRESSED ITS INABILITY TO OBTAIN CONFIRMATION FROM GLOBAL TRADE FINANCE LTD. AND FURTHER 8 ITA NO.2417, 2660/DEL/2012 (UNIWORD TELECOM LTD.) THAT THE AO COULD HAVE REQUISITION THE REQUIRED INFORMAT ION DIRECTLY FROM GLOBAL TRADE FINANCE LTD. THE ASSESSEE WAS UNABLE TO FURNISH THE CONFIRMATION. THE LD. AUTHORIS ED REPRESENTATIVE REITERATED THAT THE EXPENDITURE WAS ALLOWABLE IN TERMS OF SECTION 37(1) OF THE ACT AS THE SAME WAS INCURRED WHOLLY FOR THE PURPOSE OF THE BUSINESS OF THE ASSESSEE. 5. THE LD. AUTHORISED REPRESENTATIVE ALSO MADE REFER ENCE TO THE GROUND OF APPEAL NO. 1 OF THE DEPARTMENTS APPEAL AND SUBMITTED THE SECOND HALF OF THE GROUND WITH RES PECT TO DISALLOWANCE OF RS. 11,94,988/- U/S 40(A)(IA) DID NO T PERTAIN TO THE ASSESSEE AND WAS THEREFORE, LIABLE TO BE DISMISSED AS INFRUCTUOUS. 6. WITH REGARD TO GROUND NO. 2 CHALLENGING THE DEL ETION OF ADDITION OF RS. 6,32,969/- WHICH HAD BEEN TREATED AS BOGUS PURCHASE FROM M/S. KLASSIC PRINTERS DUE TO FAI LURE IN FURNISHING THE RESPONSE U/S 133(6) OF THE ACT, T HE LD. 9 ITA NO.2417, 2660/DEL/2012 (UNIWORD TELECOM LTD.) AUTHORISED REPRESENTATIVE SUBMITTED THAT THE AO HAD ISSUED NOTICES U/S 133(6) OF THE ACT TO 24 PARTIES OUT OF WHICH 23 PARTIES HAD RESPONDED AND ONLY M/S. KLASSIC PRINTERS HAD NOT RESPONDED AND THEREFORE, THE AO HAD PROCEEDED TO TREAT THE IMPUGNED AMOUNT AS UNVERIFIED PURCHASE AND HAD ADDED THE SAME TO THE INCOME OF THE ASSESSEE. THE LD. AUTHORISED REPRESENTATIVE SUBMITTE D THAT THE ASSESSEE HAD DULY FILED COPY OF LEDGERS ACCOUN TS OF M/S. KLASSIC PRINTERS, COPIES OF INVOICES AND CONFIRM ED COPY OF ACCOUNT OF THE ASSESSEE IN THE BOOKS OF M/S. KLASSIC PRINTERS AS ADDITIONAL EVIDENCE DURING THE COU RSE OF APPELLATE PROCEEDINGS AND LD. CIT(A) HAD ASKED FOR THE COMMENTS OF THE AO ON THE SAME IN REMAND PROCEEDINGS. THE LD. AUTHORISED REPRESENTATIVE FURTHER SUBMITTED THAT THE AO HAD NOT MADE ANY ADVERSE COMMENTS ON THIS ISSUE IN THE REMAND REPORT AND THEREAFTER THE DELETION WAS M ADE BY THE LD. CIT(A). 10 ITA NO.2417, 2660/DEL/2012 (UNIWORD TELECOM LTD.) 7. WITH RESPECT TO GROUND NO. 3 THE LD. AUTHORISE D REPRESENTATIVE POINTED OUT THAT THE IMPUGNED AMOUNT PERTAINING TO DISALLOWANCE OUT OF RENT RATES AND TAXES W AS RS. 2,27,500/- WHICH HAD BEEN INCORRECTLY STATED AS RS . 6,32,969/- IN THE GROUNDS OF APPEAL. THE LD. AUTHORIS ED REPRESENTATIVE SUBMITTED THAT THE LD. CIT(A) HAD DEL ETED THE DISALLOWANCE AFTER PERUSAL OF THE COPY OF RENT AGREE MENT FOR PREMISES LEASED BY THE ASSESSEE IN MYSORE AND AS WE LL AS PERUSAL OF LEDGER ACCOUNT OF RENT PAID WHICH WAS FILE D AS ADDITIONAL EVIDENCE AND THE AMOUNT WAS DELETED AS THE AO HAD NOT MADE ANY ADVERSE COMMENTS IN THE REMAND PROCEEDINGS. 8. ARGUEING FOR THE GROUNDS RAISED BY THE ASSESSEE IN ITS APPEAL BEARING ITA NO. 2417/DEL/2012, THE LD. AUTHORIS ED REPRESENTATIVE SUBMITTED THAT THE ASSESSEE WAS CHALLENGING THE CONFIRMATION OF ADDITION REGARDING REVE RSAL OF INCOME AMOUNTING TO RS. 2,17,86,841/-. IT WAS 11 ITA NO.2417, 2660/DEL/2012 (UNIWORD TELECOM LTD.) SUBMITTED THAT M/S. ACTARIS INDUSTRIES (INDIA) PRIVATE LTD. WAS ASSESSEES CUSTOMER FOR WHOM IT HAD DEVELOPED SPEC IFIC ZIGS, TOOLS, DIES AND FIXTURES FOR MANUFACTURE OF COMPONENTS FOR EXCLUSIVE REQUIREMENT OF M/S. ACTARIS INDUSTRIES (INDIA) PRIVATE LTD. AND A MANUFACTURING AND SUPPLY AGREEMENT WAS EXECUTED BY THE ASSESSEE WITH THI S COMPANY. IT WAS SUBMITTED THAT A COPY OF THIS AGREEMENT WAS FILED BEFORE THE LD. CIT(A) AS ADDITIONAL EVIDENCE. OUR ATTENTION WAS DRAWN TO PAGES 32 TO 61 OF THE PAPER BOOK WHEREIN A COPY OF THIS AGREEMENT HAD BEEN PLACED. IT W AS FURTHER SUBMITTED THAT THE ASSESSEE HAD BEEN SUPPLYIN G TAILOR MADE ENERGY METERS TO THIS COMPANY SINCE 2004. IT WAS FURTHER SUBMITTED THAT THIS COMPANY WAS AN INDIAN ARM OF A FOREIGN ENTITY WHICH HAD CLOSED DOWN ITS OPERATIONS IN INDIA. THE LD. AUTHORISED REPRESENTATIVE FURTHER SUBMITTED THAT THE ASSESSEE COMPANY HAD REGULAR DEALINGS WITH THIS COMPANY FOR SALE AND SERVICE AND THE 12 ITA NO.2417, 2660/DEL/2012 (UNIWORD TELECOM LTD.) ASSESSEE COMPANY HAD CUSTOMIZED INVENTORY WHICH HAD NO OTHER COMMERCIAL VALUE IN THE OPEN MARKET. IT WAS SUBMITTED THAT THE ASSESSEE COMPANY HAD RAISED THE DEBIT NOTES ON THE COMPANY BUT M/S. ACTARIS INDUSTRIES (IND IA) PVT. LTD. HAD COMPLETELY DENIED ITS LIABILITY FOR THI S AMOUNT OF RS. 20,17,90,844/- FROM THE ASSESSEE COMPANY FOR L OSS OF INTEREST ON ADVANCE GIVEN TO THE ASSESSEE COMPANY, LOSS ON ACCOUNT OF FAILURE TO MANUFACTURE THE RIGHT QUALITY OF GOODS AND DAMAGES FOR LOSS OF REPUTATION ETC. IT WAS FURTHER SUBMITTED THAT A COPY OF THIS LEGAL NOTICE WAS FILED BEFORE THE AO DURING THE ASSESSMENT PROCEEDINGS AND W AS ALSO SUBMITTED BEFORE THE LD. CIT(A). THE LD. AUTHOR ISED REPRESENTATIVE SUBMITTED THAT THE AO DID NOT ACCEPT TH E CLAIM FOR REVERSAL OF INCOME BY REFERRING TO THE INABI LITY FO THE ASSESSEE TO FURNISH CONFIRMATION AND LACK OF TIME TO MAKE ENQUIRIES BEFORE THE ASSESSMENT GOT TIME BARRED. I T WAS FURTHER SUBMITTED THAT THE AO DID NOT MAKE REQUISIT E 13 ITA NO.2417, 2660/DEL/2012 (UNIWORD TELECOM LTD.) ENQUIRIES DURING THE REMAND PROCEEDINGS AND ALSO DID NO T MAKE ANY ADVERSE COMMENT ON THE ADDITIONAL EVIDENCE AND SUBMISSION MADE BY THE ASSESSEE ON MERITS. THE LD. AUTHORISED REPRESENTATIVE ALSO SUBMITTED THAT THE LD. CIT(A) HAD UPHELD THE ADDITION BY OBSERVING THAT NO PRUDENT BUSINESSMAN WILL OFFER SUCH INCOME FOR TAXATI ON WHICH WAS UNDER DISPUTE. THE LD. AUTHORISED REPRESENTATIVE REITERATED THAT IT WAS ONLY AFTER THE ASSE SSEE HAD RAISED THE DEBIT NOTES THAT THE CUSTOMER HAD DECIDE D NOT ONLY TO DENY ITS LIABILITY BUT HAD ALSO RAISED A COU NTER CLAIM AND HAD SENT A LEGAL NOTICE TO THE ASSESSEE. IN SU CH A SITUATION THE ASSESSEE HAD NO OPTION BUT TO REVISE THE INCOME TAX RETURN BY REDUCING THE INCOME BY THE IMPUGNED AMOUNT. IT WAS SUBMITTED THAT SINCE THERE WAS NO ACCRUAL OF INCOME OF RS. 2.17 CRORES, THE SAME WOUL D NOT HAVE BEEN CHARGE TO TAX IRRESPECTIVE OF THE ENTRI ES MADE IN THE BOOKS OF ACCOUNTS. THE LD. AUTHORISED 14 ITA NO.2417, 2660/DEL/2012 (UNIWORD TELECOM LTD.) REPRESENTATIVE ALSO PLACED RELIANCE ON A NUMBER OF JUDIC IAL PRECEDENCE IN SUPPORT OF THE CONTENTION THAT INCOME CANNOT BE ASSESSED ON THE BASIS OF ENTRIES IN THE BOOK S OF ACCOUNTS ALONE. 9. THE LD. DEPARTMENTAL REPRESENTATIVE WHILE RESPOND ING TO THE ASSESSEES APPEAL PLACED RELIANCE ON THE CONCURR ENT FINDINGS OF BOTH THE AUTHORITIES AND SUBMITTED THAT TH E IMPUGNED AMOUNT HAD RIGHTLY BEEN ADDED TO THE INCOME O F THE ASSESSEE AND THAT IT WAS AN ATTEMPT BY THE ASSESSEE T O REDUCE ITS TAXABILITY. 10. WITH RESPECT TO THE DEPARTMENTS APPEAL THE LD . SR. DEPARTMENTAL REPRESENTATIVE PLACED RELIANCE ON THE OBSERVATIONS AND FINDINGS OF THE AO AND SUBMITTED THAT THE LD. CIT(A) HAD ALLOWED RELIEF TO THE ASSESSEE IGNORIN G THE OBSERVATIONS OF THE AO AND HAVE ALSO ADMITTED ADDITIONAL EVIDENCE WITHOUT QUESTIONING THE ASSESSEE AS TO WHY TH ESE 15 ITA NO.2417, 2660/DEL/2012 (UNIWORD TELECOM LTD.) EVIDENCES WERE NOT FURNISHED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 11. WE HAVE HEARD THE RIVAL SUBMISSIONS, WE HAVE ALS O PERUSED THE MATERIAL ON RECORD AS FAR AS THE DEPARTMENTS APPEAL BEARING IN ITA NO. 2660/DEL/2012 IS CONCERN IT IS SEEN THAT THE LD. CIT(A) HAS DELETED THE ADDITION OF RS. 2,73,23,202/- PERTAINING TO BILL DISCOUNT CHARGES BY NOTING THAT HE HAS GONE THROUGH THE DETAILS WITH REGARD TO TH E EXPENDITURE AND HAS FOUND THAT THE SAME IS NEITHER PERSONAL IN NATURE NOR CAPITAL IN NATURE. THE LD. CIT(A) HAS OBSERVED THAT ONLY OBJECTION OF THE AO IS THAT THE CONFIRMATION OF THE EXPENDITURE HAS NOT BEEN FILED DU RING THE COURSE OF ASSESSMENT PROCEEDINGS. THE LD. CIT(A ) HAS ALSO NOTED THAT THERE WAS A LITIGATION PENDING WITH M/ S. GLOBAL TRADE FINANCE LTD. DUE TO WHICH THE ASSESSEE WAS NOT IN A POSITION TO OBTAIN CONFIRMATION. WE ALSO NOTE THAT WHILE ADMITTING ADDITIONAL EVIDENCE WITH RESPECT TO TH IS 16 ITA NO.2417, 2660/DEL/2012 (UNIWORD TELECOM LTD.) ISSUE, THE LD. CIT(A) HAS ASKED FOR THE COMMENTS OF T HE AO IN THE REMAND PROCEEDINGS. A COPY OF THE REMAND REPOR T DATED 22.02.2012 WHICH HAS BEEN PLACED ON RECORD SHOWS THAT EVEN IN THE REMAND PROCEEDINGS THE AO HAS NOT TAKE N ANY STEPS TO ENQUIRE ABOUT THE TRANSACTION IF HE HAD ANY DOUBT REGARDING THE SAME. THE AO HAS SIMPLY STATED THAT THE ASSESSEE HAD NOT FURNISHED THE CONFIRMATION FROM T HIS PARTY. THE LD. CIT(A) HAS ALSO OBSERVED THAT IN ABSENCE OF ANY FINDING CONTRARY THE FACTORING CHARGES PAID TO M/S. GLOBAL TRADE FINANCE LTD. WERE FULLY ALLOWABLE U/S 37(1 ) OF THE ACT. ALTHOUGH THE LD. SR. DEPARTMENTAL REPRESENTAT IVE HAS VEHEMENTLY ARGUED AGAINST THE ACTION OF THE LD. CIT( A) IN DELETING THIS DISALLOWANCE. HE COULD NOT POINT OUT ANY FACTUAL OR LEGAL INACCURACY IN THE FINDINGS RECORDED BY THE LD. CIT(A) EXCEPT PLEADING THAT THE ASSESSEE HAD NOT FURNISHED THE DETAILS BEFORE THE AO. KEEPING IN VIEW THE PROVISIONS OF SECTION 37(1) OF THE ACT WHICH PRESCR IBES THAT 17 ITA NO.2417, 2660/DEL/2012 (UNIWORD TELECOM LTD.) IN EXPENDITURE WOULD BE ALLOWABLE IF IT IS NOT IN THE NATURE OF CAPITAL, IF IT IS NOT PERSONAL IN NATURE AND IF IT HAS BEEN EXPENDED FULLY AND EXCLUSIVELY FOR THE PURPOSE OF BU SINESS, WE FIND NO REASON TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A) ON THIS ISSUE. WE ALSO NOTE THAT DUE TO SOME TYPOGRAPHICAL ERROR, THE DEPARTMENT HAS ALSO CHALLENGED DELETION OF ADDITION OF RS. 11,94,988/- ALLEGED TO HAV E BEEN MADE U/S 40(A)(IA) OF THE ACT IN GROUND NO. 1 OF THE DEPARTMENTS APPEAL. WE AGREE WITH THE SUBMISSION OF T HE LD. AUTHORISED REPRESENTATIVE THAT THIS GROUND DOES N OT EMANATE FROM THE ORDERS EITHER OF THE LOWER AUTHORITIE S. ACCORDINGLY THIS PORTION OF THE GROUND IS INFRUCTUO US. ACCORDINGLY GROUND NO. 1 OF THE DEPARTMENTS APPEAL ST ANDS DISMISSED. 12. COMING TO GROUND NO. 2 OF THE DEPARTMENTS AP PEAL WHICH CHALLENGES THE ACTION OF THE LD. CIT(A) IN DELE TING THE ADDITION OF RS. 6,32,969/- BEING ALLEGED BOGUS PURCHAS ES 18 ITA NO.2417, 2660/DEL/2012 (UNIWORD TELECOM LTD.) IT IS SEEN THE LD. CIT(A) HAS OBSERVED AFTER GOING TH ROUGH THE COPY OF LEDGER ACCOUNT OF M/S. KLASSIC PRINTERS AS WELL AS THE LEDGER ACCOUNT OF PURCHASES IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE THAT THESE ENTRIES CROSS MATCH ED. THE LD. CIT(A) HAS ALSO NOTED THAT THE IMPUGNED BILLS WERE AVAILABLE AT PAGES 59 TO 63 OF THE PAPER BOOK WHEREIN COMPLETE PURCHASE DETAILS ALONG WITH ADDRESS AND PAN WERE MENTIONED. THE LD. CIT(A) HAS ALSO NOTED THAT AT THE TIME OF ADMITTING ADDITIONAL EVIDENCE, THE DETAILS WERE SENT TO THE AO FOR HIS COMMENTS BUT THE AO DID NOT MAKE ANY ADVERSE COMMENT ON THE ADDITIONAL EVIDENCES BUT ONLY REITERATED THAT THE REASON BEHIND THE ADDITION WAS THAT T HE LETTER ISSUED U/S 133(6) OF THE ACT WAS NOT RESPONDE D TOO. THUS, THE FACT REMAINS THAT THE LD. CIT(A) HAS DULY VER IFIED THE ENTRIES IN THE BOOKS OF ACCOUNTS AS WELL AS THE BI LLS OF PURCHASE. IT ALSO REMAINS UNDISPUTED THAT THE ONLY GROU ND ON WHICH THE ADDITION WAS MADE FAILURE OF THIS PARTY TO 19 ITA NO.2417, 2660/DEL/2012 (UNIWORD TELECOM LTD.) RESPOND TO THE NOTICE ISSUED U/S 133(6) OF THE ACT. THE LD. SR. DEPARTMENTAL REPRESENTATIVE ALSO COULD NOT POINT OU T ANY FACTUAL OR LEGAL INACCURACY IN THE CONCLUSION SO ARRI VE AT BY THE LD. CIT(A). IN SUCH CIRCUMSTANCES, THERE IS NO REASON FOR US TO INTERFERE AND WE DISMISS GROUND NO. 2 AND 2.1 OF THE DEPARTMENTS APPEAL. 13. COMING TO GROUND NO. 3 THE EFFECTIVE GROUND CHALLENGES THE ACTION OF THE CIT(A) IN DELETING AN ADDI TION OF RS. 2,27,500/- TOWARDS PAYMENT OF RENT, THIS AMOUNT REPRESENTED RENT OF RS.1,42,500/- TOWARDS LEASE CHARGE S OF OFFICE AND FACTORY PREMISES AT MYSORE AND RS. 85,000/- REPRESENTED RENT FOR GUEST HOUSE MAINTAINED AT MYSORE. THE LD. CIT(A) ADMITTED ADDITIONAL EVIDENCE IN THIS RE GARD ALSO WHICH WERE IN THE FORM OF LEASE AGREEMENT. BEFORE ADMIT OF ADDITIONAL EVIDENCE, THE LD. CIT(A) ALSO SOUGH T COMMENTS FROM THE AO BUT THE AO DID NOT MAKE ANY ADVERSE COMMENT ON THE SAME. THE LD. CIT(A) HAS GIVEN A 20 ITA NO.2417, 2660/DEL/2012 (UNIWORD TELECOM LTD.) CATEGORICAL FINDING THAT IN VIEW OF THE LEASE AGREEMENT AND THE DETAILS THEREOF WHICH WERE SUBMITTED BEFORE HIM, THE AMOUNT WAS DEDUCTIBLE. NO FACTUAL OR LEGAL INFIRMITY WAS POINTED OUT BY THE LD. SR. DEPARTMENTAL EVEN DURING T HE COURSE OF PROCEEDINGS BEFORE US. IN SUCH A CIRCUMSTAN CE, WE FIND NO REASON TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A) ON THIS ISSUE ALSO. ACCORDINGLY GROUND NO. 3 OF THE DEPARTMENTS APPEAL STANDS DISMISSED. 14. GROUND NO. 4 IS GENERAL GROUND RAISED BY THE DEPARTMENT AND THE SAME IS NOT BEING ADJUDICATED UPON. 15. IN THE RESULT, THE APPEAL OF THE DEPARTMENT STAND S DISMISSED. 16. COMING TO THE ASSESSEES APPEAL BEARING ITA NO. 2417/DEL/2012, THE ONLY ISSUE UNDER CHALLENGE IS THE ISSUE OF CONFIRMING ADDITION OF RS. 2,17,86,841/- PERTAINING TO INCOME WHICH AS PER THE ASSESSEE HAD NOT 21 ITA NO.2417, 2660/DEL/2012 (UNIWORD TELECOM LTD.) ACCRUED TO THE ASSESSEE. IT IS SEEN THAT THE ASSESSEE COMPANY HAD RAISED A DEBIT NOTE OF RS. 21,76,841/- ON M/S. ACTARIS INDUSTRIES (INDIA) PVT. LTD. AND HAD TREAT ED THE AMOUNT OF DEBIT NOTE AS INCOME. SUBSEQUENTLY THE M/S. ACTARIS INDUSTRIES (INDIA) PVT. LTD. DID NOT ACCEPT TH E DEBIT NOTE AND NOT ONLY DENIED ITS LIABILITY FOR THE AMOUNT OF DEBIT NOTE WHICH HAD BEEN TREATED AS INCOME BY THE ASSESSEE BUT ALSO SERVED THE LEGAL NOTICE ON THE ASSESSEE DEMANDING AN AMOUNT OF RS. 20,17,90,844/-. THE ASSESSEE IN VIEW OF THIS DEVELOPMENTS FILED A REVISED RETURN AND SOUGHT TO RED UCE ITS INCOME BY AN AMOUNT OF RS. 2,17,86,841/- ON THE GROUND THAT THIS INCOME HAD NOT ACCRUED TO THE ASSESSEE IN VIEW OF THE COMPANY M/S. ACTARIS INDUSTRIES (INDIA) PR IVATE LTD. DENYING ITS LIABILITY. THE AO AS WELL AS THE LD. CIT(A) ADDED THIS AMOUNT TO THE INCOME OF THE ASSESSEE. THE A O OBSERVED THAT HOW AND WHY THE AUDITORS DID NOT DETACT AN D 22 ITA NO.2417, 2660/DEL/2012 (UNIWORD TELECOM LTD.) POINT OUT THE MISTAKES AT THE TIME OF AUDIT THAT A SUM O F RS. 2,17,86,841/- HAD BEEN INCORRECTLY CREDITED. TH E LD. CIT(A) UPHELD THE ADDITION ON THE GROUND THAT NO PRUD ENT BUSINESSMAN WOULD HAVE OFFER INCOME FOR TAXATION WHIC H WAS UNDER DISPUTE SPECIALLY WHERE THE ACCOUNTS HAD BEE N AUDITED. THUS, BOTH THE LOWER AUTHORITIES HAVE PROCEED ED ON BASIS OF MERE CONJECTURES AND SURMISES WITHOUT ACT UALLY EXAMINING THE ISSUE AS TO WHETHER THE AVERMENTS OF THE ASSESSEE REGARDING REJECTION OF THE DEBIT NOTES, DENI AL OF LIABILITY BY M/S. ACTARIS INDUSTRIES (INDIA) PRIVATE LT D. AND FILING OF COUNTER CLAIM WAS CREDIBLE OR NOT. IN THE C OURSE OF PROCEEDING BEFORE US THE LD. AUTHORISED REPRESENTATI VE ALSO COULD NOT DEMONSTRATE BY COGENT EVIDENCE AS TO HO W THE DISPUTE WAS FINALLY SETTLED BETWEEN THE ASSESSEE AN D THE OTHER PARTY. IN SUCH A SITUATION IT IS OUR CONSIDE RED OPINION THAT INTEREST OF JUSTICE WOULD BE SERVED IF THE ISSUE 23 ITA NO.2417, 2660/DEL/2012 (UNIWORD TELECOM LTD.) IS RESTORED TO THE FILE OF THE LD. CIT(A) TO EXAMINE THE ISSUE AFRESH. ACCORDINGLY THIS GROUND IS RESTORED TO THE F ILE OF THE LD. CIT(A) WITH THE DIRECTION TO ADJUDICATE THE ISSUE AFTER TAKING INTO CONSIDERATION THE CLAIM OF ASSESSEE REGARDIN G DENIAL OF LIABILITY BY THE OTHER PARTY AS WELL AS AFTER VERIFYING THE VERACITY OF THE CLAIM AND ALSO AFTER DULY CONSIDERING THE STAGE AT WHICH THE LITIGATION BETWEEN THE TWO PARTIES IS AT THE PRESENT MOMENT. NEEDLESS TO SAY THE LD. CIT(A) WILL ALLOW PROPER OPPORTUNITY TO THE ASSES SEE BEFORE PROCEEDING WITH THE ADJUDICATION. WE ALSO DIREC T THE ASSESSEE TO EXTENT TIMELY CO-OPERATION TO THE LD. CIT (A) WHEN CALLED UPON TO DO SO. ACCORDINGLY GROUND NO. 2 OF THE ASSESSEES APPEAL STAND ALLOWED FOR STATISTICAL PURPOSES. 17. GROUND NO. 1 AND 3 ARE GENERAL IN NATURE AND ARE NOT BEING ADJUDICATED UPON. IN THE RESULT THE APPEAL OF TH E ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. 24 ITA NO.2417, 2660/DEL/2012 (UNIWORD TELECOM LTD.) 18. IN THE FINAL RESULT APPEAL OF THE DEPARTMENT STAN DS DISMISSED AND THE APPEAL OF THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH JUNE, 2018). SD/- SD/- (G.D.AGARWAL) (SUDHANSHU SRIVASTAVA) PRESIDENT JUDICIAL MEMBER DATE: 27 TH .06.2018 BINITA COPY OF ORDER TO: - 1) THE APPELLANT; 2) THE RESPONDENT; 3) THE CIT; 4) THE CIT(A)-, NEW DELHI; 5) THE DR, I.T.A.T., NEW DELHI; TRUE COPY BY ORDER ITAT, NEW DELHI 25 ITA NO.2417, 2660/DEL/2012 (UNIWORD TELECOM LTD.)