Akshat Steel Impex, Panipat V. ITO, New Delhi

ITA 2442/DEL/2014

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6961 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 09-01-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 21-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K JAIN SENIOR
• Assessee Lawyers: C AGGARWAL
• Keywords: Business expenditure; Opportunity of being heard; Additional evidence; Corroborative evidences
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH A : NEW DELHI) BEFORE SHRI KULDIP SINGH, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO.2442/DEL./2014 (ASSESSMENT YEAR : 2008-09) M/S. AKSHAT STEEL IMPEX, VS. ITO, WARD 33 (3), HOUSE NO.4, SECTOR 11, NEW DELHI. HUDA COLONY, PANIPAT 132 103. (PAN : AALFA4082D) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI C. AGGARWAL, CA REVENUE BY : SHRI S.K. JAIN, SENIOR DR DATE OF HEARING : 09.01.2017 DATE OF ORDER : 16.01.2017 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : THE APPELLANT, M/S. AKSHAT STEEL IMPEX (HEREINAFT ER REFERRED TO AS THE ASSESSEE) BY FILING THE PRESEN T APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 10.02.2014, PASS ED BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-XXIII, NEW DEL HI UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961 (FOR SHO RT THE ACT) QUA THE ASSESSMENT YEAR 2008-09 ON THE GROUNDS INTE R ALIA THAT :- ITA NO.2442/DEL./2014 2 1. THAT THE IMPUGNED ORDER IS FACTUALLY WRONG AND LEGALLY BAD. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE AD-HOC ADDITION OF RS.54000.00 P. CONFIRMED BY THE LEARNED CIT(A) ON ACCOUNT OF TELEPHONE AND ELECTRICITY EXPENSES IS WRONG AND BAD. THE SAME MAY KINDLY BE DELETED. THAT IN ALTERNATE IF THE ADDITION IS TO BE SUSTAIN ED INCURRED FROM THE UNDISCLOSED SOURCES THAN THE EXPENSES AMOUNTING TO RS 54000.00 P BE ALLOWED AS BUSINESS EXPENSES. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE ADDITION OF RS.324531.00 P ( OUT OF FREIGH T EXPENSES) CONFIRMED BY THE LEARNED CIT(A) BEING FREIGHT CHARGES PAID TO M/S JAI BALAJI ROAD LINES ON THE GROUND THAT PANO MENTIONED THEREIN BELONGS TO RAJESH BRIJBUSHAN MITTAL AND NOT TO M/S JAI BALAJI ROAD LINES IS WRONG AND BAD. THE SAME MAY KINDLY BE DELETED. 4. THAT THE LEARNED C.I.T. (A) HAS FURTHER ERRORED IN LAW & ON FACTS IN ENHANCING THE ADDITION OF RS 324531.00 P MADE BY LEARNED ASSESSING OFFICER TO RS (324531 + 58216 ) WITHOUT GIVING ANY NOTICE/OPPORTUNITY TO THE APPELLANT OF HER INTENTIO N TO DO SO. THE SAME MAY KINDLY BE DELETED. 5. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE ADDITION OF RS.52000.00 P CONFIRMED BY CIT(A) AS UNEXPLAINED CASH DEPOSITS IN BANK IS WRONG AND BAD. THE SAME MAY KINDLY BE DELETED. 6. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE ADDITION OF RS.1920000.00 P CONFIRMED BY THE LEARNED CIT(A) FOR WANT OF SOURCE OF CREDIT IN THE CAPITAL ACCOUNT OF SH. NEERAJ GARG PARTNER IS WRONG AND BAD. THE SAME MAY KINDLY BE DELETED. 7. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE ADDITION OF RS.85000.00 P CONFIRMED BY ITA NO.2442/DEL./2014 3 THE LEARNED CIT (A) FOR WANT OF SOURCE OF CREDIT IN THE CAPITAL ACCOUNT OF SH RATTAN LAL GARG PARTNER IS WRONG AND BAD. THE SAME MAY KINDLY BE DELETED. 8. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E LEARNED C.I.T.(A) HAS FURTHER ERRORED IN LAW & ON FACTS BY ENHANCING THE ADDITION OF RS.85000.00 P MADE BY LEARNED ASSESSING OFFICER TO RS 235000.00 P WITHOUT GIVING ANY NOTICE/OPPORTUNITY TO THE APPELLANT OF HER INTENTION TO DO SO. THE SAM E MAY KINDLY BE DELETED. 2. BRIEFLY STATED FACTS OF THIS CASE ARE : ASSESSEE , IS INTO THE TRADING OF IRON AND STEEL AND DURING THE YEAR UNDER ASSESSMENT, ASSESSEE HAS MADE GROSS TURNOVER / GROSS RECEIPT TO THE TUNE OF RS.1,35,23,994/- DECLARING GROSS PROFIT OF RS.5,62, 401/- WITH GROSS PROFIT RATIO OF 4.15% AS AGAINST THE GROSS TURNOVER OF RS.1,28,91,952/- DECLARING GROSS PROFIT OF RS.4,42, 986/- WITH GROSS PROFIT RATIO OF 3.43% IN THE IMMEDIATELY PRECEDING YEARS. ASSESSING OFFICER NOTICED THAT THE TELEPHONE AND EL ECTRICITY EXPENSES HAVE NOT BEEN CLAIMED IN THE PROFIT & LOSS ACCOUNT AND AS SUCH, HE MUST HAVE INCURRED THESE EXPENSES FROM HIS UNDISCLOSED SOURCES AND BY ESTIMATING THE SAME, MADE AN ADDITIO N OF RS.54,000/-. 3. AO, DURING ASSESSMENT PROCEEDINGS, CALLED UPON T HE ASSESSEE TO FURNISH BILLS AND VOUCHERS FOR THE EXPENSES INCU RRED ON ACCOUNT OF CARTAGE & UNLOADING AND FREIGHT EXPENSES BY THE ASSESSEE FIRM. ITA NO.2442/DEL./2014 4 IN THE TRADING ACCOUNT, ASSESSEE HAS DEBITED RS.58, 216/- ON ACCOUNT OF CARTAGE & UNLOADING AND RS.3,24,531/- ON ACCOUNT OF FREIGHT EXPENSES BEING PAID TO M/S. JAI BALAJI ROAD LINES O N 18.01.2008. ON FAILURE OF THE ASSESSEE TO FILE THE SUPPORTING D OCUMENTS, THE AO DISALLOWED THE AMOUNTS OF RS.58,216/- ON ACCOUNT OF CARTAGE & UNLOADING EXPENSES AND RS.3,24,531/- ON ACCOUNT OF FREIGHT EXPENSES. 4. AO ALSO NOTICED THAT UNEXPLAINED CASH DEPOSIT TO THE TUNE OF RS.52,000/- IN THE BANK ACCOUNT OF THE ASSESSEE AND IN THE ABSENCE OF ANY EXPLANATION OF SUPPORTING DOCUMENT, MADE AN ADDITION OF RS.52,000/-. AO ON PERUSAL OF THE CAPITAL ACCOUNT OF SHRI NEERAJ GARG, PARTNER OF THE ASSESSEE FIRM NOTICED CASH DEP OSIT TO THE TUNE OF RS.19,20,000/- (ON 20.02.2008 RS.20,000/-, ON 27 .02.2008 RS.9,00,000/- AND ON 29.02.2008 RS.10,00,000/-). O N FAILURE OF THE ASSESSEE TO EXPLAIN THE SOURCE OF THIS CAPITAL INTR ODUCED IN THE ASSESSEE FIRM FROM UNDISCLOSED SOURCES, AO MADE ADD ITION THEREOF TO THE INCOME OF THE ASSESSEE. AO FURTHER NOTICED FORM THE CAPITAL ACCOUNT OF SHRI RATTAN LAL GARG, ONE OF THE PARTNER S OF THE ASSESSEE FIRM WHO HAS INTRODUCED CAPITAL TO THE ACCOUNT OF R S.2,35,000/- (ON 05.11.2007 RS.1,00,000/-, ON 17.01.2008 RS.1,00,000 /-, ON 25.03.2008 RS.25,000/- AND ON 27.03.2008 RS.10,000/ -). THE AO NOTICED WITHDRAWAL OF RS.1,50,000/- ON 27.03.2008 A ND ON FAILURE ITA NO.2442/DEL./2014 5 OF ASSESSEE TO EXPLAIN AND PRODUCE THE BOOKS OF ACC OUNT MADE AN ADDITION OF RS.85,000/- (RS.2,35,000/- - RS.1,50, 000/-) TO THE INCOME OF THE ASSESSEE BY TREATING THE SAME AS UNEX PLAINED INCOME, WHICH HAS BEEN ENHANCED BY THE LD. CIT (A) TO RS.2, 35,000/-. 5. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT ( A) BY WAY OF FILING THE APPEAL WHO HAS PARTLY ALLOWED THE APPEAL . FEELING AGGRIEVED, THE ASSESSEE HAS COME UP BEFORE THE TRIB UNAL BY WAY OF FILING THE PRESENT APPEAL. 6. 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. GROUND NO.1 7. GROUND NO.1 IS GENERAL IN NATURE AND NEEDS NO AD JUDICATION. GROUND NO.2 8. THE LD. AR FOR THE ASSESSEE CONTENDED THAT THE E LECTRICITY EXPENSES WERE PART OF THE RENT PAID TO SMT. VEENA G ARG, THE LANDLADY OF THE BUSINESS PREMISES WHO HAS FILED AN AFFIDAVIT THAT THE RENT FOR THE PROPERTY WAS INCLUSIVE OF WATER AN D ELECTRICITY CHARGES AND SO FAR AS, TELEPHONE EXPENSES ESTIMATED @ RS.2,000/- PER MONTH ARE CONCERNED, THE PARTNERS WERE MAKING C ALLS FROM THEIR ITA NO.2442/DEL./2014 6 PERSONAL PHONES. THE LD. DR RELIED UPON THE ORDER PASSED BY THE AO AS WELL AS CIT (A). 9. WE ARE OF THE CONSIDERED VIEW THAT KEEPING IN VI EW THE FACT THAT THE ASSESSEE HAS EARNED GROSS TURNOVER OF RS.1 ,35,23,994/- WITH GROSS PROFIT OF RS.5,62,401/- BEING INTO TRADING OF IRON AND STEEL AND THIS MUCH TURNOVER CANNOT BE EARNED WITHOUT INC URRING EXPENSES ON TELEPHONE AND ELECTRICITY CHARGES. NO DOUBT, THE ASSESSEE HAS NOT CLAIMED THESES EXPENSES IN THE PRO FIT & LOSS ACCOUNT BUT THE ASSESSEE IS GETTING DEDUCTION OF TH ESE EXPENSES SINCE 1997. LD. CIT (A) HAS CATEGORICALLY RECORDED IN PARA 5.3 OF THE IMPUGNED ORDER THAT ADDITIONAL EVIDENCE WAN SOT ACCEPTED BY THE AO IN THE REMAND PROCEEDINGS ON THE GROUND THAT IT WAS AN AFTERTHOUGHT BUT FAILED TO RECORD ANY FINDINGS ON T HE ADMISSIBILITY OF THE ADDITIONAL EVIDENCE AND PROCEEDED TO CONFIRM THE ADDITION. SO, WE ARE OF THE CONSIDERED VIEW THAT THIS GROUND IS REQUIRED TO BE RESTORED TO THE CIT (A) TO DECIDE AFRESH AFTER ADMI TTING THE ADDITIONAL EVIDENCE SOUGHT TO BE BROUGHT ON RECORD BY THE ASSESSEE IN ACCORDANCE WITH LAW. SO, GROUND NO.2 IS DETERMI NED IN FAVOUR OF THE ASSESSEE. GROUNDS NO.3 & 4 10. THE LD. AR FOR THE ASSESSEE, AT THE VERY OUTSET , CONTENDED THAT ADEQUATE OPPORTUNITY OF BEING HEARD HAS NOT BE EN AFFORDED BY ITA NO.2442/DEL./2014 7 THE LD. CIT (A) BEFORE CONFIRMING THIS ADDITION AND ADDITION HAS BEEN CONFIRMED EVEN ON THE GROUND THAT THE PAN (NO.AFTPM4677F) PROVIDED BY THE ASSESSEE DID NOT TA LLY WITH THE ACCOUNT OF M/S. JAI BALAJI ROAD LINES AND PAN (NO.AFTPM4677F) BELONGS TO RAJESH BRIJBHUSHAN MITTA L AND NOT M/S. JAI BALAJI ROAD LINES. WE ARE OF THE CONSIDER ED VIEW THAT ADEQUATE OPPORTUNITY OF BEING HEARD HAS NOT BEEN AF FORDED TO THE ASSESSEE TO EXPLAIN THE RELATIONSHIP BETWEEN RAJESH BRISHBHUSHAN MITTAL AND M/S. JAI BALAJI ROAD LINES. 11. SO FAR AS, CARTAGE & UNLOADING EXPENSES OF RS.5 8,216/- ARE CONCERNED, THE SAME HAVE BEEN CONFIRMED ON THE GROU NDS THAT THE CARTAGE & UNLOADING EXPENSES FOR THE ENTIRE YEAR HA VE BEEN INCURRED ON ONE SINGLE DAY AND APPEARS TO BE BOGUS. WHEN THE ASSESSEE HAS RELIED UPON THE AUDITED BOOKS OF ACCOU NT WHICH HAVE NOT BEEN REJECTED, TO DECIDE THE MATTER SUMMARILY W ITHOUT AFFORDING AN OPPORTUNITY OF BEING HEARD IS ERRONEOUS. SO, WE SET ASIDE GROUNDS NO.3 & 4 TO THE FILE OF LD. CIT (A) TO DECI DE AFRESH AFTER PROVIDING AN OPPORTUNITY OF BEING HEARD TO THE ASSE SSEE. SO, GROUNDS NO.3 & 4 ARE DETERMINED IN FAVOUR OF THE AS SESSEE. GROUND NO.5 12. CIT (A) CONFIRMED THE ADDITION OF RS.52,000/- M ADE BY THE AO ON ACCOUNT OF UNEXPLAINED CASH DEPOSIT IN THE BA NK. THE AO ITA NO.2442/DEL./2014 8 MADE ADDITION OF RS.52,000/- BY DIS-BELIEVING THE E XTRACT OF THE PORTION OF CASH BOOK PRODUCED BY THE ASSESSEE SHOWI NG WITHDRAWAL OF THE CASH FOR THE PURPOSE OF DEPOSIT IN THE BANK ACCOUNT. CIT (A) RECORDED IN PARA 10.2 THAT THE ASSESSEE HAS SHOWN R ECEIPT OF RS.50,000/- IN CASH FROM SHRI NEERAJ GARG ON THE DA Y THE CASH HAS BEEN DEPOSITED IN THE BANK AND NO EVIDENCE REGARDIN G THE SOURCE OF CASH IN THE HANDS OF NEERAJ GARG HAS BEEN MADE BY T HE ASSESSEE. CIT (A) ALSO DID NOT ACCEPT THE CONTENTION OF THE A SSESSEE ON THE GROUND THAT ONLY EXTRACTS OF THE CASH BOOKS HAVE BE EN PRODUCED WHICH DO NOT SHOW THE COMPLETE PICTURE. WHEN THE A SSESSEE HAS PRODUCED THE EXTRACT OF THE CASH BOOK, HE CANNOT BE DEBARRED FROM PRODUCING THE COMPLETE CASH BOOK ITSELF AS IT IS NO T BELIEVABLE THAT EXTRACT OF THE CASH BOOK ARE FORGED DOCUMENT PRODUC ED BEFORE THE QUASI-JUDICIAL AUTHORITY. SO, WE ARE OF THE CONSID ERED VIEW THAT THIS GROUND IS ALSO REQUIRED TO BE RESTORED TO THE CIT ( A) TO DECIDE AFRESH AFTER PROVIDING AN OPPORTUNITY OF BEING HEAR D TO THE ASSESSEE. SO, GROUND NO.5 IS DETERMINED IN FAVOUR OF THE ASSESSEE. GROUND NO.6 13. CIT (A) CONFIRMED THE ADDITION OF RS.19,20,000/ - REFLECTED IN THE ASSESSEES FIRM CAPITAL ACCOUNTS WHICH SHOWS CASH DEPOSIT IN THE ACCOUNT OF SHRI NEERAJ GARG MADE BY THE AO AS U NDISCLOSED INCOME. ASSESSEE CLAIMED BEFORE CIT (A) THAT THE A MOUNT IN ITA NO.2442/DEL./2014 9 QUESTION WAS WITHDRAWAL BY SHRI NEERAJ GARG WITH OR IENTAL BANK OF COMMERCE WHICH HE HAS RECEIVED FROM M/S. RAKSHA METALS IN WHICH NEERAJ GARG WAS A PARTNER AND ALSO FILED AFFI DAVIT TO SUPPORT HIS CONTENTION. BUT THE AO DID NOT ACCEPT THE CLAI M ON THE SOLE BASIS THAT THE SAME WAS NOT FILED DURING ASSESSMENT PROCEEDINGS. CIT (A) CONFIRMED THE ADDITION ON THE GROUND THAT T HE CAPITAL ACCOUNT FILED BY THE ASSESSEE SHOWS THAT THE CHEQUE DATED 26.02.2008 FOR RS.9,00,000/- AND CHEQUE DATED 28.02 .2008 FOR RS.10,00,000/- HAS BEEN RECEIVED FROM STATE BANK OF INDIA AND AXIS BANK RESPECTIVELY BUT THE ASSESSEE HAS FAILED TO FURNISH ANY BANK ACCOUNT WITH THE STATE BANK OF INDIA OR AXIS B ANK. WHEN THE ASSESSEE HAS FILED COPIES OF BANK ACCOUNT, ANNUAL S TATEMENT AND PROFIT & LOSS ACCOUNT OF NEERAJ GARG OF M/S. RAKSHA METALS, AVAILABLE AT PAGE 37 OF THE PAPER BOOK, WHICH HAVE NOT BEEN DISPUTED BY THE CIT (A), THE MATTER IS REQUIRED TO BE RESTORED TO THE FILE OF CIT (A) TO DECIDE AFRESH AFTER PROVIDING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. SO, GROUND NO.6 IS DE TERMINED IN FAVOUR OF THE ASSESSEE. GROUNDS NO.7 & 8 14. CIT (A) ENHANCED THE ADDITION OF RS.85,000/- MA DE BY THE AO TO RS.2,35,000/- ON THE GROUND THAT THE CASH WIT HDRAWAL HAS BEEN MADE AFTER CASH WAS BEING DEPOSITED AND THE AS SESSEE HAS ITA NO.2442/DEL./2014 10 FAILED TO EXPLAIN THE SOURCE OF ITS CASH DEPOSITS A ND TREATED THE SAME AS UNEXPLAINED INCOME. 15. LD. AR FOR THE ASSESSEE CONTENDED THAT THE AMOU NT WAS WITHDRAWN OUT OF THE BOOKS OF RATTAN LAL GARG AND B ROTHERS BUT THIS CONTENTION DISBELIEVED BY THE CIT (A) ON THE G ROUND THAT THE SUPPORTING EVIDENCE REGARDING SOURCE OF CASH WITH R ATTAN LAL GARG HAS NOT BEEN FILED AND COPY OF CASH BOOK SHOWS THAT THE RECEIPT OF THE CASH FROM RATTAN LAL GARG WAS IMMEDIATELY FOLLO WED BY PAYMENT IN CASH TO M/S. JAI BALAJI ROAD LINES AND T O M/S. SANGAM MOVERS WHICH SHOWS THE CASH ENTRY IN THE HANDS OF R ATTAN LAL GARG AND SHORTAGE IN CASH IN THE HANDS OF THE FIRM ON THE DATES WHEN FREIGHT CHARGES WERE PAID IN CASH. ASSESSEE P LACED ON FILED COPY OF ACCOUNT OF RATTAN LAL GARG FROM M/S. AKSHIT STEEL, AFFIDAVIT OF SHRI RATTAN LAL GAR, INCOME-TAX RETURN OF RATTAN LAL GARG FROM M/S. RATTAN LAL GARG & BROS. AND EXTRACT OF CASH BOOK DATED 18.12.2007 AND 14.03.2008, AVAILABLE AT PAGES 92 TO 100 OF THE PAPER BOOK. 16. THE LD. CIT (A), WITHOUT PERUSING THESE DOCUMEN TS AND WITHOUT DISBELIEVING THE DOCUMENTS BROUGHT ON RECOR D BY THE ASSESSEE, PROCEEDED TO ENHANCE THE ADDITION. SO, W E ARE OF THE CONSIDERED VIEW THAT THIS GROUND IS ALSO REQUIRED T O BE RESTORED TO THE FILE OF THE LD. CIT (A) TO DECIDE AFRESH AFTER PROVIDING AN ITA NO.2442/DEL./2014 11 OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. SO, GR OUNDS NO.7 & 8 ARE DETERMINED IN FAVOUR OF THE ASSESSEE. 16. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, PRESE NT APPEAL IS ALLOWED FOR STATISTICAL PURPOSES AND FILE IS ORDERE D TO BE RESTORED TO THE LD. CIT (A) TO DECIDE AFRESH AFTER PROVIDING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ORDER PRONOUNCED IN OPEN COURT ON THIS 16 TH DAY OF JANUARY, 2017. SD/- SD/- (PRASHANT MAHARISHI) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 16 TH DAY OF JANUARY, 2017 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT (A)-XXIII, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.