ACIT, New Delhi V. M/s. ABV Alcohols Pvt. Ltd., New Delhi

ITA 2498/DEL/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 3750 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 29-05-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 23-04-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: SURENDER PAL
• Keywords: Unexplained cash credit; Depreciation
• Section: 143(3); 68; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: A NEW DELHI BEFORE SHRI B.P.JAIN, ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 2498/DEL /2014 ASSTT. YEAR: 2006-07 ACIT, CENTRAL CIRCLE-8, NEW DELHI. VS ABV ALCOHOLS PVT. LTD., 15, PUSA ROAD, NEW DELHI-110005 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUDESH GARG, ADV. RESPONDENT BY : SHRI SURENDER PAL, SR. DR DATE OF HEARING : 30.10.2017 DATE OF PRONOUNCEMENT: 31.10.2017 ORDER PER SUDHANSHU SRIVASTAVA, J.M. THIS APPEAL HAS BEEN PREFERRED BY THE DEPARTMENT AG AINST THE ORDER PASSED BY THE LD. CIT(A)-XXXII, NEW DELHI FOR ASSESSMENT YEAR 2006-07 WHEREIN VIDE ORDER DATED 29 .1.2014, THE ASSESSEES APPEAL WAS PARTLY ALLOWED. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE RETURN DECLARING INCOME AT NIL WAS FILED WHICH WAS INITIALLY PROCESS ED U/S 143(1) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED THE ACT) AND WAS ITA NO. 2498/DEL/2014 ASSESSMENT YEAR 2006-07 2 SUBSEQUENTLY SELECTED FOR SCRUTINY. HOWEVER, THE A SSESSEE DID NOT RESPOND TO VARIOUS STATUTORY NOTICES WHICH WERE ISSUED FROM TIME TO TIME AND SUBSEQUENTLY THE ORDER WAS PASSED U/S 143(3) R/W SECTION 144 OF THE ACT EX PARTE THE ASSESSEE AF TER DISALLOWING THE LOSS OF RS.3,69,934/- CLAIMED BY THE ASSESSEE I N THE PROFIT & LOSS ACCOUNT AND AFTER MAKING AN ADDITION OF RS. 96 ,19,000/- AS UNEXPLAINED CREDIT U/S 68 OF THE ACT AS THERE WAS AN INCREASE OF THIS AMOUNT UNDER THE HEAD SHARE CAPITAL. 2.1 AGGRIEVED THE ASSESSEE PREFERRED AN APPEAL B EFORE THE LD. CIT(A) WHO DELETED THE ADDITION OF RS. 96,19,000/- PERTAINING TO ADDITION UNDER THE HEAD SHARE CAPITAL ON THE GROUND THAT NO SHARE APPLICATION MONEY WAS RECEIVED DURING THE ASS ESSMENT YEAR UNDER CONSIDERATION AND DURING THE YEAR THE AS SESSEE HAD ONLY ALLOTTED THE SHARES TO THE SUBSCRIBERS WHO HAD SUBSCRIBED THE SHARE APPLICATION MONEY AMOUNTING TO RS. 9,61,9 00/- DURING EARLIER YEARS. THE LD. CIT(A) ALSO DELETED THE DIS ALLOWANCE OF RS. 3,69,934/- MADE ON ACCOUNT OF LOSS CLAIMED BY THE A SSESSEE IN THE PROFIT AND LOSS ACCOUNT. 3. NOW, THE DEPARTMENT HAS APPROACHED THE ITAT AND HAS CHALLENGED THE DELETION OF THESE TWO ADDITIONS BY R AISING THE FOLLOWING GROUNDS OF APPEAL:- ITA NO. 2498/DEL/2014 ASSESSMENT YEAR 2006-07 3 1. THAT THE LD. CIT(A) ERRED IN ADMITTING THE ADD ITIONAL EVIDENCE UNDER RULE 46A. 2. THAT THE CIT(A) ERRED IN LAW AND ON FACTS OF TH E CASE IN DELETING THE ADDITION OF RS. 96,19,000/- MADE BY ASSESSING OFFICER U/S 68 OF I.T. ACT, 1961. 3. THAT THE CIT(A) ERRED IN LAW AND ON FACTS OF TH E CASE IN DELETING THE ADDITION OF RS. 3,69,934/- MADE BY ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE OF LOS S CLAIMED. 4. (A) THE ORDER OF THE CIT(A) IS ERRONEOUS AND NO T ENABLE IN LAW AND ON FACTS. (B) THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AM END ANY/ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING T HE COURSE OF HEARING OF THE APPEAL. 3.1 AT THE OUTSET, THE LD. DEPARTMENTAL REPRESENT ATIVE SUBMITTED THAT THE ASSESSEE HAD NOT SUBMITTED ANY D OCUMENTS DURING THE COURSE OF ASSESSMENT PROCEEDINGS SO AS T O ENABLE THE ASSESSING OFFICER TO VERIFY THE GENUINENESS OF THE SHARE APPLICATION MONEY RECEIVED. HE POINTED OUT THAT TH E ASSESSMENT WAS COMPLETED U/S 144 OF THE ACT DUE TO THE NON-COO PERATION OF THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PRO CEEDINGS, IT WAS SUBMITTED THAT SINCE THE ASSESSING OFFICER DID NOT HAVE THE OPPORTUNITY TO EXAMINE THE CLAIM OF THE ASSESSEE, T HE LD. CIT(A) WAS PATENTLY WRONG IN ALLOWING THE APPEAL OF THE AS SESSEE ON THIS GROUND. ITA NO. 2498/DEL/2014 ASSESSMENT YEAR 2006-07 4 3.2 GROUND NO. 2 PERTAINS TO DISALLOWANCE OF EX PENSES OF RS. 3,69,934/- WHICH WAS ALSO DELETED BY THE LD. CIT(A) . RELIANCE WAS PLACED ON THE FINDINGS OF THE ASSESSING OFFICER AND IT WAS SUBMITTED THAT SINCE NO DETAILS HAD BEEN FORTHCOMIN G FROM THE ASSESSEE ON THIS COUNT ALSO, THE DISALLOWANCE WAS J USTIFIED. 4. IN RESPONSE, THE LD. AR SUBMITTED THAT SINCE SH ARE APPLICATION MONEY HAD NOT BEEN RECEIVED DURING THE YEAR UNDER CONSIDERATION, THE PROVISIONS OF SECTION 68 WERE WR ONGLY INVOKED BY THE ASSESSING OFFICER AND IT WAS BEYOND THE PURV IEW OF THE ASSESSING OFFICER TO BRING TO TAX THE SHARE APPLICA TION MONEY IN THE YEAR UNDER CONSIDERATION AS SHARE APPLICATION M ONEY HAD BEEN RECEIVED IN EARLIER YEAR AND IN THIS YEAR, ONL Y SHARES HAD BEEN ALLOTTED TO THE SHARE APPLICANTS, THEREBY SHOW ING AN INCREASE IN THE SHARE CAPITAL ACCOUNT. HE PLACED R ELIANCE ON THE FINDINGS OF THE LD. CIT(A) IN THIS REGARD AND SUBMI TTED THAT THE DELETION BE UPHELD. 4.1 ON THE SECOND GROUND RELATING TO DISALLOWANCE O F EXPENSES DEBITED IN PROFIT AND LOSS ACCOUNT, IT WAS SUBMITTE D THE EXPENSES DEBITED PERTAINED TO ACCOUNTING CHARGES, AUDITORS REMUNERATION, BANK CHARGES, REMUNERATION TO COMPANY SECRETARY, RO C, FILING FEE, TRAVELLING & CONVEYANCE, DEPRECIATION ETC. WHI CH WERE ITA NO. 2498/DEL/2014 ASSESSMENT YEAR 2006-07 5 INCURRED IN CONNECTION WITH THE CARRYING ON OF BUSI NESS. IT WAS ALSO SUBMITTED THAT THE ACCOUNTS OF THE ASSESSEE HA D BEEN DULY AUDITED AND, THEREFORE, THERE WAS NO REASON TO DISA LLOW THESE EXPENSES. IT WAS SUBMITTED THAT THESE DISALLOWANCE S DELETED BY THE LD. CIT(A) HAD BEEN CORRECTLY DELETED BY THE LD . CIT(A) AND THAT THE ORDER OF THE LD. CIT(A) BE UPHELD. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. AS FAR AS THE FIRST I SSUE PERTAINING TO SHARE CAPITAL IS CONCERNED, IT IS SEEN THAT THE LD. CIT(A) HAS RECORDED THE FINDING THAT AS PER RECORDS, HER PREDE CESSOR CIT(A) HAD SPECIFICALLY DIRECTED THE ASSESSING OFFICER TO EXAMINE THE RECORD AND INTIMATE AS TO WHETHER THE AMOUNT OF SHA RE APPLICATION MONEY OF RS. 96,19,000/- WAS RECEIVED DURING THE ASSESSMENT YEAR 2005-06 I.E. THE PRECEDING ASSESSME NT YEAR AS CLAIMED BY THE ASSESSEE. IT HAS BEEN FURTHER NOTED THAT THE ASSESSING OFFICER, INSTEAD OF EXAMINING THE ASSESSM ENT RECORD AND SENDING REPORT ON THE SPECIFIC DIRECTION OF THE PREDECESSOR CIT(A), SIMPLY REPEATED HIS OBSERVATIONS AS CONTAIN ED IN THE ASSESSMENT ORDER. THE LD. CIT(A) FURTHER NOTED THA T SHE HAS GONE THROUGH COPIES OF AUDITED BALANCE SHEET FOR FINANCI AL YEARS 2004- 05 AND 2005-06 RELEVANT TO ASSESSMENT YEARS 2005-06 & 2006- ITA NO. 2498/DEL/2014 ASSESSMENT YEAR 2006-07 6 07 AND HAS FOUND THAT NO SHARE APPLICATION MONEY WA S RECEIVED DURING THE ASSESSMENT YEAR UNDER CONSIDERATION AND THAT THE ASSESSEE HAD ONLY ALLOTTED SHARES TO THE SUBSCRIBER S WHO HAD SUBSCRIBED THE SHARE APPLICATION MONEY AMOUNTING TO RS. 96,19,000/- DURING THE FINANCIAL YEAR 2005-06. TH E LD. CIT(A) PROCEEDED TO DELETE THE ADDITION ON THIS ACCOUNT. AFTER GOING THROUGH THE ORDER OF THE LD. CIT(A), WE FIND THAT A S THE IMPUGNED AMOUNT WAS NOT RECEIVED DURING THE YEAR UNDER CONSI DERATION, THE SAME COULD NOT HAVE BEEN ADDED BACK BY THE ASSE SSING OFFICER AS HAS BEEN DONE IN THE ASSESSMENT ORDER. THE ASSESSING OFFICER HAD BEEN DIRECTED TO EXAMINE THE RECORDS FO R EARLIER YEARS BUT HE FAILED TO DO SO ALTHOUGH HE HAD BEEN SPECIFI CALLY DIRECTED TO DO SO IN THE ORDER OF THE LD. CIT(A). IT IS OUR CONSIDERED OPINION THAT ALTHOUGH THE ASSESSEE HAS BEEN GROSSLY NEGLIGENT IN RESPONDING TO THE ASSESSMENT PROCEEDINGS, ALL THE S AME, IT CANNOT BE PUT TO A DISADVANTAGE WHEN THE DEPARTMENT AL OFFICERS ALSO FAILED TO AVAIL THE OPPORTUNITY EVEN WHEN DIRE CTED TO DO SO AS THE LD. CIT(A) HAS EXAMINED THE RECORDS OF EARLI ER YEARS AND HAS GIVEN A CATEGORICAL FINDING THAT SHARE APPLICAT ION MONEY HAD NOT BEEN RECEIVED DURING THE YEAR UNDER CONSIDERATI ON AND HAS ALSO NOTED THE FACT THAT THE ASSESSING OFFICER DID NOT EXAMINE THE ITA NO. 2498/DEL/2014 ASSESSMENT YEAR 2006-07 7 ISSUE WHEN DIRECTED TO DO SO, WE FIND NO CAUSE OF G RIEVANCE ON THE PART OF THE DEPARTMENT. WE ACCORDINGLY FIND NO REASON TO INTERFERE AND UPHOLD THE ORDER OF THE LD. CIT(A) ON THIS ISSUE. 5.1 AS FAR AS GROUND NO. 2 OF THE APPEAL IS CONCERN ED, THE LD. CIT(A) HAS GIVEN A FINDING THAT THE EXPENSES PERTAI NED TO EXPENDITURE DEBITED UNDER VARIOUS HEADS WHICH WERE IN THE NATURE OF HAVING BEEN INCURRED IN CONNECTION WITH T HE CARRYING ON OF BUSINESS. THE LD. CIT(A) HAS ALSO NOTED THAT THE ACCOUNTS WERE DULY AUDITED AND HAS DELETED THE ADDITION. HO WEVER, SINCE IT IS SEEN THAT THE ASSESSEE HAD NOT PRODUCED ANY E VIDENCE IN SUPPORT OF THESE EXPENSES AND THE SAME DO NOT SEEM TO HAVE BEEN SUBMITTED BEFORE THE LD. CIT(A) ALSO, THE DELE TION JUST BASED ON THE FACT OF THE ACCOUNTS HAVING BEEN AUDITED DOE S NOT APPEAR CORRECT TO US. IN THE INTEREST OF JUSTICE, THIS IS SUE NEEDS TO GO BACK TO THE FILE OF THE ASSESSING OFFICER FOR THE P URPOSE OF GETTING EXPENSES VERIFIED. ACCORDINGLY, WE RESTORE THIS IS SUE TO THE FILE OF THE ASSESSING OFFICER FOR DE NOVO EXAMINATION BY TH E ASSESSING OFFICER AFTER GIVING PROPER OPPORTUNITY TO THE ASSE SSEE. 6. IN THE RESULT, THE APPEAL FILED BY THE DEPARTM ENT IS PARTLY ALLOWED IN TERMS OF OUR OBSERVATIONS. ITA NO. 2498/DEL/2014 ASSESSMENT YEAR 2006-07 8 ORDER IS PRONOUNCED IN THE OPEN COURT ON 31 ST OCTOBER, 2017. SD/- SD/- (B.P. JAIN ) (SUDHANSHU SRIVASTAVA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 31ST OCTOBER, 2017 GS COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER ASSISTANT REGI STRAR