Smt. Neelam Rani, Uttar Pradesh V. ITO, Bulandshahr

ITA 2505/DEL/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97348 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 2
• Next Hearing Date: 21-07-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 29-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: YATENDRA SINGH
• Assessee Lawyers: RK GARG
• Keywords: Opportunity of being heard; Diversion of income; Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC - 2 , NEW DELHI BEFORE SH. N. K. SAINI, AM ITA NO. 2505 /DEL/201 5 : ASSTT. YEAR : 2009 - 10 SMT. NEELAM RANI, PROP. M/S SHANT I SWAROOP & SONS, GUROOSH GANJ, BULANDSHAHAR VS INCOME TAX OFFICER, WARD - 3 , BULANDSHAHAR (APPELLANT) (RESPONDENT) PAN NO. A BGPR3553A ASSESSEE BY : SH . R. K. GARG , ADV. REVENUE BY : SH. YATENDRA SINGH , SR. DR DATE OF HEARING : 21 .0 7 .2015 DATE OF PRONOUNCEMENT : 10 .09 .2015 ORDER THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 19.0 2 .2015 OF LD. CIT (A), GHAZIABAD . 2 . FOLLOWING GROUND HAVE BEEN RAISED IN THIS APPEAL: 1. THAT UNDER THE FACTS & CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(APPEALS) HAS ERRED NOT TO ADMIT THE ADDITION AL EVIDENCE AS PER RULE 46A SUB - CLAUSE (B), (C), (D) OF INCOME TAX RULES, 1962. THE NON ADMITTANCE OF ADDITIONAL EVIDENCE IN SPITE OF NO OBJECTION FROM THE LEARNED AO, IS THEREFORE, ARBITRARY, UNJUST, UNCALLED - FOR, ILLEGAL AND AGAINST THE PRINCIPLE OF NATU RAL JUSTICE. 2. THAT UNDER THE FACTS & CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(APPEALS) HAS ERRED TO DISALLOW THE ITA NO.2505 /DEL /2015 NEELAM RANI 2 ENTIRE COMMISSION PAID TO SUB AGENT AT RS. 4,22,000/ - UNDER SUB - SECTION 40A(2)(B) ON THE PLEA THAT THIS WAS THE DIVERSION OF INCOME. CONFI RMATION IS PURELY BASED ON PRESUMPTION, SURMISES AND CONJECTURES. THE DISALLOWANCE OF ENTIRE AMOUNT OF RS. 4,22,000/ - IS THEREFORE, ARBITRARY, UNJUST, UNCALLED - FOR, ILLEGAL AND IN ANY CASE HIGHLY EXCESSIVE. 3. THAT WITHOUT PREJUDICE TO THE GROUND NO. 2, T HE DISALLOWANCE OF COMMISSION TO SUNITA RANI AT RS. 1,27,800/ - RUBI GOYAL AT RS. 1,52,600/ - AND SH. SUMIT GOYAL AT RS. 1,41,600/ - , TOTALING TO RS. 4,22,000/ - U/S 40A(2)(B) IS ARBITRARY, UNJUST, UNCALLED - FOR, ILLEGAL AND IN ANY CASE HIGHLY EXCESSIVE. 4. TH AT UNDER THE FACTS & CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(APPEALS) HAS ERRED TO CONFIRM THE ADDITION OF RS. 7,072/ - ON ACCOUNT OF DIFFERENCE IN DEBIT NOTE, WHICH WAS FULLY SUBSTANTIATED AND EXPLAINED. THE CONFIRMATION OF ADDITION OF RS. 7,072/ - IS TH EREFORE, ARBITRARY, UNJUST, UNCALLED - FOR AND ILLEGAL. 5. THAT UNDER THE FACTS & CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(APPEALS) HAS ERRED TO CONFIRM THE ADDITION OF RS. 4,27,072/ - IN SPITE OF ALL EVIDENCE INCLUDING BOOKS PRODUCED. THE ADDITION IS THER EFORE, ARBITRARY, UNJUST, UNCALLED - FOR, ILLEGAL AND IN ANY CASE HIGHLY EXCESSIVE. ITA NO.2505 /DEL /2015 NEELAM RANI 3 3 . THE MAIN GRIEVANCE OF THE ASSESSEE VIDE GROUND NO. 1 RELATES TO THE NON ADMITTANCE OF ADDITIONAL EVIDENCE FURNISHED BY THE ASSESSEE UNDER RULE 46A OF THE INCOME TAX RU LES, 1962 (HEREINAFTER REFERRED TO AS THE RULE) . 4 . FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE FILED THE RETURN OF INCOME ON 29.09.2009 , DECLARING AN INCOME OF RS. 1,84,010/ - . LATER ON, THE CASE WAS SELECTED FOR SCRUTINY. THE AO FRAMED THE ASSESSMEN T AT AN INCOME OF RS. 6,13,082/ - BY MAKING AN ADDITION OF RS. 4,22,000/ - U/S 40A(2)(B) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) AND ADDITION OF RS. 7,072/ - ON ACCOUNT OF DIFFERENCE IN DEBIT NOTES AND ACTUAL DEBIT. 5 . BEING AGGRIEVE D THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SOUGHT PERMISSION TO FILE ADDITIONAL EVIDENCES UNDER RULE 46A IN FORM OF CERTIFICATE OF PURCHASERS STATING THEREIN THAT THE SAID BROKERS HAVE OBTAINED PURCHASE ORDER FROM THE PURCHASER FOR DELIVERY OF SUGAR. IT WAS STATED THAT SUCH EVIDENCES COULD NOT BE OBTAINED DUE TO PAUCITY OF TIME. IT WAS FURTHER SUBMITTED THAT T HE AO IN HIS REMAND REPORT DATED 08.06.2014 HAS REPORTED THAT 10 PERSONS HAD CONFIRMED THAT TH E PURCHASER , PURCHASED SUGAR OF ASSESSEE TH ROUGH THE BROKERS WHILE IN TWO CASES THE LETTERS WERE RECEIVED UNSERVED. ACCORDINGLY, IT WAS SUBMITTED THAT THE FAMILY MEMBERS GENUINELY ACTED AS BROKER. ITA NO.2505 /DEL /2015 NEELAM RANI 4 6. THE LD. CIT(A) HOWEVER, DID NOT FIND MERIT IN THE SUBMISSIONS OF THE ASSESSEE AND SUSTAINED THE AD DITION OF RS. 4,22,000/ - BY OBSERVING IN PARA 5.1 OF THE IMPUGNED ORDER AS UNDER: 5.1 I FIND THAT CONTENTIONS OF THE APPELLANT LACK MERIT AND STRENGTH. THE ADDITIONAL EVIDENCES NOW PRODUCED CANNOT BE ADMITTED AS NO CONDITION UNDER RULE 46A IS SATISFIED F OR THEIR ADMITTANCE. THE SO CALLED CONFIRMATION BY PURCHASERS ARE MERELY SELF SERVING POST FACTO STATEMENTS AND KEY LACK EVIDENTIARY VALUE AS NO PAYMENTS ARE MADE BY THE PURCHASERS. MOREOVER, IT IS SEEN THAT THE TOTAL RECEIPTS OF APPELLANT ARE RS. 7,51,342 / - OUT OF WHICH COMMISSION PAYMENT OF RS. 4,22,000/ - TO THREE FAMILY MEMBERS EXCEEDS 50% OF HER RECEIPTS OF COMMISSION. APPLYING PRINCIPLE OF PREPONDERANCE OF PROBABILITY, I FIND THAT THE INTENTION OF THE APPELLANT IS MERE DIVERSION OF PROFITS IN HANDS OF FAMILY MEMBERS WHOSE RETURNED INCOME ARE BELOW TAXABLE LIMITS OR VERY NEAR TO THIS LIMIT. THE PAYMENTS ARE DUE AT END OF THE YEAR AND NO ACTUAL TRANSFER OF FUNDS HAVE TAKEN PLACE. THERE IS NO JUSTIFICATION AS TO WHY THE ASSESSEE WOULD PART WITH MORE THAN 5 0% OF HER COMMISSION TO HER FAMILY MEMBERS - SON, DAUGHTER - IN - LAW & SISTER - IN - LAW (JETHANI). THE CONTENTIONS ARE THEREFORE, REJECTED. THE PAYMENTS HAVE RIGHTLY BEEN DISALLOWED U/S 40A(2)(B) IN FACTS AND CIRCUMSTANCES OF THE CASE. THEREFORE, GROUNDS OF APPEA L NO. 1 & 2 ARE REJECTED. THE LD. CIT(A) ALSO CONFIRMED THE ADDITION OF RS. 7,072/ - . ITA NO.2505 /DEL /2015 NEELAM RANI 5 7 . NOW THE ASSESSEE IS IN APPEA L . THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT THE ADDITION AL EVIDENCE S WHICH GO TO THE ROOT OF THE MATTER AND COULD NOT BE PROCURE D BY THE ASSESSEE DUE TO PAUCITY OF TIME D URING THE COURSE OF ASSESSMENT PROCEEDINGS , WERE NOT ADMITTED AND APPRECIATED BY THE LD. CIT(A) IN RIGHT PROSPECTIVE. IT WAS FURTHER SUBMITTED THAT THE ADDITION ON ACCOUNT OF DIFFERENCE IN DEBIT NOTE WAS ALSO CONFIRMED WITHOUT CONSIDERING THE SUBMISSIONS OF THE ASSESSEE. THE LD. COUNSEL FOR THE ASSESSEE REQUESTED TO REMAND THIS CASE BACK TO THE FILE OF THE LD. CIT(A). 8 . IN HIS RIVAL SUBMISSIO NS THE LD. DR ALTHOUGH SUPPORTED THE ORDER OF THE AO BUT OBJECT ED TO REMAND THE CASE BACK TO THE FILE OF THE LD. CIT(A). 9. I HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE, IT IS NOTICED THAT THE LD. CIT(A) IN PARA 4 AT PAGE NO. 5 OF THE IMPUGNED ORDER MENTIONED THE SUBMISSION OF THE ASSESSEE THAT IN THE REMAND REPORT DATED 08.06.2014, THE AO HAS REPORTED THAT 10 PERSONS HAD CONFIRMED THAT THEY PURCHASED SUGAR OF THE ASSESSEE THROU GH THE BROKERS , HOWEVER, HE CONFIRMED THE ADDITION OF RS. 4,22,000/ - MADE BY THE AO. SIMILARLY, THE ADDITION OF RS. 7,072/ - HAS BEEN CONFIRMED ITA NO.2505 /DEL /2015 NEELAM RANI 6 WITHOUT APPRECIATING THE FACT IN RIGHT PERSPECTIVE. I, THEREFORE, CONSIDERING THE TOTALITY OF THE FACT S DEEM IT A PPROPRIATE TO REMAND THIS CASE BACK TO THE FILE OF THE LD. CIT(A) TO BE DECIDED AFRESH IN ACCORDANCE WITH LAW AFTER PROVIDING DUE AND REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 10 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STAT ISTICAL PURPOSES . ( ORDER PRON OUNCED IN THE COURT ON 10 /09 /2015 ) SD/ - (N. K. SAINI) ACCOUNTANT MEMBER DATED: 10 /09 /2015 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR