ACIT, New Delhi V. Sh. Sanjeev Malhotra, New Delhi

ITA 2528/DEL/2010

• Counselvise Citation: 252820114 RSA 2010
• Duration Of Justice: 1 year(s) 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 27-06-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 26-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S MOHANTHY
• Section: 68; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI G BENC H BEFORE SHRI RAJPAL YADAV, JM & SHRI A.N. PAHUJA, A M I.T.A NO. 2528/DEL/10 ASSESSMENT YEAR : 2005-06 ACIT,CIRCLE 22 (1), ROOM NO. 238B, 2 ND FLOOR, CR BUILDING, IP ESTATE,NEW DELHI. V/S . SHRI SANJEEV MALHOTRA, 64, HEMKUNT COLONY, G.K.-1, NEW DELHI - 48 [PAN NO.: ABDPM9549C] (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI SATISH AGGARWAL, AR REVENUE BY SMT. S. MOHANTHY ,DR DATE OF HEARING 28-11-2011 DATE OF PRONOUNCEMENT 28-11-2011 O R D E R A.N.PAHUJA:- THIS APPEAL FILED ON 26 TH MAY, 2010 BY THE REVENUE AGAINST AN ORDER DATED 3 RD MARCH, 2010 OF THE LD. CIT (A) XXIII,NEW DELHI,R AISES THE FOLLOWING GROUNDS : 1. ON THE FACTS AND ON THE CIRCUMSTANCES OF THE CASE THE CIT(A) HAS ERRED IN LAW AND ON THE FACTS IN DELETING THE ADDITION OF ` ` .38,34,32,103/- MADE BY THE AO TREATING THE SUNDRY CREDITORS AS BOGUS ENTIT IES; 2. THE APPELLANT CRAVES LEAVE TO ADD,ALTER OR AMEND ANY OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF HEARING OF TH E APPEAL.. ITA NO. 2528/DEL/10 2 2. FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THAT RETURN DECLARING INCOME OF ` 5,89,930/- FILED ON 1.8.2005 BY THE ASSESSEE, AFTER BEING PROCESSED U/S 143(1) OF THE INCOME TAX ACT 1961 (HEREINAFTER REFERRED TO AS THE ACT), WAS TAKEN UP FOR SCRUTINY WITH THE SERVICE OF A NOTICE U/S 143(2) O F THE ACT ISSUED ON 27.8.2006. NONE RESPONDED TO THIS NOTICE NOR TO THE SUBSEQUENT NO TICE U/S 142 (1) OF THE ACT ISSUED ON 9 TH FEBRUARY, 2007 NOR EVEN TO LETTERS ADDRESSED TO TH E ASSESSEE BY THE ASSESSING OFFICER[AO IN SHORT] AS DETAILED ON PAGE 2 OF THE ASSTT. ORDER. ACCORDINGLY, THE AO PROCEEDED TO COMPLETE THE ASSESSMENT EX PART E IN TERMS OF PROVISIONS OF SECTION 144 OF THE ACT. ON PERUSAL OF BALANCE SHE ET ANNEXED WITH THE RETURN, THE AO NOTICED THE FOLLOWING TWO CREDITORS M/S. ALPHA EXPORTS ` ` . 15,22,64,046/- M/S. K.S. TRADERS ` `.23,11,68,057/- 2.1 . DURING THE YEAR UNDER CONSIDERATION THE ASSES SEE DID NOT MAKE ANY PURCHASES FROM THE AFORESAID TWO PARTIES. SINCE THE ASSESSEE FAILED TO ESTABLISH GENUINENESS OF THE AFORESAID CREDITORS THE AO ADDED THESE AMOUNTS, RESULTING IN ADDITION OF ` ` 38,34,32,103/-, TREATING THE CREDITORS BOGUS AND WRITTEN OFF. 3. ON APPEAL, THE LD. CIT(A), AFTER HAVING A RE MAND REPORT FROM THE AO AND IN THE LIGHT OF DECISIONS IN CIT VS.USHA STUD AGRICULTURA L FARMS LTD., 301 ITR 384 (DELHI);AND ITO VS. SHRI RADHA KRISHAN DISTRIBUTO RS,58 ITD 47(DEL.) CONCLUDED AS UNDER :- 16) ON THE TOUCHSTONE OF THE LEGAL PRINCIPLES ENUNC IATED BY THE DELHI HIGH COURT AND THE DELHI TRIBUNAL, I MAY ENDEAVOUR TO AP PRECIATE THE FACTS. IT IS UNDISPUTED THAT THE ASSESSEE IS THE PROPRIETO R OF M/S. ALPHA EXPORTS AND M/S. K.S. TRADERS. IT IS ALSO UNDISPUTE D THAT ON 31.3.2005, AN AMOUNT OF RS. 15,22,64,046/- AND RS. 23,11,68,05 7/- HAD BEEN SHOWN AS SUNDRY CREDITORS IN THE BALANCE SHEET OF M /S, ALPHA EXPORTS AND M/S. K.S. TRADERS, RESPECTIVELY. IT IS THE STAN D OF THE ASSESSEE THAT THE TOTAL AMOUNT AS REFLECTED AS SUNDRY CREDITORS, WHICH WORKED OUT TO A FIGURE OF RS. 38,34,32,103/- WAS THE BROUGHT FORWAR D OPENING BALANCE. IN OTHER WORDS, THE ASSESEES STAND IS THAT THE AMO UNT OF RS. 38,34,32,103/- WAS THE OPENING BALANCE ON 1.4.2004. TO VERIFY THE ARGUMENT OF THE ASSESSEE, THE MATTER HAD BEEN REFER RED UNDER SUB SECTION (4) OF SECTION 250 OF THE ACT. IN SPITE OF EXPIRY OF ALMOST 3 MONTHS, THE LEARNED ASSESSING OFFICER HAS NOT GIVEN ANY FINDING. HOWEVER, HE HAS FORWARDED THE LIST OF SUNDRY CREDIT ORS FOR ASSESSMENT ITA NO. 2528/DEL/10 3 YEAR 2002-03 AND 2003-04, AS FILED IN RETURN OF INC OME. I HAVE CAREFULLY GONE THROUGH THE SAID LIST. ON 25.2.2010, I HAVE AL SO GONE THROUGH THE BOOKS OF ACCOUNTS OF THE ASSESSEE. ON PERUSAL OF TH E LIST FURNISHED BY THE LEARNED ASSESSING OFFICER AND THE VETTING OF BO OKS OF ACCOUNTS OF THE ASSESSEE, IT TRANSPIRES THAT THE OPENING BALANC E AS ON 1.4.2004 WAS BROUGHT FORWARD IN BOTH M/S. ALPHA EXPORTS AND M/S. K.S. TRADERS. IN FACT, SOME OF THE SUNDRY CREDITORS WERE AS OLD A S ASSESSMENT YEAR 2002-03. 17) IN VIEW OF THE ABOVE FINDING, IT IS CRYSTAL CLE AR THAT THE SUNDRY CREDITORS BEING BROUGHT FORWARD, THE PROVISIONS OF SECTION 68 COULD NOT BE ATTRACTED. THIS WOULD BE IN ACCORDANCE WITH THE PRO VISIONS OF SECTION 68 AS ALSO THE DECISION OF THE JURISDICTIONAL HIGH COU RT IN CIT VS. USHA STUD AGRICULTURAL FARMS LTD. (SUPRA). 18) I HAVE ENDEAVOURED TO APPRECIATE THE ISSUE FROM A D IFFERENT ANGLE TOO I.E. WHETHER THE PROVISIONS OF SECTION 41(1) COULD BE INVOKED. THE DECISIONS OF THE APEX COURT IN CIT VS. KANPUR COAL SYNDICATE (1964) 53 ITR 225 (SC) AND JUTE CORPORATION OF INDIA VS. C IT (1991) 187 ITR 688 (SC) COME TO MY AID. IN BOTH THE DECISIONS, IT HAS BEEN HELD THAT THE FIRST APPELLATE AUTHORITY HAS CONCURRENT POWER AS THE ASSESSING OFFICER. THE SPECIFIC ISSUE THAT HAS BEEN GONE INTO IS WHETHER THE LIABILITY HAD BEEN BARRED BY LIMITATION. IT IS REIT ERATED THAT THE REVENUE HAS NOT REFERRED TO THIS SECTION EITHER DURING ASSE SSMENT PROCEEDINGS OR DURING THE ENQUIRY UNDER SUB SECTION (4) OF SECT ION 250 OF THE ACT. IN OTHER WORDS, THERE IS NO FINDING OF THE REVENUE THA T THE LIABILITY IN ISSUE HAD BECOME BARRED AND UNENFORCEABLE, AS PROVIDED FO R IN THE LIMITATION ACT. 3.1 WHILE REFERRING TO THE DECISION IN SHRI VARDHMAN OVERSEAS LTD. VS. ACIT 24 SOT 393 (DEL) IN THE CONTEXT OF PROVISIONS OF SEC. 41(1) OF THE ACT, THE LD. CIT(A) FURTHER CONCLUDED AS UNDER: 20) IN VIEW OF THE ABOVE, THE PROVISIONS OF SECTION 41(1) WOULD ALSO NOT BE ATTRACTED, AS THE REVENUE EITHER AT THE ASSE SSMENT STAGE OR DURING THE ENQUIRY UNDER SUB SECTION (4) OF SECTION 250 HAS NOT MADE OUT A CASE THAT THE LIABILITY APPEARING IN THE BALA NCE SHEET HAD CEASED FINALLY AND THERE WAS NO POSSIBILITY OF THE REVIVAL OF THE LIABILITY. 4. THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST T HE AFORESAID FINDINGS OF THE LD. CIT(A). THE LD. DR SUPPORTED THE ORDER OF AO WH ILE THE LD. AR ON BEHALF OF THE ASSESSEE RELIED UPON THE FINDING OF THE LD. CIT(A). 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. INDISPUTABLY, THE AO DID NOT SUBMIT REMAND REPORT CALLED FOR BY THE LD. CIT(A) ITA NO. 2528/DEL/10 4 DESPITE SUFFICIENT OPPORTUNITY. RESULTANTLY, AFTER EXAMINING THE BOOKS OF ACCOUNTS OF THE ASSESSEE, THE LD. CIT(A) CONCLUDED THAT THE AFO RESAID TWO CREDITORS IN THE NAME OF M/S. ALPHA EXPORTS AND M/S. K.S. TRADERS WERE BROUGHT FORWARD AS ON 1.4.2004 AND WERE AS OLD AS THE AY 2002-03 ,THEREBY, DELETI NG THE ADDITION. INTER ALIA, THE LD. CIT(A) ALSO EXAMINED THE APPLICABILITY OF PROVISION S OF SECTION 41(1) OF THE ACT. SINCE THE REVENUE FAILED TO ESTABLISH THAT THE LIABILITY APPEARING IN THE BALANCE SHEET CEASED TO EXIST WHILE THE LD. DR DID NOT REFER US TO ANY MATERIAL, CONTROVERTING THE AFORESAID FINDINGS OF FACTS RECORDED BY THE LD. CIT (A) SO AS TO ENABLE US TO TAKE A DIFFERENT VIEW IN THE MATTER, WE ARE NOT INCLINED T O INTERFERE. THEREFORE, GROUND NO. 1 IN THE APPEAL IS DISMISSED. 6. NO ADDITIONAL GROUND HAVING BEEN RAISED BEFORE US IN TERMS OF RESIDUARY GROUND NO. 2 IN THE APPEAL ACCORDINGLY THIS GROUND OF APPEAL IS ALSO DISMISSED. 7. IN THE RESULT APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT SD/- SD/- (RAJPAL YADAV) (A.N. PAHU JA) (JUDICIAL MEMBER) (ACCOUNTAN T MEMBER) COPY OF THE ORDER FORWARDED TO :- 1. ACIT,CIRCLE 22 (1),ROOM NO. 238B, 2 ND FLOOR,CR BUILDING,IP ESTATE,NEW DELHI 2. SHRI SANJEEV MALHOTRA, 64, HEMKUNT COLONY, G.K.-1,N EW DELHI - 48 3. CIT(A)-XXIII, NEW DELHI. 4. CIT CONCERNED. 5. DR, ITAT,G BENCH, NEW DELHI 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, DELHI