ACIT, New Delhi V. M/s Nidhi Exports, New Delhi

ITA 2547/DEL/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 53463 (ITAT-DELHI)
• Duration Of Justice: 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 08-12-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 16-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R S NEGI
• Keywords: Additional evidence
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : E : NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI K.D. RANJAN, ACCOUNTANT MEMBER ITA NO.2547/DEL/2011 ASSESSMENT YEAR : 2007-08 ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 29(1), NEW DELHI. VS. M/S NIDHI EXPORTS, 2751/2 HAMILTON ROAD, MORI GATE, DELHI 06. PAN : AACFN0462H (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SHRI R.S. NEGI, SR. DR ORDER PER I.P. BANSAL, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE REVENUE. IT IS DIRECT ED AGAINST THE ORDER PASSED BY THE CIT (A) DATED 15 TH MARCH, 2011 FOR ASSESSMENT YEAR 2007-08. THE GROUNDS OF APPEAL READ AS UNDER:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW , THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS.20,44 ,993/- WITHOUT AFFORDING AN OPPORTUNITY TO THE ASSESSING OFFICER TO EXA MINE THE ADDITIONAL EVIDENCE RELIED UPON BY THE CIT (A). 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LA W, THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS.20,44,993 /- IGNORING THE FACT THAT THE ASSESSEE FAILED TO DISCHARGE ITS ONUS TO PRO VE THE GENUINENESS OF THE SAID PURCHASES. 3. THE APPELLANT CRAVES LEAVE FOR RESERVING THE RIGHT TO AMEND, MODIFY, ALTER, ADD FORGO AND GROUNDS (S) OF APPEAL A T ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL. 2. THE RETURN OF INCOME WAS FILED BY THE ASSESSEE AT AN INCOME OF ` 27,48,686/-. IT IS NOTICED BY THE ASSESSING OFFICER IN T HE ASSESSMENT ORDER ITA NO.2547/DEL/2011 2 THAT GROSS PROFIT RATE OF THE ASSESSEE HAD DECLINED TO 21 .23% FROM 31.62% WHEN IT WAS COMPARED TO THE IMMEDIATE PRECEDING ASSESSME NT YEAR. THE ASSESSEE WAS REQUIRED TO FURNISH CONFIRMATIONS FROM SUNDRY CREDITORS HAVING OUTSTANDING BALANCE OF ` 10 LAC OR MORE AS AT THE END OF THE FINANCIAL YEAR. IT WAS NOTICED THAT THE ASSESSEE HAD MADE VARIOUS PURCHASES FROM ONE CONCERN NAMELY M/S ROYALE ELECTRIC & GENERAL IND USTRY, GURGAON AND TOTAL PURCHASES SO MADE WERE ` 20,44,993/- AGAINST WHIC H AN AMOUNT OF ` 14,15,966/- WAS OUTSTANDING AS ON 31 ST MARCH, 2007. THE ASSESSEE WAS REQUIRED TO FILE CONFIRMATION WHICH WAS FILED BY THE ASSESSEE VIDE LETTER DATED 12 TH NOVEMBER, 2009 AND ON THE CONFIRMATION NO PAN WAS M ENTIONED AND NAME OF THE PERSON WHO SIGNED THE SAID CONFIRMATIO N WAS ALSO NOT MENTIONED. HOWEVER, THE ASSESSING OFFICER MADE HIS OWN INQUIRIES U/S 133(6) BY ISSUE OF LETTER AND BY SENDING THE INSPECTOR WHO FOUND THAT THE SAID PARTY DID NOT EXIST ON THE SAID ADDRESS. THE ASSESSEE W AS AGAIN REQUIRED TO EXPLAIN THE SAME. IN RESPONSE TO SUCH QUER Y, LETTER DATED 10 TH DECEMBER, 2011 WAS FILED. IT WAS SUBMITTED THAT PHOTO COPIES OF ALL THE BILLS RAISED BY THE SAID PARTY ARE ALREADY FILED AND O N THESE BILLS, THE ADDRESS OF THE PARTY, TELEPHONE NO. AND EVEN THE TIN NO. WERE MENTIONED. COPY OF STATUTORY FORMS ISSUED BY GURGAON SALES-TAX AUTH ORITY TO THE SAID PARTY WERE ALSO FILED ALONG WITH THE COPY OF LEDGER ACCOUNT OF THE SAID PARTY AND COPY OF BANK STATEMENT SHOWING THAT PAYMENT S WERE MADE TO THAT PARTY THROUGH CHEQUES. HOWEVER, THE ASSESSING OFFI CER DID NOT ACCEPT SUCH CONTENTION OF THE ASSESSEE AND HAS REJECTED THE CONT ENTION OF THE ASSESSEE FOR THE REASONS LISTED IN THE ASSESSMENT ORDER. THE REASONS MENTIONED BY THE ASSESSING OFFICER INTER ALIA INCLUDE T HAT CONFIRMATION WAS FILED BY THE ASSESSEE ONLY ON 12 TH NOVEMBER, 2009 WHICH IS A TIME WHEN THE TIME BARRING DATE IS APPROACHING AND THE FACT TH AT THE ASSESSEE COULD GET CONFIRMATION SIGNED FROM THE SAID CONCERN IS EVIDE NT OF THE FACT THAT THE ASSESSEE IS IN THE KNOWLEDGE OF WHEREABOUTS OF THE SAID PA RTY AND DESPITE THAT FACT THE ASSESSEE DID NOT GIVE THE CORRECT ADDRESS A ND HAS SIMPLY FILED THE COPIES OF INVOICES CLAIMED TO HAVE BEEN ISSUED BY T HE SAID PARTY. THE ASSESSING OFFICER ALSO MENTIONED THAT MERE PAYMENT OF AC COUNT PAYEE ITA NO.2547/DEL/2011 3 CHEQUE IS NOT SUFFICIENT TO ESTABLISH THE GENUINENESS OF THE PURCHASE. IT IS IN THIS MANNER THE ASSESSING OFFICER ADDED A SUM OF ` 20, 44,993/- TO THE INCOME OF THE ASSESSEE WHICH REPRESENTED THE ENTIRE PURC HASE MADE BY THE ASSESSEE FROM THE SAID PARTY. 3. LEARNED CIT (A) HAS DELETED THE ADDITION ON THE G ROUND THAT THE ASSESSEE HAD SUBMITTED AMPLE EVIDENCE AND IT WAS SUBMITTED THAT THE SAID CONCERN WAS REPRESENTED BY TWO PARTNERS, NAMELY, SHRI DEEPAK ARORA AND SHRI SAMEER ARORA, BOTH HAVING PANS AND PANS ARE ALSO MENTIONED IN THE ORDER OF THE CIT (A). AFTER SATISFYING HIMSELF, LEARN ED CIT (A) HAS DELETED THE ADDITION WITH THE FOLLOWING OBSERVATIONS:- 4.3 THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF TH E A.O. AND IT IS SUBMITTED THAT THE ASSESSEE IS IN THE BUSINESS FOR A LONG TIME AND DURING THE CURRENT A.Y. 2007-08 PURCHASE OF RS.20,44 ,993/- WAS MADE OUT OF WHICH PAYMENT OF RS.6,29,027/- WAS MADE BY CHE QUE OUT OF THE BANK ACCOUNT NO.650 OF THE ASSESSEE WITH INDIAN OVERSE AS BANK, HAMILTAN ROAD CHOWK MORIGATE, DELHI 110 006. IT IS ALSO SUBMITTED THAT THE ASSESSEE HAD MADE PURCHASE OF RS.6,62,616/- D URING THE A.Y. 2008-09 AND HAD ALSO MADE THE PAYMENT OF RS.8,77,700/ - AND THERE IS NET OUTSTANDING BALANCE IS OF RS.12,00,882/- (RS.14,14 ,966/- (+) RS.6,62,616 = RS.20,78,582/- (-) RS.8,77,700/- = RS .12,00,882/-) AS ON 31.03.2008. IT IS ALSO SUBMITTED THAT ALL THE PAYMENTS WE RE MADE BY CHEQUE TO THE PARTY AND ALL THE PURCHASES ARE REFLECTED IN THE FORM OF CORRESPONDING EXPORTS WHICH ARE REFLECTED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. IT IS SUBMITTED THAT THE SUPPLIER HAS THE PA N NO. AAIFR6403J AND THE SALES TAX REGISTRATION NO.063819186 00 AND THERE ARE TWO PARTNERS NAMELY SH. DEEPAK ARORA (PAN NO.ADWP A1144J) AND SH. SAMEER ARORA (PAN NO.ADWPA1152G). IT IS ALSO SU BMITTED THAT THE ASSESSEE COLD NOT HAVE MADE THE EXPORTS WITHOUT THE CORRE SPONDING PURCHASES. IT IS ALSO SUBMITTED THAT THE PARTY HAD RUN IN HUGE DEBT AND HAS BEEN HIDING SINCE THEN BECAUSE OF PRESSURE OF ITS CREDITORS. IT IS ALSO SUBMITTED THAT THE ASSESSEE SHOULD NOT BE PENALIZED JUST BECAUSE THE PARTY WAS NOT READILY AVAILABLE IN THE GIVEN ADDRES S MUCH AFTER THE TRANSACTION AND IN FACT SCRUTINY ASSESSMENT WAS MADE EVE N IN A.Y. 2006-07 AND THERE WAS NO ADVERSE FINDING IN THE CASE OF THE ASSESSEE. IT IS ALSO SUBMITTED THAT IN CASE THE PARTY IS NOT THERE TO CLAIM THE MONEY FROM THE ASSESSEE THE SAME WILL BE OFFERED FOR TAXATION IN THE RELEVANT YEAR. IT IS ALSO SUBMITTED THAT IT IS NOT THE CASE OF THE A.O. THAT THE PARTY HAS EVER DENIED THE TRANSACTION AND IT IS ON LY A QUESTION OF NON-AVAILABILITY OF THE PARTY AT THE GIVEN ADDRESS DU RING THE COURSE OF ASSESSMENT PROCEEDINGS WHICH IS GENERALLY MUCH AF TER THE DATE OF TRANSACTION. 4.4 I HAVE CONSIDERED THE ORDER OF THE A.O. AND THE SU BMISSION OF THE ASSESSEE AND I FIND CONSIDERABLE MERIT IN THE SUBM ISSION OF THE ITA NO.2547/DEL/2011 4 ASSESSEE THAT THERE IS CORRESPONDING EXPORTS OF THE MATER IAL FOR THE PURCHASES AND THE INCOME HAS BEEN REFLECTED IN THE BOO KS OF ACCOUNTS OF THE ASSESSEE OUT OF THE EXPORTS. IT IS NOT UNCOMMON TH AT SOME OF THE PARTIES CLOSE THEIR BUSINESS AND AVOID THE SERVICE OF NOTICES WHEN THE BUSINESS IS NOT GOING WELL AND THE CREDITORS ARE GE NERALLY AFTER THEM. IN THE PRESENT CASE, THE ASSESSEE HAS MADE THE PAY MENTS IN CHEQUE AND THERE IS APPARENTLY NO DOUBT REGARDING THE G ENUINENESS OF THE PAYMENTS. THERE IS ALSO APPARENTLY NO DOUBT REGARD ING THE CORRESPONDING EXPORTS OF THE MATERIALS AND THE SALES CO NSIDERATION WHICH ARE ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS. AFTE R CONSIDERING ALL THE FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE VIE W THAT THERE IS CONSIDERABLE MERIT IN THE SUBMISSION OF THE ASSESSEE TH AT THE ASSESSEE SHOULD NOT BE PENALIZED JUST BECAUSE THE PARTY IS NOT AV AILABLE IN THE GIVEN ADDRESS WHILE MAKING THE INQUIRY DURING THE COU RSE OF ASSESSMENT PROCEEDINGS AND THE A.O. IS NOT JUSTIFIED TO MAKE THE ADDITION AND ACCORDINGLY, THE SAME IS DELETED. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. 4. THE NOTICE OF HEARING WAS SENT TO THE ASSESSEE. HOWEV ER, ON THE FIXED DATE OF HEARING NONE WAS PRESENT ON BEHALF OF T HE ASSESSEE, THEREFORE, WE PROCEEDED TO HEAR THE APPEAL AFTER HE ARING THE LEARNED DR. 5. THE LEARNED DR, AFTER NARRATING THE FACTS, RELYIN G UPON THE ASSESSMENT ORDER, PLEADED THAT THE ASSESSEE COULD NOT ESTABL ISH THE GENUINENESS OF THE PURCHASE MADE BY THE ASSESSEE FROM THE SAID PARTY. THE GP OF THE ASSESSEE HAD DECLINED. THEREFORE, HE PLE ADED THAT THE ASSESSING OFFICER WAS RIGHT IN MAKING THE ADDITION AND T HIS ADDITION HAS WRONGLY BEEN DELETED BY THE CIT (A). HE SUBMITTED T HAT THE CIT (A) WHILE DELETING THE ADDITION DID NOT GIVE OPPORTUNITY TO T HE ASSESSING OFFICER TO EXAMINE THE ADDITIONAL EVIDENCES RELIED UPON BY LEAR NED CIT (A). 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE L EARNED DR. WE HAVE ALSO CAREFULLY GONE THROUGH THE ASSESSMENT ORDER AS WELL AS THE ORDER PASSED BY THE CIT (A). WE DO NOT FIND THAT ANY ADDIT IONAL EVIDENCE WAS PLACED BEFORE THE LEARNED CIT (A) WHICH WAS NOT CONF RONTED TO THE ASSESSING OFFICER. IT HAS BEEN RECORDED IN THE ASSESSMENT O RDER THAT THE ENTIRE EVIDENCE AVAILABLE WITH THE ASSESSEE WITH REGARD TO THE SAID PARTY WAS FURNISHED TO THE ASSESSING OFFICER. THE ASSESSING OFFICE R ALSO MADE INQUIRIES. EVEN AFTER MAKING INQUIRIES THE ASSESSING OFF ICER COULD NOT FOUND ITA NO.2547/DEL/2011 5 ANY DISCREPANCY IN THE EVIDENCE SUBMITTED BY THE ASSESSEE AND SIMPLY HE HAS MADE THE ADDITION FOR THE REASON THAT THE SAID PAR TY WAS NOT AVAILABLE AT THE ADDRESS GIVEN. THE SAID PARTY WAS HAVING TIN AN D WAS REGISTERED WITH THE SALES-TAX DEPARTMENT. STATUTORY FORMS WERE ALSO SUBMITTED. IT WAS SHOWN THAT THE PAYMENTS WERE MADE THROUGH PAYEES ACCOU NT CHEQUES. IT HAS ALSO BEEN SHOWN THAT CORRESPONDING SALES HAVE BEEN MA DE AGAINST THE PURCHASES MADE BY THE ASSESSEE. IN VIEW OF ALL THESE EVID ENCE, IT CANNOT BE SAID THAT THE PURCHASES MADE BY THE ASSESSEE FROM THE SA ID CONCERN WAS IN ANY MANNER BOGUS OR NON-GENUINE. TO HOLD THAT THE PURCHASES WERE BOGUS AND NON-GENUINE, SOME CONTRARY MATERIAL SHOULD B E BROUGHT ON RECORD. IN THE ABSENCE OF ANY SUCH MATERIAL, WE DO N OT FIND ANY INFIRMITY IN THE ORDER OF CIT (A) VIDE WHICH THE AFOREMENTIONED ADDITION HAS BEEN DELETED. WE DECLINE TO INTERFERE AND THE APPEAL FI LED BY THE REVENUE IS DISMISSED. 7. IN THE RESULT, THE APPEAL IS DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 16.12.20 11. SD/- SD/- [K.D. RANJAN] [I.P. BANSAL] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED,16.12.2011. DK COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT DEPUTY REGISTRAR, ITAT, DELHI BENCHES