ITO, New Delhi V. Sh. Kaushalendra Agarwal, New Delhi

ITA 2749/DEL/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 98046 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 14-10-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 06-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RICHA RASTOGI
• Keywords: Additional evidence
• Section: 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH D NEW DELHI BEFORE : SHRI I.C. SUDHIR , JUDICIAL MEMBER & SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 2749/DEL./2012 ASSTT. YEAR : 2007 - 08 INCOME - TAX OFFICER, VS. KAUSHALENDRA AGARWAL, WARD 24(1), NEW DELHI. 200, ARJUN NAGAR, SAFDARJUNG ENCLAVE, NEW DELHI. [PAN: AACPA5653M] (APPELLANT) (RESPONDENT) APPELLANT BY : MS RICHA RASTOGI, SR. DR RESPONDENT BY : SHRI RAJEEV SAXENA , ADV. DATE OF HEARING : 14.10.2015 DATE OF PRONOUNCEMENT : 04 .12.2015 ORDER PER L.P. SAHU, ACCOUNTANT MEMBER: THIS APPEAL BY THE REVENUE ARISES OUT OF THE ORDER DATED 19.03.2012 OF LD. CIT(A) - XII, NEW DELHI FOR THE ASSESSMENT YEAR 2007 - 08 ON THE FOLLOWING GROUNDS : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.15,46,830/ - ON ACCOUNT OF SUNDRY CREDITORS IGNORING THIS FACT THAT THE ASSESSEE WAS FAILED TO SUBSTANTIATE HIS CLAIM IN SPITE OF SUFFICIENT OPPORTUNITIES WERE PROVIDED TO ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN ADMITTING THE ADDITIONAL EVIDENCES UNDER RULE 46A OF THE I.T. ITA NO. 2749/DEL./2012 2 RULE, 1 962 WITHOUT PROVIDING OPPORTUNITY TO THE AO AS REQUIRED UNDER SUB - RULE 3 OF RULE 46A. 2 . THE ASSESSEE FILED ITS RETURN OF INCOME ON 30.10.2007, DECLARING INCOME OF RS.8,36,257/ - WHICH WAS PROCESSED U/S. 143(1) OF THE IT A CT. THE CASE WAS SELECTED FOR SCRU TINY AND NOTICE U/S. 143(2) WAS ISSUED ON 29.09.2008 AND SERVED UPON THE ASSESSEE. DURING THE COURSE OF SCRUTINY, THE ASSESSEE WAS ASKED TO FILE CONFIRMATION OF SUNDRY CREDITORS BUT THE ASSESSEE COULD NOT FILE THE CONFIRMATION OF THE FOLLOWING CREDITORS: S R. NO. NAME OF CREDITORS AMOUNT 1. M/S. DEE DCOR CR. RS.8,19,106/ - 2. MR. LAL CHAND CR. RS.1,01,893/ - 3. M/S. MIANAAM GARDEN FLOWERS CR. RS.3,62,041/ - 4. M/S. VERDANT BIO - TECHNOLOGIES CR. RS.2,12,040/ - 5. M/S. JAIN SANITARY AND HARDWARE CR. RS. 51,750/ - THE AO, THEREFORE, ADDED THE AFORESAID CREDITORS BALANCE TOTALING TO RS.15,46,830/ - TO THE INCOME OF THE ASSESSEE. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A) WHO DELETED THE ADDITION AFTER ADMITTING THE CONFIRMATION AND LEDGER ACCOUNT WITH COMPLETE ADDRESS, PLACED BEFORE HIM. THE AGGRIEVED REVENUE HAS, THEREFORE, COME UP IN THIS APPEAL BEFORE US AGAINST THE IMPUGNED ORDER. ITA NO. 2749/DEL./2012 3 3. THE LD. DR RELYING UPON THE ORDER OF THE AO SUBMITTED THAT THE DELETION OF ADD ITION MADE BY THE LD. CIT(A) IS NOT JUSTIFIED AFTER ADMITTING THE ADDITIONAL EVIDENCE SUBMITTED BY THE ASSESSEE BEFORE HIM IN THE SHAPE OF CONFIRMATIONS ETC. WITHOUT GIVING ANY OPPORTUNITY TO THE ASSESSING OFFICER TO EXAMINE THE SAME WHICH IS IN SHEER CONT RAVENTION OF RULE 46A OF THE IT RULES. HE, THEREFORE, URGED TO SET ASIDE THE IMPUGNED ORDER AND TO RESTORE THE MATTER BACK TO THE AO. 4. THE LD. AR, ON THE OTHER HAND, RELIED UPON THE ORDER OF THE FIRST APPELLATE AUTHORITY AND SUBMITTED THAT THE BOOKS OF ACCOUNT WERE DULY AUDITED BY A QUALIFIED CHARTERED ACCOUNTANT AND DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE BOOKS OF ACCOUNTS AND VOUCHERS WERE PRODUCED BEFORE THE AO. THE GROSS PROFIT OF THE ASSESSEE DURING THE INSTANT YEAR WAS 44.16% WHICH IS BET TER AS COMPARED TO 31.47% IN THE IMMEDIATELY PRECEDING YEAR. THE LD. AR OF THE ASSESSEE SUBMITTED THE DETAILS OF OPENING BALANCE, PURCHASES DURING THE YEAR, PAYMENTS MADE AND CLOSING BALANCE WHICH IS AS UNDER : S. NO. NAME OF THE CREDITOR OPENING BALANCE A S ON 01.04.2006 (IN RS.) PURCHASES DURING THE YEAR (IN RS.) PAYMENT MADE DURING THE YEAR (IN RS.) CLOSING BALANCE AS ON 31,93,2997 (IN RS.) I. JAIN SANITARY AND HARDWARE (SEE PAGE 6) - 3,53,796 3,02,046 51,750 ITA NO. 2749/DEL./2012 4 II DEE DCOR (SEE PAGE 8) 8,19,106 - - 8,19,106 III. LAL CHAND (SEE PAGE 9) 7,37,878 7,21,985 13,57,970 1,01,893 IV VERDANT BIO - TECHNOLOGIES (SEE PAGE 10) 4,73,040 - 2,25,000 2,12,040 V. MAINAAM GARDEN, FLOWERS (SEE PAGE 10A) 6,75,121 13,86,920 17,00,000 3,62,041 TOTAL 15,46,830 5. IT WAS SUBMITTED THAT DESPITE THE FACT THAT THE ASSESSEE HAS PROVIDED COMPLETE DETAILS OF THE OUTSTANDING CREDIT BALANCES AND ALSO COMPLETE VOUCHERS WHICH CLEARLY PROVIDE COMPLETE ADDRESS OF THE CREDITORS , THE AO WITHOUT MAKING ANY ENQUIRY FROM THE CREDITORS MADE THE ADDITIONS OF THE AFORESAID OUTSTANDING BALANCES OF THE CREDITORS. HE ALSO SUBMITTED THAT IF A SUM IS CREDITED IN THE BOOKS OF ACCOUNTS IN PREVIOUS ASSESSMENT YEARS, THE SAME CANNOT BE TAXED IN ANY ASSESSMENT YEAR OTHER THAN THAT YEAR. RELIANCE IS PLACED ON CIT VS. PRAMESHWAR BOHRA 301 ITR 404 HC(RAJASTHAN) AND USHA STUD 301 ITR - HC (DEL.). HE ALSO ARGUED THAT OPENING BALANCE OF THE PURCHASES, PURCHASES MADE DURING THE YEAR AND THE PAYMENTS MADE TO THE PARTIES FROM WHOM THE PURCHASES WERE MADE HAD B EEN ACCEPTED BY THE AO. FURTHER, THE BOOKS OF ACCOUNTS WERE AUDITED WHICH WERE ACCEPTED BY THE AO. IT WAS SUBMITTED THAT THE AO WAS NOT JUSTIFIED IN MAKING THE ADDITION BY DOUBTING ITA NO. 2749/DEL./2012 5 THE BALANCES OUTSTANDING IN THE NAMES OF PARTIES FROM WHOM THE PURCHASES WE RE MADE. RELIANCE IS PLACED ON THE FOLLOWING DECISIONS : (I). ACIT VS. BAHRI BROS. PVT. LTD. 154 ITR 244 (PAT) (II). MATHER PLATT (INDIA) LTD. VS. CIT, 168 ITR 493 (CAL.) (III). CIT VS. PANCHAM DAS JAIN 205 CTR 444 (ALL.) (IV). SHREE NASHIK PANCHVATI PANJARPOLE VS. DIT (EXEMPTIONS) 26 DTR 113 (BOM BAY ) (V). CIT VS. RITU ANURAG AGGARWAL REPORTED IN (2012) DTLONLINE 134 (DEL.) (VI) ITO VS. ZAZSONS EXPORTS LTD. 153 ITD 1 (LKO - TM) (VII). CIT VS. M/S NIKUNJ EXIM ENTERPRISES P. LTD. 372 ITR 619 (BOM.) IT WAS ALSO SUBMITTED THAT THE AO HAD POWER TO SUMMON THE PARTIES, BUT NO SUCH EXERCISE WAS DONE. THEREFORE, THE ADDITION ONLY ON THE BASIS OF SUSPICION WAS NOT JUSTIFIED IN VIEW OF THE DECISION IN THE CASE OF NATHU RAM PREMCHAND VS. CIT 49 ITR 561. IN ANOTHER D ECISION OF HON BLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. PANCHAM DASS JAIN (2006) 205 CTR 440 THE IDENTICAL ISSUE HAS BEEN DECIDED AS UNDER : THE TRIBUNAL HAS RECORDED A CATEGORICAL FINDING OF FACT BASED ON APPRECIATION OF MATERIALS AND EVIDENCE ON RECORD THAT THE AO HAD ACCEPTED THE PURCHASES, SALES AS ALSO THE TRADING RESULT DISCLOSED BY THE ASSESSEE. IT HAD RECORDED A FINDING THAT THE TWO AMOUNTS REPRESENTED THE PURCHASES MADE BY THE ASSESSEE ON CREDIT AND, THEREFORE, THE PROVISIONS OF SEC. 68 COU LD NOT BE ATTRACTED IN THE PRESENT CASE. THE VIEW TAKEN BY THE TRIBUNAL ON THIS ISSUE IS SUSTAINABLE INASMUCH AS ON THE BASIS OF THE FINDINGS RECORDED BY IT THAT THESE TWO AMOUNTS REPRESENTED PURCHASES MADE BY THE ASSESSEE ON CREDIT AND THE PURCHASES AND S ALES HAVING BEEN ACCEPTED BY THE DEPARTMENT, THE QUESTION OF ADDITION OF THE SAID TWO AMOUNTS UNDER SEC. 68 DID NOT ARISE INASMUCH AS THE PROVISIONS OF SEC. 68 WOULD NOT BE ATTRACTED ON THE PURCHASES MADE ON CREDIT. ITA NO. 2749/DEL./2012 6 THE LD. AR FURTHER SUBMITTED THAT THE DISALLOWANCE MADE BY THE AO OF OUTSTANDING CREDIT BALANCES IN RESPECT OF PURCHASE IS WHOLLY UN - SUSTAINABLE. RELIANCE IS PLACED ON THE FOLLOWING JUDGMENTS : (I). JAGDAMBA TRADING CO. VS. ITO, (2007) 16 SOT 66 (JODH) (II). CIT VS. NANGALIA FABRICS (P) LTD ., 220 TAXMAN 17. (III). CIT VS. NIKUNJ EXIM ENTERPRISES PVT. LTD.(2015) 372 ITR 616. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND THE MATERIAL AVAILABLE BEFORE US. IT IS NOT IN DISPUTE THAT MOST OF THE CREDITORS ARE OLD CREDITORS. THE ACCOUNT BOOKS OF THE ASSESSEE ARE AUDITED IN WHICH THE AO HAS NOT POINTED OUT ANY DEFECT NOR HAS DOUBTED THE SYSTEM OF ACCOUNTING EMPLOYED BY THE ASSESSEE. THE GROSS PROFIT SHOWN BY THE ASSESSEE STANDS AT BETTER SIDE AS COMPARED TO THE IMMEDIATELY PRE CEDING YEAR AND THE AO HAS NOT POINTED OUT ANY SUPPRESSION IN THE PURCHASES AND SALES. WE ALSO DO NOT FIND ANY REBUTTAL FROM THE SIDE OF REVENUE OF THE ASSESSEE S CONTENTION THAT LIABILITY AGAINST THE PURCHASES HAD BEEN PAID IN THE SUCCEEDING YEAR. ONCE TH E AO DID NOT DOUBT THE PURCHASES AND THE GROSS PROFIT RATE DECLARED BY ASSESSEE, THERE WAS NO OCCASION TO DOUBT THE CREDIT BALANCES OF SUCH PURCHASES. ALL THE BOOKS OF ACCOUNT AND VOUCHERS CONTAINING COMPLETE NAME AND ADDRESSES OF THE CREDITORS ARE SAID TO HAVE BEEN PRODUCED BEFORE THE AO. THEREFORE, IF THE AO HAD ANY DOUBT ON ANY OF THE CREDIT BALANCES, HE COULD HAVE VERIFIED THE SAME AFTER EXERCISING HIS POWERS U/S. 13 1 OF THE ACT, WHICH HE FAILED TO DO ITA NO. 2749/DEL./2012 7 SO. IN PRESENCE OF ALL THESE FACTS, IN OUR CONSIDERED OPINION, THE LD. AO WAS NOT JUSTIFIED IN MAKING THE IMPUGNED ADDITION SIMPLY BECAUSE CONFIRMATION OF CREDITORS WERE NOT PLACED BEFORE THE AO, WHICH HE PLACED BEFORE THE LD. CIT(A) AND THAT WAS ONLY IN FURTHERANCE TO THE EVIDENCES AND INF ORMATION ALREADY FURNISHED BEFORE THE AO . BEFORE US ALSO, THE LD. DR COULD NOT POINT OUT ANY DEFECTS IN THE LEDGER ACCOUNT CONFIRMED BY THE CREDITORS. BESIDES, THE AO HAS NOT GIV EN ANY FINDING FOR REJECTING THE BOOKS OF ACCOUNTS BY INVOKING THE PROVISIONS OF SECTION 145(3) OF THE ACT. IN VIEW OF ALL THESE FACTS AS DISCUSSED ABOVE, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT(A). ACCORDINGLY, THE APPEAL OF THE REVENUE IS DEVOID OF MERITS AND IS LIABLE TO BE DISMISSED. 7. IN THE RES ULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 04.12 .2015 . SD/ - SD/ - ( I.C. SUDHIR ) (L.P. SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 04.12.2015 *AKS/ - COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT. REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES, NEW DELHI