Sh. Ramesh Chand Agarwal, New Delhi V. ACIT, New Delhi

ITA 2918/DEL/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90949 (ITAT-DELHI)
• Duration Of Justice: 11 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 24-03-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 12-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIKRAM SAHAY
• Assessee Lawyers: SAURABH GOAL
• Keywords: Rejection of books of accounts; Opportunity of being heard; Additional evidence
• Section: 142(1); 145; 144

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F : NEW DELHI BEFORE SHRI R.S. SYAL, ACCOUNTANT MEMBER AND SHRI A. T. VARKEY, JUDICIAL MEMBER ITA NO.2918/DEL/2014 (ASSESSMENT YEAR: 2009 - 10) RAMESH CHAND AGARWAL C/O. RAJKUMAR & ASSOCIATES,CA4435/7,ANSARI ROAD, DARYGANJ, NEW DELHI PAN NO - AAEP5411D ACIT, CIRCLE - 32(1), NEW DELHI (APPELLANT) (RESPONDENT) APPELLANT BY :SHRI SAURABH GOAL, CA RESPONDENT BY :SHRI VIKRAM SAHAY SR. DR DATE OF HEARING 24 .03.2015 DATE OF PRONOUNCEMENT 30 .04 .2015 ORDER PER A. T. VARKEY , JUDICIAL MEMBER THIS APPEAL FILED BY THE ASSESSEE ARISES OUT OF THE ORDER PASSED BY THE LD. CIT(A) - XXVI, NEW DELHI DATED 31 .3.20 14 PERTAINING TO ASSESSMENT YEAR 200 9 - 10 . 2. THE GROUNDS RAISED IN THE ASSESSEES APPEAL READ AS UNDER: - 1. THAT UNDER THE FACTS AND CIRCUMSTANCES, THE ASSTT. FRAMED U/S. 144 R/W. SEC. 145 (3) IS ABSOLUTELY UN SUSTAINABLE IN LAW AS WELL AS ON MERITS. 2. THAT UNDER THE FACTS AND CIRCUMSTANCES, NO PROPER AND REASONABLE OPPORTUNITY OF HEARING HAS BEEN ALLOWED BY THE AO. 3. THAT UNDER THE FACTS AND CIRCUMSTANCES, NO PROPER AND REASONABLE OPPORTUNITY OF HEARING HAS BEEN ALLOWED BY THE CIT ( A). 4. THAT UNDER THE FACTS AND CIRCUMSTANCES, THE REJECTION OF BOOKS OF ACCOUNTS AND APPLICATION OF SEC. 145 (3) IS UN WARRANTED, ILLEGAL AND UN SUSTAINABLE IN LAW AS WELL AS ON MERITS. 5A. THAT UNDER THE FACTS AND CIRCUMSTANCES, THERE IS NO LEGALITY AND JUSTIFICA TION IN SUSTAINING THE ADDITION OF RS. 14,53,97,067/ - OUT OF SUNDRY CREDITORS OF RS. 18,21,29,614/ - . ITA NO. 2918/ DEL/ 2014 2 B. THAT UNDER THE FACTS AND CIRCUMSTANCES, OUT OF ADDITIONS FOR S. CREDITORS SUSTAINED FOR RS.14,53,97,067/ - , THE SUNDRY CREDITORS FOR RS. 13,61,86,602/ - (15,62,45,486 - 40,30,000 - 1,60,28,884) ARE OPENING SUNDRY CREDITORS COMING FROM EARLIER YEARS AND UNDER NO CIRCUMSTANCE ADDITION FOR OPENING SUNDRY CREDITORS FOR RS.13,61 ,86,602/ - CAN BE MADE AND SUSTAINED IN IMPUGNED A.Y. 2009 - 2010. C. THAT WITHOU T PREJUDICE, ADDITION TO THE EXTENT OF RS. 26,73,000/ - HAS BEEN MADE TWICE, I.E. FIRST TIME BY DISALLOWING THE SUNDRY CREDITORS AND SECOND TIME, BY SEPARATELY MAKING ADDITION BY DISALLOWING THE CORRESPONDING EXPENSE ON ACCOUNT OF WHICH SAID SUNDRY CREDITOR EXIST, IN RESPECT OF FOLLOWING CASES: - AMOUNT ADDITION MADE OUT AGAIN ADDITION MADE BY OF LIST OF CREDITORS DISALLOWING EXPENSES 900000 TILAK INTERNATIONAL CONSULTANCY 300000 SANJEEV YADAV COMMISSION 290000 RAHUL YADAV -- DO -- 285000 RAIEEV YADAV -- DO -- 300000 MANU YADAV -- DO -- 598000 PRAMOD AGARWAL COMMISSION OUT OF TOTAL DISALLOWANCE OF RS.7,50,000/ - ) 2673000 TOTAL D. THAT IN VIEW OF THE EVIDENCES FILED BEFORE CIT CA), BEFORE AA DURING REMAND PROCEEDINGS AND THE INFORMATION AND EVIDENCES COLLECTED DIRECTLY BY THE A O DURING REMAND PROCEEDINGS, ALL SUNDRY CREDITORS STANDS FULLY PROVED AS WELL AS SUBSTANTIATED. E. THAT THE F IN DINGS OF LD. CIT CA) ARE BASED ON IRRELEVANT AND NON MA TERIAL FACTS AND SUFFERS FROM NON APPRECIATING THE FACTS AND NOT CONSIDERING THE MATERIAL BEFORE HIM APART FROM THAT, HE HAS NOT ADJUDICATED THE ISSUE OF LARGE NO. OF SUNDRY CREDITORS ON MERITS AND CONFIRMED THE ADDITION WITHOUT ANY BASIS. F. THAT WITHOU T PREJUDICE, AFTER REJECTING THE BOOKS OF A/C'S U/S. 145 (3) AND WHILE RESORTING TO BEST JUDGMENT ASSTT. U/S, 144, THE LD. A O ERRED IN MAKING ADDITION ON THE BASIS OF BOOKS OF A /C'S. AND IN MAKING ADDITION FOR SUNDRY CREDITORS SEPARATELY AGAINST CORRECTLY ESTIMATING THE INCOME ON THE BASIS OF PAST ACCEPTED HISTORY. H. THAT WITHOUT PREJUDICE, LD. CIT (A) EXCEEDED HIS JURISDICTION IN GIVING THE FOLLOWING F IN DINGS IN PARA - 6.5, WHICH UNDER THE FACTS AND CIRCUMSTANCES ARE UN - WARRANTED AND IN ANY CASE, NEEDS TO BE EX - PUNCHED THRESHOLD 'THE AO THEREFORE, MAY CONSIDER TAKING REMEDIAL ACTION IN THE CASE OF THE APPELLANT IN THESE YEARS AND OTHER YEARS AS THE CASE MAY BE AS PER THE LAW. ' ITA NO. 2918/ DEL/ 2014 3 6 A. THAT UNDER THE FACTS AND CIRCUMSTANCES, THERE IS ABSOLUTELY NO JUST IFICATION FOR MAKING AND SUSTAINING THE DISALLOWANCE OF RS. 1,39,32,391/ - ULS. 37 (1) AS UN - VERIFIABLE EXPENSES OUT OF TOTAL PURCHASES AND DEVELOPMENT EXPENSES CLAIMED AT RS. 2,29,75,101 / - B. THAT THE LD. CIT (A) HAS NOT APPRECIATED THE FACTS AS WELL AS HE GROSSLY FAILED IN TAKING INTO CONSIDERATION THE SUBMISSIONS MADE BEFORE HIM, DOCUMENTS EVIDENCES FILED BEFORE HIM, EVIDENCES FILED BEFORE LD. AO DURING REMAND PROCEEDINGS AS WELL AS THE MATERIAL AND INFORMATION COLLECTED DIRECTLY BY THE AO DURING REMAN D PROCEEDINGS, HENCE THE FINDINGS BASED ON NON - CONSIDERATION OF RELEVANT MATERIAL AND FACTS ARE NOT SUSTAIN ABLE IN LAW AS WELL AS ON MERITS. C. THAT WITHOUT PREJUDICE, THE PART OF SAID ADDITION HAS BEEN MADE TWICE, BY WAY OF MAKING THE ADDITION BY DISA LLOWING THESE EXPENSES AS WELL AS BY M A KING ADDITION FOR THE CORRESPONDING CREDITORS D. THAT WITHOUT PREJUDICE, AFTER REJECTING THE BOOKS OF A/C'S ULS. 145 (3) AND WHILE RESORTING TO BEST JUDGEMENT ASSTT. ULS. 144, THE LD. AO ERRED IN MAKING ADDITION ON T HE BASIS OF BOOKS OF ALC'S. BY MAKING ADDITION BY DISALLOWING THE EXPENSES SEP A RATE L Y AS CLAIMED IN THE BOOKS OF ALE'S AGAINST CORRECTLY ESTIMATING THE INCOME ON THE BASIS OF PAST ACCEPTED HISTORY. E. THAT WITHOUT PREJUDICE, LD. CIT (A) EXCEEDED HIS JURIS DICTION IN GIVING THE F IN DINGS THAT THESE EXPENSES ARE OTHERWISE ALSO NOT ALLOWABLE IN AC CO RDANCE WITH SEC. 40 A (3) AND SEC. 40 (A) (IA). NO SUCH QUERY WAS RAISED DURING APPEAL PROCEEDINGS. NO OPP O RTUNI TY OF HEARING AND NO OPP O RTUNITY AT ALL FOR DEFENDING ON THIS ISSUE HAS BEEN ALLOWED. IN ANY CASE, UNDER THE FACT S AND CIRCUMSTANCES, PROVISIONS OF SEC. 40 A (3) AND SEC. 40 (A) (IA) ARE NOT APPLICABLE AT ALL. 7 A. THAT UNDER THE FACTS AND CIRCUMSTANCES, THERE IS NO JUSTIFICATION IN DISALLOWING THE FOLLOWI NG EXPENSES : - S. NO. HEAD OF EXPENSE AMOUNT (RS.) 1. COMMISSION 19,25,000 / - 2. OTHER EXPENSES 11,00,522/ - 3. CONSULTANCY 9,00,000 / - TOTAL 39,25,522/ - B. THAT THE LD. CIT (A) HAS NOT APPRECIATED THE FACTS AS WELL AS HE GROSSLY FAILED IN TAKING INTO CONSIDERATION THE SUBMISSIONS MADE BEFORE HIM, DOCUMENTS / EVIDENCES FILED BEFORE HIM, EVIDENCES FILED BEFORE LD. AO DURING REMAND PROCEEDINGS AS WELL AS THE MATERIAL AND INFORMATION COLLECTED DIRECTLY BY THE AO DURING REMAND PROCEEDINGS, HEN CE THE F IN DINGS BASED ON NON - CONSIDERATION OF RELEVANT MATERIAL AND FACTS ARE NOT SUSTAIN ABLE IN LAW AS WELL AS ON MERITS. C. THAT WITHOUT PREJUDICE, THE PART OF SAID ADDITION HAS BEEN MADE TWICE, BY WAY OF MAKING THE ADDITION BY DISALLOWING THESE EXPE NSES AS WELL AS BY MAKING ADDITION FOR THE CORRESPONDING CREDITORS . ITA NO. 2918/ DEL/ 2014 4 D. THAT WITHOUT PREJUDICE, AFTER REJECTING THE BOOKS OF A/C'S ULS. 145 (3) AND WHILE RESORTING TO BEST JUDGEMENT ASSTT. ULS. 144, THE LD. AO ERRED IN MAKING ADDITION ON THE BASIS OF BOOK S OF AL CS BY MAKING ADDITION BY DISALLOWING THE EXPENSES SEP A RATE L Y AS CLAIMED IN THE BOOKS OF ALE'S AGAINST CORRECTLY ESTIMATING THE INCOME ON THE BASIS OF PAST ACCEPTED HISTORY. E. THAT WITHOUT PREJUDICE, LD. C IT ( A) EXCEEDED HIS JURISDICTION IN GIVING THE F IN DINGS THAT THESE EXPENSES ARE OTHERWISE ALSO NOT ALLOWABLE IN ACC O RDANCE WITH SEC. 40 A (3) AND SEC. 40 (A) (IA). NO SUCH QUERY WAS RAISED DURING APPEAL PROCEE D INGS. NO OPPORTUNITY OF HEARING AND NO OPP O RTUNITY AT ALL FOR DEFENDING ON THIS ISSUE HAS BEEN ALLOWED. IN ANY CASE, UNDER THE FACTS AND CIRCUMSTANCES, PROVISIONS OF SEC. 40 A (3) AND SEC. 40 (A) (IA) ARE NOT APPLICABLE AT ALL. 8. THAT UNDER THE FACTS AND CIRCU M ST A NCES, THE LOWER AUTHORITIES GROSS LY ERRED IN LAW AS WELL AS ON MERITS IN MAKING AND SU S TAINING THE ADDITION OF RS. 21,686/ - U/S . 14 A OF THE LT. ACT. 9. THAT UNDER THE FACTS AND CIRCUMSTANCES, NO INTEREST U/S. 234 B SHOULD HAVE BEEN CHARGED. WITHOUT PREJUDICE, AT ANY RATE THE CALCULATIONS ARE EXCESSIVE AND ERRONEOUS. 3. BRIEFLY STATED THE FACTS OF THE CASE AS STATED BY THE LD CIT(A) ARE THAT RETURN SHOWING INCOME OF RS. 27,43,180/ - WAS FILED ON 30.9.2009 AND PROCESSED U/S. 143(1) OF THE INCOME TAX ACT, 1961 (HEREIN AFTER THE ACT) . ON SELECTION OF CASE FOR SCRUTINY, NOTICE U/S. 143(2) OF THE ACT WAS ISSUED ON 24.8.2010 AND SERVED ON THE ASSESSEE FIXING THE CASE ON 0 9. 0 9.2010 . NONE ATTENDED ON THIS DATE. SUBSEQUENTLY, NOTICE U/S. 142(1) OF THE ACT SEEKING SPECIFIC DETAILS REQUIRED FOR COMPUTING AND ASSESSING CORRECT INCOME OF ASSESSEE WAS ALSO ISSUED ON 22. 0 7.2011 FIXING THE CASE ON 10.8.2011. BUT AGAIN NONE APPEARED. AGAIN ON 3.10.2011 NOTICE U/S. 142(1) WAS ISSUED FOR FIXING THE CASE ON 14.10.2011, BUT NONE APPEARED AND T HEN A SHOW CAUSE NOTICE U/S. 144 OF THE ACT ALONG WITH NOTICE U/S. 142(1) OF THE ACT WAS ISSUED ON 02.11.2011. IN RESPONSE THERETO, ASSESSEES COUNSEL ATTENDED THE HEARING AND FILED THE REPLY. ON THIS DATE THE ASSESSEE WAS ASKED TO FILE SOME MORE DETAILS A ND NEXT DATE OF HEARING WAS FIXED FOR 21.11.2011, BUT NONE APPEARED ON THAT DATE, HOWEVER, ON 22.11.2011 ASSESSEES REP RESENTATIVE FILED SOME PAPERS. ON ASSESSE E S REQUEST FURTHER TIME WAS SOUGHT FOR 28.11.2011, BUT NONE APPEARED ON THAT DATE. THEN AO GAV E FINAL OPPORTUNITY ON 13.12. 2011 ITA NO. 2918/ DEL/ 2014 5 AND ON NON - APPEARANCE, AO ASSESSED THE TOTAL INCOME AT RS. 22,42,52,390/ - AND COMPLETED THE SAME U/S. 144(1) READ WITH SECTION 145(3) OF THE ACT, VIDE HIS ORDER DATED 21.12.2011 AND MADE VARIOUS ADDITIONS. 4. AGGRIEVE D BY THE ORDER OF THE ASSESSING OFFICER , THE ASSESSEE HAS PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO VIDE HIS ORDER DATED 31 . 0 3 .20 14 HAS PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 5. NOW THE ASSESSEE IS IN APPEAL BEFORE US. 6. AT THE OUTSET LD . AR OF THE ASSESSEE SUBMITTED THAT NO PROPER AND REASONABLE OPPORTUNITY WAS GRANTED TO THE ASSESSEE BY THE ASSESSING OFFICER AND ASSESSMENT WAS MADE U/S.144 EX PARTE. HE FURTHER SUBMITTED THAT THE AFFIDAVIT OF ASSESSEE EXPLAINING THE REASON FOR BEING ABSENT/ NON APPEARANCE BEFORE THE LOWER AUTHORITIES HAS BEEN PLACED ON RECORD AND THE NON - COMPLIANCE WAS FOR REASONS BEYOND THE CONTROL L OF THE ASSESSEE . NOW BEFORE US THE ASSESSEE HAS UNDERTAKEN TO COOPERATE BEFORE THE AO, IF THE ISSUES INVOLVED IN DISPUTE ARE R EMANDED BACK TO THE AO AND ALSO UNDERTAKES THAT IF THE ASSESSEE DOES NOT COOPERATE WITH THE AO, THEN AO IS AT LIBERTY TO DRAW ADVERSE INFERENCE AGAINST HIM . 7. ON THE OTHER HAND THE LD . DR OPPOSED THE REQUEST OF THE ASSESSEE AND HIGHLIGHTED THE FACT THAT DESPITE SEVERAL OPPORTUNITY GRANTED TO HIM, HE DELIBERATELY AVOIDED APPEARING BEFORE THE AUTHORITIES BELOW, SO A SECOND INNINGS MAY NOT BE GRANTED TO HIM. 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORDS . WE HAVE GONE T HROUGH THE AFFIDAVIT DATED 25.6.2012 FILED BY THE ASSESSEE BEFORE THE LD. CIT(A) WHICH IS ATTACHED IN THE PAPER BOOK VIDE PAGE NO. 3 . WE FIND THAT THE ASSESSEE CONTENDS THAT THE AR (CA) FIRM ENGAGED BY HIM DID NOT APPEAR BEFORE THE AO AND HE KNEW ABOUT TH E NON - APPEARANCE BY THE SAID FIRM DURING THE ASSESSMENT PROCEEDINGS ONLY WHEN HE GOT THE COPY OF THE ASSESSMENT ORDER. THEN HE PROMPTLY WITHDR E W THE CASE FR O M THE SAID CA FIRM. SO THE GIST OF THE CONTENTION IS THAT FOR THE FAULT OF CA FIRM, THE ASSESSEE SH OULD NOT HAVE BEEN ASSESSED INVOKING SECTION 144/ 145 OF THE ACT (BEST ITA NO. 2918/ DEL/ 2014 6 JUDGMENT ASSESSMENT) WITHOUT HEARING HIM PROPERLY. WE FIND THAT AO HAS INVOKED THE BEST JUDGMENT ASSESSMENT IN THE ABSENCE OF AR APPEARING FOR THE ASSESSEE. AND WE FIND THAT ADDITIONAL EVIDENCES WERE PRODUCED BEFORE THE LD CIT(A) FOR THE FIRST TIME. THOUGH REMAND REPORT WAS CALLED FOR BY THE LD CIT(A), THE AO HAS OPPOSED THE ADMISSION OF ADDITION EVIDENCE WITHOUT TOUCHING UPON THE MERITS OF THE EVIDENCE ADDUCED BY THE ASSESSEE . SO TAKING INTO CONSIDERATION THE ENTIRETY OF FACTS AND CIRCUMSTANCES OF THE MATTER, WE ARE OF THE OPINION THAT IN THE INTEREST OF JUSTICE, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW ; AND THE ISSUES IN DISPUTE ARE RESTORED BACK TO THE FILE OF THE AO ALONG WITH THE EVIDENCES PRODUCED BY THE ASSESSEE DURING THE APPELLATE PROCEEDINGS BEFORE THE LD CIT(A) FOR DE NOVO ASSESSMENT . ASSESSEE IS ALSO DIRECTED TO FULLY COOPERATE WITH THE AO , AS AGREED BY HIS AR BEFORE US, AS AFORESAID AND IN CASE OF FAILURE O N THE PART OF THE ASSESSEE TO FULLY CO - OPERATE BEFORE THE AO THAN AO IS AT LIBERTY TO DRAW ADVERSE INFERENCE IN ACCORDANCE TO LAW. NEEDLESS TO SAY ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE BE GRANTED . 9 . IN THE RESULT, THE APPEAL OF THE ASSESSE E IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 3 0 .04.2015. - S D / - - S D / - (R.S. SYAL ) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 3 0 /04/2015 A K KEOT (DOC) COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI