ITO, New Delhi V. M/s Aquariuz Fashions Pvt. Ltd., New Delhi

ITA 2951/DEL/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6680 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 28-09-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 13-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K JAIN
• Assessee Lawyers: SANDE EP AHIYA
• Keywords: Unexplained cash credit; Salary income; Additional evidence; Reasonable cause
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH A NEW DELHI BEFORE : SHRI SUNIL KUMAR YADAV , JUDICIAL MEMBER & SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 2951/DEL./2013 ASSTT. YEAR : 2007 - 08 INCOME - TAX OFFICER, VS. AQUARIUZ FASHIONS PVT. LTD., WARD 2(1), NEW DELHI. 23/7, IIND FLOOR, OLD RAJINDER NAGAR, NEW DELHI. (PAN: AAECA 9955F) (APPELLANT) (RESPONDENT) APPELLANT BY : SH. S.K. JAIN, DR RESPONDENT BY : SH. SANDE EP AHIYA, CA DATE OF HEARING : 28.09.2016 DATE OF PRONOUNCEMENT : 16 .11.2016 ORDER PER L.P. SAHU, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A) - V, NEW DELHI DATED 28.02.2013 FOR THE ASSESSMENT YEAR 2007 - 08 ON THE FOLLOWING GROUNDS : 1. THE LEARNED CIT(APPEALS) HAS ERRED IN LAW AND ON FACTS IN DELETING ADDITION OF RS.60 LAKHS U/S. 68 OF THE ACT BY ADMITTING ADDITIONAL EVIDENCE IN VIOLATION OF RULE 46A OF THE ACT. 2. THE LD. CIT(A) HAS ERRED IN LAW AND IN FACTS IN ADMITTING ADDITIONAL EVIDENCE IN VIOLATION OF RULE 46A OF THE ACT. ITA NO. 2951/DEL./2013 2 THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE DERIVED INCOME FROM MANUFACTURING AND EXPORT OF GARMENTS. THE ASSESSEE FILED RETURN OF INCOME ELECTRONICALLY ON 30.10.2007 D ECLARING TOTAL LOSS OF RS.44,56,490/ - . DURING THE ASSESSMENT PROCEEDINGS, A S PER AO NECESSARY DETAILS CALLED FOR , WERE SUBMITTED BY THE ASSESSEE FROM TIME TO TIME. HOWEVER, THE BOOKS OF ACCOUNT WERE NOT PRODUCED S T ATING THAT DUE TO AN ACCIDENTAL FIRE ON 11/12 MARCH, 2008 AT ASSESSEE S FACTORY PREMISES, SOME OF THE RECORDS AND COMPUTERS WERE DESTROYED. DURING THE ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE BALANCE SHEET OF ASSESSEE SHOWS THAT ADVANCE FROM CUSTOMER AMOUNTING TO RS.1,01,00,000/ - WAS RECE IVED DURING THE RELEVANT ASSESSMENT YEAR AND SHOWED THE SAME UNDER THE HEAD CURRENT LIABILITIES IN SCHEDULE 6 OF THE BALANCE SHEET. VIDE LETTER DATED 04.11.2009, DETAILS OF ADVANCE AMOUNTING TO RS.93,60,000/ - WERE PROVIDED WHICH SHOWED THAT THE SAID AMO UNT WAS PERTAINING TO SALE OF MACHINERY TO M/S. ANCHI APPARELS PVT. LTD. THE AO OBSERVED THAT SINCE NO SUPPORTING DOCUMENTS, I.E. DE T AILS OF RECEIPTS FROM M/S. ANCHI APPARELS PVT. LTD. DURING THE RELEVANT ASSESSMENT 2007 - 08 WERE BROUGHT ON RECORD AS ALSO T HE FACT THAT THE VALUE OF PLANT AND MACHINERY AS ON 01.04.2006 WAS RS.59,97,961/ - ONLY . IT WAS ALSO OBSERVED THAT AFTER ADDITION OF RS.50,50,614/ - DURING THE YEAR THE WDV AS ON 31.03.2007 WAS RS.1,10,48,575/ - ONLY. THE AO, THEREFORE, ADDED THE ENTIRE SUM O F ITA NO. 2951/DEL./2013 3 RS.1,01,00,000/ - SHOWN AS ADVANCE FROM CUSTOMER, TREATING THE SAME AS UNEXPLAINED CASH CREDIT U/S. 68 OF THE ACT. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A), WHEREIN THE ASSESSEE SUBMITTED THE DETAILS OF ADVANCES RECEIVED AGGREGATING TO RS.1, 01,00,000/ - AS UNDER : ANCHI APPARELS (P) LTD. RS.30,00,000/ - MR. ISHWAR SINGH RS.60,00,000/ - NODAI SEEDS INDIA (P) LTD. RS.11,00,000/ - TOTAL: RS.1,01,00,000/ - THE ASSESSEE FILED CONFIRMATIONS OF THE ABOVE THREE PARTIES. THE LD. CIT (A) DELETED THE ADDITION AFTER CONSIDERING THE DETAILED SUBMISSIONS OF THE ASSESSEE , THE ADDITIONAL EVIDENCES FURNISHED BEFORE HIM , VARIOUS REMAND REPORTS CALLED FROM AO, REJOINDER OF ASSESSEE AGAINST THE SAID REMAND REPORTS AND SEVERAL DECISIONS RELIED UP ON . THE REVENUE WAS NOT SATISFIED WITH THE IMPUGNED ORDER AND HAS ASSAILED THE SAME BY WAY OF THIS APPEAL BEFORE THE TRIBUNAL CHALLENGING THE DELETION OF ADDITION OF RS.60,00,000/ - ONLY SHOWN AS ADVANCE RECEIVED FROM SH. ISHWAR SINGH, WHO IS ALSO THE DIRECTOR OF ASSESSEE COMPANY. THE LD. DR RELIED ON THE ORDER OF THE ASSESSING OFFICER AND SUBMITTED THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION, PARTICULARLY WHEN NO BOOKS OF ACCOUNTS OR OTHER COMPLETE DETAILS WERE FURNISHED BY THE ASS ESSEE BEFORE THE AO. IT WAS SUBMITTED THAT KEEPING IN VIEW THE SMALL INCOME SHOWN ITA NO. 2951/DEL./2013 4 IN THE RETURN OF THE CREDITOR, THE HEAVY AMOUNTS ADVANCED TO THE RESPONDENT CANNOT BE RELIED UPON AND THE SUBSEQUENT DISCLOSURE OF SOURCE OF CREDITS BEFORE THE LD. CIT(A) WAS AN AFTERTHOUGHT. ON THE OTHER HAND, THE LD. AR OF THE ASSESSEE RELIED ON THE ORDER OF THE LD. CIT(A) AND SUBMITTED THAT REASONABLE CAUSE HAS BEEN ASSIGNED BY THE ASSESSEE BEFORE THE AUTHORITIES BELOW FOR DELAYED FILING OF INFORMATION AND NON - PRODUCTIO N OF COMPLETE ACCOUNT BOOKS BEFORE THE AO DUE TO THE SAME HAVING BEEN BURNT IN A FIRE ACCIDENT TOOK PLACE IN THE FACTORY. THE CREDITOR APPEARED BEFORE THE AO IN THE REMAND PROCEEDINGS , OWNED THE MONEY ADVANCED TO THE ASSESSEE - RESPONDENT BY FILING CONFIRMA TIONS AND FILED EACH AND EVERY DETAILS BEFORE HIM INCLUDING THE BANK STATEMENT ETC. THE SOURCE OF CREDITS WERE ALSO EXPLAINED BEFORE THE AO WHO ALSO MADE INDEPENDENT ENQUIRY FROM THE BANK ETC. AND FOUND THE VERSION OF THE CREDITOR AS CORRECT, AS IS EVIDENT FROM THE REMAND REPORTS AND THE FINDINGS OF THE LD. CIT(A). HE, THEREFORE, URGED THAT THE ORDER OF THE LD. CIT(A) DOES NOT CALL FOR ANY INTERFERENCE. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE PERUSED THE MATERIAL AVAILABLE ON RECORD AND WE FIND SUBSTANCE IN THE CONTENTION OF ITA NO. 2951/DEL./2013 5 ASSESSEE THAT THE IMPUGNED ORDER DOES NOT CALL FOR ANY INTERFERENCE ON THE ISSUE INVOLVED IN THIS APPEAL. IT IS NOTABLE THAT THE ASSESSEE HAS SUBSTANTIATED BY WAY OF VARIOUS EVIDENCES THE FACTUM OF FIRE ACCIDENT OCCURRED IN ITS FACTORY, WHICH IS A REASONABLE CAUSE PREVENTING HIM NOT TO PRODUCE COMPLETE SET OF BOOKS OF ACCOUNTS BEFORE THE AO AND DELAYED FILING OF SUPPORTING INFORMATION AND EVIDENCES BEFORE THE LD. CIT(A) BY WAY OF ADDITIONAL EVIDENCES. THE LD. CIT(A) HAD REMAN DED THE MATTER INCLUDING THE ADDITIONAL EVIDENCES FILED WITH RESPECT TO FIRE ACCIDENT AS WELL AS SOURCE OF CREDITS, CALLING FOR REMAND REPORTS FROM AO AFTER MAKING PROPER ENQUIRIES. IN THE REMAND PROCEEDINGS, THE CREDITOR SHRI ISHWAR SINGH, WHO WAS THE DI RECTOR OF NOT ONLY THE ASSESSEE - COMPANY BUT ALSO OF NODAI SEEDS INDIA (P) LTD. AND M/S. AGROMUSK INDIA LTD., APPEARED BEFORE THE AO, FILED CONFIRMATION AND EXPLAINED THE SOURCE OF CREDITS GIVEN TO THE ASSESSEE. THE LD. CIT(A) RELYING ON THE DETAILED SUBMIS SIONS OF THE ASSESSEE, VARIOUS REMAND REPORTS ON THE ADDITIONAL EVIDENCES AND REJOINDER OF ASSESSEE THEREUPON APPEARS TO HAVE RIGHTLY DELETED THE ADDITION OF RS.60 LACS OBSERVING AS UNDER : - (III) AS REGARDS, ADDITION OF RS. 60 LACS ON ACCOUNT OF SHRI ISH WAR SINGH, THE DIRECTOR OF THE APPELLANT COMPANY, THE AO HAS, IN ITS REPORT TREATED SHRI ISHWAR SINGH AS NOT CREDIT WORTHY AND HAS RECOMMENDED CONFIRMATION OF ADDITION U/S 68 OF THE I.T. ACT. THE AO HAS TAKEN INTO ACCOUNT ONLY THE DECLARED/TAXABLE INCOME O F SHRI ISHWAR SINGH; HE HAS IGNORED THE SUBMISSIONS OF THE APPELLANT THAT SHRI ISHWAR SINGH WAS ITA NO. 2951/DEL./2013 6 HAVING SALARY INCOME OF RS. 3 LACS, GROSS RENTAL INCOME OF RS. 8,55,275/ - AND AGRICULTURAL INCOME OF RS.9,08,900/ - ALSO AND ALL THE THREE SOURCES HAVE BEEN DEC LARED IN HIS RETURN OF INCOME. EVEN THEN, FROM A PERUSAL OF THE ADDITIONAL EVIDENCE SUBMITTED BY THE APPELLANT WHICH WAS GOT EXAMINED THROUGH THE AO IT HAS BEEN SEEN THAT: (A) SHRI ISHWAR SINGH HAD SOLD LAND MEASURING 3 BIGHAS & 6 BISWAS AT VILIAGE - KH ANDSA, DISTT. GURGAON TO SHRI MADAN BASSI S/O SHRI BANSI LAL R/O 18 - E, SARRAFFA NAGAR, LUDHIANA(PUNJAB) FOR AN AMOUNT OF RS. 1 CRORE AS PER REGISTERED DEED DATED 25.9.2006. THE AMOUNT HAS BEEN PAID AS CASH RS. 5 L ACS AND THE REMAINING AMOUNT OF RS. 95 LACS BY WAY OF CHEQUES. THE BREAKUP OF RS. 95 LACS PAID BY ACCOUNT PAYEE CHEQUES IS AS UNDER: - 1 LAC VIDE CHEQUE NO.00213 DTD.10.2.2006, CH.NO.000215 DT.27.2.2006 FOR RS. 10 LACS, BOTH DRAWN ON VIJAYA BANK. RS. 25 LACS VIDE CHEQUE NO. 124960 DT. 1 0.8.2006 DRAWN ON CITI BANK AND RS. 50 LACS VIDE CHEQUE NO.109052 DT.16.6.2006 DRAWN ON STATE BANK OF INDIA. (B)SHRI ISHWAR SINGH HAD GIVEN ADVANCE OF F 60 LACS BY WAY OF CHEQUES DRAWN ON ICICI BANK A/C NO.002101000074 SEC. 14, GURGAON. THE DETAILS OF PA YMENTS AND SOURCES OF PAYMENTS MADE BY MR. ISHWAR SINGH TO THE APPELLANT ARE AS UNDER: - ON 28.6.2006, CHEQUE NO.248979 FOR RS. 30 LACS HAS BEEN PAID TO THE APPELLANT OUT OF RS. 50 LACS CREDITED TO THIS ACCOUNT ON 21.6.2006 ON CLEARANCE OF CHEQUE NO.109052 SBI ON ACCOUNT OF LAND SALE PROCEEDS. FURTHER, ON 22.8.2006 & 24.8.2006 AMOUNTS OF RS. 10 LACS & RS. 15 LACS RESPECTIVELY WERE ISSUED IN THE NAME OF THE APPELLANT OUT OF SALE P ROCEEDS OF LAND TO THE EXTENT OF RS. 25 LACS CREDITED IN THIS BANK A/C ON 18.8.2006. AS REGARDS, THE REMAINING RS. 5 LACS PAID TO THE APPELLANT ON 03.3.2007 VIDE CHEQUE NO. 135284, THE SAME APPEARS TO BE MADE OUT OF CHEQUE DEPOSITS OF RS. 5,25,000/ - AND R S. 4,36,642/ - ON 1.3.2007 EACH WHICH HAVE BEEN SUBMITTED TO BE ON ACCOUNT OF RENT FROM TENANTS DECLARED IN THE INCOME - TAX RETURN BY SHRI ISHWAR SINGH. IN VIEW OF THE AFORESAID, THERE DOES NOT APPEAR ANY REASON TO DOUBT THE CREDITWORTHINESS OF SHRI ISHWAR S INGH OR TO QUESTION THE GENUINENESS OF THE TRANSACTIONS OF ADVANCES MADE BY HIM TO THE APPELLANT TO THE EXTENT OF RS.60 LACS. THEREFORE, THE ADDITION OF RS.60 LACS MADE BY THE AO IS DELETED. ITA NO. 2951/DEL./2013 7 IN VIEW OF THE ABOVE FACTS AND SOURCES OF CREDITS PROVED BY TH E ASSESSEE, WE ENDORSE THE VIEW TAKEN BY THE LD. CIT(A) THAT THE CREDITWORTHINESS OF THE CREDITOR AND GENUINENESS OF THE TRANSACTIONS COULD NOT BE DOUBTED IN THE PRESENT FACTS AND CIRCUMSTANCES OF THE CASE. WE, THEREFORE, CONCLUDE THAT ALL THE CONDITIONS G IVEN IN SECTION 68 STOOD SATISFIED BY THE ASSESSEE - RESPONDENT AND WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE LD. CIT(A) ON THIS COUNT. ACCORDINGLY, THE APPEAL OF THE REVENUE HAS NO MERIT AND IS LIABLE TO FAIL. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 16.11.2016 SD/ - SD/ - ( SUNIL KUMAR YADAV ) (L.P. SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 16.11.2016 *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