ITO, New Delhi V. M/s. Riverwood Constructions Company (P) Ltd, New Delhi

ITA 3095/DEL/2009

• Counselvise Citation: 309520114 RSA 2009
• Duration Of Justice: 5 year(s) 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 03-03-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 03-07-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VIKRAM SAHAY
• Keywords: Opportunity of being heard; Additional evidence
• Section: 40A(3); 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F NEW DELHI BEFORE SMT DIVA SINGH, JUDICIAL MEMBER AND SH. T.S.KAPOOR, ACCOUNTANT MEMBER I.T.A .NO. - 3095 /DEL/20 09 (ASSESSMENT YEAR - 2 00 6 - 0 7 ) ITO, WARD - 15(4), ROOM NO. - 223, C.R. BUILDING, I.P.ESTATE, NEW DELHI. (APPELLANT) VS RIVERWOOD CONSTRUCTIONS COMPANY (P.) LTD., 11 - 12, ANTRIKSH BHAWAN, K.G.MARG, NEW DELHI (RESPONDENT) APPELLANT BY S H. VIKRAM SAHAY , SR. DR RESPONDENT BY SH. ASHWANI KUMAR, CA ORDER PER DIVA SINGH, JM BY THE PRESENT APPEAL THE REVENUE ASSAILS THE CORRECTNESS OF THE ORDER PASSED IN APPEAL NO. - 134/08 - 09 BY CIT(A) - XV II I , NEW DELHI PERTAINING TO 200 6 - 0 7 ASSESSMENT YEAR ON THE FOLLOWING GROUND S : - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD.CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS.9 , 19,000/ - MADE U/S 40A(3) OF THE I.T. ACT WITHOUT PROPER APPRECIATION OF THE FACTS OF THE CASE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD. CIT(A HAS ERRED IN DELETING THE ADDITION OF RS.1,46,00,000/ - MADE U/S 68 OF THE I.T. ACT WHICH REPRESENTED AMOUNT RECEIVED IN CASH FROM A SINGLE PARTY, ALLEGED TO BE AN ADVANCE WITH OUT PROPER APPRECIATION OF THE FACTS OF THE CASE. 3. THE LD. CIT(A) HAS ERRED IN GRANTING RELIEF TO THE ASSESSEE ON BOTH THE ABOVE MENTIONED COUNTS BY ADMITTING FRESH EXPLANATIONS AND EVIDENCES (NOT PRODUCED BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS) WITHOUT ALLOWING PROPER TIME TO AO TO ENQUIRE INTO SUCH FRESH EVIDENCE. 4. THE APPELLANT CRAVES TO BE ALLOWED TO ADD, DELETE OR AMEND ANY OTHER GROUNDS OF APPEAL. DATE OF HEARING 03 . 0 3 .2015 DATE OF PRONOUNCEMENT 04. 0 3 .2015 2 I.T.A .NO. - 3095/DEL/2009 2. THE RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE WHO AT THE RELEVANT POINT OF TIME WAS ENGAGED IN THE BUSINESS OF CONSTRUCTION RETURNED AN INCOME OF RS.23,570/ - ON 29.11.2006. THE SAID RETURN WAS SELECTED FOR SCRUTINY UNDER CASS AFTER ISSUANCE OF NOTICE U/S 143(2) ETC. 3. THE AO IN THE SCRUTINY ASSESSMENT FOUND THAT THE ASSES SEE IN THE YEAR UNDER CONSIDERATION HAD PURCHASED LAND AT LUDHIANA (PUNJAB) WHERE PAYMENTS IN CASH WAS MADE TO THE FOLLOWING PERSONS : - S.NO. DATE OF PAYMENT NAME OF THE PERSON AMOUNT MODE OF PAYMENT 1. 11.7.2005 MEHAR SINGH 22,50,000 CASH 2. 25.7.2005 ARUN KR. PAWAN 9,38,000 CASH 3. 27.7.2005 MAGHAR SIGH 9,40,000 CASH 4. 29.9.2005 HARBANS LAL 4,70,000 CASH TOTAL 45,98,000 3. 1. ACCORDINGLY HE REQUIRED T HE ASSESSEE TO EXPLAIN WHY IN VIEW OF SECTION 40A(3) ADDITION BY WAY OF DISALLOWANCE OF 20% OF THE SAME SHOULD NOT BE MADE. AFTER HEARING THE ASSESSEE S RESPONSE HE REJECTED THE EXPLANATION HOLDING THAT IN VIEW OF THE AMENDMENT BY FINANCE ACT, 1995 W.E.F 01.04.1996 WHICH HAD OMITTED SUB - RULE (J) OF RULE 6DD ACCORDINGLY THE CASE LAW RELIED UPON WERE NOT RELEVANT. THE ASSESSEE THEREAFTER MADE ITS CLAIM UNDER SUB - CLAUSE (H) OF RULE 6DD WHICH WAS ALSO NOT ACCEPTED AS THE LAND WAS AT A DISTANCE OF 10 KMS FROM LUDHIANA AND THE AO WAS OF THE VIEW THAT IT CANNOT BE ACCEPTED THAT IT WAS NOT COVERED BY BANKING FACILITIES. IN VIEW THER E OF ADDITION BY WAY OF A DISALLOWANCE TO THE TUNE OF RS.9,19,000/ - WAS MADE . 3.2 . APART FROM THAT THE ASSESSEE ALSO CLAIMED TO HAVE RECEIVED AN ADVANCE OF RS.1,46,00,000/ - IN CASH FROM M/S DEV BUILDERS AND COLONIZERS P. LTD. THE CASH CREDIT APPEARING IN THIS BOOKS OF ACCOUNTS TO THAT EXTENT WAS CONSIDERED TO HAVE REMAINED UNEXPLAINED AS THE ASSESSEE WHO WAS REQUIRED TO PRODUCE DETAILS LIKE ADDRESS, PAN NO. ETC OF M/S DEV BUILDERS AND COLONIZERS P. LTD. OR THE PURPOSE OF THE ADVANCE FAILED TO PROVIDE THE SAME. THE AO HELD THAT THE ASSESSEE COULD NOT EVEN PROVIDE COPY OF THE CONFIRMATION FROM M/S DEV BUILDERS AND COLONIZERS 3 I.T.A .NO. - 3095/DEL/2009 P. LTD. EVEN THAT WAS NOT PR OVIDED. IN VIEW THEREOF THE SAID AMOUNT U/S 68 HAVE BEEN MADE AS THE ASSESSEE WAS HELD TO HAVE FAILED IN ESTABLISHING EITHER IDENTITY, CREDITWORTHINESS OR GENUINENESS OF THE TRANSACTION. 4 . IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY, THE CIT ADMITTED FRESH EVIDENCES WHICH WERE REMANDED TO THE AO AND THEREAFTER ALLOWED RELIEF TO THE ASSESSEE QUA THE ADDITIONS MADE. 5 . AGGRIEVED BY THIS THE REVENUE I S IN APPEAL BEFORE THE TRIBUNAL ON THE ABOVE MENTIONED GROUNDS. 6 . THE LD. SR. DR ADDRESSING GROUND NO. - 3 QUA THE ADDITION DELETED ADDRESSED VIDE GROUND NOS. - 1 & 2 SUBMITTED THAT THE ADDITIONS MADE HAVE BEEN DELETED WITHOUT GRANTING ADEQUATE TIME TO THE AO TO INQUIRE INTO THE FRESH EVIDENCE S TAKEN ON RECORD. FOR THE SAID PURPOSE FINDINGS ARRIVED AT IN THE IMPUGNED ORDER WERE REFERRED TO. A TTENTION WAS ALSO INVITED TO THE ASSESSMENT ORDER ON THE BASIS OF WHICH IT WAS HIS SUBMISSION THAT ADMITTEDLY NO EVIDENCE WAS PLACED ON RECORD BY THE ASSESSEE BEFORE THE AO DESPITE REPEATED OPPORTUNITIES. IN THESE C IRCUMSTANCES IT WAS HIS PRAYER THAT THE RELIEF GRANTED BY THE CIT(A) MAY BE SET ASIDE AND THE ISSUE MAY BE RESTORED TO THE FILE O F THE AO SO AS TO ENABLE HIM TO CONSIDER THE FRESH EVIDENCE S TAKEN ON RECORD. THE L D . AR THOUGH CANVASSED THAT REASONABLE OPPOR TUNITY WAS PROVIDED TO THE AO BY THE CIT(A) HOWEVER IN VIEW OF THE OBSERVATION MADE BY THE CIT(A) HIMSELF IN PARA S 15 & 16 WHICH WERE POINTED OUT TO HIM AND ALSO IN AND PARA 22 OF THE IMPUGNED ORDER THAT IT WAS H I S SUBMISSION THAT HE HAS NO OBJECTION IF THE MATTER IS RESTORED BACK TO THE AO FOR VERIFICATION ON FACTS. 7 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. A PERUSAL OF PARAS 15 & 16 AND PARA 22 OF THE IMPUGNED ORDER ADEQUATELY DEMONSTRATE THE GRIEVANCE OF THE REV ENUE. A READING OF THE SAME SHOWS THAT REPEATEDLY THE AO SOUGHT TIME TO VERIFY THE NECESSARY DETAILS PLACED ON RECORD AS ADDITIONAL EVIDENCE. FOR READY - REFERENCE, WE REPRODUCE THE SAME HEREUNDER: - 4 I.T.A .NO. - 3095/DEL/2009 15. AFTER GOING THROUGH THE REMAND REPORT OF THE ASSESSI NG OFFICER, WHEREIN HE SOUGHT TIME FOR VERIFICATION OF CONFIRMATION OF M/S DEV BUILDERS AND COLONIZERS P. LTD., A LETTER, DATED 24 TH OF MARCH 2009 WAS WRITTEN TO THE AO TO SUBMIT HIS REPORT BY 30 TH OF MARCH, 2009 SINCE IT WAS A HIGH DEMAND APPEAL ALTHOUGH THE ORIGINAL LETTER ASKING FOR REMAND REPORT WAS SERVED ON HIM ON 6 TH OF MARCH, 2009 AND THUS, THE A.O. HAD ALREADY BEEN GIVEN SUFFICIENT TIME. 16. THE ASSESSING OFFICER BY WAY OF REMAND REPORT DATED 27.03.2009 RECEIVED IN THIS OFFICE ON 30 TH OF MARCH 200 9 HAS SOUGHT TIME FOR VERIFICATION OF THE CERTIFICATE FILED WITH REGARD TO NON - EXISTENCE OF BANK IN VILLAGE T HAKARWAL AND IN RESPECT OF M/S DEV BUILDERS AND COLONIZERS P. LTD. IT HAS BEEN STATED THAT NO INFORMATION WAS FILED DURING THE COURSE OF ASSESSME NT PROCEEDINGS ABOUT THE ABOVE PARTY AND ALL THE PAYMENTS ARE BY WAY OF CASH AND THE STATUS OF ADVANCE HAVE NOT BEEN CLARIFIED AND SOUGHT A TIME OF ONE MONTH. 22. AS REGARD THE 2 ND REMAND REPORT OF THE ASSESSING OF FICER, HE HAS SOUGHT TIME FOR VERIFICATIO N OF THE EXISTENCE OF THE BANK IN VILLAGE THAKARWAL, I AM IN AGREEMENT WITH THE SUBMISSIONS OF THE APPELLANT THAT IN THE EARLIER REMAND REPORT, THE TIME WAS SOUGHT ONLY FOR VERIFICATION OF THE CONFIRMATION OF M/S DEV BUILDERS AND COLONIZERS P. LTD. AND W HICH COULD HAVE BEEN VERIFIED BY NOW SINCE THE ASSESSMENT ORDER HAS BEEN PASSED IN THAT CASE U/S 143(3) FOR ASSTT. YEAR 2006 - 07, THE BALANCE SHEET AS ON 31.03.2006 HAS BEEN FIELD WHERE SUCH BALANCE IS EXISTING AND ABOVE ALL, THE PARTY IS EXISTING ASSESSEE AND SOME OF THE TRANSACTIONS ARE BY WAY OF CHEQUES AND MAJOR PORTION OF THE ADVANCE HAS BEEN ADJUSTED AGAINST THE PURCHASE OF LAND IN THE SUBSEQUENT YEARS. BESIDES, DURING THE ASSESSMENT PROCEEDINGS, THE ATTENTION OF THE ASSESSING OFFICER WAS DRAWN TO THE FACT BY RELYING ON CLAUSE (G) OF RULE 6DD THAT THERE IS NO BANK IN VILLAGE THAKARWAL AND THE ASSESSING OFFICER INSTEAD OF VERIFYING THE FACT AT THE TIME, ONLY PRESUMED THE EXISTENCE OF BANK IN VILLAGE THAKARWAL AND NOW IN THE REMAND REPORT DATED 16.03.200 9, THE ASSESSING OFFICER DID NOT RAISE ANY DOUBT WITH REGARD TO THE CONTENTION OF THE ASSESSEE ABOUT THE NON - EXISTENCE OF THE BANK IN VILLAGE THAKARWAL AND IN THE 2 ND REMAND REPORT, HE HAS RAISED THIS ISSUE, WHICH DOES NOT APPEAR TO BE PROPER AND INSPIRE C ONFIDENCE AND BEING A HIGH DEMAND CASE AND TAKING INTO CONSIDERATION THE TOTALITY OF CIRCUMSTANCES, THE REQUEST OF THE ASSESSING OFFICER FOR FURTHER TIME IS NOT JUSTIFIED AND WOULD AMOUNT TO DELAY IN DECIDING THE HIGH DEMAND APPEAL AND JUSTICE DELAYED IS J USTICE DENIED. IN VIEW OF THE FACTS AND CIRCUMSTANCES NARRATED ABOVE AND THE EXPLANATION SUBMITTED BY THE APPELLANT, IN MY CONSIDERED OPINION, THERE WAS NO JUSTIFICATION IN MAKING DISALLOWANCE OF 20% OF CASH PAYMENTS TO THE TUNE OF RS.9,19,000/ - AND THE S AME IS DIRECTED TO BE DELETED. 7 .1. ACCORDINGLY I N VIEW THEREOF WHERE ADMITTEDLY ADEQUATE TIME WAS NOT PROVIDED TO THE AO TO MADE NECESSARY ENQUIRES THE IMPUGNED ORDER IS SET ASIDE AND THE ISSUE IS RESTORED BACK TO THE FILE OF THE AO WITH THE DIRECTION TO DECIDE THE SAME 5 I.T.A .NO. - 3095/DEL/2009 BY WAY OF A SPEAKING ORDER IN ACCORDANCE WITH LAW AFTER GIVING THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD. 8 . IN THE RESUL T THE APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES . THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 0 4 T H OF MARCH 2015 . S D / - S D / - ( T.S.KAPOOR ) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 0 4 / 03 /201 5 *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI