M/s. Rohini Chemicals Pvt. Ltd., Meerut V. JCIT, Ghaziabad

ITA 3291/DEL/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3935 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 7 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-01-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 29-06-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 29-05-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: BENCH F NEW DELHI BEFORE SRI G.D.AGRAWAL, HON BLE PRESIDENT AND SMT. BEENA A PILLAI, JM ITA NO. 3291 /DEL/201 4 A.Y. 2010 - 11 ROHINI CHEMICALS P.LTD. VS. JCIT, RANGE 2 C/O M/S MALIK & CO. (ADVOCATES) GHAZIABAD 305/7, THAPAR NAGAR MEERUT PAN: AAACR 9256 L (APPELLANT) (RESPONDENT) APPELLANT BY: SRI S ANJAY MALIK, ADV. RESPONDENT BY: SRI A TIQ AHMAD , SR.D.R. DATE OF HEARING: 21.12.2017 DATE OF PRONOUNCEMENT : 19.01.18 ORDER PER BEENA A PILLAI, JUDICIAL MEMBER P RESENT APPEAL HAS BEEN FILED BY ASSESSEE AGAINST ORDER DATED 24/02/14 PASSED BY LD.CIT(A), GHAZIABAD FOR ASSESSMENT YEAR 2010 - 11 ON THE FOLLOWING GROUNDS OF APPEAL: 1. (A) THAT ON FACTS AND IN LAW NO ADDITION WAS WARRANTED U/S 41(1)(B) OF I.T.ACT. (B) THAT THE ADDITION OF RS.80,94,171/ - (EIGHTY LAC NINETY FOUR THOUSAND ONE HUNDRED SEVENTY ONE ONLY) MADE BY THE ASSESSING ITA 3291/DEL/14 A.Y:2010 - 11 ROHINI CHEMICALS (P) LTD., GHAZIABAD 2 OFFICER AND SUSTAINED BY THE LD.CIT(A) BEING ERRONEOUS, ILLEGAL, WITHOUT JURISDICTION AND UNTENABLE ON FACTS AND IN LAW DESERVES TO BE DELETED. 2. THAT THE COMPUTATION OF INCOME AT RS.73,62,550/ - DESERVES TO BE QUASHED AND CANCELLED AND THE DECLARED LOSS OF RS.7,32, 625/ - DESERVES TO BE ACCEPTED. 2. BRIEF FACTS OF THE CASE ARE AS UNDER : A SSESSEE FILED ITS RETURN OF INCOME ON 30/09/10 DECLARING LOSS OF RS. 7,32,625/ - . THE RETURN WAS PROCESSED UNDER SECTION 143 (1) AND THE CASE WAS SELECTED FOR SCRUTINY. STATUTORY NOTICES UNDER SECTION 143 (2) WAS ISSUED IN RESPONSE TO WHICH REPRESENTATIVES OF A SSESSEE APPEARED BEFORE THE LD. AO FROM TIME TO TIME AND FILED SUPPORTING DOCUMENTS A ND EVIDENCES AS REQUIRED. THE BOOKS OF ACCOUNTS, BILLS AND VOUCHERS PRODUCED BEFORE LD.AO , WERE SUBJECTED TO TES T CHECK BASIS AND THE CASE WAS DISCUSSED WITH ASSESSEE. 2.1 . ON PERUSAL OF THE RECORDS, LD. AO OBSERVED THAT ASSESSEE HA D SHOWN SUNDRY CREDITORS OF RS. 10,01,66,474/ - . ACCORDINGLY SHOW CAUSE WAS ISSUED TO ASSESSEE REQUIRING TO EXP LAIN AS TO WHY AN AMOUNT OF RS. 1,65,70,714/ - MAY NOT BE ADDED TO THE INCOME OF ASSESSEE , AS CESSATION OF LIABILITY UNDER SECTION 41 OF THE A CT. IN COMPLIANCE TO THE NOTICE S, ASSESSEE FILED WRITTEN SUBMISSI ONS AND PARTY WISE DETAILS. LD. AO AFTER GOING THROUGH THE SUBMISSIONS FILED BY ASSESSEE , FOUND THAT IN SOME CASES THERE WE RE ILLEGAL SUITS FILED BY CREDITORS AGAINST ASSESSEE AND IN SOME OTHER CASES ASSESSEE HAS PAID THE LIABILITY IN 2011 - 12. LD.AO ALSO FOUND THAT THERE WERE CERTAIN STATIC CREDITORS IN THE BOOKS OF ASSESSEE WHICH HAD ACTUA LLY CEASED TO EXIST AS THERE WERE NO DOCUMENTARY EVIDENCES FILED BY ITA 3291/DEL/14 A.Y:2010 - 11 ROHINI CHEMICALS (P) LTD., GHAZIABAD 3 ASSESSEE OF ANY LEGAL SUITS ETC. LD.AO MADE ADDITION OF RS.80,94,171/ - WHICH HAD NOT BECOME STATIC , AND LIABILITY CEASED TO EXIST. THE DETAILS OF SUCH CREDITORS WHICH HAD BECOME STATIC ARE AS UNDER: SL. NO. NAME OF THE CREDITORS AMOUNT - RS. 1. AARTI INDUSTRIES LTD. 4,71,794/ - 2. LAXMI INDUSTRIAL PRODUCTS 5,43,400/ - 3. LAXMI MICRO METALLIC INDUSTRIES 7,65,407/ - 4. MITTAL CONCEPTS PVT.LTD. 4,17,098/ - 5. R.B.CHEM 3,20,803/ - 6. SAI PACKAGING CO. 2,36,822/ - 7. SHREE LAXMI POWDER PRODUCTS 28,50,593/ - 8. UNITED ALKALIES 1,29,985/ - 9. ALLIANCE ENGG. COMPANY 1,88,288/ - 10. ENVIROTECH UTILITY 1,96,652/ - 11. EUREKA FORBES LIMITED 1,01,270/ - 12. HEM SUPRA ENGINEERS PVT.LTD. 1,13,166/ - 13. LAKRA OIL TRADING PVT.LTD. 2,90,659/ - 14. MAKWANA ENTERPRISES 3,98,320/ - 15. NEW SHAKTI HIGHWAY CARRIER (REGD.) 4,15,545/ - 16. PRAVEEN OIL COMPANY 6,54,369/ - 17. TOTAL : 80,94,171/ - 2.2 . AGGRIEVED BY THE ORDER OF LD.AO ASSES SEE PREFERRED APPEAL BEFORE LD. CIT (A). 2.3 . BEFORE LD.CIT(A) ASSESSEE FILED COPIES OF THE CIVIL SUITS PREFERRED BY CREDITORS AGAINST ASSESSEE. ASSESSEE ALSO FILED CONFIRMATIONS BY CERTAIN CREDITORS. THESE WERE FILED BEFORE THE LD. CIT (A) BY WAY OF ADDITIONAL EVIDENCE. ASSESSEE PLAC ED RELIANCE UPON THESE DOCUMENTS TO SUBMIT THAT NEITHER THE LIABILITY HAD SEIZED , NOR ITA 3291/DEL/14 A.Y:2010 - 11 ROHINI CHEMICALS (P) LTD., GHAZIABAD 4 I T WAS LIMITED BY CREDITORS. LD. CIT(A) REFERRED IT TO LD.AO FOR A REMAND REPORT. LD.AO IN THE REMAND REPORT REJECTED ADDITIONAL EVIDENCE S AS NOT A CCEPTABLE. 2.4. THEREAFTER LD. CIT (A) ALSO REJECTED THE ADDITIONAL EVIDENCE FILED BY ASSESSEE AND DECIDED THE ISSUE ON MERITS BY OBSERVING AS UNDER: IT IS THE FACT THAT THE AO GAVE APPELLANT AN OPPORTUNITY TO PROVIDE CONFIRMATIONS AND OTHER DETAILS. OUT OF TOTAL LIABILITY OF RS. 10,01,66,474/ - , THE AO HAS IDENTIFIED 25 PARTIES WHICH REMAINED STATIC AND HE ISSUED SHOW CAUSE NOTICE ON 21.01.2012 TO EXPLAIN AS TO WHY NOT THE SAME BE ADDED U/S 41 OF THE LT. ACT. THE APPELLANT RESPONDED TO THIS SHOW CAUSE NOTI CE AND THE AO HAS ACCEPTED THE GENUINENESS OF MANY PARTIES WHO HAVE FILED LEGAL SUIT OR HAVE BEEN PAID THE LIABILITY DURING THE YEAR 2011 - 12. IT IS NOT DISPUTED THAT 16 PARTIES REMAINED STATIC AND NO LEGAL ACTIONS HAVE BEEN INITIATED BY THEM ON THE APPELLA NT. ALSO NO EVIDENCE WAS FOUND REGARDING PAYMENT OF LIABILITY IN FUTURE YEAR. THESE ARE UNDISPUTED FACTS WHICH THE APPELLANT HAS NOT DENIED. THE APPELLANT'S CLAIM THAT THIS ADDITION WAS NOT MADE IN THE EARLIER YEAR HAS NO FORCE AS THE AO HAS GIVEN FINDING THAT THESE LIABILITIES DOES NOT INITIATED ANY LEGAL ACTIONS AND THEREFORE ,THESE LIABILITIES CEASED TO EXIST. IT IS VERY STRANGE THAT THE APPELLANT HAS FURNISHED BALANCE SHEET FROM 01.04.2009 TO 31.03.2010 BUT NOT FOR 31.03.2009. 1. LAXMI MICRO METALIC INDUSTRIES 503, SAFFRON PARK NR CENTRE POINT PANCHWATI, AHMEDABAD RS. 7,65,407.54 2. SHREE LAXMI POWDER PRODUCTS 503, SAFFRON PARK NR CENTRE POINT PANCHWATI, AHMEDABAD RS.28,50,593.36 TOTAL: RS.36,15,900.90 ITA 3291/DEL/14 A.Y:2010 - 11 ROHINI CHEMICALS (P) LTD., GHAZIABAD 5 THE APPELLANT SUBMITTED THAT BOTH THE PARTIES HAVE FILED CIVIL SUIT AGAINST THE APPELLANT. HOWEVER THE FACT IS QUITE DIFFERENT. BOTH THESE PARTIES HAVE NOT FILED ANY CIVIL SUIT. IN FACT CIVIL SUIT HAS BEEN FILED BY A COMPANY SHRI LAXMI INTRACHEM PVT. LTD. THE LEGAL SUI T IS FOR RECOVERY OF PRINCIPAL AMOUNT OF RS. 98,76,019/ - + INTEREST OF RS.47,40,488/ - . PARA NO. 4 & 5 OF SUIT SUBMITTED BY THE APPELLANT IS REPRODUCED AS UNDER. 4. THE PLAINTIFF COMPANY HAS SUPPLIED THE GOODS TO THE DEFENDANTS FROM THE GODOWN OF THE OWN ERSHIP OF THE PLAINTIFF SITUATED AT 2/3, SAFFRONI PARK, SARKHEJ SANSAD ROAD, VILLAGE TELAV, TAL SANAND, DISTT. AHMEDABAD. 5. THE DEFENDANTS HAVE SETTLED THE ACCOUNT WITH THE PLAINTIFF ON 30.01.2009. THE DEFENDANTS HAVE CONFIRMED, ACKNOWLEDGED AND APPROVED THAT RS. 9876019.46 HAS BEEN DUE TOWARDS THE DEFENDANTS AND DEFENDANTS HAVE GIVEN ASSURANCE THAT THEY WILL PAY THE OUTSTANDING AMOUNT WITHIN A SHORT PERIOD. PERUSAL OF THE ABOVE CLEARLY SHOWS THAT THIS WAS TRANSACTION BETWEEN SHREE LAXMI INTRACHEM PVT. L TD. AND THE APPELLANT COMPANY. THIS CIVIL SUIT IS FOR THE SUPPLY MADE BY SHRI LAXMI INTRACHEM PVT L TD. TO THE APPELLANT COMPANY .THIS SUIT IS NOT FILED FOR THE RECOVERY OF OUTSTANDING BALANCE IN THE CASE OF M/S LAXMI MICRO METALLIC INDUSTRIES AND M/S SHREE LAXMI POWDER PRODUCTS. THE APPELLANT HAS TRIED TO MISLEAD THE UNDERSIGNED AND THE DEPARTMENT BY ME NTIONING THAT THESE TWO PARTIES ARE CLUBBED IN THE CIVIL SUIT. THEREFORE IT IS CLEAR THAT BOTH THE PARTIES HAVE NOT FILED ANY SUIT OF RECOVERY AGAINST THE APPELLANT. THEREFORE, THESE ENTIRE GROUNDS AND SUBMISSION MADE BY THE APPELLANT HAVE NO FORCE. SINCE THE APPELLANT HAS NOT PRODUCED ANY DETAILS REGARDING RECOVERY OF AMOUNT. RELIANCE IS PLACED IN THE CASE OF SURESH KUMAR T. JAIN VS. ITO (ITAT, BANS) 128 ITD 74 WHEREIN HON'BLE ITAT HELD: - ASSESSEE FAILED TO PROVE THE GENUINENESS OF BROUGHT FORWARD TRADE CREDITORS - ADDITION UPHELD'. SINCE COPY OF CIVIL SUIT FILED BY THE APPELLANT IS NOT RELATE D TO THE CREDITORS OF THE APPELLANT COMPANY AND CIVIL SUIT HAVE BEEN FILED BY ITA 3291/DEL/14 A.Y:2010 - 11 ROHINI CHEMICALS (P) LTD., GHAZIABAD 6 ANOTHER COMPANY, THE ADDITION OF R.80,94,171/ - MADE BY THE AO I S CONFIRMED. GROUNDS OF APPEAL NO. 1 &2 ARE REJECTED. 3 . AGGRIEVED BY THE ORDER OF LD. CIT (A) ASSESSEE IS IN APPEAL BEFORE US NOW. 3.1 . LD. AR SUBMITTED THAT SHRI LAXMI POWER PRODUCTS AND LAXMI MICRO METALLIC INDUSTRIES ARE SUBUNITS OF SHRI LAXMI INTRACHEM PVT. LTD. H E HAS PL ACED BEFORE US ON THE COPY OF SUMMONS DATED 06/08/11, ISSUED BY THE C OURT OF PRINCIPAL SESSIONS CIVIL JUDGE, AHMADABAD , GUJARAT STATE IN CIVIL SUIT NO. 727/2011 FILED BY SHRI LAXMI INTRACHEM PVT. LTD AGAINST PRESENT ASSESSEE. HE HAS ALSO PLACED THE LEDGER ACCOUNTS OF M/S ROHINI CHEMICALS PVT. LTD. IN THE BOOKS OF SHRI LAXMI INTRACHEM PVT. LTD WHICH IS PLACED AT PAGE 166 AND 167 OF PAPER BOOK 3.2. LD. AR SUBMITTED THAT AS THE EVIDENCE REGARDING THE SUIT BEING FILED BY THESE COMPANIES AGAINST ASSESSEE WAS NOT PRODUCED AT THE TIME OF ASSESSMENT PROCEEDINGS AND THE ASSESSEE HAD ALSO FAILED TO ESTABLISH THE ABOVE CREDITORS ARE RUNNING CREDITORS, HENCE THE SAME WERE ADDED BACK TO THE INCOME IN THE HANDS OF ASSESSEE. LD. AR SUBMITTED THAT THE ORDER PASSED BY THE CIVIL COURT PLACED AT PAGE 165 OF THE PAPER BOOK PROVES THAT THE SUIT S WERE FILED AND THE LIABILITY OF REPAYING THE SAME HAS BEEN CAST UPON THE ASSESSEE. HE THUS PRAYED FOR DELETION OF THE ADDITION MADE BY LD. AO. 3.3 . LD. DR AT THE OUTSET SUBMITTED THAT THE CONFIRMATION LETTERS AT PAGES 17 - 72 FOR FRESH EVIDENCES FILED BEFORE LD. CIT (A), WHICH WAS REJECTED BY LD. CIT (A) A S WELL AS LD.AO AND HENCE THE SAME CANNOT ITA 3291/DEL/14 A.Y:2010 - 11 ROHINI CHEMICALS (P) LTD., GHAZIABAD 7 BE CONSIDERED BY THIS T RIBUNAL AS ASSESSEE HAS NOT FILED ANY APPLICATION FOR ADMISSION OF ADDITIONAL EVIDENCE. 3.4. LD. DR SUBMITTED THAT OUT OF THE TOTAL SUNDRY CREDITORS AT RS. 10,01,66,474/ - , ASSESSING OFFICER H AS FOUND ONLY 17 CREDITORS TO BE CEASED TO HAVE EXIST. HE SUBMITTED THAT THE 17 CREDITORS TOTALLING TO RS.80,94,171/ - ASSESSEE HAS FILED SOME DOCUMENTS IN RELATION TO M/S LAXMI MICRO M ETALLIC I NDUSTRIES, SHRI LAXMI INTRACHEM PVT. LTD AND SH. LAXMI POWER P RODUCTS. LD.DR SUBMITTED THAT THE ORDER IS PLACED AT PAGE 165 OF THE PAPER BOOK DOES NOT CONTAIN THE COPY OF THE PLAINT IN ORDER TO ASCERTAIN THE ENTIRE LIABILITY OF SHRI LAXMI INTRACHEM PVT. LTD AND ITS SUBUNITS. LD. DR SUBMITTED THAT THE TOTAL OUTSTANDING LIABILITY STANDING IN THE NAME OF THESE CREDITORS IS RS. 41,59,400/ - . 3.5 . LD.DR FURTHER SUBMITTED THAT APART FROM THESE 3 PARTIES, ASSESSEE HAS NOT PLACED ON RECORD ANY DOCUMENT/EVIDENCE REGARDING LI ABILITY IN RESPECT OF REMAINING 14 CREDITORS AS OUTSTAN DING. LD. DR THUS SUBMITTED THAT SUIT FILED BY THESE PARTIES AGAINST ASSESSEE MUST BE VERIFIED BEFORE ARRIVING AT A CONCLUSION OF THESE CREDITORS BEING OUTSTANDING IN THE BOOKS OF ACCOUNT AS ON THE DATE OF THE END OF FINANCIAL YEAR RELEVANT TO THE ASSESSME NT YEAR UNDER CONSIDERATION. 3.6 . LD. DR THUS TRIED TO JUSTIFY THE ADDITIONS MADE BY LD. AO IN RESPECT OF THE 17 PARTIES IN RESPECT OF WHOM NO EVIDENCES WERE PLACED BEFORE HIM. 4. WE HAVE PERUSED THE SUBMISSIONS ADVANCED BY BOTH THE SIDES IN THE LIGHT OF THE RECORDS PLACED BEFORE US. WE AGREE WITH THE ITA 3291/DEL/14 A.Y:2010 - 11 ROHINI CHEMICALS (P) LTD., GHAZIABAD 8 SUBMISSION ADVANCED BY LD. DR REGARDING NON - ADMISSION OF EVIDENCES PLACED AT PAGES 17 - 72 OF PAPER BOOK. ON PERUSAL OF THESE PAGES, WE OBSERVE THAT THESE DOCUMENTS WOULD BE VERY MUCH RELEVANT TO DECIDE THE ISS UE OF CESSATION OF LIABILITY IS IN RESPECT OF THE 17 CREDITORS. ACCORDINGLY WE ARE INCLINED TO ADMIT THESE DOCUMENTS. 4.1. ON PERUSAL OF IMPUGNED ORDER , IT IS OBSERVED THAT LD. CIT (A) DECIDED THE ISSUE ON THE BASIS OF THERE BEING NO EVIDENCE REGARDING 1 7 PARTIES BEING OUTSTANDING IN THE BOOKS OF ACCOUNTS. IN OUR CONSIDERED OPINION IN THE INTEREST OF JUSTICE I T WOULD BE APPROPRIATE TO SET ASIDE THE ISSUE TO LD.A.O. FOR VERIFICATION ON THE BASIS OF THESE DOCUMENTS. LD. AO SHALL CONSIDER THESE DOCUMENTS AS P ER LAW AND GIVE A DETAILED FINDING IN RESPECT OF THE SAME VIS - - VIS THE CREDITORS. NEEDLESS TO SAY THAT PROPER OPPORTUNITY MAY BE GRANTED TO ASSESSEE AS PER LAW. 4.2. ACCORDINGLY WE SET ASIDE THIS ISSUE TO THE FILE OF LD. A.O. 5. IN THE RESULT APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 1 9 . 0 1 . 2 0 1 8 . S D / - S D / - (G.D.AGRAWAL) (BEENA A PILLAI) PRESIDENT J UDICIAL MEMBER DT. 1 9 T H JANUARY, 2018 *MV ITA 3291/DEL/14 A.Y:2010 - 11 ROHINI CHEMICALS (P) LTD., GHAZIABAD 9 COPY FORWARDED TO: - 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR, ITAT - TRUE COPY - BY ORDER, ASSISTANT REGISTRAR ITAT DELHI BENCHES S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON DRAGON 1 6 .01.2018 SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR 1 7 .01.2018 SR. PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 19.01.2018 JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/AM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR. PS/PS 6 KEPT FOR PRONOUNCEMENT 1 9 . 0 1 . 1 8 SR. PS/PS 7 FILE SENT TO BENCH CLERK SR. PS/PS 8 DATE ON WHICH THE FILE GOES TO HEAD CLERK 9 DATE ON WHICH FILE GOES TO A.R. 10 DATE OF DISPATCH OF ORDER