DCIT, Faridabad V. M/s. Vijay Engineering & Metal Works, Faridabad

ITA 3294/DEL/2015

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5372 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 8 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 25-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NAINA SOIN KAPIL
• Keywords: Additional evidence
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: BENCH D, NEW DELHI BEFORE SMT. BEENA A PILLAI, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 3294/DEL/2015 AY: 2009-10 DCIT CIRCLE-II, BLOCK-B, CGO COMPLEX, NH-IV FARIDABAD. VS . VIJAY ENGINEERING & METAL WORKS, PLOT NO. 165, SECTOR-24, FARIDABAD. AACFV6169R (APPELLANT) (RESPONDENT) APPELLANT BY : MS. NAINA SOIN KAPIL, SR. DR RESPONDENT BY : NONE DATE OF HEARING : 24/01/2019 DATE OF PRONOUNCEMENT : 29/01/2019 ORDER PER BEENA A PILLAI, JUDICIAL MEMBER PRESENT APPEAL HAS BEEN FILED BY REVENUE AGAINST OR DER DATED 16/03/15 PASSED BY LD. CIT (A), FARIDABAD FOR ASSES SMENT YEAR 2009-10 ON FOLLOWING GROUNDS OF APPEAL: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT(A) WAS RIGHT ON FACTS AND IN LAW IN DEL ETING THE ADDITION OF RS. 59,35,878/- MADE BY THE ASSESSING O FFICER ON A/C OF UNVERIFIED SUNDRY CREDITORS EVEN WHEN THE ASSESSEE COULD NOT PRODUCE THE REQUISITE EVIDENCE D URING ASSESSMENT PROCEEDINGS AS WELL AS DURING REMAND PROCEEDINGS TO AUTHENTICATE CREDITORS OUTSTANDING A S ON 31.03.2009. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT(A) WAS RIGHT ON FACTS AND IN LAW IN ADM ITTING THE ADDITIONAL EVIDENCE EVEN WHEN ON PROVIDING MORE THA N SUFFICIENT OPPORTUNITIES THE ASSESSEE COULD NOT PRO DUCE THE ITA NO. 3294DEL/2015 2 REQUISITE EVIDENCE DURING ASSESSMENT PROCEEDINGS AS WELL AS DURING REMAND PROCEEDINGS TO AUTHENTICATE CREDIT ORS OUTSTANDING AS ON 31.03.2009. 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT(A) WAS RIGHT ON FACTS AND IN LAW IN NOT CONFIRMING THE ADDITION OF RS. 7,97,431/- MADE BY T HE ASSESSING OFFICER ON ACCOUNT OF SUBSTANTIALLY HIGH AND UNVERIFIED CLAIM OF TELEPHONE EXPENSE EVEN WHEN THE BILLS WERE NOT PRODUCED BY THE ASSESSEE IN SUPPORT OF EXP ENSES DEBITED TO P&L ACCOUNT. 4. THE APPELLANT CRAVES FOR THE PERMISSION TO ADD, DEL ETE OR AMEND THE GROUNDS OF APPEAL BEFORE OR AT THE TIME O F HEARING OF APPEAL. BRIEF FACTS OF THE CASE ARE AS UNDER : 2. ASSESSEE FILED ITS RETURN OF INCOME ON 25/11/09. CASE WAS PROCESSED UNDER SECTION 143 (1) OF THE ACT, WHICH W AS LATER ON PICKED UP FOR SCRUTINY. NOTICES UNDER SECTION 143 (2) WAS ISS UED, FOLLOWED BY NOTICE UNDER SECTION 142 (1) ALONG WITH QUESTIONNAIRE. IN RESPONSE TO STATUTORY NOTICES, ASSESSEES REPRESENTATIVES APPEARED BEFORE LD.AO AND FILED DETAILS AS CALLED FOR. 3. LD.AO OBSERVED THAT ASSESSEE WAS ENGAGED IN THE BUSINESS OF MANUFACTURING OF AUTO PARTS. A SURVEY UNDER SECTION 133A OF THE ACT WAS CONDUCTED AT BUSINESS PREMISES OF ASSESSEE, DURING WHICH ASSESSEE SURRENDERED ADDITIONAL INCOME OF RS.2,40,53,582/-. FURTHER AMOUNT OF RS.23,06,964/- WAS ADDED IN P&L ACCOUNT, AS UNCLAIM ED BALANCES WRITTEN OFF. 4. LD.AO DURING COURSE OF SURVEY OBSERVED THAT, SUR RENDER WAS IN RESPECT OF SUNDRY CREDITORS, WHO WERE NOT INCLUDED IN CREDITORS LIST TOTALING TO RS.4,50,67,865/- FOR ASSESSMENT YEAR 20 08-09 AS ON 31/03/08. ITA NO. 3294DEL/2015 3 4.1 LD.AO CALLED UPON ASSESSEE TO FILE COMPLETE DET AILS OF SUNDRY CREDITORS, AND TO PROVE GENUINENESS THEREOF. LD. AO MADE ADDITION IN RESPECT OF 54 CREDITORS, WHERE NO CONFIRMATIONS WER E FILED BY ASSESSEE AMOUNTING TO RS.59,35,878/-. 5. FURTHER LD.AO OBSERVED THAT ASSESSEE HAD PAID SU M OF RS.7,50,780/-, TO M/S. CITIFINANCIAL CONSUMER FINAN CE INDIA LTD., DURING YEAR UNDER CONSIDERATION. LD.AO CALLED UPON ASSESSEE TO PRODUCE EVIDENCE OF TDS MADE ON THE PAYMENT MADE. IN RESPON SE TO QUERY RAISED, ASSESSEE SUBMITTED THAT, NO TDS WAS DEDUCTED ON INT EREST PAID, AS THESE WERE INTEREST PAYMENTS AGAINST LOAN TAKEN BY ASSESS EE. 6. LD.AO MADE ADDITION IN THE HANDS OF ASSESSEE BY INVOKING SECTION 40 (A) (IA) OF THE ACT. 7. FURTHER LD.AO OBSERVED THAT, A SUM OF RS.8,97,43 1/- WAS FOUND DEBITED UNDER THE HEAD ADMINISTRATIVE EXPENSES, IN P&L ACCOUNT FOR YEAR UNDER CONSIDERATION. ASSESSEE WAS CALLED UPON TO PR OVE EXPENSES INCURRED. IN RESPONSE, ASSESSEE FILED PRINT OUTS OF CASH BOOK AND LEDGER VOUCHERS TO SUPPORT CERTAIN EXPENSES DEBITED, BUT N O EVIDENCE IN FORM OF BILLS FOR HUGE EXPENSES CLAIMED UNDER THE HEAD TELE PHONES, WERE PRODUCED. LD.AO ACCORDINGLY MADE DISALLOWANCE OF RS .7,97,431/-. 8. AGGRIEVED BY ADDITION MADE BY LD.AO, ASSESSEE PR EFERRED APPEAL BEFORE LD.CIT (A), WHO PARTLY ALLOWED APPEAL OF ASS ESSEE. 9. AGGRIEVED BY ORDER OF LD. CIT (A), REVENUE IS IN APPEAL BEFORE US NOW. 10. AT THE OUTSET, NONE APPEARED BEFORE US TODAY ON BEHALF OF ASSESSEE. IT IS ALSO OBSERVED THAT NOTICES HAVE BEEN SENT TO ADDRESS MENTIONED BY ASSESSEE, IN FORM 35, FILED BEFORE LD.CIT (A) ON 19 /09/18 AS WELL AS, ON ITA NO. 3294DEL/2015 4 19/11/18. CONSIDERING SMALLNESS OF CASE, WE ARE INC LINED TO DISPOSE OF APPEAL AS UNDER: GROUND NO.1 RAISED BY REVENUE IS AGAINST DELETION OF RS.59,35, 878/- ON ACCOUNT OF SUNDRY CREDITORS OUTSTANDING AS ON 31/03 /09. 11. LD.SR.DR PLACED RELIANCE UPON ORDER OF LD.AO AN D SUBMITTED THAT NO COMPLIANCE TO PROVE GENUINENESS OF SUNDRY CREDIT ORS SHOWN OUTSTANDING AS ON 31/03/09 WAS MADE BY ASSESSEE. SH E VEHEMENTLY SUBMITTED THAT, ASSESSEE WAS GRANTED SUFFICIENT OPP ORTUNITIES BEFORE LD.AO TO FILE ALL REQUISITE DETAILS TO PROVE GENUIN ENESS OF CREDITORS WHICH ASSESSEE FAILED TO DISCHARGE. SHE THUS SUPPORTED AD DITION MADE BY LD. AO. 12. WE HAVE PERUSED RECORDS PLACED BEFORE US AND OR DER PASSED BY LD. CIT (A). IT IS OBSERVED THAT BEFORE LD. CIT (A) ASS ESSEE HAD FILED ADDITIONAL EVIDENCE UNDER RULE 46A WITH REGARDS TO UNEXPLAINED SUNDRY CREDITORS AMOUNTING TO RS.59,35,878/-, WHICH INCLUDED CONFIRM ATIONS OF 37 CREDITORS WITH THEIR PAN AND PLACE OF ASSESSMENT WI TH COPIES OF ACCOUNTS, CONFIRMATIONS FROM 17 CREDITORS WITH DATE OF PAYMEN T IN FOLLOWING YEARS ALONG WITH BANK STATEMENTS AND COPIES OF ACCOUNTS F OR ASSESSMENT YEAR 2009-10 AND 2010-11. LD. CIT (A) FORWARDED ADDITION AL EVIDENCE TO LD.AO FOR EXAMINATION WITH REGARDS TO ITS ADMISSIBI LITY AS WELL AS MERITS OF ADDITION IN LIGHT OF ADDITIONAL EVIDENCES. LD.AO IN REMAND REPORT DATED 05/01/15 SUBMITTED THAT ONUS WAS ON ASSESSEE TO PRO VE THE SAME WITH SUFFICIENT DOCUMENTARY EVIDENCE AND ASSESSEE WAS GR ANTED SUFFICIENT OPPORTUNITIES IN REGARDS TO THE SAME. HE THUS REJEC TED ADDITIONAL EVIDENCE. 13. LD.CIT (A) UPON RECEIPT OF REMAND REPORT, OBSER VED THAT IN RETURN OF INCOME FILED FOR ASSESSMENT YEAR 2008-09, ASSESSEE HAD SHOWN 182 ITA NO. 3294DEL/2015 5 PARTIES UNDER THE HEAD SUNDRY CREDITORS. DURING SUR VEY UNDER SECTION 133A OF THE ACT, ASSESSEE SURRENDERED ADDITIONAL IN COME OF RS.2,40,53,582/- FOR TAXATION, WHICH INCLUDED 7 SUN DRY CREDITORS AMOUNTING TO RS.1,00,33,582/-. HE ALSO OBSERVED THA T IN RETURN OF INCOME FILED FOR ASSESSMENT YEAR 2009-10, SAID SURR ENDERED AMOUNT WAS SHOWN IN PROFIT AND LOSS ACCOUNT AS ADDITIONAL INCO ME. IN ADDITION, REGARDING 7 SUNDRY CREDITORS OF RS.1,00,33,582/- AS SESSEE SURRENDERED SUM OF RS.23,06,694/- IN PROFIT AND LOSS ACCOUNT, A S UNCLAIMED BALANCES WRITTEN OFF. 14. POST SURVEY, LD. AO DREW A LIST OF 54 SUNDRY CR EDITORS IN RESPECT OF WHICH, NO CONFIRMATION WAS FILED BY ASSESSEE. 15. LD. CIT (A) OBSERVED THAT ASSESSEE HAS NOT ONLY PROVIDED CONFIRMATIONS OF SUNDRY CREDITORS BUT ALSO HAS GIVE N COPY OF ACCOUNT OF VARIOUS SUNDRY CREDITORS SHOWING PAYMENT IN SUBSEQU ENT YEAR. HE, THUS OBSERVED THAT ASSESSEE HAS SHOWN HOW THE AMOUNT WAS OUTSTANDING AGAINST SUNDRY CREDITORS. LD. CIT (A) HAS ACCEPTED ADDITIONAL EVIDENCE AND DECIDED THE ISSUE AS UNDER: 7.5 ON ACCOUNT OF THE REASONS MENTIONED EARLIER I N THE ORDER, I HAVE PROCEED TO ACCEPT THE ADDITIONAL EVIDENCE PROV IDED BY THE APPELLANT IN THE FORM OF CONFIRMATIONS AND VARIOUS SUNDRY CREDITORS. ON A PERUSAL OF THE SAID CONFIRMATIONS, IT IS REVEALED THAT THE APPELLANT HAS PROVIDED DETAILED CONFIRMED COPIES OF ACCOUNT OF VARIOUS SUNDRY CREDITORS IN RESPECT OF W HOSE OUTSTANDING BALANCES, ADDITIONS WERE MADE IN THE AS SESSMENT ORDER. NOT ONLY ARE THE COPIES OF ACCOUNT CONFIRME D BUT THE PERMANENT ACCOUNT NUMBER OF THE SAID CREDITORS HAS ALSO BEEN FURNISHED BY THE APPELLANT. IN ADDITION, THE APPEL LANT HAS ALSO FURNISHED COPIES OF ACCOUNT OF VARIOUS CREDITORS IN THE SUBSEQUENT YEAR FROM WHICH THE POSITION REGARDING P AYMENT OF OUTSTANDING BALANCES GETS CRYSTAL CLEAR. ON A CARE FUL EXAMINATION OF THE SUBSEQUENT YEARS COPY OF ACCOUN T, IT IS ITA NO. 3294DEL/2015 6 REVEALED THAT THE APPELLANT HAD MADE PAYMENTS TO TH ESE SUNDRY CREDITORS BY CHEQUE. 16. WE DO NOT FIND ANY INFIRMITY IN AFORE STATED OB SERVATION AND FINDINGS OF LD.CIT (A), AS ASSESSEE PRODUCED INFORM ATIONS REQUIRED BY LD.AO, AND THEREFORE ASSESSING OFFICER COULD NOT HA VE ASSUMED THAT THESE CREDITORS WERE NO MORE PAYABLE BY ASSESSEE. FURTHER LD.CIT (A) RECORDS THAT CREDIT BALANCES WERE IN RESPECT OF PARTIES, FR OM WHOM PURCHASES WERE MADE BY ASSESSEE, OR TO WHOM PAYMENTS FOR SUCH EXPENSES WERE DUE FROM ASSESSEE. 17. THUS IN OUR CONSIDERED OPINION ASSESSING OFFICE R CANNOT PROCEED TO DISALLOW THE SUNDRY CREDITORS STANDING IN THE BOOKS OF ACCOUNT OF ASSESSEE UNDER SECTION 41 (1) OF THE ACT. LD. CIT ( A) FURTHER RECORDS THAT ASSESSEE HAS SHOWN COPIES OF ACCOUNT OF VARIOUS SUN DRY CREDITORS WHERE PAYMENTS HAVE BEEN MADE IN SUBSEQUENT YEARS. WE THEREFORE UPHOLD ORDER OF LD. CIT (A) IN THIS RE GARD. ACCORDINGLY THIS GROUND RAISED BY REVENUE STANDS DI SMISSED. GROUND NO. 2 RAISED BY REVENUE IS ON ACCOUNT OF DELETION OF RS.7,50,780/- UNDER SECTION 40 (A) (IA) OF THE ACT. 18. LD.SR.DR PLACED RELIANCE UPON ORDER PASSED BY L D.AO. 19. WE HAVE PERUSED SUBMISSIONS ADVANCED BY ASSESSE E BEFORE LD.CIT (A). 20. IT IS OBSERVED THAT ASSESSEE HAD FURNISHED DEDU CTION CERTIFICATE UNDER SECTION 197 (1) ISSUED BY ACIT (TDS) WHICH ST ATES THAT PAYMENT OF INTEREST TO CITIFINANCIAL CONSUMER FINANCE INDIA MA Y BE MADE AT NIL RATE FOR PERIOD BETWEEN 18/08/08 TO 31/03/09. IN THE LIG HT OF AFORE STATED CERTIFICATE DISALLOWANCE MADE BY LD.AO HAS BEEN RIG HTLY DELETED BY LD. CIT (A) AND THE SAME IS UPHELD. ITA NO. 3294DEL/2015 7 ACCORDINGLY GROUND RAISED BY REVENUE STANDS DISMISS ED. GROUND NO. 3 RAISED BY REVENUE IS ON ACCOUNT OF ADDITION RESTRI CTED TO 1/7 TH OF TOTAL TELEPHONE EXPENSES AMOUNTING TO RS.8,97,4 31/-. LD.CIT (A) RESTRICTED DISALLOWANCE TO 1/7 OF TOTAL EXPENSES, AS HE WAS OF THE OPINION THAT ASSESSING OFFICER HAS NOT BEEN ABL E TO GIVE ANY COGENT REASON FOR DISALLOWANCE OF RS.7,97,431/-. HE RESTRI CTED DISALLOWANCE LOOKING INTO PAST HISTORY OF ASSESSMENT PROCEEDINGS . LD.SR.DR COULD NOT PRODUCE ANYTHING IN CONTRARY IN ORDER TO SUSTAIN AD DITION MADE BY LD.AO, WE THEREFORE UPHOLD THE VIEW OF LD. CIT (A). ACCORDINGLY GROUND RAISED BY REVENUE STANDS DISMISS ED. IN THE RESULT APPEAL FILED BY REVENUE STANDS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 29/01/2019 SD/- SD/- (PRASHANT MAHARISHI) (B EENA A PILLAI) ACCOUNTANT MEMBER JUDIC IAL MEMBER DATED: 29.01.2019 *KAVITA ARORA COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT TRUE COPY ASSISTANT REGISTRAR ITAT NEW DELHI ITA NO. 3294DEL/2015 8 DATE OF DICTATION 2 8 /01/2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 2 8 /01 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P S/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 2 9 / 0 1 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 3 0 / 0 1 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT 3 0 / 0 1 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 3 0 / 0 1 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER