ITO, Sonepat V. Smt. Inderjeet Kaur, Sonepat

ITA 3381/DEL/2011

• Counselvise Citation: 338120114 RSA 2011
• Duration Of Justice: 4 year(s) 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-10-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 23-10-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 30-06-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANIMA BARNWAL
• Assessee Lawyers: K SAMPATH
• Keywords: Opportunity of being heard
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C : NEW DELHI BEFORE SHRI R.S. SYAL, AM & MS SUCHITRA KAMBLE, JM ITA NO.3381/DEL/2011 ASSESSMENT YEAR : 2008-09 ITO, WARD-2, SONEPAT. VS. INDERJEET KAUR, PROP. M/S BABBAR JEWELERS, 76, JAMAIPURA, SONEPAT. PAN: ABOPK6571H (APPELLANT) (RESPONDENT) APPELLANT BY : MS ANIMA BARNWAL, SR. DR RESPONDENT BY : SHRI K. SAMPATH, ADVOCATE DATE OF HEARING : 23.10.2015 DATE OF PRONOUNCEMENT : 23.10.2015 ORDER PER R.S. SYAL, AM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) ON 18.04.2011 IN RELATION TO T HE ASSESSMENT YEAR 2008-09. ITA NO.3381/DEL/2011 2 2. THE FIRST GROUND IS AGAINST THE DELETION OF ADDI TION OF RS.40,25,234/- MADE BY THE AO ON ACCOUNT OF `SUNDRY CREDITORS. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE IS ENGAGED IN THE BUSINESS OF PURCHASE AND SALE OF GOL D JEWELLERY. SUNDRY CREDITORS TO THE TUNE OF RS.40,20,234/- WERE SHOWN IN THE ACCOUNTS. ON BEING CALLED UPON TO FURNISH THEIR DE TAILS, THE ASSESSEE SUBMITTED THE DETAILS, WHICH HAVE BEEN REP RODUCED ON PAGES 5 AND 6 OF THE ASSESSMENT ORDER. THE ASSESSE E STATED THAT THESE WERE NOT THE CREDITORS IN THE STRICT SENSE, B UT, THE CUSTOMERS WHO SOLD THEIR OLD ORNAMENTS. IN SUPPORT OF THE GE NUINENESS OF THESE CREDITS, THE ASSESSEE SUBMITTED THAT THE JEWE LLERY PURCHASED FROM THEM WAS SOLD TO HER SOLE CUSTOMER, NAMELY, M/ S NIKKI JEWELLERS HOUSE, FROM WHOM THE PAYMENT WAS STUCK UP . THE ASSESSEE SUBMITTED THAT THE AMOUNT WAS RECEIVED FRO M M/S NIKKI JEWELLERS HOUSE AND THEN PAID TO THESE CUSTOMERS IN THE IMMEDIATELY SUCCEEDING YEAR. THE AO HAS RECORDED TH AT DESPITE GIVING ADEQUATE OPPORTUNITY TO PRODUCE THESE CREDIT ORS, THE ITA NO.3381/DEL/2011 3 ASSESSEE COULD PRODUCE ONLY THREE PERSONS, NAMELY, SMT. MURTI DEVI, SMT. JOGINDER KAUR AND SHRI SATPAL, WHOSE STA TEMENTS WERE RECORDED ON DIFFERENT DATES. THE AO NOTICED THAT T HEY WERE PERSONS OF NO MEANS AND, HENCE, THE ASSESSEES CONT ENTION OF HAVING PURCHASED GOLD JEWELLERY FROM THEM, WAS NOT ACCEPTABLE. RESULTANTLY, HE MADE ADDITION OF THE SAID SUM WHICH CAME TO BE DELETED IN THE FIRST APPEAL. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS AN ADMITTED POSITION THAT THE ASSESSEE SOLD THE JEWELLERY PURCHASED FROM THESE PERSONS TO M/S N IKKI JEWELLERS HOUSE, FROM WHOM PAYMENT WAS DELAYED. ON RECEIPT OF THE AMOUNT FROM M/S NIKKI JEWELLERS HOUSE, THE ASSESSEE IMMEDIATELY SETTLED THE ACCOUNTS OF THESE CUSTOMERS. THE LD. C IT(A) HAS RECORDED THAT ALL THE SUNDRY CREDITORS WERE PRODUCE D BEFORE THE AO ON 7.10.2010, BUT, THEY WERE SENT BACK BY THE OFFIC ER ON THE PRETEXT THAT HIS HEALTH DID NOT PERMIT TO TAKE STAT EMENT OF MORE THAN TWO PERSONS IN A SINGLE DAY. SHRI DARSHAN SINGH, HU SBAND OF THE ITA NO.3381/DEL/2011 4 ASSESSEE STATED THESE FACTS ON AFFIDAVIT BEFORE THE LD. FIRST APPELLATE AUTHORITY. A COPY OF SUCH AFFIDAVIT IS AVAILABLE ON RECORD WHICH DIVULGES THAT ALL THE CREDITORS WERE TAKEN TO THE O FFICE OF THE AO IN PURSUANCE OF HIS DIRECTIONS, ON 7.10.2010, BUT THE OFFICER REFUSED TO EXAMINE THEM. THE LD. DR HAS NOT CONTROVERTED TH ESE FINDINGS RECORDED IN THE IMPUGNED ORDER WITH ANY COGENT MATE RIAL. THE THREE PERSONS WHO WERE EXAMINED BY THE AO DULY ADMI TTED THAT THEY HAD SOLD THEIR JEWELLERY TO THE ASSESSEE. THE AO HAS DOUBTED THE GENUINENESS OF TRANSACTIONS WITH THEM BY HOLDIN G THAT THEY WERE PERSONS OF NO MEANS. WHEN WE PERUSE THE DETAIL S OF AMOUNTS APPEARING AGAINST THESE PERSONS, IT IS FOUND THAT T HE SAME RANGED BETWEEN RS.1 LAC TO RS.2 LAC. THE FACT THAT CONFIR MATION FROM ALL THE CREDITORS WERE FILED ALONG WITH THE AFFIDAVIT F ILED BY THE ASSESSEES HUSBAND AVERRING THEIR PRODUCTION BEFORE THE AO WHO REFUSED TO EXAMINE AND OTHER ATTENDING CIRCUMSTANCE S GO TO PROVE THE GENUINENESS OF THE TRANSACTIONS OF PURCHASE OF GOLD JEWELLERY BY THE ASSESSEE FROM THEM. IMMEDIATE PAYMENT COULD NOT BE MADE TO THESE PERSONS BECAUSE THE RECEIPT FROM M/S NIKKI JEWELLERS ITA NO.3381/DEL/2011 5 HOUSE, THE SOLE BUYER OF THE ASSESSEE, WAS HELD UP. CONSIDERING THE ENTIRETY OF THE FACTS UNDER CONSIDERATION, WE ARE O F THE CONSIDERED OPINION THAT THE LD. CIT(A) WAS JUSTIFIED IN DELETI NG THIS ADDITION. THIS GROUND IS NOT ALLOWED. 5. GROUND NO.2 IS AGAINST THE DELETION OF ADDITION OF RS.14,19,200/- (CORRECT AMOUNT GIVEN IN THE REVISED GROUNDS) ON ACCOUNT OF UNSECURED LOANS. THE FACTS APROPOS THIS GROUND ARE THAT THE ASSESSEE HAD SHOWN UNSECURED LOANS AMOUNTING TO RS.14.19 LAC FROM FRIENDS AND RELATIVES. ON BEING CALLED UPON TO PRODUCE THESE PERSONS, THE ASSESSEE SUBMITTED THAT A SUM OF RS.11 ,14,926/- REPRESENTED BROUGHT FORWARD UNSECURED LOANS AND ONL Y A SUM OF RS.3,04,270/- WAS ON ACCOUNT OF TRANSACTION UNDERTA KEN DURING THE YEAR WITH SMT. AMARJEET KAUR, WHO SOLD JEWELLERY TO THE ASSESSEE FOR WHICH CONFIRMATION WAS FILED. THE AO OBSERVED THAT IN THE RETURN OF INCOME FOR THE A.Y. 2007-08, THERE WAS NO BALANCE OF UNSECURED LOANS. HE, THEREFORE, MADE ADDITION OF R S.14,19,200/-, WHICH CAME TO BE DELETED IN THE FIRST APPEAL. ITA NO.3381/DEL/2011 6 6. HAVING HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE RELEVANT MATERIAL ON RECORD, WE FIND THAT THERE CANNOT BE AN Y ADDITION UNDER SECTION 68 IN RESPECT OF BROUGHT FORWARD BALANCES. SECTION 68 CONTEMPLATES THE ADDITION IN RESPECT OF AMOUNTS REC EIVED DURING THE YEAR WHICH ARE NOT PROPERLY EXPLAINED BY THE AS SESSEE TO THE SATISFACTION OF THE AO. HERE IS A CASE IN WHICH TH E ASSESSEE CONTENDED BEFORE THE AO THAT A SUM OF RS.11.14 LAC REPRESENTED BROUGHT FORWARD BALANCES, BUT, THE AO DID NOT FIND ANY CLOSING BALANCES OF UNSECURED LOANS IN THE RETURN FOR THE I MMEDIATELY PRECEDING YEAR. THE LD. AR DID NOT READILY HAVE TH E BALANCE SHEET OF THE PRECEDING YEAR TO AMPLIFY HIS CONTENTION ABO UT SUCH BROUGHT FORWARD BALANCES. IN OUR CONSIDERED OPINION, THIS FACT IS OF UTMOST IMPORTANCE WHICH REQUIRES EXAMINATION AT THE AOS E ND. WE, THEREFORE, SET ASIDE THE IMPUGNED ORDER AND SEND TH E MATTER BACK TO THE FILE OF AO FOR DECIDING THIS ISSUE AFRESH AS PE R LAW, AFTER ALLOWING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. IN CASE IT IS FOUND THAT UNSECURED LOANS AMOUNTING TO ITA NO.3381/DEL/2011 7 RS.11,14,926/- WERE BROUGHT FORWARD BALANCES FROM T HE LAST YEAR, THEN, NO ADDITION SHOULD BE MADE FOR THIS AMOUNT IN THE CURRENT YEAR. IN THE OTHERWISE SITUATION, THE AO IS FREE T O EXAMINE THE GENUINENESS OF THESE CREDITS AS PER LAW. WHILE EXA MINING THIS ISSUE OF THE OPENING BALANCES, THE AO WILL ALSO EXA MINE THE ASSESSEES CONTENTION ABOUT THE SALE OF JEWELLERY B Y SMT. AMARJEET KAUR DURING THE YEAR FOR A SUM OF RS.3.04 LAC. THI S GROUND IS, THEREFORE, ALLOWED FOR STATISTICAL PURPOSES. 7. THE LAST EFFECTIVE GROUND IS AGAINST THE DELETIO N OF ADDITION OF RS.3 LAC ON ACCOUNT OF EXCESSIVE SALARY PAID TO EMP LOYEES AND RS.63,000/- ON ACCOUNT OF SALARY PAYABLE FOR THE MO NTH OF MARCH, 2008. THE ASSESSEE DEBITED A SUM OF RS.7,56,000/- AS SALARY PAID TO THE PERSONS WHOSE NAMES HAVE BEEN INCORPORATED O N PAGE 9 OF THE ASSESSMENT ORDER. IN ADDITION TO THAT, THE ASS ESSEE CLAIMED DEDUCTION FOR A SUM OF RS.2,00,000 PAID TO OUTSIDE `KARIGARS. THE ASSESSEE ALSO CREATED A PROVISION OF RS.63,000/- TO WARDS SALARY PAYABLE AT THE END OF THE YEAR. THE AO REQUIRED TH E ASSESSEE TO ITA NO.3381/DEL/2011 8 PRODUCE THE PERSONS TO WHOM SUCH SALARY OF RS.7,56, 000/- WAS PAID AND ALSO THE PERSONS TO WHOM A SUM OF RS.2 LAC WAS PAID. IN THE ABSENCE OF THE PRODUCTION OF SUCH EMPLOYEES/KARIGAR S, THE AO MADE AN AD HOC DISALLOWANCE OF RS.3 LAC ON ACCOUNT OF EXCESSIVE SALARY PAID TO ITS EMPLOYEES AND OUTSIDE KARIGARS. HE FURTHER MADE DISALLOWANCE OF RS.63,000/- REPRESENTING PROVI SION FOR SALARY PAYABLE FOR THE MONTH OF MARCH, 2008. THE LD. CIT( A) DELETED THE ADDITIONS. THE REVENUE IS AGGRIEVED AGAINST THE DEL ETION OF THIS ADDITION. 8. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD, WE OBSERVE THAT THE AS SESSEE PAID A SALARY OF RS.7.56 LAC TO ITS EMPLOYEES AND RS.2 LAC TO OUTSIDE KARIGARS . THE ASSESSEE FURNISHED PERSON-WISE DETAILS TO WH OM SALARY PAYMENTS WERE MADE AND ALSO PAYMENT TO KARIGARS. THE ASSESSEE EXPRESSED INABILITY TO PRODUCE THESE PERSO NS BECAUSE THE BUSINESS ITSELF WAS CLOSED DOWN ON 27.7.2009 AND, T HEREAFTER, IT WAS DIFFICULT TO LOCATE THEM. IN OUR CONSIDERED OPI NION, THE AMOUNT OF SALARY PAID TO THE ASSESSEES EMPLOYEES AND CHAR GES TO OUTSIDE ITA NO.3381/DEL/2011 9 KARIGARS IS REASONABLE IN THE FACTS AND CIRCUMSTANCES OF T HE INSTANT CASE AS THE FURTHER CORROBORATION BY PRODUC ING THEM FOR PERSONAL EXAMINATION WAS NOT POSSIBLE DUE TO THE CL OSURE OF BUSINESS. AS SUCH, THE AD HOC DISALLOWANCE OF RS.3 LAC MADE BY THE AO IS HELD TO BE RIGHTLY DELETED. AS REGARDS THE R EMAINING AMOUNT OF RS.63,000/-, WE FIND THAT THIS WAS A PROVISION CREATED BY THE ASSESSEE TOWARDS SALARY FOR MARCH, 2008 WHICH WAS P AID IN APRIL, 2008, WHICH DOES NOT REQUIRE DISALLOWANCE. WE, THER EFORE, UPHOLD THE IMPUGNED ORDER ON THIS COUNT. THIS GROUND FAIL S. 9. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. STAND DISMISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 2 3RD OCT., 2015. SD/- SD/- (SUCHITRA KAMBLE) (R.S. SYAL) JUDICIAL MEMBER ACCONTANT MEMBER DATED, 23 RD OCTOBER, 2015. DK ITA NO.3381/DEL/2011 10 COPY FORWARDED TO: - 1. APPELLANT : 2. RESPONDENT : 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR