DCIT, New Delhi V. M/s. Narula Milk Udyog Pvt. Ltd., New Delhi

ITA 3382/DEL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3656 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 22-02-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 02-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIRUPAMA KATRU
• Assessee Lawyers: BHUPESH KR DHINGRA
• Keywords: Bogus purchase; Unexplained expenditure; Peak credit
• Section: 69C; 145; 6

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E : NEW DELHI BEFORE SMT BEENA A PILLAI , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI , ACCOUNTANT MEMBER I TA NO . 3382/DEL/2014 (ASSESSMENT YEAR: 2008 - 09 ) DCIT, CENTRAL CIRCLE - 17, NEW DELHI VS. NARULA MILK UDYOG PVT LTD, F - 90, JAGAT PURI, GALI NO.7, KARISHNA NAGAR, NEW DELHI PAN:AACCN5141B (APPELLANT) (RESPONDENT) REVENUE BY : MS. NIRUPAMA KATRU, CIT DR ASSESSEE BY: SH. BHUPESH KR. DHINGRA, CA DATE OF HEARING 23/02 / 2017 DATE OF PRONOUNCEMENT 10 / 0 4 / 2017 O R D E R PER PRASHANT MAHARISHI , A . M . 1. THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE LD CIT(A) - II, NEW DELHI DATED 31.03.2014 FOR THE ASSESSMENT YEAR 2008 - 09. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS. 77,74,542/ - MADE BY THE AO ON ACCOUNT OF UNEXPLAINED PURCHASE U/S 69C OF THE IT. ACT. 2 THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS. 4,14,608/ - MADE BY THE AO BY WAY OF DISALLOWANCE OF EXPENSES . 3. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN LAW AND ON FACTS OF THE CASE IN ADOPTING THE WORKING OF PEAK AMOUNTS SUBMITTED BY THE APPELLANT. 4. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN LAW AND ON FACTS OF THE CASE IN RELYING ON CASH BOOK AND BANK BOOK FOR TELESCOPING, WHEREAS CIT(A) HAS HERSELF RECORDED REASONS IN THE APPELLATE ORDER FOR CONFIRMING THE REJECTION OF BOOKS OF ACCOUNT OF THE ASSESSEE. 5. (A) THE ORDER OF THE CIT (A) IS ERRONEOUS AND NOT TENABLE IN LAW AND ON FACTS. PAGE 2 OF 4 3. THE BRIEF FACT OF THE CASES THAT ASSESSEE IS A PRIVATE LIMITED COMPANY RELATED TO M/S HARPER HOMES GROUP OF CASES. THE MAIN ALLEGATION AGAINST THE GROUP IS THAT THE GROUP HAS FLOATED SEVERAL CONCERNS WITH THE MAIN DIRECTORS AND SHAREHOLDERS AND CONSEQUENTL Y, IT IS ENGAGED IN CAPITAL FORMATION ETC . ALLEGEDLY THE ASSESSEE REMAINED ENGAGED IN THE BUSINESS OF DEALING IN WHOLESALE BUSINESS OF TRADING OF FABRICS AND CLOTHES AND FOR THE CURRENT YEAR, IT IS SHOWN PROFIT OF RS. 2 409/ BUT IT HAS A HUGE RESERVE AND SURPLUS OF RS. 5 927422/ . THE ASSESSEE FILED ITS RETURN OF INCOME ON 14 TH MADE 2008 DECLARING INCOME OF RS. 2 640/ AND THE CASE OF THE ASSESSEE WAS PICKED UP FOR SCRUTINY . THE LD. ASSESSING OFFICER NOTED THAT ASSESSEE HAS SHOWN PURCHASES OF RUPEES 777 4542/ AND NET SALES OF RS. 4 134277/ . AS ALL THE PURCHASES AND SALES ARE DECLARED TO HAVE BEEN MADE IN CASH ONLY AND AS ASSESSEE HAS NOT MAINTAINED ANY BANK ACCOUNT, THE ASSESSEE WAS DIRECTED TO PROVE ITS TRADING ACTIVITIES AND TO PRODUCE SALES TAX REC ORDS . THE ASSESSEE CONTENDED THAT SINCE IT DEALS WITH TAX - FREE GOODS ONLY . THERE IS NO NECESSITY FOR IT TO FILE SALES TAX RETURNS . AS THE ASSESSEE DID NOT MAINTAINED ANY STOCK RECORD AS WELL AS ACCORDING TO THE ASSESSEE NO PROPER VOUCHERS OR BILLS ON EV IDENCES WERE PROVIDED THE BOOKS OF ACCOUNTS PRODUCED BY THE ASSESSEE ARE NOT VERIFIABLE AND NOT RELIABLE . AND, THEREFORE HE REJECTED THE BOOKS OF ACCOUNT UNDER SECTION 145 OF THE INCOME TAX ACT AND THE ENTIRE PURCHASE AND ADMINISTRATIVE EXPENSES WERE HELD TO BE UNEXPLAINED EXPENDITURE UNDER SECTION 69C OF THE INCOME TAX ACT AND HAS MADE AN ADDITION OF RS. 7 774542/ ON ACCOUNT OF PURCHASES AND RS. 4 14608/ ON ACCOUNT OF ADMINISTRATIVE EXPENSES . CONSEQUENTLY, AGAINST THE RETURNED INCOME OF RS. 2 640 THE A SSESSMENT WAS MADE UNDER SECTION 143 (3) OF THE INCOME TAX ACT ON 31 ST . DECEMBER 2010 AT RS. 2 819 1790/ . AGGRIEVED BY THE ORDER OF THE LD. ASSESSING OFFICER THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. 1 ST APPELLATE AUTHORITY WHO IN TURN DELETED THE ADDITION UNDER SECTION 6 9C OF THE INCOME TAX ACT , HOWEVER , SINCE THE APPELLANT COMPANY ALONG WITH OTHER COMPANIES ARE ALL IN - HOUSE TO THE THAPAR/DHINGRA GROUP AND THERE IS A WIDESPREAD WEB OF INTER - SE TRANSACTIONS AMONGST THEM, KEEPING THEIR SEPARATE JURI DICAL ENTITY IN MIND, THE HANDS OF THE JUSTICE PAGE 3 OF 4 WILL BE MATT IF IN EACH CASE, THE ADDITION OF THE PEAK OF FINANCIAL TRANSACTIONS IS WORKING OUT FROM THE RELEVANT CASH BOOK OF EACH ENTITY IS MADE. CONSEQUENTLY, THE PEAK BALANCE WAS DETERMINED AT RS. 5 023335 / DURING THE YEAR WHICH WAS AN OPENING BALANCES AND THEREFORE, THE LD. CIT APPEAL HELD THAT NO ADDITION IS NECESSARY IN THE YEAR UNDER CONSIDERATION. REVENUE, AGGRIEVED WITH THE ORDER OF THE LD. FIRST APPELLATE AUTHORITY HAS PREFERRED AN APPEAL BEFORE US. 4. LD. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY SUPPORTED THE ORDER OF THE LD. ASSESSING OFFICER AND SUBMITTED THAT WHEN THE PURCHASE AND SALE TRANSACTIONS ARE BOGUS THE WALL OF THE AMOUNT SHOULD HAVE BEEN ADDED BY THE LD. CIT (A) AND NOT ONLY THE PEAK . SHE FURTHER SUBMITTED THAT ASSESSEE DOES NOT HAVE ANY BANK ACCOUNT AND ALL TRANSACTIONS ARE CARRIED OUT IN THE CASH . THEREFORE, SHE SUBMITTED THAT THE ADDITION MADE BY THE LD. ASSESSING OFFICER MAY BE SUSTAINED. 5. THE LD. AUTHORIZED REPRESENTATIVE RELIED UPON T HE ORDER OF THE LD. CIT (A) OF THE ACT AND SUBMITTED THAT DURING THE YEAR THERE IS NO PEAK BALANCE THEREFORE NO ADDITION HAS BEEN MADE . HE FURTHER SUBMITTED THAT THAT THE STATEMENT OF THE LD. ASSESSING OFFICER IS NOT CORRECT IN THE ASSESSEE HAS SUBMITTED THE COMPLETE DETAILS OF THE PURCHASES OF THE GOODS STATING THE NAME, ADDRESS, PERMANENT ACCOUNT NUMBER AS WELL AS THE AMOUNT OF PURCHASES MADE FROM THESE PARTIES . HE FURTHER SUBMITTED THAT THE NAME OF THE ASSESSEE COMPANY IS ALREADY BEEN STRUCK OF BY THE REGISTRAR OF COMPANIES . THEREFORE, NOW NO PROCEEDINGS CAN BE TAKEN OR INITIATED AGAINST IT . IN THE END, HE SUPPORTED THE ORDER OF THE LD. CIT (A) OF THE ACT. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS . WE HAVE DECIDED IDENTICAL ISSUE IN ITA NUMB ER 03/04/2002/DEL/2014 FOR ASSESSMENT YEAR 2008 2009 IN CASE OF DCIT VERSUS NEW LIGHT M ARKETING PRIVATE LIMITED V IDE OUR ORDER OF EVEN DATE , WHEREIN WE HAVE HELD THAT THE LD. CIT APPEAL HAS CORRECTLY ADJUDICATED THE ISSUE BY TAXING THE PEAK AMOUNT INVESTED BY THE ASSESSEE IN ITS BUSINESS . HOWEVER, IN THE PRESENT YEAR THE PEAK BALANCES ARISING OUT OF THE OPENING BALANCE OF THE YEAR , THEREFORE, NO ADDITION HAS BEEN SUSTAINED BY THE LD. CIT APPEAL . IN VIEW OF THIS, WE DO NOT FIND ANY INFIRMITY IN THE ORDER O F THE LD. CIT PAGE 4 OF 4 APPEAL IN RESTRICTING THE ADDITION BECAUSE OF BOGUS PURCHASES AND BOGUS ADMINISTRATIVE EXPENSES TO THE EXTENT OF PEAK, WHICH IS NIL. D URING THE YEAR . I N THE RESULT GROUND NO. 1 AND 2 OF THE APPEAL OF THE REVENUE ARE DISMISSED. 7. IN THE RESUL T APPEAL OF THE REVENUE IS DISMISSED ORDER PRONOUNCED IN THE OPEN COURT ON 1 0 / 0 4 / 2017 . - S D / - - S D / - ( BEENA A PILLAI ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 0 / 0 4 / 2017 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI