M/s Nav Bharat Engineering Works, Ghaziabad V. Deputy Commissioner of Income-tax, Ghaziabad

ITA 3391/DEL/2015

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2197 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2010-2011
• Appeal Filed On: 27-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURENDER PAL
• Assessee Lawyers: V RAJ KUMAR
• Keywords: Question of law
• Section: 131; 68

Judgement Text

ITA NO. 3391/DEL/2015 A.Y. 2010-11 NAV BHARAT ENGINEERING WORKS 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: F, NEW DELHI BEFORE SHRI SMT. BEENA A PILLAI, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 3391/DEL/2015 AY: 2010-11 NAV BHARAT ENGINEERING WORKS C/O S.K. BAJAJ & CO., ADVOCATES 106, NAVYUG MARKET, GHAZIABAD. AABFN9103C VS . DCIT CIRCLE 1, GHAZIABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. K. SAMPATH, ADV. & SH. V. RAJKUMAR, ADV. DEPARTMENT BY : SH. SURENDER PAL, SR. DR DATE OF HEARING : 05/11/2018 DATE OF PRONOUNCEMENT : 16/11/2018 ORDER PER BEENA A PILLAI, JUDICIAL MEMBER PRESENT APPEAL HAS BEEN FILED BY ASSESSEE AGAINST ORDER DATED 24/02/15 PASSED BY LD. CIT (A), MUZAFFARNAGAR FOR ASSESSMENT YEAR 2010-11 ON FOLLOWING GROUNDS OF APP EAL: 1. IN LAW, FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) WAS NOT JUSTIFIED IN MAINTAINING THE ADDITIO N OF RS. 60,00,000/- MADE BY THE AO U/S 68 OF THE INCOME TAX ACT. 2. THAT THE APPELLANT CRAVES LEAVE TO ALTER, AMEND OR ADD TO THE FORGOING GROUNDS BEFORE OR AT THE TIME OF HEARI NG OF THE APPEAL. ITA NO. 3391/DEL/2015 A.Y. 2010-11 NAV BHARAT ENGINEERING WORKS 2 2. BRIEF FACTS OF THE CASE ARE AS UNDER: ASSESSEE FILED ITS RETURN OF INCOME ON 28/09/10 DEC LARING TOTAL INCOME OF RS.1,05,63,210/-. THE CASE WAS SELECTED F OR SCRUTINY AND SUBSEQUENTLY NOTICE UNDER SECTION 143(2) AND 14 2(1) ALONG WITH QUESTIONNAIRE WAS ISSUED TO ASSESSEE. IN RESPO NSE TO STATUTORY NOTICES, REPRESENTATIVE OF ASSESSEE APPEA RED BEFORE LD.AO AND FILED AUDITED BALANCE SHEET AND PROFIT AN D LOSS ACCOUNT WHICH WERE TEST CHECKED. 3. LD.AO OBSERVED THAT ASSESSEE IS A FIRM CARRYING ON INDUSTRIAL ACTIVITIES. IT WAS OBSERVED THAT IT IS ENGAGED IN M ANUFACTURING OF ALL KINDS OF HEAVY MACHINERIES AND ROLLING MILLS MA CHINERY, IN PARTICULAR THEIR PARTS. ON PERUSAL OF ACCOUNTS, LD. AO NOTICED THAT ASSESSEE SHOWN FRESH UNSECURED LOANS TO A TUNE OF RS.85,05,000/-, OUT OF WHICH RS.40,00,000/- WAS REC EIVED FROM M/S. VINAY HOLDINGS PVT. LTD, RS.20,00,000/- FROM M /S. WELQUIN SUPPLIERS PVT. LTD., AND RS.15,00,000/- FROM SH. KR ISHNA TRADERS. LD.AO, ACCORDINGLY, CALLED UPON ASSESSEE T O FILE COMPLETE DETAILS OF UNSECURED CREDITORS ALONG WITH COMPANY E TC. ASSESSEE WAS THUS REQUIRED TO VERIFY IDENTITY, CAPACITY CRED ITWORTHINESS OF PERSONS AND MOST IMPORTANTLY GENUINENESS OF TRANSAC TION. LD.AO RECORDED THAT ASSESSEE IN RESPONSE TO NOTICE, FILED COPY OF ITR, BANK STATEMENT AND COPY OF LEDGER ACCOUNT AND OTHER DETAILS. 4. AS REGARDS, MONEY RECEIVED FROM SH. KRISHNA TRAD ERS, LD.AO WAS SATISFIED AS PROPRIETOR OF THIS CONCERN STATED ON OATH AND RECORDED THE CONFIRMATION REGARDING LOAN GIVEN BY H IM TO ASSESSEE. ITA NO. 3391/DEL/2015 A.Y. 2010-11 NAV BHARAT ENGINEERING WORKS 3 4.1 IN REGARDS, OTHER 2 COMPANIES, LD.AO REJECTED S UBMISSIONS OF ASSESSEE AND MADE ADDITION IN HANDS OF ASSESSEE, UNDER SECTION 68 OF THE ACT. AGGRIEVED BY ORDER OF LD.AO, ASSESSEE PREFERRED APP EAL BEFORE LD. CIT (A), WHO DISMISSED APPEAL FILED BY ASSESSEE BY PLACING RELIANCE UPON DECISION OF HONBLE SUPREME COURT IN CASE OF CIT VS. LOVELY EXPORTS REPORTED IN 216 CTR 195 (SC). 5. AGGRIEVED BY ORDER OF LD. CIT (A) ASSESSEE IS IN APPEAL BEFORE US NOW. 6. LD. COUNSEL SUBMITTED THAT ASSESSEE HAS DISCHARG ED ITS PRIMARY ONUS AS PER SECTION 68 OF THE ACT, BY FILIN G ALL NECESSARY DETAILS REGARDING TWO CREDITORS. HE SUBMITTED THAT CONFIRMATIONS OF CREDITORS VERIFYING TRUTHFULNESS AND GENUINENESS OF TRANSACTION WERE ALSO PLACED ON RECORD, AND THAT, THERE WAS NO MATERIAL BASED UPON WHICH LD.AO REJECTED CONTENTIONS OF ASSESSEE. HE SUBMITTED THAT MERELY BECAUSE CREDITORS HAD COLLECTED MONIES THROUGH RTGS TO FINANCE CHEQUES BY THEM TO ASSESSEE, ENTIRE ADDI TION WAS MADE IN HANDS OF ASSESSEE. HE SUBMITTED THAT THIS CANNOT BE REASON TO CONVERT GENUINE LOAN TRANSACTION INTO DUBIOUS SHAM TRANSACTION. 7. LD. COUNSEL FURTHER SUBMITTED THAT TWO CREDITORS WERE ASSESSED TO INCOME TAX, AND HAS FILED PARTICULARS R EGARDING PAN AND THEIR JURISDICTION, UNDER WHICH, THEY ARE ASSES SED TO TAX. IT IS ALSO SUBMITTED THAT SCRUTINY ASSESSMENT ORDER PASSE D UNDER SECTION 143 (3) FOR ASSESSMENT YEAR 2009-10 WAS ALS O PRODUCED BEFORE THE LD.AO IN RESPECT OF THE TWO CREDITORS. ITA NO. 3391/DEL/2015 A.Y. 2010-11 NAV BHARAT ENGINEERING WORKS 4 7.1 HE THUS SUBMITTED THAT, UNDER THESE CIRCUMSTANC ES DETAILED ANALYSIS MADE HONBLE SUPREME COURT IN CASE OF CIT VS. LOVELY EXPORTS (SUPRA) COMES IN RESCUE TO ASSESSEE, AS ASSESSEE HAS DISCHARGED ITS PRIMARY ONUS OF PROVIDING DETAILS RE GARDING IDENTITY, CREDITWORTHINESS AND GENUINENESS OF TRANS ACTION. 8. AS REGARDS DECISION RELIED UPON BY LD. CIT (A) I N HIS ORDER, LD. COUNSEL SUBMITTED THAT THESE DECISIONS ARE SPEC IFICALLY DEALING WITH ISSUE OF SHARE APPLICATION MONEY, WHER EAS IN PRESENT CASE OF ASSESSEE IT IS LOAN TRANSACTION, AS HAS BEE N ADMITTED BY CREDITORS IN THEIR CONFIRMATIONS FILED BEFORE AUTHO RITIES BELOW. 9. ON THE CONTRARY, LD. SR. DR SUBMITTED THAT ADDRE SS OF BOTH THESE ARE SAME AS HAS BEEN INDICATED IN RETURN OF I NCOME PLACED AT PAGE 8 AND PAGE 41 OF PAPER BOOK. HE SUBMITTED T HAT ASSESSEE HAS FAILED TO DISCHARGE ONUS CAST UPON IT AS REGARD S TO CREDITWORTHINESS, IDENTITY OF CREDITORS AND MOST IM PORTANTLY GENUINENESS OF TRANSACTION. 10. WE HAVE PERUSED SUBMISSIONS ADVANCED BY BOTH SI DES IN LIGHT OF RECORDS PLACED BEFORE US. 11. IN PAPER BOOK FILED BEFORE US, ASSESSEE PLACED DOCUMENTS THAT HAVE BEEN FILED BEFORE AUTHORITIES BELOW. IT I S OBSERVED THAT ASSESSEE FILED COMPUTATION AND ITR OF THE CREDITOR COMPANIES, SCRUTINY ASSESSMENT ORDER PASSED UNDER SECTION 143 (3) OF THE ACT FOR ASSESSMENT YEAR 2009-10 OF CREDITOR COMPANY, CO PY OF CERTIFICATE OF REGISTRATION WITH REGISTRAR OF COMPA NIES IN RESPECT OF BOTH CREDITORS. ALL THESE DETAILS ARE FILED UPON LD .AO/LD. CIT (A) (WHO HAS COTERMINOUS POWERS AS OF LD.AO) TO VERIFY VERACITY OF ITA NO. 3391/DEL/2015 A.Y. 2010-11 NAV BHARAT ENGINEERING WORKS 5 THESE DOCUMENTS, IT IS OBSERVED FROM ORDERS PASSED BY AUTHORITIES BELOW THAT FURTHER VERIFICATION ON BASIS OF THESE D OCUMENTS HAS NOT BEEN CONDUCTED EITHER BY LD. AO OR BY LD. CIT(A ). 12. ASSESSING OFFICER IN HIS ORDER, MADE ADDITION U NDER SECTION 68 BY RELYING UPON DECISION OF HONBLE SUPREME COURT IN CASE OF SUMATHI DYAL VS. CIT REPORTED IN (1995) 214 ITR 801 . FACTS IN CASE OF SUMATHI DYAL VS. CIT (SUPRA ) WAS THAT, IN THAT CASE PRIMA FACIE BURDEN OF DISCHARGING GENUINENESS, IDENTITY AND CRE DITWORTHINESS OF CREDITORS, IN RESPECT OF CASH TRANSACTIONS WAS N OT DISCHARGED BY ASSESSEE THEREIN. FURTHER IN THAT CASE EXPLANATION TENDERED BY ASSESSEE WAS FOUND NOT GENUINE, AND UNDER SUCH CIRC UMSTANCES HONBLE SUPREME COURT LAID DOWN CONSIDERATION OF SURROUNDING CIRCUMSTANCES, AFTER APPLYING TEST OF HUMAN PROBABI LITIES. 13. WHEREAS IN FACTS OF PRESENT CASE, ASSESSEE FILE D ALL NECESSARY DETAILS AS CALLED FOR BY LD.AO, THEREBY DISCHARGING INITIAL ONUS CAST UPON ASSESSEE UNDER SECTION 68 OF THE ACT. LD. COUNSEL PLACED RELIANCE UPON THE ORDER OF HONBLE SUPREME COURT IN CASE OF CIT VS ORISSA CORPORATION PVT. LTD., REPORTED IN (1986) 25 TAXMANN 80. WE HAVE PERUSED THE SAID DECISION AND OBSERVED THAT FOLLOWING OBSERVATIONS OF SUPREME COURT ARE SQ UARELY APPLICABLE TO FACTS OF PRESENT CASE: 13. IN THIS CASE ASSESSEE HAD GIVEN THE NAMES AND ADDRESSES OF THE ALLEGED CREDITORS. IT WAS IN THE K NOWLEDGE OF THE REVENUE THAT THE SAID CREDITORS WORK INCOME TAX ASSESSEES. THEIR INDEX NUMBERS WAS THERE IN THE FIL E OF THE REVENUE. THE REVENUE, APART FROM ISSUING NOTICE UND ER SECTION 131 AT THE INSTANCE OF THE CAKE ASSESSEE, D ID NOT PERCEIVE THE MATTER FURTHER. THE REVENUE DID NOT EX AMINED THE SOURCE OF INCOME OF THE SAID ALLEGED CREDITORS TO FIND OUT WHETHER THEY WERE CREDITWORTHY OR WORTH SUCH, WHO C OULD ITA NO. 3391/DEL/2015 A.Y. 2010-11 NAV BHARAT ENGINEERING WORKS 6 ADVANCE THE ALLEGED LOANS. THERE WAS NO EFFORT MADE TO PURSUE THE SO-CALLED ALLEGED CREDITORS. IN THOSE CIRCUMSTANCES, THE ASSESSEE COULD NOT TO ANY FURTHE R. IN THE PREMISES, IF THE TRIBUNAL CAME TO THE CONCLUSION TH AT ASSESSEE HAS DISCHARGED THE BURDEN THAT LAY ON HIM THEN IT COULD NOT BE SAID THAT THE SAID CONCLUSION WAS UNREASONABLE OR PERVERSE OR BASED ON NO EVIDENCE. I F THE CONCLUSION IS BASED ON SOME EVIDENCE ON WHICH A CONCLUSION COULD BE ARRIVED AT, NO QUESTION OF LAW AS SUCH ARISES. 14. ON PERUSAL OF OBSERVATIONS BY LD.AO IN ASSESSME NT ORDER, IT IS OBSERVED THAT LD.AO HAS NOT ISSUED NOTICE UNDER SECTION 131 OF THE ACT, IN ORDER TO VERIFY VERACITY OF DETAILS FIL ED BY ASSESSEE. THERE IS NOTHING ON RECORD BROUGHT OUT BY LD.AO/LD. CIT(A) OR LD. CIT (DR) WHICH COULD LEAD TO CONCLUSION THAT DE TAILS FILED BY ASSESSEE WERE NOT GENUINE. UNDER SUCH CIRCUMSTANCES , WE FIND ORDER PASSED BY AUTHORITIES BELOW CANNOT BE SUSTAIN ED. 15. RESPECTFULLY FOLLOWING OBSERVATIONS BY HONBLE SUPREME COURT IN CASE OF CIT VS ORISSA CORPORATION PVT.LTD. (SUPRA), AND CI T VS. LOVELY EXPORTS (SUPRA) REPRODUCED HEREINABOVE, WE HOLD THAT LD.AO HAS NOT MADE OUT GROUND FOR SUSTAINING ADDITI ON UNDER SECTION 68 OF THE ACT AND THUS DESERVES TO BE DELET ED. ACCORDINGLY GROUND RAISED BY ASSESSEE STANDS ALLOWE D. IN THE RESULT APPEAL FILED BY ASSESSEE STANDS ALLOW ED. ORDER PRONOUNCED IN THE OPEN COURT ON 16/11/2018 SD/- SD/- (PRASHANT MAHARISHI) (BE ENA A PILLAI) ACCOUNTANT MEMBER JUDICIA L MEMBER DT. 16 TH NOVEMBER,2018 *KAVITA ARORA ITA NO. 3391/DEL/2015 A.Y. 2010-11 NAV BHARAT ENGINEERING WORKS 7 COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT - TRUE COPY - BY ORDER, ASSISTANT REGISTRAR ITAT DELHI BENCHES DATE DRAFT DICTATED ON 14.11.18 DRAFT PLACED BEFORE AUTHOR 15.11.18/16.11.18 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. APPROVED DRAFT COMES TO THE SR.PS/PS 16.11.18 KEPT FOR PRONOUNCEMENT ON & ORDER UPLOADED ON : 16.11.18 FILE SENT TO THE BENCH CLERK 16.11.18 DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.