Sh. Rakesh Kumar Bhargava, New Delhi V. ITO, New Delhi

ITA 3432/DEL/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97304 (ITAT-DELHI)
• Duration Of Justice: 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 24-08-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 28-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: IRA GUPTA
• Keywords: Opportunity of being heard; Principle of natural justice
• Section: 133(6); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G, NEW DELHI) BEFORE SHRI N. K. SAINI, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER I.T.A. NO. 3432/DEL/2015 ASSESSMENT YEAR : 2006-07 SH. RAKESH KUMAR BHARGAVA, VS. ITO, WARD 19(2), PROP. M/S. MAPYTRON SYSTEMS, NEW DELHI 17, NARINDER BHAWAN, 448, RING ROAD, AZADPUR DELHI 110 033 GIR / PAN:AAGPB6366G (APPELLANT) (RESPONDENT) APPELLANT BY : MS. IRA GUPTA, ADV. RESPONDENT BY : SHRI SUJIT KUMAR, SR. DR DATE OF HEARING : 24.08.2015 DATE OF PRONOUNCEMENT : 17.09.2015 ORDER PER KULDIP SINGH, JM: APPELLANT ASSESSEE, BY FILING THE PRESENT APPEAL H AS SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 29.08.2014 PASSED BY LD. C IT(A) XXII, NEW DELHI FOR THE ASSESSMENT YEAR 2006-07 ON THE SOLE E FFECTIVE GROUND THAT LD. CIT(A) XXII HAS ERRED IN HOLDING THAT CREDIT O F RS.9,14,516/- (RUPEES NINE LAC, FOURTEEN THOUSAND FIVE HUNDRED SIXTEEN ON LY) FROM 11 SUNDRY CREDITORS WERE BOGUS AND THEREBY UPHELD THE ADDITIO N MADE BY THE A.O. OF RS.9,14,516/-. ITA NO.3432/DEL/2015 2 2. THE BRIEF FACTS OF THE CASE ARE: DURING THE PROC ESSING OF INCOME TAX RETURN FILED BY THE ASSESSEE FOR THE ASSESSMENT YEA R 2006-07, DECLARING AN INCOME OF RS.1,38,320/-, THE CASE WAS PUT UNDER SCR UTINY THROUGH CASS AND CONSEQUENTLY, NOTICE U/S 143(2) DATED 19.10.2007 WA S ISSUED. THE ASSESSEE ATTENDED THE ASSESSMENT PROCEEDINGS FROM TIME TO TI ME AND CLAIMED HIS SUNDRY CREDITORS TO THE FOLLOWING EFFECT:- 1 M/S. MAYUR ELECTRONICS RS.28,159/- 2 M/S. VERMA ENGINEERING WORKS RS.1,59,955/- 3 M/S. S.L.B. EXPORTS LTD. RS.48,430/- 4 M/S. J.K. TUBE CO. RS.24,248/- 5 M/S. N.K.A. RCC PIPES SUP. RS.2,57,283/- 6 M/S. VED GENERATORS RS.1,49,377/- 7 M/S. KATYAL B.M.S. RS.18,750/- 8 M/S. R. K. ENTERPRISES RS.83,326/- 9 M/S. NATRAJ SANITARY & P RS.68,354/- 10 M/S. WALIA FABRICATORS RSA.72,368/- 11 M/S. RAJNI BUILD. M. SUP. RS.4,500/- RS.9,14,750/- 3. TO ASCERTAIN THE GENUINENESS AND CREDITWORTHINES S, THE ASSESSEE WAS REQUIRED TO FURNISH NAMES, COMPLETE ADDRESS AND AMO UNT OF CREDITORS VIDE QUESTIONNAIRE DATED 07.01.2008. THE ASSESSEE FILED HIS REPLY DATED 29.01.2008 BUT FAILED TO FURNISH REQUISITE INFORMAT ION. THEN, VIDE LETTER DATED 01.07.2008, THE ASSESSEE WAS ASKED TO FURNISH CONFIRMATION OF ITA NO.3432/DEL/2015 3 CREDITORS, WHICH HE HAS FURNISHED PERTAINING TO THE PERIOD 1998-99 TO 2001- 02 AND FURTHER SUBMITTED THAT ALL THESE PAYMENTS AR E PENDING SINCE 2000-01 DUE TO DELAY OF PAYMENT FROM M/S. NBC CORPN. LTD. IN ORDER TO VERIFY THE CLAIM MADE BY THE ASSESSEE, NOTICES U/S 133(6) OF T HE ACT WERE ISSUED FOR CONFIRMATION FROM THE PARTIES CONCERNED. PURSUANT TO THE NOTICES ISSUED U/S 133(6), M/S. J. K. TUBE CO. AND M/S. S.L.B. EXPORTS LTD. HAVE DENIED TO HAVE ANY BUSINESS TRANSACTION WITH THE ASSESSEE DUR ING THE RELEVANT PERIOD OF 2005-06 AND 2006-07. HOWEVER, THE ASSESSEE HAS FIL ED CONFIRMATION REGARDING FOLLOWING SUNDRY CREDITORS:- 1 M/S. MAYUR ELECTRONICS RS.28,159/- 2 M/S. VERMA ENGINEERING WORKS RS.1,59,955/- 3 M/S. N.K.A. RCC PIPES SUP. RS.2,57,283/- 4 M/S. VED GENERATORS RS.1,49,377/- 5 M/S. KATYAL B.M.S. RS.18,750/- 6 M/S. R. K. ENTERPRISES RS.83,326/- 7 M/S. NATRAJ SANITARY & P RS.68,354/- 8 M/S. RAJNI BUILD. M. SUP. RS.4,500/- 4. THE ASSESSEE HAS ALSO FURNISHED SOME COPIES OF B ILLS IN SUPPORT OF CLAIM OF CREDITORS BUT THE COPIES OF BILLS PERTAINI NG TO M/S. VED GENERATORS, SUMIT KATYAL AND N. K. AGARWAL DO NOT REFLECT CHARG ING OF INTEREST NOR ANY SUCH INSTRUCTION HAVE BEEN GIVEN. CONSEQUENTLY, A. O. ARRIVED AT THE CONCLUSION THAT INSPECTOR OF INCOME TAX OF THE CONC ERNED WARD BE DEPUTED FOR INQUIRY REPORT OF M/S. R, J, ENTERPRISES VERMA ENGINEERING WORKS, NATRAJ ITA NO.3432/DEL/2015 4 SANITARY AND HARDWARE PAINTS AND VED GENERATORS AN D THE SAME SUNDRY CREDITORS ARE NOT EXISTING AT THE GIVEN ADDRESS. C ONSEQUENTLY, THE A.O. ARRIVED AT THE CONCLUSION THAT THERE IS NO LIABILIT Y OF ASSESSEE TOWARDS THE CLAIMED SUNDRY CREDITORS AND THE CLAIM OF RS.9,14,7 50/- IS A BOGUS LIABILITY AND LIABILITY WHICH HAS CEASED TO EXIST. LD. CIT(A ) VIDE IMPUGNED ORDER, UPHELD THE ORDER PASSED BY THE A.O. FEELING AGGRIE VED, THE APPELLANT, HAS COME UP BEFORE TRIBUNAL BY WAY OF THE PRESENT APPEA L. 6. LD. A.R. FOR THE ASSESSEE CHALLENGED THE IMPUGNE D ORDER BY CONTENDING INTER ALIA THAT A.O. AS WELL AS LD. CIT( A) HAVE ERRED IN HOLDING THAT ALL THE ELEVEN SUNDRY CREDITORS AS CLAIMED BY THE ASSESSEE, ARE NOT EXISTING AND THE ENTRIES CLAIMED BY THE ASSESSEE AR E BOGUS ONE; THAT THE A.O. HAS NOT FILED ANY AFFIDAVIT TO THE EFFECT THAT THE ASSESSEE HAS FAILED TO PRODUCE SUCH SUNDRY CREDITORS, THEREFORE, THE CONFIRMATION LETTERS AS DETAILED AT PAGE 5 OF THE IMPUGNED ORDER HAVE BEEN WRONGLY TREATED AS STEREOTYPED; THAT THE ASSESSEE HAS NOT BEEN GIVEN SUFFICIENT TIME TO FILE REPLY NOR IT WAS ASKED TO PRODUCE SUCH SUNDRY CREDITORS NOR HE WAS CONFRONTED WITH THE CONFIRMATIONS FIELD BY SUNDRY CREDITORS, AND PRAYED FOR SETTING A SIDE THE IMPUGNED ORDER. 8. ON THE OTHER HAND, LD. D.R. RELIED UPON THE ORDE R OF A.O. AS WELL AS LD. CIT(A) AND CONTENDED THAT SINCE OUT OF ELEVEN S UNDRY CREDITORS CLAIMED BY THE ASSESSEE, TWO WERE FOUND TO BE NOT EXISTING AND CONFIRMATIONS MADE BY EIGHT SUNDRY CREDITORS WERE FOUND TO BE STEREOTY PED, NOR ANY MATERIAL HAS BEEN PLACED ON RECORD TO SUPPORT THE CONFIRMATIONS, THE ASSESSEE HAS NO LIABILITY TOWARDS THE SAID ELEVEN CREDITORS AND THE CLAIM OF RS.9,14,750/- WAS BOGUS ONE AND THE A.O. HAS RIGHTLY MADE THE ADDITIO N OF RS.9,14,750/- AND PRAYED FOR DISMISSAL OF THE PRESENT APPEAL OF THE A SSESSEE. ITA NO.3432/DEL/2015 5 9. UNDISPUTEDLY, M/S. J. K. TUBES AND S.L.B. EXPORT S LTD. HAVE DENIED THE CLAIM OF TRANSACTION WITH THE ASSESSEE WHEREAS, REMAINING NINE PARTIES WERE CALLED UPON TO SUPPLY THE INFORMATION DURING A SSESSMENT PROCEEDINGS AND REMAND PROCEEDINGS U/S 133(6) OF THE ACT. HOWE VER, THE NOTICES SENT TO THEM HAVE BEEN RECEIVED BACK UNSERVED AND WITHOUT C OMPLIANCE. FOR READY REFERENCE, THE OUTCOME OF THE NOTICES ISSUED TO THE ASSESSEE IS REPRODUCED AS UNDER:- S.NO. NAME & ADDRESS STATUS 1 SHRI YRAV DEWAL PROP. M/S. NATRAJ SANITARY HARDWARE & PAINTS, MIYAWALI NAGAR, NEW ROHTAK ROAD, DELHI-110 087 RETURNED BACK UNSERVED BY THE POSTAL AUTHORITIES. 2 SHRI R. K. AGGARWAL PROP. M/S R K ENTERPRISES 2ND FLOOR, 1528, BHAGIRATH PALACE DELHI-110006 RETURNED BACK UNSERVED BY THE POSTAL AUTHORITIES. 3 SHRI SUMIT KR. KATYAL PROP. M/S S K KATYAL B M SUPPLIERS DERAWAL NAGAR, G. T. ROAD, DELHI110009 AND 2/21, ROOP NAGAR, DELHI-110007 RETURNED BACK UNSERVED BY THE POSTAL AUTHORITIES. 4 SHRI VED PRAKASH PROP. M/S VED GENERATORS SHOP NO.9, NEW MARKET, OPP. OBC NANGLOI, DELHI- 110041 NEITHER LETTER RECEIVED BACK NOR ANY COMPLIANCE TO THE LETTER. 5 SHRI MADAN LAL PROP. M/S RAJNI BUILDING MATERIAL SUPPLIER BADLI VILLAGE, OUTER RING ROAD, DELHI. RETURNED BACK UNSERVED BY THE POSTAL AUTHORITIES. 6 SHRI NARINDER KUMAR AGGARWAL PROP. M/S N K AGGARWAL A-80 DDA COLONY, KHAYOLA, DELHI-110018. NEITHER LETTER RECEIVED BACK NOR ANY COMPLIANCE TO THE LETTER. 7 SHRI MOHAN LAL VERMA PROP. M/S VERMA ENGINEERING WORKS FLAT NO. 91, POCKET B-5, SECTOR-18, ROHINI, DELHI- 110085. NEITHER LETTER RECEIVED BACK NOR ANY COMPLIANCE TO THE LETTER. 8 SHRI AKASH BHARGAVA PROP.M/SMAYUR ELECTRONICS & ELECTRICALS NEW RAILWAY ROAD, GURGAON-122001. RETURNED BACK UNSERVED BY THE POSTAL AUTHORITIES. ITA NO.3432/DEL/2015 6 9 SHRI H S WALIA PROP. M/S WALIA STEEL WORKS & STEE L BY THE FABRICATORS, PALAM VIHAR, POLOM-DELHI ROAD, GURGAON, HARYANA RETURNED BACK UNSERVED BY THE POSTAL AUTHORITIES. 10. WE HAVE HEARD AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL AND GONE THROUGH DOCUMENTS PLACED ON RECORD IN THE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 11. KEEPING IN VIEW THE UNDISPUTED FACT THAT THE AS SESSEE HAS PLACED BEFORE ASSESSING OFFICER THE CONFIRMATIONS MADE BY HIS NINE SUNDRY CREDITORS AS REQUIRED U/S 133(6) OF THE ACT, DOCUME NTS RELIED UPON BY THE PARTIES AND SUBMISSIONS MADE BEFORE THE BENCH, WE A RE OF THE CONSIDERED VIEW THAT LD. CIT(A) HAS ERRED IN PASSING THE IMPUG NED ORDER DATED 29.08.2014 IN AFFIRMING THE ADDITION OF RS.9,14,750 /- MADE BY THE A.O. VIDE ORDER DATED 16.12.2008 FOR THE FOLLOWING REASONS:- I) THAT BOTH, THE A.O. AS WELL AS LD. CIT(A) BEING JUDICIAL AUTHORITIES, WERE UNDER OBLIGATION TO ADHERE TO THE RULE OF NATURAL JUSTICE BY PROVIDING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE TO PRODUCE NINE SUNDRY CREDITORS WHOSE CONFIRMATIONS H AVE BEEN DULY PLACED ON RECORD DURING ASSESSMENT / REMAND PROCEED INGS; II) THAT WHEN THE ASSESSEE HAS DISCHARGED ITS ONUS U/S 68 OF THE ACT BY PROVIDING CONFIRMATION LETTER FROM THE SUNDRY CR EDITORS, THE ONUS STANDS SHIFTED TO THE A.O. TO CONTROVERT THE SAME B Y BRINGING COGENT EVIDENCE ON RECORD, THAT THE SAID PARTIES ARE NOT E XISTING AND THEIR CREDITWORTHINESS AND GENUINENESS IS HIGHLY DOUBTFUL . THE A.O. HAS RATHER SUMMARILY DISMISSED THE CONFIRMATION LETTERS ON THE SOLE ITA NO.3432/DEL/2015 7 GROUND THAT THE SAME ARE STEREOTYPED AND HAS NEVER GIVEN FINDINGS THAT THE CONFIRMATION FILED BY THE ASSESSEE IN RESPECT O F THE NINE SUNDRY CREDITORS ARE FAKE ONE AND OF NON EXISTING ENTITIES ; III) THAT NO DOUBT INSPECTOR, INCOME TAX DEPUTED BY THE A.O. REPORTED THAT M/S. R. K. ENTERPRISES, NATRAJ SANITA RY AND VERMA ENGINEERING WORKS ARE NON-EXISTING, BUT THE ASSESSE E HAS NEVER BEEN PROVIDED OPPORTUNITY TO PRODUCE THEM, OR TO FILL TH EIR LATEST ADDRESSES BUT OUTRIGHTLY, IGNORED THE CONFIRMATIONS AND BUSIN ESS TRANSACTIONS SUBMITTED BY THE ASSESSEE; IV) THAT NOTICES SENT TO NINE PARTIES DETAILED AT P AGE 20 OF THE IMPUGNED ORDER ARE SHOWN TO HAVE BEEN RECEIVED BACK UNSERVED BUT THEREAFTER, NO OPPORTUNITY HAS BEEN PROVIDED TO THE ASSESSEE TO PROVIDE THEIR LATEST ADDRESS OR TO PRODUCE THE PARTIES BEFO RE THE A.O. NOR ANY EFFORT HAS BEEN MADE TO SERVE THEM THROUGH SUBSTITU TE SERVICE; V) THAT CONFIRMATION FILED BY ASSESSEE PERTAINING T O NINE PARTIES / SUNDRY CREDITORS DETAILED AT PAGE 20 OF THE IMPUGNE D ORDER OUGHT NOT TO HAVE BEEN REJECTED MERELY ON THE GROUND THAT THE LETTERS SENT TO THEM BY THE A.O. HAVE BEEN RECEIVED BACK UNSERVED E XCEPT WITH THOROUGH PROBE; VI) THAT IT IS ABUNDANTLY CLEAR FROM THE FACTS ON R ECORD THAT A.O. HAS FAILED TO VERIFY CONFIRMATIONS FILED BY THE ASSESSE E RATHER REJECTED THE SAME ON THE BASIS OF CONJECTURES AND SURMISES. 12. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, THE I MPUGNED ORDER DATED 29.08.2014 PASSED BY LD. CIT(A) AFFIRMING THE ADDIT ION OF RS.9,14,750/- MADE BY A.O. VIDE ORDER DATED 16.012.2008 IS NOT SU STAINABLE IN THE EYES OF ITA NO.3432/DEL/2015 8 LAW, HENCE, HEREBY SET ASIDE. CONSEQUENTLY, THE CA SE IS RESTORED TO THE FILE OF A.O. FOR VERIFICATION OF CONFIRMATIONS FILED BY ASS ESSEE BY PROVIDING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 12. IN THE RESULT, APPEAL FIELD BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 13. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH SEP., 2015. SD./- SD./- ( N. K. SAINI) (KULDIP SIN GH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 17.09. 2015 SP COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 24/8 SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR 25/8, 4,7,10/9 SR. PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/AM 5 APPROVED DRAFT COMES TO THE SR. PS/PS 17/9/15 SR. PS/PS 6 KEPT FOR PRONOUNCEMENT 17/9 SR. PS/PS 7 FILE SENT TO BENCH CLERK 17/9 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