Cheil India Pvt. Ltd., Gurgaon V. Addl. CIT, New Delhi

ITA 3549/DEL/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 6635 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 7 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 05-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K JAIN
• Assessee Lawyers: SAMARTH CHAUDHARI
• Keywords: Unexplained cash credit; Principle of natural justice; Set aside
• Section: 143(3); 133(6); 201

Judgement Text

PAGE | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B: NEW DELHI BEFORE SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 3549/DEL/2017 (ASSESSMENT YEAR: 2008 - 09 ) CHEIL INDIA PVT. LTD, TWO HORIZON CENTER, 7 TH FLOOR, DLF PHASE - V, GURGAON PAN: AACCC2299Q VS. ADDL. CIT, SPECIAL RANGE - 2, NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SAMARTH CHAUDHARI, ADV REVENUE BY: SHRI S. K. JAIN, CIT DR DATE OF HEARING 01/11 / 201 9 DATE OF PRONOUNCEMENT 3 1 / 0 1 / 2 0 2 0 O R D E R PER PRASHANT MAHARISHI, A. M. 1 . THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD CIT(A) - 2, NEW DELHI DATED 31.03.2017 FOR THE ASSESSMENT YEAR 2008 - 09. 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THAT THE ADDITIONS MADE BY DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 6(1), NEW DELHI (LEARNED AO) ARE UNJUST, ILLEGAL, BAD IN LAW AND AGAINST THE PRINCIPLE OF NATURAL JUSTICE . THE LEARNED CIT (A) HAS ERRED IN LAW AND ON FACTS IN UPHOLDING THE SAME. 2. THAT THE LEARNED AO HAS GROSSLY ERRED BOTH ON FACTS AND IN LAW IN ADDING AMOUNT PAID/PAYABLE TO ITS VENDOR AS INCOME OF THE APPELLANT FOR THE REASON THAT SUCH VENDOR FAILED TO PROVIDE DETAILS SOUGHT BY THE LEARNED AO, WITHOUT GIVING ADEQUATE OPPORTUNITY AND WITHOUT CONSIDERING ALTERNATIVE EVIDENCES SUBMITTED BY THE APPELLANT AND WITHOUT APPRECIATING THE FACT THAT PENALIZING THE APPELLANT FOR THE INACTION OF THIRD PARTY WHO ARE NOT UNDER ANY SORT OF CO NTROL IS BLATANTLY INCORRECT AND LEARNED CIT(A) HAS ERRED IN UPHOLDING SUCH ORDER. 3. THAT THE EVIDENCES PLACED AND THE MATERIAL AVAILABLE ON RECORD HAVE NOT BEEN PROPERLY AND JUDICIOUSLY CONSIDERED BY LEARNED AO/CIT(A) AND THE ADDITIONS HAVE BEEN MADE IGN ORING THE MATERIAL ON RECORD AND ARE AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 4. THAT THE LEARNED CIT (A) HAS ERRED IN DISALLOWING THE ENTIRE PASS THROUGH COST PAID/PAYABLE TO 6 VENDORS ON THE GROUND THAT THE APPELLANT HAS NOT SUBMITTED COMPLETE DOCUMENT ARY EVIDENCE/BILL FOR PORTION OF SUCH COST PAYABLE TO TWO VENDORS. PAGE | 2 4.1. THAT THE LEARNED CIT(A) HAS ERRED IN DISREGARDING THE ALTERNATIVE MATERIAL ON RECORD FILED BY THE APPELLANT WHICH SUBSTANTIATE THE GENUINENESS OF SUCH VENDORS. 4.2. THAT THE LEARNED CI T(A) HAS ERRED IN PASSING THE ORDER WITHOUT GIVING ADEQUATE OPPORTUNITY AND WITHOUT CONFRONTING THE NON - AVAILABILITY OF SPECIFIC DOCUMENTARY EVIDENCES WHICH IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE AND HENCE THE ADDITION IS BAD IN LAW. 3 . THE BRIEF FACTS OF THE CASE SHOWS THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 30.09.2008 DECLARING INC O ME OF RS. 53172401/ - . THE ASSESSMENT WAS COMPLETED AT RS. 1 , 31 , 32 , 80 , 674/ - . THE MATTER REACHED TO THE LEVEL OF ITAT AGAINST THE ORDER OF THE LD AO AND ITAT SET ASIDE THE MATTER BACK TO THE FILE OF THE LD AO TO CONSIDER THE ISSUE AFRESH AFTER GRANTING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. THUS, FRESH ASSESSMENT ORDER U/S 143(3) READ WITH SECTION 254 OF THE ACT WAS PASSED ON 16.03.2015 , WHEREIN, THE ADDITION OF RS. 9 , 37 , 76 , 354/ - ON ACCOUNT OF UNEXPLAINED CREDIT WAS MADE. THE ASSESSEE PREFERRED APPEAL BEFORE THE LD CIT(A) WHO DISMISSED THE APPEAL OF THE ASSESSEE. 4 . AT THE TIME OF HEARING THE ASSESSEE PREFERRED AN APPLICATION FOR ADJOURNME NT SEEKING FURTHER TIME TO PREPARE PAPER BOOK, HOWEVER, IT WAS FOUND THAT THE ASSESSEE HAS RAISED THE GROUNDS OF APPEAL CHALLENGING THE ORDER OF THE LD AO AGAINST THE PRINCIPLE OF NATURAL JUSTICE. ON THE FACTS OF THE CASE IT WAS FOUND THAT IN CASE OF 6 VEN DOR S THE LD AO ISSUED NOTICES U/S 133(6) WHO ARE HAVING TRANSACTIONS IN EXCESS OF RS. 50 LAKHS WITH THE ASSESSEE. 6 PERSONS OUT OF TOTAL 55 VENDORS DID NOT RESPOND TO THE NOTICES ISSUED U/S 133(6) OF THE ACT AND THEREFORE, THE LD AO MADE AN ADDITION OF RS. 9 , 37 , 76 , 354/ - . THEREFORE, DUE TO NONE RECEIPT OF CONFIRMATION ADDITION HAS BEEN MADE BY THE LD AO AND WAS CONFIRMED BY THE LD CIT(A) . THEREFORE , THE ASSESSEE IS IN APPEAL BEFORE US. THE APPLICATION DOES NOT DESERVE TO BE ACCEDED AS THE ASSESSEE IS IN SECO ND INNINGS OF THE ADDITION. HENCE, WE PROCEED TO DECIDE ISSUES ON MERIT. 5 . THE LD DR VEHEMENTLY SUPPORTED THE ORDER OF THE LD AO. 6 . WE HAVE CAREFULLY CONSIDERED THE CONTENTIONS OF THE LD ASSESSEE BEFORE THE LOWER AUTHORITIES. ADMITTEDLY, IN THIS CASE MERELY BECAUSE SOME OF THE CREDITORS DID NOT RESPOND TO NOTICE S ISSUED U/S 133(6) OF THE ACT BY THE LD AO THE ADDITION HAS BEEN MADE BY THE LD AO WHERE THE PARTY MENTIONED IN THE LIST IS DOORDARSHAN WHICH IS A GOVT ORGANIZATION. M ERELY BECAUSE CERTAIN PAGE | 3 CREDITORS I.E. 6 OUT OF 55 DID NOT RESPOND TO NOTICES ISSUED U/S 133(6) AND COULD NOT PERSUADED BY THE ASSESSEE FOR THEM TO SUBMIT THE DETAILS, IT CANNOT RESULT INTO ADDITION WHEN THE EXPENDITURE INCURRED BY THE ASSESSEE WAS NOT FOUND TO BE NON GENUINE. THE ASSESSEE IS NOT AT FAULT AT LEAST IN THIS CASE FOR THE SIMPLE REASON THAT THERE MAY BE THE REASON WHERE THE ASSESSEE FAILS TO CONVINCE THE SUPPLIERS OR CREDITORS TO RESPOND TO THE AO. THERE MAY BE BECAUSE OF THE REASON THAT SUCH ORG ANIZATION ARE OF DIFFERENT STATURE. IN THE PRESENT CASE THE ASSESSEE FILED ITS RETURN OF INCOME OF RS. 53172401/ - . THIS RETURN OF INCOME WAS ASSESSED AT RS. 1313280674/ - . WHEN THE MATER REACHED TO ITAT THE ORDER WAS SET ASIDE BACK TO THE FILE OF THE LD AO. IN THE ASSESSMENT ORDER FRAMED IN PURSUANCE OF THE ORDER OF THE COORDINATE BENCH NO OTHER ADDITIONS WERE MADE BY THE LD AO, BUT THE IMPUGNED ADDITION OF RS. 93776354/ - ONLY , BECAUSE THE CREDITORS DID NOT RESPOND TO NOTICE S OF THE LD AO ISSUED U/S 133(6) O F THE ACT. IN THE PRESENT CASE , OTHER THAN THIS NO OTHER ADDITIONS WERE MADE BY THE LD AO AND FURTHER THE REASONS FOR THE CREDIT TO ACCOUNT OF 6 PARTIES IS DEFINITELY THE EXPENDITURE INCURRED BY THE ASSESSEE AND SUCH EXPENDITURE HAVE NOT BEEN FOUND NON GEN UINE BY THE AO. OUT OF 55 VENDORS 49 VENDORS HAVE CONFIRMED THE TRANSACTIONS BY SUBMITTING THEIR BOOKS OF ACCOUNTS AND CONFIRMATION. ONLY 6 VENDORS DID NOT RESPOND. IN SUCH A CASE IT IS POSSIBLE THAT AT CERTAIN TIME S, NO DIRECT EVIDENCE ARE FORTHCOMING FRO M THE ASSESSEE, THE LD AO MUST EITHER ACCEPT INDIRECT EVIDENCE OR TO EXERCISE H IS AUTHORITY UNDER THE LAW, IF HE WANTS TO, FOR OBTAINING SUCH CONFIRMATION. THE ASSESSEE HAS DONE WHAT IT COULD HAVE DONE IN THE GIVEN SITUATION. IT IS NOT THE CASE THAT THE AS SESSEE DID NOT MADE EFFORT TO PROVIDE SOME ASSURANCE TO THE AO. THE ASSESSEE SUBMITTED THE CONTRACT ACCOUNT AS WELL AS DETAILS OF P A S S THROUGH COST. THE LD AO AND LD CIT(A) DISBELIEVED EXPLANATION. BOTH THE LOWER AUTHORITIES HAVE CONFIRMED THE ADDITION MER ELY FOR THE REASON OF NON FURNISHING OF REPLY BY THE CREDITORS U/S 133(6) OF THE ACT. IN VIEW OF THE ABOVE FACTS , WE SET ASIDE THE WHOLE ISSUE BACK TO THE FILE OF THE LD AO TO VERIFY THE EXPENSES OF 6 CREDITORS , ONE OF THEM IS DOORDARSHAN , BY DIRECT EVIDEN CE AVAILABLE WITH THE ASSESSEE IN THE FORM OF BILLS AND SUBSEQUENT PAYMENT TO THEM BY ACCOUNT PAYEE CHEQU E AND NATURE OF TRANSACTIONS. THE ASSESSEE IS DIRECTED TO PRODUCE THIS EVIDENCE BEFORE THE LD AO WITHIN THREE MONTHS OF THE DATE OF THIS ORDER. THE LD AO PAGE | 4 MAY EXAMINE THE DETAILS. IF AFTER LOOKING AT THESE DETAILS , STILL AO IS NOT SATISFIED ABOUT THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE , HE MAY ISSUE NOTICE TO THESE PARTIES U/S 131(1) OF THE ACT. THIS WILL RESULT INTO FURTHER EXAMINATION BY THE LD AO IF DETAILS ARE FORTHCOMING FROM THE ASSESSEE TO HIS SATISFACTION. IN THE RESULT , APPEAL OF THE ASSESSEE IS SET ASIDE ON ALL GROUNDS TO THE FILE OF THE LD AO WITH A DIRECTION TO DECIDE THE ISSUE OF THE ABOVE DISALLOWANCE AFRESH. 7 . IN THE RESULT, ADJOURNMENT APPLICATION OF THE ASSESSEE IS REJECTED AND APPEAL OF THE ASSESSEE IS ALLOWED WITH ABOVE DIRECTION. ORDER PRONOUNCED IN THE OPEN COURT ON 3 1 / 0 1 / 2 0 2 0 - SD/ - - SD/ - ( SUDHANSHU SRIVASTAVA ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 3 1 / 0 1 / 2 0 2 0 A K KEOT COPY FORWARDED TO 1 . APPLICANT 2 . RESPONDENT 3 . CIT 4 . CIT (A) 5 . DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI