DYNAMIX INDIA DRILL-CON CO., NEW DELHI V. DCIT, CIRCLE- 62(1), NEW DELHI

ITA 3569/DEL/2019

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 6763 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-10-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 24-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Additional evidence
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B, NEW DELHI BEFORE SH. R. K. PANDA, ACCOUNTANT MEMBER AND. MS. SUCHITRA KAMBLE, JUDICIAL MEMBER ITA NO.3569/DEL/2019 ASSESSMENT YEAR: 2015-16 DYNAMIX INDIA DRILL CON CO. G-4, 208-209, SECTOR-16, ROHINI, NEW DELHI-110085 PAN NO. AADFD2170K VS. DCIT CIRCLE 62 (1) NEW DELHI (APPELLANT) (RESPONDENT) APPELLANT BY DR. M. K. BHATT & MALAV GOSWAMI, CAS RESPONDENT BY MS. ASHIMA NEB, SR. DR. DATE OF HEARING: 26/08/2019 DATE OF PRONOUNCEMENT: 15/10/2019 ORDER PER R.K PANDA, AM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER DATED 15.03.2019 OF CIT(A)-38, NEW DELHI RELA TING TO A.Y. 2015-16. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A PARTNERSHIP FIRM ENGAGED IN CONSTRUCTION BUSINESS. IT FILED ITS RETURN OF INCOME ON 29.09.2015 DECLARING TOTAL INCO ME OF RS.80,16,210/-. DURING THE COURSE OF ASSESSMENT PRO CEEDINGS THE PAGE | 2 AO NOTED FROM THE BALANCESHEET THAT THE ASSESSEE HA S SHOWN UNSECURED LOAN OF RS.3 LACS FROM SUMIT GAS AGENCY I N THE HEAD CURRENT LIABILITIES. SINCE THE ASSESSEE FAILED TO F URNISH THE BANK DETAILS OR INCOME TAX RETURN OF THE SAID LOAN CREDI TOR, THE AO INVOKING THE PROVISION OF SECTION 68 OF THE IT ACT MADE ADDITION OF RS.3 LACS TO THE TOTAL INCOME OF THE ASSESSEE. 2.1 THE AO NOTED FROM THE PROFIT & LOSS ACCOUNT THA T THE ASSESSEE HAS DEBITED AN AMOUNT OF RS.5,94,45,793/- AS SUB- CONTRACTOR EXPENSES. SINCE THE ASSESSEE COULD NOT SUBSTANTIATE THE ABOVE EXPENSES WITH ADEQUATE SUPPORTING BILLS A ND VOUCHERS AND SINCE A LARGE NUMBER OF PAYMENTS WERE MADE IN C ASH FOR WHICH THESE WERE NOT VERIFIABLE, THE AO MADE AD-HOC DISALLOWANCE OF RS.5 LACS OUT OF SUB CONTRACTOR EXPENSES TO PLUG THE LEAKAGE OF REVENUE. THE AO ALSO MADE ADDITION OF RS.5,90,550/ - ON ACCOUNT OF DISCREPANCY IN THE FIGURE MENTIONED AS PER FORM 26 AS AND THE AMOUNT SHOWN IN THE PROFIT AND LOSS ACCOUNT BY INVO KING THE PROVISION OF SECTION 68 OF THE IT ACT AS UNDISCLOSE D INCOME OF THE ASSESSEE. SIMILARLY, THE AO MADE ADDITION OF RS.3,5 0,000/- ON ESTIMATE BASIS OUT OF THE VARIOUS EXPENSES DEBITED IN THE PROFIT & LOSS ACCOUNT IN ABSENCE OF SUPPORTING BILLS AND VOU CHERS. THE AO ALSO MADE ADDITION OF RS.70,903/- ON ESTIMATE BA SIS OUT OF TELEPHONE EXPENSES, DIWALI EXPENSES AND TRAVELLING AND CONVEYANCE EXPENSES TOTAL OF WHICH COMES TO RS. 7,0 9,030/- FOR WANT SUPPORTING BILLS AND VOUCHERS. PAGE | 3 3. IN APPEAL THE LD. CIT(A) DISMISSED THE APPEAL FI LED BY THE ASSESSEE FOR WHICH THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUNDS :- 1. THAT THE LEARNED CIT (APPEALS) HAS ERRED IN LAW AN D ON THE FACT WHILE CONFIRMING THE ADDITIONS MADE BY THE LEA RNED AO, WITHOUT EVEN DISCUSSING THE MATTER AT ONCE AND AFFO RDING EVEN A SINGLE REASONABLE OPPORTUNITY TO THE ASSESSEE/APPEL LANT TO REPRESENT ITS CASE, WHICH IS AGAINST THE LAW OF NAT URAL JUSTICE. THUS, VIOLATED THE PRINCIPLES AS LAID DOWN IN THE MATTER BY THE JURISDICTIONAL ITAT (DELHI) BENCH-F, IN CASE OF RAJ KAMAL ASSOCIATES LTD.,VS ITO, (ITA NO. 704/DEI/2014) ORDER PRONOUNCED ON 19- 02-2015. 2. THAT THE LEARNED CIT (APPEALS) HAS ERRED IN LAW AN D ON THE FACT WHILE REJECTING THE ADDITIONAL EVIDENCES ADDUC ED BY THE ASSESSEE/APPELLANT UNDER RULE 46A OF THE INCOME TAX RULES 1962 BEFORE HER, WITHOUT AFFORDING AN OPPORTUNITY TO BE HEARD TO THE ASSESSEE/APPELLANT ON THE REMAND RECEIVED FROM THE OFFICE OF THE LEARNED AO DESPITE KNOWING THE VITAL FACTS THAT THE EVIDENCES SO PRODUCED WERE RELATES TO THE ROOTS OF THE MATTER BE FORE HER. THUS, VIOLATED THE PRINCIPLES AS LAID DOWN RECENTLY IN TH E MATTER OF DHARMENDRA SEVANTILAL SHAH VS ITO (2019), 103 TAXMA NN.COM 394 (SURAT ITAT) ORDER PRONOUNCED ON 20-06-2018. 3. THAT ORDER PASSED BY THE LEARNED CIT (APPEALS) UND ER SECTION 250(6) OF THE INCOME TAX ACT, 1961 IS AGAIN ST LAW AND FACTS, AS THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) , WAS NOT JUSTIFIED TO ARBITRARILY UPHOLD THE ADDITION OF RS. 3,00,000/- ON ACCOUNT OF UNSECURED LOAN, IGNORING THE FACT THAT A PPELLANT PRODUCED SUBSTANTIVE EVIDENCE TO PROVE THE IDENTITY , CREDITWORTHINESS AND GENUINESS OF THE TRANSACTION A S CONDITION LAID DOWN UNDER SECTION 68 OF THE ACT. 4. THAT ORDER PASSED BY THE LEARNED CIT (APPEALS) UND ER SECTION 250(6) OF THE INCOME TAX ACT, 1961 IS AGAIN ST LAW AND FACTS, AS SHE WAS NOT JUSTIFIED TO ARBITRARILY UPHOLD THE DISALLOWANCE OUT OF THE FOLLOWING EXPENSES : PAGE | 4 A. RS. 5,00,000/-, OUT OF SUB CONTRACTORS EXPENSES, D UE TO NON- PRODUCTION OF BILLS AND VOUCHERS, B. RS. 3,50,000/- OUT OFREPAIRS AND MAINTENANCE, BUSI NESS PROMOTION, FOOD AND CONVEYANCE EXPENSES, ON ACCOUNT OF UNVERIFIABLE EXPENSES, C. RS. 70,903/-, 1/10 OF TELEPHONE EXPENSES, DIWALI EXPENSES, TRAVELLING EXPENSES AND CONVEYANCE EXPENSES BEING T HE PERSONAL EXPENSES. THUS, VIOLATED THE PRINCIPLES AS LAID DOWN RECENTLY I N THE MATTER BY THE JURISDICTIONAL ITAT (DELHI) BENCH-G, IN CASE OF SIL ENT BUSINESS SOLUTIONS LIMITED VS DCIT, (ITA NO. 6297/DEL/2013-1 4) ORDER PRONOUNCED ON 19-05-2017. 5. THAT THE LEARNED CIT (APPEALS) HAS ERRED IN LAW AN D ON THE FACT IN CONFIRMING THE ADDITIONS ON ACCOUNT OF DIFF ERENCE IN CONTRACT RECEIPTS OF RS. 5,90,550/- WITH REMARK 'DISMISSED F OR STATISTICAL PURPOSES', IGNORING THE ALL POSSIBLE RECONCILIATION SUBMITTED DURING THE COURSE OF THE ASSESSMENT AS WELL AS IN THE APPE AL. 6. THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND TH E GROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD OR DISPOSED OF . 4. THE LD. COUNSEL FOR THE ASSESSEE AT THE TIME OF HEARING SUBMITTED THAT NO PROPER OPPORTUNITY WAS GRANTED BY THE AO AT THE TIME OF HEARING. EVEN BEFORE THE CIT(A) NO ADEQ UATE OPPORTUNITY WAS GRANTED TO THE ASSESSEE TO MAKE REJ OINDER TO THE REMAND REPORT RECEIVED FROM THE OFFICE OF THE AO. HE FURTHER SUBMITTED THAT WHEN THE ACCOUNTS OF THE ASSESSEE AR E AUDITED AND AUDITORS HAVE NOT FOUND ANY DEFECT IN THE BOOKS OF ACCOUNTS, THE AO WITHOUT SPECIFICALLY PIN POINTING ANY DEFECT IN ANY BILLS AND VOUCHERS OR BOOKS OF ACCOUNTS COULD NOT HAVE MA DE ADDITION ON ESTIMATE BASIS. RELYING ON VARIOUS DECISIONS THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE REVENUE AUTHORI TIES CANNOT PAGE | 5 COMMENT ON THE REASONABLENESS OF THE EXPENSES AND I T IS THE ASSESSEE WHO HAS THE PRIVILEGE TO CONDUCT HIS BUSIN ESS AND REVENUE AUTHORITIES CANNOT SIT ON THE ARM CHAIR OF THE ASSESSEE. FURTHER IN ORDER TO DISALLOW ANY EXPENDITURE THE AO HAS TO ESTABLISH THAT THE SAME WAS NOT INCURRED FOR CARRYI NG OUT BUSINESS. MERELY BECAUSE CERTAIN EXPENSE WAS INCURR ED IN CASH CANNOT BE THE BASIS FOR MAKING ANY DISALLOWANCE. RE FERRING TO VARIOUS DECISIONS HE SUBMITTED THAT WHERE THE AO FA ILED TO GIVE DETAILS OF EXPENSES WHICH WERE FOUND UNVERIFIABLE A ND MADE AD- HOC DISALLOWANCE, THE SAID DISALLOWANCE HAS TO BE D ELETED. HE ACCORDINGLY SUBMITTED THAT THE VARIOUS ADDITIONS MA DE BY THE AO AND UPHELD BY THE CIT(A) SHOULD BE DELETED. 5. THE LD. DR ON THE OTHER HAND STRONGLY RELIED ON THE ORDER OF THE CIT(A). REFERRING TO THE ORDER OF THE CIT(A) SHE SUBMITTED THAT A PERUSAL OF THE CONFIRMATION OF SUMIT GAS AGE NCY SHOWS THAT IT IS A PRIVATE LIMITED COMPANY, COPY OF WHICH IS PLACED AT PAGE 23 OF THE PAPER BOOK. THE ASSESSEE IN HIS CONF IRMATIONS HAS GIVEN THE NAME OF THE LENDER AS M/S. SUMIT GAS AGEN CY, SH. RAMAN LAMBA (PARTNER). THEREFORE, THE ASSESSEE WAS HIMSELF NOT GIVING THE CORRECT DETAILS FOR WHICH NO OTHER OPTIO N IS LEFT TO THE AO AND THE CIT(A) BUT TO MAKE THE ADDITION. SO FAR AS THE DISALLOWANCE OF VARIOUS EXPENSES ARE CONCERNED, SHE SUBMITTED THAT THE ASSESSEE HAD NOT FILED THE REQUISITE DETAI LS AND, THEREFORE, THE AO WAS FULLY JUSTIFIED IN MAKING AD-HOC DISALLO WANCE. SHE ACCORDINGLY SUBMITTED THAT THE ORDER OF THE CIT(A) BE UPHELD. PAGE | 6 6. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE AO AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. WE FIND THE AO IN THE INSTANT CASE MADE ADDITION OF RS.3 LACS BEING THE UNSECURED LOAN FROM SUMIT GAS AGENCY ON THE GROUND THAT NO BANK DETAILS OR COPY OF INCOME TAX RETURN WAS FILED. FURTHER A PERUSAL OF T HE CONFIRMATION GIVEN BY THE LOAN CREDITOR SHOWS THE NAME OF THE LE NDER AS SUMIT GAS AGENCY PRIVATE LIMITED WHEREAS THE ASSESSEE BEF ORE THE CIT(A) HAD GIVEN THE NAME OF THE LENDER AS M/S. SUM IT GAS AGENCY AND RAMAN LAMBA AS PARTNER. THEREFORE, IT IS NOT COMING OUT CLEARLY AS TO WHETHER WHO HAS GIVEN THE LOAN TO THE ASSESSEE I.E. WHETHER IT IS A PRIVATE LIMITED COMPANY OR A P ARTNERSHIP FIRM. UNLESS THE INCOME TAX RETURN COPY AND BANK ACCOUNT OF THE SAID LENDER IS FURNISHED IT IS DIFFICULT FOR ANYBODY TO VERIFY THE CREDITWORTHINESS AND IDENTITY OF THE SAID PARTIES. SIMILARLY, WHEN THE ASSESSEE FAILED TO SUBSTANTIATE WITH EVIDENCE T O THE SATISFACTION OF THE AO REGARDING THE ALLOWABILITY O F CERTAIN EXPENSES, HE CANNOT TAKE THE SHELTER OF VARIOUS CAS E DECISIONS TO SAY THAT THE AO CANNOT MAKE AD-HOC DISALLOWANCE WIT HOUT PINPOINTING THE DETAILS OF CERTAIN EXPENSES WHICH A CCORDING TO HIM ARE UNVERIFIABLE. HOWEVER, IT IS ALSO AN ARGUME NT BY THE LD. COUNSEL FOR THE ASSESSEE THAT THE ASSESSEE WAS NOT GIVEN ADEQUATE OPPORTUNITY TO FILE A REJOINDER TO THE COP Y OF THE REMAND REPORT OF THE AO. IT IS ALSO HIS GRIEVANCE THAT TH E LD. CIT(A) HAD REJECTED THE ADDITIONAL EVIDENCES SUBMITTED BY THE ASSESSEE UNDER RULE 46 A OF THE INCOME TAX RULES 1962 WHICH GO TO THE ROOTS OF PAGE | 7 THE MATTER. CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE AND IN THE INTEREST OF JUSTICE WE DEEM IT PROPER TO RESTOR E THE ISSUE TO THE FILE OF THE AO WITH A DIRECTION TO DECIDE THE ISSUE AFRESH AND IN ACCORDANCE WITH LAW AFTER GIVING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE HOLD AND DIRECT ACCORDINGLY. TH E GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSE. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESS EE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 15.10.2019. SD/- SD/- (SUCHITRA KAMBLE) (R.K PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER *NEHA* DATE:- 15.10.2019 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE OF DICTATION 14.10.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 15.10.2019 DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS /PS 15.10.2019 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 15.10.2019 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/ PS 15.10.2019 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT 15.10.2019 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 16.10.2019 DATE ON WHICH FILE GOES TO THE HEAD CLERK. THE DATE ON WHICH FILE GOES TO THE ASSISTANT REGIST RAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER