M/s. Technico Agri Sciences Ltd., Chandigarh V. ITO, New Delhi

ITA 3717/DEL/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7065 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 08-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Earning of tax free income; Additional evidence
• Section: 14A; 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C, NEW DELHI BEFORE SHRI P. M. JAGTAP, ACCOUNTANT MEMBER AND MS. SUCHITRA KAMBLE, JUDICIAL MEMBER ITA NO.3717/DEL/2015 ASSESSMENT YEAR : 2010-11 TECHNICO AGRI SCIENCES LTD., SCO- 835, 2 ND FLOOR, NAC, MANIMAJRA, CHANDIGARH. VS. ITO, WARD- 16(2), NEW DELHI. PAN : AAACC9811G (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI ROHIT JAIN, ADV., SHRI DEEPESH JAIN, ADV. DEPARTMENT BY : SHRI ARUN KUMAR YADAV, SR.DR DATE OF HEARING : 13-07-2018 DATE OF PRONOUNCEMENT : 13-07-2018 O R D E R PER P. M. JAGTAP, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LD. CIT(A)- 9, NEW DELHI DATED 27.03.2015. 2. THE GROUND NO.1 RAISED BY THE ASSESSEE IN THIS A PPEAL IS GENERAL. 3. THE GROUND NO.2 INVOLVES THE ISSUE RELATING TO D ISALLOWANCE OF RS.5,39,582/- MADE BY THE ASSESSING OFFICER AND CON FIRMED BY THE LD. CIT(A) U/S 14A OF THE I.T. ACT, 1961 READ WITH RULE 8D OF THE INCOME TAX RULES, 1962. 4. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY WH ICH IS ENGAGED IN THE BUSINESS OF GROWING TECHNITUBER SEED POTATOES. TH E RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY IT ON 27.09.2010 DECLARING TOTAL 2 ITA NO.3717/DEL/2015 INCOME AT NIL. IN THE SAID RETURN, THE TOTAL INCOM E OF RS.41,42,455/- RECEIVED DURING THE YEAR UNDER CONSIDERATION WAS CLAIMED TO BE EXEMPT BY THE ASSESSEE U/S 10(34) OF THE ACT. HOWEVER, THE EXPENDITURE IN CURRED IN RELATION TO THE EARNING OF THE SAID EXEMPT INCOME WAS NOT DISALLOWE D BY THE ASSESSEE AS REQUIRED BY THE PROVISIONS OF SECTION 14A OF THE AC T. IN THIS REGARD, THE CONTENTION RAISED BY THE ASSESSEE BEFORE THE ASSESS ING OFFICER WAS THAT THE DIVIDEND INCOME RECEIVED BY IT HAD ALREADY SUFFERED DIVIDEND DISTRIBUTION TAX AND THE SAME, THEREFORE, COULD NOT BE TREATED AS AN EXEMPT INCOME WARRANTING ANY DISALLOWANCE U/S 14A. THIS CONTENTION OF THE A SSESSEE WAS NOT FOUND ACCEPTABLE BY THE ASSESSING OFFICER. HE ACCORDINGL Y PROCEEDED TO WORK OUT THE EXPENDITURE INCURRED BY THE ASSESSEE IN RELATION TO THE EARNING OF EXEMPT INCOME AS PER RULE 8D AT RS.5,39,582/- AND DISALLOWANCE TO THAT EXTENT WAS MADE BY HIM U/S 14A OF THE ACT. 5. THE DISALLOWANCE MADE BY THE ASSESSING OFFICER U /S 14A WAS CHALLENGED BY THE ASSESSEE IN THE APPEAL FILED BY THE ASSESSEE BEFORE THE LD. CIT(A) AND ALTHOUGH A SPECIFIC GROUND WAS RAISED BY THE ASSESS EE IN THE APPEAL FILED BEFORE THE LD. CIT(A) ON THIS ISSUE, THE SAME WAS NOT DECI DED BY THE LD. CIT(A) VIDE HIS IMPUGNED ORDER. 6. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. LD. COUNSEL FOR THE ASSESSEE HAS INVITED OUR ATTENTION TO THE COMPUTATION OF TOTAL INCOME (C OPY PLACED AT PAGE NO.2 OF THE 3 ITA NO.3717/DEL/2015 PAPER BOOK) AND POINTED OUT THAT NO DEDUCTION ON AC COUNT OF ANY EXPENDITURE WAS CLAIMED BY THE ASSESSEE AGAINST TAXABLE INCOME. HE HAS CONTENDED THAT IN THE ABSENCE OF ANY SUCH DEDUCTION CLAIMED BY THE AS SESSEE, THE DISALLOWANCE MADE BY THE ASSESSING OFFICER U/S 14A AND CONFIRMED BY THE LD. CIT(A) IS NOT SUSTAINABLE. LD. DR ON THE OTHER HAND HAS CONTENDE D THAT THIS NEW CONTENTION RAISED BY THE LD. COUNSEL FOR THE ASSESSEE FOR THE FIRST TIME BEFORE THE TRIBUNAL REQUIRED VERIFICATION BY THE ASSESSING OFFICER. WE FIND MERIT IN THE CONTENTION OF THE LD. DR. THIS ISSUE IS ACCORDINGLY RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR DECIDING THE SAME AFRESH AFTER VERIFYIN G THE CLAIM OF THE ASSESSEE THAT NO DEDUCTION WHATSOEVER WAS CLAIMED BY THE ASS ESSEE ON ACCOUNT OF ANY EXPENDITURE AGAINST THE TAXABLE INCOME. THE GROUND NO.2 OF THE ASSESSEES APPEAL IS ACCORDINGLY TREATED AS ALLOWED FOR STATIS TICAL PURPOSES. 7. THE ISSUE RAISED IN GROUND NO.3 RELATES TO THE A DDITION OF RS.5,03,765/- MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(A) ON ACCOUNT OF AMOUNTS CLAIMED TO BE RECEIVED BY THE ASSESSEE FROM CUSTOMERS BY TREATING THE SAME AS UNEXPLAINED. 8. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSE E HAD CREDITED IN HIS BOOKS OF ACCOUNT THE FOLLOWING THREE AMOUNTS RECEIV ED IN CASH :- (I) 13.10.2009 - RS.1,71,600/- (II) 24.11.2009 - RS.1,74,355/- (III) 15.05.2009 - RS.1,57,810/- TOTAL - RS.5,03,765/- 4 ITA NO.3717/DEL/2015 9. WHEN THE ASSESSEE WAS CALLED UPON BY THE ASSESSI NG OFFICER TO EXPLAIN THE ABOVE CASH RECEIPTS, IT WAS SUBMITTED ON BEHALF OF THE ASSESSEE THAT THE SAID AMOUNTS WERE DEPOSITED BY THE FARMERS/CUSTOMERS AGA INST THE PURCHASE OF SEEDS POTATOES/POTATOES. THE DETAILS OF SUCH FARMERS/CUS TOMERS WERE ALSO FURNISHED BY THE ASSESSEE. IN ORDER TO VERIFY THE CLAIM OF THE ASSESSEE NOTICES U/S 133(6) WERE ISSUED BY THE ASSESSING OFFICER TO THE SAID PARTIES AT THE ADDRESS GIVEN BY THE ASSESSEE. THE SAID NOTICES, HOWEVER, WERE RETURNED BACK UNDELIVERED BY THE POSTAL AUTHORITIES. WHEN THIS POSITION WAS CONFRON TED BY THE ASSESSING OFFICER TO THE ASSESSEE SEEKING THE LATERS EXPLANATION, TH ERE WAS NO COMPLIANCE ON THE PART OF THE ASSESSEE. THE ASSESSING OFFICER, THERE FORE, TREATED THE CASH RECEIPTS OF RS.5,03,765/- AS UNEXPLAINED AND ADDED THE SAID AMOUNT TO THE TOTAL INCOME OF THE ASSESSEE. ON APPEAL, THE LD. CIT(A) CONFIRM ED THE SAID ADDITION MADE BY THE ASSESSING OFFICER. 10. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES A ND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE POSITION REGARDING THE RETURNING BACK OF THE NOTICES ISSUED TO THE CONCERNED FARMERS/CUSTOMERS BY THE POSTAL AUTHO RITIES UNDELIVERED WAS CONFRONTED BY THE ASSESSING OFFICER TO THE ASSESSEE VIDE LETTER DATED 13.03.2013 AND THE MATTER WAS FIXED FOR HEARING ON 18.03.2013. HE HAS SUBMITTED THAT THE SAID LETTER DATED 13.03.2013, HOWEVER, WAS RECEIVED BY THE ASSESSEE ONLY ON 20.03.2013 AND THE ASSESSEE, THEREFORE, COULD NOT C OMPLY WITH THE REQUIREMENT 5 ITA NO.3717/DEL/2015 OF THE ASSESSING OFFICER. HE HAS CONTENDED THAT TH E ASSESSING OFFICER MEANWHILE PROCEEDED TO COMPLETE THE ASSESSMENT VIDE AN ORDER DATED 21.03.2013 DRAWING AN ADVERSE INFERENCE AGAINST THE ASSESSEE ON THIS ISSUE WITHOUT GIVING PROPER AND SUFFICIENT OPPORTUNITY OF BEING HEARD. HE HAS CONTENDED THAT THE ASSESSEE, HOWEVER, OBTAINED THE CONFIRMATION/AFFIDAVIT OF THE CONCERNED FARMERS/CUSTOMERS FOR THE AMOUNTS IN QUES TION PAID/DEPOSITED IN CASH AND FILED THE SAME BEFORE THE LD. CIT(A). HE HAS C ONTENDED THAT THE LD. CIT(A), HOWEVER, DID NOT ENTERTAIN THIS ADDITIONAL EVIDENCE AND CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER ON THIS ISSUE. HE HA S INVITED OUR ATTENTION TO THE COPIES OF THE SAID CONFIRMATION/AFFIDAVIT OF THE CO NCERNED CREDITORS FILED IN HIS PAPER BOOK AND CONTENDED THAT THE ADDITION MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(A) ON THIS ISSUE IS LIABLE TO BE DELETED IN THE LIGHT OF THE SAID CONFIRMATION/AFFIDAVIT. THE LD. DR, ON TH E OTHER HAND, HAS CONTENDED THAT THIS ISSUE ALSO SHOULD BE SENT BACK TO THE ASS ESSING OFFICER FOR GIVING HIM AN OPPORTUNITY TO VERIFY THE AFFIDAVIT/CONFIRMATION FILED BY THE ASSESSEE/CONCERNED CREDITORS AS THE SAID EVIDENCE W AS ADMITTEDLY NOT FILED BEFORE THE ASSESSING OFFICER. WE FIND MERIT IN THI S CONTENTION OF THE LD. DR. THE IMPUGNED ORDER OF THE LD. CIT(A) ON THIS ISSUE IS ACCORDINGLY SET-ASIDE AND THE MATTER IS RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR DECIDING THE SAME AFRESH AFTER VERIFYING THE EVIDENCE FILED BY THE AS SESSEE IN THE FORM OF AFFIDAVIT/CONFIRMATION OF THE CONCERNED CREDITORS. NEEDLESS TO OBSERVE THAT THE 6 ITA NO.3717/DEL/2015 ASSESSING OFFICER SHALL OFFER PROPER AND SUFFICIENT OPPORTUNITY TO THE ASSESSEE BEFORE DECIDING THE ISSUE AFRESH. THE GROUND NO.3 OF THE ASSESSEES APPEAL IS ACCORDINGLY TREATED AS ALLOWED FOR STATISTICAL PURP OSES. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TR EATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 13 TH DAY OF JULY, 2018. SD/- SD/- (SUCHITRA KAMBLE) (P. M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 13-07-2018. SUJEET COPY OF ORDER TO: - 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT 4) THE CIT(A) 5) THE DR, I.T.A.T., NEW DELHI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, NEW DELHI