Callina Care Overseas Pvt. Ltd., Ghaziabad V. ITO, New Delhi

ITA 3739/DEL/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86998 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 17-03-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 04-08-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PARWINDER KAUR
• Assessee Lawyers: V MOHAN C AS
• Keywords: Additional evidence; Tax effect
• Section: 133(6); 68; 145

Judgement Text

IN TH E INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B : NEW DELHI BEFORE SHRI GEORGE GEORGE K., JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO. 3739 /DEL/201 1 ASSESSMENT YEAR 200 5 - 0 6 CALLINA CARE OVERSEAS PVT. LTD. VS. ITO, WARD 3(2), PLO T NO.2, ANANAD INDUSTRIAL ESTATE NEW DELHI. MOHAN NAGAR, GHAZIABAD ( PAN AA BCC 9735 E ) ITA NO. 3953 /DEL/201 1 ASSESSMENT YEAR 200 5 - 06 ITO, WARD 3(2), CALLINA CARE OVERSEAS PVT. LTD. NEW DELHI PLOT NO.2, ANANAD INDUSTRIAL ESTATE MOHAN NAGAR, GH AZIABAD ( PAN AA BCC 9735 E ) ( APPELLANT) (RESPONDENT) DATE OF HEARING : 1 7 .0 3 .2015 DATE OF PRONOUNCEMENT : 20 . 03 .2015 APPELLANT BY : SHRI VED JAIN AND SHRI V. MOHAN, CA S. RESPONDENT BY: SMT. PARWINDER KAUR, SR. D.R. ORDER PER SHRI GEORGE GEORGE K , J M : 1. THESE ARE CROSS APPEALS DIRECTED AGAINST THE CIT(A) S ORDER DATED 06 .0 6 .201 1 . THE RELEVANT ASSESSMENT YEAR IS AY 200 5 - 0 6 . IT A NO S . 3739 & 3953 /DEL /201 1 2 2. IN THE ASSESSEE S APPEAL (ITA NO. 3739/DEL/2011) , THE SOLITARY GROUND THAT IS RAISED IS WHETHER TH E CIT(A) IS JUSTIFIED IN CONFIRMING THE ADDITION OF RS.67,21,611/ - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF EXPENSES ON PACKAGING MATERIAL. IN THE REVENUE S APPEAL (ITA NO.3953/DEL/2011), THE SOLITARY ISSUE THAT IS RAISED IS WHETHER THE CIT(A) IS JUSTIF IED IN DELETING THE ADDITION OF RS.12,00,000/ - MADE BY THE AO U/S 68 OF THE ACT ON ACCOUNT OF UNEXPLAINED SHARE APPLICATION MONEY. WE SHALL FIRST TAKE UP FOR ADJUDICATION THE ASSESSEE S APPEAL. ASSESSEE S APPEAL ITA NO. 3739/DEL/2011 3. BRIEF FACTS WITH RE GARD TO ASSESSEE S APPEAL ARE AS FOLLOWS. THE ASSESSEE HAD DEBITED IN ITS P&L ACCOUNT A SUM OF RS.67,21,611/ - , BEING EXPENSES INCURRED IN PURCHASE OF PACKAGING MATERIAL FROM M/S. S.R. ENTERPRISES. THE ASSESSING OFFICER HAD ISSUED NOTICE U/S 133(6) OF THE ACT TO M/S S.R. ENTERPRISES IN THE ADDRESS FURNISHED BY THE ASSESSEE. THE NOTICE OF SUMMON WAS RETURNED UNSERVED . THE ASSESSEE WAS DULY INTIMATED OF THE NOTICE BEING UNSERVED . THE INSPECTOR ATTACHED TO THE ASSESSING OFFICER WAS DIRECTED TO CONDUCT FIELD EN QUIRIES . THE INSPECTOR FILED A REPORT THAT THERE IS NO CONCERN BY THE NAME M/S SR ENTERPRISES IN ADDRESS GIVEN BY THE ASSESSEE. THE ASSESSEE WAS ALSO INFORMED ABOUT THE REPORT OF THE INSPECTOR. IT WAS SUBMITTED BEFORE THE ASSESSING OFFICER THAT ASSESSEE HA S PURCHASED SPECIAL PACKING MATERIAL I.E. PP BAGS FOR ITS EXPORT MERCHANDISE. COPY OF THE PURCHASED ORDER RECEIVED FROM OVERSEAS BUYERS WAS ALSO FURNISHED TO THE ASSESSING OFFICER. IT WAS FURTHER STATED BY THE ASSESSEE S COUNSEL IT A NO S . 3739 & 3953 /DEL /201 1 3 BEFORE THE AO MERELY BECAUS E NOTICE U/S 133(6) WAS RETURNED UNSERVED , THE EXISTENCE OF S.R. ENTERPRISES IS VERIFIABLE FROM THE REGISTRATION CERTIFICATE GRANTED BY THE VARIOUS TAX AUTHORITIES. 4. THE AO REJECTED THE CONTENTIONS RAISED BY THE ASSESSEE . THE AO HELD THAT ASSESSEE HAD C LAIMED N IL PACKING EXPENSES DURING THE PREVIOUS FINANCIAL YEAR WHILE EXPORTING GOODS WORTH 32,99,000. IT WAS STATED BY THE AO THAT THE TOTAL EXPORT OF BOPP FILM WAS RS.17,83,763/ - , AND ASSESSEE HAD CLAIMED PACKING EXPENSES TO THE TUNE OF RS.67,21,611/ - . THE ASSESSING OFFICER AFTER ANALYZING THE INVOICES SUBMITTED BY THE SELLER OF THE PACKING MATERIAL, NAMELY, S.R. ENTERPRISES OPINED THAT THE ASSESSEE S COMPANY WAS A MAJOR BUYER FROM THE M/S SR ENTERPRISES AND STILL THE ASSESSEE WAS UNABLE TO PRODUCE THE P ARTY . ACCORDING TO THE AO , THE CONTENTION OF THE ASSESSEE THAT M/S ENTERPRISES HAD SALES TAX NO. DID NOT MAKE THE TRANSACTION GENUINE, PARTICULARLY WHEN THE ASSESSEE WAS SPECIFICALLY CONFRONTED WITH THE ADVERSE EVIDENCES GATHERED BY THE DEPARTMENT. THE LD. AO FURTHER DREW AN INFERENCE THAT M/S SR ENTERPRISES HAD NOT BEEN PAID DURING THE YEAR EVEN THOUGH PURCHASES WERE MADE AS EARLY AS 2 ND APRIL, 2004 (BEGINNING OF THE FINANCIAL YEAR). ACCORDINGLY, THE AO DISALLOWED THE EXPENDITURE FOR PURCHASE OF PACKING MAT ERIAL AMOUNTING TO RS.67,21,611/ - / 5 . AGGRIEVED BY THE ADDITION OF RS.67,21,611/ - BEING UNEXPLAINED EXPENSES , THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A) , ASSESSEE SUBMITTED AN AFFIDAVIT OF SHRI RAJNISH TYAGI DETAILING THE PURCHAS ES MADE BY THE IT A NO S . 3739 & 3953 /DEL /201 1 4 ASSESSEE FROM M/S SR ENTERPRISES . T HE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE WAS PLACED ON RECORD BY THE CIT(A) . THE CIT(A) CALLED FOR THE COMMENTS OF THE ASSESSING OFFICER. THE ASSESSING OFFICER FURNISHED DETAILED REMAND REPORT S . THE ASS ESSEE ALSO FILED A REJOINDER TO THE REMAND REPORT. THE CIT(A) AFTER EXAMINING THE ADDITIONAL EVIDENCE, THE REMAND REPORT AND THE REJOINDER , DECIDED THE ISSUE AGAINST THE ASSESSEE. THE RELEVANT FINDING OF THE CIT(A) READS AS FOLLOWS: - 11. I HAVE GONE THRO UGH THE ORDER OF THE ID. AO AND THE SUBMISSIONS MADE BY THE ID. AR OF THE ASSESSEE. THE REMAND REPORTS AS WELL AS THE REJOINDER FILED BY THE ID. AR HAS BEEN CAREFULLY GONE THROUGH. IT IS UNDISPUTABLE THAT DURING THE TIME OF ASSESSMENT PROCEEDINGS, THE ID. AO ISUED NOTICES TO M / S SR ENTERPRISES. THIS WAS ISSUED ON THE ADDRESS GIVEN BY THE ASSESSEE. THE NOTICES REMAINED UNSERVED AND RETURNED UNDELIVERED. THE ID. AO INFORMED THE ASSESSEE ABOUT THIS DEVELOPMENT AND ALSO ISSUED A SHOW CAUSE NOTICE. FURTHER, THE ID. AO SENT INSPECTORS OF INCOME TAX FOR VERIFICATION ON THE FIELD. THE ENTITY, M / S SR ENTERPRISES WAS NOT FOUND AND WAS REPORTED TO HAVE NEVER EXISTED. DURING THE APPELLATE STAGE, THE ASSESSEE REITERATED THAT DIRECT SUPPLIES WERE MADE BY M / S SR ENTERPRISE S TO THE PURCHASERS AND ALSO SUBMITTED THE RESPECTIVE INVOICES/BILLS. AN AFFIDAVIT FROM SHRI RAJNISH TYAGI WAS ALSO FILED. THE SAID SHRI TYAGI CONFIRMED THE EXISTENCE OF M / S SR ENTERPRISES AND THE EXISTENCE OF ITS OWNER SHRI RAHUL AGGARWAL. ON ENQUIRIES UL S 250(4), THE REPORTS OF THE INSPECTORS, YET AGAIN DREW A BLANK. THEY COULD NOT TRACE M/S SR ENTERPRISES. ENQUIRIES FROM THE BANK ALSO REVEALED THAT THE OWNER OF M/S SR ENTERPRISES WAS NOT RAHUL AGARWAL BUT SHRI VIJAY GUPTA. ADDRESSES OBTAINED FROM THE BAN K ALSO PROVED FUTILE IN AS MUCH AS ONE OF THE NOTICES WAS RETURNED UNDELIVERED. THE SECOND NOTICE ISSUED AT KAVI NAGAR, REMAINED UNCOMPLIED WITH, THOUGH. 1 2 . THE ASSESSEE I S REPEATEDLY STATING THAT HE HAS NO CONNECTIO N W I TH M/S SR ENT E R P RI SES . THI S MAY O R MAY NOT BE TRUE . HOWEVER , PAGE 4 OF THE I MPUGNE D ORDE R CL EA RL Y S U G G ES T S TH A T T HERE WAS A C L OSE CONNECTION BETWEEN THE ASSESSEE AND M/S S R ENT E R P RI SES . OUT OF THE 36 BILLS RAISED BY M/S SR ENTERPRISES , 20 OF THEM PE R TAINED TO T H E ASSESSEE . T HE GOODS WERE SOLD ON CREDIT . ASSUMING FOR A MOMENT , THAT THERE WAS N O C O NN ECT I O N BETWEEN THE ASSESSEE AND M / S SR ENTERPRISES , GOODS WOULD NOT H AVE B EE N SO LD O N CRED IT EVEN ON THE 2 N D APRIL OF THE FINANCIAL YEAR . NO PAYMENT WAS MADE BY T H E ASSESSEE D U R I NG THE ENTIRE FIN ANC I AL YEAR . HOW CAN THERE BE NO CONNECTION B E T WEE N TH E T WO PAR T IES , WHERE GOODS ARE SOLD ON CREDIT AND REMAIN OUTSTAND I NG F O R M ORE TH A N 1 2 M ONTHS ? FURTHER , SOME PAYMENTS WERE MADE BY THE ASSESSEE I N S U BSEQU E NT Y EA R S T O M / S SR ENTERPR I SES . IT CANNOT BE APP RECIATED THA T WHO T OO K T H E P A YM E NT S . IT CA NN O T A L SO BE ASCERTA I NED THAT WHO APPROACHED THE ASSESSEE FO R THE SA ID P A YM E NT S . IT I S U NBE L IEVABLE THA T THE ASSESSEE WAS NOT I N CONTAC T W I T H M / S SR ENT E R P RI SES , I N CASE I T EX I STED . TO MY M I ND , T HE P R OPRIETORSH I P IT A NO S . 3739 & 3953 /DEL /201 1 5 C ONCERN D I D NOT EX I S T , NO T WITH S T AND I NG THE SALES T AX NU MBE R THAT I T HAD . THE EXISTENCE OF THE SALES T AX N UMBE R D OES N O T H AVE A BEA RI NG ON THE CASE CONSIDER I NG THE FACT THAT SUSTAINED I NVEST I GAT I ONS BY TH E IN COME T AX AUTHOR I T I ES C L EAR L Y REVEAL THE NON - EX I ST ENCE OF THE FIRM , BUT FO R CERTA IN P A P E R TR A N SACT I O N S ON THE F I LE / BANK , DETAILS OF WHICH ARE ALSO NOT CLEARLY AVAI L AB L E. 13. IN VIEW OF THE DISCUSSIONS ABOVE, I HOLD THAT M/S ENTERPRISES WAS NOTHING BUT A BOGUS ORGANIZATION, CREATED BY THE ASSESSEE ITSELF T O EXECUTE BOGUS TRANSACTIONS. THE BOGUS TRANSACTIONS HELPED THE ASSESSEE IN INFLATING ITS EXPENDITURE. WHILE ON THE ISSUE, I ALSO REJECT THE BOOKS OF ACCOUNTS U/S 145 OF THE ACT. THE ASSESSEE FAILS IN GROUND OF APPEAL NO.1. ADDITION OF RS.67,21,611/ - IS UP HELD. 6 . THE ASSESSEE BEING AGGRIEVED IS IN APPEAL BEFORE US. THE LD. COUNSEL SUBMITTED THAT THE CIT(A) HAD ERRED BOTH ON FACTS AND LAW IN CONFIRMING THE ADDITION AND HOLDING THE TRANSACTION OF PURCHASE OF PACKING MATERIAL FROM M/S S.R. ENTERPRISES WAS A BOGUS TRANSACTION. IT WAS SUBMITTED THAT ALL MATERIAL AND EVIDENCES W ERE PLACED ON RECORD TO PROVE THE GENUINE NESS OF THE TRANSACTION. IT WAS FURTHER CONTENDED THAT THE CIT(A) HAS ERRED BOTH ON FACTS AND LAW IN CONSIDERING MATERIAL/REMAND REPORT OF THE AO WITHOUT GIVING AN OPPORTUNITY TO THE ASSESSEE TO REBUT THE SAME. THE LD. DR ON THE OTHER HAND, STRONGLY RELIED ON THE FINDINGS/CONCLUSION OF THE INCOME TAX AUTHORITIES. 7 . WE HAVE HEARD RIVAL SUBMISSIONS AND P ERUSED THE MATERIAL ON RECORD. THE ONLY ISSUE IN THE APPEAL FILED BY THE ASSESSEE IS WITH REGARD TO THE ADDITION OF RS.67,21,611/ - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF PURCHASE EXPENSES ON PACKING MATERIAL. THE ADDITION WAS MADE BY THE AO HOLDING THE PURCHASES TO BE BOGUS. IT IS INDISPUTABLE F ACT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAD ISSUED SUMMON TO M/S S.R. ENTERPRISES (SELLER OF PACKING MATERIAL). THE NOTICES WERE RETURNED UNSERVED AND SAME WAS DULY INTIMATED TO THE IT A NO S . 3739 & 3953 /DEL /201 1 6 ASSESSEE. THE TWO INSPECTORS WHO CARRIED OU T LOCAL ENQUIRIES ON 18.10.2010 ALSO COULD NOT LOCATE THE ADDRESS OF M/S SR ENTERPRISES GIVEN BY THE ASSESSEE. NONE OF THE OUTLETS IN THE AREA HAD EVER HEARD OF M/S SR ENTERPRISES . I N THE COURSE OF APPELLATE PROCEEDING , T HE ASSESSEE HAD GIVEN AN AFFIDAVIT OF SRI RAJNISH TYAGI, DETAILING THE DEALINGS OF THE ASSESSEE WITH THAT OF M/S SR ENTERPRISES. IT WAS CATEGORICALLY FOUND BY THE ASSESSING OFFICER IN THE COURSE OF REMAND PROCEEDING THAT SRI RAJNISH TYAGI WAS NO WAY CONNECTED WITH EITHER OF M/S SR ENTERPRIS ES NOR THE ASSESSEE. THE BANK ACCOUNT OF M/S SR ENTERPRISES ALSO WAS VERIFIED BY THE ASSESSING OFFICER . I T WAS NOTED THE AMOUNT THAT WAS RECEIVED FROM THE ASSESSEE WAS WITHDRAWN IMMEDIATELY BY CASH. TH OUGH THE GOODS WERE SOLD IN BEGINNING OF THE FINANCIAL YEAR BY SR ENTERPRISES NO PAYMENT WAS MADE BY THE ASSESSEE DURING THE ENTIRE FINANCIAL YEAR . S O ME PAYMENTS WERE MADE IN THE SUBSEQUENT YEAR TO M/S SR ENTERPRISES AND AS MENTIONED EARLIER THE BENEFICIAR IES OF THESE PAYMENTS COULD NOT VERIFIED . THE FINDINGS OF THE INCOME TAX AUTHORITIES HA VE CLEARLY ESTABLISHED THAT SO CALLED PURCHASES MADE BY THE ASSESSEE FROM M/S SR ENTERPRISES ARE NOTHING BUT BOGUS TRANSACTIONS , JUST TO INFLATE THE EXPENSES . THESE FIND INGS OF THE LOWER AUTHORITIES HAVE NOT BEEN DISPELLED BY THE ASSESSEE BY PLACING ON RECORD ANY MATERIAL/EVIDENCE. THEREFORE, WE CONFIRM THE ORDERS OF THE INCOME TAX AUTHORITIES AND REJECT THE GROUND S RAISED BY THE ASSESSEE. IT A NO S . 3739 & 3953 /DEL /201 1 7 8 . REVENUE S APPEAL ITA NO. 3 953/DEL/2011 IN REVENUE S APPEAL, THE SOLITARY ISSUE THAT IS RAISED IS WHETHER THE CIT(A) IS JUSTIFIED IN DELETING THE ADDITION MADE U/S 68 OF THE ACT AMOUNTING TO RS.12,00,000/ - . 9 . AT THE VERY OUTSET THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE T AX EFFECT IN THE APPEAL OF THE REVENUE IS BELOW THE PRESCRIBED LIMIT FOR FILING OF APPEAL BEFORE THE ITAT. IT WAS SUBMITTED THE TAX EFFECT IS BELOW RS. 4 LAKHS. THE LD. COUNSEL FOR THE ASSESSES SUBMITTED INSTRUCTION NO. 5/2014 WHICH PRESCRIBED THE REVISED MONETARY LIMITS FOR FILING APPEAL TO TRIBUNAL AT RS. 4 LACS IS APPLICABLE TO PENDING CASES AND RELIED ON THE RECENT KOLKATA TRIBUNAL BENCH ORDER IN THE CASE OF DCIT VS. SUSHILA SARAOGI REPORTED IN 2014 (11) TMI 294 ITAT KOLKATA . 10 . LD. DR PRESENT WAS D ULY HEARD. 11 . WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE TRIBUNAL IN THE CASE OF DEPUTY COMMR.OF INCOME TAX VS. SUSHILA SARAOGI (SUPRA) AFTER CONSIDERING THE PRECEDENTS ON THE SUBJECT HELD INSTRUCTION NO. 5/14 ISSUED BY THE C BDT ON 10.7.2014 IS APPLICABLE TO THE PENDING APPEALS. THE TRIBUNAL FOLLOWED THE DICTUM LAID DOWN THE JUDGMENTS OF THE VARIOUS HIGH COURTS INCLUDING THE TWO JUDGMENTS OF THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. M/S. P.S. JAIN & CO. IN I TA NO.179/1991DATED 2.8.2010 AND IN THE CASE OF COMMISSIONER OF INCOME TAX VS. DELHI RACE CLUB LTD. DATED 3.3.2011. IN VIEW OF THE ORDER OF THE TRIBUNAL IN THE CASE OF DEPUTY COMMISSIONER OF INCOME IT A NO S . 3739 & 3953 /DEL /201 1 8 TAX VS. SUSHILA SARAOGI WHICH HAVE ELABORATELY CONSIDERED THE IDENTICAL ISSUE, WE HOLD THAT INSTRUCTION NO. 5/2014 ISSUED BY THE CBDT ON 10.7.2014 IS APPLICABLE TO THE PENDING APPEALS. IN THE INSTANT CASE, THE TAX EFFECT BEING BELOW RS. 4 LACS, WITHOUT GOING INTO THE ISSUE ON MERIT, WE DISMISS THE APPEAL OF THE R EVENUE IN LIMINEE. IT IS TO BE MENTIONED THAT LD. DR WAS UNABLE TO POINT OUT ANY EXCEPTIONAL CIRCUMSTANCES /SITUATION (MENTIONED INBOARD INSTRUCTION NO. 5 /2014) FOR FILING AN APPEAL DESPITE THE MONETARY LIMIT BEING BELOW THE PRESCRIBED LIMIT. 1 2 . THEREFOR E, REVENUE S APPEAL IS DISMISSED. 1 3 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE AND REVENUE ARE DISMISSED. TH E DECISION WAS PRONOUNCED IN THE OPEN COURT ON 2 0 TH MARCH , 201 5 . SD/ - SD/ - ( B.C. MEENA ) (GEORGE GEORGE K.) A CCOUNTANT MEMBER J UDICIAL MEMBER DATED: 2 0 TH MARCH , 201 5 . AKS/ - COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST . REGISTRAR, ITA T, NEW DELHI