ITO, New Delhi V. Sh. Prateek Jain, Delhi

ITA 3817/DEL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3144 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 10 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 24-04-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 01-07-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: F R MEENA
• Assessee Lawyers: C S ANANAD
• Keywords: Opportunity of being heard; Additional evidence; Corroborative evidences
• Section: 68

Judgement Text

IN THE INCOME - TAX APPELLATE TRIBUNAL, DELHI BENCH F , NEW DELHI BEFORE : SHRI AMIT SHUKLA , JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 3817/DEL./2014 ASSESSMENT YEAR: INCOME - TAX OFFICER, WARD 35(4), NEW DELHI (APPELLANT) VS. SHRI PRATEEK JAIN, 70, KIRAN VIHAR, DELHI. (PAN: AFJPJ 4008F) (RESPONDENT) ASSESSEE BY SH. C.S. ANANAD, ADVOCATE REVENUE BY SH. F.R. MEENA, SR. DR ORDER PER L.P. SAHU, A.M.: THIS IS AN APPEAL BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A) - XXVII, NEW DELHI DATED 28.04.2014 FOR THE ASSESSMENT YEAR 2010 - 11 ON THE FOLLOWING GROUNDS : 1. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(APPEAL) HAD ERRED IN B BOTH FACTS AND LAW IN DELETING THE ADDITION OF RS. 1,55,89,129/ - ON ACCOUNT OF UNACCOUNTED AND UNVERIFIABLE PURCHASES.' 2. 'ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE, THE LD, CIT(A) HAD ERRED IN DELETING THE ADDITION MADE BY THE AO OF RS. 1,39,33,349/ - ON ACCOUNT OF UNPROVED UNSECURED LOANS.' DATE OF HEARING 24.04.2017 DATE OF PRONOUNCEMENT 11 .05.2017 ITA NO. 3817/DEL./2014 11 3. 'ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE, THE LD. CIT(A) HAD ERRED IN GIVING A FINDING THAT THE CREDITWORTHINESS OF CREDITORS STANDS PROVED.' 4. 'ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE, THE L D. CIT(A) HAD ERRED IN NOT ACCEPTING THE OBJECTIONS RAISED BY THE A.O. IN HIS REMAND REPORT WITH REGARD TO ADDITIONAL EVIDENCES.' 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED RETURN OF INCOME DECLARING INCOME OF RS.8,80,390/ - . THE CASE WAS SELECTED FOR SCRUTINY AND STATUTORY NOTICES WERE ISSUED TO THE ASSESSEE. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF RESALE AND TRADING OF MAGNET & SPEAKERS PARTS. DURING THE S CRUTINY PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT TOTAL UNSECURED LOANS RAISED DURING THE YEAR FROM 1 7 PARTIES WERE FOR RS.1,39,33,349/ - . THE ASSESSEE SUBMITTED CONFIRMATIONS OF UNSECURED LOANS, COPY OF SAVING BANK ACCOUNTS AND COPY OF ITR OF THE PARTI ES FROM WHOM THE UNSECURED LOANS WERE RECEIVED. THE ASSESSING OFFICER OBSERVED THAT THE ONUS TO SATISFY THE CONDITIONS OF SECTION 68, I.E., IDENTITY AND CREDITWORTHINESS OF THE LOAN CREDITORS AND GENUINENESS OF THE TRANSACTIONS , WAS ON THE ASSESSEE, WHICH STOOD NOT PROPERLY DISCHARGED. THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO PROVE THE CREDITWORTHINESS OF THE LOAN CREDITORS AND TO FURNISH THE COPY OF ITA NO. 3817/DEL./2014 12 CASH FLOW STATEMENT OF AFFAIRS AND THE BALANCE SHEET ALONG WITH COMPUTATION OF INCOME IN RESPECT OF P ARTIES DOING BUSINESS, BUT THE ASSESSEE FAILED TO PROVE THE CREDITWORTHINESS OF THE LOAN CREDITORS. THE ASSESSEE FILED COPY OF ITRS, COPY OF BANK ACCOUNTS AND CONFIRMATION OF ACCOUNTS. THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE REPLY OF THE ASSESSEE AND ADDED THE TOTAL UNSECURED LOANS AMOUNTING TO RS.1,39,33,350/ - RECEIVED FROM 17 PARTIES. 3. THE ASSESSING OFFICER FURTHER NOTED THAT THERE WAS A DIFFERENCE IN THE PURCHASES SHOWN IN THE TRADING & PROFIT & LOSS ACCOUNT AND THAT SHOWN IN THE VAT RETURN F URNISHED BEFORE THE ASSESSING OFFICER OF RS.1,55,89,129/ - . ON BEING ASKED FOR FURNISHING THE BILLS AND VOUCHERS RELATING TO PURCHASES TO EXPLAIN THE DIFFERENCE, THE ASSESSEE DID NOT FURNISH THE SAME. THEREFORE, THE ASSESSING OFFICER DISALLOWED THE PURCHASE S TO THE EXTENT OF THE DIFFERENCE OF RS.1,55,89,129/ - . DURING THE SCRUTINY PROCEEDINGS, THE ASSESSEE HAS SUBMITTED REPLY TO THE ASSESSING OFFICER WHICH IS AT PAGE 214 TO 219 OF THE PAPER BOOK. AGGRIEVED BY THE ADDITIONS, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY AND ALSO FILED WRITTEN SUBMISSIONS ITA NO. 3817/DEL./2014 13 WHICH WERE SENT TO THE ASSESSING OFFICER FOR HIS COMMENTS. IN THE REMAND PROCEEDINGS, THE AO FURTHER ASKED THE ASSESSEE TO FURNISH THE COPY OF LEDGER ACCOUNTS OF THOSE PERSON S WHO HAVE GIVEN UNSECURED LOANS TO THE ASSESSEE AND THE STATEMENTS OF AFFAIRS. THE ASSESSEE SUBMITTED BEFORE THE AO THE REQUISITE DOCUMENTS VIDE THEIR LETTER DATED 06.04.2014. DURING THE REMAND PROCEEDINGS, THE ASSESSING OFFICER ALSO ISSUED LETTER DATED 27 .12.2013 FOR FURNISHING CERTAIN DOCUMENTS. IN RESPONSE THE ASSESSEE SUBMITTED WRITTEN REPLY VIDE LETTER DATED 03.01.2014 & 06.01.2014. ON SCRUTINY OF THESE REPLIES, THE AO NOTICED THAT DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS GRANTED AMPLE OPPOR TUNITIES, BUT NONE OF THESE DOCUM ENTS WERE SUBMITTED. HE, THEREFORE, MADE OBJECTIONS FOR NOT ACCEPTING THE EVIDENCES SUBMITTED BEFORE THE FIRST APPELLATE AUTHORITY. THE LD. CIT(A) NOTED THAT IN THE REMAND REPORT, THE QUANTIFICATION OF UNSECURED LOANS FROM 17 CREDITORS WERE NOT MENTIONED IN THE ASSESSMENT ORDER AS WELL AS IN THE REMAND REPORT WHEREAS THE DETAILS WERE GIVEN BY THE ASSESSEE. THE AO IN THE REMAND PROCEEDINGS CALLED FOR ADDITIONAL EVIDENCES FROM THE ASSESSEE TO VERIFY THE SOURCE OF UNSECURED LOA NS, BUT LATER ON OBJECTED THAT ITA NO. 3817/DEL./2014 14 THESE EVIDENCES WERE NOT PRODUCED IN THE ASSESSMENT PROCEEDINGS. HOWEVER, THE LD. AR OF THE ASSESSEE SUBMITTED THAT THERE WAS NO ANY ADDITIONAL EVIDENCE FILED BEFORE THE FIRST APPELLATE AUTHORITY. THE ADDITIONAL EVIDENCES WER E FILED ONLY ON THE REQUEST OF ASSESSING OFFICER IN THE REMAND PROCEEDINGS. HE FURTHER SUBMITTED THAT THERE WAS NO VIOLATION OF RULE 46A OF THE IT RULES, 1962. AFTER CONSIDERING THE WRITTEN SUBMISSIONS, REMAND REPORTS AND REJOINDER, THE LD. CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE VIDE IMPUGNED ORDER. AGGRIEVED BY THE ORDER OF LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 4. THE LEARNED DR VEHEMENTLY OBJECTED THE ORDER PASSED BY THE LD. CIT(A) WITHOUT CONSIDERING THE OBJECTIONS RAISED BY THE A SSESSING OFFICER IN THE REMAND REPORT AS WELL AS ON THE ADDITIONAL EVIDENCES SUBMITTED BY THE ASSESSEE BEFORE THE LD. CIT(A). DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS GIVEN AMPLE OPPORTUNITY FOR PROVING THE CREDITWORTHINESS OF THE LOAN CREDITOR S, BUT HE FAILED TO SATISFY THE SAME AS CONTEMPLATED U/S. 68 OF THE ACT. MERE FILING OF CONFIRMATIONS, BANK STATEMENT S AND ACKNOWLEDGEMENT S OF RETURNS DOES NOT SATISFY THE CONDITIONS AS LAID DOWN U/S. 68. EVEN DURING THE REMAND PROCEEDINGS, THE ITA NO. 3817/DEL./2014 15 CREDITWORTH INESS OF THE LENDERS WAS NOT PROVED. THE ASSESSEE HAS SUBMITTED BANK STATEMENT, IN WHICH OPENING BALANCE WAS NOT APPEARING. IN RESPECT OF DIFFERENCE IN PURCHASES OF RS.1,55,89,129/ - , THE BILLS AND VOUCHERS WERE NOT PRODUCED BEFORE THE ASSESSING OFFICER DES PITE AMPLE OPPORTUNITY WAS GIVEN TO THE ASSESSEE AND THE LD. CIT(A) HAS ACCEPTED THE ADDITIONAL EVIDENCES AGAINST RULE 46A OF THE IT RULES ON BOTH THE ISSUES. THEREFORE, THE ORDER OF THE LD. CIT(A) MAY BE SET ASIDE. 5. ON THE OTHER HAND, THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE LD. CIT(A) HAS MADE A GOOD ORDER WHICH NEEDS NO INTERFERENCE. NO NEW EVIDENCES WERE SUBMITTED BEFORE THE LD. CIT(A). HE DREW OUR ATTENTION ON PAGE NO. 213 TO 219 OF THE PAPER BOOK, IN WHICH HE COMPLIED WITH THE REQUIREMENTS OF THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS AND DURING THE REMAND PROCEEDINGS, THE REQUISITE DOCUMENTS WERE SUBMITTED AS REQUIRED BY THE ASSESSING OFFICER. HE FURTHER SUBMITTED THAT ALL THE TRANSACTIONS WERE MADE THROUGH ACCOUNT PAYEE CHEQUES AND PURCHASE BILLS WERE PRODUCED DURING THE REMAND PROCEEDINGS, WHICH HAVE BEEN VERIFIED BY THE ASSESSING OFFICER. DURING THE SCRUTINY P ROCEEDINGS, THE CONFIRMATIONS OF ITA NO. 3817/DEL./2014 16 AC COUNTS, COPY OF ITRS AND BANK STATEMENTS WERE PRODUCED BEFORE THE ASSESSING OFFICER, BUT HE DID NOT DOUBT THE SAME. THEREFORE, THE LD. CIT(A) IS JUSTIFIED IN DELETING THE ADDITIONS MADE BY THE ASSESSING OFFICER ON BOTH THE ISSUES. 6. AFTER HEARING THE SUB MISSIONS OF BOTH THE SIDES AND GOING THROUGH THE ENTIRE MATERIAL AVAILABLE ON RECORD, WE OBSERVE FROM THE ASSESSMENT ORDER THAT THE ASSESSEE HAD TAKEN LOAN FROM 17 PARTIES AS MENTIONED BY THE ASSESSING OFFICER, HOWEVER, LENDER - WISE QUANTUM OF LOANS TAKEN I S NOT MENTIONED BY THE ASSESSING OFFICER IN ORDER TO VERIFY THEIR CREDITWORTHINESS. THE LD. CIT(A) THOUGH COMMENTED ON THIS LAPSE OF THE AO, BUT HE ALSO DID NOT MENTION AS TO HOW MUCH AMOUNT OF LOAN WAS ADVANCED BY EACH OF THE LOAN CREDITORS. THE ASSESSING OFFICER HAS ASKED THE ASSESSEE TO PROVE THE CREDITWORTHINESS OF THE LENDERS BY FILING THE CASH FLOW, STATE OF AFFAIRS, BALANCE SHEET AND COMPUTATION OF INCOME IN RESPECT OF THE PARTIES DOING BUSINESS, BUT THE ASSESSEE DID NOT COMPLY WITH THE SAME AT THE S TAGE OF ASSESSMENT PROCEEDINGS AS WELL AS APPELLATE PROCEEDINGS. THEREFORE, THE CREDITWORTHINESS OF THE LENDERS REMAINED UNVERIFIED. A PERUSAL OF THE RECORD FURTHER SHOWS THAT THERE WAS CONTRADICTION BETWEEN ITA NO. 3817/DEL./2014 17 THE ASSERTIONS OF THE ASSESSEE AND THE OBSERVATI ONS OF THE ASSESSING OFFICER REGARDING FURNISHING OF EVIDENCES AT THE STAGE OF ASSESSMENT PROCEEDINGS. MERE FILING OF CONFIRMATIONS, IT RETURNS ACKNOWLEDGEMENT AND BANK STATEMENT WOULD NOT BE SUFFICIENT TO PROVE THE CREDITWORTHINESS OF THE LENDERS. THE ASS ESSING OFFICER HAS NOTED THAT SOME OF THE LENDERS HAVE ONLY INTEREST INCOME AND THE LD. CIT(A) HAS ALSO NOT BOTHERED TO VERIFY THE CREDITWORTHINESS OF THE LENDERS BEFORE ALLOWING THE APPEAL OF THE ASSESSEE. THE ASSESSEE HAD SUBMITTED SOME EVIDENCES AT ASSE SSMENT STA GE , SOME DURING REMAND PROCEEDINGS AND SOME OF THEM AT APPELLATE STAGE, BUT NONE OF THE AUTHORITIES BELOW HAVE GIVEN ANY FINDING ON VERIFICATION AND AUTHENTICITY OF SUCH EVIDENCES BEFORE ALLOWING OR DISALLOWING THE CLAIM OF ASSESSEE. 7. SIMILARL Y, WITH RESPECT TO THE ISSUE OF DIFFERENCE IN PURCHASES, IT IS EVIDENT FROM RECORD THAT THE ASSESSEE DID NOT FURNISH ANY PURCHASE VOUCHERS/BILLS AT THE ASSESSMENT STAGE, AS SPEAKS THE ASSESSMENT ORDER. HOWEVER, SUCH BILLS/VOUCHERS ARE STATED TO HAVE BEEN F ILED IN THE REMAND PROCEEDINGS. HOWEVER, NONE OF THE AUTHORITIES BELOW HAVE TRIED TO VERIFY THE SAME AND THE ASSESSEE COULD ALSO NOT SUCCESSFULLY RECONCILE THE DIFFERENCE ITA NO. 3817/DEL./2014 18 AS ALLEGED BY THE ASSESSING OFFICER. THE AUTHORITIES BELOW HAVE ALSO NOT MADE COMPLET E VERIFICATION OF THE PURCHASES FROM ALL THE QUARTERLY VAT RETURNS FILED BY THE ASSESSEE. IN PRESENCE OF ALL THE ABOVE FACTS, W E DEEM IT APPROPRIATE TO RESTORE BOTH THE ISSUES BACK TO THE FILE OF ASSESSING OFFICER FOR MAKING THE ASSESSMENT DE NOVO AFTER M AKING PROPER VERIFICATION IN THE LIGHT OF OBSERVATIONS MADE IN THE BODY OF THIS ORDER ABOVE. NEEDLESS TO SAY, THE ASSESSEE SHALL BE GIVEN REASONABLE OPPORTUNITY OF BEING HEARD AND THE ASSESSEE IS ALSO DIRECTED TO ADDUCE ALL THE SUPPORTING EVIDENCE AS HE DE EMS FIT AND AS REQUIRED BY THE AO. ACCORDINGLY, THE APPEAL OF THE REVENUE DESERVES TO BE ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 11.05.201 7 . SD/ - SD/ - ( AMIT SHUKLA ) ( L.P. SAHU ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 11.05.2017 *AKS* ITA NO. 3817/DEL./2014 19 COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES, NEW DELHI DATE 1. DRAFT DICTATED (DNS) 02.05.17 PS 2. DRAFT PLACED BEFORE AUTHOR 03.05.17 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.