ITO, New Delhi V. Sh. Ajay Kharbanda, New Delhi

ITA 3855/DEL/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74253 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 04-03-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 25-07-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: Y KAKKAR
• Keywords: Unexplained expenditure; Opportunity of being heard
• Section: 143(3); 133(6); 68; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A NEW DELHI BEFORE SHRI R.P. TOLANI AND SHRI SHAMIM YAHYA ITA NO. 3855/DEL/2012 ASSTT. YR: 2008-09 INCOME-TAX OFFICER, VS. AJAY KHARBANDA, WARD 34(1), NEW DELHI. R-41D, DILSHAD GRDEN, DEL HI-95. PAN: ACGPK 9669 F ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : MS. Y. KAKKAR SR. DR RESPONDENT BY : SHRI RAKESH NANDA CA O R D E R PER R.P. TOLANI, J.M: : THIS IS REVENUES APPEAL AGAINST THE ORDER OF CIT (A)-XXX, NEW DELHI DATED 28-5-2012 RELATING TO A.Y. 2008-09. FOL LOWING GROUND IS RAISED: ON THE FACTS AND CIRCUMSTANCES OF THE CSE, THE LD. CIT(A) HAS ERRED IN DELETING ADDITIONS OF BOGUS LIABILITIES OF RS. 4,71,908/- AND RS. 16,55,391/- MADE BY THE ASSESSING OFFICER O N THE GROUND THAT THESE RELATE TO OPENING BALANCES WHEREA S ON THE CONTRARY THE TWO PARTIES HAVE CONFIRMED NIL BALANCE . 2. FACTS, IN BRIEF ARE: ASSESSEE IS OWNER OF TWO PR OPRIETARY FIRMS M/S GREENTEX MINING CO. AND KABINI MINERAL CO. WHICH AR E ENGAGED IN TRADING OF IRON ORE FROM KARNATAKA. BESIDES, ASSESSEE IS AL SO A PARTNER IN FIRM M/S GREENTEX MINING & MINERALS CO. FROM WHERE HE RECEIV ED REMUNERATION DURING THE YEAR. FOR A.Y. 2008-09 THE A.O. COMPLET ED THE ASSESSMENT U/S 2 143(3) AT AN INCOME OF RS. 76,50,310/- AS AGAINST I NCOME OF RS. 18,53,039/- RETURNED BY THE ASSESSEE, BY DISALLOWING LIABILITIE S CLAIMED BY THE ASSESSEE ON ACCOUNT OF FOLLOWING SUNDRY CREDITORS: MYSORE MERCANTILE CO. (MMCL) RS. 36,69,969 KARNATAKA LIMPO CEMENT INDUSTRIES (KLCI) RS. 4,71, 908 TERAPANTH FOODS LTD. (TFL) RS. 16,55,391 2.1. ASSESSING OFFICER HELD THE ABOVE AMOUNTS TO BE NOT CONFIRMED BY THE CREDITORS AND MADE THE ADDITIONS. 2.2. IN FIRST APPEAL THE CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE BY SUSTAINING THE ADDITION OF RS. 36,69,969/- AND DEL ETING THE ADDITIONS OF RS. 4,71,908/- AND RS. 16,55,391/-. AGGRIEVED, AGAINST THE ABOVE DELETION OF TWO CREDITORS ADDITIONS, THE REVENUE IS IN APPEAL BEFOR E US. 3. LD. DR RELIED ON THE ORDER OF ASSESSING OFFICER AND CONTENDS THAT ASSESSEE HAD HUGE BALANCES OF CREDITORS; THEIR DETA ILS WERE CALLED BY A.O. THE ASSESSEE, VIDE WRITTEN SUBMISSIONS DATED 19-10- 2010, FURNISHED A LIST OF SUNDRY CREDITORS ALONG WITH THEIR CONFIRMATION. 3.1. IN RESPECT OF KLCI THE ASSESSEE REMARKED THAT THE MATTER WAS UNDER LITIGATION AND PARTY WAS NOT RESPONDING. IN RESPONS E TO NOTICES U/S 133(6) KLCI FURNISHED COPIES OF LEDGER ACCOUNTS OF M/S GRE ENTEX MINING CO. FOR F.Y. 2006-07 & 2007-08; AND COPY OF LEDGER A/C OF M/S GREENTEX MINING & MINERAL CO. FOR F.Y. 2007-08 SHOWS THAT THERE WAS NIL BALANCE IN RESPECT 3 OF M/S GREENTEX MINING CO. FOR F.Y. 2007-08. SIMIL ARLY, TFL RESPONDED THAT IT DID NOT HAVE ANY ACCOUNT IN THEIR BOOKS OF A/C IN THE NAME OF MR. AJAY KHARBANDA OR M/S GREENTEX MINING COMPANY, THOUGH IT WAS HAVING ACCOUNT IN THE NAME OF PARTNERSHIP CONCERN M/S GREE NTEX MINING & MINERALS CO., WHICH IS A DIFFERENT ASSESSEE. IN VI EW OF ABOVE THE ASSESSING OFFICER WAS PERFECTLY JUSTIFIED IN TREATING THE AFO REMENTIONED AMOUNTS AS UNEXPLAINED EXPENDITURE OF THE ASSESSEE FROM UNDISC LOSED SOURCES. THE LD. DR SUBMITTED THAT CIT(A) WITHOUT PROPER VERIFICATIO N WAS NOT JUSTIFIED IN DELETING THE ADDITIONS BY OBSERVING THAT NO TRANSAC TIONS TOOK PLACE BETWEEN THE ASSESSEE AND THESE PARTIES DURING A.Y. 2008-09 . FURTHER, IT HAS BEEN ERRONEOUSLY HELD THAT THESE CREDITS WERE OPENING B ALANCES WHICH HAVE BEEN CARRIED FORWARD AS CLOSING BALANCE AS ON 31-3-2008. IT IS PLEADED BY THE DR THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE ORDER OF CIT(A) MAY BE SET ASIDE AND THAT OF ASSESSING OFFICER RESTORED. 4. LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HAND S UPPORTED THE ORDER OF CIT(A). 5. WE HAVE CONSIDERED RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. AS THE FACTS EMERGE ASSESSEE WAS CARRYING OUT ITS BUSINESS OF TRADING IN IRON ORE IN TWO PROPRIETARY CONCERNS, NAMELY, M/S 4 GREENTEX MINING CO. AND KABINI MINERAL CO. BOTH THE FIRMS WERE ENGAGED IN THE SAME BUSINESS. 5.1. THE CIT(A) DELETED THE ADDITIONS IN QUESTION BY FOLLOWING OBSERVATIONS: I HAVE CONSIDERED THE SUBMISSIONS OF ASSESSEE AND FOUND THAT IN CASE OF TWO CREDITORS, KARNATAKA LIMPO CEMENT IN DUSTRIES AND TERAPANTH FOODS LTD., NO TRANSACTIONS TOOK PLAC E BETWEEN THE ASSESSEE & SUCH PARTIES DURING THE PREV IOUS YEAR 2007-08 RELEVANT TO ASSESSMENT YEAR 2008-09 AND IT AS THE OPENING BALANCE IN THE ACCOUNTS OF ABOVE PARTIES AP PEARING IN THE BOOKS OF ASSESSEE WHICH WERE BEING CARRIED FORW ARD AS CLOSING BALANCE AS ON 31 ST MARCH 2008. THE STATEMENT OF ACCOUNTS OF ABOVE CREDITORS APPEARING IN THE BOOKS OF ASSESSEE IS AVAILABLE IN THE PAPER BOOK ON RECORD. IN ABSENCE OF ANY EXPENDITURE BEING INCURRED BY THE ASSESSEE D URING THE RELEVANT PREVIOUS YEAR 2007-08 THROUGH THE ABOVE TW O PARTIES, I HOLD THAT NO ADDITION CAN BE MADE AS UNE XPLAINED EXPENDITURE U/S 68 IN RESPECT OF OPENING BALANCE ST ANDING IN THE NAMES OF ABOVE TWO PARTIES. I, THEREFORE, DELET E THE ADDITION OF RS. 4,71,908/- AND RS. 16,55,391/- MADE ON ACCOUNT OF BALANCES IN THE NAME OF KARNATAKA LIMPO CEMENT INDUSTRIES & TERAPANTH FOODS LTD. RESPECTIVELY. 5.2. FROM THE A.OS ORDER IT CLEARLY EMERGES THAT T HERE WAS LITIGATION BETWEEN ASSESSEE AND KLCI. SIMILARLY, THERE APPEARS TO BE A CONFUSION AS TO IN WHOSE ACCOUNTS THE CHEQUES ISSUED BY THE ABOVE P ERSONS WERE CREDITED I.E. WHETHER IT WAS M/S GREENTEX MINING CO. OR KABINI MINERAL CO. THE ASSESSEE CLAIMS THAT THERE IS INTERMIXING OF ENTRIE S WHICH HAS NOT BEEN PROPERLY VERIFIED BY THE LOWER AUTHORITIES. CIT(A) ON OBSERVATION THEREOF HAS DELETED THE ADDITION. THE ASSESSEE HAS NOT FILED AN Y PAPER BOOK TO 5 DEMONSTRATE THE ACTUAL POSITION. BESIDES, THE RELUC TANCE OF KLCI IN PROVIDING INFORMATION IS OBVIOUS. WHAT TYPE OF DISP UTES WERE THERE IS NEITHER LOOKED INTO NOR EMERGE FROM THE RECORD. SIMILARLY, THE BOOKS OF BOTH PROPRIETARY CONCERNS OF THE ASSESSEE ARE TO BE CONS IDERED AND RECONCILIATION OF ACCOUNTS IS TO BE CARRIED OUT. THERE APPEARS NO DOUBT THAT BOTH THE CREDITORS ARE GENUINE PARTIES HAVING BUSINESS TRANS ACTIONS WITH THE ASSESSEE. IN THESE CIRCUMSTANCES WE ARE INCLINED TO SET ASIDE THE MATTER BACK TO THE FILE OF ASSESSING OFFICER TO DECIDE THE SAME AFRESH IN A CCORDANCE WITH LAW AFTER THOROUGH VERIFICATION OF THE BOOKS OF ACCOUNTS OF THE ASSESSEES PROPRIETARY CONCERNS AS WELL AS THE BOOKS OF THE CREDITORS CON CERNED AFTER GIVING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE . WE ORDER ACCORDINGLY. 6. IN THE RESULT, REVENUES APPEAL STANDS ALLOWED F OR STATISTICAL PURPOSES ONLY. ORDER PRONOUNCED IN OPEN COURT ON 04-03-2014. SD/- SD/- ( SHAMIM YAHYA) ( R.P. TOLANI ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 04-03-2014. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR 6