ITO, New Delhi V. Shri Sanjeev Dania, Delhi

ITA 3858/DEL/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 7277 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 11 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC 3
• Next Hearing Date: 15-06-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 03-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K K JAISWAL
• Assessee Lawyers: DEEPAK OSTWAL
• Keywords: Principle of natural justice; Assessment record
• Section: 143(3); 133(6); 68

Judgement Text

IN THE INCOME TAX APPELATE TRIBUNAL DELHI BENCH SMC-3: NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 3858/DEL/2014 A.Y. : 2010-11 ITO, WARD 25(4), VS. SHRI SANJEEV DANIA, ROOM NO. 1710, 487/10, PUNJAB & SINDH 17 TH FLOOR, E-2 BLOCK BANK, PEERA GARHI CHOWK , CIVIC CENTRE, PEERA GARH I, DELHI MINTO ROAD, JLN MARG, NEW DELHI 2 (PAN: AAKPD7622F) (APPELLANT) (RESPONDENT) DEPARTMENT BY : SH. KK JAISWAL, SR. DR ASSESSEE BY : SH. DEEPAK OSTWAL, FCA DATE OF HEARING : 15-06-2016 DATE OF ORDER : 15-06-2016 O R D E R PER H.S. SIDHU, JM THIS APPEAL IS FILED BY THE REVENUE IS DIRECTED AG AINST THE ORDER DATED 30.4.2014 OF THE LD. CIT(A)-XXIV, NEW DELHI RELEVANT TO ASSESSMENT YEAR 2010-11 ON THE FOLLOWING GROUNDS:- 1. DELETING THE ADDITION OF RS. 34,26,278/- AS THE ASSESSEE HAS FAILED TO PRODUCE SUNDRY CREDITORS / PARTIES BEFORE THE AO. 2. DELETING THE ADDITION OF RS. 75,000/- BY STATING THAT THE ADDITION WAS MADE MERELY ON ESTIMATE 2 BASIS, WHEREAS THE FACTS WAS THAT NO BOOKS OF ACCOUNTS ALONGWITH BILLS/VOUCHERS WERE PRODUCED BY THE ASSESSEE BEFORE THE AO. 3. THE ASSESSMENT MAY BE SET ASIDE AND RESTORE BACK TO THE AO FOR VERIFICATION OF THE ABOVE FACTS . 4. THE APPELLANT CRAVES THE RIGHT TO ADD, ALTER OR AMEND ANY GROUND OF APPEAL. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FILED RETURN DECLARING AN INCOME OF RS. 8,67,232/- ON 14.10.2010 . THE STATUTORY NOTICE U/S. 143(2) OF THE INCOME TAX ACT, 1961 (HER EAFTER REFERRED AS THE ACT) WAS ISSUED ON 27.8.2011 AND DULY SERVED UPON T HE ASSESSEE, THEREAFTER, OTHER NOTICES INCLUDING NOTICE U/S. 142 (1) WERE ISSUED. IN RESPONSE TO THE NOTICE ASSESSEES AUTHORISED REPRES ENTATIVE ATTENDED THE PROCEEDINGS AND FILED THE DOCUMENTS WHICH HAVE BEEN EXAMINED. THEREAFTER, THE AO COMPLETED THE ASSESSMENT U/S. 1 43 OF THE I.T. ACT, 1961 AT AN INCOME OF RS. 44,83,400/- AND MADE VARIO US ADDITIONS VIDE ORDER DATED 11.3.2013. 3. AGGRIEVED BY THE AFORESAID ADDITION, ASSESSEE AP PEALED BEFORE THE LD. CIT(A) WHO VIDE IMPUGNED ORDER DATED 30.4.2014 HAS ALLOWED THE APPEAL OF THE ASSESSEE. 3 4. AGAINST THE ORDER OF THE LD. CIT(A), REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 5. DURING THE HEARING, LD. DR RELIED UPON THE ORD ER PASSED BY THE AO AND REITERATED THE CONTENTIONS RAISED IN THE GROUND S OF APPEAL BY THE DEPARTMENT AND STATED THAT ASSESSING OFFICER HAD IS SUED NOTICES U/S 133(6) OF THE ACT TO THE SUNDRY CREDITORS FOR ESTAB LISHING THEIR IDENTITY AND CREDITWORTHINESS WHICH WERE RECEIVED BACK UNSERVED . HE FURTHER STATED THAT AO ALSO DIRECTED THE ASSESSEE TO PRODUCE ALL THE CREDITORS, BUT THE ASSESSEE FAILED TO PRODUCE THEM BEFORE THE AO TO V ERIFY THE GENUINENESS OF THE TRANSACTIONS IN DISPUTE. IN THE ABSENCE OF T HE SUFFICIENT EVIDENCE AND NON-PRODUCTION OF THE CREDITORS THE AO HAS RIGH TLY HAD MADE THE ADDITION IN DISPUTE WHICH HAS WRONGLY BEEN DELETED BY THE LD. CIT(A). HE FURTHER REQUESTED THAT THE IMPUGNED ORDER MAY BE CANCELLED AND THE ORDER OF THE AO MAY BE RESTORED OR IN THE ALTERNATI VE MATTER MAY BE SET ASIDE TO THE FILE OF THE AO WITH THE DIRECTIONS TO THE ASSESSEE TO PRODUCE THE CREDITORS FOR NECESSARY VERIFICATION OF THE CR EDITORS. 6. ON THE CONTRARY, LD. COUNSEL OF THE ASSESSEE REL IED UPON THE ORDER OF THE LD. CIT(A) AND STATED THAT AO ISSUED NOTICE U/S 133(6) TO M/S STAR POWER COATING AND M/S HARI ENTERPRISES WHICH WERE R ETURNED BACK BY THE POSTAL AUTHORITIES DUE TO INADEQUATE ADDRESS AND TH E NOTICE U/S 133(6) OF THE INCOME TAX ACT, ISSUED TO M/S JAI MATA DI UDYOG WAS RETURNED BY THE POSTAL AUTHORITIES WITH THE REMARKS 'TO CONSULT BAH ADURGARH' MEANING THEREBY THE CREDITORS ARE IN EXISTENCE. HE FURTHER STATED THAT ASSESSEE HAS FURNISHED ALL OTHER EVIDENCES FOR SUBSTANTIATING I TS CLAIM BEFORE THE AO 4 AS WELL AS BEFORE THE LD. CIT(A) LIKE COPY OF CONFI RMATION ALONGWITH THE COPIES OF PAN CARD OF THE CREDITORS DULY CONFIRMED BY THEM ALONGWITH THE OTHER DOCUMENTARY EVIDENCE FOR SUBSTANTIATING THE C LAIM OF THE ASSESSEE WHICH THE LD. CIT(A) HAS MENTIONED IN THE IMPUGNED ORDER. THEREFOREE, HE REQUESTED THAT LD. CIT(A) HAS PASSED A WELL REA SONED ORDER ON THE BASIS OF THE DOCUMENTARY EVIDENCE FILED BY THE ASSE SSEE BEFORE THE ASSESSEE AS WELL AS BEFORE THE LD. CIT(A) AND THE I MPUGNED ORDER MAY BE UPHELD. 7. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE RE CORDS, ESPECIALLY THE ORDER OF THE LD. FIRST APPELLATE AUTHORITY. AF TER PERUSING THE IMPUGNED ORDER OF THE LD. CIT(A), I FIND THAT LD. C IT(A) HAS ELABORATELY DISCUSSED THE ISSUES IN DISPUTE VIDE HIS IMPUGNED ORDER DATED 30.4.2014 VIDE PARA NO. 5 TO 6 AT PAGES 4 TO 6 AND HELD AS UN DER:- 5. I HAVE CAREFULLY CONSIDERED THE SUBMISSION MADE BY THE AR OF THE APPELLANT AND ASSESSMENT ORDER. I HAVE AL SO VERIFIED THE ASSESSMENT RECORDS OF THE APPELLANT. IT IS NOTE D THAT THE ASSESSING OFFICER HAD ISSUED NOTICES U/S 133(6) THR OUGH SPEED POST TO THE FOLLOWING CREDITORS ON 14.02.2013 REQUE STING THE CREDITORS TO FURNISH THE COPY OF ACCOUNT OF THE APP ELLANT FOR THE RELEVANT ASSESSMENT YEAR, THE PAN NO AND THE BA LANCE OUTSTANDING IN THEIR BOOKS OF ACCOUNTS. SL.NO. NAME & ADDRESS OF SUNDRY CREDITORS. AMOUNT OUTSTANDING AS ON 31.3.2010 1 STAR POWER COATING, 1/17, MAIN NAJAFGARH ROAD, NEW DELHI RS. 1,84,947/- 2 HARI ENTERPRISES, KHERA ROAD, RS. 3,64,445/ - 5 VILL. SIRASPUR, DELHI 42 3 JAI MATA DI UDYOG, 34 KM STONE, ROHTAK ROAD, BAHADURGARH RS. 28,76,886/- TOTAL RS. 34,26,278/- THE NOTICE U/S 133(6) TO M/S STAR POWER COATING AND M/S HARI ENTERPRISES WERE RETURNED BACK BY THE POST AL AUTHORITIES DUE TO INADEQUATE ADDRESS. THE NOTICE U /S 133(6) OF THE INCOME TAX ACT, ISSUED TO M/S JAI MATA DI UD YOG WAS RETURNED BY THE POSTAL AUTHORITIES WITH THE REMARKS ' TO CONSULT BAHADURGARH'. THEREAFTER, THE ASSESSING OFF ICER REQUESTED THE APPELLANT TO PRODUCE THE AFORESAID CR EDITORS ALONG WITH THE REQUISITE DETAILS VIDE LETTER DATED 26.02.2013. IN RESPONSE THE APPELLANT FURNISHED THE COPY OF CON FIRMATION ALONGWITH THE COPIES OF PAN CARD OF THE CREDITORS D ULY CONFIRMED BY THEM VIDE LETTER DATED 4.3.2013. SUBS EQUENTLY, THE COPY OF CONFIRMATION OF ACCOUNTS OF THE CREDITO RS WERE ALSO RECEIVED BY THE ASSESSING OFFICER FROM THE CREDITOR S NAMELY STAR POWER COATING ON 09.03.23013, HARI ENTERPRISE S ON 20.3.2013 AND JAI MADA DI UDYOG ON 20.3.2013 WHERE IN THE CREDITORS PROVIDED THE COPY OF ACCOUNTS ALONGWITH T HE THEIR PROOF OF IDENTITY AND PAN NOS. THE APPELLANT ALSO FURNISHED COPIES OF HIS BANK STATEMENTS TO PROVE THAT THE PAY MENTS WERE MADE TO THESE CREDITORS DURING THE RELEVANT AS SESSMENT YEAR THROUGH CHEQUES AGAINST THE PURCHASES MADE FRO M THEM. HOWEVER, IT SEEMS THAT THE ASSESSING OFFICER DID NO T PROCEED FURTHER AND WITHOUT VERIFYING THE GENUINENESS OF TH ESE CREDITORS AND THEIR ACCOUNTS WITH THE APPELLANT, HA STILY COMPLETED THE ASSESSMENT ULS 143(3) VIDE HIS ORDER DATED 11.3.2013 WHICH WAS DESPATCHED FOR SERVICE THROUGH SPEED POST ON 25.03.2013. THIS IS IN CLEAR VIOLATION OF T HE PRINCIPLE OF NATURAL JUSTICE. IT IS FURTHER NOTED THAT THESE CREDITORS ARE 6 OLD CREDITORS AND DURING THE RELEVANT ASSESSMENT YE AR A FEW TRANSACTIONS OF PURCHASES WERE MADE BY THE APPELLAN T FROM THESE PARTIES. IN THE CASE OF HARI ENTERPRISES, THE OUTSTANDING BALANCE OF CREDIT AMOUNT AS ON 01.04.2009 WAS RS. 6,24,937/- AND DURING THE RELEVANT ASSESSMENT YEAR, THE APPELLANT HAS MADE PAYMENTS TO MIS HARI ENTERPRISE THROUGH HIS BANK ACCOUNT AT PUNJAB NATIONAL BANK (ACCOUNT N O 4081002101003073). THE PAN NO OF MIS HARI ENTERPRIS ES WAS ALSO PROVIDED AND AS PER THE PAN NO ASTPR5345N, SHR I PRADEEP RANA, WAS THE PROPRIETOR OF M/S HARI ENTERP RISES. EVEN THE CONFIRMATION OF ACCOUNTS FROM M/S HARI ENT ERPRISES, WAS FURNISHED INDEPENDENTLY THROUGH POST TO THE AS SESSING OFFICER 0(20.03.2013. . HE ASSESSING OFFICER HAS NO T GIVEN ANY FINDING ABOUT THE IN-GENUINENESS OF THE TRANSACTION S WITH MIS HARI ENTERPRISES. SIMILARLY, IN THE CASE OF M/S MA TA DI UDYOG, SMT. NEENA VERMA WAS FOUND TO BE THE PROPRIETOR OF , THE CONCERN AND HER PAN NO WAS AEAPV3268H.LN THE BOOKS OF ACCOUNT OF THE APPELLANT THE OPENING CREDIT BALANCE AS ON 01.04.2009 IN THE NAME OF JAI MATA DI UDYOG HAS BEE N SHOWN AT RS. 35,58,603.54. THE PAYMENTS AGAINST PURCHASES MADE FROM JAI MAT DI UDYOG WERE MADE BY THE APPELLANT TH ROUGH HIS BANK ACCOUNT AT PUNJAB NATIONAL BANK. THE PURCH ASES MADE FROM JAI MATA DI UDYOG AND THE PAYMENTS MADE A GAINST THESE PURCHASES WERE NOT DISPUTED BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT. IN THE CASE OF STA R POWER COATING, THE CONFIRMATION OF ACCOUNT WAS RECEIVED B Y THE ASSESSING OFFICER TWICE I.E. ON 04.03.2013 AND ON 0 9.03.2013. AGAIN THE PURCHASES AND PAYMENTS WERE MADE AGAINST THE PURCHASES HAS NOT BEEN DISPUTED BY THE ASSESSING OF FICER. ON THESE FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE CONSIDERED OPINION THAT THE ASSESSING OFFICER HAS E RRED IN TREATING THE OUTSTANDING CREDIT AMOUNT AGAINST THE ABOVE 7 MENTIONED THREE CREDITORS AS UNEXPLAINED CASH CREDI T U/S. 68 OF THE INCOME TAX ACT, AND THEREFORE, ADDITION MADE ON THIS ACCOUNT OF RS. 34,26,278/- IS DIRECTED TO BE DELETE D. IT IS FURTHER NOTED THAT DURING THE RELEVANT ASSESS MENT YEAR THE APPELLANT HAS PAID INSURANCE PREMIUM TO LLC ON THE FOLLOWING DATES: 1. 30.04.2009 POLICY NO 115164188 RS. 25,000 2. 11.08.2009 POLICY NO 114817723 RS. 22,145 3. 11.08.2009 POLICY NO 112564002 RS.6,030 4. 09.01.2010 POLICY NO 112564002 RS. 6,304 5. 27.01.2010 POLICY NO 114817723 RS.45,301 BESIDES THE APPELLANT HA ALSO PAID PREMIUM AGAINST MEDI CLAIM POLICY TO NEW INDIA INSURANCE CO LTD. AS FOLL OWS: 1. 03.02.2010 POLICY NO 311401 RS.5,500 FROM THE ABOVE IT IS EVIDENT THAT THE APPELLANT HAS RIGHTLY CLAIMED THE DEDUCTION ULS 80-C AND 80-D OF THE INCO ME TAX ACT, AND THEREFORE, THE ASSESSING OFFICER IS DIRECTED TO ALLOW THE AFORESAID CLAIM OF DEDUCTION OF RS. 1,05,550/- TO THE APPELLANT. IT IS FURTHER NOTED THAT THE ASSESSING OFFICER HAS DISALLOWED A LUMP SUM AMOUNT OF RS. 75,000/- ON ACCOUNT OF VARI OUS EXPENSES DEBITED IN THE P & L ACCOUNT SUCH AS BUSINESS PROMO TION, COMMISSION ON SALES, CONVEYANCE EXPENSES, FREIGHT A ND FORWARDING EXPENSES, PRINTING AND STATIONARY EXPENSES ETC. MER ELY ON ESTIMATE BASIS AND WITHOUT POINTING OUT A SINGLE VOUCHER OF EXPENSE WHICH WAS NOT ACCOUNTED FOR BY THE APPELLANT. THEREFORE, I AM UNABLE TO SUSTAIN THE ESTIMATED ADDITION OF RS. 75,000/- MADE BY THE ASSESSING OFFICER AND ACCORDINGLY, THE ASSESSING OF FICER IS DIRECTED TO DELETE THE ADDITION OF RS. 75,000/-. 8 6. IN THE RESULT, THE APPEAL IS ALLOWED. 7.1 AFTER PERUSING THE FINDING OF THE LD. CIT(A), I AM OF THE VIEW THAT LD. CIT(A) HAS PASSED A WELL REASONED AND SPEAKING ORDER, BECAUSE AO ISSUED NOTICE U/S 133(6) TO M/S STAR POWER COATING AND M/S HARI ENTERPRISES WHICH WERE RETURNED BACK BY THE POSTAL AUTHORITIES DUE TO INADEQUATE ADDRESS AND THE NOTICE U/S 133(6) OF TH E INCOME TAX ACT, ISSUED TO M/S JAI MATA DI UDYOG WAS RETURNED BY TH E POSTAL AUTHORITIES WITH THE REMARKS 'TO CONSULT BAHADURGARH' MEANING T HEREBY THE CREDITORS ARE IN EXISTENCE. I ALSO FIND THAT ASSESSEE HAS FUR NISHED ALL OTHER EVIDENCES FOR SUBSTANTIATING ITS CLAIM BEFORE THE AO AS WELL AS BEFORE THE LD. CIT(A) LIKE COPY OF CONFIRMATION ALONGWITH THE COPIES OF PAN CARD OF THE CREDITORS DULY CONFIRMED BY THEM ALONGWITH THE OTHER DOCUMENTARY EVIDENCE FOR SUBSTANTIATING THE CLAIM OF THE ASSESS EE WHICH THE LD. CIT(A) HAS MENTIONED IN THE IMPUGNED ORDER. THEREFORE, IN MY CONSIDERED OPINION, CIT(A) HAS PASSED A WELL REASONED ORDER ON THE BASIS OF THE DOCUMENTARY EVIDENCES FILED BY THE ASSESSEE AND RIG HTLY DELETED THE ADDITIONS IN DISPUTE, WHICH DOES NOT REQUIRE INTERF ERENCE ON MY PART, HENCE, I UPHOLD THE ORDER OF THE LD. CIT(A) AND DIS MISS THE APPEAL FILED BY THE REVENUE. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 15-06-2016. SD/- [H.S. SIDHU] JUDICIAL MEMBER DATE: 15/6/2016 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4.CIT (A) 5. D R, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES 9