ITO, New Delhi V. Sh. Surender Kumar Jain, New Delhi

ITA 3871/DEL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65466 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 06-09-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 17-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR PRABHA KANT
• Keywords: Additional evidence
• Section: 133A

Judgement Text

ITA NO. 3871/DEL/2011 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G, NEW DELHI BEFORE SHRI I.C. SUDHIR, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 3871/DEL/2011 A.Y. : 2007-08 ITO, WARD - 31(2), ROOM NO. 334A, CR BUILDING, NEW DELHI VS. SH. SURENDER KUMAR JAIN, PROP. M/S TIRTH WIRES, 25, CENTRAL LANE, BENGALI MARKET, NEW DELHI (PAN : AAHPJ2008E) (APPELLANT ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) ASSESSEE BY : SH. K. SAMPATH, ADVOCATE DEPARTMENT BY : DR. PRABHA KANT, SR. D.R. ORDER ORDER ORDER ORDER PER PER PER PER SHAMIM YAHYA: AM SHAMIM YAHYA: AM SHAMIM YAHYA: AM SHAMIM YAHYA: AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-XXVI, NEW D ELHI DATED 30.6.2011 PERTAINING TO ASSESSMENT YEAR 2007-08. 2. THE GROUNDS RAISED READ AS UNDER:- I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME TAX (A) HAS ERRED IN DELETING THE ADDITION OF ` 10,00,000/- ON ACCOUNT O F STOCK SURRENDERED DURING THE COURSE OF SURVEY CONDUCTED U/S. 133A. II) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME TAX (A) HAS ERRED IN ITA NO. 3871/DEL/2011 2 DELETING THE ADDITION OF ` 40,44,492/- ON ACCOUNT O F BOGUS SUNDRY CREDITORS. III) THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY / ALL THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF HEARING OF THE APPEAL. 3. APROPOS ISSUE OF ADDITION OF ` 10 LACS ON ACCOU NT OF EXCESS STOCK SURRENDERED DURING SEARCH. ON THIS ISSUE ASSESSING OFFICER OBSERVED THAT A SURVEY U/S. 133A WAS CONDUCTED AND DURING THE COURSE OF SURVEY THE A SSESSEE SURRENDERED AN AMOUNT OF ` 10 LACS ON ACCOUNT OF E XCESS STOCK FOUND. HOWEVER, THE ASSESSEE DID NOT DISCLOSE THIS SURREN DERED AMOUNT OF ` 10 LACS IN HIS RETURN OF INCOME FILED FOR THE PERIOD UNDER CONSIDERATION. ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THIS AMOUNT OF ` 10 LACS SHOULD NOT BE ADDED TO HIS INCOME AS INCOME FROM UN DISCLOSED SOURCES. ASSESSEES REPLY IN THIS REGARD WAS NOT ACCEPTED BY THE ASSESSING OFFICER. HE PROCEEDED TO MAKE THE ADDI TION OF ` 10 LACS IN THE INCOME OF THE ASSESSEE AS INCOME FROM UNDISCLOSE D SOURCES. 4. BEFORE THE LD. COMMISSIONER OF INCOME TAX (A) AS SESSEE SUBMITTED THAT ASSESSEE HAS NOT INCLUDED THE SAID SURRENDERED AMOUNT IN THE RETURN OF INCOME, AS IT WAS BASED SOLE LY ON THE STATEMENT MADE DURING THE SURVEY TAKEN BY FORCE WITH OUT ANY EVIDENCE WHATSOEVER TO SUPPORT IT. IT WAS SUBMITTED THAT THE SAID STATEMENT DURING SURVEY WAS RECORDED UNDER HIGH PR ESSURE. IT WAS FURTHER SUBMITTED THAT LAW PERTAINING TO SURVEY DOES NOT PROVIDE FOR POWER TO RECORD A STATEMENT ON OATH. FURTHERMORE, THE ACTION TAKEN BY THE AUTHORIZED OFFICERS IN RECORDING THE STATEM ENT ON OATH SO AS TO ELICIT SURRENDER BY FORCE IS IN CONTRAVENTION OF B OARDS INSTRUCTIONS ITA NO. 3871/DEL/2011 3 GIVEN VIDE CBDT CIRCULAR NO. F. 286/F.2003/IT DATED 10.3.2003. IT WAS FURTHER SUBMITTED THAT IT WAS A WELL ESTABLISHE D POSITION OF LAW THAT A STATEMENT OBTAINED DURING SURVEY HAS NO EVID ENTIARY VALUE IN TERMS OF THE DECISION OF THE MADRAS HIGH COURT IN 300 ITR 157 C.I.T. VS. S. KHADER KHAN SON. IT WAS FURTHER SUBMITTED TH AT NO SPECIFIC DISCREPANCY HAS BEEN POINTED OUT BY THE ASSESSING O FFICER IN THE TRADING ACCOUNT. ALL THE PURCHASES AND SALES WER E DULY ACCEPTED. THE BOOKS OF ACCOUNTS WERE STATED TO BE DULY AUDITE D AND ACCOMPANIED BY COPIES OF AUDITED ACCOUNTS ALOGNWITH TAX AUDIT REPORT. CONSIDERING THE AFORESAID SUBMISSIONS, LD. COMMISSIONE R OF INCOME TAX (A) HELD THAT THE ASSESSING OFFICER WAS NOT JU STIFIED IN MAKING THE ADDITION ON ACCOUNT OF EXCESS STOCK AS ABOVE. HEN CE, THE ADDITION OF ` 10 LACS MADE ON THIS ACCOUNT WAS DELETED. 5. AGAINST THE ABOVE ORDER THE REVENUE IS IN APPEAL BEFORE US. 6. LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT ASS ESSEE HAS DULY ADMITTED DURING THE SURVEY THAT THERE IS UNDISC LOSED STOCK OF ` 10 LACS. HOWEVER, THE SAME WAS NOT ADDED IN THE RETURN SUBMITTED. HE CLAIMED THAT WHEN ASSESSEE HIMSELF ADMITTED DURING SU RVEY BY STATEMENT ON OATH THAT ` 10 LACS AS AN EXCESS STOC K, THE SAME SHOULD BE ADDED TO THE INCOME OF THE ASSESSEE. 6.1 LD. COUNSEL OF THE ASSESSEE ON THE OTHER HA ND SUBMITTED THAT THERE IS NO CORROBORATIVE MATERIAL FOUND ON THIS ISSUE. HE SUBMITTED THAT STATEMENT OBTAINED UNDER SURVEY HAS NO EVIDENTI ARY VALUE. HENCE, HE PLEADED THAT THE ADDITION ON THIS ACCOUN T IS WITHOUT ANY FOUNDATION. 7. WE HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT OF THE MATERIAL PRODUCED AND PRECEDENT RELIED UPON. WE FIND THA T ADDITION IN THIS ITA NO. 3871/DEL/2011 4 REGARD IS BASED SOLELY ON STATEMENT GIVEN BY THE AS SESSEE DURING THE SURVEY. THERE IS NO OTHER CORROBORATIVE MATERIAL IN THIS REGARD. WE FIND THAT HONBLE MADRAS HIGH COURT IN THE CASE OF C .I.T. VS. S. KHADER KHAN SON 300 ITR 157 HAS HELD THAT SECTION 133A DO ES NOT EMPOWER ANY INCOME TAX OFFICER TO EXAMINE ANY PERSON ON OATH, SO STATEMENT RECORDED U/S. 133A HAS NO EVIDENTIARY VALUE AND AN Y ADMISSION MADE DURING SURVEY STATEMENT CANNOT BE MADE THE BASIS OF ADDITION. WE FIND THAT THE ABOVE CASE LAW IS SQUARELY APPLICABLE ON THIS ISSUE. THE ASSESSING OFFICER HAS NOT BROUGHT ANY COGENT MATER IAL TO SUPPORT THE ADDITION OF ` 10 LACS. THERE IS NO MATERIAL TO SU PPORT THE ADDITION OF ` 10 LACS ON THE GROUND OF EXCESS STOCK FOUND. ACCOR DINGLY, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. COMMISSIO NER OF INCOME TAX (A). ACCORDINGLY, WE AFFIRM THE SAME. 8. APROPOS ADDITION OF ` 40,44,492/- ON ACCOUNT OF BOGUS SUNDRY CREDITORS. ON THIS ISSUE ASSESSING OFFICER NOTED THAT REGAR DING SUNDRY CREDITORS ASSESSEE HAS SUBMITTED THE LEDGER ACCOUNT OF THE SUPPLIERS/ CREDITORS IN THE BOOKS OF THE ASSESSEE. IT WAS FURTHER SUBMITTED THAT ASSESSEE HAD MADE ALL HIS BEST EFFORTS TO COLLEC T CONFIRMATIONS AGAINST THE CREDIT BALANCE AND REMINDERS WERE SENT A ND AS SOON AS THE CONFIRMATION WILL BE RECEIVED THE SAME WILL BE SUBMI TTED. ASSESSING OFFICER DID NOT FIND THE CONTENTION OF THE ASSESS EE ACCEPTABLE. HE HELD THAT MERELY BY FILING THE LEDGER ACCOUNT OF TH E CREDITORS AND THE BOOKS OF ACCOUNTS, THE ASSESSEE DOES NOT PROVE THE GENUINENESS OF THE TRANSACTIONS, SOME OF THEM WITHOUT PAN. KEEPING IN VIEW THE AFORESAID ASSESSING OFFICER ADDED THE AMOUNT OF SUNDRY CRED ITORS AMOUNTING TO ITA NO. 3871/DEL/2011 5 ` 40,44,992/- AS BOGUS AND ADDED THE SAME TO THE IN COME OF THE ASSESSEE. 9. BEFORE THE LD. COMMISSIONER OF INCOME TAX (A) IT WA S SUBMITTED BY THE ASSESSEE THAT THE NECESSARY CONFIRMATIONS FR OM PARTIES AT THE RELEVANT TIME COULD NOT BE RECEIVED BECAUSE THE AS SESSING OFFICER PERMITTED VIRTUALLY NO TIME FOR DOING SO. IT WAS SUBMITTED THAT ASSESSEE HAS DULY SUBMITTED THE LEDGER ACCOUNTS OF T HE CREDITORS. IT WAS SUBMITTED THAT THE PAN OF ALL THE CREDITORS A ND THEIR CONFIRMATIONS WERE AVAILABLE NOW AND SUBMITTED. AS REGARDS THE GENUINENESS OF THE TRANSACTIONS, IT WAS SUBMITTED T HAT ALL THE ENTRIES WERE DULY SUPPORTED BY VOUCHERS OF THE CONCERNED SU NDRY CREDITORS. EACH VOUCHER MENTIONED NOT ONLY THE ADDRESS OF THE SUNDRY CREDITOR BUT ALSO THE ITEM AND QUANTUM. FURTHER, THE ENTIR E PURCHASES AND SALES WERE ACCEPTED. THE ACCOUNTS WERE DULY AUDI TED AND NO DISCREPANCY IN THIS REGARD WAS NOTED. THE ASSESSIN G OFFICER HAS NOT POINTED OUT ANY DISCREPANCY IN THIS REGARD. LD. COMMISSIONER OF INCOME TAX (A) OBTAINED THE REMAND REPORT IN THIS REGARD. THE ASSESSEE SUBMITTED BEFORE THE LD. COMMISSIONER OF INC OME TAX (A) THAT ASSESSING OFFICER HAS HARDLY LOOKED IN TO TH E ACCOUNTS OF THE PARTIES WHOSE VERIFICATION WAS SOUGHT. HIS INSIST ENCE WAS ONLY UPON THE PHYSICAL VERIFICATION OF THE PARTIES. ASSESSE E SUBMITTED BEFORE THE LD. COMMISSIONER OF INCOME TAX (A) THAT WITH RESPECT TO THE FOLLOWING FIVE PARTIES, THEIR BALANCES WERE HAVING ONLY OPEN ING BALANCES WHICH HAVE BEEN CARRIED OVER TO THE NEXT YEAR AND THERE W ERE NO TRANSACTIONS DURING THIS YEAR. HENCE, IT WAS PL EADED THAT THERE IS NO QUESTION OF DISALLOWING THEM IN THE YEAR UNDER CONSI DERATION. I) AUTO LINE ENGINEERS ITA NO. 3871/DEL/2011 6 II) CALEX AUTO III) SH. RAM KARAN IV) SMT. SUDHA RASAYAN V) PRATAP INDUSTRIES 9.1 THE NEXT TWO PARTIES, NAMELY P.B. ENTERPRISES AND SEEMA ENTERPRISES, ALSO HAD ONLY OPENING BALANCES. THER E WAS NO TRANSACTION FOR THE PURCHASE DURING THE YEAR. SO THERE WAS NO ADDITION TO THE OPENING BALANCES. THE ASSESSEE HAS ONLY MADE THE PAYMENT TO THESE PARTIES DURING THE YEAR OUT OF THE IR DUES OF THEIR OPENING BALANCES AND WITH REGARD TO SUCH RECEIPTS, THE SAID TWO PARTIES HAVE FILED THEIR CONFIRMATIONS. IT WAS FURTHER SU BMITTED THAT AS TO THE ACCOUNT OF SHUBHAM STEELS, THERE WERE ADDITIONS DU RING THE YEAR. THE PURCHASE VOUCHERS ISSUED FROM THE PARTIES ACCOMP ANIED BY THE RELEVANT GRS WERE FILED BEFORE THE ASSESSING OFFICE R. THE ASSESSING OFFICER WAS ALSO PROVIDED THE SALES TAX DECLARAT ION FORMS RELATABLE TO THESE PURCHASES. THE PARTY HAD DULY CONFIRMED T HE TRANSACTIONS TO THE ASSESSING OFFICER. WITH REGARD TO THE REMAINI NG PARTY I.E. GHANSHYAM INDUSTRIES, THERE HAVE BEEN REGULAR TRA NSACTIONS OF BOTH PURCHASES AND PAYMENTS DURING THE YEAR. CONFIRMATIO N WAS ALSO FILED AND THE ASSESSING OFFICER HAS NOT POINTED OUT ANY DISCREPANCY THEREIN. CONSIDERING THE ABOVE, LD. COMMISSIONER OF INCOME TAX (A) HELD THAT THE ADDITIONS MADE BY THE ASSESSING OFFICER WAS NOT JUSTIFIED AND HENCE, HE DELETED THE ADDITION IN THIS REGARD. 10. AGAINST THE ABOVE ORDER THE REVENUE IS IN APPEA L BEFORE US. ITA NO. 3871/DEL/2011 7 11. WE HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT OF THE MATERIAL PRODUCED. WE FIND THAT THE ASSESSEE HAS NOT PRODU CED THE CONFIRMATIONS FROM THE CREDITORS AT THE TIME OF ASSESS MENT PROCEEDINGS. THE CAUSE IN THIS REGARD HAS BEEN ATT RIBUTED TO THE SHORT TIME ALLOWED BY THE ASSESSING OFFICER. HOWEVER , ALL THE NECESSARY CONFIRMATIONS ALONGWITH ADDRESS AND PAN OF THE CREDI TORS WERE DULY SUBMITTED AS ADDITIONAL EVIDENCES DURING APPELLAT E PROCEEDINGS. THE SAME WERE ALSO GIVEN TO THE ASSESSING OFFICER TO OBTAIN HIS REMAND REPORT. IT WAS SUBMITTED THAT ALL THE TRANSACTIONS AND THE ENTRIES WERE DULY SUPPORTED BY VOUCHERS OF THE CONCERNED SUNDRY CREDITORS. EACH VOUCHER MENTIONED NOT ONLY THE ADDRESS OF THE SUNDR Y CREDITOR BUT ALSO THE ITEM AND QUANTUM. FURTHER, THE ENTIRE PURCHAS ES AND SALES WERE ACCEPTED. THE ACCOUNTS WERE DULY AUDITED AND NO DISCREPANCY IN THIS REGARD WAS NOTED. THE ASSESSING OFFICER HAS NOT POINTED OUT ANY DISCREPANCY IN THIS REGARD. FURTHER, OUT OF THE SAID CREDITORS FIVE PARTIES HAD NO TRANSACTION ONLY THE OPENING BALANCE WAS COMING FROM YEAR TO YEAR. HENCE, ADDITION OF CREDITORS FOR PR ECEDING YEAR CANNOT BE JUSTIFIABLY MADE DURING THE YEAR UNDER CONSIDERAT ION. FURTHER WITH REGARD TO TWO PARTIES, NAMELY P.B. ENTERPRISES AND S EEMA ENTERPRISES, IT WAS SUBMITTED THAT THE BALANCES ARE ONLY OPENING BALANCES AGAINST WHICH SOME PAYMENTS WERE MADE DURING THE YEAR. THE SAID TWO ITA NO. 3871/DEL/2011 8 PARTIES HAVE FILED THEIR CONFIRMATIONS. AS REGARDS THE REMAINING PARTY SHUBHAN STEELS AND GHANSHYAM INDUSTRIES THERE WER E TRANSACTIONS OF BOTH PURCHASES AND PAYMENT DURING THE YEAR. A LL THE NECESSARY VOUCHERS IN THIS REGARD INCLUDING THE GRS AND PAN AN D ALSO SALES TAX DECLARATION FORMS RELATABLE TO THESE PURCHASES WERE SUBMITTED BEFORE THE ASSESSING OFFICER. THUS, WE FIND THAT ASSESSE E HAS SUBMITTED ALL THE NECESSARY DETAILS BEFORE THE ASSESSING OFFICER WITH REGARD TO THE VERIFICATION OF THE SUNDRY CREDITORS. ASSESSING OF FICER HAS NOT POINTED OUT ANY DISCREPANCY IN THE DOCUMENTS SUBMITTED THER EIN. HENCE, WE FIND THAT THE ASSESSEE HAS SUBMITTED ALL THE RELEVAN T DETAILS DURING THE APPELLATE PROCEEDINGS, WHICH WERE DULY EXAMINED BY THE ASSESSING OFFICER IN REMAND REPORT. HENCE, WE FIND THAT THE RE WAS NO BASIS FOR MAKING THE ADDITION ON ACCOUNT UNEXPLAINED SUNDRY CREDITORS IN THIS REGARD. IN OUR CONSIDERED OPINION, WHEN THE ASS ESSEE HAS SUBMITTED ALL THE NECESSARY DETAILS INCLUDING THE VOUCHERS, ADDRESS OF THE PARTIES AND PAN PARTICULARS, IF THE ASSESSING OFFICER WAS I N DOUBT IN THIS REGARD, HE SHOULD HAVE MADE SEPARATE ENQUIRIES IN THIS REGARD. HENCE, THE ADDITION ON ACCOUNT OF SUNDRY CREDITORS IS NOT SUSTAINABLE. IN THIS REGARD WE DRAW SUPPORT FROM APEX COURT DEC ISION IN THE CASE OF C.I.T. VS. ORISSA CORP. P LTD. 158 ITR 78. IN TH IS CASE, IT WAS HELD THAT ITA NO. 3871/DEL/2011 9 ADDITION WAS NOT SUSTAINABLE WHEN THE REVENUE APART FROM ISSUING NOTICE U/S. 131 TO CREDITORS DID NOT PURSUE THE MAT TER FURTHER. 12. IN THE BACKGROUND OF THE AFORESAID DISCUSSION A ND PRECEDENT, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CO MMISSIONER OF INCOME TAX (A). ACCORDINGLY, WE UPHOLD THE SAME. 13. IN THE RESULT, THE APPEAL FILED BY THE REVENU E STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14/9/2012. SD/- SD/- [ [[ [I.C. SUDHIR I.C. SUDHIR I.C. SUDHIR I.C. SUDHIR] ]] ] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 14/9/2012 SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES