ACIT, Meerut V. M/s. Meerut Roller Flour Mills (P) Ltd., Meerut

ITA 3895/DEL/2013

AI Insights

The case involves cross appeals by the Revenue and the assessee, M/s Meerut Roller Flour Mills [P] Ltd, against the order of the CIT(A), Meerut, pertaining to the Assessment Year 2009-10. The primary issue was the addition of Rs. 3,38,72,852 to the assessee's income, which was claimed to be non-genuine purchases from two entities. The Hon'ble High Court of Delhi had earlier remanded the matter back to the Tribunal for a fresh decision on merits after the Tribunal had set aside the CIT(A)'s directions for further inquiry by the Assessing Officer. The Tribunal, after re-examination, upheld the addition, citing the absence of evidence of genuine transactions and the non-filing of income tax returns by the parties involved in the transactions.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 300924 (ITAT-DELHI)
• Duration Of Justice: 10 year(s) 1 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2023
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 23-07-2023
• Assessment Year: 2009-2010
• Appeal Filed On: 18-06-2013
• Other Referred Cases: Writ Tax No. 163 of 2014
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Business income; Question of law; Set aside
• Section: 143(3); 250; 251

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI ‘E’ BENCH, NEW DELHI BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER, AND MS. ASTHA CHANDRA, JUDICIAL MEMBER ITA No. 3895/DEL/2013 [A.Y. 2009-10] The A.C.I.T Vs. M/s Meerut Roller Flour Mills [P] Ltd Circle – 1, Meerut 214-A, Ganj, Bazar, Sadar, Meerut PAN : AAACM 9399 K ITA No. 2187/DEL/2013 [A.Y. 2009-10] M/s Meerut Roller Flour Mills [P] Ltd Vs. The A.C.I.T 214-A, Ganj, Bazar, Sadar, Meerut Circle – 1, Meerut PAN : AAACM 9399 K (Applicant) (Respondent) Assessee By : Shri Sanjeev Sapra, FCA Department By : Ms. Smita Singh, Sr. DR Date of Hearing : 24.07.2023 Date of Pronouncement : 27.07.2023 2 ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER:- The above cross appeals by the Revenue and the assessee are preferred against the order of the ld. CIT(A), Meerut dated 28.03.2013 pertaining to Assessment Year 2009-10. Both the appeals were heard together and are disposed of by this common order for the sake of convenience and brevity. 2. In the first round of litigation, the quarrel travelled upto the Hon'ble Jurisdictional High Court of Delhi and the Hon'ble High Court, vide order dated 17.01.2019 in ITA No. 284/2017 remanded the quarrel to the Tribunal to rehear the matter afresh and decide the appeal on merits. 3. It would be pertinent to refer to the factual aspect considered by the Hon'ble High Court. The observations/findings read as under: “The Tribunal, in the impugned order, has set aside the direction of the Commissioner of Income Tax (Appeal) to conduct an inquiry by the Assessing Officer. 3 We have heard Shri Manu Ghildyal, learned counsel for the appellant and Shri R.R. Agrawal, learned senior counsel assisted by Shri Suyash Agrawal, learned counsel for the respondent - assessee. On 29.12.2011, the assessment was completed under section 143(3) of the I.T. Act on the total income of Rs. 6.25 crores. The Assessing Officer has made an addition of Rs. 3,38,72,852/- in respect of certain purchases made by the respondent - assessee from Mohit Trading Company (amounting to Rs. 2.10 crores) and Surana Brothers (amounting to Rs. 1.28 crores). Feeling aggrieved by the aforesaid assessment order, the respondent - assessee preferred an appeal before the Commissioner of Income Tax (Appeal), who by order dated 28.03.2013, has observed that both, during the course of assessment as well as remand proceedings, the enquiry letters issued to the aforesaid two parties, had been returned unserved and the assessee could not produce the said two identities before the Assessing Officer. The Commissioner of Income Tax (Appeal) directed Assessing Officer to conduct an inquiry with the Assessing Officer having jurisdiction over the PAN of the said parties and ascertain whether return of income has been filed for the relevant year by the party and if so, he had disclosed the turnover of business in such return, in excess of amount of purchases, shown by the assessee, as have been made from the said party. The respondent - assessee preferred a writ petition before this Court against the order dated 28.03.2013 passed by the Commissioner of Income Tax (Appeal). The said writ petition was 4 disposed by a learned Single Judge of this Court on 16.05.2013 on the ground of availability of alternative remedy. In pursuance of the direction dated 28.03.2013, the Assessing Authority passed an order dated 24.02.2014 in exercise of powers under section 251 of the Act. In the said assessment, it was brought on record that the returns were not filed by the respective parties and therefore, the said amounts, disclosed by the respondent - assessee, were non-genuine purchases. Against the said assessment order dated 24.02.2014, the assessee preferred Writ Tax No. 163 of 2014. The order dated 24.02.2014 was set aside by this Court on the ground of violation of principles of natural justice. However, this Court has clarified that the Assessing Officer was not precluded from passing a fresh order in accordance with law after due notice to the assessee - respondent. Thereafter, again, an order dated 08.08.2014 was passed by the Assessing Officer and it was again brought on record that there was neither information regarding filing of return of income of the said party, i.e., Shri Chhaggan Lal Jain, Proprietor of M/s Mohit Trading Company & M/s Surana Brothers, nor has been furnished by the said assessee. This information is vital for verification of purchases made by the assessee from the said party as per direction given by the Commissioner of Income Tax (Appeal), Meerut in his order dated 28.03.2013. 5 The aforesaid information was also provided to the respondent - assessee, but no contrary material was brought on record to show that the returns of income were filed by the said party and therefore, the purchase of Rs. 3,38,72,852/- was confirmed as non- genuine. The Tribunal, being the last court of fact and law, ought to have considered the materials on record, especially, when it has come on record that the said party has not filed the return of income. The Tribunal was swayed away by the contention of the respondent - assessee, but lost sight of the fact that the Revenue has also raised the issue of addition of Rs. 3,38,72,852/- to be non-genuine purchases. In view of the aforesaid facts and circumstances of the case, the impugned judgment and order dated 13.04.2017 passed in Income Tax Appeal No. 3895/Del/2013by the Income Tax Appellate Tribunal, Delhi, Bench 'E', New Delhi cannot be sustained and it is set aside to that extent. The appeal succeeds and is allowed. The matter is remanded back to the Tribunal concerned to re-hear the matter afresh and decide the appeal on merits. The question of law is answered in favour of the Revenue and against the respondent - assessee.” 6 4. The following observations made by the ld. CIT(A) were under consideration by the Hon'ble High Court : “Never the less, the assessee was requested to acertain why the enquiry letters issued to the two parties had been returned unser ved. It now transpires that both the parties are the concerns of a single individual Shri Chagganlal Jain, who has given a letter s aying that he had closed his business and 6r this reason, the enquiry letters issued by the Department had been returned unserved. Never the less, keeping in view the quantum of disallowance and as a measure of abundant caution, the AO is directed to conduct enquiry with-the AO having jurisdiction over the PAN of this party and ascertain whether return of income had been filed for the relevant year by this party and if so, he had disclosed turnover of business in such return, in excess of the amount of purchases , shown by the assessee as having made from the said party. If the result of such verification is negative, the addition is confirmed. Otherwise, the AO is directed to delete the addition.” 5. A perusal of the order of the Hon'ble High Court shows that the Hon'ble High Court was not pleased with the findings of the Tribunal and the Hon'ble High Court showed its displeasure in the Tribunal for not considering the fact that the impugned parties did not file return of income and when the ld. CIT(A) directed the Assessing Officer to make necessary enquiries, the Tribunal has struck down the directions of the ld. CIT(A). 7 6. However, vide order dated 08.08.2014 passed by the Assessing Officer giving effect to the order of the ld. CIT(A), Meerut u/s 250 of the Act which was also in accordance with the judgment of the Hon'ble Allahabad High Court in Writ Tax No. 163 of 2014 dated 13.03.2014. The Assessing Officer, after making due enquiry, gave the following findings: “10. As the appellate order of the CIT(A), Meerut dated 28.03.2013 stand confirmed as it is as on date. As discussion made above , full opportunity have been given to the assessee to furnish the 'information regarding filing of return of the said party for verification of purchases made from the said party as per direction given by the CIT(A), Meerut in his order dated 28 .03.2013. However, the assessee has filed other irrelevant documents/information, but failed to provide relevant document to proof of filing of the return of income of the said party, as the concerned Assessing Officer (on the basis of PAN) was already informed that the said party has not filed his return of income for A.Y. 2009-10. The specific direction of the CIT(A) clearly and unambiguously indicate that if the said party has filed his return of income and disclosed turnover of business in such return, in excess of the amount purchases, shown by the assessee as having made from the said party, if the result of such verification is negative the addition is confirmed, otherwise the AO is directed to delete the addition . 8 In absence of any information regarding filing of the, return of income of the said party from the assessee as well as from the concerned Assessing Officer v erification of the purchases made from the said party cannot be made as per the direction given by the CIT(A}, Meerut in his order dated 28.03.2013. In view of above facts, addition on account of purchases made by.the assessee company from the said party i.e. Shri Chhagan Lal Jain, Prop. M/s Mohit Trading Co and M.s Surana Bros amounting to Rs.3,38,72,852/- is confirmed as per the direction given by the ld. CIT(A), Meerut in his order dated 28.03.2013.” 7. Before us, the ld. DR vehemently stated that the Assessing Officer has done what has been asked to be done and the end result that the impugned parties of whom Shri Chagganlal Jain is the Proprietor, were not present at the given addresses. Therefore, transactions by them could not be confirmed nor there are Income tax returns filed by the said parties. 8. The ld. counsel for the assessee vehemently reiterated what has been stated in the first round of litigation and drew our attention to the very same documents which were there in the first round of litigation and pointed out that the transactions have been confirmed 9 by M/s Mohit Trading Co. and also by M/s Surana Bros as both were proprietary concern of Shri Chagganlal Jain. 9. Referring to various judicial decisions, the ld. counsel for the assessee vehemently stated that the assessee has discharged the burden cast upon it and the onus shifted on the Assessing Officer, who failed to bring any cogent material evidence on record to dislodge the confirmations filed by the respective parties. The ld. counsel for the assessee prayed for deletion of addition of Rs. 3,38,72,852/-. 10. We have given thoughtful consideration to the order of the Hon'ble High Court remanding the matter back to this Tribunal. AS can be seen from the enquiry conducted by the Assessing Officer, which resulted into passing of the order dated 08.08.2014 giving effect to the order of the ld. CIT(A) and the judgment of the Hon'ble Allahabad High Court in Writ Tax No. 163/2014 dated 13.03.2014 that the said parties, namely, M/s Mohit Trading Co. and also by M/s Surana Bros of whom Shri Chagganlal Jain was proprietor did not file any Income tax return for the impugned A.Y from which the turnover of those parties could have been verified. 10 11. Emphasis by the ld. counsel for the assessee that confirmations have been filed is not factually correct as the confirmations are from the side of the assessee itself who got its copy of ledger account confirmed from the said two parties whereas there is no confirmation from the books of account of the said two parties. The undisputed fact is that M/s Mohit Trading Co. and M/s Surana Bros of whom Shri Chagganlal Jain was proprietor were never found at the given addresses, assuming that the business was closed, even though the assessee could have confirmed the transactions from the books of account of the said two parties. 12. The documentary evidences which have been referred by the ld. counsel for the assessee were very much there in the first round of litigation and could not find any support from the decision of the Hon'ble High Court when the Hon'ble High Court wanted the verification done through the Income tax returns of the two parties. 13. Considering the report/order of the Assessing Officer dated 08.08.2014, we are of the considered view that the assessee grossly failed in proving the genuineness of the transaction with M/s Mohit Trading Co. and M/s Surana Bros. Reliance placed on various judicial 11 decisions will not do any good to the assessee as all the decisions are facts specific and the facts of the case in hand have been explained hereinabove, which are clearly distinguishable from the facts of the case relied upon by the ld. counsel for the assessee. 14. Considering the facts of the case in totality, the assessment order is upheld on the issue remanded back to us, thereby the appeal of the Revenue is allowed and that of the assessee is dismissed. 15. To sum up, in the result the appeal of the Revenue in ITA No. 3895/DEL/2013 is allowed whereas the appeal of the assessee in ITA No. 2187/DEL/2017 is dismissed. Sd/- Sd/- [ASTHA CHANDRA] [N.K. BILLAIYA] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 27 th JULY, 2023. VL/ 12 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi Date of dictation Date on which the typed draft is placed before the dictating Member Date on which the typed draft is placed before the Other Member Date on which the approved draft comes to the Sr.PS/PS Date on which the fair order is placed before the Dictating Member for pronouncement Date on which the fair order comes back to the Sr.PS/PS Date on which the final order is uploaded on the website of ITAT Date on which the file goes to the Bench Clerk Date on which the file goes to the Head Clerk The date on which the file goes to the Assistant Registrar for signature on the order Date of dispatch of the Order