ITO, New Delhi V. M/s. Madhusudan Woodcraft P. Ltd., New Delhi

ITA 4192/DEL/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 4058 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 27-06-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 30-07-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MANOJ KUMAR SENIOR
• Assessee Lawyers: RAJIV MAGO; ANUJ MAHESHWARI CAS
• Keywords: Unexplained cash credit; Opportunity of being heard; Period of limitation; Additional evidence
• Section: 43B; 142(1); 115JB; 68; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E : NEW DELHI) BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.4192/DEL./2014 (ASSESSMENT YEAR : 2009-10) INCOME TAX OFFICER, VS. M/S. MADHUSUDAN WOODCRAFT P . LTD., WARD 6 (1), C/O V.K. SEHGAL & ASSOCIATES, NEW DELHI. 201, HARSH BHAWAN, 64 65, NEHRU PLACE, NEW DELHI 110 019. (PAN : AADCM7507J) (APPELLANT) (RESPONDENT) ASSESSEE BY : S/SHRI RAJIV MAGO & ANUJ MAHESHWARI, CAS REVENUE BY : SHRI MANOJ KUMAR, SENIOR DR DATE OF HEARING : 17.08.2017 DATE OF ORDER : 11.10.2017 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : THE APPELLANT, INCOME TAX OFFICER, WARD 6 (1), NEW DELHI (HEREINAFTER REFERRED TO AS THE REVENUE), BY FILI NG THE PRESENT APPEAL, SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATE D 29.05.2014 PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS)- IX, NEW DELHI QUA THE ASSESSMENT YEAR 2009-10 ON THE GROUND S INTER ALIA THAT :- ITA NO.4192/DEL./2014 2 1. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE & IN LAW, THE LD. CIT(A) ERRED IN DECLARING THE ASSESSMENT ORDER U/S 144/143(2) AS INVALID WITHOUT APPRECIATING THE FACTS THAT ASSESSEE HAS NARRATED WRONG FACTS TO LD. CIT(A)? 2. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE & IN LAW, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCES U/S 68 AMOUNTING TO RS.40,21,948/-? 3. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE & IN LAW, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCES U/S 40 & 43B OF RS.17,83,830 AND RS.25,825/- ,WITHOUT APPRECIATING THE FACT THAT AO HAS GIVEN VARIOUS OPPORTUNITIES TO ASSESSEE TO SUBSTANTIATE ITS CLAIM.? 4. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE & IN LAW, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCES U/S 37, AMOUNTING TO RS.15,00,000/- ON ACCOUNT OF ADHOC ADDITION ON EXPENDITURE CLAIMED, WITHOUT APPRECIATING THE FACT THAT AO HAS GIVEN VARIOUS OPPORTUNITIES TO ASSESSEE TO SUBSTANTIATE ITS CLAIM.? 5. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE & IN LAW, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCES OF RS.9,73,613/- ON ACCOUNT OF INCREASE IN CREDITOR, WITHOUT APPRECIATING THE FACT THAT ASSESSEE HAS FAILED TO SUBSTANTIATE ITS CLAIM? 6. WHETHER IN THE FACTS & CIRCUMSTANCES OF THE CASE & IN LAW THE LD. CIT(A) IS RIGHT IN ACCEPTING THE ADDITIONAL EVIDENCES IN VIOLATION OF RULE 46A, WHEN THE ASSESSEE HAS FAILED TO AVAIL THE OPPORTUNITIES PROVIDE TO HIM DURING THE COURSE OF ASSESSMENT PROCEEDINGS? 7. THAT THE ORDER OF THE LD. CIT(A) IS ERRONEOUS AND IS NOT TENABLE ON FACTS AND IN LAW. ITA NO.4192/DEL./2014 3 8. THAT THE GROUNDS OF APPEAL ARE WITHOUT PREJUDICE TO EACH OTHER. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICATION OF THE CONTROVERSY AT HAND ARE : DURING SCRUTINY PROCEEDIN G, FIRST NOTICE UNDER SECTION 143 (2) OF THE INCOME-TAX ACT, 1961 ( FOR SHORT THE ACT) WAS ISSUED ON 16.09.2010 WHICH WAS SERVED ON THE ASSESSEE COMPANY. THEN, DETAILED QUESTIONNAIRE WAS ISSUED T O THE ASSESSEE ON 18.08.2011. THEREAFTER, AO ISSUED NOTICES U/S 1 43 (2) AND 142 (1) WITH DETAILED QUESTIONNAIRE ON 16.09.2010, 08.0 7.2011, 03.08.2011,18.08.2011, 07.10.2011 AND 31.10.2011 AN D THEN FINAL NOTICE U/S 144 WAS ISSUED ON 04.11.2011. NOTICES W ERE SENT ON THE ADDRESS GIVEN IN PAN DATABASE AND AS PER ADDRESS GI VEN IN THE RETURN OF INCOME FOR AYS 2009-10, 2010-11 AS WELL A S ON THE ADDRESS OF ALL THE DIRECTORS OF THE COMPANY GIVEN I N THE RETURN. HOWEVER, ASSESSEE REMAINED UNSERVED. THEN NOTICE W AS ALSO ISSUED U/S 133 (6) AND THE STATUTORY AUDITOR, M/S. V.K. SEHGAL & CO., CA, HAS FILED AUDITED BALANCE SHEET FOR THE YE AR ENDING 31.03.2008 AND 31.03.2009. ASSESSEE IS INTO THE BU SINESS OF MANUFACTURING OF WOODEN HANDICRAFT AND FURNITURE AN D HAS DECLARED SALES OF RS.1,65,00,000/- DURING THE YEAR UNDER ASS ESSMENT AS AGAINST RS.2,85,00,000/- IN THE IMMEDIATELY PRECEDI NG YEAR, THUS DECLARED LOSS OF RS.8,38,977/-. ASSESSEES GROSS P ROFIT WAS AT ITA NO.4192/DEL./2014 4 18.41% & 39.23% AND NET PROFIT WAS AT 0.48% & 1.57% FOR AY 2008-09 & 2009-10 RESPECTIVELY. ASSESSEE DECLARED BOOK PROFIT AT RS.2,59,051/- AND HAS DECLARED NIL TAX PAYABLE U/S 115JB AFTER SETTING OFF BROUGHT FORWARD LOSSES / UNABSORBED DEP RECIATION. 3. FROM THE BALANCE SHEET, AO NOTICED THAT THERE IS AN INCREASE OF RS.40,21,948/- IN THE UNSECURED LOANS DURING THE YEAR UNDER ASSESSMENT AND AN AMOUNT OF RS.95,29,888/- HAS BEEN DECLARED AS UNSECURED LOAN RECEIVED AS ON 31.03.2009 AS AGAINST RS.55,07,940/- AS ON 31.03.2008. ON FAILURE OF THE ASSESSEE TO DISCHARGE ONUS U/S 68 OF THE ACT BY NOT PROVING THE CREDITWORTHINESS OF THE CREDITORS, THE AO MADE ADDI TION OF RS.40,21,948/- ON ACCOUNT OF UNSECURED LOANS. ASSE SSEE CLAIMED AN AMOUNT OF RS.17,83,830/- TO BE ALLOWABLE U/S 40 AND RS.25,825/- U/S 43B IN COMPUTATION OF INCOME. ON F AILURE OF THE ASSESSEE TO FILE SUPPORTING DOCUMENTS, THE AO MADE AN ADDITION OF RS.18,09,655/- TO THE INCOME OF THE ASSESSEE. ON F AILURE OF THE ASSESSEE TO PRODUCE DOCUMENTS, VOUCHERS, BILLS OR L EDGERS IN RESPECT OF EXPENDITURE CLAIMED UNDER THE HEAD EXPE NSES VIZ. INTEREST EXPENSES TO THE TUNE OF RS.36,74,674/-. A O DISALLOWED AN EXPENDITURE OF RS.15,00,000/- AND ADDED THE SAME TO THE NET PROFIT OF THE ASSESSEE. AO FURTHER NOTICED THAT THE ASSES SEE HAS DECLARED CREDIT OF EXPENSES AND ADVANCES FROM CUSTOMERS TO T HE TUNE OF ITA NO.4192/DEL./2014 5 RS.26,29,494/- AND RS.1,21,251/- RESPECTIVELY AS ON 31.03.2009 AS AGAINST RS.17,77,132/- AND RS.NIL AS ON 31.03.2008 AS PER BALANCE SHEET. ON FAILURE OF ASSESSEE TO EXPLAIN THE SAME, THE AO MADE AN ADDITION OF RS.9,73,613/- ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. 4. ASSESSEE CARRIED THE MATTER BY WAY OF FILING APP EAL BEFORE THE LD. CIT (A) WHO HAS PARTLY ALLOWED THE APPEAL . FEELING AGGRIEVED, THE REVENUE HAS COME UP BEFORE THE TRIBU NAL BY WAY OF CHALLENGING THE IMPUGNED ORDER PASSED BY LD. CIT (A ) . 5. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 6. UNDISPUTEDLY, INITIALLY FIRST NOTICE DATED 16.09 .2010 WAS ISSUED AND SECOND NOTICE ISSUED AFTER 10 MONTHS BY THE AO ON WRONG ADDRESS I.E. ON THE ADDRESS COLLECTED FROM PA N DATABASE. IT IS ALSO NOT IN DISPUTE THAT EXCEPT NOTICE DATED 16. 09.2010, ALL OTHER NOTICES HAVE BEEN ISSUED BY THE AO AFTER PRESCRIBED PERIOD OF LIMITATION. IT IS ALSO NOT IN DISPUTE THAT NOTICES DATED 03.08.2011, 07.10.2011, 31.10.2011 AND 04.11.2011 WHICH WERE AD DRESSED AT 63-C, POCKET 1, MAYUR VIHAR PHASE 1, NEW DELHI 110 091 WERE ISSUED BEYOND THE PRESCRIBED PERIOD OF LIMITAT ION U/S 143 (2) ITA NO.4192/DEL./2014 6 WHICH REMAINED UNDELIVERED DUE TO THE REASONS THAT THE ASSESSEE HAS VACATED THE PREMISES AND NONE OF THE NOTICES RE ACHED IN THE HANDS OF THE ASSESSEE. FURTHER NOTICE ISSUED ON 18 .08.2011 IN THE NAME OF DIRECTORS AT B 54, ASHOKA NIKETAN, DELHI ALSO NOT REACHED IN THE HANDS OF THE ASSESSEE BECAUSE THE DI RECTORS HAVE VACATED THE PREMISES WAY-BACK IN 2001 SO THIS NOTIC E ALSO REMAINED UNSERVED. 7. THE LD. CIT (A) QUASHED THE ASSESSMENT MADE U/S 144 OF THE ACT MERELY ON THE GROUND THAT AO HAVE NEVER ISSUED THE NOTICES ON THE ADDRESS MENTIONED IN THE RETURN OF INCOME FILED BY THE ASSESSEE FROM AYS 2005-06 TO 2009-10 NOR THE AO HAS MADE ANY EFFORT TO SERVE THE ASSESSEE ON CORRECT ADDRESS. 8. HOWEVER, THE AO IN THE ASSESSMENT ORDER HAS MERE LY GIVEN THE DETAIL OF NOTICES U/S 143 (2) AND 142 (1) ALONG WITH QUESTIONNAIRE TO THE ASSESSEE COMPANY AND ITS DIREC TORS AT VARIOUS ADDRESSES BUT HAS NOT PREFERRED TO EXPLAIN WHETHER THE SUMMON ISSUED TO THE ASSESSEE COMPANY OR ITS DIRECTORS REC EIVED BACK UNSERVED OR THEY HAVE REFUSED TO ACCEPT THE SUMMONS OR THE SUMMONS SENT HAVE NEVER RECEIVED BACK SERVED/UNSERV ED. 9. THIS ASPECT OF THE CASE HAS ALSO NOT BEEN EXAMIN ED BY THE LD. CIT (A). IN ORDER TO RAISE THE PRESUMPTION THAT SU MMONS HAVE BEEN ISSUED AND PRESUMED TO HAVE BEEN SERVED ON THE ASSESSEE, ITA NO.4192/DEL./2014 7 THERE MUST BE COGENT MATERIAL ON THE FILE BUT AO AS WELL AS CIT (A), BOTH ARE SILENT AS TO THE FATE OF THE REPEATED NOTICES ISSUED TO THE ASSESSEE COMPANY OR ITS DIRECTORS FROM TIME TO TIME. 10. FOR READY PERUSAL, THE DETAILS OF NOTICES ISSUE D BY THE AO FOR SERVICE OF THE ASSESSEE COMPANY OR ITS DIRECTORS CO MPILED IN THE ASSESSMENT ORDER IS REPRODUCED AS UNDER :- 2. FOLLOWING NOTICES HAVE BEEN ISSUE DOT THE ASSESSEE COMPANY WHICH HAVE NOT BEEN COMPLIED WITH : SL. NO. NOTICE U/S DATE OF ISSUE OF NOTICE DUE DATE OF COMPLIANCE ISSUED TO ADDRESS TO WHICH STATU S OF COMPL IANCE 1 143(2) 16.09.2010 24.09.2010 M/S. MADHUSUDAN WOODCRAFT P LTD. FFIE, GANESH NAGAR II, MADHUSUDAN ROAD, SHAKARPUR, DELHI- 110092. NONE ATTEN DED 2 143(2) 08.07.2011 18.07.2011 M/S. MADHUSUDAN WOODCRAFT P LTD. FFIE, GANESH NAGAR II, MADHUSUDAN ROAD, SHAKARPUR, DELHI- 110092. NONE ATTEN DED 3 143(2) 03.08.2011 11.08.2011 M/S. MADHUSUDAN WOODCRAFT P LTD., C/O SHRI PUNEET MAHESHWARI, DIRECTOR 63 C, POCKET 1, MAYUR VIHAR, PHASE 1, NEW DELHI 110091 NONE ATTEN DED 4 142(1) WITH DETAILED QUESTIO N-NAIRE 18.08.2011 24.08.2011 M/S. MADHU- SUDAN WOOD- CRAFT P LTD. C/O SHRI PUNEET MAHESH -WARI, DIRECTO R M/S. MADHU- SUDAN WOOD- CRAFT P LTD. B-54, ASHOKA NIKETAN DELHI FFIE, GANESH NAGAR II, MADHUS UDAN ROAD, SHAKARP UR, DELHI- 110092. NONE ATTEN DED 5 NON- COMP- LIANCE LETTER WITH NOTICES U/S 07.10.2011 17.10.2011 M/S. MADHUSUDAN WOODCRAFT P LTD., 63 C, POCKET 1, MAYUR VIHAR, PHASE 1, NEW DELHI 110091 NONE ATTEN DED ITA NO.4192/DEL./2014 8 142(1) AND 143(2) 6 142(1) 31.10.2011 08.11.2011 M/S. MADHUSUDAN WOODCRAFT P LTD. 63 C, POCKET 1, MAYUR VIHAR, PHASE 1, NEW DELHI 110091 NONE ATTEN DED 7 SHOW CAUSE U/S 144 04.11.2011 (FINAL SHOW CAUSE) 14.11.2011 M/S. MADHUSUDAN WOODCRAFT P LTD. 63 C, POCKET 1, MAYUR VIHAR, PHASE 1, NEW DELHI 110091 NONE ATTEN DED 3. BUT THE ASSESSEE COMPANY DID NOT FILE ANY REPLY. AS PER RECORDS OF THIS OFFICE FOLLOWING ADDRESSES O F THE ASSESSEE COMPANY WERE IDENTIFIED : ADDRESS AS PER PAN DATA BASE FF 1E, GANESH NAGAR II, MADHUDAN ROAD, SHAKARPUR, NEW DELHI ADDRESS AS PER RETURN OF INCOME FOR AY 2009-10 63 C, POCKET 1, MAYUR VIHAR, PHASE 1, NEW DELHI 110091 ADDRESS AS PER RETURN OF INCOME FOR AY 2010-11 63 C, POCKET 1, MAYUR VIHAR, PHASE 1, NEW DELHI 110091 ADDRESS OF ALL DIRECTORS AS PER RETURN 63 C, POCKET 1, MAYUR VIHAR, PHASE 1, NEW DELHI 110091 3.1 EFFORTS MADE BY THIS OFFICE TO SERVE THE NOTICE AT ALL THE ADDRESSES GIVEN ABOVE FAILED. IN THE CIRCUMSTANCES NOTICES WERE SERVED BY AFFIXTURE. 11. BARE PERUSAL OF THE AFORESAID DETAILS GIVEN BY THE AO IN THE ASSESSMENT ORDER AS TO THE ISSUANCE OF THE SUMMONS FOR SERVICE OF THE NOTICES U/S 143 (2) AND 142 (1) TO THE ASSESSEE COMPANY OR ITS DIRECTORS GOES TO PROVE THAT THE AO HAS NOT PREFERR ED TO BRING ON RECORD IF THE SUMMONS ISSUED BY HIM WERE RECEIVED B ACK UNSERVED ITA NO.4192/DEL./2014 9 FOR WANT OF CORRECT ADDRESS OR ASSESSEE HAS REFUSED TO ACCEPT THE SUMMONS SO AS TO RAISE A VALID PRESUMPTION OF SERVI CE OF SUMMONS. SO, MERELY ISSUING THE SUMMONS CANNOT AND WILL NOT AMOUNT TO SERVICE OF SUMMONS TO PROCEED EX-PARTE AGAINST THE ASSESSEE. THE LD. CIT (A) HAS LOST SIGHT OF ALL THESE FACTS BY QU ASHING THE ASSESSMENT ORDER U/S 144 OF THE ACT MERELY ON THE G ROUND THAT APART FROM NOTICE DATED 16.09.2010, ALL THE SUMMONS WERE ISSUED BEYOND THE PRESCRIBED PERIOD OF LIMITATION U/S 143 (2). W HEN UNDISPUTEDLY AO HAS ISSUED THE NOTICE DATED 16.09.2010 WELL WITH IN THE PRESCRIBED PERIOD OF LIMITATION U/S 143 (2), IT NEE DS TO BE BROUGHT ON RECORD IF THE SAID NOTICE WAS RECEIVED BACK UNSE RVED OR ASSESSEE HAS REFUSED TO ACCEPT THE NOTICE. THE AO HAS ALSO NOT PREFERRED TO SERVE THE ASSESSEE THROUGH AFFIXTURE. BEFORE PROCE EDING FURTHER, THE CIT (A) WAS REQUIRED TO ENSURE IF NOTICE DATED 16.0 9.2010 WAS SERVED UPON THE ASSESSEE. 12. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE TO DEC IDE THE LEGAL ISSUE AS TO THE JURISDICTION OF THE AO TO MAKE ASSE SSMENT U/S 144 IS REQUIRED TO BE DECIDED ONLY WHEN THE AO PROVES ON R ECORD THAT THE NOTICES ISSUED TO THE ASSESSEE WITHIN PRESCRIBED PE RIOD OF LIMITATION WERE SERVED BUT THE ASSESSEE HAS NOT PREFERRED TO A TTEND THE ASSESSMENT PROCEEDINGS. AO HAS MERELY MENTIONED TH E STATUS OF COMPLIANCE AS NONE ATTENDED . SO, IN THESE CIRCUMSTANCES, WE ARE ITA NO.4192/DEL./2014 10 OF THE CONSIDERED VIEW THAT IMPUGNED ORDER PASSED B Y LD. CIT (A) QUASHING THE ASSESSMENT U/S 144 OF THE ACT IS NOT S USTAINABLE IN THE EYES OF LAW, HENCE THIS CASE IS RESTORED BACK TO TH E AO WHO SHALL VERIFY FROM THE RECORD AS TO THE NOTICES ISSUED TO THE ASSESSEE WITHIN LIMITATION WERE ACTUALLY RECEIVED BY THE ASS ESSEE AND THEN TO PROCEED AFTER PROVIDING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. CONSEQUENTLY, APPEAL FILED BY THE REVENUE IS ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON THIS 11 TH DAY OF OCTOBER, 2017. SD/- SD/- (R.K. PANDA) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 11 TH DAY OF OCTOBER, 2017 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT (A)-IX, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.