ITO, New Delhi V. M/s. Sujan Timber Traders Pvt. Ltd., New Delhi

ITA 4328/DEL/2014

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 0737 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 1 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2011-2012
• Appeal Filed On: 08-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B S RAJPUROHIT
• Keywords: Income from undisclosed sources
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G, NEW DELHI BEFORE SHRI R. K. PANDA, ACCOUNTANT MEMBER AND MS. SUCHITRA KAMBLE, JUDICIAL MEMBER ITA NO.4328/DEL/2014 ASSESSMENT YEAR : 2011-12 ITO, WARD- 9(3), NEW DELHI. VS. SUJAN TIMBER TRADERS PVT. LTD., E-29, KHANPUR EXTENSION, DEVIL ROAD, NEW DELHI. PAN : AAGCS2980Q (APPELLANT) (RESPONDENT) DEPARTMENT BY : SHRI B. S. RAJPUROHIT, SR. DR ASSESSEE BY : SHRI SAMEER KAPOOR, CA DATE OF HEARING : 06-09-2018 DATE OF PRONOUNCEMENT : 12-09-2018 O R D E R PER R. K. PANDA, AM : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER DATED 30.05.2014 OF THE CIT(A)- XII, NEW DELHI RELATING T O ASSESSMENT YEAR 2011-12. 2. THE ONLY EFFECTIVE GROUND RAISED BY THE REVENUE READS AS UNDER :- THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN DELET ING THE ADDITION OF RS.77,75,083/- MADE BY THE A.O. BEING INTRODUCTION OF UNACCOUNTED INCOME IN THE FORM OF SALE RECEIPTS. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A COMPANY AND ENGAGED IN THE BUSINESS OF TRADING OF TIMBER, PLYWOOD, LAMI NATES AND ADHESIVES. IT FILED ITS RETURN OF INCOME ON 17.09.2011 DECLARING TOTAL INCOME OF RS.2,90,220/-. 2 ITA NO.4328/DEL/2014 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSING OFFICER OBSERVED FROM THE DETAILS OF MATERIAL SUPPLIED TO VARIOUS PA RTIES THAT THE BILLS PRODUCED BY THE ASSESSEE IN RESPECT OF MATERIAL SUPPLIED TO M/S LITMUS DESIGN PVT. LTD. OF RS.3,36,334/- AND M/S PICO EVENT PVT. LTD. OF RS.74 ,38,749/- ARE NOT VERIFIABLE AS THERE IS A BROAD GAP BETWEEN THE DATE OF BILL AN D ACTUAL DATE OF DELIVERY OF GOODS. THE REASON FOR DELAY IN THE DELIVERY WAS NO T SATISFACTORILY EXPLAINED BY THE ASSESSEE. THEREFORE, THE ASSESSING OFFICER DOU BTED ABOUT THE GENUINENESS OF THE SALE BILLS OF THE ASSESSEE TO THE ABOVE TWO PAR TIES AND ACCORDINGLY MADE ADDITION OF RS.77,75,083/- TREATING THE SAME AS THE ASSESSEES OWN UNACCOUNTED INCOME INTRODUCING IN THE FORM OF SALE RECEIPTS. W HILE DOING SO, THE ASSESSING OFFICER FURTHER NOTED THAT THE ASSESSEE COMPANY HAS NOT PROVIDED ANY DETAIL OF INVENTORIES. 4. BEFORE THE LD. CIT(A), IT WAS SUBMITTED THAT DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS A QUESTIONNAIRE WAS ISSUED I N WHICH THE ASSESSING OFFICER ASKED THE ASSESSEE FOR VARIOUS DETAILS AND THE ASSESSEE HAS FILED ALL THE REQUISITE DETAILS AS CALLED FOR BY HIM. IT WAS CAT EGORICALLY STATED BEFORE THE ASSESSING OFFICER THAT OPENING AND CLOSING STOCK HA S BEEN VALUED AT COST PRICE OR MARKET VALUE WHICHEVER IS LESS. IT WAS ALSO SUB MITTED THAT MARKET VALUE IN RESPECT OF THE CATEGORY OF STOCK DOES NOT FALL IN N ORMAL WORKING CONDITIONS OF THE BUSINESS. THE ASSESSEE HAD ALSO STATED THAT TH E PARTIES TO WHOM THE MATERIAL WERE SUPPLIED ARE REGULAR CUSTOMERS OF THE ASSESSEE AND THE CONFIRMATIONS WERE 3 ITA NO.4328/DEL/2014 FILED AND THE AUDITORS HAVE NOT POINTED OUT ANY MIS TAKE IN THE ACCOUNTS. THE ASSESSEE HAD ALSO FILED QUANTITATIVE DETAILS OF THE VALUATION OF OPENING AND CLOSING STOCK. IT WAS ACCORDINGLY ARGUED THAT THE ADDITION IS NOT CALLED FOR. 4.1 BASED ON THE ARGUMENT ADVANCED BY THE ASSESSEE, THE LD. CIT(A) DELETED THE ADDITION. WHILE DOING SO, SHE NOTED THAT SUFFI CIENT EVIDENCE WAS PRODUCED BEFORE THE ASSESSING OFFICER FOR PROVING THE CREDIT WORTHINESS AND GENUINENESS OF THE SALE MADE TO THE SAID TWO PARTIES. FURTHER, THE AMOUNT HAS ALREADY BEEN INCLUDED IN THE SALES OF THE COMPANY FOR THE YEAR U NDER CONSIDERATION AND, THEREFORE, ADDITION U/S 68 DOES NOT DESERVE TO BE M ADE. 5. AGGRIEVED WITH SUCH ORDER OF THE LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 6. THE LD. DR STRONGLY RELIED ON THE ORDER OF THE A SSESSING OFFICER. HE SUBMITTED THAT THE LD. CIT(A) WITHOUT PROPERLY APPR ECIATING THE FACTS OF THE PRESENT CASE HAS DELETED THE ENTIRE ADDITION MADE B Y THE ASSESSING OFFICER WHICH IS NOT JUSTIFIED. 7. THE LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HA ND HEAVILY RELIED ON THE ORDER OF THE LD. CIT(A). REFERRING TO PAGE 34 TO 3 7A OF THE PAPER BOOK, HE DREW THE ATTENTION OF THE BENCH TO THE CONFIRMATION S OF THE SAID PARTIES ON ACCOUNT OF SALES TO THEM FOR THE PERIOD FROM 01 ST APRIL, 2010 TO 31 ST MARCH, 2011. REFERRING TO PAGE 38 TO 41 OF THE PAPER BOOK , HE DREW THE ATTENTION OF THE BENCH TO THE COPY OF CERTIFICATE FROM M/S PICO EVEN T MARKETING (INDIA) PVT. 4 ITA NO.4328/DEL/2014 LTD. CERTIFYING THE INVOICES WITH CORRESPONDING CHA LLANS ALONG WITH COPY OF INVOICES AND CHALLANS. REFERRING TO PAGE 43 OF THE PAPER BOOK, HE DREW THE ATTENTION OF THE BENCH TO THE COPY OF ACCOUNT CONFI RMATION FROM M/S LITMUS DESIGN PVT. LTD.. REFERRING TO PAGE 44 OF THE PAPE R BOOK, HE DREW THE ATTENTION OF THE BENCH TO COPY OF CERTIFICATE FROM M/S LITMUS DESIGN PVT. LTD. CERTIFYING THE INVOICES WITH CORRESPONDING CHALLANS. REFERRIN G TO PAGE 129 TO 131 OF THE PAPER BOOK, HE DREW THE ATTENTION OF THE BENCH TO T HE COPY OF QUESTIONNAIRE DATED 23.08.2013 BY THE ASSESSING OFFICER. REFERRI NG TO PAGE 132 TO 138 OF THE PAPER BOOK, HE DREW THE ATTENTION OF THE BENCH TO T HE REPLY OF THE ABOVE QUESTIONNAIRE. REFERRING TO PAGE 139 TO 145 OF THE PAPER BOOK, HE DREW THE ATTENTION OF THE BENCH TO THE VALUATION OF OPENING AND CLOSING STOCK. REFERRING TO PAGE 146 OF THE PAPER BOOK, HE DREW THE ATTENTIO N OF THE BENCH TO THE COPY OF SHOW-CAUSE NOTICE DATED 17.01.2014 BY THE ASSESSING OFFICER. REFERRING TO PAGE 147 TO 150 OF THE PAPER BOOK, HE DREW THE ATTE NTION OF THE BENCH TO THE REPLY DATED 24.01.2014 TO THE ABOVE SHOW CAUSE NOTI CE. HE SUBMITTED THAT THE ACCOUNTS OF THE ASSESSEE ARE AUDITED AND THE AUDITO RS HAVE NOT GIVEN ANY ADVERSE REPORT AS THERE IS NO QUALIFICATION ON THE QUANTITA TIVE DETAILS OF STOCK THAT HAS BEEN GIVEN BY THE ASSESSEE AND THE SALES HAVE BEEN ACCEPTED BY THE ASSESSING OFFICER. THE PARTIES TO WHOM SUPPLIES ARE MADE ARE REGULAR CUSTOMERS OF THE ASSESSEE AND THEY HAVE CONFIRMED TO HAVE PURCHASED THE GOODS FROM THE ASSESSEE. UNDER THESE CIRCUMSTANCES, IT IS NOT JUS TIFIED TO MAKE THE ADDITION BY 5 ITA NO.4328/DEL/2014 THE ASSESSING OFFICER. HE SUBMITTED THAT THE LD. C IT(A) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE HAS RIGHTLY DELETED THE A DDITION. THEREFORE, THE GROUND RAISED BY THE REVENUE SHOULD BE DISMISSED. 8. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THE ASSESSING OFFICER IN THE INSTANT CASE MADE ADDITION OF RS.77,75,083/- ON ACC OUNT OF SALES MADE TO M/S LITMUS DESIGN PVT. LTD. RS.3,36,334/- AND M/S PIC O EVENT PVT. LTD. RS.74,38,749/- ON THE GROUND THAT THE BILLS PRODUCE D ON ACCOUNT OF SALES TO THE ABOVE TWO PARTIES ARE NOT VERIFIABLE BECAUSE THERE IS A BROAD GAP BETWEEN THE DATE OF BILL AND ACTUAL DATE OF DELIVERY OF GOODS. FURTHER, THE ASSESSEE COMPANY DID NOT PROVIDE ANY DETAIL OF INVENTORY. WE FIND T HE LD. CIT(A) DELETED THE ADDITION ON THE GROUND THAT THE ASSESSEE HAS FURNIS HED SUFFICIENT EVIDENCE FOR PROVING THE CREDITWORTHINESS AND THE GENUINENESS OF THE SALES MADE TO THE ABOVE TWO PARTIES AND THE AMOUNT HAS ALREADY BEEN INCLUDE D IN THE SALES OF THE COMPANY FOR THE YEAR UNDER CONSIDERATION. WE DO NO T FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) ON THIS ISSUE. A PERUSAL O F THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE SHOWS THAT THE ASSESSEE HAS FILED THE REQUISITE DETAILS BEFORE THE ASSESSING OFFICER IN RESPONSE TO THE QUE RY RAISED BY HIM FROM TIME TO TIME. THE ASSESSEE HAS FURNISHED THE COPY OF ACCOU NT CONFIRMATIONS FROM THE ABOVE TWO PARTIES AND HAS ALSO FILED FULL QUANTITAT IVE DETAILS OF THE VALUATION OF OPENING AND CLOSING STOCK. THE ACCOUNTS OF THE ASS ESSEE ARE AUDITED AND THE 6 ITA NO.4328/DEL/2014 AUDITORS HAVE NOT GIVEN ANY ADVERSE REPORT. THERE IS NO QUALIFICATION ON THE QUANTITATIVE DETAILS GIVEN BY THE ASSESSEE IN THE A UDITORS REPORT PREPARED UNDER COMPANIES AUDITORS REPORT ORDER, 2003 ISSUED BY THE CENTRAL GOVERNMENT IN TERMS OF SECTION 227(4A) OF THE COMPANIES ACT, 1956 . WE, THEREFORE, FULLY AGREE WITH THE FINDINGS OF THE LD. CIT(A) THAT THE ASSESSEE HAD PRODUCED SUFFICIENT EVIDENCE BEFORE THE ASSESSING OFFICER FO R PROVING THE CREDITWORTHINESS AND GENUINENESS OF THE SALES MADE TO THE ABOVE TWO PARTIES. FURTHER, THE SALE HAS ALREADY BEEN INCLUDED IN THE SALES OF THE COMPANY FOR THE YEAR UNDER CONSIDERATION. WE, THEREFORE, UPHOLD TH E ORDER OF THE LD. CIT(A) ON THIS ISSUE AND THE GROUND RAISED BY THE REVENUE IS ACCORDINGLY DISMISSED. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 12 TH SEPTEMBER, 2018. SD/- SD/- (SUCHITRA KAMBLE) (R. K. P ANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 12-09-2018. SUJEET COPY OF ORDER TO: - 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT 4) THE CIT(A) 5) THE DR, I.T.A.T., NEW DELHI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, NEW DELHI