G K FOOTCARE INDIA PVT. LTD., NEW DELHI V. ITO, WARD- 10(1), NEW DELHI

ITA 4439/DEL/2017

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 5924 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 6 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-02-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 04-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GURMEET SINGH
• Keywords: Deemed to accrue or arise in india
• Section: 143(3); 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER & SHRI O.P. KANT, ACCOUNTANT MEMBER I.T.A. NO.4439/DEL/2017 ASSESSMENT YEAR 2012-13 M/S. G.K. FOOTCARE (INDIA) PVT. LTD., 139, TARUN ENCLAVE, PITAMPURA, NEW DELHI. V. ITO, WARD-10(1), NEW DELHI. TAN/PAN: AACCG0949D (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI RAVI PRATAP MALL, ADV. RESPONDENT BY: SHRI GURMEET SINGH, SR.D.R. DATE OF HEARING: 7 01 2021 DATE OF PRONOUNCEMENT: 02 02 2021 O R D E R PER AMIT SHUKLA, J.M.: THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE IMPUGNED ORDER DATED 07.04.2017, PASSED BY LD. COMMISSIONER OF INCOME TAX (APPEALS)-XVIII, NEW DEL HI FOR THE QUANTUM OF ASSESSMENT PASSED U/S. 143(3) FOR TH E ASSESSMENT YEAR 2012-13. 2. IN VARIOUS GROUNDS OF APPEAL, THE ASSESSEE HAS R AISED THE ADDITION OF RS.26,43,879/- IN RESPECT OF CLOSIN G BALANCE OF SUNDRY CREDITORS; AND NON SERVICE OF NOTICE U/S.143 (2) WITHIN THE STATUTORY TIME LIMIT. 3. THE BRIEF FACTS QUA THE FIRST ISSUE RAISED ARE T HAT I.T.A. NO. 4439/DEL/2017 2 ASSESSEE-COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF FOOT WARES. THE ASSESSING OFFICER FROM THE PERUSAL OF THE BALANCE-SHEET NOTICED THAT THERE ARE TRADE PAYABLE OUTSTANDING AS ON 31.12.2013 TO THE TUNE OF RS.26,43,879/-. HE REQUIRED THE ASSESSEE TO FURNISH CONFIRMED COPY OF ACCOUNT FROM THE SUNDRY CREDITORS . IN RESPONSE, THE ASSESSEE FILED LEDGER ACCOUNT COPIES OF SUNDRY CREDITORS AND OTHER DETAILS LIKE PURCHASE BILLS, BO OKS OF ACCOUNT, AND VOUCHERS, ETC. ALONG WITH SELF CERTIFI ED COPIES OF ACCOUNT. THE LD. ASSESSING OFFICER HELD THAT NO CON FIRMATIONS FROM THESE PARTIES WERE MADE AVAILABLE AND NOTICES SENT U/S. 133(6) REMAIN UNSERVED. ACCORDINGLY, HE ADDED BALAN CE PAYABLE AMOUNT TO SUNDRY CREDITORS FOR SUMS AGGREGA TING TO RS.26,43,879/- AS UNEXPLAINED U/S.68. 4. LD. CIT (A) TOO HAS CONFIRMED THE SAID ADDITION AFTER REFERRING TO VARIOUS JUDGMENTS. 5. BEFORE US, LD. COUNSEL SUBMITTED THAT THE ASSESS EE IS IN THE BUSINESS OF MANUFACTURING AND SALES OF FOOT WAR ES AND HAS MADE PURCHASES OF RS.1,10,27,257/- AND TURNOVER DISCLOSED WAS AT RS.2,26,48,398/-. HE SUBMITTED THA T NEITHER THE PURCHASES NOR THE SALES HAVE BEEN DISPUTED BY T HE ASSESSING OFFICER AND THE ASSESSEE HAD RUNNING ACCO UNT WITH THESE PARTIES WITH WHOM IT HAS BEEN MAKING REGULAR PURCHASES AND ALSO MAKING REGULAR PAYMENTS. NO DISC REPANCY AS SUCH HAS BEEN FOUND IN THE BOOKS OF ACCOUNT OR P URCHASE BILLS. EVEN THE GROSS PROFIT AFTER EXCLUDING THE EX TRAORDINARY I.T.A. NO. 4439/DEL/2017 3 LOSS DUE TO FIRE IS EXCLUDED, THEN THE SAME IS MUCH MORE THAN THE EARLIER YEARS. PURCHASES WERE MADE IN THE FINAN CIAL YEAR 2011-12 AND INQUIRY WAS MADE AFTER 3-4 YEARS, THERE FORE, IF THE NOTICE COULD NOT BE SERVED AT THE ADDRESS AVAIL ABLE WITH THE ASSESSEE, THAT DOES NOT MEAN THE LIABILITY UNDE R THE SUNDRY CREDITORS ARE BOGUS OR THE PURCHASES MADE FR OM THEM ARE NOT GENUINE. FURTHER, THE ASSESSING OFFICER NEV ER CONFRONTED THE RESULT OF THE INQUIRY SO THAT THE AS SESSEE COULD HAVE MADE ENDEAVOUR TO GIVE THE CORRECT ADDRESS, IF SOME OF THE PARTIES HAVE SHIFTED TO OTHER PLACES OR WHY THE Y DID NOT RESPONDED. IN SUPPORT, HE RELIED UPON THE JUDGMENT OF HONBLE HIGH COURT IN THE CASE OF CIT VS. WINSTRAL PETRO CHEMICALS, 330 ITR 603 (DELHI) AND IN THE CASE OF CIT VS. RITU ANURAG AGARWAL, IN ITA NO.325/2008 . THUS, NO ADDITION COULD BE MADE U/S.68, BECAUSE PURCHASES MA DE FROM SUCH PARTIES HAVE DULY BEEN ACCEPTED AND THE CORRESPONDING SALES. 6. LD. COUNSEL FURTHER POINTED OUT THAT OUT OF TOTA L 14 PARTIES, THERE WERE OPENING BALANCES IN THE ACCOUNT OF 10 PARTIES AND SUBSTANTIAL REPAYMENT HAVE BEEN MADE DU RING THE YEAR ITSELF FOR WHICH THERE IS NO DISPUTE AND T HE ONLY ADDITION WHICH HAS BEEN MADE IS OF CLOSING BALANCE. IN SUPPORT, HE REFERRED PAGES 86 AND 87 OF THE PAPER B OOK WHICH WERE SUBMISSIONS AND DETAILS FILED BEFORE THE CIT ( A). 7. ON THE OTHER HAND, LD. DR STRONGLY RELIED UPON T HE ORDER OF THE ASSESSING OFFICER AND LD. CIT (A) AND SUBMIT TED THAT I.T.A. NO. 4439/DEL/2017 4 ONUS WAS ON THE ASSESSEE TO PROVE THAT THE AMOUNT S HOWN PAYABLE TO THE SUNDRY CREDITOR WERE GENUINE FOR WHI CH NEITHER CONFIRMATIONS WERE FILED NOR ANY RESPONSE WAS MADE BY THE PARTIES ON THE NOTICES SENT BY THE ASSESSING OFFICE R U/S. 133(6), THEREFORE, ADDITION AS SUSTAINED BY THE LD. CIT (A) SHOULD BE CONFIRMED. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PER USED THE RELEVANT FINDING GIVEN IN THE IMPUGNED ORDERS A S WELL AS THE MATERIAL PLACED ON RECORD. THE ASSESSEE IS IN T HE BUSINESS OF MANUFACTURING AND SALES OF FOOT WARES AND HAD SH OWN TOTAL PURCHASE OF RAW MATERIALS RS.1,10,27,257/- AND MADE CORRESPONDING SALES OF MANUFACTURED PRODUCT OF RS.2,26,48,398/-. ADMITTEDLY, THE PURCHASE AND SALE S MADE BY THE ASSESSEE WERE DULY SUPPORTED BY THE BILLS/IN VOICES AND VOUCHERS IN WHICH NO DISCREPANCY HAS BEEN POINTED O UT AND SAME STANDS ACCEPTED. IN RESPECT OF 14 PARTIES, THE ASSESSEE HAD SHOWN TRADE PAYABLE OUTSTANDING AS ON 31.03.201 2, I.E., AT RS.26,43,879/-, WHICH HAS BEEN ADDED BY THE ASSE SSING OFFICER ON THE GROUND THAT ASSESSEE HAS FAILED TO F URNISH CONFIRMATION FROM THE SAID PARTIES/SUNDRY CREDITORS AND NOTICES U/S.133(6) WERE NOT RESPONDED BACK. ONCE AS SESSEE HAS FILED THE PURCHASE BILLS FROM THE SAID PARTIES, WHICH HAS BEEN ACCEPTED AND ALL THESE PARTIES WERE HAVING A R UNNING ACCOUNT WITH THE ASSESSEE AND PURCHASES FROM SAID P ARTY IN THE EARLIER YEARS OR DURING THE YEAR IS NOT IN DISP UTE, WHICH MEANS THAT THE ASSESSEE WAS HAVING REGULAR BUSINESS TRANSACTION OF PURCHASES TO THE SAID PARTIES. ONCE AGAIN IT IS I.T.A. NO. 4439/DEL/2017 5 REITERATED THAT THE PURCHASES MADE DURING THE YEAR AND THE PAYMENTS MADE DURING THE YEAR HAVE NOT BEEN DOUBTED WHICH STAND ACCEPTED AND IT IS ONLY THE BALANCE AMOUNT WH ICH STOOD PAYABLE AT THE YEAR-END WHICH HAS BEEN ADDED U/S.68 . IN OUR OPINION SUCH AN ADDITION CANNOT BE HELD TO BE DEEME D INCOME FROM UNEXPLAINED SOURCES. 9. BEFORE THE AUTHORITIES BELOW, THE ASSESSEE HA S FILED THE FOLLOWING DETAILS OF THE PARTIES ALONG WITH THE ADD RESS, OPENING BALANCE, PURCHASES MADE DURING THE YEAR, REPAYMENTS DURING THE YEAR AS WELL AS THE CLOSING B ALANCE. S.NO . NAME ADDRESS EVIDENCES FURNISHED OPENING BALANCE PURCHASES MADE DURING THE YE AR REPAYMENT S DURING THE YEAR CLOSING BALANCE 1 ASIAN POLYMERS J - 3368 DSIDC INDUSTRIAL AREA, NARELA, DELHI CERTIFIED COPIES OF LEDGER 189,855 150,000 39,855 2. ASIAN POLY PLAST J-3368 DSIDC INDUSTRIAL AREA, NARELA, DELHI CERTIFIED COPIES OF LEDGER 21,07 7 129,855 150000 962 3. GARG TRADERS A-65, DSIDC INDUSTRIAL AREA, NARELA, DELHI CERTIFIED COPIES OF LEDGER 17,300 251,500 250000 118,800 4. GOEL PACKAGING IND H-1432, DSIDC INDUSTRIAL AREA, NARELA, DELHI CERTIFIED COPIES OF LEDGER 305,531 150000 155,53 1 5. MANSA INDUSTRIES K-134, SEC. 3, BWANA, DELHI CERTIFIED COPIES OF LEDGER 286,895 - 286,895 6. PCL OIL AND SOLVENTS LTD 702, DLF TOWER B, DIS JASOLA, DELHI CERTIFIED COPIES OF LEDGER 73,013 432,020 373013 432,020 7. POOJA PLASTIC KH-714, SWAM PARK, MUNDKA, DELHI CERTIFIED COPIES OF LEDGER 150,960 110,544 240000 21,504 I.T.A. NO. 4439/DEL/2017 6 8. RITZY POLYMERS 703, DLF TOWER B, DIS JASOLA, DELHI CERTIFIED COPIES OF LEDGER 353,613 4,541,241 4400000 494,854 9. SHIV POLY CHEM D- 7, KHASRA NO. 30/23, NAGLI POONA EXTN, DELHI CE RTIFIED COPIES OF LEDGER 403,200 1,260,000 730000 903,200 10. SHRI SHYAM ENTERPRISES F - 1994, DSIDC INDUSTRIAL AREA, NARELA, DELHI CERTIFIED COPIES OF LEDGER 2,300 52,500 50000 4,800 11. SHUBHAM POLYMERS E - 952, DSIDC INDUSTRIAL AREA, NARELA, DELHI CERTIF IED COPIES OF LEDGER 13232 - - 13232 12. SR BROTHERS E - 862, DSIDC INDUSTRIAL AREA, NARELA, DELHI CERTIFIED COPIES OF LEDGER 105840 87112 375000 17952 13. SUMIT SALES CO. 4449/10, JAI MATA MARKET, TRINAGAR, DELHI CERTIFIED COPIES OF LEDGER 19015 150923 49 00 120938 14. RITZY CHEMICALS PVT. LTD. 703, DLF TOWER B, DIS JASOLA, DELHI CERTIFIED COPIES OF LEDGER - 1533335 1500000 33335 THE ABOVE DETAIL GOES TO PROVE THAT PURCHASES FROM THE SAID PARTIES HAVE BEEN SUBSTANTIALLY ACCEPTED. 10. IF THE TRADING AS A WHOLE HAS BEEN ACCEPTED IN CLUDING PURCHASES AND THE SALES AND THE GROSS PROFIT, THEN AMOUNT PAYABLE ON ACCOUNT OF PURCHASES AT THE YEAR-END CAN NOT BE ADDED AS A DEEMED INCOME. THIS PROPOSITION HAVE BEE N UPHELD BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. RITU ANURAG AGARWAL (SUPRA), WHEREIN IT HAS BEEN HELD THAT ONCE THERE IS NO CASE OF DISALLOWANCE FOR I.T.A. NO. 4439/DEL/2017 7 CORRESPONDING PURCHASES NO ADDITION COULD BE MADE U /S.68 ON THE OUTSTANDING BALANCE OF THE CREDITOR RELATING TO PURCHASES AND WHERE THE TRADING RESULT HAVE BEEN AC CEPTED BY THE ASSESSING OFFICER. SIMILAR POSITION IS APPLI CABLE ON THE FACTS OF THE PRESENT CASE ALSO. THUS, RESPECTFULLY FOLLOWING THE SAME PRINCIPLE, WE HOLD THAT THE ADDITION MADE ON A CCOUNT OF AMOUNT OUTSTANDING BALANCE IN THE BALANCE-SHEET UND ER THE HEAD SUNDRY CREDITOR CANNOT BE DISALLOWED OR ADDED U/S.68, AND SAME IS DIRECTED TO BE ALLOWED. SINCE, WE HAVE ALREADY ALLOWED THE APPEAL; THE SECOND GROUND IS PURELY ACA DEMIC. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 ND FEBRUARY, 2021 SD/- SD/- [O.P. KANT] [AMIT SHUKLA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 2 ND FEBRUARY, 2021 PKK: