M/s. Presswell Industries, Faridabad V. ITO, Faridabad

ITA 4471/DEL/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 8206 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 28-01-2010
• Assessment Year: 1995-1996
• Appeal Filed On: 24-11-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H K LAL
• Keywords: Unexplained cash credit
• Section: 147; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `F : NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI B.P. JAIN, ACCOUNTANT MEMBER I.T.A. NO.4471/DEL/2009 ASSESSMENT YEAR : 1995-96 M/S. PRESSWEL INDUSTRIES, INCOME-TAX OFFICER, 152, SECTOR-24, FARIDABAD. VS. WARD II(1), FARIDABAD. PAN: AABFP2576K (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI C.S. ANAND, CA RESPONDENT BY : SHRI H.K. LAL, SR. DR. O R D E R PER B.P. JAIN, ACCOUNTANT MEMBER. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS), KARNAL, DATED 22.09.2009 PERTAINING TO THE ASSESSMENT YEAR 2004-05 IN AN APPEAL AGAINST ORDER UNDER SECTION 143(3)/254 OF THE INCOME-TAX ACT, 1961 (THE ACT). 2. GROUND NOS.1 & 2 RAISED BY THE ASSESSEE ARE BEIN G TAKEN UP TOGETHER BEING THE ISSUE IDENTICAL AS UNDER:- 1. THAT THE LEARNED C.I.T.(APPEALS) WAS NOT JUSTIF IED IN CONFIRMING ADDITION OF RS.300000/- ON ACCOUNT OF AD VANCE RECEIVED AGAINST MACHINERY FROM M/S. CENTURY CORPOR ATION, MORADABAD FOR ALLEGED UNEXPLAINED CREDIT U/S 68 OF THE INCOME TAX ACT HAVING REGARDS TO FACTS AND CIRCUMSTANCES O F THE CASE. 2 2. IT IS RESPECTFULLY SUBMITTED THAT THE PARTY HAD ACKNOWLEDGED THE TRANSACTION, GIVING PAN NO. WHICH WAS DULY SUPP ORTED BY THE DOCUMENTARY EVIDENCE. SINCE THE IDENTITY OF TH E PARTY WAS ESTABLISHED AND GENUINENESS OF THE TRANSACTION HAVI NG BEEN EXPLAINED, THE CONFIRMATION OF THE DISALLOWANCE IS COMPLETELY BAD IN LAW AND AGAINST FACTS OF THE CASE. THEREFOR E, THE SAME MAY KINDLY BE DIRECTED TO BE DELETED ON MERITS. 3. BRIEF FACTS OF THE PRESENT CASE ARE THAT THE ASS ESSEE HAS CLAIMED TO HAVE TAKEN ADVANCE OF RS.4 LAC FROM M/S. CENTURY CO RPORATION, MORADABAD (UP), OUT OF WHICH RS.1 LAC PERTAINED TO A.Y. 1994- 95 AND BALANCE RS.3 LAC PERTAINED TO A.Y. 1995-96. THE CIT(A) CONFIRMED TH E ADDITION OF RS.1 LAC TO THE INCOME OF THE ASSESSEE IN A.Y. 1994-95 ON AC COUNT OF THE ALLEGED ADVANCE RECEIVED FROM M/S. CENTURY CORPORATION, MOR ADABAD (UP) BECAUSE ASSESSEE FAILED TO FILE ANY CONFIRMATION FROM THE C REDITORS AND LETTERS WRITTEN TO THE PARTIES RECEIVED BACK UNSERVED. THEREFORE, THE AO ISSUED NOTICE UNDER SECTION 148 FOR A.Y. 1995-96 ALSO, WHERE ADVA NCE OF RS.3 LAC WAS CLAIMED FROM THE SAME PARTY. SUBSEQUENTLY THE ADDI TION OF RS.3 LAC WAS MADE IN A.Y. 1995-96 AND THE SAME WAS CONFIRMED BY THE CIT(A) ALSO BUT SUBSEQUENTLY THE ASSESSEE FILED APPEAL BEFORE ITAT AND RAISED THE FOLLOWING TWO GROUNDS:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(APPEALS) WAS NOT JUSTIFIED TO HOLD THAT THE PRO CEEDINGS INITIATED U/S 147/148 OF THE I.T. ACT WERE WITHIN T HE AMBIT OF LAW. THOUGH THE APPELLANTS REQUEST VIDE LETTER DA TED 26/4/2002 FOR THE COMMUNICATION OF THE REASONS FOR RE-OPENING OF THE CASE HAD NOT BEEN COMPLIED WITH AND THE REASONS FOR RE-O PENING OF 3 THE CASE HAD NOT BEEN COMMUNICATED TO THE APPELLANT IN SPITE OF THE FACT THAT THE REQUEST HAD BEEN MADE AND THE APP ELLANT HAD BEEN DENIED THE OPPORTUNITY TO CONTEST THE RE-OPENI NG OF THE ASSESSMENT PROCEEDINGS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE L D. CIT(APPEALS) WAS NOT JUSTIFIED TO CONFIRM THE ADDIT ION OF RS.3,00,000/- FOR ALLEGED UNEXPLAINED CREDITS UNDER SECTION 68 OF THE I.T. ACT. AGAINST GROUND NO.1, ITAT RESTORED THE ISSUE BACK T O THE FILE OF THE ITO WITH THE DIRECTION TO FURNISH THE REASONS RECORDED UNDER SEC. 148 AND ALLOW THE ASSESSEE TO FILE OBJECTION IF ANY AND THEREAFTE R CONSIDER SUCH OBJECTIONS ON MERIT BY PASSING A SPEAKING ORDER. WHEREAS, GRO UND NO.2 WAS NOT DECIDED ON MERIT AND THE SAME WAS DEEMED TO BE ALLO WED FOR STATISTICAL PURPOSES. THEREFORE, THE AO ACCORDINGLY ISSUED NOT ICE TO THE ASSESSEE AND SUPPLIED THE REASONS RECORDED AND DISPOSED OFF THE OBJECTION OF THE ASSESSEE VIDE ORDER DATED 29.09.2006 AND HELD THAT NOTICE UN DER SEC.148 WAS VALIDLY ISSUED. WHEREAS, THE SECOND ISSUE RELATING TO ADDI TION OF RS.3 LAC TO THE INCOME OF THE ASSESSEE WAS NOT CONSIDERED BY THE AO HOLDING THAT THE SAME WAS NEITHER RESTORED TO HIS FILE BY ITAT NOR DECIDE D ON MERIT. 4. BEFORE THE LEARNED CIT(A) AND THE AO THE ASSESSE E SUBMITTED THAT AN ADVANCE AGAINST THE ORDER HAS ALREADY BEEN CONFIRME D BY M/S. CENTURY CORPORATION AND HAS ALSO BEEN CONFIRMED BY THE INCO ME-TAX DEPARTMENT. THE MACHINERY WAS BOOKED BY M/S. CENTURY CORPORATIO N IN THE FINANCIAL 4 YEAR 1999-2000 FOR WHICH ADVANCE WAS RECEIVED DURIN G THE YEAR ENDING 31 ST MARCH, 1994 OF RS. 1 LAC AND DURING THE IMPUGNED YE AR OF RS.3 LAC. THE LEARNED CIT(A) OBSERVED THAT THE ASSESSING OFFICER HAS RECORDED THE PROPER REASONS AND AFTER PROPER APPROVAL, NOTICE HAS BEEN ISSUED FOR RE-ASSESSMENT PROCEEDINGS AND THEREFORE, HELD THE REOPENING OF TH E ASSESSMENT UNDER SECTION 147 AS VALID. THE LEARNED CIT(A) DID NOT D ECIDE THE ISSUE ON MERITS SINCE THE SAME HAS NOT BEEN DECIDED BY THE ITAT ON MERIT NOR THE SAME HAS BEEN DIRECTED TO BE RE-DECIDED BY THE AO OR THE CIT (A). 5. WE HAVE HEARD THE PARTIES AND PERUSED THE MATERI AL AVAILABLE ON RECORD. ITAT VIDE ITS ORDER DATED 30.06.2005 HAS R ESTORED THE MATTER TO THE FILE OF THE AO ON THE LEGAL ISSUE AND HAS NOT DECID ED THE MATTER ON MERITS. THE AO AS WELL AS THE LEARNED CIT(A) BOTH DECIDED T HE MATTER ON LEGAL ISSUE ONLY AND HELD THAT THE ISSUE ON THE MERIT CANNOT BE DECIDED SINCE ITAT IN ITS ORDER DATED 30.06.2005 HAS RESTORED THE MATTER ON L EGAL ISSUE ONLY. THOUGH THE MATTER SHOULD HAVE BEEN DECIDED ON MERIT AS WEL L. IN THE PRESENT CASE THE ASSESSEE HAS AGITATED THE ISSUE ON MERIT ONLY. IT WAS POINTED OUT BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT ALL THE DOCUM ENTS PERTAINING TO ADVANCE RECEIVED WERE AVAILABLE ON RECORD BEFORE BOTH THE A UTHORITIES BELOW. HE HAS INVITED OUR ATTENTION TO PAGES 57 TO 59 OF PAPER BO OK WHERE THE CONFIRMATION 5 FROM M/S. CENTURY CORPORATION WAS SUBMITTED BEFORE BOTH THE AUTHORITIES BELOW. ADVANCE OF RS.1 LAC HAVING BEEN RECEIVED DU RING THE ASSESSMENT YEAR 1994-95 AND RS. 3 LACS DURING THE ASSESSMENT Y EAR 1995-96 FOR SUPPLY OF HYDRAULIC PRESS. THE MACHINE COULD NOT BE SUPPL IED DURING THESE YEARS SINCE THE FACTORY OF M/S. CENTURY CORPORATION WAS N OT READY. THEREAFTER THE MACHINE WAS SUPPLIED AND THE ASSESSEE HAS POINTED O UT LETTER DATED 30.09.2005 ALONG WITH BILL DATED 29.02.2005 AT PAGE S 97 & 98 OF THE PAPER BOOK AND COPY OF GR AND CHALLAN AT PAGES 99 TO 101O F PAPER BOOK AS EVIDENCE FOR SUPPLY OF THE MACHINERY TO M/S. CENTUR Y CORPORATION. THEREFORE, THE EXPLANATION GIVEN BY THE ASSESSEE AP PEARS TO BE SATISFACTORY THAT THE SUM OF RS.3 LAC IN THE IMPUGNED YEAR HAS B EEN RECEIVED AS ADVANCE AGAINST SUPPLY OF MACHINERY WHICH HAS DULY BEEN ACC OUNTED FOR IN THE REGULAR BOOKS OF ACCOUNT AND THE MACHINERY HAS BEEN SUPPLIED IN THE FOLLOWING YEAR. THEREFORE, ON THE SAID CIRCUMSTANC ES AND FACTS OF THE CASE, THE ASSESSEE HAS A VERY GOOD CASE ON MERIT AND THE ASSESSING OFFICER IS NOT JUSTIFIED IN TREATING THE IMPUGNED SUM OF RS.3 LAC AS UNEXPLAINED CREDIT UNDER SECTION 68 OF THE ACT. THERE IS NOTHING ON RECORD TO SHOW THAT M/S. CENTURY CORPORATION IS A BOGUS CONCERN. THE SAID CONCERN H AS ACKNOWLEDGED THE TRANSACTION GIVING INCOME-TAX PARTICULARS SUPPORTED BY THE DOCUMENTARY 6 EVIDENCE. THEREFORE, IN THE CIRCUMSTANCES AND FACT S OF THE CASE, BOTH THE GROUNDS OF THE ASSESSEE ARE ALLOWED. 6. IN THE RESULT, THE APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 5 TH FEBRUARY, 2010. SD/- SD/- (I.P. BANSAL) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 5 TH FEBRUARY, 2010. COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR BY ORDER *MG DEPUTY REGISTRAR, ITAT.