Max Fabrics, Solan V. DCIT Circle, Parwanoo

ITA 457/CHANDI/2022

AI Insights

Max Fabric, a company based in Baddi, Solan, appealed against the order of the NFAC, which had upheld certain additions made during the assessment year 2015-16. The primary contention was regarding an addition of Rs.4,18,200 related to alleged unexplained credit entries for M/s Nishtha Plastics. The NFAC had confirmed this addition based on the nature of cash transactions, deeming them suspicious without substantial evidence. The Tribunal, after reviewing the case, found that the NFAC's decision lacked a solid evidentiary basis and thus allowed the appeal, removing the disputed addition.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 128430 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-06-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 15-03-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 22-05-2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Set aside
• Section: 80IC; 80IC

Judgement Text

आयकर अपीलȣय अͬधकरण,चÖडीगढ़ Ûयायपीठ,चÖडीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, “SMC”, CHANDIGARH BEFORE SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER आयकरअपीलसं./ITA No.457/CHD/2022 Ǔनधा[रणवष[ / Assessment Year :2015-16 Max Fabric, Village Dassomajra, Baddi, Solan H.P.173205 बनाम The DCIT, Circle, Parwanoo èथायीलेखासं./PAN NO: AAUFM1452A अपीलाथȸ/Appellant Ĥ×यथȸ/Respondent Ǔनधा[ǐरतीकȧओरसे/Assessee by : None राजèवकȧओरसे/ Revenue by : Sh. Akashdeep, JCIT ,Sr. DR स ु नवाईकȧतारȣख/Date of Hearing :16.03.2023 उदघोषणाकȧतारȣख/Date of Pronouncement : 06.06.2023 आदेश/Order Per Sudhanshu Srivastava, Judicial Member: This appeal is preferred by the assessee against order dated 12.11.2021passed National Faceless Appeal Centre, (NFAC), Delhi for Assessment Year 2015-16. 2.0 The brief facts of the case are that the assessee had filed its return of income for the relevant assessment year, declaring income of Rs.NIL, after claiming deduction of Rs.38,61,291/- u/s. 80IC of the Income Tax Act, 1961 (hereinafter called ‘the Act’). Subsequently, the case was selected for limited scrutiny under the CASS guidelines. The ITA No. 457-Chd-2022 (A.Y. 2015-16) - Max Fabric, Solan 2 assessment was completed at an income of Rs.28,09,676/-, after making an addition of Rs.1,12,555/- on account of disallowance of deduction u/s.80IC of the Act on interest received, another addition of Rs.24,63,430/- on account of alleged unexplained credit entries in respect of creditors and further addition of Rs.2,33,991/- on account of 1/5 th of telephone expenses, tour and travelling expenses and vehicle running expenses on an adhoc basis. 3.0 Aggrieved, the assessee approached the NFAC, wherein, vide the impugned order, the NFAC upheld the disallowance of deduction of Rs.1,12,255/- on account of interest earned. The NFAC partly deelted the addition on account of unexplained balances of sundry creditors but confirmed an amount of Rs.4,18,200/- on account of balance pertaining to M/s Nishtha Plastics. The NFAC also upheld the disallowance of Rs.2,33,991/- on account of telephone expenses, tour and travelling expenses and vehicle running expenses. 4.0 Aggrieved with the order of the NFAC, the assessee has now approached this Tribunal and in its sole ground has challenged the action of the NFAC in confirming the addition of Rs.4,18,200/- pertaining to M/s Nishtha Plastics. ITA No. 457-Chd-2022 (A.Y. 2015-16) - Max Fabric, Solan 3 5.0 None was present on behalf of the assessee-appellant when the case was called out for hearing. However, an application for adjournment was placed before us, wherein, it has been stated that the counsel was in the process of compiling the documents and, therefore, some more time was required. I have gone through the case record and I am of the considered view that adjournment need not be granted in this case and, therefore, I am proceeding to hear the appeal ex-parte qua the assessee. 6.0 It is seen that the appeal of the assessee has been filed belatedly and there is a delay of 132 days in filing the appeal before the Tribunal. It is further seen that the assessee has submitted an application praying for condonation of delay and in this regard, it has been submitted that the delay had occurred because of COVID-19 situation prevailing in the country and the assessee has placed reliance on the order of the Hon'ble Apex Court in suo moto Writ Petition (C) No. 3 of 2020 and M.A. No. 29 of 2022 extending the period of limitation from 15.03.2020 to 28.02.2022. 7.0 The ld. Sr. D.R. fairly accepted that the assessee’s delay can be condoned in view of the orders of the Hon'ble Apex Court as above. Accordingly, I condone the delay and admit the appeal for the purpose of regular hearing. ITA No. 457-Chd-2022 (A.Y. 2015-16) - Max Fabric, Solan 4 8.0 I have perused the impugned order I note that the reason given by the NFAC for confirming the addition of Rs.4,18,200/- is that the assessee had made the payment to M/s Nishtha Plastics pertaining to the outstanding balance of Rs.4,18,200/- in cash between the period of 01.04.2016 to 23.10.2016 instead of making the payment through Bank. As per the NFAC, the cash transactions appear to be fishy transactions. Thus, the reason given by the NFAC for the confirmation of the impugned disallowance is that the assessee has returned the outstanding amount in cash. However, the books of account maintained by the assessee have not been disputed in as much as the NFAC had allowed filing of additional evidence to justify its contentions vis-à- vis the outstanding balance of the creditors in form of copy of ledger account, Form-26, copy of legal notice, court summon, etc. Also, the NFAC has not pointed out any defect in the ledger account submitted by the assessee but has disregarded the same only on the ground that the transactions appear fishy. In my view, the NFAC could not have ignored/disregarded the transactions without bringing on record any cogent evidence to prove their non- genuineness. In such a situation, I am unable to agree with the action of the NFAC on the issue and I set aside the order ITA No. 457-Chd-2022 (A.Y. 2015-16) - Max Fabric, Solan 5 of the NFAC and direct the Assessing Officer to delete the impugned addition. 9.0. In the final result, the appeal of the assessee stands allowed. (Order pronounced in the open Court on 06/06/2023) Sd/- (SUDHANSHU SRIVASTAVA) Judicial Member Dated : 06.06 .2023 Aks/- आदेशकȧĤǓतͧलͪपअĒेͪषत/ Copy of the order forwarded to : 1. अपीलाथȸ/ The Appellant 2. Ĥ×यथȸ/ The Respondent 3. आयकरआय ु Èत/ CIT 4. आयकरआय ु Èत (अपील)/ The CIT(A) 5. ͪवभागीयĤǓतǓनͬध, आयकरअपीलȣयआͬधकरण, चÖडीगढ़/ DR, ITAT, CHANDIGARH 6. गाड[फाईल/ Guard File सहायकपंजीकार/ Assistant Registrar