M/s. Swarn Gems Pvt. Ltd., New Delhi V. ITO, New Delhi

ITA 474/DEL/2014

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 4807 (ITAT-DELHI)
• Duration Of Justice: 8 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: G
• Assessment Year: 2008-2009
• Appeal Filed On: 26-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Source of fund
• Section: 68; 143(3); 143(2)

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH”G”: NEW DELHI BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND MS. ASTHA CHANDRA, JUDICIAL MEMBER ITA No. 474/Del/2014 Asstt. Year : 2008-09 O R D E R PER ASTHA CHANDRA, JM The appeal filed by the assessee is directed against the order dated 15.11.2013 of the Ld. Commissioner of Income Tax (Appeals)–X, New Delhi (“CIT(A)”) pertaining to the assessment year 2008-09. Swarn Gems Pvt. Ltd. 611, Somdutt Chamber-II, 9, Bhikaji Cama Place, New Delhi – 110 066 PAN AAACS0391P Vs. ITO, Ward 7(4) New Delhi. (Appellant) (Respondent) Assessee by: Shri K.P. Ganguli, Advocate Department by : Shri Umesh Takyar, Sr. DR Date of Hearing 31.03.2022 Date of pronouncement 11.04.2022 ITA No. 474/Del/2014 2 2. The assessee has taken the following grounds of appeal :- “1. That, on the facts and in the circumstance of the case, the order passed by ITO ward 7(4) u/s 143(3) of I.T. Act 1961 dated 30.12.2010 for the assessment year 2008-09 is invalid as it was passed without serving notice u/s 143(2) of the Act. 2. That, on facts and in the circumstance of the case, Commissioner of Income (Appeal)-X, New Delhi erred both on facts and on law is setting aside the matter to ITO in respect of addition of Rs.27,84,370/- on account of advances from customers for verification. 3. That, on facts and in the circumstance of the case, Commissioner of Income tax (Appeal)-X, New Delhi erred both on facts and on law in confirming of Rs.3,25,432/- out of total expenses of Rs.13,01,729/- made by ITO.” 3. Ground No. 1 has not been pressed. 4. Ground No. 2 relates to addition of Rs. 27,84,370/- on account of advances from the customers. The Ld. Assessing Officer (“AO”) made the addition observing as under in the assessment order :- “the assessee company has shown an amount of Rs. 27,84,370/- as advance from customers. The assessee has not submitted the complete details of the same. For the assessment year 2007-08 an amount of Rs. 24,13,787/- was also added back under this head. This year also the company has not submitted sufficient proof of this advance. So total amount of Rs. 27,84,370/- is added back in the income of the assessee company under section 68 of the Income Tax Act”. [Emphasis supplied] 4.1 Before the Ld. CIT(A), the assessee submitted that this amount of advances from customers has already been accounted for in the assessment year 2007-08 to the extent of Rs. 24,13,787/-. As regards balance amount ITA No. 474/Del/2014 3 of Rs. 3,70,583/- it was stated that Rs. 2,57,000/- was on account of Diamond Accumulation Plan and that there were no other advances more than Rs. 20,000/- from any single customer. It was argued that it would result in a double addition in this year under consideration if the same amount of advances were added again. 4.2 The Ld. CIT(A) directed the Ld. AO to verify the details of advances from customers shown in earlier year and the amount shown as carried forward from the same customer during this year. If on verification, it is found that the same addition has already been made in the assessment year 2007-08, to that extent the same addition may not be repeated in the assessment year 2008-09. The amount of addition may be modified accordingly in order to ensure that there is no double addition of the same amount. 5. We have heard the representatives of the parties and perused the material on record. Our attention was drawn to the order of the Tribunal dated 04.08.2021 in ITA No. 473/Del/2014 in the case of the assessee for the assessment year 2007-08 wherein the Tribunal observed that the remand report has not disputed the confirmations received from the customers and the advances obtained were genuine loan from the customers. The assessee has established the genuineness of all the transactions, identity of creditors and source of funds received. The assessee has filed the relevant documents which have been ignored by the Ld. AO/ CIT(A) who have simply added/ confirmed the addition. 6. From the perusal of the Tribunal’s order (supra) and the material on record pertaining to assessment year 2007-08 submitted before us, we find that Rs. 24,13,787/- forms part of the addition of Rs. 27,84,370/- made in the assessment year 2008-09 which have already been accounted for in assessment year 2007-08. The addition of Rs. 24,13,787/- was deleted by the Tribunal in its order for the assessment year 2007-08 (supra). Hence, respectfully following the decision (supra) of the Co-ordinate Bench of the ITA No. 474/Del/2014 4 Tribunal, we hold that the Ld. AO has made the addition of Rs. 24,13,787/- again in this year which deserves to be deleted. We do so. As regards the balance amount of Rs. 3,70,583/- the matter is restored to the file of the Ld. AO to verify the nature and source thereof and decide the allowability or otherwise of the same in accordance with law after allowing proper opportunity to the assessee. 7. Ground No. 3 relates to disallowance of 25% out of expenses claimed by the assessee under the head ‘Administrative, selling and other expenses’ amounting to Rs. 3,25,432/-. The assessee had claimed expenses of Rs. 13,01,729/- under this head. The Ld. AO made the impugned disallowance for want of proper vouchers and supporting documents. Before the Ld. CIT(A) the assessee submitted that all such vouchers had been maintained and hence the disallowance was not justified. The Ld. CIT(A), however, declined to interfere with the findings of the Ld. AO. This has brought the assessee before us. 8. On hearing the arguments of the parties, we are of the view that no adverse material has been brought on record to justify the impugned disallowance on the face of the assertion made by the assessee that all the vouchers and supporting documents have been maintained. Ad-hoc disallowance without any material to disprove the claim of the assessee for expenses incurred for the purposes of business is unwarranted. We, therefore, delete the impugned disallowance and allow this ground. 9. In the result, the appeal of the assessee is partly allowed. Order pronounced in the open court on _11 th April, 2022. sd/- sd/- (N.K. BILLAIYA) (ASTHA CHANDRA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 11/04/2022 Veena ITA No. 474/Del/2014 5 Copy forwarded to - 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi Date of dictation Date on which the typed draft is placed before the dictating Member Date on which the typed draft is placed before the Other Member Date on which the approved draft comes to the Sr. PS/PS Date on which the fair order is placed before the Dictating Member for pronouncement Date on which the fair order comes back to the Sr. PS/PS Date on which the final order is uploaded on the website of ITAT Date on which the file goes to the Bench Clerk Date on which the file goes to the Head Clerk The date on which the file goes to the Assistant Registrar for signature on the order Date of dispatch of the Order