M/s. Shiva Rubber Industries, New Delhi V. ITO, Gurgaon

ITA 4898/DEL/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3967 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 5 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-01-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 20-06-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 29-07-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NIRMAL JIT SINGH
• Assessee Lawyers: DR RAKESH GUPTA
• Keywords: Opportunity of cross examination; Wrong claim; Corroborative evidences
• Section: 234B

Judgement Text

1 ITA NO. 4898/DEL/2015 IN THE INCOME TAX APPELLA TE TRIBUNAL DELHI BENCH: SMC NEW DELHI BEFORE SMT. DIVA SINGH, JUDICIAL M EMBER I.T.A .NO. 4898/DEL/2 015 (A.Y 2008-09) SHIVA RUBBER INDUSTRIES C/O. M/S. RRA TAX INDIA D-28, SOUTH EXTENSION, PART-1 NEW DELHI AAEFS7221G (APPELLANT) VS ITO WARD-II (2) GURGAON (RESPONDENT) APPELLANT BY DR. RAKESH GUPTA, ADV RESPONDENT BY SH. NIRMAL JIT SINGH, SR. DR ORDER PER DIVA SINGH, JM BY THE PRESENT APPEAL THE ASSESSEE ASSAILS THE CORRECT NESS OF THE ORDER DATED 2/6/2015 OF CIT(A)-1, GURGAON PERTAINING TO 2008-0 9 ASSESSMENT YEAR ON THE FOLLOWING GROUNDS:- 1. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES O F THE CASE, LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF LD. AO IN MAKI NG AGGREGATE ADDITION OF RS.2,50,527/- ON ACCOUNT OF DIFFERENCE IN THE BALANCES OF SUNDRY CRE DITORS THAT TOO BY RECORDING INCORRECT FACTS AND FINDINGS AND WITHOUT CONFRONTING ANY ADVERSE MATERI AL AVAILABLE ON RECORD AND WITHOUT PROVIDING ANY OPPORTUNITY OF CROSS EXAMINATION. 2. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN NOT DELETING THE ADDITION OF RS.3,90,23 9/- FULLY AS MADE BY LD. AO ON ACCOUNT OF UNVERIFIED SUNDRY CREDITORS AND HAS FURTHER ERRED I N SUSTAINING THE ADDITION TO THE EXTENT OF RS.3,70,239/- THAT TOO BY RECORDING INCORRECT FACTS AND FINDINGS AND WITHOUT CONFRONTING ANY ADVERSE MATERIAL AVAILABLE ON RECORD AND WITHOUT PR OVIDING ANY OPPORTUNITY OF CROSS EXAMINATION. 3. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN NOT DELETING THE ADDITION OF RS.5,52,62 6/- FULLY AS MADE BY LD. AO ON ACCOUNT OF UNVERIFIED SUNDRY CREDITORS AND HAS FURTHER ERRED I N SUSTAINING THE ADDITION TO THE EXTENT OF RS.5,21,625/- THAT TOO BY RECORDING INCORRECT FACTS AND FINDINGS AND WITHOUT CONFRONTING ANY ADVERSE MATERIAL AVAILABLE ON RECORD AND WITHOUT PR OVIDING ANY OPPORTUNITY OF CROSS- EXAMINATION. 4. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES O F THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT REVERSING THE ACTION OF LD. AO FULLY I N ESTIMATING THE GROSS PROFIT @ 43.21% RESULTING AN ADDITION OF RS.27,86,353/- AND HAS FURTHER ERRED IN SUSTAINING THE GROSS PROFIT @ 25% AND THAT TOO BY RECORDING INCORRECT FACTS AND FINDINGS AND W ITHOUT GIVING ADEQUATE OPPORTUNITY OF HEARING AND WITHOUT FOLLOWING THE PRINCIPLES OF NATURAL JUS TICE. 5. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF LD. AO IN REJE CTING THE BOOKS OF ACCOUNTS OF ASSESSEE U/S 145(3) OF THE ACT. DATE OF HEARING 04.12.2017 DATE OF PRONOUNCEMENT 11.01.2018 2 ITA NO. 4898/DEL/2015 6. THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER, AC TION OF LD. CIT(A) IN NOT QUASHING THE IMPUGNED ASSESSMENT ORDER PASSED BY LD. AO AND IN N OT DELETING VARIOUS ADDITIONS/DISALLOWANCES MADE BY LD. AO AS THE ASSESSMENT ORDER IS NOT SUSTA INABLE ON VARIOUS LEGAL AND FACTUAL GROUNDS. 7. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT REVERSING THE ACTION OF LD. AO IN C HARGING INTEREST U/S 234A, 234B AND 234C OF INCOME TAX ACT, 1961. 8. THAT THE APPELLANT CRAVES THE LEAVE TO ADD, MODIFY , AMEND OR DELETE ANY OF THE GROUNDS OF APPEAL AT THE TIME OF HEARING AND ALL THE ABOVE GROUNDS AR E WITHOUT PREJUDICE TO EACH OTHER. 2. THE LD. AR INVITING THE ATTENTION TO THE ABOVE GROUND S RAISED IN THE PRESENT APPEAL SUBMITTED THAT IN THE FACTS OF THE PRESEN T CASE, THE ASSESSEE UNFORTUNATELY WAS NOT PROPERLY ADVISED AND ON ACCOUNT OF LACK OF PROPER ADVISE THE REQUISITE DOCUMENTS IN SUPPORT OF THE QUERIES RAISED WERE NOT OBTAINED OR MADE AVAILABLE. HOWEVER, THE ASSESSING OFFICER A LSO ON HIS PART APART FROM MAKING CERTAIN ADDITIONS ALSO TINKERED WITH THE GP RATE OF THE ASSESSEE AND APPLIED THE IMPOSSIBLY HIGH GP RATE OF 43.2 1% WITHOUT ASSIGNING ANY REASONS. THE ASSESSEE CARRIED THE ISSUE IN APPEAL BEFORE THE CIT(A) WHO THOUGH GRANTED PART RELIEF IN AS MUCH AS HE RE DUCED THE ESTIMATED GP RATE TO 25% OF THE TOTAL TURNOVER, HOWEVER , HE SUSTAINED ALL THE OTHER ADDITIONS CONTRARY TO THE PAST HISTORY OF THE ASS ESSEE. IN THESE CIRCUMSTANCES, IT WAS HIS SUBMISSION THAT THOUGH ON FACTS, THE ASSESSEE COULD ARGUE FOR DELETING THE ADDITIONS. HOWEVER, SINCE DUE TO INCORRECT HANDLING OF THE CASE IN THE LOWER STAGES, RELEVANT DOCUME NTS HAVE NOT BEEN FILED. ACCORDINGLY, THE ASSESSEE WOULD NOT BE CONTESTING T HE ADDITION OF RS. 2,50,527/- WHICH HAS BEEN MADE ON ACCOUNT OF THE FOLLOWING THREE SUNDRY CREDITORS:- I) M/S SVS POLYMERS RS.13,104/- II) M/S LIBERTY CHEMICALS RS. 1,68,715/- III) M/S HARYANA RUBBER CHEMICALS RS. 68,708/- TOTAL RS. 2,50,527/- 2.1 THE ASSESSEE, IT WAS SUBMITTED, WOULD ALSO NOT BE CONT ESTING THE ADDITION OF RS.3,90,239/- AGAIN ON ACCOUNT OF THE SAME HAND ICAP WHICH HAS BEEN MADE ON ACCOUNT OF THE FOLLOWING FOUR CREDITORS:- I) ARORA CHEMICALS RS.2,89,212/- II) MEHRA ENTERPRISES RS.76,050/- III) NARESH MOHN LOVELESH MOHAN RS.4,977/- IV) PASHUPATI AUTO INDUSTRIES RS.20,000/- 2.2 SIMILARLY, THE ADDITION ON ACCOUNT OF THE FOUR SUNDRY CR EDITOR AMOUNTING TO RS .5,52,626/- COMPRISING OF THE FOLLOWING PARTIE S AGITATED IN GROUND NO. 3 WOULD ALSO NOT BE CONTESTED FOR SIMILAR REASONS:- I) MONICA BEHL RS.1,85,200/- II) PAVAN CHEMICALS RS.1,82,835/- III) MAHAVIRA ENTERPRISES RS.1,53,590/- IV) CHRISTO ENTERPRISES RS. 5,52,626/- TOTAL RS. 5,52,626/- 3 ITA NO. 4898/DEL/2015 2.3. IN THE SAID BACKGROUND IT WAS HIS SUBMISSION THAT AS A RESULT OF THESE ADDITIONS, THE TOTAL TURNOVER OF THE ASSESSEE IS ENHANCED . AS A RESULT OF THIS, APPLYING THE ESTIMATED GP RATE AS ESTIMATED BY THE CIT (A) IGNORING THE PAST HISTORY RESULTED IN A HUGE INJUSTICE. IT WAS HIS SUBMISSION THAT THOUGH THE ASSESSEE IDEALLY COULD HAVE CONTESTED THE ADDITIONS ON M ERITS HOWEVER, HE IS HANDICAPPED BY THE FACT THAT SUPPORTING EVIDENCES WERE NOT OBTAINED OR FILED. HOWEVER, IN ALL FAIRNESS KEEPING THE PAST HISTORY OF THE ASSESSEE ITSELF, THE G.P. RATES MAY BE REDUCED TO 19 TO 20% AS THAT WO ULD BE A JUST AND FAIR ESTIMATE OF THE ASSESSEES INCOME AS ADMITTEDLY THE SAID G.P. RATE WOULD APPLY TO THE ENHANCED TURNOVER WHICH HAS INCREASED AS A RESULT OF ADDITIONS NOT CONTESTED. FOR THE SAID PURPOSES, ATTENTION WAS INV ITED TO PAPER BOOK PAGE NO. 21WHICH WAS PLACED BEFORE THE CIT (A) ALSO. 3. THE LD. SENIOR DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 4. I HAVE HEARD THE SUBMISSIONS AND PERUSED THE MATERIA L AVAILABLE ON RECORD. A PERUSAL OF THE SAME SHOWS THAT THE ASSESSE E BEFORE THE CIT(A) OPPOSING THE ADDITIONS MADE ON ACCOUNT OF SUNDRY CREDITO RS ETC. ADMITTEDLY, HAS CLAIMED THAT HE WAS NOT CONVERSANT WITH THE FACTS. THE RELEVANT EXTRACT IS REPRODUCED HEREUNDER:- RESPECTFULLY SUBMITTED THAT APPELLANT IS NOT WELL CONVERSANT WITH THE KNOWLEDGE OF INCOME TAX LAWS AND RULES AND WAS NOT ALSO GUIDED BY ITS PROFESSIONAL WHO WAS LOOKING AFTER ITS ASSESSMENT P ROCEEDINGS. EVEN IF WHERE THERE IS A CASE, WHERE ANY ASSESSEE MAKE ANY WRONG CLAIM, OR FAILS TO MAKE ANY CLAIM WHICH IS DUE TO HIM FOR WHICH HE IS ADMIS SIBLE UNDER THE LAW, IN ORDER TO DETERMINE THE CORRECT INCOME OF THE YEAR. ASSESSING OFFICER IS OBLIGED TO ASSESS THE CORRECT INCOME. 4.1. IT IS SEEN THAT THE ASSESSEE HAS OFFERED AN EXPLANAT ION IN REGARD TO EACH OF THESE ADDITIONS MADE WHICH HAVE BEEN SUSTAINED B Y CIT(A). THE FACT THAT AT THIS STAGE THEY HAVE BEEN GIVEN UP ON ACCOUNT OF HANDICAP OF NOT COLLECTING AND PLACING ON RECORD THE EVIDENCE DOES DEMONS TRATE THE PECULIAR DILEMMA OF THE ASSESSEE AS THE FACT REMAINS THAT EXPLANAT ION WHATEVER ITS WORTH HAS BEEN OFFERED. CONSIDERING THE PAST HISTORY OF TH E ASSESSEE AND THE ARGUMENTS ADVANCED ON BEHALF OF THE ASSESSEE IN THE PRO CEEDINGS BEFORE THE CIT(A) AND CONSIDERING THE SAME IN THE LIGHT OF THE LIMITED P RAYER OF THE LD. AR. LD. SENIOR DR WAS REQUIRED TO RESPOND AS TO WHAT E STIMATE IN THE PECULIAR FACTS AND CIRCUMSTANCES WOULD BE JUST AND FAIR IN ORDER TO SATISFY THE REVENUE ALSO. CONSIDERING THE FACT THAT THE TOTAL TU RNOVER HAS BEEN ENHANCED BY VIRTUE OF THESE ADDITIONS WHICH HAVE BEEN GIV EN UP IN THE PECULIAR FACTS AND CIRCUMSTANCES WHICH HAVE BEEN ADDRESS ED IN THE EARLIER PART OF THIS ORDER, THE LD. SENIOR DR CONSIDERING THE PAP ER BOOK PAGE NO. 21 OBJECTED TO THE ESTIMATE OF 19% AND SUBMITTED THAT THE REVENUE WOULD BE 4 ITA NO. 4898/DEL/2015 SATISFIED WITH THE ESTIMATE OF 22%. ACCORDINGLY, IN THE LIGHT OF THE SUBMISSIONS OF THE PARTIES BEFORE THE BENCH THE ADDITIONS CHALLENGED IN GROUND NO. 1 TO 3 ARE SUSTAINED AND GROUND NO. 5 IN THE PECULIAR FACTS AND CIRCUMSTANCES STANDS REJECTED. GROUND NO. 6 IS NOT PRE SSED. GROUND NO. 7 IS CONSEQUENTIAL IN NATURE. THE PRAYER MADE IN GROUND NO . 4 IS ALLOWED. THE ASSESSING OFFICER IS DIRECTED TO APPLY THE ESTIMATE TH E GP @ 22%. THE SAID ORDER WAS PRONOUNCED IN THE PRESENCE OF THE PARTIE S AT THE TIME OF HEARING ITSELF. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH JANUARY, 2018. SD/- (DIVA SINGH) JUDI CIAL MEMBER DATED : 11/01/2018 R. NAHEED(DLI)/POONAM(CHD) COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI