M/s. Barter Impex India Pvt. Ltd., New Delhi V. ITO, New Delhi

ITA 4966/DEL/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7140 (ITAT-DELHI)
• Duration Of Justice: 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 1
• Next Hearing Date: 07-11-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 19-09-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S.K.SARKAR
• Keywords: Business income; Depreciation; Opportunity of being heard; Revised return; TDS; Set aside
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92; 142(1); 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: SMC-I NEW DELHI BEFORE SMT DIVA SINGH, JUDICIAL MEM BER I.T.A .NO.-4966/DEL/2016 (ASSESSMENT YEAR-2012-13) BARTER IMPEX INDIA PVT.LTD., C/O-SARKAR & ASSOCIATES, CAS, K-45, KAILASH COLONY, NEW DELHI-110048. PAN-AAACB1033H ( APPELLANT) VS ITO, WARD-4(2), C.R.BUILDING, NEW DELHI. (RESPONDENT) ASSESSEE BY SH. S.K.SARKAR, CA REVENUE BY SH.F.R.MEENA, SR.DR DATE OF HEARING 07.11.2016 DATE OF PRONOUNCEMENT 06 . 0 1.201 7 ORDER THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE A SSAILING THE CORRECTNESS OF THE ORDER DATED 17.08.2016 OF CIT(A)-35, DELHI PERTAINING TO 201213 ASSESSMENT YEAR ON THE FOLLOWING GROUNDS:- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) & THE LEARNED INCOME TAX OFFICER HAVE ERRED IN NOT ADJUSTING LOSS INCLUSIVE OF DEPRECIATION OF RS.187,501.00 AGAINST THE ASSESSED INCOME OF RS.118,130.00 FOR AS SESSMENT YEAR 2012-13. 2. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) & THE LEARNED INCOME TAX OFFICER HAVE ERRED IN ASSESSING THE INCOME OF THE A PPELLANT-COMPANY AT RS.118,130.00. 3. THE APPELLANT-COMPANY CRAVES FOR ITS RIGHT, WITH OUT PREJUDICE, TO ADD, DELETE, ALTER, MODIFY OR OTHERWISE PRESENT ANY GROUNDS OF APPEAL E ITHER AT OR BEFORE HEARING OF THE APPEAL. 2. THE RELEVANT FACTS OF THE CASE AS EMANATING FROM THE RECORD ARE THAT THE ASSESSEE RETURNED NIL INCOME. THE SAID RETURN WAS SUBSEQUEN TLY REVISED AGAIN FILING A NIL INCOME. HOWEVER, IN BOTH THE RETURNS THE ASSESSEE WAS FOUND TO HAVE CLAIMED A LOSS OF RS.1,87,501/-. THE SAID RETURN WAS PROCESSED UNDER SECTION 143 (1) . AFTER ISSUANCE OF NOTICE UNDER SECTION 143 (2) AND SUBSEQUENTLY NOTICE 142(1) ALONGWITH QUESTI ONNAIRE, THE SCRUTINY ASSESSMENT ORDER WAS PASSED. 3. THE ASSESSING OFFICER TOOK NOTE OF THE FACT THAT THE ASSESSEE HAS NOT DECLARED ANY BUSINESS RECEIPTS IN THE YEAR UNDER CONSIDERATION. ACCORDINGLY, HE REQUIRED THE ASSESSEE TO PAGE 2 OF 5 I.T.A .NO.-4966/DEL/2016 BARTER IMPEX INDIA P.LTD. VS ITO EXPLAIN THE CLAIM OF LOSS. CONSIDERING THE FACT THA T THE ASSESSEE DID NOT HAVE ANY BUSINESS ACTIVITY THE LOSS CLAIMED WAS DISALLOWED. 3.1. APART FROM THAT ASSESSING OFFICER TOOK NOTE OF THE FACT THAT AS PER 26AS, AN ENTRY OF TCS INCOME FROM M/S PYRAMID SALES CORPORATION SHOWED TH AT THERE WAS A GROSS PAYMENT OF RS.1,18,125/- AND TCS OF RS.2,953/- HAS BEEN SHOWN. SINCE IT WAS NOT DECLARED BY THE ASSESSEE IN ITS RETURN, A SPECIFIC QUERY WAS RAISED . IN REPLY THERETO, THE ASSESSEE SUBMITTED THAT THE ENTRY DOES NOT PERTAIN TO IT AND IT HAS DISCUSSED THE MATTER WITH M/S PYRAMID SALES CORPORATION AND THE PARTY HAS AGREES THAT THE TRANS ACTION DOES NOT PERTAIN TO THEM. SINCE DESPITE A SPECIFIC QUERY TO FILE SUPPORTING EVIDENC ES THE ASSESSEE FAILED TO FILE ANY EVIDENCE OF THE ALLEGED DISCUSSION, THE AO TAKING NOTE OF THE F ACT THAT EVEN M/S PYRAMID SALES CORPORATION ALSO HAD NOT TAKEN ANY CORRECTIVE STEPS TO RECTIFY SUCH A MISTAKE AS CLAIMED BY THE ASSESSEE, THE AMOUNT WAS TREATED AS INCOME OF THE ASSESSEE. 4. AGGRIEVED BY THESE ADDITIONS, THE ASSESSEE CAME IN APPEAL BEFORE THE CIT(APPEALS). THE CLAIM WAS REJECTED HOLDING AS UNDER:- 4. THE ONLY ADDITION MADE IN THE ASSESSMENT ORDER IS A ADDITION OF RS.1,18,125/- BEING THE RECEIPTS REFLECTED IN 26AS FROM M/S PYRAMID SAL ES CORPORATION. IN THE ABSENCE OF ANY EVIDENCE, TO ESTABLISH THE CONTRARY THE APPELLA NT'S CLAIM THAT THE TRANSACTION DOES NOT PERTAIN TO IT CANNOT BE ACCEPTED. CONSEQUENTLY, THE ADDITION MADE IS CONFIRMED. 4.1 HOWEVER, GROUND NO. 3 OF THE APPEAL IS FOR CLAI MING CREDIT OF TCS CORRESPONDING TO THE RECEIPTS REFLECTED IN 26AS. SINCE THE ASSESSING OFFICER HAS TAXED THE CORRESPONDING RECEIPTS THE CREDIT FOR TDS IS TO BE ALLOWED. 5. GROUND NO. 1 AND 2 ALSO RAISE ANOTHER ISSUE OF L OSS OF RS.1,87,501/-. THIS LOSS WAS DISALLOWED BY THE APPELLANT IN THE RETURN OF INCOME AND NO REVISED RETURN WAS FILED ON THIS ISSUE. THOUGH REVISED RETURN WAS FILED ON 31.0 3.2013 THE SAID RETURN ALSO REFLECTED NIL INCOME. THEREFORE, THE CLAIM OF LOSS OF RS.1,87 ,501/- IS IN CONTRADICTION WITH THE DECISION OF APEX COURT IN THE CASE OF GOETZE INDIA LIMITED. AS A RESULT THE SAID CONTENTION OF THE APPELLANT IS ALSO NOT ACCEPTED. C ONSEQUENTLY, GROUND NO. 1 AND 2 OF THE APPEAL ARE DISMISSED. 5. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE ITAT. 6. THE LD. AR IN SUPPORT OF THE GROUNDS RAISED, SUB MITTED THAT IT IS A FACT THAT NO BUSINESS RECEIPTS WERE DECLARED BY THE ASSESSEE IN THE YEAR UNDER CONSIDERATION. ON QUERY, IT WAS SUBMITTED THAT THE BUSINESS OF THE ASSESSEE HAS CLO SED FOR MORE THAN ALMOST 4 TO 5 YEARS. PAGE 3 OF 5 I.T.A .NO.-4966/DEL/2016 BARTER IMPEX INDIA P.LTD. VS ITO REFERENCE TO THE RECEIPTS REFLECTED IN 26AS PERTAIN ING TO PYRAMID SALES CORPORATION, IT WAS SUBMITTED THAT THE SAID CONCERN PROBABLY HAS DEALIN GS IN ALCOHOL, LIQUORS COMMODITIES. REFERRING TO THE BUSINESS OF THE ASSESSEE WHEN IT WAS CONDUCT ED THE LD. AR INVITING ATTENTION TO THE OBJECTS CLAUSE, SUBMITTED THAT THE ASSESSEE WAS A B UYER, SELLER AND IMPORTER OF METALS, MINERALS AND ORES, IRON AND STEEL, COAL, CRUDE OIL ETC. HOW EVER, ON CONSIDERING THE OBJECTS CLAUSE REFERRED TO THE PAPER BOOK PAGES 52 TO 54, IT WAS N OTICED THAT THE OBJECTS ARE DIVERSE AND ALSO INCLUDED AGRICULTURAL PRODUCTS, COMMODITIES, PROCES SED FOODS ETC. AMONGST VARIOUS OTHER ACTIVITIES. THE LD.AR IN REPLY SUBMITTED THAT THE A SSESSEES BUSINESS HAD STOPPED IN THE LAST 4 TO 5 YEARS AND CURRENTLY THERE HAS BEEN SOME EXPLORATI ON IN REGARDS TO WINE BUSINESS HOWEVER, AS FAR AS THE YEAR UNDER CONSIDERATION WAS CONCERNED, THERE WERE NO BUSINESS RECEIPTS. IN THE CIRCUMSTANCES, IT WAS HIS SUBMISSION THAT THE LOSS CLAIMED COULD NOT HAVE BEEN ADDED AS BUSINESS RECEIPT AND THE ADDITION MADE IN REGARDS T O INFORMATION COLLECTED IN 26 AS IN REGARD TO M/S PYRAMID SALES CORPORATION WHICH HAS BEEN DENIED BY THE ASSESSEE FIRSTLY COULD NOT HAVE BEEN ADDED AND IN THE EVENTUALITY, IT WAS TO BE ADD ED AS ASSESSEES INCOME THEN THE LOSS CLAIMED SHOULD HAVE BEEN SET OFF AGAINST THE ALLEGE D INCOME OF RS.1,18,130/-. IT WAS HIS ARGUMENT THAT ONCE THE ASSESSEE HAS DENIED ANY TRAN SACTION WITH M/S PYRAMID SALES CORPORATION THEN IT WAS THE DUTY OF THE ASSESSING O FFICER TO ISSUE NOTICE UNDER SECTION 133(6) TO THE SAID CONCERN AS IT IS NOT POSSIBLE FOR THE ASSE SSEE TO PRODUCE EVIDENCE SUPPORTING THAT THERE WAS NO TRANSACTION WITH THE SAID CONCERN. EVEN OTHE RWISE, IT WAS HIS SUBMISSION THAT NO PURCHASES HAVE BEEN MADE BY THE ASSESSEE IN THE YEA R UNDER CONSIDERATION. THE SAID CLAIM IT WAS SUBMITTED IS SUPPORTED FROM THE FACT THAT THER E IS NO INVENTORY HELD BY THE ASSESSEE. REFERRING TO THE NATURE OF TCS, M/S PYRAMID SALES C ORPORATION IT WAS SUBMITTED THAT THE RATE OF TCS DEDUCTED WOULD SHOW THAT IT IS COLLECTED UNDER SECTION 206 C THAT IS PROFITS AND GAINS FROM THE BUSINESS OF TRADING IN ALCOHOLIC LIQUOR, FOREST PRODUCE SCRAP ETC AND THIS WOULD NOT COME PAGE 4 OF 5 I.T.A .NO.-4966/DEL/2016 BARTER IMPEX INDIA P.LTD. VS ITO UNDER THE OBJECTS CLAUSE OF THE ASSESSEE. ACCORDING LY IT WAS HIS PRAYER THAT ADDITION OF A HYPOTHETICAL INCOME WHICH IS NOT THE INCOME OF THE ASSESSEE, CANNOT BE SUSTAINED 7. THE LD. SR.DR ON THE OTHER HAND, RELYING UPON TH E IMPUGNED ORDER, SUBMITTED THAT THE BASIS OF MAKING THE ADDITIONS HAVE BEEN CONFRONTED TO THE ASSESSEE, THE EVIDENCES IN SUPPORT OF THE CLAIM MADE BY THE ASSESSEE HAVE NOT BEEN PLACED ON RECORD. ADDRESSING THE OBJECTIONS OF THE LD.AR IT WAS SUBMITTED THAT IT IS A FACT THAT N O NOTICE U/S 133 (6) HAD BEEN ISSUED BY THE AO ACCORDINGLY, IT WAS HIS SUBMISSION THAT SINCE THE A DDITION IS BASED ON AN EVIDENCE IN PUBLIC DOMAIN I.E. 26AS THE MATTER MAY BE REMANDED IN ORDE R TO CONFRONT THE EVIDENCE WHICH NOW THE ASSESSEE STATED IT CANNOT PLACE ON RECORD AS ALL AL ONG THE ASSESSEE HAS RELIED ON SOME DISCUSSION WITH M/S PYRAMID SALES CORPORATION AND W HICH EVIDENCE DESPITE OPPORTUNITY IT HAS NEVER FILED. IT WAS RE-ITERATED THAT THE AO MAY NO T HAVE CARRIED OUT THIS EXERCISE BECAUSE IT IS THE ASSESSEE WHO CLAIMED BEFORE THE ASSESSING OFFIC ER THAT ITS INTERACTION WITH M/S PYRAMID SALES CORPORATION SHOW THAT M/S PYRAMID SALES CORPO RATION ACCEPTED THAT THE TRANSACTION DOES NOT PERTAIN TO THE ASSESSEE. IN THE CIRCUMSTANCES, THE ASSESSING OFFICER HAS FAULTED THE ASSESSEE FOR NOT FILING ANY EVIDENCE IN SUPPORT OF THAT CLAIM, THUS THE ENTIRE RESPONSIBILITY IT WAS SUBMITTED COULD NOT BE SAID TO HAVE RESTED UPON THE TAX AUTHORITIES. ACCORDINGLY TO ADDRESS THE CORRECT FACTS IT WAS SUBMITTED THE MATTER MAY BE R EMANDED. ADDRESSING THE OBJECTS CLAUSE IT WAS SUBMITTED AGRICULTURE PRODUCE IS ONE OF THE AR EAS AND AS POTENTIAL VENTURE IN WINE OR ALCOHOL COULD HAVE BEEN ACTED UPON. THE FACTS IT W AS SUBMITTED NEED TO BE ADDRESSED. 8. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE MATERIAL AVAILABLE ON RECORD. I FIND THAT IN THE ABSENCE OF ANY RELEVANT DISCUSSION ON T HE ISSUES, IT WOULD BE APPROPRIATE TO SET ASIDE THE IMPUGNED ORDER. NO DOUBT IN THE FACE OF THE DEN IAL OF ANY INTERACTION WITH M/S PYRAMID SALES CORPORATION THE ONUS WOULD HAVE BEEN ON THE DEPARTM ENT TO CONFRONT THE ASSESSEE WITH POSITIVE CONFIRMATION FROM THE SAID CONCERN, HOWEVER IN THE FACTS OF THE PRESENT CASE THE ASSESSEE AS PER RECORD HAS RELIED UPON SOME DISCUSSION WITH SOM EONE FROM THE SAID CONCERN, ACCORDINGLY IN PAGE 5 OF 5 I.T.A .NO.-4966/DEL/2016 BARTER IMPEX INDIA P.LTD. VS ITO THE CIRCUMSTANCES, THE AO MAY HAVE BEEN JUSTIFIED I N AWAITING THE EVIDENCE OF THE FACTUAL INFORMATION RELIED UPON. EVEN OTHERWISE, IT IS SEE N THAT NO EFFORT HAS BEEN MADE BY THE TAX AUTHORITIES TO ADDRESS WHAT WAS THE BUSINESS OF THE ASSESSEE WHEN IT WAS IN OPERATION AND BY WHAT EVENT OR FACT IT IS CLAIMED AND ACCEPTED THAT THE BUSINESS HAS STOPPED. EVEN THE LD.AR IT IS NOTICED WAS NOT SURE WHEN THE BUSINESS WAS STOPP ED. IN THE CIRCUMSTANCES WHERE THE ASSESSEE HAS SHIED AWAY FROM SUPPORTING ITS CLAIM T HAT THE SAID CONCERN ALSO ACCEPTS THAT THERE WAS NO BUSINESS WITH THE ASSESSEE, IT WILL BE APPRO PRIATE TO RESTORE THE ISSUE BACK TO THE FILE OF AO DIRECTING THE SAID AUTHORITY TO PASS A SPEAKING ORDER IN ACCORDANCE WITH LAW. NEEDLESS TO SAY THAT THE ASSESSEE SHALL BE AFFORDED A REASONAB LE OPPORTUNITY OF BEING HEARD. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 06 TH OF JANUARY, 2017. SD/- (DIVA SINGH) JUDICIAL MEMBER *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR, ITAT NEW DELHI