Jyoti Buildtech Pvt. Ltd., Delhi V. ACIT, New Delhi

ITA 5093/DEL/2014

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8727 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 4 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 15-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J K MISHRA CITD R SH G JOHNSON
• Keywords: Bogus purchase; Principle of natural justice; Additional evidence
• Section: 143(3); 142(1); 14A; 143(2); 68

Judgement Text

1 ITA NOS. 5093 & 5657/DEL/2014 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: D NEW DELHI BEFORE MS SUCHITRA KAMBLE, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER I.T.A. NO. 5093/DEL/2014 (A.Y 2010-11) JYOTI BUILDTECH PVT. LTD., 68/5339, REGHAR PURA, KAROL BAGH, DELHI-110 005. (PAN : AAACJ 9998 F) (APPELLANT) VS ACIT, RANGE 4, NEW DELHI ( RESPONDENT) AND I.T.A. NO. 5657/DEL/2014 (A.Y 2010-11) DCIT, CIRCLE 4(1), NEW DELHI (APPELLANT) VS JYOTI BUILDTECH PVT. LTD., 68/5339, REGHAR PURA, KAROL BAGH, DELHI-110 005. (PAN : AAACJ 9998 F) ( RESPONDENT) APPELLANT BY --NONE-- RESPONDENT BY SH. J. K. MISHRA, CIT-D.R. SH. G. JOHNSON, SR. D.R. ORDER PER SUCHITRA KAMBLE, JM THESE TWO APPEALS ARE FILED BY THE ASSESSEE AND REV ENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX [APPEALS]-V III, NEW DELHI DATED 16.07.2014 FOR ASSESSMENT YEARS 2010-11. DATE OF HEARING 08.01.2020 DATE OF PRONOUNCEMENT 17.01.2020 2 ITA NOS. 5093 & 5657/DEL/2014 2. THE GROUNDS OF APPEAL ARE AS UNDER:- ITA N O.5093/DEL/2014 : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A )] IS BAD BOTH IN THE EYE OF LAW AND ON FACTS. 2(I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING DISALLOWANCE TO THE EXTENT OF RS.15,00,000/- ON ACCOUNT OF PAYMENT MADE TO ADVANC E TECHNO GRAPH ENTERPRISES. (II) THAT THE ABOVE DISALLOWANCE HAS BEEN CONFIRMED ON AN ADHOC FIGURE BY INDULGING INTO SURMISES AND CONJECTURES WITHOUT THE RE BEING ANY BASIS FOR THE SAME. 3(I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE ADDITION OF RS. 10,00,000/- ON ACCOUNT OF BOGUS CREDITORS/BOGUS PURCHASES. (II) THAT THE ADDITION HAS BEEN MADE ON ADHOC FIGU RE DESPITE HOLDING THE PURCHASES ARE GENUINE AND WITHOUT GIVING ANY BASIS FOR THE SAME. 4(I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE DISALLOW ANCE OF RS.5,04,495/- MADE BY THE AO ON ACCOUNT OF FESTIVAL EXPENSES. (II) THAT THE DISALLOWANCE HAS BEEN CONFIRMED REJE CTING THE CONTENTION OF THE ASSESSEE THAT THE EXPENSES HAVE BEEN INCURRED WHOLL Y AND EXCLUSIVELY FOR THE PURPOSES OF BUSINESS. 5(I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE ACTION O F THE AO IN MAKING DISALLOWANCE OF AN AMOUNT OF RS.56.772/- INVOKING T HE PROVISION OF SECTION 14A OF THE ACT. (II) THAT THE ADDITION HAS BEEN CONFIRMED REJECTING THE CONTENTION OF THE ASSESSEE THAT NO EXEMPTED INCOME HAVING BEEN INCURR ED, THE PROVISIONS OF SECTION 14A CANNOT BE INVOKED. 6. THAT THE APPELLANT CRAVES LEAVE TO ADD, AMEND O R ALTER ANY OF THE GROUNDS OF APPEAL. 3 ITA NOS. 5093 & 5657/DEL/2014 ITA N O.5657/DEL/2014 : 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE & IN LAW, THE LD. CIT(A) ERRED IN ADMITTING THE ADDITIONAL EVIDENCES FILED DURING THE APPELLATE PROCEEDINGS, IGNORING THE OBJECTION OF TH E ASSESSING OFFICER IN THIS REGARD.? 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE & AND IN LAW, THE LD. CIT (A) ERRED IN ADMITTING THE ADDITIONAL EVIDE NCES THAT WERE NOT PRODUCED DURING THE ASSESSMENT PROCEEDING EVEN AFTE R GIVING A FINDING THAT THE ASSESSMENT PROCEEDINGS WERE CONCLUDED IN A VALID MANNER AND THE APPELLANT WAS PROVIDED SUFFICIENT TIME BY THE A O TO REPRESENT ITS CASE, AND THE MANNER IN WHICH ASSESSMENT HAS BEEN F RAMED IS PROPER AND UNDER THE PRINCIPLES OF NATURAL JUSTICE.? 3. WHETHER ON THE FACTS AND CIRCUMSTANCE OF THE CASE & LAW, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE OF RS. 47,64,79, 140/- MADE BY THE AO ON ACCOUNT OF SECTION 68 OF THE I.T. ACT.? 4. WHETHER ON THE FACTS AND CIRCUMSTANCE OF THE CASE & IN LAW, THE LD. CIT (A) ERRED IN DELETING THE DISALLOWANCE OF RS. 15,02 ,583/- MADE BY THE AO ON ACCOUNT OF COMMISSION PAID. 5. WHETHER ON THE FACTS AND CIRCUMSTANCE OF THE CASE & IN LAW, THE LD. CIT (A) ERRED IN DELETING THE DISALLOWANCE OF RS. 31,12 ,188/- MADE BY THE AO ON ACCOUNT OF PREPAID EXPENSES CLAIMED UNDER THE HEAD KEYMAN INSURANCE PREMIUM.? 6. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE & IN LAW, THE LD. CIT (A) ERRED IN DELETING THE DISALLOWANCE OF RS. 5 9,22,119/- MADE BY THE AO ON ACCOUNT OF INTEREST PAID ON INTEREST FREE ADVANCE TO SISTER CONCERNS AND RELATIVES AND SHARE-HOLDERS.? 7. WHETHER ON THE FACTS AND CIRCUMSTANCE OF THE CASE & IN LAW, THE LD. CIT (A) ERRED IN DELETING THE DISALLOWANCE OF RS. 1,00, 00,000/- MADE BY THE AO U/S 68 ON ACCOUNT OF HUGE SHARE PREMIUM AND VARY ING SUBMISSIONS, ADOPTION OF COLORABLE AND DECEITFUL DE VICES AND TAX AVOIDANCE TECHNIQUES.? 8. WHETHER ON THE FACTS AND CIRCUMSTANCE OF THE CASE & IN LAW, THE LD. CIT (A) ERRED IN DELETING THE DISALLOWANCE OF RS. 1,90, 32,050/- MADE BY THE AO U/S 68 ON ACCOUNT OF BOGUS CREDITORS / BOGUS PUR CHASES.? 9. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 15,0 0,000/- ONLY OUT OF 4 ITA NOS. 5093 & 5657/DEL/2014 ADDITION OF RS. 2,64,63,562/- MADE BY THE AO ON ACC OUNT OF BOGUS PURCHASES AND GIVING THE RELIEF OF RS. 2,49,63,562/ -.? 3. THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINES S OF CONSTRUCTION AND ALLIED ACTIVITIES FOR BOTH PRIVATE AND GOVERNMENT CLIENTS. THE ORIGINAL RETURN OF THE ASSESSEE WAS DULY FILED ON 05.10.2010 DECLARING AN INCOME OF RS.9,25,66,205/-. THE NOTICES U/S 143(2) AND 142(1) WERE SERVED TO THE ASSESSEE. IN RESPONSE TO THE SAME THE AR OF THE ASS ESSEE ATTENDED THE PROCEEDINGS AND FILED THE INFORMATION AND EXPLANATI ONS. THE ASSESSING OFFICER OBSERVED THAT THE PERFORMANCE OF ASSESSEE COMPANY F ROM 2005-06 TO 2009-10 SHOWS INCREASE IN NP RATIO FROM 2.02% IN A.Y. 2005- 06 ON A TURNOVER OF RS.28,46,44,126/- TO 5.67% IN A.Y. 2009-10 ON A TUR NOVER OF RS.1,27,74,05,153/- WHICH IS BETTER PERFORMANCE. TH E ASSESSING OFFICER PASSED ORDER U/S 143(3) ON 30.03.2013 ASSESSING THE INCOME OF THE ASSESSEE AT RS.63,66,39,120/- AND MADE ADDITION OF RS.54,40,72, 909/-. 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASS ESSEE FILED AN APPEAL BEFORE THE CIT(A). THE CIT(A) PARTLY ALLOWED THE AP PEAL OF THE ASSESSEE. 5. BOTH THE REVENUE AS WELL AS THE ASSESSEE IS IN A PPEAL BEFORE US. 6. AS REGARDS TO GROUND NO. 1, 2 AND 3 OF THE REVEN UES APPEAL, THE LD. DR SUBMITTED THAT THE CIT(A) HAS NOT GIVEN ANY FINDING AS TO WHETHER THE ADDITIONAL EVIDENCES FILED DURING THE APPELLATE PRO CEEDINGS BEFORE THE CIT(A) WAS ADMITTED OR NOT AS NO DOCUMENTS OR EVIDENCES WE RE PRODUCED DURING THE ASSESSMENT PROCEEDINGS. THE LD. DR SUBMITTED THAT T HE ASSESSMENT PROCEEDINGS WERE CONCLUDED IN A VALID MANNER AND TH E ASSESSEE WAS PROVIDED SUFFICIENT TIME TO REPRESENT ITS CASE BEFORE THE AS SESSING OFFICER. FOR GROUND NOS. 4, 5, 6, 7, 8 AND 9 ARE CONCERNED; THE LD. DR RELIED UPON THE ASSESSMENT ORDER. AS REGARDS TO ASSESSEES APPEAL, THE LD. DR RELIED UPON THE ASSESSMENT ORDER. 7. NONE APPEARED DURING THE COURSE OF HEARING DESPI TE GIVING NOTICES WHICH WERE DULY SERVED UPON THE ASSESSEE. 5 ITA NOS. 5093 & 5657/DEL/2014 8. WE ARE TAKING UP SUBMISSIONS MADE BY THE ASSESSE E BEFORE THE CIT(A) AS THE SUBMISSION BEFORE US. 9. WE HAVE HEARD THE LD. DR AND PERUSED ALL THE REL EVANT MATERIALS AVAILABLE ON RECORD. AS REGARDS GROUND NOS. 1, 2 AN D 3 OF REVENUES APPEAL IS CONCERNED, IT IS PERTINENT TO NOTE THAT THE CIT(A) HAS ADMITTED THE ADDITIONAL EVIDENCES, WITHOUT FOLLOWING THE PROCEDURE PRESCRIB ED UNDER RULE 46 OF THE INCOME TAX RULE, 1962. THE CIT(A) PROCEEDED WITHOUT CALLING FOR REMAND REPORT FROM THE ASSESSING OFFICER. THE CIT(A) THOUGH HAS M ENTIONED THAT FEW DOCUMENTS WERE NOT FILED BEFORE THE ASSESSING OFFIC ER AND THOUGH CALLED FOR HIS COMMENTS, DID NOT GIVE OPPORTUNITY TO THE ASSESSIN G OFFICER TO SUBMIT THOSE COMMENTS. MERELY STATING THAT THESE DOCUMENTS ESTAB LISHED THE IDENTITY, CREDITWORTHINESS AND GENUINENESS WILL NOT SUFFICE A S THE SAME HAS TO BE TAKEN INTO THE CONTEXT OF SECTION 68 OF THE ACT. THUS, TH E ISSUE CONTESTED BY THE REVENUE NEEDS TO BE LOOKED INTO A FRESH. THEREFORE, IT WILL BE APPROPRIATE TO REMAND BACK THIS ISSUE TO THE FILE OF THE CIT(A) FO R FRESH ADJUDICATION AND FURTHER DIRECT TO FOLLOW THE PROCEDURE OF ADMISSION OF ADDITIONAL EVIDENCE. NEEDLESS TO SAY THE ASSESSEE BE GIVEN OPPORTUNITY O F HEARING BY FOLLOWING PRINCIPLE OF NATURAL JUSTICE. AS REGARDS TO GROUND NO. 4 OF REVENUES APPEAL, HERE ALSO ADDITIONAL EVIDENCE WAS FILED BY THE ASSE SSEE BEFORE THE CIT(A), THEREFORE, THIS ISSUE IS ALSO REMANDED BACK TO THE FILE OF THE CIT(A) FOR FRESH ADJUDICATION. AS REGARDS TO GROUND NO. 5 OF THE REV ENUES APPEAL, THE PREPAID EXPENSES CLAIMED UNDER THE HEAD KEYMAN INSURANCE PR EMIUM, THE CIT(A) HAS NOT GIVEN A CATEGORICAL FINDING BUT SIMPLY STATED T HAT AS ASSESSEE CLAIMING THE INSURANCE PREMIUM ON PAID BASIS SINCE LAST MANY YEA RS AND THE SAME HAS BEEN ALLOWED ACCORDINGLY DOES NOT ESTABLISH THAT TH E SAME IS RIGHTLY CLAIMED BY THE ASSESSEE IN THIS YEAR. THIS NEEDS TO BE VERIFIE D. THEREFORE, THIS ISSUE IS ALSO REMANDED BACK TO THE FILE OF THE CIT(A) FOR FRESH A DJUDICATION. AS REGARDS TO GROUND NO. 6 OF THE REVENUES APPEAL RELATING TO IN TEREST PAID ON INTEREST FREE ADVANCE TO SISTER CONCERNS AND RELATIVES AND SHARE- HOLDERS, THE SAME WAS NOT BASED ON COGENT MATERIAL AS ONLY THE CONFIRMATION O F THE PARTIES WERE FILED BUT WHETHER ADVANCES WAS ACTUALLY FOR BUSINESS PURPOSE OR NOT HAS NOT BEEN 6 ITA NOS. 5093 & 5657/DEL/2014 ELABORATED BY THE CIT(A) IN HIS ORDER. THEREFORE, T HIS ISSUE ALSO NEEDS TO BE REMANDED BACK TO THE FILE OF THE CIT(A). AS REGARDS TO GROUND NO. 7 OF THE REVENUES APPEAL ADDITION ON ACCOUNT OF HUGE SHARE PREMIUM, THE ASSESSEE FILED THE EVIDENCES BEFORE THE CIT(A) ONLY AND NOT BEFORE THE ASSESSING OFFICER. MERELY STATING THAT THESE DOCUMENTS ESTABLISHED THE IDENTITY, CREDITWORTHINESS AND GENUINENESS WILL NOT SUFFICE AS THE SAME HAS TO BE TAKEN INTO THE CONTEXT OF SECTION 68 OF THE ACT. THUS, THE ISSUE CONTESTED BY THE REVENUE NEEDS TO BE LOOKED INTO A FRESH. THEREFORE, IT WILL BE APPROPRI ATE TO REMAND BACK THIS ISSUE TO THE FILE OF THE CIT(A) FOR FRESH ADJUDICATION AN D FURTHER DIRECT TO FOLLOW THE PROCEDURE OF ADMISSION OF ADDITIONAL EVIDENCE. AS R EGARDS TO GROUND NO. 8 AND 9 OF THE REVENUES APPEAL ADDITION ON ACCOUNT OF SE CTION 68 RELATING TO BOGUS CREDITORS/BOGUS PURCHASES, HERE ALSO THE ASSESSEE F ILED THE EVIDENCES BEFORE THE CIT(A) ONLY AND NOT BEFORE THE ASSESSING OFFICE R. MERELY STATING THAT THESE DOCUMENTS ESTABLISHED THE IDENTITY, CREDITWORTHINES S AND GENUINENESS WILL NOT SUFFICE AS THE SAME HAS TO BE TAKEN INTO THE CONTEX T OF SECTION 68 OF THE ACT. THUS, THE ISSUE CONTESTED BY THE REVENUE NEEDS TO B E LOOKED INTO A FRESH. THEREFORE, IT WILL BE APPROPRIATE TO REMAND BACK TH IS ISSUE TO THE FILE OF THE CIT(A) FOR FRESH ADJUDICATION AND FURTHER DIRECT TO FOLLOW THE PROCEDURE OF ADMISSION OF ADDITIONAL EVIDENCE. NEEDLESS TO SAY, IN ALL THE ABOVE ISSUES REMANDED BACK TO THE FILE OF THE CIT(A), THE ASSESS EE BE GIVEN OPPORTUNITY OF HEARING BY FOLLOWING PRINCIPLES OF NATURAL JUSTICE. HENCE, APPEAL FILED BY THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 10. AS REGARDS TO ASSESSEES APPEAL, GROUND NO. 1 I S GENERAL IN NATURE, HENCE DISMISSED. AS REGARDS TO GROUND NO. 2 (I) AND 2(II) OF THE ASSESSEES APPEAL, THE SAME IS IN CONSONANCE WITH THE GROUND NO. 9 OF THE REVENUES APPEAL. WE HAVE ALREADY REMANDED BACK THIS ISSUE TO THE FILE OF THE CIT(A) FOR DECIDING THE SAME AFRESH. THUS, GROUND NO. 2(I) AND 2(II) OF ASSESSEE S APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. AS REGARDS TO GROUND NO. 3 (I) AND 3 (II) OF THE ASSESSEES APPEAL THE SAME IS IN CONSONANCE WITH THE GROUND NO . 8 OF THE REVENUES APPEAL. WE HAVE ALREADY REMANDED BACK THIS ISSUE TO THE FILE OF THE CIT(A) FOR DECIDING THE SAME AFRESH. THUS, GROUND NO. 3(I) AND 3(II) OF ASSESSEES APPEAL 7 ITA NOS. 5093 & 5657/DEL/2014 IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. AS REGAR DS TO GROUND NO. 4(I) AND 4(II) OF THE ASSESSEES APPEAL ADDITION ON ACCOUNT OF FES TIVAL EXPENSES, THE CIT(A) HAS NOT GIVEN ANY FINDING AT ALL. THIS ISSUE NEEDS TO B E REMANDED BACK TO THE FILE OF THE CIT(A). NEEDLESS TO SAY, THE ASSESSEE BE GIVEN OPPORTUNITY OF HEARING BY FOLLOWING PRINCIPLES OF NATURAL JUSTICE. GROUND NO. 4(I) AND 4(II) IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. AS REGARDS TO GROUND NO. 5 (I) AND 5(II) OF THE ASSESSEES APPEAL, INVOKING PROVISION OF SECTION 14A OF THE AC T, THE SAME IS NOT PROPERLY DEALT BY THE CIT(A). THUS, GROUND NO. 5(I) AND 5(II ) ARE REMANDED BACK TO THE FILE OF THE CIT(A) FOR DECIDING THE SAME AFRESH. NE EDLESS TO SAY, THE ASSESSEE BE GIVEN OPPORTUNITY OF HEARING BY FOLLOWING PRINCIPLE S OF NATURAL JUSTICE. GROUND NO. 5(I) AND 5(II) ARE PARTLY ALLOWED FOR STATISTIC AL PURPOSE. HENCE, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. 11. IN RESULT, BOTH THE APPEALS ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 17TH DAY OF JANUARY, 2020 . SD/- SD/- (PRASHANT MAHARISHI) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 17/01/2020 PRITI YADAV, SR. PS * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 8 ITA NOS. 5093 & 5657/DEL/2014 DATE OF DICTATION 1 3 . 01 .20 20 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 1 4 .01.2020 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER 17 .01.2020 DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS 17.01.2020 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 17.01.2020 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 17.01.2020 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 17.01.2020 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 17.01.2020 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK