ACIT, Meerut V. M/s Modern Chemicals, Meerut

ITA 5099/DEL/2012

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7448 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 24-02-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 01-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJNA
• Keywords: Unexplained expenditure
• Section: 69C; 133(6); 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: E NEW DELHI BEFORE SMT DIVA SINGH, JUDICIAL MEMBER AND SH.O.P.KANT, ACCOUNTANT MEMBER I.T.A .NO.-509 9/DEL/2012 (ASSESSMENT YEAR-20 09-10) ACIT, CIRCLE-1, MEERUT (APPELLANT) VS MODERN CHEMICALS, BAGHPAT ROAD, MEERUT PAN-AABFM2563R (RESPONDENT) APPELLANT BY SH. P.DAM. KANUNJNA, SR.DR RESPONDENT BY SH. SANJIV SAPRA, CA ORDER PER DIVA SINGH, JM THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE AS SAILING THE CORRECTNESS OF THE ORDER DATED 02.07.2012 OF CIT(A), MEERUT PERTAINING TO 2009-10 ASSESSMENT YEAR ON THE FOLLOWING GROUNDS:- 1. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN DELETING THE A DDITION OF RS. 2,89,20,989/- TOWARDS UNEXPLAINED SUNDRY CREDITORS WITHOUT APPRECIATING THAT THE ASSESSEE HAD FAILED TO DISCHARGE THE ONUS CAST UPON IT TO PROVE THE GENUINENESS, CREDITWORTHINESS AND IDENTITY OF THE C REDITORS. 2. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW IN DELETIN G THE DISALLOWANCE OF RS. 5 LACS TOWARDS COMMISSION ALLEGEDLY PAID TO MRS. UR VASHI MAHESHWARI (RS. 2 LACS) AND SHRI VINOD MAHESHWARI (RS. 3 LACS) IGNORI NG THE FACT THAT THE ASSESSEE FAILED TO PROVE THE SERVICES, IF ANY, REND ERED BY THEM AS PER PROVISIONS OF SECTION 37 OF THE IT ACT, 1961. 3. THAT THE APPELLANT CRAVES LEAVE TO ADD, MODIFY AND/ OR DELETE ANY GROUND(S) OF APPEAL. 4. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORD ER OF THE CIT (A) MAY BE SET ASIDE AND THAT OF THE A.O. RESTORED. DATE OF HEARING 14 .06.2016 DATE OF PRONOUNCEMENT 12 .0 8 .2016 I.T.A .NO.-509 9/DEL/2012 PAGE 2 OF 7 2. THE RELEVANT FACTS OF THE CASE ARE THAT THE ASSE SSEE FIRM DECLARED AN INCOME OF RS.7,86,510/- IN THE YEAR UNDER CONSIDERATION IN TH E STATUS OF FIRM. THE SAID RETURN WAS SELECTED FOR SCRUTINY UNDER CASS AFTER ISSUANCE OF NOTICE UNDER SECTION 143(2)/142(1) ETC. THE ASSESSING OFFICER TAKING NOTE OF THE FACT THAT THE FIRM WHICH IS ENGAGED IN THE BUSINESS OF TRADING IN PETROLEUM PRODUCTS LIKE CRUDE MINERAL OIL, MIX FUEL OILS, ETC. IN ORDER TO VERIFY THE SUNDRY CREDITORS ISSUED NOTICES UNDER SECTION 1 33 (6) TO THE FOLLOWING 5 PARTIES NAMELY M/S PASWARA IMPEX LTD. MEERUT; ICICI BANK LTD. DELH I ROAD MEERUT; M/S PETROLUBE INDIA LTD. N. DELHI; AJANTA TRANSPORT KOLKATA; AND UNITED ENTERPRISES, KOLKATA. CONSIDERING THAT NOTICE SENT TO M/S AJANTA TRANSPORT KOLKATA WAS REC EIVED BACK UNSERVED AND THE FACT THAT NONE OF THE PARTIES INDEPENDENTLY FILED CONFIRMED C OPIES OF ACCOUNTS, HE IGNORED THE COPIES OF ACCOUNTS FILED BY THE ASSESSEE FOR M/S PASWARA IMPEX LTD; MS. PETROLUBE INDIA AND UNITED ENTERPRISES AND PROCEEDED TO MAKE THE ADDITIO N HOLDING THE PURCHASES MADE FROM THESE 5 PARTIES AS NOT GENUINE. 3. THE ASSESSEE IN APPEAL BEFORE THE FIRST APPELLAT E AUTHORITY SUBMITTED THAT THE CONCLUSION DRAWN WERE WRONG AS REPLIES HAD BEEN SEN T BY M/S PASWARA IMPEX LTD. AND M/S PETROLUBE INDIA LTD. DIRECTLY TO THE AO AND IN SUPP ORT OF THE SAID ARGUMENT FOLLOWING EVIDENCES WERE RELIED UPON:- I. PASWARA IMPEX LTD : RS 1,40,00,000 : PASWARA IMPEX LTD HAS VIDE LETTER DATED 6.12.2011 (FILED ON DAK COUNTER ON 7.12.2011) HAS CONFIRMED DIRECTLY TO THE LEARNED A.O. IN RESPONSE TO NOTICE U/S 133(6) OF THE INCOME TAX ACT , 1961 DATED 29.11.2011 ALONG WITH THE CONFIRMATION OF ACCOUNT; COPY OF STATEMENT OF INCOME FOR ASSTT. YEAR 2009-10; COPY OF ACKNOWLE DGEMENT OF INCOME TAX RETURN FOR ASSTT. 2009-10 AND COPY OF BANK ACC OUNT. COPY AGAIN BEEN PLACED AT PAGE NO 15 TO PAGE NO 22 FOR YOUR HO NOUR'S KIND CONSIDERATION. I.T.A .NO.-509 9/DEL/2012 PAGE 3 OF 7 II. PETROLUBE INDIA LTD. RS 1,49,20,989: PETROLUBE INDIA LTD. HAS VIDE LETTER DATED 7TH DECE MBER 2011 HAS CONFIRMED DIRECTLY TO THE LEARNED A.O. IN RESPONSE TO NOTICE U/S 133(6) OF THE INCOME TAX ACT, 1961 ALONG WITH THE CONFIRMA TION OF ACCOUNT; AND COPY OF ACKNOWLEDGEMENT OF INCOME TAX RETURN FO R ASSTT. YEAR 2009-10 - COPY AGAIN BEEN PLACED AT PAGE NO, 23 TO PAGE NO. 25 FOR YOUR HONOUR'S KIND VERIFICATION. 3.1. IT WAS ALSO SUBMITTED THAT INDEPENDENT CONFIRM ATIONS OF ACCOUNTS WERE AVAILABLE BEFORE THE AO NOT ONLY FOR M/S PASWARA IMPEX LTD. & M/S PETROLUBE INDIA LTD. BUT ALSO FOR M/S AJANTA TRANSPORT, KOLKATA AS PER PAGE 466 AND 4 67 AND OF UNITED ENTERPRISES AT PAGE NO. 447 OF THE PAPER BOOK. COPIES OF THE SAID EVID ENCES WERE AGAIN PLACED BEFORE THE CIT(A). 3.2. ADDRESSING THE SHORTCOMING POINTED OUT BY THE AO THAT THE NOTICE ISSUED TO M/S AJANTA TRANSPORT, KOLKATA UNDER SECTION 133(6) CAME BACK UNSERVED IT WAS SUBMITTED THAT THERE WAS AN INCOMPLETENESS IN THE ADDRESS MENTIONE D BY THE AO AS AJANTA TRANSPORT, 1C, HEYSHAM ROAD, KOLKATA-700020 INSTEAD OF AJANTA TRAN SPORT, 1 C, HEYSHAM ROAD, KOLKATA- 700029, EMAIL ADDRESS: [e-mail] ; CELL NO.09413209648; CONTACT PERSON:- S.SINGH. 4. ON THE BASIS OF THESE FACTS AND ARGUMENTS IT WAS SUBMITTED THAT IN FACT CONFIRMED STATEMENTS FROM ALL THE 5 PARTIES INCLUDING THE SUN DRY CREDITORS HAD BEEN PROVIDED TO THE ASSESSING OFFICER FOR VERIFICATION WHICH HAVE BEEN TABLED IN THE FOLLOWING MANNER:- 1. PASWARA IMPEX LTD. RS.1,40,00,000 AT PAGE NO .26 2. ICICI BANK LTD. DELHI ROAD, MEERUT RS.2,71,591 AT PAGE NO.31 3. PETROLUBE INDIA LTD., NEW DELHI RS.1,49,20,989 AT PAGE NO.27 4. AJANTA TRANSPORT, KOLKATA RS.6,52,077 AT PAGE NO28 TO PAGE NO. 29 5. UNITED ENTERPRISES KOLKATA RS.7,17,411 AT PAGE NO. 30 RS.3,05,62,068 I.T.A .NO.-509 9/DEL/2012 PAGE 4 OF 7 4.1. ACCORDINGLY, AFTER CONFRONTING THESE EVIDENCES TO THE AO AND OBTAINING A REMAND REPORT, THE ADDITION WAS DELETED. AGGRIEVED BY WHIC H, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 5. THE LD. SR. DR SUBMITTED THAT THE REVENUE IS AGG RIEVED BY THE DELETION OF THE ADDITIONS QUA THE PARTIES MENTIONED AT SERIAL NO. 2 AND 4. RELIANCE IS PLACED UPON THE ASSESSMENT ORDER. 6. THE LD. AR RELYING UPON THE IMPUGNED ORDER AND T HE SYNOPSIS FILED, SUBMITTED THAT THE ICICI BANK AT SERIAL NO. 2 IS A BANK AND THE DE TAILS OF THE SAID OUTSTANDINGS HAD BEEN FILED BEFORE THE AO AS WELL AS THE CIT(A) AND ARE A VAILABLE AT PAGE 31. ADDRESSING THE SECOND PARTY I.E. AJANTA TRANSPORT KOLKATA, IT WAS HIS SUBMISSION THAT CONFIRMATION LETTER FROM THE SAID PARTY HAD BEEN FILED BY THE ASSESSEE. HOWEVER THE ASSESSING OFFICER INSISTED THAT SINCE REPLY HAS NOT BEEN RECEIVED DIRECTLY BY HIM AS THE NOTICE UNDER SECTION 133(6) RETURNED THE ADDITION WAS MADE. RELYING UPON THE S UBMISSIONS MADE AND THE FINDINGS RECORDED THEREON BY THE CIT(A), IT WAS HIS SUBMISSI ON THAT ADMITTEDLY THE NOTICE HAD BEEN SENT TO AN INCOMPLETE ADDRESS AND THE FACTS WERE AC KNOWLEDGED BY WAY OF AN EMAIL ALSO AND CONFRONTED TO THE AO. EVEN OTHERWISE, IT WAS H IS SUBMISSION THAT THERE ARE NO TRANSACTIONS IN FINANCIAL YEAR 2008-09 AND THE OPEN ING BALANCE IN THESE ACCOUNT REMAINS. THE CLOSING BALANCE AT THE END OF THE YEAR AND THE FIGURE REMAINS. THE SUPPORTING DOCUMENTS AVAILABLE IN THE PAPER BOOK FILED IT WAS SUBMITTED HAVE NOT BEEN ASSAILED. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE DOCUMENTS AVAILABLE ON RECORD RELIED UPON BEFOR E THE AO THE CIT(A) HAVE BEEN TAKEN INTO CONSIDERATION. WE FIND THAT IN THE ABSENCE OF ANY ARGUMENT ASSAILING THE SAME THE FINDING OF THE CIT(A) THAT THE ADDITION DESERVES TO BE DELETED CANNOT BE FAULTED WITH. IT IS I.T.A .NO.-509 9/DEL/2012 PAGE 5 OF 7 SEEN THAT THE CONCLUSION DRAWN THAT THE SUNDRY CRED ITORS HAD NOT DIRECTLY CONFIRMED TO THE AO WAS FOUND TO BE INCORRECT. FURTHER THE NON-RECE IPT OF A RESPONSE TO NOTICE UNDER SECTION 133(6) FROM M/S AJANTA TRANSPORT, KOLKATA, THE ASSESSEE HAS EXPLAINED IT BY STATING THAT THE NOTICE WAS SENT TO AN INCOMPLETE ADDRESS. THE SAME HAS BEEN CONFIRMED BY THE SAID PARTY AND THE EVIDENCES HAVE ALSO BEEN CONFIRM ED BY WAY OF AN EMAIL. IN THE ABSENCE OF ANY INFIRMITY POINTED OUT BY THE REVENUE, THE D EPARTMENTAL GROUND IS DISMISSED. 8. THE FACTS RELATED TO THE NEXT ISSUE ARE THAT IT WAS NOTICED THAT A COMMISSION OF RS. 2 LACS WAS PAID TO MRS. URVASHI MAHESHWARI AND RS. 3 LACS TO SH. VINOD MAHESHWARI. THE AO REQUIRED THE ASSESSEE TO SHOW THEIR QUALIFICATI ONS AND TO PRODUCE THESE PERSONS IN ORDER TO JUSTIFY THE SERVICES RENDERED BY THEM BEFO RE HIM. THOUGH THE CONFIRMATIONS WERE RECEIVED INDEPENDENTLY HOWEVER PROOF OF SERVICE WAS NOT PROVIDED. THIS FACT WAS BROUGHT TO THE NOTICE OF THE ASSESSEE AGAIN REQUIRING THE P RODUCTION OF THESE 2 PERSONS. SINCE DESPITE VARIOUS OPPORTUNITIES, THEY WERE NOT PRODUC ED ADDITION OF THE SAID AMOUNT WAS MADE UNDER SECTION 69C AS UNEXPLAINED EXPENDITURE. 9. THE ADDITION WAS DELETED IN APPEAL BY THE CIT(A) . THE REVENUE IS AGGRIEVED. 10. THE LD. SR.DR RELIED UPON THE ASSESSMENT ORDER AND SUBMITTED THAT THE EVIDENCE OF SERVICES HAVING BEEN PERFORMED HAVE NOT BEEN MADE A VAILABLE ON ACCOUNT OF WHICH FACT ADDITION MAY BE SUSTAINED. 11. THE LD.AR ON THE OTHER HAND RELYING UPON THE IM PUGNED ORDER SUBMITTED THAT NOT ONLY THE QUALIFICATIONS OF THESE 2 PERSONS HAVE BEE N BROUGHT OUT ON RECORD AS PER THE EXTRACT OF THE WRITTEN SUBMISSIONS AT PAGES 9 AND 1 0 OF THE IMPUGNED ORDER BUT EVEN THE EVIDENCE OF SERVICES HAVING BEEN RENDERED HAVE BEEN FILED AND DESPITE THIS THE AO REFUSED TO LOOK INTO THE SAME AND INSISTED UPON MAKING ADDI TION ON THE GROUNDS THAT THESE 2 I.T.A .NO.-509 9/DEL/2012 PAGE 6 OF 7 PERSONS WERE NOT PRODUCED. IT WAS HIS SUBMISSION T HAT THE RELEVANT DOCUMENTS ARE AVAILABLE IN THE PAPER BOOK FILED. NOT ONLY THESE 2 PARTIES CONFIRMED DIRECTLY TO THE AO THAT THEY HAD RENDERED SERVICES AND RECEIVE THE SAID AMO UNTS BUT EVEN RETURNS OF INCOME WERE FILED ALONGWITH COPY OF THE PAN NUMBER EVIDENCING T HAT THE SAID INCOME HAD BEEN SHOWN BY THESE 2 COMMISSION AGENTS. THE DETAILS OF THE S ALES MADE THROUGH SH. VINOD MAHESHWARI ON ACCOUNT OF WHICH THE COMMISSION WAS P AID, IT WAS SUBMITTED ARE AT PAPER BOOK PAGE 51 AND 52 AND THE DETAILS OF THE SALES MA DE THROUGH MRS. URVASHI MAHESHWARI ARE AVAILABLE AT PAPER BOOK PAGE 53. ALL THESE HAV E BEEN CONFRONTED TO THE AO AND HAVE BEEN AVAILABLE BEFORE THE CIT(A) AS WELL AS IN THE PAPER BOOK ON RECORD AND THESE HAVE NOT BEEN ASSAILED BY THE REVENUE. ACCORDINGLY THE A DDITION ON FACTS IT WAS SUBMITTED WAS WRONGLY MADE AND HAS CORRECTLY BEEN DELETED BY THE CIT(A). 12. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ON CONSIDERING THE SAME, IT IS SEEN THAT SRI VINOD MAHESHWARI AND MRS. URVASHI MAHESHWARI AT THE RELEVANT POINT OF TIME AGED 40 AN D 38 ARE STATED TO HAVE 20 YEARS AND 12 YEARS EXPERIENCE IN DEALING IN PETROLEUM PRODUCT S AND THEIR QUALIFICATIONS WERE B.COM. AND B.A. RESPECTIVELY. THE SERVICES RENDERED HAVE B EEN EXPLAINED THAT THEY BOOKED ORDERS OF PETROLEUM PRODUCTS FOR MODERN CHEMICALS EFFECTIN G SALES TO THE TUNE OF RS.52,69,216/- AND RS.36,76,469/- BY MR. VINOD KUMAR MAHESHWARI AN D SMT. URVASHI MAHESHWARI RESPECTIVELY. ACCORDINGLY ON A CONSIDERATION OF TH E PECULIAR FACTS, CIRCUMSTANCES, EVIDENCES AND THE MATERIAL ON RECORD, WE FIND NO GOOD REASON TO INTERFERE WITH THE FINDING ARRIVED AT. BEING SATISFIED BY THE REASONING AND THE CONCLUSION , THE GROUNDS ARE DISMISSED AND THE APPEAL OF THE REVENUE IS DISMISSED. I.T.A .NO.-509 9/DEL/2012 PAGE 7 OF 7 13. IN THE RESULT THE APPEAL OF THE REVENUE IS DISM ISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 12 TH AUGUST 2016. SD/- SD/- (O. P.KANT) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR, ITAT NEW DELHI