ITO, New Delhi V. Sh. Ram Niwas Aggarwal, New Delhi

ITA 5392/DEL/2016

• Counselvise Citation: [2019] 114 COUNSELVISE.COM (IT) 6219 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 1 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-11-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2008-2009
• Appeal Filed On: 17-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIDHI SRIVASTAVA
• Keywords: Unexplained cash credit; Additional evidence
• Section: 143(3); 201; 147

Judgement Text

1 ITA NOS.5392 & 5393/DEL/2016 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F NEW DELHI BEFORE MS SUCHITRA KAMBLE, JUDICIAL MEMBER AND SHRI O. P. MEENA, ACCOUNTANT MEMBER I.T.A. NOS. 5392 & 539 3/DEL/2016 (ASSESSMENT YEARS : 2008-09 & 2011-12) ITO, WARD 38(2), NEW DELHI. (APPELLANT) VS SHRI RAM NIWAS AGGARWAL, PROP. R. N. AGGARWAL & CO. D-16/381, SECTOR- 7, ROHINI, NEW DELHI 110 085. (ABKPA 6231 C) ( RESPONDENT) APPELLANT BY SMT. NIDHI SRIVASTAVA, CIT- D.R. RESPONDENT BY SHRI KAPIL GOEL, ADV. ORDER PER SUCHITRA KAMBLE, JM THESE TWO APPEALS ARE FILED BY THE REVENUE AGAINST THE ORDER DATED 29.07.2016 PASSED BY THE COMMISSIONER OF INCOME TAX [APPEALS]-13, NEW DELHI FOR ASSESSMENT YEARS 2008-09 & 2011-12 RESPE CTIVELY. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- ITA NO. 5392/DEL/2016 GROUNDS OF APPEAL BEFORE HONBLE ITAT NEW DELHI IN THE CASE OF SH. RAM NIWAS AGGARWAL, D-16/381, SECTOR-07, ROHINI, DELHI- 110085, VIDE PAN NO.- ABKPA6231C, A.Y. 2008-09. DATE OF HEARING 19.11.2019 DATE OF PRONOUNCEMENT 19.11.2019 2 ITA NOS.5392 & 5393/DEL/2016 (I). WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN THE LAW, THE LD. CIT(APPEAL) ERRED IN NOT APPRECIAT ING THE FACTS OF THE CASE PROPERLY? (II). WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN THE LAW, THE LD. CIT (APPEAL) HAS ERRED IN DELETING THE ADDITION OF RS.13,30,16,654/- ON ACCOUNT OF UNEXPLAINED TOTAL D EPOSITS WITH THE BANK. (III) THE CIT(A) ERRED IN ADMITTING ADDITIONAL EVID ENCES WITHOUT GIVING SUFFICIENT OPPORTUNITY TO THE ASSESSING OFFICER UND ER RULE 46-A OF THE I.T. ACT, 1961. ITA NO. 5393/DEL/2016 GROUNDS OF APPEAL BEFORE HONBLE ITAT NEW DELHI IN THE CASE OF SH. RAM NIWAS AGGARWAL, D-16/381, SECTOR-07, ROHINI, DELHI- 110085, VIDE PAN NO.- ABKPA6231C, A.Y. 2011-12. (I). WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN THE LAW, THE LD. CIT(APPEAL) ERRED IN NOT APPRECIAT ING THE FACTS OF THE CASE PROPERLY? (II). WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN THE LAW, THE LD. CIT (APPEAL) HAS ERRED IN DELETING THE ADDITION OF RS.38,80,43,254/- ON ACCOUNT OF UNEXPLAINED TOTAL D EPOSITS WITH THE BANK. (III) THE CIT(A) ERRED IN ADMITTING ADDITIONAL EVID ENCES WITHOUT GIVING SUFFICIENT OPPORTUNITY TO THE ASSESSING OFFICER UND ER RULE 46-A OF THE I.T. ACT, 1961. 3. THESE TWO APPEALS ARE IDENTICAL, THEREFORE, WE A RE TAKING BRIEF FACTS FOR A.Y. 2008-09. 4. THE ASSESSEE FILED HIS RETURN OF INCOME FOR A.Y. 2008-09 ON 02.02.2009 DISCLOSING INCOME OF RS.1,80,560/- FROM BROKERAGE O F STOCK AND SHARES AND FROM COMMISSION. THE ASSESSMENT WAS REOPENED UNDER SECTION 147 ON 28.03.2013 ON THE BASIS OF INFORMATION WITH THE ASS ESSING OFFICER THAT THE ASSESSEE WAS THE REAL OWNER OF TWO BANK ACCOUNTS IN THE NAMES OF M/S PRIDE TRADE AGENCY AND M/S. SIDH TRADING COMPANY THOUGH T HESE BUSINESS WERE IN 3 ITA NOS.5392 & 5393/DEL/2016 THE NAME OF HIS EMPLOYEE SHRI DHARMENDER KUMAR. THE ASSESSING OFFICER RECORDED THE STATEMENT OF SHRI R. N. AGGARWAL WHO A DMITTED CONTROL AND SUPERVISION OF THESE TWO CONCERNS WHICH WERE ENGAGE D IN PURCHASE AND SALE OF GOODS ON COMMISSION BASIS. THE ASSESSEE CLAIMED THA T OUT OF COMMISSION OF 25 PAISE PER THOUSAND, THE ASSESSEE PAID 10 PAISE TO S HRI DHARMENDER KUMAR. THE ASSESSING OFFICER TREATED THE ENTIRE DEPOSITS I N THESE BANK ACCOUNTS TOTALING RS.3,34,35,821/- AS UNEXPLAINED CREDITS. T HE ASSESSING OFFICER ALSO TREATED THE ENTIRE CREDITS IN THE ASSESSEES BANK A CCOUNT WITH SYNDICATE BANK AS UNEXPLAINED AND AFTER CONSIDERING THE AMOUNTS TR ANSFERRED TO THIS ACCOUNT FROM M/S SIDH TRADING COMPANY AND M/S. PRIDE TRADE AGENCY AND ADDED THE SUM OF RS.13,30,16,654/- TO THE INCOME OF THE ASSES SEE. THE ASSESSING OFFICER ALSO ADDED THE COMMISSION INCOME OF RS.5,016/- ON A CCOUNT OF THE TRANSACTION OF M/S. SIDH TRADING COMPANY AND M/S. PRIDE TRADE A GENCY AND RS.24,896/- ON ACCOUNT OF TRANSACTIONS IN THE SYNDICATE BANK AC COUNT. 5. BEING AGGRIEVED BY THE ASSESSMENT ORDER THE ASSE SSEE FILED APPEAL BEFORE THE CIT(A) THE CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 6. THE LD. DR SUBMITTED THAT THE ASSESSEE FOUND THE DIFFERENT UNITS UNDER THE BUSINESS ONE IN THE NAMES OF M/S. SIDH TRADING AGENCY AND OTHER IN THE NAME OF M/S. PRIDE TRADING AGENCY. THE WHOLE BUSINE SS CONCERNS WAS PLACED IN CAPACITY OF PROPRIETORSHIP CONCERN OF SHRI DHARM ENDER KUMAR, HIS EMPLOYEE AND AS FAR AS THE QUESTION OF FUND NECESSARY FOR RU NNING THE BUSINESS IS CONCERNED THE SAME WAS ARRANGED BY THE ASSESSEE. TH E OTHER SIGNIFICANT ASPECT OF THE CASE IS THAT SHRI DHARMENDER WAS HIS EMPLOYE E HE WAS PAID FOR AS A SALARY BUT SINCE HIS EMPLOYEE WAS ASSISTING THE ASS ESSEE IN CARRYING OUT HIS BUSINESS THE ASSESSEE WAS GIVING HIM 10 PAISE OUT O F 25 PAISE AS COMMISSION. THE ASSESSEE ADMITTED TO HAVE HIS FULL CONTROL AND SUPERVISION OVER THE BUSINESS. THUS, THE LD. DR FURTHER SUBMITTED THAT T HE ASSESSING OFFICER HAS RIGHTLY MADE ADDITION AS NO CONFIRMATION WAS FILED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS TO ESTABLISH THE IDENTITY, C REDITWORTHINESS AND GENUINENESS OF THE CREDITORS FROM WHOM THE CASH AMO UNT WAS TAKEN. 4 ITA NOS.5392 & 5393/DEL/2016 THEREFORE, THE CREDIT OF RS.1,76,53,000/- IN CASH A ND ALSO THE DEPOSITS OTHER THAN THE CASH OF RS.1,57,82,821/- IN THE BANK ACCOU NTS OF M/S. SIDH TRADING AGENCY AND M/S. PRIDE TRADE AGENCY WHICH WERE UNEXP LAINED WAS ADDED TO THE INCOME OF THE ASSESSEE. APPLYING THE SAME, COMMISSI ON RATE AS APPLIED IN THE EARLIER YEAR, THE ASSESSING OFFICER HAS RIGHTLY MAD E ADDITION OF RS.24,896/- TO THE INCOME OF THE ASSESSEE ON COMMISSION. 7. THE LD. AR RELIED UPON THE ORDER OF THE CIT(A) A ND SUBMITTED THAT FOR A.Y. 2009-10 AND 2010-11 THE SAME ASSESSING OFFICER HAS ACCEPTED THE ASSESSEES PLEA IN RESPECT OF COMMISSION INCOME. TH E LD. AR FURTHER SUBMITTED THAT THE HONBLE DELHI HIGH COURT IN CASE OF PCIT V S. VIJAY CONDUCTORS INDIA PVT. LTD. (ITA NO.683/2015 DATED 29.09.2015) HAS DE LETED THE SIMILAR ADDITION ON CASH CREDITS. THE LD. AR ALSO RELIED UPON THE DE CISION OF THE TRIBUNAL IN CASE OF M/S ALPHA CHEMIE TRADE AGENCIES PVT. LTD. V S. DCIT (ITA NO. 6558 TO 6564/MUM/2012 ORDER DATED 09.09.2016) WHEREIN ON TH E SIMILAR FACTS THE INCOME BY WAY OF COMMISSION WAS ASSESSED AT 0.15% I NSTEAD OF 2% APPLIED BY THE ASSESSING OFFICER. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL T HE RELEVANT MATERIALS AVAILABLE ON RECORD. THE CIT(A) HELD AS UNDER: THE ABOVE SUBMISSIONS HAVE BEEN CAREFULLY CONSIDER ED. SO FAR AS THE ADMISSION OF ADDITIONAL EVIDENCE IS CONCERNED, THE AO HAS OBJECTED TO THEIR ADMISSION WITHOUT ANY REBUTTAL PER SE LOOKING TO TH E ISSUE AT HAND, THE SAME ARE ADMITTED BEING NECESSARY FOR DECIDING THE APPEAL. THE APPELLANT HAS POINTED OUT THAT SUBSTANTIVE ADDITION OF THE EN TIRE DEPOSITS IN HIS BANK ACCOUNT, AND IN THE BANK ACCOUNTS OF M/S SIDH TRADI NG CO. AND M/S PRIDE TRADE AGENCY, WERE MADE IN HIS CASE IN THE A.Y. 200 8-09, AND AFTER REOPENING, IN THE A.Y. 2011-12, VIDE ORDER DATED 31 .03.2014; HOWEVER, IN THE SUBSEQUENT ASSESSMENT ORDERS U/S 143(3) R.W.S. 147 DATED 30.03.2015, FOR THE A.YS. 2009-10 AND 2010-11, NO SUCH ADDITION OF THE CREDITS WAS MADE. THE AO HAS ASSESSED THE COMMISSIO N INCOME EARNED ON THE TOTAL CREDITS IN THESE BANK ACCOUNTS, BY APPLYI NG A RATE OF 0.43% IN THE A.Y. 2009-10 AND 0.37% IN THE A.Y. 2010-11, BEING T HE NET PROFIT RATE FROM THE DISCLOSED BUSINESS TRANSACTIONS. THE APPELLANT HAS FURTHER POINTED OUT THAT, ON THE SAME SET OF FACTS, THE CIT(A) 32 HAS D ELETED THE PROTECTIVE ADDITION IN THE HANDS OF SH. DHARMENDER KUMAR FOR T HE A.Y. 2010-11, OF THE CREDITS IN THE BANK ACCOUNTS OF M/S PRIDE TRADE AGENCY AND M/S SIDH 5 ITA NOS.5392 & 5393/DEL/2016 TRADING CO., RESTRICTING THE PROTECTIVE ADDITION TO THE COMMISSION EARNED AT 0.37% OF THE NET CREDITS (I.E. TOTAL TRANSACTIONS O F THESE TWO CONCERNS LESS TRANSFER TO M/S R.N. AGGARWAL & CO.). 8.1 THERE IS EVIDENTLY NO DOUBT THAT THE DEPARTMENT AND THE APPELLANT ARE NOW IN AGREEMENT THAT THE APPELLANT IS THE BENE FICIAL OWNER OF M/S PRIDE TRADE AGENCY AND M/S SIDH TRADING CO., AND TH AT HE WAS EARNING COMMISSION OF 0.37-0.43% ON THE DEPOSITS IN THOSE B ANK ACCOUNTS. CONSIDERING THE DEPARTMENT'S OWN STAND IN SUBSEQUEN T SCRUTINY ASSESSMENTS, AND THE FINDINGS OF THE CIT(A)-32 IN T HE CASE OF SHRI DHARMENDER KUMAR IN THE A.Y. 2010-11, THERE IS NO C REDIBLE BASIS FOR TREATING THE ENTIRE TURNOVER AS THE INCOME OF THE A PPELLANT. THE CREDITS IN THE SYNDICATE BANK ACCOUNT OF THE APPELLANT ARE SHO WN TO BE OUT OF THE BUSINESS OF SHARE BROKING. THE APPELLANT HAS FILED THE BANK STATEMENT, THE DEBIT NOTES AND DIFFERENCE BILLS, AND CERTIFICATE O F SEBI OF REGISTRATION AS A SUB-BROKER, IN SUPPORT OF THIS CONTENTION. IT IS SE EN THAT IN THE SUBSEQUENT SCRUTINY ASSESSMENT ORDERS, NO ADVERSE VIEW HAS BEE N TAKEN OF THE TRANSACTIONS IN THE SYNDICATE BANK ACCOUNT. AFTER C AREFULLY LOOKING AT THE ABOVE FACTS AND CIRCUMSTANCES, THE ADDITION MADE OF THE CREDITS IN THE BANK ACCOUNTS, AMOUNTING TO RS.13,30,16,654/- IS DE LETED. 8.2 SO FAR AS THE ADDITION OF COMMISSION INCOME IS CONCERNED, THE AO HAS COMPUTED THE COMMISSION INCOME ON THE CREDITS I N THE BANK ACCOUNTS OF M/S PRIDE TRADE AGENCY AND M/S SIDH TRADING CO. AT 25 PAISE PER THOUSAND RUPEES, BY RELYING ON THE STATEMENT OF THE APPELLANT, SHRI R.N. AGGARWAL, RECORDED ON 20.03.2014. OUT OF THE SAID 2 5 PAISE PER THOUSAND RUPEES, WHICH WORKS OUT TO JUST 0.025%, THE APPELLA NT STATED THAT HE PAID 10 PAISE TO SHRI DHARMENDER KUMAR, I.E. 40% OF THE COMMISSION EARNED. HOWEVER IN THE SUBSEQUENT A.YS. 2009-10 AND 2010-11 , THE AO HAS WORKED OUT THE COMMISSION ON THE CREDITS IN THE BAN K ACCOUNTS AT THE NET PROFIT SHOWN BY THE APPELLANT IN THE DISCLOSED BUSI NESS TRANSACTIONS. THIS COMPUTATION HAS NOT BEEN CONTESTED BY THE APPELLANT . IN ANY EVENT, IT IS NOT BELIEVABLE THAT ANY BUSINESS WOULD BE OPERATED FOR AN EARNING OF 0.025%. HENCE, AFTER CAREFUL CONSIDERATION, THE AO IS DIRECTED TO COMPUTE THE COMMISSION INCOME AT 0.37% ON THE TOTAL TRANSAC TIONS IN THE BANK ACCOUNTS OF M/S PRIDE TRADE AGENCY AND M/S SIDH TRA DING CO.. THE APPELLANT HAD SUBMITTED THAT THE CASH WITHDRAWN OF RS. 10,33,000/- FROM THE BANK ACCOUNT OF M/S SIDH TRADING CO. AND OF RS. 5,70,400/- FROM THE BANK ACCOUNT OF M/S PRIDE TRADE AGENCY SHOULD BE RE DUCED FROM THE TOTAL TRANSACTIONS, AS ALLOWED IN THE ORDER OF THE CIT(A) 32 IN THE CASE OF SHRI DHARMENDER KUMAR IN THE AY 2010-11. HOWEVER, THE APPELLANT HAS BEEN UNABLE TO SHOW THE NEXUS BETWEEN THE CASH WITHDRAWN AND CASH DEPOSITED ON LATER DATES. HENCE, THIS CLAIM IS NOT ACCEPTED. THE COMMISSION INCOME WORKS OUT TO RS.1,23,712/- ACCORD INGLY. 9. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. 6 ITA NOS.5392 & 5393/DEL/2016 FROM THE PERUSAL OF THE ORDER OF THE CIT(A), IT CAN BE SEEN THAT THE PROTECTIVE ADDITION IN THE HANDS OF DHARMENDER KUMA R WAS RESTRICTED TO THE COMMISSION AT 0.37% ON THE NET CREDITS FOR A.Y. 201 0-11. THEREFORE, THERE IS NO CREDIBLE BASIS FOR TREATING THE ENTIRE TURNOVER AS THE INCOME OF THE ASSESSEE FOR WHICH THE ASSESSEE HAS FILED ADDITIONAL EVIDENCE BE FORE THE CIT(A) WHICH WERE TAKEN COGNIZANCE BY THE CIT(A). THE CIT(A) HAS RIGH TLY HELD THAT IN THE SUBSEQUENT SCRUTINY ASSESSMENT ORDERS NO ADVERSE VI EW HAS BEEN TAKEN ON THE TRANSACTION IN THE BANK ACCOUNT AND THEREFORE, CIT( A) RIGHTLY DELETED THE ADDITION OF RS.13,30,16,654/-. AS REGARDS DIRECTION GIVEN TO THE ASSESSING OFFICER TO COMPUTE THE COMMISSION INCOME AT 0.37% O N THE TOTAL TRANSACTIONS IN BANK ACCOUNT OF M/S. PRIDE TRADE AGENCY AND M/S SIDH TRADING COMPANY THE CIT(A) HAS RIGHTLY HELD THAT THE ASSESSEE HAS N OT SHOWN ANY NEXUS BETWEEN THE CASH WITHDRAWAL AND CASH DEPOSITED ON LATER DAT ES AND HAS NOT ACCEPTED THE CLAIM OF THE ASSESSEE AND WORKED OUT COMMISSION TO THE EXTENT OF RS.1,23,712/-. THUS ITA NO.5392/DEL/2016 FILED BY T HE REVENUE IS DISMISSED. 8. AS REGARDS ITA NO.5393/DEL/2016, THE FACTS ARE S IMILAR TO THE A.Y. 2008- 09 AND THEREFORE THE SAME FINDING WILL BE APPLICABL E IN THIS APPEAL AS WELL. HENCE APPEAL OF THE REVENUE FOR A.Y. 2011-12 IS DIS MISSED. 9. IN RESULT, BOTH THE APPEALS FILED BY THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH DAY OF NOVEMBER, 2019 . SD/- SD/- (O. P. MEENA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 19/11/2019 PRITI YADAV, SR. PS * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT 7 ITA NOS.5392 & 5393/DEL/2016 ASSISTANT REGISTRAR ITAT NEW DELHI DATE OF DICTATION 19 .11.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 19 .11.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER 1 9 . 1 1 . 2 0 1 9 DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS 1 9 . 1 1 . 2 0 1 9 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 1 9 . 1 1 . 2 0 1 9 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 1 9 . 1 1 . 2 0 1 9 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 1 9 . 1 1 . 2 0 1 9 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 1 9 . 1 1 . 2 0 1 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK