ITO, New Delhi V. M/s Anka India Ltd., Gurgaon

ITA 5535/DEL/2013

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6623 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 18-01-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 10-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K JAIN SENIOR
• Assessee Lawyers: AJAY KUMAR AGARWAL
• Keywords: Unexplained cash credit
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH A : NEW DELHI) BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.5535/DEL./2013 (ASSESSMENT YEAR : 2009-10) ITO, WARD 1 (4), VS. M/S. ANKA INDIA LIMITED, NEW DELHI. V & P.O. KHERKI DAULA, GURGAON 122 001 (HARYANA) (PAN : AAACA2017J) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI AJAY KUMAR AGARWAL, CA REVENUE BY : SHRI S.K. JAIN, SENIOR DR DATE OF HEARING : 18.01.2017 DATE OF ORDER : 28.02.2017 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : THE APPELLANT, INCOME-TAX OFFICER, WARD 1 (4), NEW DELHI (HEREINAFTER REFERRED TO AS THE REVENUE) BY FILIN G THE PRESENT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 31.07.2013 PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS)- IV, NEW DELHI QUA THE ASSESSMENT YEAR 2009-10 ON THE GROUND S INTER ALIA THAT :- 1. THE LD CIT(A) HAS ERRED ON FACTS AND IN LAW IN DELETING THE ADDITION OF RS.26,65,449/- (SIC RS.2,65,549/-) MADE ON ACCOUNT OF UNVERIFIED JOB ITA NO.4005/DEL./2013 2 WORK EXPENSES DESPITE THE FACT THAT THE ASSESSEE HAD FAILED TO PROVE THE GENUINENESS OF THE CLAIM ESPECIALLY WHEN NOTICE U/S 133(6) WERE RECEIVED BACK UNSERVED WITH POSTAL REMARKS 'NO SUCH PERSON'. 2. THE LD CIT(A) HAS ERRED ON FACTS AND IN LAW IN DELETING THE ADDITION OF RS.42,21,908/- MADE ON A/C OF UNEXPLAINED CREDITORS FOR WANT OF VERIFICATION WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAD FAILED TO PROVE THE GENUINENESS OF THE CLAIM MADE AND IDENTITY OF THE CREDITORS ESPECIALLY WHEN THE LETTERS ISSUED U/S 133(6) OF TH E I.T. ACT WERE RECEIVED BACK UNSERVED. 3. THE APPELLANT CRAVES LEAVE FOR RESERVING THE RIG HT TO AMEND, MODIFY, ALTER ADD OR FOREGO ANY GROUND (S) OF APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL. 2. BRIEFLY STATED FACTS OF THIS CASE ARE : THE ASSE SSEE COMPANY IS INTO BUSINESS OF MANUFACTURING AND JOB WORK OF SHOE SOLES, NAMELY POLYURETHANE (PO) AND THERMO PLASTIC RUBBER (TPR). ASSESSING OFFICER NOTICED THE NET PROFIT OF RS.95,79,927/- DE CLARED FROM THE SALES OF RS.1,72,07,196/-, JOB WORK INCOME OF RS.12 ,98,334/- AND OTHER INCOME OF RS.12,46,874/- TOTAL COMES TO RS.1, 97,52,404/-. AFTER ADJUSTMENT OF EXTRA ORDINARY ITEMS OF RS.2,62 ,21,820/- AGAINST THE NET LOSS OF RS.1,65,07,382/- AS PER NOT E 19 OF THE NOTES ON ACCOUNTS OF SCHEDULE L OF THE BALANCE SHEET OF THE COMPANY, AS PER COPIES OF AUDITED PROFIT & LOSS ACC OUNT, BALANCE SHEET AND ITS ANNEXURES FILED ALONG WITH AUDIT REPO RT AND COMPUTED ITA NO.4005/DEL./2013 3 THE TOTAL INCOME AT RS.2,11,28,554/-, AFTER TAKING INTO ACCOUNT THE INADMISSIBLE AND ADMISSIBLE AND DECLARED NIL INCOME AFTER SETTING OFF THE BROUGHT FORWARD LOSSES OF EARLIER YEARS. 3. AO PERUSED THE DETAILS OF JOB-WORK EXPENSES AND COPY OF LEDGER ACCOUNT AND CALLED UPON SHRI PANDEY AND M/S. KURT O JOHN SHOE COMPONENTS U/S 133 (6) OF THE INCOME-TAX ACT, 1961 (FOR SHORT THE ACT) FOR VERIFICATION OF JOB-WORK TRANS ACTION SHOWN BY THE ASSESSEE. ON FAILURE OF PANDEY AND M/S. KURT O JOHN SHOE COMPONENTS, TO VERIFY THE TRANSACTION OF JOB-WORK, AO DISALLOWED THE AMOUNT OF RS.2,66,549/- DEBITED TO THE PROFIT & LOSS ACCOUNT. 4. AO CALLED UPON AN INFORMATION U/S 133 (6) OF THE ACT FORM SUNDRY CREDITORS, M/S. VINTAGE ENTERPRISES AND OTHE RS BUT RECEIVED BACK THE NOTICES UNSERVED. HOWEVER, BENGAL PRINTIN G PRESS FILED COPY OF ASSESSEE COMPANYS LEDGER ACCOUNTS SHOWING CLOSING BALANCE AS ON 31.03.2009 AS NIL WHEREAS, AS PER DET AILS FURNISHED BY THE AR FOR THE ASSESSEE COMPANY, CREDIT BALANCE WAS SHOWN AS RS.61,602/- IN THE NAME OF BENGAL PRINTING PRESS AS ON 31.03.2009. IN THE ABSENCE OF ANY EXPLANATION, AO MADE AN ADDIT ION OF RS.42,46,140/- ON ACCOUNT OF UNEXPLAINED CREDIT. 5. ASSESSEE CARRIED THE MATTER BY FILING AN APPEAL BEFORE THE LD. CIT (A) WHO HAS DELETED THE ADDITION. FEELING AGGR IEVED, THE ITA NO.4005/DEL./2013 4 REVENUE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF F ILING THE PRESENT APPEAL. 6. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. GROUND NO.1 7. UNDISPUTED FACTS OF THIS CASE INTER ALIA ARE THA T THE ACCOUNT OF THE ASSESSEE COMPANY ARE AUDITED BOTH UNDER THE COM PANIES ACT AS WELL AS U/S 44AB OF THE ACT AND AUDITED REPORTS WER E FILED BEFORE THE AO DURING ASSESSMENT PROCEEDINGS; THAT THE ASSE SSEE COMPANY BEING A SICK UNIT FILED REFERENCE TO BOARD OF INDUS TRIAL FINANCIAL RECONSTRUCTION (BIFR) AND BIFR DECLARED THE UNIT SI CK U/S 31-O OF THE ACT AND IDBI WAS APPOINTED AS OPERATING AGENCY TO PREPARE REHABILITATION SCHEME FOR THE COMPANY WHO HAS ADMIT TED THE APPLICATION OF PRESENT ASSESSEE AND DEALT WITH THE CREDITORS OF THE COMPANY; THAT BIFR HAS SANCTIONED A REHABILITATION SCHEME FOR REVIVAL OF THE COMPANY AND WRITTEN BACK SUNDRY CRED ITORS (APPROX. 85%) OFFERED AS INCOME FOR THE YEAR ENDING 31.03.20 09 AND BALANCE OF 15% WERE PAID IN SUBSEQUENT YEARS IN INS TALLMENT AS APPROVED UNDER THE REHABILITATION SCHEME; THAT DURI NG THE SCRUTINY ASSESSMENT FOR AY 2007-08 TRADING RESULT OF THE ASS ESSEE HAS BEEN ITA NO.4005/DEL./2013 5 ACCEPTED; THAT REMAND REPORT WAS ALSO CALLED UPON B Y THE LD. CIT (A) FROM THE AO DURING FIRST APPELLATE PROCEEDINGS. 8. IN THE BACKDROP OF THE AFORESAID UNDISPUTED FACT S AND CIRCUMSTANCES, ARGUMENTS ADDRESSED BY THE LD. REPRE SENTATIVES OF THE PARTIES AND ORDER PASSED BY THE REVENUE AUTHORI TIES BELOW, THE FIRST QUESTION ARISES FOR DETERMINATION IN THIS CAS E IS :- AS TO WHETHER CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS.2,66,549/- ON ACCOUNT OF UNVERIFIED JOB- WORK EXPENSES? 9. AO HAS MAINLY MADE THIS ADDITION OF RS.2,66,549/ - FOR THE REASON THAT NOTICE ISSUED U/S 133 (6) OF THE ACT TO VERIFY THE JOB- WORK CHARGES RECEIVED BACK UNSERVED. HOWEVER, THE AO HAS LOST SIGHT OF THE FACT THAT THE CONTRACTOR HAS DEDUCTED THE APPLICABLE EMPLOYEE STATE INSURANCE) ESI AND EPF (EMPLOYEE PRO VIDENT FUND) CONTRIBUTION ON THESE TEMPORARY LABOUR WORKIN G IN THEIR PREMISES AND PROVIDED THEIR NUMBER, NAME AND RESPEC TIVE LABOUR. THE AO HAS ALSO LOST SIGHT THE FACT THAT THE ASSESS EE HAS ALSO DEDUCTED TDS AND IN THE IMMEDIATE PRECEDING YEAR I. E. 31.03.2008, THE JOB-WORK EXPENSES TO THE TUNE OF RS.3,01,402/- WAS ALLOWED BY THE AO IN THE ASSESSMENT ORDER PASSED BY THE AO U/S 143 (3) OF THE ACT. ITA NO.4005/DEL./2013 6 10. WHEN THE CASE OF THE ASSESSEE IS EXAMINED IN TH E LIGHT OF THE AFORESAID FACTS, WE ARE OF THE CONSIDERED VIEW THAT WHEN CONTRACTOR HAS DEDUCTED ESIC AND EPF ON THE TEMPORARY LABOUR U SED IN PROVIDING JOB-WORK TO THE ASSESSEE COMPANY AND THE ASSESSEE HAS DEDUCTED TDS AND THE SAME JOB-WORK EXPENSES TO THE TUNE OF RS.3,01,402/- WAS ALLOWED IN THE PRECEDING YEAR, TH ERE IS NO QUESTION TO TREAT THE JOB-WORK CHARGES UNVERIFIED B Y THE AO. 11. MOREOVER, ASSESSEES BALANCE SHEET AND ACCOUNT BOOKS ARE DULY AUDITED UNDER THE COMPANIES ACT AS WELL AS U/S 44AB OF THE ACT AND NO DISCREPANCY HAD BEEN FOUND IN THE SAME B Y THE AO. MOREOVER, NO NOTICE ISSUED AFTER A PERIOD OF TWO YE ARS TO VERIFY THE JOB-WORK ACCOMPLISHED BY TEMPORARY WORKERS CAN BE E XPECTED TO BE SERVED UPON. ON THE BASIS OF NON-SERVICE OF NOTI CE U/S 133 (6), PRESUMPTION CANNOT BE DRAWN THAT THE JOB-WORK CHARG ES PAID TO THE WORKERS ARE NOT GENUINE. SO, IN THE GIVEN CIRCUMST ANCES, WE DO NOT FIND ANY ILLEGALITY OR PERVERSITY IN THE FINDINGS R ETURNED BY THE LD. CIT (A) IN DELEING THE ADDITION OF RS.2,66,549/-, C ONSEQUENTLY GROUND NO.1 IS DETERMINED AGAINST THE REVENUE. GROUND NO.2 10. AO HAS MADE ADDITION OF RS.42,46,140/- ON ACCOU NT OF UNVERIFIED SUNDRY CREDITORS FOR THE REASON THAT THE NOTICE ISSUED TO SOME CREDITORS U/S 133 (6) OF THE ACT EITHER NOT RE CEIVED BACK OR ITA NO.4005/DEL./2013 7 RECEIVED BACK WITH THE REMARK THAT NO SUCH FIRM IS IN EXISTENCE. A LIST OF THE SUNDRY CREDITORS CLAIMED BY THE ASSESSE E COMPANY IS REPRODUCED AS UNDER FOR READY REFERENCE :- AMOUNT OF CREDIT BALANCE AS ON 31.3.2009 (RS.) REMARKS OF POSTAL AUTHORITIES M/S. VINTAGE ENTERPRISES 212876 NO SUCH FIRM M/S. HUNTSMAN INTERNATIONAL INDIA LTD. 2368155 LEFT WITHOUT ADDRESS M/S. A.S. SHOE ACCESSORIES PVT. LTD. 20238 LEFT M/S. GULSHAN INTERNATIONAL PVT. LTD. 1422403 NO SUCH FIRM M/S. URMI PLAST 3994 NO SUCH FIRM M/S. HI TECH POWER SYST EM 6000 INCOMPLETE ADDRESS M/S. AKANSHA TRADERS 2251 LEFT M/S. ONKAR EXIM PVT. LTD. 22447 NO SUCH FIRM M/S. GANPATI PACKAGING 53294 NOT KNOWN M/S. NIKHIL TERMOPLAST 72880 UNSERVED BENGAL PRINTING PRESS 61,602 TOTAL 42,46,140 11. DURING THE COURSE OF ARGUMENT, ASSESSEE COMPANY FILED SYNOPSIS CONTAINING DETAIL OF PAYMENT TO SUNDRY CRE DITORS IN SUBSEQUENT YEARS AS PER BIFR SANCTIONED SCHEME, AVA ILABLE AT PAGES 9 AND 10 OF THE SYNOPSIS, WHICH IS REPRODUCED AS UNDER:- ITA NO.4005/DEL./2013 8 PARTY NAME CLOSING BALANCE AS ON 31.03.2009 FY 2009-10 FY 2010-11 FY 2011-12 M/S. VINTAGE ENTERPRISES 2,12,876 RS.1,81,876 PAID BY ACCOUNT PAYEE CHEQUES IN FY 2009-10 ONLY RS.31,000/- OUTSTANDING AS ON 31.03.2010 AGAINST RS.2,12,876 AS ON 31.03.2009 M/S. HUNTSMAN INTERNATIONAL INDIA LTD. 23,68,155 FIRST INSTALLMENT OF RS.5,92,094 ON 21.03.2011 BY BANKING CHANNEL. CLOSING BALANCE RS.17,76,061 FURTHER PAYMENT OF RS.5,92,039 AS ON 03.10.2012 AND RS.5,92,039 AS ON 01.11.2012. CLOSING BALANCE RS.5,91,983 REQURIED TO PAY BY MARCH 2013 M/S. A.S. SHOE ACCESSORIES PVT. LTD. 20,238 RS.20,000 PAID ON 15.05.2009 LEAVING CLOSING BALANCE OF RS.238/- RS.238/ - WRITTEN ON IN FY 2010- 11 AND OFFERED AS INCOME M/S. GULSHAN INTERNATIONAL PVT. LTD. 14,22,403 WRITTEN OFF IN FY 2011- 12 AND OFFERED INCOME. M/S. URMI PLAST 3,994 RS.3,994 WRITTEN ON IN FY 2010- 11 AND OFFERED AS INCOME M/S. HI TECH POWER SYSTEM 6,000 RS.6,000 WRITTEN ON IN FY 2010- 11 AND ITA NO.4005/DEL./2013 9 OFFERED AS INCOME M/S. AKANSHA TRADERS 2,251 RS.2,251 WRITTEN ON IN FY 2010- 11 AND OFFERED AS INCOME M/S. ONKAR EXIM PVT. LTD. 22,447 RS.22,447 WRITTEN ON IN FY 2010- 11 AND OFFERED AS INCOME M/S. GANPATI PACKAGING 53,294 RS.53,294 WRITTEN ON IN FY 2010- 11 AND OFFERED AS INCOME M/S. NIKHIL TERMOPLAST 72,880 RS.72,880 WRITTEN ON IN FY 2010- 11 AND OFFERED AS INCOME BENGAL PRINTING PRESS 61,602 RS.61,602 WRITTEN ON IN FY 2010- 11 AND OFFERED AS INCOME TOTAL 42,46,140 2,01,876 8,14,800 11,84,078 12. MAJOR ADDITION OUT OF ADDITION OF RS.42,46,140/ - ON ACCOUNT OF CREDIT BALANCE OF RS.23,68,155/- AND RS.14,22,40 3/- AS ON 31.03.2009 IS MADE IN CASE OF M/S. HUNTSMAN INTERNA TIONAL INDIA PRIVATE LIMITED AND GULSHAN INTERNATIONAL PRIVATE L IMITED RESPECTIVELY. ITA NO.4005/DEL./2013 10 13. BIFR HAS NOTED IN RESPECT OF SCARIFIES OF SUNDR Y CREDITORS AS UNDER :- 'AS ON 31.03.2008, THE COMPANY HAD 93 SUNDRY CREDIT ORS WITH OUTSTANDING DUES OF RS.394.51 LACKS (PI REFER TO ANNEXURE). OUT OF THE ABOVE. 25 SUNDRY CREDITORS AM OUNTING TO RS.322.05 LACKS ARE CONSIDERED OLD NOT SEEKING C LAIMS / PAYMENTS AND HENCE THE COMPANY PROPOSE TO SETTLE TH EM AT 15 % OF THEIR PRINCIPAL SUM FOR THE FINANCIAL YEAR 2009-10. THE ENTIRE PAYMENT WILL BE COMPLETED DURING THE FY 2011- 12. IN RESPECT OF 68 SUNDRY CREDITORS WITH AN OUTST ANDING OF RS.72.46 LAKHS. NO RELIEF AND CONCESSIONS ARE ENVIS AGED AS THEY ARE TREATED RUNNING CREDITORS WHOSE SERVICES W ILL CONTINUE TO BE UTILIZED BY THE COMPANY DURING THE REHABILITATION PERIOD. 14. IT IS A MATTER OF RECORD THAT IN CASE OF M/S. H UNTSMAN INTERNATIONAL INDIA PVT. LTD., OPENING BALANCE AS O N 01.04.2008 WAS RS.1,57,87,704/- AND AS PER BIFR ORDER, RS.1,34,19, 549/- (85% WRITTEN OFF AND OFFERED MISC. INCOME) AND REMAINING BALANCE OF RS.23,68,155/- PAID IN THREE EQUAL INSTALLMENTS AMO UNTING TO RS.5,92,094/- PAID ON 21.03.2011, 03.10.2012 AND 01 .11.2012, AS IS EVIDENT FROM THE TABLE DRAWN IN PRECEDING PARA 1 1. 15. SO FAR AS CASE OF M/S. GULSHAN INTERNATIONAL PR IVATE LTD. IS CONCERNED, THE LIABILITY OF RS.14,22,403/- HAS ALSO BEEN WRITTEN OFF IN FY 2011-12, RELEVANT TO AY 2012-13, AND IN CASE OF OTHER SMALL CREDITORS, THE COMPANY HAS EITHER PAID IN SUBSEQUEN T PERIOD OR WRITTEN OFF AS DETAILED IN THE TABLE IN PRECEDING P ARA 11. 16. SO, WHEN THE AO HAS ACCEPTED PURCHASES AND TRAD ING ACCOUNT OF THE ASSESSEE WHOSE DETAIL HAS BEEN GIVEN WITH THEIR LAST ITA NO.4005/DEL./2013 11 AVAILABLE ADDRESS PARTICULARLY MAJOR CREDITORS, M/S . HUNTSMAN INTERNATIONAL INDIA PRIVATE LIMITED AND GULSHAN INT ERNATIONAL PRIVATE LIMITED, WHICH ARE PRIVATE LIMITED COMPANIE S, THE TRANSACTION WITH THEM CANNOT BE DISPUTED ON THE BAS IS OF CONJECTURES AND SURMISES. 17. MOREOVER, THE PAYMENT TO THE CREDITORS HAS BEEN MADE BY ACCOUNT PAYEE CHEQUES AND COMPLETE BANK STATEMENT H AS BEEN FILED. ASSESSEE COMPANY ALSO FILED LEDGER ACCOUNT OF SUNDRY CREDITOR DURING ASSESSMENT PROCEEDINGS WHICH COULD HAVE BEEN VERIFIED FORM CENTRAL EXCISE AND VAT DEPARTMENT WIT H WHOM THE ASSESSEE IS REGISTERED. SO, IN THE GIVEN CIRCUMSTA NCES, WE ARE OF THE CONSIDERED VIEW THAT THERE IS NO ILLEGALITY OR PERV ERSITY IN THE ORDER OF THE LD. CIT (A) IN DELETING THE ADDITION OF RS.4 2,46,140/-, HENCE GROUND NO.2 IS ALSO DETERMINED AGAINST THE REVENUE. 17. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, PRESE NT APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 28 TH DAY OF FEBRUARY, 2017. SD/- SD/- (G.D. AGRAWAL) (KULDIP SINGH) VICE PRESIDENT JUDICIAL MEMBE R DATED THE 28 TH DAY OF FEBRUARY, 2017 TS ITA NO.4005/DEL./2013 12 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT (A)-IV, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.