ACIT, Circle- 26(2), New Delhi V. Vishal Chain & Jewellery Pvt. Ltd., New Delhi

ITA 5542/DEL/2019

AI Insights

The case involves the Revenue's appeal against the order of the CIT(A) which pertained to the Assessment Year 2006-07. The Revenue challenged the deletion of additions amounting to Rs. 1,55,27,844 and Rs. 62,36,308 made by the AO, who had treated the purchases from M/s Balaji Chain & Co. and M/s Bengali Chain & Co. as bogus. The CIT(A) had allowed the assessee's appeal, leading to the Revenue's challenge before the Tribunal. The Tribunal's decision focused on the adequacy of evidence and the procedural adherence of the CIT(A) in admitting additional evidence and providing opportunities for the AO to respond.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 302750 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 7 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 31-01-2023
• Assessment Year: 2006-2007
• Appeal Filed On: 24-06-2019
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Additional evidence; Set aside
• Section: 143(3); 143(1)

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “F”: NEW DELHI BEFORE N.K. BILLAIYA, ACCOUNTANT MEMBER AND MS. ASTHA CHANDRA, JUDICIAL MEMBER ITA No. 5542/Del/2019 Asstt. Year: 2006-07 O R D E R PER ASTHA CHANDRA, JM The appeal filed by the Revenue is directed against the order dated 22.04.2019 of the Ld. Commissioner of Income Tax (Appeals) – 34, New Delhi (“CIT(A)”) pertaining to Assessment Year (“AY”) 2006-07. 2. The Revenue has raised the following grounds of appeal:- “1. That on the facts and in the circumstances of the case the Ld. CIT(A) has erred in law and on facts in deleting the additions of Rs. 1,55,27,844/- and Rs. 62,36,308/-, made by the AO by treating these purchases from M/s Bajaji chain & Co. And M.s Bengali chain & Co. as bogus, without appreciating the detailed findings given by the AO in the Remand Report 2. That on the facts and in the circumstances of the case the Ld. CIT(A) has erred in law and on facts in deleting the additions of Rs. ACIT, Circle-26(2) New Delhi. Vs. Vishal Chain & Jewellery Pvt. Ltd. 2775/20, 1 st Floor, Beadon Pura, Karol Bagh, New Delhi – 110 005 PAN AABCV2103K (Appellant) (Respondent) Department by: Shri Vivek Vardhan, Sr. DR Assessee by : Shri Y P Rawala, CA Date of Hearing 01/02/2023 Date of pronouncement 08/02/2023 ITA No. 5542/Del/2019 ACIT vs. Vishal Chain & Jewellery Pvt. Ltd. 2 62,36,308/-, made by the AO by treating the purchases from Bengali Chain & Co. bogus without appreciating that in response to the summon u/s 131 Sh. Sumer Chand Verma, prop: M/s Bengali Chain Co., failed to appear despite getting adequate opportunities, thus, neither the identity was established nor the genuineness of transaction was established 3. That on the facts and in the circumstances of the case the Ld. CIT(A) has erred in law and on facts in deleting the additions of Rs. 1,55,27,844/- made by the AO by treating these purchases from M/s Bajaji Chain & Co. and M.s Bengali Chain & Co. as bogus without appreciating that in response to the summon u/s 131 Sh. Muni Ram Verma, prop: Balaji Chain Co., failed to produce copy of original bills, ledger accounts, balance sheet etc., thus, in this case neither the creditworthiness nor the genuineness of transaction was established.. 4. That on the facts and in the circumstances of the case the Ld. CIT(A) has erred in law and on facts in holding that M/s Bajaji Chain & Co. submitted copy of sales bills, ledgers, bank statements etc. making the order perverse 5. That the order of the CIT(A) is perverse, erroneous and is not tenable on facts and in law. 6. That the grounds of appeal are without prejudice to each other.” 3. The facts in brief are that the assessee company is engaged in the manufacturing and trading of gold jewellery, gold chains and resale of bullion i.e. fine gold. For AY 2006-07, the assessee filed its return on 23.11.2006 declaring income of Rs. 15,25,870/-. After initial processing of the return under section 143(1) of the Income Tax Act, 1961 (the “Act”), the case was selected for scrutiny and assessment was completed on total income of Rs. 2,35,40,300/- on 31.12.2008 under section 143(3) of the Act against which the appeal of the assessee filed before the Ld. CIT(A) was allowed. The Revenue challenged the order of the Ld. CIT(A) before the Tribunal. Vide order in ITA No. 4773/Del/2009 dated 30.09.2011, the Tribunal set aside the order of the Ld. CIT(A) on the issue of purchases amounting to Rs. 2,17,64,152/- for decision afresh. Accordingly, the Ld. CIT(A) has decided the said issue afresh whereby he deleted the addition of Rs. 1,55,27,844/- and Rs. 62,36,308/- made by the Ld. AO by treating the purchases from M/s. Balaji Chain & Co. and M/s. Bengali Chain & Co. ITA No. 5542/Del/2019 ACIT vs. Vishal Chain & Jewellery Pvt. Ltd. 3 respectively as bogus recording the following observations and findings in para 10 of the appellate order: “10. I have considered the facts of the case, finding of the AO and submission of the appellant. The case is set aside with the specific direction from the Hon'ble ITAT to the file of the CIT(A) to provide opportunity to the AO as per Rule 46A, as the CIT(A) has admitted the additional evidences without providing opportunity to the AO. CIT(A) has provided opportunity to the AO as well as the appellant. The evidences which were furnished by the appellant during the appellate proceedings in respect of purchases from Bengali Chain & Co. and Balaji Chain & Co. were sent to the AO for his comments. AO has made detailed investigation by way of issuing notice and summon u/s 131 and both the parties have confirmed that appellant has made purchases from them and furnished necessary evidences in support of the transaction. The payments were made by the appellant to both the parties against the purchases and they have furnished copy of sale bills, PAN details, copy of bank accounts reflecting the transactions. Since both the parties have provided necessary details to the AO to establish the genuineness of the transaction and purchases are duly recorded in the books of account of the appellant, AO is not justified in making addition in respect of purchases made both the parties at Rs.2,17,64,152/- and addition made by the AO is hereby deleted.” 4. The Revenue is aggrieved and is before the Tribunal in second round and all the grounds of appeal relate thereto. 5. The Ld. DR placed reliance on the order of the Ld. AO and submitted that necessary documents were not filed by the assessee before the Ld. CIT(A) and therefore the requisite verification in respect of the transactions could not be undertaken by him. The Ld. AR refuted the contention of the Ld. DR and submitted that all documents were filed before the Ld. CIT(A) who after due consideration recorded his findings that the impugned additions made by the Ld. AO were not justified. He submitted that the Ld. CIT(A) had called for remand report from the Ld. AO and during remand proceedings the parties from whom the assessee had made the purchases confirmed the transactions which is obvious from para 8 of the appellate order. 6. We have considered the submission of the parties and perused the record. There is no substance in the argument of the Ld. DR that no ITA No. 5542/Del/2019 ACIT vs. Vishal Chain & Jewellery Pvt. Ltd. 4 documents were produced for verification before the Ld. CIT(A). In fact certain details as enumerated in serial No. 14 and 16 of the assessee’s Paper Book filed before the Ld. CIT(A) in the first round were treated by the Tribunal to be additional evidence which the Ld. CIT(A) had admitted and relied upon without following the mandate of rule 46A of the Income Tax Rules, 1962 which prompted the Tribunal to set aside the matter for decision afresh after providing opportunity of hearing to the Ld. AO. Hence, the necessary documents etc. did exist in the file of the Ld. CIT(A) who in the second round called for the report from the Ld. AO vide his letter dated 14.08.2015 to which the Ld. AO responded vide his letter dated 27.02.2019. The details of remand report are given by the Ld. CIT(A) in para 8 of his appellate order. 7. In para 9 of his appellate order, the Ld. CIT(A) has observed that remand report clearly states that both the parties have confirmed that they have received the complete payments and have filed the required documents. We observe that during remand proceedings the Ld. AO had issued summons to both the parties under section 131 of the Act. in response to which Authorised Representative of Bengali Chain & Co. appeared on 14.02.19 as the Prop. Shri Sumer Chand Verma himself was outside India and produced all necessary supporting documents before the Ld. AO which he admits. No adverse inference can be drawn against the assessee merely because of non personal appearance of the Prop. of Bengali Chain & Co. before the Ld. AO from whom the assessee had made purchases of Rs. 62,36,308/- . Admittedly, in response to summons issued by the Ld. AO under section 131 of the Act, Shri Muni Ram Verma, Prop. of Balaji Chain & Co. appeared before the Ld. AO on 15.02.2019 and his statement was duly recorded in which he confirmed having made sale of jewellery items of Rs. 1,55,27,844/- to the assessee during the year. The Ld. CIT(A) has observed in para 9 of the appellate order that in the statement Shri Muni Ram Verma, Prop. of Balaji Chain & Co. clearly states that he is furnishing bank statement and also furnished statement of copy of account and copy of bills as proof of transactions and sales and payment. The Ld. ITA No. 5542/Del/2019 ACIT vs. Vishal Chain & Jewellery Pvt. Ltd. 5 CIT(A) also recorded finding of fact with which we agree that proper and satisfactory answers to all questions were given and documents required in terms of notice dated 27.11.2018 were already produced by Shri Muni Ram Verma, Prop. of Balaji Chain & Co. 8. In the light of the above facts and circumstances of the case, we decline to interfere with the order of the Ld. CIT(A) holding that the impugned addition is not justified. Consequently, there being no substance in the appeal of the Revenue, the same is rejected. 9. In the result, the appeal of the Revenue is dismissed. Order pronounced in the open court on 8 th February, 2023. sd/- sd/- (N.K. BILLAIYA) (ASTHA CHANDRA) ACCOUNTANT MEMBER JUDICIAL MEMEBR Dated: 08/02/2023 Copy forwarded to- 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi Date of dictation Date on which the typed draft is placed before the dictating Member Date on which the typed draft is placed before the Other Member Date on which the approved draft comes to the Sr. PS/PS Date on which the fair order is placed before the Dictating Member for pronouncement Date on which the fair order comes back to the Sr. PS/PS Date on which the final order is uploaded on the website of ITAT Date on which the file goes to the Bench Clerk Date on which the file goes to the Head Clerk The date on which the file goes to the Assistant Registrar for signature on the order Date of dispatch of the Order