ACIT, New Delhi V. M/s. Nalwa Sons Investments Ltd., Delhi

ITA 5668/DEL/2013

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6680 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 16-02-2017
• Assessment Year: 1997-1998
• Appeal Filed On: 21-10-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Depreciation; Accommodation entries; Set aside
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 143(3); 92

Judgement Text

PAGE 1 OF 8 ACIT V NALWA SONS INVESTMENTS LIMITED ITA NO 5668 5669 AND 5670 /DEL/2013 A Y 1997 - 98 1998 - 99 1999 - 200 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E : NEW DELHI BEFORE SHRI H.S.SIDHU , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 5668 , 5669, & 5670/DEL/2013 (ASSESSMENT YEAR: 1997 - 98, 1998 - 99 & 1999 - 2000 ) ACIT, CIRCLE - 13(1), ROOM NO. 212, CR BUILDING, IP ESTATE, NEW DELHI VS. NALWA SONS INVESTMENT LTD, 28, NAJAFGARH ROAD, MOTI NAGAR, INDL. AREA, DELHI PAN:AAACJ2734R (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. RAJESH KUMAR, SR. DR REVENUE BY: SH. ASHWANI KUMAR, ADV DATE OF HEARING 16/02/ 2017 DATE OF PRONOUNCEMENT 2 7 / 0 2 / 2017 O R D E R PER PRASHANT MAHARISHI, A. M. 1. ALL THESE THREE APPEALS PREFERRED BY REVENUE HAVE COMMON GROUNDS AND ARE AGAINST THE ORDERS OF LD. CIT (APPEALS 1), NEW DELHI PASSED ON 16/07/2013 FOR A Y 199 7 98, 98 99 AND 99 2000. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL IN ITA NO. 5668/DEL/2013: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) HAS ERRED IN DELETING THE ADDITION MADE ON ACCOUNT OF DISALLOWANCE ON LEASE RENT CLAIMED BY THE PAGE 2 OF 8 ACIT V NALWA SONS INVESTMENTS LIMITED ITA NO 5668 5669 AND 5670 /DEL/2013 A Y 1997 - 98 1998 - 99 1999 - 200 ASSESSEE BY NOT APPRECIATING THE FACT THAT THE FIRST APPELLATE AUTHORITY HAS DISMI SSED THE APPEAL OF THE ASSESSEE FILED AGAINST THE ORDER U/S 148/ 143(3) ON THE SAME ISSUE AND THE HONBLE ITAT DID NOT GIVE ANY OBSERVATION IN ITS ORDER ON THE ISSUE. 1.1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY THE AO OF RS. 34387000/ - ON ACCOUNT OF DISALLOWANCE OF LEASE RENT BY IGNORING THE FACT THAT AFTER REPEATED OPPORTUNITIES THE ASSESSEE DID NOT PRODUCE THE ORIGINAL LEASE DEEDS FOR VERIFICATION OR ANY BILLS, VOUCHERS/ INVOICES AS EVIDENCE IN THIS REGARD. 1.2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) HAS ERRED BY IGNORING THE FACT THE ENQUIRIES MADE BY THE AO CLEARLY REVEALED THAT THE LEASE RENT PAID W ERE MERE ACCOMMODATION ENTRIES. 3. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL IN ITA NO. 5669/DEL/2013: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) HAS ERRED IN DEL ETING THE ADDITION MADE ON ACCOUNT OF DISALLOWANCE ON LEASE RENT CLAIMED BY THE ASSESSEE BY NOT APPRECIATING THE FACT THAT THE FIRST APPELLATE AUTHORITY HAS DISMISSED THE APPEAL OF THE ASSESSEE FILED AGAINST THE ORDER U/S 148/ 143(3) ON THE SAME ISSUE AN D THE HONBLE ITAT DID NOT GIVE ANY OBSERVATION IN ITS ORDER ON THE ISSUE. 1.1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY THE AO OF RS. 33301000/ - ON ACCOUNT OF DISALLOWANCE OF LE ASE RENT BY IGNORING THE FACT THAT AFTER REPEATED OPPORTUNITIES THE ASSESSEE DID NOT PRODUCE THE ORIGINAL LEASE DEEDS FOR VERIFICATION OR ANY BILLS, VOUCHERS/ INVOICES AS EVIDENCE IN THIS REGARD. 1.2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD CIT(A) HAS ERRED BY IGNORING THE FACT THE ENQUIRIES MADE BY THE AO CLEARLY REVEALED THAT THE LEASE RENT PAID WERE MERE ACCOMMODATION ENTRIES. 4. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL IN ITA NO. 5670/DEL/2013: - PAGE 3 OF 8 ACIT V NALWA SONS INVESTMENTS LIMITED ITA NO 5668 5669 AND 5670 /DEL/2013 A Y 1997 - 98 1998 - 99 1999 - 200 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) HAS ERRED IN DELETING THE ADDITION MADE ON ACCOUNT OF DISALLOWANCE ON LEASE RENT CLAIMED BY THE ASSESSEE BY NOT APPRECIATING THE FACT THAT THE FIRST APPELLATE AUTHORITY HAS DISMISSED THE APP EAL OF THE ASSESSEE FILED AGAINST THE ORDER U/S 148/ 143(3) ON THE SAME ISSUE AND THE HONBLE ITAT DID NOT GIVE ANY OBSERVATION IN ITS ORDER ON THE ISSUE. 1.1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) HAS ERRED IN DELETIN G THE ADDITION MADE BY THE AO OF RS. 33301000/ - ON ACCOUNT OF DISALLOWANCE OF LEASE RENT BY IGNORING THE FACT THAT AFTER REPEATED OPPORTUNITIES THE ASSESSEE DID NOT PRODUCE THE ORIGINAL LEASE DEEDS FOR VERIFICATION OR ANY BILLS, VOUCHERS/ INVOICES AS EVIDE NCE IN THIS REGARD. 1.2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) HAS ERRED BY IGNORING THE FACT THE ENQUIRIES MADE BY THE AO CLEARLY REVEALED THAT THE LEASE RENT PAID WERE MERE ACCOMMODATION ENTRIES. 5. BRIEF FACTS OF THE CASE STATED FOR ASSESSMENT YEAR 1997 - 98 ARE THAT ORIGINAL ASSESSMENT WAS MADE ON 31/03/2005 AT RS. 165624966/ AFTER MAKING DISALLOWANCE OF RS. 34387000/ ON ACCOUNT OF LEASE RENT . ASSESSEE BEFORE HIGHER APPELLATE FORUMS CONTESTED THIS ADDITION. ON APPEAL BEFORE ITAT, COORDINATE BENCH SET ASIDE THE ISSUE BACK TO THE FILE OF THE LD. ASSESSING OFFICER ON THE ISSUE OF REOPENING BY DIRECTING A O TO SUPPLY REASONS RECORDED TO THE ASSESSEE AND TO DISPOSE OF ,IF ANY ,OBJECTION FILED BY WAY OF THE SPEAK ING ORDER. IN THE SET ASIDE PROCEEDINGS LD. ASSESSING OFFICER ISSUED REASONS RECORDED FOR REOPENING AND ASSESSEE FILED AN OBJECTION AGAINST WHICH WAS DISPOSED OF. IN THE SET ASIDE PROCEEDINGS ALSO LD. ASSESSING OFFICER REITERATED THE PAGE 4 OF 8 ACIT V NALWA SONS INVESTMENTS LIMITED ITA NO 5668 5669 AND 5670 /DEL/2013 A Y 1997 - 98 1998 - 99 1999 - 200 SAME REASONS FOR MA KING A DISALLOWANCE OF RS. 34387000/ ON ACCOUNT OF LEASE RENT. 6. SUCCINCTLY STATED THE FACTS ARE THAT ASSESSEE IS A COMPANY HAVING MULTI LOCATION PRODUCTION UNITS . ON VERIFICATION OF THE DETAIL OF RENT PAID UNIT WISE IT WAS NOTED BY THE LD. ASSESSING OFFI CER THAT COMPANY HAS OBTAINED ITEMS ON LEASE FROM VARIOUS PARTIES . IT WAS ALSO NOTED THAT THE ASSESSEE COMPANY HAS PAID LEASE RENT OF RS . 34387000/ FOR 5 GEARBOXES WORTH RS . 90 LAKHS FOR THE RAIGARH UNIT . ON INQUIRY BY THE LD. ASSESSING OFFICER, IT WAS FO UND THAT GEARBOXES WERE PURCHASED BY THE FINANCE COMPANY FROM M/S SHANKAR ENTERPRISES AND IN TURN LEASED TO THE ASSESSEE COMPANY. ON INQUIRIES CONDUCTED BY THE INSPECTORS OF THE DEPARTMENT, IT WAS FOUND THAT SHANKAR ENTERPRISES WAS NON - EXISTENT . T HE ADDRESS MENTIONED IN THE BILLS WAS FOUND THAT NO SUCH CONCERN EXISTED AT THE GIVEN ADDRESS . THE PHONE NUMBERS FOUND TO BE OF ANOTHER PERSON . THE CHEQUES ISSUED BY THE FINANCE TO THE SHANKAR ENTERPRISES WERE ALSO DEPOSITED AND WITHDRAWN IN CASH OR TRANS FER TO THE ACCOUNT OF SOME OTHER PARTY IN THE SAME BANK . EVEN THE SUMMONS COULD NOT BE SERVED TO THE PROPRIETOR OF THAT CONCERN . THE ENQUIRIES CONDUCTED UNDER SECTION 131A WERE ALSO NOT SATISFACTORY TO PROVE EXISTENCE OF SUCH CONCERN . THEREFORE, THE LD. ASSESSING OFFICER REACHED AT THE CONCLUSION THAT THE PURCHASE OF PLANT AND MACHINERY FROM SHANKAR ENTERPRISES THROUGH THE FINANCE WERE SIMPLY PAPER TRANSACTION AND THAT CONCERN IS ACCOMMODATION ENTRY PROVIDER BY ISSUING BOGUS BILLS IN THE NAME OF NON - E XISTING CONCERN . IT WAS FURTHER NOTED THAT DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS THE ASSESSEE COULD NEITHER PRODUCE THE EVIDENCE IN PAGE 5 OF 8 ACIT V NALWA SONS INVESTMENTS LIMITED ITA NO 5668 5669 AND 5670 /DEL/2013 A Y 1997 - 98 1998 - 99 1999 - 200 THE FORM OF ORIGINAL SALE BILLS, VOUCHERS, ORIGINAL LEASE DEED AND NOR ASSESSEE COULD PRODUCE THE PROPR IETOR OF SHANKAR ENTERPRISES TO SUPPORT ITS CLAIM . THEREFORE, THE LD. ASSESSING OFFICER DISALLOWED LEASE RENT OF RS. 34387000/ - . 7. AGAINST THE ORDER OF THE LD. ASSESSING OFFICER ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT (A) WHO DELETED THE DISALLOW ANCE. 8. AGGRIEVED BY THE ORDER OF THE LD. CIT (A) REVENUE IS IN APPEAL BEFORE US . THE LD. DR REITERATED THE FACTS STATED BY THE LD. ASSESSING OFFICER IN THE ASSESSMENT ORDER AND SUBMITTED THAT WHEN THE ASSESSEE COULD NOT PRODUCE EVEN ORIGINAL BILLS, VOUC HERS, ORIGINAL LEASE DEED AND NEITHER THE PROPRIETOR OF SHANKAR ENTERPRISE THEREFORE THE CLAIM OF LEASE RENT IS BOGUS . HE FURTHER SUBMITTED THAT LD. CIT (A) HAS MERELY GONE BY WRITTEN SUBMISSION MADE BY THE ASSESSEE AND ALLOWED THE CLAIM DISREGARDING ALL THE FACTS, WHICH HAVE BEEN RECORDED BY THE LD. ASSESSING OFFICER IN HIS ASSESSMENT ORDER . HE FURTHER SUBMITTED THAT LD. CIT (A) MERELY BELIEVED THE SUBMISSION OF THE ASSESSEE THAT THE CLAIM OF THE DEPRECIATION DOES NOT PERTAIN TO RAIGARH UNIT BUT TO VA SIND UNIT . IRRESPECTIVE OF THE UNIT IT PERTAINS TO, THE LD. ASSESSING OFFICER HAS GIVEN THE CONCRETE FACTS FOR MAKING DISALLOWANCES, WHICH HAS BEEN COMPLETELY IGNORED BY THE LD. CIT (A). HE THEREFORE VEHEMENTLY SUBMITTED THAT THE LD. CIT A ERRED IN NOTI NG THAT REVENUE HAS BEEN GIVEN TWO REASSESSMENT OPPORTUNITIES TO EXAMINE THE MATTER PROPERLY AND IT FAILED TO DO SO . HE SUBMITTED THAT IN FACT IT IS NOT REVENUE BUT THE ASSESSEE HAS FAILED TO PRODUCE THE EVIDENCES CALLED FOR DESPITE ANY OPPORTUNITIES BEFORE LD AO AND OTHER AUTHORITIES . HE THEREFORE SUBMITTED THAT THE ORDER OF THE LD. CIT A IS NOT SUSTAINABLE. PAGE 6 OF 8 ACIT V NALWA SONS INVESTMENTS LIMITED ITA NO 5668 5669 AND 5670 /DEL/2013 A Y 1997 - 98 1998 - 99 1999 - 200 9. THE LD. AUTHORIZED REPRESENTATIVE REITERATED THE SAME FACTS WHICH ARE MENTIONED IN PARA NO. 5.1 OF THE ORDER OF THE LD. CIT (A) . HE FURTHER SUBM ITTED A CHART TO DEMONSTRATE THAT LEASE RENT PAID BY THE VARIOUS UNITS OF THE ASSESSEE FOR RESPECTIVE 3 YEARS, AND THE PROPORTIONATELY RENT ON 5 GEARBOX WAS ONLY RS. 55110/ THAT TOO ONLY FOR ASSESSMENT YEAR 98 - 99 ONLY NOT FOR ASSESSMENT YEAR 97 98 A ND 99 00 . HE THEREFORE SUBMITTED THAT DISALLOWANCE OF WHOLE OF LEASE RENT BY LD AO IS ERRONEOUS. 10. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES . IN THE PRESENT CASE THE CLAIM OF THE REVENUE IS THAT T HE ENQUIRY CARRIED OUT BY THE INVESTIGATION WING OF THE DEPARTMENT REVEALED THAT FIVE GEARBOXES WORTH RS. 90 LAKHS TAKEN BY THE APPELLANT ON LEASE FOR ITS RAIGARH UNITS THROUGH FINANCE COMPANY WAS PURCHASED FROM ONE M/S SHANKAR ENTERPRISE OF GHAZIAB AD AND ITS EXISTENCE WAS DOUBTED . THE LD. AO HAS ALSO CARRIED OUT DETAILED ENQUIRIES WHERE THE WHEREABOUTS OF THIS PARTY COULD NOT BE FOUND . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ORIGINAL BILLS VOUCHERS ETC WITH RESPECT TO THE PURCHASE OF THIS ASSET TAKEN ON LEASE WAS ALSO NOT SUBMITTED BY THE ASSESSEE . THE ASSESSEE ALSO COULD NOT PRODUCE THE PROPRIETOR OF THE ALLEGED BOGUS ENTITY . IN THIS BACKGROUND, THE LD. ASSESSING OFFICER MADE THE ADDITION/DISALLOWANCES OF LEASE RENT PAID . THE LD. CIT(A) D ELETED THE ABOVE DISALLOWANCE WITHOUT DISCUSSING ANY OF THE FACTS, WHICH ARE BEING STATED BY THE LD. ASSESSING OFFICER . HE MERELY ALLOWED THE CLAIM OF THE ASSESSEE BELIEVING THAT DISALLOWANCE MADE BY THE REVENUE APPEARS TO BE RELATED TO VASIND UNIT AND NO T TO RAIGARH UNIT . FURTHER, HE MERELY LOOKING AT THE DETAILS PAGE 7 OF 8 ACIT V NALWA SONS INVESTMENTS LIMITED ITA NO 5668 5669 AND 5670 /DEL/2013 A Y 1997 - 98 1998 - 99 1999 - 200 FILED BY THE ASSESSEE CONCLUDED RENT OF ONLY RS. 55110/ - WAS PAID FOR FIVE GEAR BOXES THAT TOO ONLY FOR ASSESSMENT YEAR 1998 99. HE FURTHER HELD THAT REVENUE HAD TWO REASSESSMENT OPPO RTUNITIES TO EXAMINE THE MATTER PROPERLY YET IT FAILED TO DO SO . WE DO NOT AGREE WITH THE OPINION OF THE LD. CIT APPEAL IN DELETING THE DISALLOWANCE WITHOUT PROPER VERIFICATION MADE BY HIM AND WITHOUT CONTROVERTING ANY OF THE FACTS STATED BY THE LD. ASSES SING OFFICER IN HIS ASSESSMENT ORDER . WE ALSO COULD NOT MAKE OUT THAT HOW THE CLAIM MADE BY ONE UNIT OR ANY OTHER UNITS MAKE A DIFFERENCE WHEN THE ASSESSEE IS ONE . FURTHERMORE, THE ASSESSEE HAS ALSO NOT PRODUCED ORIGINAL BILLS VOUCHERS ETC DESPITE TO OPPOR TUNITIES AVAILABLE TO THE ASSESSEE, NOT ONLY AT THE ASSESSMENT STAGES TWICE BUT AT THE APPELLATE STAGES ALSO, WHO IS DUTY BOUND TO SUPPORT ITS CLAIM OF EXPENDITURE . IT IS FOR ASSESSEE TO ESTABLISH THAT ITS CLAIM IS PROPERLY SUPPORTED BY THE EVIDENCE . SU RPRISINGLY, THE LD. CIT (A) HAS ALSO NOT CALLED FOR A REMAND REPORT AND GIVING LD AO AN OPPORTUNITY TO EXAMINE THE DETAILS SUBMITTED BY THE ASSESSEE . IN VIEW OF THIS WE SET ASIDE THE WHOLE ISSUE OF ALLOWABILITY OF LEASE RENT OF RS. 34387000/ TO THE FILE OF THE LD. ASSESSING OFFICER WITH A DIRECTION TO EXAMINE THE CLAIM OF THE ASSESSEE AND ASSESSEE IS ALSO DIRECTED TO PRODUCE THE DETAILS CALLED FOR WITH RESPECT TO THE CLAIM OF THE ALLOWABILITY OF LEASE RENT . IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED WITH ABOVE DIRECTION. 11. THE FACTS FOR 1998 - 99 AND 1999 - 2000 ARE SIMILAR EXCEPT THE AMOUNT OF DISALLOWANCE AS CONFIRMED BY THE PARTIES . THEY ALSO PAGE 8 OF 8 ACIT V NALWA SONS INVESTMENTS LIMITED ITA NO 5668 5669 AND 5670 /DEL/2013 A Y 1997 - 98 1998 - 99 1999 - 200 PRESSED SAME ARGUMENTS . AS WE HAVE ALREADY DECIDED THE APPEAL OF THE REVENUE FOR AY 1997 - 98 WHERE IN WE HAVE RESTORED THE MATTER TO THE FILE OF THE AO FOR THE REASONS GIVEN THEREIN, THEREFORE FOR THE SAME REASONS WE ALSO RESTORE THE APPEAL OF THE REVENUE TO THE FILE OF LD AO FOR AY 1998 - 99 AND 1999 - 2000. IN THE RESULT BOTH THE APPEAL OF THE REVENUE WERE ALLOWED W ITH SIMILAR DIRECTIONS AS CONTAINED IN AY 1997 - 98. 12. IN THE RESULT APPEALS OF THE REVENGE FOR ALL THE THREE YEARS ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PR ONOUNCED IN THE OPEN COURT ON 2 7 / 0 2 / 2017 . - S D / - - S D / - ( H.S.SIDHU ) ( PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2 7 / 02 / 2017 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI