ITO, New Delhi V. M/s Bitek Electronics Ltd., New Delhi

ITA 5688/DEL/2012

• Counselvise Citation: 568820114 RSA 2012
• Duration Of Justice: 2 year(s) 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 21-05-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 08-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y KAKKAR
• Assessee Lawyers: K G SHARMA
• Keywords: Principle of natural justice; Additional evidence
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: A NEW DELHI BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER AND SHRI J. S. REDDY, ACCOUNTANT MEMBER I.T.A. NO. 5688 /DEL/201 2 ASSESSMENT YEAR: 2007 - 0 8 ITO VS. M/S BITEK ELECTRONICS LTD. WARD 3( 1 ), C - 330, STREET NO. 9, NEW DELHI. MAJLIS PARK , NEW DELHI - 110033. PAN: AAAC B3683K (APPELLANT) (RESPONDENT) REVENUE BY : MS. Y. KAKKAR , CIT. DR. ASSESSEE BY: SHRI. K. G . SHARMA , CA. DATE OF HEARING: 21/05/2015 DATE OF PRONOUNCEMENT: 19 TH /06/2015 ORDER PER J. S. REDDY, AM : THIS IS AN APPEAL FILED BY THE REVENUE DIRECTED AGAINST THE ORDER OF CIT (APPEALS) - IV , NEW DELHI, DATED 0 6 .0 8 .201 2 FOR THE A SSESSMENT Y EAR 200 7 - 0 8. 2. THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE A.Y. 2007 - 08 ON 31.10.2007 DECLARING AN INCOME OF RS.3,41,270/ - . THE AO PASSED AN ORDER U/S 144 OF THE I NCOME T AX ACT ON 30.12.2009 ASSESSING THE TOTAL INCOME AT RS.37,67,318/ - . I.T.A. NO. 5688/DEL/2012 2 3. AGGRIEVED , THE ASSESSEE CARRIED THE MATTER IN APPEAL. THE FIRST APPELLATE AUTHORITY GRANTED PART RELIEF. 4. AGGRIEVED THE REVENUE IS IN APPEAL ON THE FOLLOWING GROUNDS; 5 . WE HAVE HEARD MS . Y . KAKKAR , THE DR ON BEHALF OF THE R EVENUE AND SHRI K. G. SHARMA , THE LD. COUNSEL O N BEHALF OF THE ASSESSEE. 6 . ON CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE , A PERUSAL OF THE PAPER ON RECORD AND ORDER S OF THE AUTHORITIES B ELOW AS WELL AS CASE LAW CITED WE HOLD AS FOLLOWS; 7 . GROUND NO. 1 IS ON THE ISSUE OF ADMISSION OF ADDITIONAL EVIDENCE BY THE LD. CIT(A) UNDER RULE 46A. 8 . THE LD. DR RELIED ON THE DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF MANISH BUILDWELL. THE ASSESSEE RELIED ON THE ORDER OF LD. CIT(A). 9 . WE FIND THAT ADMITTEDLY THE AO HAS NOT SERVED ANY NOTICE ON THE ASSESSEE COMPANY . T HE FIRST APPELLATE AUTHORITY AT PARA 4.8 HELD AS FOLLOWS: 4.8 I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDER, REMAND REPORTS OF THE AO AND SUBMISSIONS MADE BY THE LD. AR ALONGWITH THE DOCUMENTS PLACED ON RECORD. AS SUBMITTED BY THE LD. AR, THE APPELLANT COMPANY IS A CLOSELY HELD COMPANY AND TWO DIRECTORS, NAMELY MR. A ND MRS. PRAKASH V. BATRA HOLD 99.9% OF THE SHARES OF THE COMPANY. THE APPELLANT COMPANY AND ITS DIRECTORS U NDERWENT FINANCIAL STRIFE AND A SPATE OF LITIGATIONS FILED BY CREDITORS ETC. DURING THE PERIOD UNDER CONSIDERATION AS A RESULT OF WHICH THE I.T.A. NO. 5688/DEL/2012 3 COMPANY WAS ON THE VERGE OF CLOSURE. THIS FACT IS ALSO MENTIONED BY THE LD. CIT(A) - VI, NEW DELHI IN HER ORDER DATED 28.05.2010 IN APPEAL NO. 47/09 - 10 IN THE CASE OF SHRI PRAKASH V. BATRA AS FOLLOWS: DURING THE PROCEEDINGS BEFORE ME, IT WAS SUBMITTED THAT THE ASSESSEE IS THE MANAGING DIRECTOR OF M/S BITEK ELECTRONICS LTD. AND EARNED DIRECTOR S REMUNERATION OF RS.96,000/ - FROM THE COMPANY. THE COMPANY IS CLOSELY HELD COMPANY AND OTHER DIRECTOR IS HIS WIFE. THE ASSESSEE IS MANAGING DIRECTOR OF COMPANY AS WELL AS SHAREHOLDER HOLDING 40% EQUITY SHARE CAPITAL OF M/S BITEK ELECTRONICS LTD. AND REMAINING SHARES IN T HE NAME OF FAMILY MEMBERS WHICH SUFFERED FINANCIAL CRUNCHY AND IN ORDER TO REMAIN IN THE BUSINESS THE DIRECTORS RAISED SECURED LOANS AND ALSO UNSECURED LOANS FROM VARIOUS BANK. IN VIEW OF THE ABOVE, IT IS SUBMITTED THAT THE NOTICES ISSUED BY THE AO WERE NOT RECEIVED BY THE APPELLANT, WHICH HAS RESULTED IN THE EX - PARTE ASSESSMENT ORDER U/S 144 FRAMED BY THE AO COMING TO THE ADDITIONAL EVIDENCE, IT IS POINTED OUT BY THE LD. AR THAT THE SAID EVIDENCES COULD NOT BE PRODUCED DURING THE ASSESSMENT PROCEEDING DU E TO NON - RECEIPT OF NOTICES AS MENTIONED ABOVE. THE AO HAS ALSO NOT FURNISHED ANY EVIDENCE OF SERVICE OF THE ABOVE NOTICES. IN ANY CASE, IT IS NOT IN DOUBT THAT THE SAID EVIDENCES ARE VERY MUCH RELATED TO THE ISSUES ON WHICH ADDITIONS HAVE BEEN MADE BY THE AO IN THE EX - PARTE ORDER AND TO THE GROUNDS OF APPEAL RAISED BY THE APPELLANT. THE SAID EVIDENCES WERE ALSO DULY FORWARDED TO THE AO FOR EXAMINATION THRICE BY THE LD. CIT(A) - VI, NEW DELHI DURING THE REMAND PR OCEEDINGS. IN VIEW OF THE ABOVE, THE ADDITIONAL EVIDENCES ARE ADMITTED UNDER RULE 46A IN THE INTEREST OF NATURAL JUSTICE. 10 . WE FIND THAT NO INFIRMITY IN THIS DECISION O F THE FIRST APPELLATE AUTHORITY, T HUS GROUND NO. 1 IS DISMISSED. 11. GROUND NO. 2 IS AGAINST THE DELETION OF ADDITION OF 30% OF SUN DRY CREDITORS. THE LD. CIT(A) DEALT WITH ISSUE AT PARA 4.10 OF HIS ORDER . H E HELD THAT THE AO HAS CONDUCTED INQUIRIES AND VERIFIED THE CLAIM OF THE ASSESSEE DURING THE REMAND PROCEEDINGS. CONFIRMATIONS WERE RECEIVED BY THE AO FROM THE PARTIES I.T.A. NO. 5688/DEL/2012 4 THE AO HAS NO T BROUGHT OUT ANY ADVERSE MATERIAL IN THE REMAND REPORT EXCEPT TO SAY THAT VOUCHERS WERE NOT PRODUCED AND CERTAIN PAYMENTS TO M/S KNIGHT QUEEN MARKETING PVT. LTD. WAS MADE IN CASH OF LESS THAN RS.20,000/ - EACH. 12 . IN OUR VIEW DISALLOWANCE OF 30% OF SUNDRY CREDITORS ON AD HOC BASIS IS ARBITRARY . WE DO NOT UNDERSTAND HOW SUCH ADDITION CAN BE MADE BY THE AO. THE FACTUAL FINDINGS OF THE LD. CIT(A) COULD NOT BE CONTROVERTED BY THE LD. DR. THUS THIS GROUND OF THE REVENUE IS DISMISSED. 1 3 . GROUND NO. 3 IS AGAINST THE DELETION OF AD HOC DISALLOWANCE OF 30% OF EXPENSES ON ESTIMATE BASIS . A T PARA 4.13 AT PAGE 25 THE FIRST APPELLATE AUTHORITY HELD AS FOLLOWS: 4.13 COMING TO GROUND NO. 7 RELATING TO DISALLOWANCE OF 30% OF EXPENSES ON ESTIMATE TOTALLING RS.6,06, 454/ - , THE RECORDS SHOW THAT THE NECESSARY REGISTERS AND DETAILS WERE PRODUCED BY THE APPELLANT BEFORE THE AO DURING THE REMAND PROCEEDING. THE SAID EXPENSES RELATE TO SALARY, INSURANCE PAID TO INSURANCE COMPANIES ON VEHICLES AND STOCK, ADVERTISEMENT, LEGA L AND PROFESSIONAL CHARGES AND TELEPHONE CHARGES ETC. THE LD. AR HAS SUBMITTED THAT TDS HAS BEEN DEDUCTED WHEREVER REQUIRED UNDER THE LAW, THE DETAILS OF WHICH WERE PRODUCED BEFORE THE AO EXCEPT FOR INTEREST OF RS.46,298/ - PAID CHOLAMANDALAM DBS. THE AO HA S NOT POINTED OUT ANY SPECIFIC DEFECTS IN THE BOOKS OF ACCOUNT, EXCEPT MAKING SOME FLIMSY COMMENTS IN THE REMAND REPORT, DESPITE THE FACT THAT THE LD. CIT(A) - VI HAD REMANDED THE MATTER TO THE AO FOR EXAMINATION AS MANY AS THREE TIMES. IN VIEW OF THE ABOVE , DISALLOWANCE TO THE EXTENT OF RS.46,298/ - PAID TO CHOLAMANDALAM DBS WITHOUT TDS IS CONFIRMED. THE BALANCE ADDITION OF RS.5,60,156/ - IS DELETED. I.T.A. NO. 5688/DEL/2012 5 1 4 . WE FIND NO IN FIRMITY IN THIS FACTUAL FINDING HENCE WE DISMISS THE GROUND NO. 3. 15 . GROUND NO. 4 IS GENERAL IN NATURE. 16 . IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH /06/2015. SD/ - SD/ - (DIVA SINGH ) (J. S. REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 19 /06/2015 *AK VERMA* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR