Ankit Kapoor, New Delhi V. JCIT Range - 63, New Delhi

ITA 5878/DEL/2019

AI Insights

The case involves an appeal by the assessee, Ankit Kapoor, against the order of the CIT(A) which confirmed the additions made by the Assessing Officer (AO) for the Assessment Year 2015-16. The additions included disallowances of travelling expenses, unexplained loans, and cash payments violating section 40A(3) of the Income Tax Act. The CIT(A) had decided the appeal ex-parte due to the non-appearance of the assessee or his representative, leading to the Tribunal's decision to remand the case back to the CIT(A) for a fresh examination on merits.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 302611 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 10 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-05-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 21-03-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 04-07-2019
• Other Referred Cases: CIT vs. B. N. Bhattacharjee & another, Late Tukoji Rao Holker Vs. CWT, CIT Vs. Multiplan India Pvt. Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business expenditure; Set aside
• Section: 68; 246; 40A(3); 143(3); 133(6)

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “A”: NEW DELHI BEFORE SHRI SHAMIM YAHYA , ACCOUNTANT MEMBER AND MS. ASTHA CHANDRA, JUDICIAL MEMBER ITA No. 5878/Del/2019 Asstt. Year: 2015-16 O R D E R PER ASTHA CHANDRA, JM The appeal filed by the assessee is directed against the order of the Ld. Commissioner of Income Tax (Appeals)-20, New Delhi (“CIT(A)”) dated 16.04.2019 pertaining to the Assessment Year (“AY”) 2015-16. 2. The grounds raised by the assessee are as under:- “1. That in the facts and circumstances of the case, the Ld. CIT (A) erred in summarily dismissing the appeal filed by the appellant without appreciating the facts of the case. 2. That the Learned CIT (A) erred in coming to the conclusion that ‘the appellant has deliberately not complied’ and ‘appellant is not interest in pursuing this appeal’. The appellant is not accustomed with tax laws and he engaged a Chartered Accountant and handed over the appeal papers to the Chartered Accountant who it seems did not appear on the date of posting of the appeal. Appellant noticed the same only on receipt Ankit Kapoor B-102, RG City Centre, Plot No. 4, Motia Khan, Pahar Ganj, New Delhi 110 055 Vs. JCIT, Range-63 New Delhi. (Appellant) (Respondent) Assessee by: Ms. Monika Agarwal, Advocate Department by : Shri Kanv Bali, Sr. DR Date of Hearing 22.03.2023 Date of pronouncement 18.05.2023 ITA No. 5878/Del/2019 2 of appeal order. In fact, the notices send by email were not to the appellant but to the Chartered Accountant of the Appellant. 3. That in any case and without prejudice the learned CIT (A) has failed to appreciate that the Assessing Officer had passed the Order by violating the principle of natural justice and the assessment made is thus vitiated in law. 4. That the learned CIT (A) has also failed to appreciate that, the judgment of the Apex Court in the case of CIT vs. B. N. Bhattacharjee & another reported in 118 ITR 461 and Late Tukoji Rao Holker Vs. CWT 223 ITR 480 (MP) & CIT Vs. Multiplan India Pvt. Ltd. 38 ITO 320 (Del).had no application in respect of the appeal filed by the assessee u/s 246 A of the Income Tax Act. 5. That on the facts and circumstances of the present case and in law, the Ld. CIT (A) erred in confirming the Order of the Assessing Officer who added back a sum of Rs.15,48,061/- on account of sundry creditors without even giving a finding that the assessee could not offer satisfactory explanation about the nature and source of Rs.l 5,48,061/- or that the explanation provided by the assessee is unsatisfactory. Therefore, this addition is liable to be set aside. 6. That on the facts and circumstances of the present case and in law, the Ld. CIT (A) erred in confirming the Order of the Assessing Officer who disallowed a sum of Rs. 1,38,150/- on account of travelling expenses. 7. That on the facts and circumstances of the present case and in law, the Ld. CIT (A) erred in confirming the Order of the Assessing Officer who had disallowed a sum of Rs.3,00,000/- on expenses in violation of section 40A(3) which is unjustified and illegal. 8. That on the facts and circumstances of the present case and in law, the Ld. CIT (A) erred in confirming the Order of the Assessing Officer who had disallowed a sum of Rs.25,00,000/- on account of unexplained loans/cash credits.” 3. The facts in brief are that the assessee is an individual who is engaged in the business of export of meat and meat products under the name and style of M/s. Global Food International. For the AY 2015-16, he filed his return on 30.09.2015 declaring income of Rs. 32,97,080/-. His case was selected first for limited scrutiny under CASS and later on, the case was converted into complete scrutiny. In response to statutory notices and ITA No. 5878/Del/2019 3 questionnaires, the assessee filed requisite information/details which the Ld. Assessing Officer (“AO”) examined and placed on record. 4. During assessment proceedings, the Ld. AO found that the assessee claimed travelling expenses of Rs. 4,13,653/- which included expenses in the name of seven persons who did not figure in the list of employees filed by the assessee. On inquiry, it was explained that five of them are his raw material suppliers and expenses incurred on their travelling are business promotions expenses; two of them are his business clients and expenses incurred on their travelling are business expenses. The explanation of the assessee was not acceptable to the Ld. AO who disallowed Rs. 1,38,150/- holding that out of the total claim, the expenses to the extent of Rs. 1,38,150/- are not incurred for the purposes of assessee’s business. 5. The Ld. AO found that during the year the assessee had obtained loan of Rs. 15,00,000/- from Samyak Sourcing. The assessee filed confirmation of Samyak Sourcing but the Ld. AO treated the said sum as unexplained for the reason that the assessee failed to prove identity, creditworthiness of the creditor and genuineness of the transaction and added the same to the income of the assessee under section 68 of the Income Tax Act, 1961 (the “Act”). 6. Similarly, the assessee has taken loan of Rs. 10,00,000/- from Yash Allied which was also treated as unexplained for identical reasons and addition of the said sum was made by the Ld. AO under section 68 of the Act. 7. The Ld. AO found that the assessee has made cash payment of Rs. 2 Lakhs on 13.09.2014 and Rs. 1 Lakh on 20.11.2014 to M/s. Santoshi Maa Enterprises against purchases of packing material in violation of provisions of section 40A(3) of the Act. Rejecting the explanation of the assessee that the said amounts were paid on separate fifteen days as recorded in his books of account, the Ld. AO added Rs. 3 Lakhs to the income of the assessee. ITA No. 5878/Del/2019 4 8. The Ld. AO also found outstanding liability of Rs. 5,11,183/- in the name of M/s. Maersk Line India Pvt. Ltd. On query, the assessee filed the ledger account and bills along with bank statement. The Ld. AO issued notice under section 133(6) of the Act to M/s. Maersk Line India Pvt. Ltd. who in reply denied any liability/transaction with the assessee. The Ld. AO therefore treated the said liability as unexplained and added it to the income of the assessee under section 68 of the Act. 9. Similarly, the Ld. AO found outstanding liability of Rs. 8,45,460/- in the name of Albatross Shipping Pvt. Ltd. The assessee filed ledger account and bills. The Ld. AO issued notice under section 133(6) to the party but the party did not reply. The Ld. AO added the said sum to the income of the assessee under section 68 of the Act stating, inter alia that the assessee did not file any confirmation of the creditor. 10. Likewise the Ld. AO noticed outstanding liability of Rs. 1,91,418/- in the name of Saba Enterprises. The assessee filed ledger account, bills and confirmation. The Ld. AO issued notice under section 133(6) of the Act to the party but it was received back undelivered. The Ld. AO added the said sum to the income of the assessee under section 68 of the Act treating it as unexplained. 11. Accordingly, the Ld. AO completed the assessment on total income of Rs. 77,83,300/- on 28.12.2017 under section 143(3) of the Act as against income returned at Rs. 32,97,080/-. 12. The assessee challenged the addition before the Ld. CIT(A). Hearing was fixed for 17.01.2019, 13.02.2019, 22.02.2019, 06.03.2019 and 19.03.2019 but no one appeared nor any adjournment application was filed before the Ld. CIT(A). He, therefore, proceeded to decide the appeal ex-parte and confirmed all the additions. This has brought the assessee before the Tribunal challenging the order of the Ld. CIT(A) on the ground, among others that the Ld. CIT(A) has summarily dismissed the appeal of the assessee without appreciating the facts of the case. ITA No. 5878/Del/2019 5 13. We have heard the Ld. Representative of the parties and perused the records. The appellate order reveals that the Ld. CIT(A) has not considered the issues involved in the appeal on merits. Since representation was not made by the assessee before the Ld. CIT(A), the Ld. CIT(A) confirmed the findings of the Ld. AO in the absence of any rebuttal by the assessee. On these facts and in the circumstances of the case, we are of the view that in the interest of justice, it would be expedient to remit the matter back to the file of the Ld. CIT(A) for fresh adjudication and decision. Accordingly, we set aside the order of the Ld. CIT(A) and restore the matter to the file of the Ld. CIT(A) for denovo hearing and disposal of the appeal. The assessee shall cooperate in the hearing for which the Ld. CIT(A) shall allow adequate opportunity. We order accordingly. 14. In the result, the appeal of the assessee is treated as allowed for statistical purposes. Order pronounced in the open court on 18 th May, 2023. sd/- sd/- (SHAMIM YAHYA) (ASTHA CHANDRA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 18/05/2023 Veena Copy forwarded to - 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi 5.05.2023 15.05.2023 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 ITA No. 5878/Del/2019 6 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