M/s. Chamical Sale Corp., New Delhi V. ITO, New Delhi

ITA 6009/DEL/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6255 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 1
• Next Hearing Date: 04-02-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 07-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUBHAKANT SAHU
• Assessee Lawyers: SALIL AGGARWAL RP MALL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH I - 2 NEW DELHI) BEFORE SHRI I.C. SUDHIR AND SHRI PRASHANT MAHARISHI ITA NO. 6009 /DEL/201 3 ASSESSMENT YEAR: 200 8 - 09 CHAMICAL SALE CORP., VS. ITO, DCM BUILDING, 3 RD FLOOR, WARD - 31(3), 16 - BARAKHAMBA ROAD, NEW DELHI. NEW DELHI. (PAN: AA FF C 7156C ) (APPELLANT) (RESPONDENT) ASSESSEE BY: S/ SHRI SALIL AGGARWAL, RP MALL, ADV. & SHAILESH GUPTA, CA DEPARTM ENT BY: SHRI SUBHAKANT SAHU , SR. DR DATE OF HEARING : 0 4 . 0 2 .201 6 DATE OF PRONOUNCEMENT: 30 : 0 3 .201 6 ORDER PER I.C. SUDHIR : JUDI CIAL MEMBER THE ASSESSEE HAS QUESTIONED FIRST APPELLATE ORDER ON SEVERAL GROUNDS RAISING THE ISSUES OF VALIDITY OF DISALLOWANCE OF BUSINESS LOSS AT RS.2,49,593 SUSTAINED BY THE LEARNED CIT(APPEALS) . 2. IN SUPPORT OF THE GROUNDS, THE LEARNED AR SUBMITTED THAT ASSESSEE, A FIRM, WAS HAVING GROSS RENTAL INCOME OF RS.7,79,626 AND THE TAXABLE INCOME AFTER STATUTORY DEDUCTION AT RS.4,26,010. IT HAD CLAIMED SET OFF OF BUSINESS LOSS OF RS.2,49,593 FROM THE FLOWER BUSINESS. THE ASSESSEE CLAIMED THAT IT HAD CONDUCT ED FLOWER BUSINESS FROM 02.04.2007 TO 29.7.2007 (FOUR MONTHS 2 ONLY) AND HAD INCURRED THE LOSS OF RS.2,49,593. IT HAD PURCHASED FLOWERS OF RS.3,73,453 AND HAD SOLD THEM AT RS.1,23,860 AS SUCH HAD INCURRED THE LOSS OF RS.2,49,593. THE ASSESSING OFFICER DID NO T AGREE WITH THE ASSESSEE ON THE BASIS THAT THE ASSESSEE HAD NOT PRODUCED ANY PAKKA BILLS FOR THE PURCHASE AND SALE OF FLOWERS AND THERE WERE NO EMPLOYEES FOR THE FLOWER BUSINESS. THE ASSESSING OFFICER NOTED THAT THE FLOWER BUSINESS WAS CONDUCTED BY TWO PA RTNERS, NAMELY, SHRI SURESH GOEL AND SHRI GAUTAM GOEL WHO WERE RESIDING IN A POSH FARM HOUSE AT SULTANPUR, MEHRAULI. THE ASSESSING OFFICER THUS ALLEGED THAT ASSESSEE HAD NOT CONDUCTED ANY FLOWER BUSINESS AND THE CLAIM SET OFF OF BUSINESS LOSS WAS BOGUS. T HE LEARNED AR SUBMITTED THAT THE ASSESSING OFFICER FAILED TO APPRECIATE THAT THE ASSESSEE WAS ENGAGED IN FLOWER BUSINESS SINCE PAST SEVERAL YEARS AND THE SAME HAS BEEN ACCEPTED AS SUCH . HE SUBMITTED THAT NORMALLY THE FLOWER VENDORS AND PURCHASERS ARE UNSKI LLED AND UNEDUCATED LABOURS WHO ARE NOT ACCUSTOMED TO PAKKA BILLS AND BANK ACCOUNTS. THE ASSESSING OFFICER HAS MADE THE DISALLOWANCE OF THE CLAIMED LOSS WITHOUT REJECTED THE BOOKS OF ACCOUNT UNDER SEC. 145(3) OF THE ACT. HIS FINDING THAT NO BUSINESSMAN OF THE STATURE OF PARTNERS WOULD ENTER INTO SUCH BUSINESS IS BASED ON MERE ASSUMPTION AND SURMISES. THE LEARNED AR REFERRED PAGE NOS. 1 TO 55 OF THE PAPER BOOK UNDER THE CERTIFICATE THAT PAGE NOS. 1 TO 51 WERE FILED BOTH BEFORE THE ASSESSING OFFICER AND LEARN ED 3 CIT(APPEALS) AND PAGE NOS. 52 TO 55 ARE THE SUBMISSIONS MADE ON BEHALF OF THE ASSESSEE BEFORE THE LEARNED CIT(APPEALS). AT PAGE NOS. 1 TO 51 HAVE BEEN PLACED, COPIES OF ACKNOWLEDGEMENT OF RETURN AND COMPUTATION OF INCOME ALONG WITH BALANCE SHEET FOR THE FINANCIAL YEAR 2007 - 08 RELEVANT TO ASSESSMENT YEAR 2009 - 10; REPLY DATED 24.8.2009, 02.03.2010, 22.4.2010, 8.7.2010, 6.9.2010 AND 26.11.2010 FILED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER, LEDGER ACCOUNT OF PURCHASE OF FLOWERS AND SALE OF FLOWERS DURIN G THE YEAR; CASH INVOICES OF PURCHASE ON SAMPLE BASIS; RECEIPTS AS EVIDENCE OF PAYMENTS OF HOUSE - TAX OF RS.1,71,040; AND PARTNERSHIP DEED OF SHRI SURESH GOEL, SHRI GAUTAM GOEL AND SMT. ANURADHA GOEL FOR RUNNING THE FLOWER BUSINESS . THE LEARNED AR PLACED RE LIANCE ON THE FOLLOWING DECISIONS: I) CIT VS. DHANRAJ GIRI RAJA - 91 ITR 544 (SC); II) CIT VS. DALMIA CEMENT (B) LTD. - 254 ITR 377 (DEL.); III) OMAR SALAY MOHAMED SAIT VS. CIT - 37 ITR 151 (SC); 3. THE LEARNED SENIOR DR ON THE OTHER HAND PLACED RELIAN CE ON THE ORDERS OF THE AUTHORITIES BELOW WITH THIS SUBMISSION THAT IT IS AN ESTABLISHED POSITION OF THE LAW THAT ONUS ALWAYS LIES UPON THE CLAIMANT TO ESTABLISH THE GENUINENESS OF ITS CLAIM TO WHICH THE PRESENT ASSESSEE HAS THOROUGHLY FAILED TO. THE ASSES SEE COULD NOT ESTABLISH BEYOND DOUBT THAT IT WAS IN THE BUSINESS 4 OF FLOWERS AND THE CLAIMED SET OFF OF THE BUSINESS LOSS WAS ALSO NOT SUPPORTED WITH RELIABLE EVIDENCE. 4. CONSIDERING THE ABOVE SUBMISSIONS, WE ARE OF THE VIEW THAT ASSESSEE HAD FURNISHED E VIDENCES LIKE LEDGER ACCOUNT OF PURCHASES AND SALES OF FLOWERS DURING THE YEARS SUPPORTED WITH INVOICES OF PURCHASE AND SALES AS WELL AS PARTNERSHIP DEED TO SUPPORT THAT THE ASSESSEE WAS IN THE BUSINESS AND HAD INCURRED THE CLAIMED LOSS. IT HAD ALSO FURNIS HED COPY OF ACKNOWLEDGEMENT OF RETURN AND COMPUTATION OF INCOME ALONG WITH BALANCE SHEET FOR THE FINANCIAL YEAR RELEVANT FOR THE ASSESSMENT YEAR 2009 - 10 TO SHOW THAT THE ASSESSEE WAS IN THE FLOWER BUSINESS. MERELY BECAUSE THE BILLS WERE KACHA, THE CLAIM CA NNOT BE REJECTED IF THE BILLS CONTAIN THE REQUIRED PARTICULARS WHICH CAN BE VERIFIED. SIMILARLY, THE CLAIM OF THE ASSESSEE THAT IT WAS IN FLOWER BUSINESS CANNOT BE DENIED ON THE BASIS OF ASSUMPTION THAT PARTNERS OF IT ARE LIVING IN A FARM HOUSE. IT IS ALS O AN IMPORT FACT OF THE PRESENT CASE THAT BOOKS OF ACCOUNT MAINTAINED IN THE REGULAR COURSE OF BUSINESS IN THE CASE OF PRESENT ASSESSEE HAS NOT BEEN REJECTED BY THE ASSESSING OFFICER UNDER SEC. 145(3) OF THE ACT. UNDER THESE FACTS AND CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN DENYING THE CLAIMED BUSINESS LOSS OF RS.2,49,593 FOR THE SET OFF. WE THUS WHILE SETTING ASIDE ORDERS OF THE AUTHORITIES BELOW IN THIS REGARD 5 DIRECT THE ASSESSING OFFICER TO ALLOW THE CLAIMED LOSS OF RS.2,49,593 FOR THE SET OFF. THE GROUNDS INVOLVING THE ISSUE ARE THUS ALLOWED. 5 . IN RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 . 0 3 . 201 6 S D/ - SD/ - ( P RASHANT MAHARISHI ) ( I.C. UDHIR ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 30 / 0 3 /201 6 MOHAN LAL COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR DATE DRAFT DICTATED DIRECTLY ON CO MPUTER 2 9 . 0 3 .201 6 DRAFT PLACED BEFORE AUTHOR 2 9 . 0 3 .2016 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 2 9 .03 .2016 APPROVED DRAFT COMES TO THE SR.PS/PS 30 . 0 3 .2016 KEPT FOR PRONOUNCEME NT ON 30 .03 .2016 FILE SENT TO THE BENCH CLERK 31 . 0 3 .2016 DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.