Sh. Santokh Singh Prop. M/s. Speedline International Co., New Delhi V. JCIT, New Delhi

ITA 6489/DEL/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7393 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-09-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 10-07-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 31-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHALINI VERMA
• Assessee Lawyers: DALJIT SINGH
• Keywords: Bogus purchase; Principle of natural justice; Reassessment proceedings
• Section: 143(3)

Judgement Text

ITA NO. 6489/DEL/2012 ASSTT.YEAR: 2009-10 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `G NEW DELHI BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER I.T.A.NO.6489/DEL/2012 ASSESSMENT YEAR : 2009-10 SANTOKH SINGH, VS JCIT, PROP. M/S SPEEDLINE INTERNATIONAL RANGE-29, CO., 48/33-34, 2 ND FLOOR, NEW DELH I. DSIDC COMPLEX, PKT-II, MAYUR VIHAR PH-I, NEW DELHI-110091 (PAN: AISPS8712K) (APPELLANT) (RESPONDENT) APPE LLANT BY: SHRI DALJIT SINGH RESPONDENT BY : SMT. SHALINI VERMA, SR. DR O R D E R PER CHANDRA MOHAN GARG, JUDICIAL MEMBER THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGA INST THE ORDER OF THE CIT(A)-XXV, NEW DELHI DATED 30.10.2012 IN APPEAL N O. 150/2011-12 FOR AY 2009-2010. 2. BRIEFLY STATED THE FACTS GIVING RISE TO THIS APP EAL ARE THAT THE AO COMPLETED ASSESSMENT U/S 143(3) OF THE INCOME TAX A CT, 1961 (FOR SHORT THE ACT) ON 30.12.2011 BY MAKING ADDITION OF RS. 5,71,7 3,777 BY HOLDING THAT THE SUNDRY CREDITORS AND SUPPLIERS AS PER STATEMENT OF ACCOUNTS OF THE ASSESSEE ARE BOGUS AND THE AO ALSO HELD THAT THE AB OVE AMOUNT OF ADDITION ITA NO. 6489/DEL/2012 ASSTT.YEAR: 2009-10 2 ALSO INCLUDES PART OF PURCHASES WHICH WERE FOUND TO BE BOGUS. THE AO ALSO MADE ANOTHER ADDITION ON ACCOUNT OF UNEXPLAINED UNS ECURED LOAN FROM MR. KIRAT SINGH CHAWLA AND MR. PRITPAL CHAWLA, ANOTHER ADDITION OF RS. 3000 ON ACCOUNT OF DISALLOWANCE OF PART DISALLOWANCE OR REN T EXPENDITURE AND ANOTHER ADDITION OF RS. 84,000 ON ACCOUNT OF ESTIMATED RENT AL VALUE OF ASSESSEES LETTABLE PROPERTY SITUATED AT 642, 4 TH FLOOR, AZAD HIND COOPERATIVE SOCIETY, DWARKA, NEW DELHI WHICH WAS BEING USED BY HIS BROTH ER DURING THE RELEVANT PERIOD. 3. BEING AGGRIEVED BY THE ABOVE ASSESSMENT ORDER, A SSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) WHICH WAS PARTLY ALLOWED O N THE ISSUE OF DISALLOWANCE OF RENT OF RS. 3000 WHICH WAS A PART O F RENTAL EXPENDITURE BUT THE APPEAL WAS DISALLOWED ON ACCOUNT OF ADDITION UN DER THE HEAD OF BOGUS PURCHASE AND SUNDRY CREDITORS, ADDITION OF NOTIONAL RENT AND ADDITION ON UNEXPLAINED UNSECURED LOAN. NOW THE EMPTY HANDED AS SESSEE IS BEFORE THIS TRIBUNAL IN THIS SECOND APPEAL. 4. AT THE OUTSET, LD. COUNSEL FOR ASSESSEE AS WELL AS LD. DR SUBMITTED THAT GROUND NO. 5 OF THE ASSESSEE MAY BE TAKEN UP FIRST FOR ADJUDICATION WHICH READS AS UNDER:- 5. THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER, ACTION OF LD. CIT(A) IN NOT QUASHING THE IMPUGNED ASSESSMENT AND IN NOT DELETING THE IMPUGNE D ADDITIONS/DISALLOWANCES MADE BY LD. AO ARE CONTRARY TO ITA NO. 6489/DEL/2012 ASSTT.YEAR: 2009-10 3 LAW AND FACTS, VOID AB INITIO, AND WITHOUT GIVING A DEQUATE OPPORTUNITY OF HEARING, BY RECORDING INCORRECT FACT S AND FINDINGS AND THE SAME IS NOT SUSTAINABLE ON VARIOUS LEGAL AND FACTUAL GROUNDS. 5. LD. COUNSEL OF THE ASSESSEE HAS DRAWN OUR ATTENT ION TOWARDS IMPUGNED ORDER PARA NO. 2 AND SUBMITTED THAT THE AS SESSEES REPRESENTATIVE FIRST TIME APPEARED BEFORE THE FIRST APPELLATE AUTH ORITY I.E. CIT(A) ON 30.10.2012 AND THE CIT(A) PASSED THE ORDER ON THE V ERY SAME DATE DISMISSING THE APPEAL OF THE ASSESSEE. LD. COUNSEL VEHEMENTLY CONTENDED THAT THE CIT(A) DID NOT PROVIDE DUE OPPORTUNITY OF HEARING FOR THE ASSESSEE FOR THE REASONS BEST KNOWN TO HIM AS THE ASSESSEE W AS NOT PROVIDED AN OPPORTUNITY TO SUPPORT HIS CASE AND SUBMITTED FURTH ER SUBMISSIONS AND CONTENTION IN HIS FAVOUR. THE DR FAIRLY ACCEPTED T HAT THE CASE WAS DISPOSED OF ON THE SAME DATE ON WHICH THE ASSESSEES REPRESE NTATIVE APPEARED BEFORE THE CIT(A) FOR THE FIRST TIME. 6. LD. COUNSEL OF THE ASSESSEE FURTHER POINTED OUT THAT THE CITA) ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF LD. AO IN MAKING ADDITION OF RS.2,98,06,365/- OUT OF TOTAL PURCHASES OF RS.3,63, 14,938/- AND RS.2,73,67,412 OUT OF TOTAL SUNDRY CREDITORS OF R S.5,32,96,930/- AND THAT TOO WITHOUT CONSIDERING THE SUBMISSIONS FILED BY TH E ASSESSEE. LD. COUNSEL FURTHER CONTENDED THAT THE CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ITA NO. 6489/DEL/2012 ASSTT.YEAR: 2009-10 4 ADDITION OF THE AO MAKING AGGREGATE ADDITION OF RS. 5,71,73,777 AGAINST THE FACTUAL MATRIX OF THE CASE. LD. COUNSEL FURTHER CO NTENDED THAT THE CIT(A) GROSSLY IN LAW AND ON FACTS IN CONFIRMING THE ACTIO N OF LD. AO IN MAKING ADDITION OF RS. 19,00,000/- ON ACCOUNT OF UNSECURED LOAN BECAUSE THE ASSESSEE WAS NOT GIVEN DUE OPPORTUNITY FOR SUBMITTI NG CONFIRMATION AND OTHER RELEVANT DOCUMENTARY EVIDENCE TO PROVE THE CR EDITWORTHINESS OF THE LENDERS AS WELL AS GENUINENESS OF THE TRANSACTION. LD. COUNSEL OF THE ASSESSEE FURTHER CONTENDED THAT THE CIT(A) ALSO ERR ED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF LD. AO IN MAKING DISALLOWA NCE OF RS.84,000/- UNDER THE HEAD NOTIONAL RENT AND THAT TOO WITHOUT A NY BASIS AS THE ASSESSEE DID NOT RECEIVE ANY RENTAL INCOME FROM SAID PROPERT Y WHICH WAS BEING USED BY HIS BROTHER AS PER FAMILY ARRANGEMENT AND REQUIR EMENT. LD. COUNSEL OF THE ASSESSEE POINTED OUT THAT THE AUTHORITIES BELOW DID NOT PROVIDE OPPORTUNITY FOR THE ASSESSEE TO SUBMIT REASONABLE E XPLANATION IN THIS REGARD AND ASSESSEE WAS DEPRIVED OF OPPORTUNITY OF HEARING CLEARLY VIOLATING THE PRINCIPLES OF NATURAL JUSTICE BY THE AUTHORITIES BE LOW. REPLYING TO THE ABOVE, LD. DR SUBMITTED THAT THE AO PROVIDED DUE OPPORTUNI TY OF HEARING FOR THE ASSESSEE ON ALL THE ISSUES BUT ASSESSEE FAILED TO S UBMIT ACCEPTABLE AND PLAUSIBLE EXPLANATION AND RELEVANT DOCUMENTARY EVID ENCE AND OTHER MATERIAL TO SUPPORT HIS CLAIM, THEREFORE, THE AO WAS RIGHT I N MAKING DISALLOWANCE AND ITA NO. 6489/DEL/2012 ASSTT.YEAR: 2009-10 5 ADDITION IN THE ASSESSMENT ORDER. THE DR FURTHER P OINTED OUT THAT THE ASSESSEE EVEN DURING THE FIRST APPELLATE PROCEEDING S DID NOT SUBMIT ANY ACCEPTABLE AND COGENT EXPLANATION AND SUBMITTED EVI DENCE TO SUPPORT HIS CASE, THEREFORE, THE CIT(A) DECIDED THE APPEAL AGAI NST HIM. THE DR REITERATED THAT THE CIT(A) PASSED THE ORDER ON THE VERY SAME DATE I.E. 30.10.2012 WHEN THE ASSESSEES REPRESENTATIVE APPEA RED BEFORE IT FOR THE FIRST TIME DURING THE FIRST APPELLATE PROCEEDINGS BUT THE DR ALSO SUBMITTED THAT WHEN THERE IS NO REQUEST FOR ADJOURNMENT FROM ASSES SEES REPRESENTATIVE, THEN THE CIT(A) CANNOT BE HELD GUILTY OF NOT PROVID ING DUE OPPORTUNITY OF HEARING FOR THE ASSESSEE. 7. ON CAREFUL CONSIDERATION OF ABOVE SUBMISSIONS, W E ARE OF THE CONSIDERED OPINION THAT THE ASSESSEE WAS NOT PROVID ED DUE OPPORTUNITY OF HEARING TO SUPPORT HIS APPEAL AND TO SUBMIT REQUIRE D EXPLANATION, DOCUMENTARY EVIDENCE AND OTHER RELEVANT MATERIAL TO SUPPORT HIS CLAIM AND TO PROVE GENUINENESS OF THE TRANSACTION AS SHOWN IN THE FINAL STATEMENT OF ACCOUNTS WHICH WERE PLACED BEFORE THE AO. WE ARE A LSO IN AGREEMENT WITH THE CONTENTION OF THE LD. COUNSEL OF THE ASSESSEE T HAT WITHOUT PURCHASE THERE CANNOT BE AN EXPORT TURNOVER AND DISPUTED AMOUNT OF BOGUS PURCHASE AND SUNDRY CREDITORS AS ALLEGED BY THE AO REQUIRES DETA ILED AND THOROUGH EXAMINATION AND VERIFICATION AT THE END OF AO. WE ALSO FIND IT APPROPRIATE ITA NO. 6489/DEL/2012 ASSTT.YEAR: 2009-10 6 THAT THE ISSUE OF ADDITION PERTAINING TO UNEXPLAINE D UNSECURED LOAN AND INCOME FROM SECOND HOUSE PROPERTY SITUATED AT DWARK A, NEW DELHI ALSO REQUIRES FURTHER EXAMINATION AND VERIFICATION AT TH E END OF AO. THEREFORE, IN VIEW OF ABOVE FOREGOING DISCUSSION AND PECULIAR FAC TS AND CIRCUMSTANCES OF THE PRESENT CASE, WE REACH TO A CONCLUSION THAT ALL THREE ISSUES AGITATED IN THIS APPEAL DESERVE TO BE RESTORED TO THE FILE OF AO FOR PROPER VERIFICATION AND EXAMINATION. THIS WOULD MEET THE ENDS OF JUSTICE A S WELL AS SUBSERVE THE PRINCIPLES OF NATURAL JUSTICE. ACCORDINGLY, THE EN TIRE CONTROVERSY ONLY ON THREE COUNTS I) IN REGARD TO ADDITION OUT OF TOTAL PURCHASE AND TOTAL SUNDRY CREDITORS II) UNEXPLAINED UNSECURED LOAN AND III) N OTIONAL INCOME FROM HOUSE PROPERTY, IS RESTORED TO THE FILE OF AO FOR DE NOVO ADJUDICATION AFTER AFFORDING DUE OPPORTUNITY OF HEARING FOR THE ASSESS EE. NEEDLESS TO SAY THAT THE ASSESSEE WOULD COOPERATE AND AVAIL HIS RIGHT OF HEARING BEFORE THE AO DURING THE REASSESSMENT PROCEEDINGS AS PER OUR DIRE CTIONS IN THIS ORDER. ACCORDINGLY, GROUND NO. 5 OF THE ASSESSEE IS ALLOWE D AS INDICATED ABOVE. GROUND NO. 1 TO 4 8. SINCE WE HAVE RESTORED THE ISSUE TO THE FILE OF AO ON ALL THREE GROUNDS, THEREFORE, THIS GROUND DOES NOT SURVIVE FO R ADJUDICATION ON MERITS AND WE DISMISS THE SAME WITH A CLARIFICATION THAT T HE ASSESSEE SHALL BE ITA NO. 6489/DEL/2012 ASSTT.YEAR: 2009-10 7 ELIGIBLE TO AGITATE THIS GROUND BEFORE THE LOWER AU THORITIES AFRESH AND ALSO BEFORE THE TRIBUNAL IF REQUIRED IN FUTURE. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DEE MED TO BE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 01.09.2014. SD/- SD/- (S.V. MEHROTRA) (CHANDRAMOHAN GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 1 ST SEPTEMBER 2014 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. COMMISSIONER OF INCOME TAX(A) 4. C.I.T. 5. DR BY ORDER ASSTT.REGISTRAR