M/s. Paragon Shrink Packers (P) Ltd., New Delhi V. ITO, New Delhi

ITA 652/DEL/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 7770 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-05-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 16-05-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 05-02-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AMRIT LAL
• Assessee Lawyers: S S KALRA
• Keywords: Competent authority
• Section: 145; 144

Judgement Text

ITA NO. 652/DEL/2014 ASSTT. YEAR: 2008-09 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER ITA NO. 652/DEL/2014 ASSESSMENT YEAR: 2008 -09 PARAGON SHRINK PACKERS (P) LTD. VS. ITO B-1, EXTN, A-41, WARD-14(1) MOHAN CO-OPERATIVE, INDUSTRIAL ESTATE NEW DELHI . NEW DELHI 110 044 PAN AACCP4074C. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S.S. KALRA, CA DEPARTMENT BY: SHRI AMRIT LAL, S R. DR DATE OF HEARING : 16.05.2016 DATE OF PRONOUNCEMENT : 25.5 .2016 O R D E R PER CHANDRA MOHAN GARG, JUDICIAL MEMBER THIS APPEAL BY THE ASSESSEE HAS BEEN FI LED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX XVII DATED 1.11. 2013 PASSED IN APPEAL NO. 133/10-11 FOR ASSTT. YEAR 2008-09. ITA NO. 652/DEL/2014 ASSTT. YEAR: 2008-09 2 2. GROUNDS RAISED BY THE ASSESSEE READ AS UN DER :- 1. LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 15 LAKHS. THE ASSESSEE PRODUCED THE NECESSARY EVIDENCE JUSTIFYING LOAN RECEIVED FROM SHRI ASHOK KUMAR JAIN OF RS. 5 LAKHS AND M/S. CANDICO (I) PVT. LTD. OF RS. 10 LAKHS. THE LD. CIT(A) HAS NOT BEEN APPRECIATING, THE EVIDENCE FURNISHED BY TH E ASSES SEE. 2. THE LD . CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS . 12,18,500/- MADE BY THE LD. AO BECAUSE OF NON FILIN G OF RECORD/EVIDENCE FOR VERIFICATION OF THE EXPENSES. 3. THE LD . CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS . 73,052/- IN RESPECT OF AMOUNT PAYABLE TO M/S. OSWAL CABLE PRODUCTS BY IGNORING THE CONFIRMATION FILED BY THE ASSESSEE IN THIS RESPECT. 3. BRIEFLY STATED THE FACTS GIVING RISE TO TH E APPEAL AS PER RECORD ARE THAT THE CASE WAS SELECTED FOR SCRUTINY AND THE AO COMPLETED ASSESSMENT PROCEEDINGS U/S 144 OF THE INCOME TAX AC T 1961 (FOR SHORT THE ACT) BY MAKING CERTAIN ADDITIONS AND ASSE SSED THE TAXABLE INCOME AT RS. 83,86,910/- AS AGAINST THE RETURNED L OSS OF RS. 13,47,550/-. THE AGGRIEVED ASSESEE FILED AN APPEAL BEFORE LD. CIT(A) WHICH WAS PARTLY ALLOWED. HOWEVER, THE LD. CIT(A) C ONFIRMED ADDITION OF RS. 15 LACS ON ACCOUNT OF UNSECURED LOA NS, CONFIRMED THE ADDITION OF RS. 12,18,500/- ON ACCOUNT OF ESTIMATIO N OF NET PROFIT AND ALSO CONFIRMED ADDITION OF RS. 73,052/- IN RESPECT OF AMOUNT PAYABLE ITA NO. 652/DEL/2014 ASSTT. YEAR: 2008-09 3 TO M/S. OSWAL CABLE PRODUCTS ON ACCOUNT OF UNSECURE D SUNDRY CREDITORS. NOW THE EMPTY HANDED ASSESSEE IS BEFORE THIS TRIBUNAL IN THIS SECOND APPEAL WITH THE GROUNDS AS REPRODUCED H EREINABOVE 4. GROUND NO. 1 APROPOS GROUND NO. 1 THE LD. ASSESSEES REPRESENTATIVE (AR) SUBMITTED A COPY OF THE REMAND REPORT DATED 14.12.2012 SUBMITTED TO THE LD. CIT(A) BY THE AO AN D DRAWN OUR ATTENTION TOWARDS PARA 1 AND SUBMITTED THAT THE AO COMPLETED ASSESSMENT EX PARTE U/S 144 OF THE ACT AND THE ASS ESSEE SUBMITTED BANK STATEMENT OF SHRI ASHOK KUMAR JAIN SHOWING TRA NSFER OF RS. 5 LAC FROM HIS ACCOUNT MAINTAINED WITH ICICI BANK T O THE ASSESSEES BANK ACCOUNT THROUGH CHEQUE NO. 632932 DATED 21.6.2 007 AND CONFIRMATION WAS ALSO FILED BY SHRI ASHOK KUMAR JAI N SUPPORTED BY HIS INCOME TAX RETURN. THE LD. AR ALSO CONTENDED TH AT IN RESPECT OF ADDITION OF RS. 10 LACS RECEIVED FROM M/S. CANDICO (I) PVT. LTD. WAS ALSO FILED BEFORE LD. CIT(A) AND AO VERIFIED THE SA ME IN HIS REMAND REPORT AND THERE IS NO ALLEGATION OF THE AO IN THE REMAND REPORT. LD. AR VEHEMENTLY CONTENDED THAT IN THIS SITUATION WHEN THE AO AFTER VERIFICATION AND EXAMINATION OF THE CONFIRMATIONS, COPY OF THE BANK STATEMENT AND LEDGER ACCOUNT COUPLED WITH COPIES OF INCOME TAX ITA NO. 652/DEL/2014 ASSTT. YEAR: 2008-09 4 RETURN OF THE RESPECTIVE LOAN CREDITORS . NO ADDITI ON COULD BE MADE AND SUSTAINED. 5. LD. DR STRONGLY SUPPORTED THE ACTION OF THE AO AS WELL AS THE FIRST APPELLATE ORDER, HOWEVER, HE DID NOT CONTROVE RT THIS FACT THAT THE AO HAS NOT MADE ANY ADVERSE COMMENTS IN HIS REMAND REPORT DATED 14.12.2012 SUBMITTED TO THE LD. CIT(A) IN REGARD TO UNSECURED LOANS FROM SHRI ASHOK KUMAR JAIN AND M/S. CANDICO (I) PV T. LTD.. IN VIEW OF ABOVE NOTED FACTS AND CIRCUMSTANCES OF THE PRESE NT CASE WE ARE OF THE CONSIDERED VIEW THAT WHEN THE ASSESEE IS PROPER LY DISCLOSING SOURCE OF UNSECURED LOANS WHICH IS ALSO SUPPORTED B Y THE CONFIRMATIONS, COPIES OF THE BANK STATEMENT, INCOME TAX REPORT OF THE CREDITORS AND THEIR CONFIRMATIONS THEN WITHOUT ANY ALLEGATION OR INCRIMINATING FACTS OR DOCUMENT NO ADDITION IN THIS REGARD CAN BE MADE AND SUSTAINED. THUS WE ARE OF THE CONSIDERED O PINION THAT ADDITION MADE BY THE AO AND CONFIRMED BY THE LD. CI T(A) HAS NO LEGS TO STAND ON THE FOOTINGS OF THE RESPECTIVE PRO VISIONS OF THE ACT. THEREFORE, WE ARE INCLINED TO ACCEPT CONTENTIONS OF THE LD. AR AND THE CONCLUSIONS OF THE AUTHORITIES BELOW ARE DISMIS SED AND THE AO IS DIRECTED TO DELETE THE ADDITION. ACCORDINGLY. GROUN D NO. 1 IS ALLOWED. ITA NO. 652/DEL/2014 ASSTT. YEAR: 2008-09 5 6. GROUND NO. 2 APROPOS GROUND NO. 2 THE LD. AR VEHEMENTLY CONTENDED THAT THE CIT(A) HAS ERRED IN CONFIRMING T HE ADDITION OF RS. 12,18,500/- MADE BY THE AO BECAUSE OF NON FILING O F RECORD AND EVIDENCE FOR VERIFICATION OF EXPENSES. LD. AR ALS O TOOK US THROUGH THE RELEVANT OPERATIVE PART OF THE ASSESSMENT ORDER AND IMPUGNED FIRST APPELLATE ORDER AND CONTENDED THAT ALL THE AC COUNT OF THE ASSESEE HAS BEEN DULY AUDITED BY THE CHARTERED ACCO UNTANT AND THE AO HAS NOT GIVEN ANY REASON FOR ARRIVING AT ADDITIO N OF 10% OF THE TOTAL TURNOVER. THE LD.AR STRENUOUSLY CONTENDED TH AT THE ASSESSEE HAS MAINTAINED REGULAR BOOKS OF ACCOUNT WHICH WERE ALSO AUDITED BY A COMPETENT AUTHORITY. THEREFORE, WITHOUT BRINGING OUT ANY ALLEGATION AGAINST THE CORRECTNESS OF THE FINANCIAL RESULT OF THE ASSESSEE THE ADDITION MADE ON ESTIMATION BASIS IS WRONG AND BAD IN LAW. 7. REPLYING TO THE ABOVE, SUPPORTING THE ACT ION OF THE AUTHORITIES BELOW, THE LD. DR DRAWN OUR ATTENTION TOWARDS RELEV ANT OPERATIVE PARA C OF THE ASSESSMENT ORDER PARA 8.1 & 8.2 OF THE IMPUGNED ORDER AND SUBMITTED THAT THE ASSESSEE WAS GIVEN OPP ORTUNITIES TO FURNISH ALL THE BOOKS OF ACCOUNTS AND RELEVANT DOCU MENTS IN SUPPORT OF THE CLAIM OF EXPENSES DEBITED IN THE P & L ACCOU NT BUT THE ASSESEE ITA NO. 652/DEL/2014 ASSTT. YEAR: 2008-09 6 DID NOT PRODUCE THE SAME AND THEREFORE THE AO WAS C ORRECT IN DETERMINING AND ESTIMATING THE NET PROFIT OF THE AS SESEE @ 10% OF TURNOVER. LD. DR ALSO POINTED OUT THAT EVEN DURING THE REMAND PROCEEDINGS THE AO STATED THAT NO DETAILS AND EVIDE NCE WERE FILED FOR VERIFICATION OF EXPENSES CLAIMED IN THE P & L ACCOU NT OF THE ASSESSEE. THE DR VEHEMENTLY POINTED OUT THAT EVEN BEFORE THE CIT(A) DURING THE FIRST APPELLATE PROCEEDINGS THE ASSESEE HAS NOT PRODUCED ANY DOCUMENTS TO VERIFY THE EXPENSES CLAIMED IN P & L A CCOUNT. THEREFORE THE CIT(A) WAS QUITE CORRECT AND JUSTIFY IN UPHOLDING AND CONFIRMING THE ADDITION MADE BY THE AO IN THIS REGA RD. 8. ON CAREFUL CONSIDERATION OF THE ABOVE SUBMI SSIONS FROM THE OPERATIVE PART OF THE ASSESSMENT ORDER PARA C AT PA GE 3 WE NOTE THAT THE AO MADE ADDITION BY OBSERVING AS UNDER :- C) DURING THE COURSE OF ASSESSMENT PROCEEDINGS, DESPITE GIVING REPEATED OPPORTUNITIES AND PARTICULARLY VIDE ORDER SHEET ENTRY DATED 18.11.2010, AR OF THE ASSESEE WAS ASKE D TO FURNISH COMPLETE BOOKS OF ACCOUNT, INCLUDING BILLS/ VOUCHERS, SALARY AND WAGES REGISTERS AND OTHER NECESSARY SUPP ORTING DOCUMENTARY EVIDENCE IN SUPPORT OF EXPENSES CLAIMED IN PROFIT AND LOSS ACCOUNT TO VERIFY THE GENUINENESS OF THE B USINESS RESULTS. HOWEVER, TILL DATE NO BOOKS OF ACCOUNTS HA VE BEEN PRODUCED FOR VERIFICATION. AS PER PROFIT AND LOSS A CCOUNT, THE TOTAL TURNOVER HAS BEEN SHOWN AT RS. 1,21,85,005/- AND OTHER INCOME SHOWN AT RS. 7,75,000/- IN THE ABSENCE OF BO OKS OF ACCOUNT, THE CORRECTNESS AND GENUINENESS OF THE EXP ENSES ITA NO. 652/DEL/2014 ASSTT. YEAR: 2008-09 7 CLAIMED IN THE P & L ARE NOT VERIFIABLE. THEREFORE, THE NET PROFIT OF THE ASSESSEE DURING THE YEAR IS TAKEN AT RS. 12, 18,500/- WHICH IS 10% OF THE TOTAL TURNOVER AND ADDED TO THE INCOME. 9. FROM THE RELEVANT PARA OF THE FIRST APPELLA TE ORDER WE OBSERVE THAT THE CIT(A) HAS CONFIRMED THE ADDITION WITH FOL LOWING CONCLUSIONS :- 8.1. THE AO IN THE ORDER STATED THE APPELLANT WAS GIVEN OPPORTUNITIES TO FURNISH ALL BOOKS OF ACCOUNT AND D OCUMENTS IN SUPPORT OF CLAIM OF EXPENSES DEBITED IN THE P & L A/C. THE APPELLANT HOWEVER DID NOT PRODUCE ANY BOOKS OF ACCO UNT OR DOCUMENTS. THE AO THEREFORE DETERMINED THE NET PROF IT OF THE APPELLANT AT 10% OF THE TURNOVER. 8.2. EVEN DURING REMAND PROCEEDINGS THE A O HAS STATED THAT NO DETAILS / EVIDENCE FILED WAS FILED FOR VERIFICAT ION OF EXPENSES IN THE P & L A/C. EVEN BEFORE ME IN APPELLATE PROCE EDINGS, THE APPELLANT HAS NOT PRODUCED ANY DOCUMENTS TO VERIFY THE EXPENSES IN THE P & L A/C. I THEREFORE CONFIRM THE ADDITION OF RS. 12,18,500/- MADE BY THE AO. THE GROUND OF APPEA L IS RULED AGAINST THE APPELLANT. 10. IN VIEW OF ABOVE CONCLUSION OF THE AUTH ORITIES BELOW AT THE VERY OUTSET WE NOTE THAT AS PER SECTION 145 (3) OF THE ACT WHERE THE AO IS NOT SATISFIED ABOUT THE CORRECTNESS OR COMPLE TENESS OF THE ACCOUNTS OF THE ASSESEE THEN THE AO MAY MAKE AN ASS ESSMENT IN THE MANNER PROVIDED IN SECTION 144 OF THE ACT. IN THE P RESENT CASE THE AO EXPLICITLY OBSERVE THAT DESPITE GIVING REPEATED OPPORTUNITIES AND ITA NO. 652/DEL/2014 ASSTT. YEAR: 2008-09 8 PARTICULARLY VIDE ORDER SHEET ENTRY DATED 18.11.20 10 THE AR OF THE ASSESEE WAS ASKED TO FURNISH COMPLETE BOOKS OF ACCO UNTS INCLUDING BILLS, VOUCHERS, SALARY AND WAGES REGISTERS AND OTH ER NECESSARY SUPPORTING DOCUMENTS ETC. IN SUPPORT OF THE EXPENSE S CLAIMED IN THE P & L ACCOUNT TO ENABLE THE AO TO VERIFY THE GENUIN ENESS OF THE BUSINESS RESULTS BUT NO BOOKS OF ACCOUNTS HAVE BEEN PRODUCED FOR VERIFICATION DURING THE ASSESSMENT PROCEEDINGS. WE FURTHER OBSERVE THAT EVEN DURING THE REMAND PROCEEDINGS BEFORE THE AO ASSESEE DID NOT PRODUCE THE SAME AND THE ASSESEE WAS ALSO FAILE D TO SUBMIT THE SAME DURING THE APPELLATE PROCEEDINGS AS OBSERVED B Y THE CIT(A) IN PARA 8.2 AS REPRODUCED HEREINABOVE . IN THE ABOVE N OTED FACTUAL SITUATION, WE ARE OF THE OPINION THAT THE AUTHORITI ES BELOW WERE QUITE CORRECT AND JUSTIFIED IN ESTIMATING THE NET PROFIT OF THE ASSESSEE @ 10% OF THE TURNOVER AND THIS ESTIMATION HAS NOT BE EN CHALLENGED BY THE ASSESEE IN ANY MANNER. THEREFORE WE DECLINE TO ACCEPT CONTENTION OF THE ASSESSEE IN THIS REGARD AND THUS WE UPHOLD THE CONCLUSIONS OF THE AO WHICH HAS BEEN UPHELD BY THE CIT(A) BY PASSING THE IMPUGNED ORDER . CONSEQUENTLY THE GROUN D NO. 2 OF THE ASSESEEE BEING DEVOID ON MERITS IS DISMISSED. ITA NO. 652/DEL/2014 ASSTT. YEAR: 2008-09 9 11. GROUND NO. 3 APPROPOSE GROUND NO. 3 THE LD. AR SUBMITTED THAT THE CIT(A) HAS ERRED IN CONFIRMING THE ADDITIO N OF RS. 73,052 IN RESPECT OF AMOUNT PAYABLE TO M/S. OSWAL CABLE PRODU CTS BY IGNORING THE CONFIRMATION FILED BY THE ASSESSE. HE FURTHER D RAWN OUR ATTENTION TOWARDS REMAND REPORT DATED 14.12.2012 PARA III (3) AT PAGE 2 AND SUBMITTED THAT DURING THE ASSESSMENT PROCEEDINGS DE TAILS OF SUNDRY CREDITORS WAS FILED BEFORE THE AO WHICH CLEARLY REV EALS THAT THE OPENING BALANCE OF M/S. OSWAL CABLE PRODUCTS WAS OF RS. 690260/- AND NO PAYMENTS WERE MADE DURING THE YEAR. LD. AR F URTHER POINTED OUT THAT IN THE FIRST PART OF THIS PARA (III) THE AO HIMSELF MENTIONED THAT THE AO HAS MADE ADDITION OF RS. 73,052/- AS U NCONFIRMED SUNDRY CREDITORS AND AS PER COPY OF THE ACCOUNT OF M/S. OSWAL CABLE PRODUCTS FILED FOR THE FINANCIAL PERIOD 1.3.2007 T O 31.3.2008 SHOWS OPENING BALANCE OF RS. 9,68,011/- AND CLOSING BALAN CE OF RS. 7,63,312/- SHOWING PAYMENTS OF RS. 2,04,699/- DURIN G THE RELEVANT PERIOD. THEREFORE IT WAS CONTENDED BY THE LD. AR TH AT THE AO IN THE SECOND PART OF THIS PARA (C) OF REMAND REPORT WRON GLY OBSERVE THAT THE OPENING BALANCE OF M/S. OSWAL CABLE PRODUCTS WH ICH LED TO THIS ITA NO. 652/DEL/2014 ASSTT. YEAR: 2008-09 10 ADDITION AND THE AO WRONGLY NOTED AMOUNT OF RS. 690 260/- AS OPENING BALANCE THEREFORE THIS ADDITION SHOULD BE D ELETED. 12. LD. DR STRONGLY SUPPORTED THE ACTION OF TH E AO AND SUBMITTED THAT WHEN THERE WAS NO PAYMENT BY THE ASSESSEE TO M/S. OSWAL CABLE PRODUCTS THEN THE ADDITION WAS CORRECTLY MAD E BY THE AO AND CIT(A) WAS QUITE JUSTIFIED IN UPHOLDING THE SAME. 13. ON CAREFUL CONSIDERATION OF THE RIVAL SUBM ISSIONS, WE NOTE THAT THE AO HIMSELF MENTIONED IN HIS REMAND REPORT (SUPRA) SUBMITTED TO THE CIT(A) THAT AS PER CONFIRMED COPY OF THE ACCOUNT OF M/S. OSWAL CABLE PRODUCTS FILED FOR THE RELEVANT P ERIOD SHOWS CREDIT BALANCE OF RS. 7,63,312/- AT THE END OF THE YEAR WH ICH WAS TAKEN BY THE AO AS RS. 6,90,260/- FOR MAKING ADDITION OF RS. 73,052/- AND THUS WE HOLD THAT WHEN THE AO HAS HIMSELF NOTED THI S FACT THAT THE ASSESSEE MADE PAYMENT OF RS. 2,04,699/- DURING THE PERIOD TO SAID CREDITOR LEAVING THE CLOSING BALANCE OF RS. 7,63,31 2/- THEN AS PER CONFIRMED COPY OF ACCOUNT OF M/S. OSWAL CABLE PRODU CTS CLOSING BALANCE CAN NOT BE REDUCED TO RS. 6,90,260/- FOR M AKING A BASELESS ADDITION. THEREFORE, WE INCLINED TO ACCEPT CONTENTI ON OF THE LD. AR THAT THE ADDITION MADE BY THE AO ARE UPHELD BY THE CIT(A) ITA NO. 652/DEL/2014 ASSTT. YEAR: 2008-09 11 AMOUNTING TO RS. 73,052/- (RS. 7,63,312/- - RS. 6,9 0,260/-) PERTAINING TO M/S. OSWAL CABLE PRODUCES BASED ON IN CORRECT FACTUAL OBSERVATIONS OF THE AO IS NOT SUSTAINABLE AND THUS WE DEMOLISH THE SAME AND AO IS DIRECTED TO DELETE THE IMPUGNED ADD ITION. ACCORDINGLY, GROUND NO. 3 OF THE ASSESSES APPEAL IS ALLOWED. 14. FINALLY, GROUND NO. 2 OF THE APPEAL IS DISM ISSED AND GROUND NO. 1 & 3 ARE ALLOWED. IN THE RESULT, APPEAL OF THE ASSESSE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH MAY, 2016. SD/- SD/- (G.D. AGRAWAL) (CHANDRA MOHAN GARG) VICE PRESIDENT JUDICIAL MEMBE R DATED 25 TH MAY, 2016 VEENA COPY OF ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER ASSTT REGISTRAR, ITAT