DCIT, New Delhi V. Sh. Vijay Kumar Ahuja, New Delhi

ITA 6579/DEL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 7576 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 18-05-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 10-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ASHISH CHADHA
• Keywords: Unexplained cash credit; Rule of consistency
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER I.T.A. NO. 6579/DEL/2013 A.Y. : 2009-10 DCIT, CIRCLE 29(1), NEW DELHI ROOM NO. 107, DRUM SHAPE BUILDING, IP ESTATE, NEW DELHI -2 VS. SH. VIJAY KUMAR AHUJA PROP. M/S DELHI BOOK STORE, 19, ANSARI ROAD, DARYA GANJ, NEW DELHI 2 (PAN:AAFPA6918M) (APPELLANT) (RESPONDENT) DEPARTMENT BY : SH. AMIT JAIN, SR. DR ASSESSEE BY : SH. ASHISH CHADHA, ADV. DATE OF HEARING : 18-05-2016 DATE OF ORDER : 02-06-2016 ORDER PER H.S. SIDHU, JM REVENUE HAS FILED THE APPEAL AGAINST THE ORDER DAT ED 12.9.2013 PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-XXV, N EW DELHI PERTAINING TO ASSESSMENT YEAR 2009-10 ON THE FOLLOWING GROUND:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD . CIT(A) HAS ERRED IN DELETING THE PENALTY U/S. 271(1)(C) OF TH E I.T. ACT, 1961 ITA NO. 6579/DEL/2013 2 LEVIED ON ACCOUNT OF UNEXPLAINED CREDITORS, IGNORIN G THE FACT THAT THE ASSESSEE HAD FAILED TO PROVE THE GENUINENESS OF THE CREDITORS. 2. THE FACTS NARRATED BY THE REVENUE AUTHORITIES AR E NOT DISPUTED BY BOTH THE PARTIES, THEREFORE, THE SAME ARE NOT REPEATED H ERE FOR THE SAKE OF CONVENIENCE. 3. LD. DR RELIED UPON THE ORDER OF THE AO AND REITE RATED THE CONTENTIONS RAISED IN THE GROUNDS OF APPEAL. 4. AT THE TIME OF HEARING, LD. COUNSEL OF THE ASSES SEE SH. ASHISH CHADHA, ADVOCATE STATED THAT THE QUANTUM ON WHICH THE PENAL TY HAS BEEN IMPOSED, HAS ALREADY BEEN DELETED BY THE ITAT. LD. CIT(A) BY FO LLOWING THE ORDER OF THE ITAT ORDER DATED 26.8.2013 HAS RIGHTLY DELETED THE PENALTY IN DISPUTE, THEREFORE, IMPUGNED ORDER MAY BE UPHELD. HE HAS ALSO FILED T HE COPY OF THE ORDER DATED 26.8.2013 PASSED BY THE ITAT, DELHI BENCH H IN IT A NO. 5856/DEL/2012 (AY 2009-10) IN ASSESSEES OWN CASE. 5. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS AND PERUSED THE RECORDS. WE FIND THAT IN ASSESSEES OWN CASE IN ITA NO. 5856 /DEL/2012 FOR A.Y. 2009-10 VIDE ORDER DATED 26.8.2013, THE TRIBUNAL HA D ADJUDICATED THE ISSUE VIDE PARA NO. 11 TO 16 AT PAGES 6 TO 9 AND DELETED THE A DDITION IN THIS REGARD. THE TRIBUNAL HAS HELD AS UNDER:- 11. WITH REGARD TO THIS ISSUE, HAVING HEARD THE RI VAL CONTENTIONS AND HAVING PERUSED THE RELEVANT MATERIAL PLACED ON RECORD, WE FIND ITA NO. 6579/DEL/2013 3 THAT UNDISPUTEDLY, THE AMOUNTS IN QUESTION ARE OUTS TANDING AS SUNDRY CREDITORS FOR THE LAST THREE YEARS. THIS IS EVIDENT FROM THE LEDGER ACCOUNTS OF THE CREDITORS, AS PLACED IN THE PAPER BOOK AT PAGES 44-57. AS SUCH, THERE IS NO INFIRMITY IN THE STAND TAKEN BY STUDENTS BOOK DEPOT, RANCHI AND UNICATE PUBLISHERS & DISTRIBUTORS, PUNE, THAT THEY DID NOT HAVE ANY TRAN SACTION WITH THE ASSESSEE DURING THE YEAR. NO CREDIT HAVING GIVEN IN THE BOOKS OF THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION, THE P ROVISIONS OF SECTION 68 OF THE ACT ARE OBVIOUSLY NOT ATTRACTED. THEN, IT IS ONLY BY WAY OF SURMISE THAT THE LD. CIT (A) HAS OBSERVED TH AT: ..THE ABOVE FOUR TRADE CREDITORS HAS NOT DEMANDED ANY MON EY FROM THE ASSESSEE FOR A LONG TIME AND IT IS ALSO APPARENT TH AT THE ABOVE FOUR PARTIES WOULD HAVE SQUARED OFF OR WRITTEN OFF THE B ALANCES IN THE NAME OF THE ASSESSEE AND, AS SUCH, THERE IS A REMIS SION OR CESSATION OF THE LIABILITY OF THE ASSESSEE.. 12. HOWEVER, SINCE UNDISPUTEDLY, THE AMOUNTS ARE ST ILL OUTSTANDING, IT CANNOT BE SAID THAT THEY HAVE BEEN EITHER WRITTE N OFF OR SQUARED OFF OR THAT ANY BENEFIT HAS BEEN DERIVED BY THE ASS ESSEE. FOR DOING SO, THE PROVISIONS OF SECTION 41 (1) OF THE ACT ARE ALSO NOT ATTRACTED AND NO ADDITION THEREIN IS ENVISAGABLE. THEN, THE A MOUNTS IN QUESTION PERTAINED TO SUNDRY CREDITORS OF THE ASSES SEE, THEY BEING ITA NO. 6579/DEL/2013 4 ON ACCOUNT OF PURCHASES OF THE ASSESSEE. AS SUCH AL SO, NO ADDITION IS CALLED FOR, SINCE THE PURCHASES OR THE SALES HAV E NOT BEEN DISPUTED BY THE ASSESSING OFFICER. THUS, IN KEEPING WITH CIT VS. PANCHAM DAS JAIN, 205 CTR (ALL) 444, NO ADDITION I S CALLED FOR. THEN, IN THE BOOKS OF ACCOUNT OF THE ASSESSEE, NO M ISTAKE OR DEFECT, WHATSOEVER WAS POINTED OUT BY THE ASSESSING OFFICER . THEREFORE, JUST BECAUSE CONFIRMATIONS WERE NOT FILED, ACCORDIN G TO YFC PROJECTS (P) LTD. VS. DCIT, 134 TTJ 167 (DEL), NO ADDITION CAN BE MADE. FURTHER, TO SUPPORT THE PROPOSITION THAT AMOU NTS REPRESENTING PURCHASES MADE ON CREDIT DO NOT ATTRAC T THE PROVISIONS OF SECTION 68 OF THE ACT, ACIT VS. HAN SINGER GUTKHA (P) LTD., 9 DTR (LUC) (TRIB.) 604 HAS RIGHTLY BEEN RELIED ON. THEN, AS OBSERVED, SINCE THE PURCHASES HAVE BEEN ACCEPTED AS GENUINE, BALANCES REMAINING OUTSTANDING AT THE END OF THE YE AR AGAINST SUCH PURCHASE CANNOT BE TREATED AS A BOGUS LIABILITY AND ADDITION MADE ON THAT BASIS CANNOT BE SUSTAINED AS HELD IN JCIT VS. MATHURA DASS ASHOK KUMAR, 101 TTJ (ALL) 810. IN CIT VS. S MT. P.K. NOORJEHAN, 237 ITR 570 (SC), IT HAS BEEN HELD THAT AS PER THE PROVISIONS OF SECTION 68 OF THE ACT, IT IS NOT MAND ATORY THAT IN CASE THE ASSESSEE FAILS TO SATISFY THE ASSESSING OFFICER ABOUT THE OUTSTANDING CREDITS, THE SAME ARE MANDATORILY REQUI RED TO BE ADDED AS INCOME OF THE ASSESSEE AND THAT SECTION 68 OF TH E ACT GIVES A ITA NO. 6579/DEL/2013 5 DISCRETION OF THE ASSESSING OFFICER IN THIS REGARD; AND THAT THE ASSESSING OFFICER HAS TO TAKE INTO ACCOUNT THE OVER ALL FACTS. IN THE PRESENT CASE, AS DISCUSSED, ON CONSIDERING THE FACT S OF THE CASE, THE PROVISIONS OF SECTION 68 OF THE ACT ARE NOT ATTRACT ED AND CONSIDERING THE OVERALL FACTS, NO ADDITION IS CALLE D FOR UNDER THE SECTION. 13. FURTHER, AS CONSIDERED IN THE ORDER DATED 30.0 9.2011 PASSED BY THIS BENCH (AUTHORED BY THE JM) IN THE CA SE OF M/S DIVINE INTERNATIONAL FOR ASSESSMENT YEAR 2001-02, IN THE CASE OF THE ASSESSEE THESE CREDITORS REPRESENT THE OUTSTAND ING AMOUNT ON ACCOUNT OF THE PURCHASES. THERE CAN BE THREE ALTERN ATIVE ALLEGATIONS AGAINST THE ASSESSEE. ONE CAN BE THAT T HESE CREDITS REPRESENT THE CREDIT FOR EARLIER YEARS. IF THAT BE THE CASE, NO ADDITION CAN BE MADE IN THIS YEAR UNDER SECTION 68 OF THE ACT. THE SECOND ALLEGATION CAN BE THAT THESE CREDITS REPRESE NT THE PURCHASES FOR WHICH PAYMENTS HAVE BEEN MADE BY THE ASSESSEE D URING THE YEAR ITSELF. IF THIS IS SO, THE ONUS WILL BE ON THE DEPARTMENT TO ESTABLISH THAT ASSESSEE HAS MADE PAYMENT TO THESE C REDITORS. THIS IS NOT EVEN THE ALLEGATION OF THE ASSESSING OFFICER, M UCH LESS HIS CASE AGAINST THE ASSESSEE. THE THIRD ALLEGATION CAN BE T HAT THESE CREDITS DO NOT REPRESENT THE PURCHASES WHICH HAVE BEEN MADE BY THE ITA NO. 6579/DEL/2013 6 ASSESSEE. THE IMPLICATION OF THIS WILL BE THAT THE PURCHASES DEBITED IN THE TRADING ACCOUNT ARE NOT GENUINE TO THAT EXTE NT AND ACCORDINGLY, THAT THE TRADING ACCOUNT IS NOT CORREC T. HOWEVER, AS DISCUSSED, THE TRADING RESULTS OF THE ASSESSEE HAVE BEEN ACCEPTED AND CONSIDERING THE OVERALL FACTS OF THE CASE, AS D WELT UPON, NO ADDITION U/S 68 OF THE ACT IS CALLED FOR. 14. FURTHER, EVEN ON THE PRINCIPLE OF CONSISTENCY, NO ADDITION IS CALLED FOR AND THE CLAIM IS TO BE ALLOWED, AS HELD IN RADHA SOAMI SATSANG VS. CIT, 193 ITR 321 (SC), CIT VS. NEO PO LY PACK (P) LTD., 245 ITR 492 (DEL) AND CIT VS. DALMIA PROMOT ERS DEVELOPERS (P) LTD., 281 ITR 346 (DEL). 15. STILL FURTHER, EVIDENTLY, IT WAS NOT SCRUTINY A SSESSMENTS FOR ASSESSMENT YEARS 2007-08 AND 2008-09, THAT U/S 143 (3) OF THE ACT, THESE CREDITORS WERE ACCEPTED BY THE DEPARTMENT. TH EREFORE, THE FACTS AND CIRCUMSTANCES FOR THE YEAR UNDER CONSIDER ATION REMAINING ENTIRELY UNCHANGED, CONSISTENCY IS REQUIR ED TO BE MAINTAINED FOR THE YEAR UNDER CONSIDERATION ALSO. 16. FOR THE ABOVE DISCUSSION, FINDING THE GRIEVANCE SOUGHT TO BE RAISED BY THE ASSESSEE IN THIS REGARD TO BE JUSTIFI ED, WE ACCEPT THE SAME. ACCORDINGLY, THE ORDER OF THE LD. CIT (A) ON THIS ISSUE IS ITA NO. 6579/DEL/2013 7 CANCELLED AN THE ASSESSING OFFICER IS DIRECTED TO A LLOW THE CLAIM OF THE ASSESSEE. 5.1 WE ALSO FIND THAT LD. CIT(A) HAS ADJUDICATED T HE ISSUE IN DISPUTE VIDE PARA NO. 4.00 AT PAGE NO. 3 OF THE IMPUGNED ORDER D ATED 12.9.2013. FOR THE SAKE OF CONVENIENCE, WE ARE REPRODUCING THE PARA NO. 4.0 0 AS UNDER:- 4.00 I HAVE GONE THROUGH THE SUBMISSIONS MADE BY T HE APPELLANT AND THE ARGUMENTS ADVANCED DURING THE COURSE OF APP ELLATE PROCEEDINGS. THERE IS NO GAINSAYING THE FACT THAT THE HONBLE DELHI H BENCH, NEW DELHI VIDE ITA NO. 5856/DEL/2012 DATED 26.8.2013 PRONOUNCED ITS JUDGME NT IN FAVOUR OF THE APPELLANT AS IS APPARENT FROM THE REL EVANT EXTRACT OF ITS ORDER QUOTED IN ITALICS ABOVE. PARA 11 OF THE HONBLE ITATS ORDER WAS ALSO REFERRED TO WHEREUNDE R IT WAS HELD BY THE HONBLE ITAT THAT THE SUNDRY CREDIT ORS REFLECTED IN THE BOOKS OF ACCOUNT OF THE APPELLANT WERE GENUINE OUTSTANDING BALANCES. ON THE STRENGTH OF T HE ABOVE FACTS THE HONBLE ITAT DELHI H-BENCH HAD FELT INCLI NED TO ALLOW THAT GROUND OF APPEAL. IN THE FACE OF FOREGO ING FACTS THE PENALTY ORDER DATED 12.6.2012 PASSED BY THE LD. ACIT CIRCLE 29(1), NEW DELHI COULD NOT BE SUSTAINED, THE QUANTUM ADDITION WHICH RESULTED IN THE IMPOSITION OF PENALT Y UNDER CONSIDERATION HAVING BEEN KNOCKED DOWN BY THE HONB LE ITAT DELHI. WHEN THE FOUNDATION GOES EVERYTHING GOE S. ACCORDINGLY, THE PENALTY ORDER IS CONSIDERED TO HAV E ABATED. ITA NO. 6579/DEL/2013 8 5.2 KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE ADDITION ON WHICH THE PENALTY IN DISPUTE WAS LE VIED, WHICH HAS BEEN DELETED BY THE ITAT VIDE ORDER DATED 26.8.2013 IN ITA NO. 5 856/DEL/2012 (2009-10), AS AFORESAID, THEREFORE, THE PENALTY IN DISPUTE WI LL NOT SURVIVE. THEREFORE, LD. CIT(A) HAS RIGHTLY DELETED THE PENALTY IN DISPUTE. HENCE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A), THEREFO RE, WE CONFIRM THE IMPUGNED ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL S) IN THIS CASE IN DELETING THE LEVY OF PENALTY. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 02/06/2016. SD/- SD/- [O.P. KANT] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 02/06/2016 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES