ACIT, New Delhi V. M/s. Tirupatii Building and Offices Pvt. Ltd., New Delhi

ITA 6689/DEL/2016

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1224 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 11 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-12-2019
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2013-2014
• Appeal Filed On: 29-12-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Principle of natural justice; Additional evidence; Assessment record; Onus to prove
• Section: 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: G, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER ITA NO.6689/DEL/2016 ASSESSMENT YEAR: 2013-14 ACIT, CENTRAL CIRCLE-18, NEW DELHI VS. M/S. TIRUPATI BUILDING AND OFFICES PVT. LTD., PLOT NO.3, DISTRICT CENTRE, SECTOR-10, DWARKA, NEW DELHI PAN :AACCT7060J (APPELLANT) (RESPONDENT) ORDER PER O.P. KANT, AM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST OR DER DATED 27/10/2016 PASSED BY THE LEARNED COMMISSIONER OF IN COME-TAX (APPEALS)-27, NEW DELHI, [IN SHORT THE LEARNED CIT (A)] FOR ASSESSMENT YEAR 2013-14 RAISING FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD.CLT(A) HAS ERRED IN LAW IN DELETING THE ADDITION OF RS.5,12,74 ,226/- ON ACCOUNT OF SUNDRY CREDITORS OVERLOOKING THE FACT THAT THE A SSESSEE FAILED TO PROVE THE GENUINENESS OF THE SUNDRY CREDITORS BY PR OVIDING THE APPELLANT BY SHRI S.S. RANA, CIT(DR) RESPONDENT BY SHRI MAHAVIR SINGH, ADV. DATE OF HEARING 15.10.2019 DATE OF PRONOUNCEMENT 10.12.2019 2 ITA NO.6689/DEL/2016 BALANCE SHEET, P & L ACCOUNTS, ITRS, BANK STATEMENT S AND ALL THE DOCUMENTS OF THE PARTIES INVOLVED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD.CIT(A) HAS ERRED IN LAW IN DELETING THE ADDITION OF RS.12.21.8 3.656)/- ON ACCOUNT OF DISALLOWANCE OF OTHER EXPENSES WITHOUT P ROPER APPRECIATION OF THE PROVISIONS OF SECTION 106 AND 1 14 OF THE INDIAN EVIDENCE ACT WHERE THE ONUS TO PROVE THE VERACITY A ND JUSTIFICATION OF THE TRANSACTION AND GENUINENESS OF THE CREDITORS LI ES ON THE ASSESSEE AND ASSESSEE COMPANY FAILED TO PROVE THE JUSTIFICAT ION OF THESE EXPENSES AND SUBSTANTIATE ITS CLAIM WITH ANY DOCUME NTARY EVIDENCES. 3. (A) THE ORDER OF THE LD.CIT(A) IS ERRONEOUS AND NOT TENABLE IN LAW AND ON FACTS. (B) THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AM END ANY/ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF TH E HEARING OF THE APPEAL. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE COMPANY FILED RETURN OF INCOME ON 30/09/2013, DECLA RING LOSS OF 82,88,23,389/-. THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143(2) OF THE INCOME-TAX ACT, 1961 (I N SHORT THE ACT) WAS ISSUED ON 04/09/2014 AND SERVED, BUT THER E WAS NO COMPLIANCE FROM THE ASSESSEE. AT LATER STAGE OF PR OCEEDINGS, THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE, ATTENDED AND FILED PART SUBMISSIONS. KEEPING IN VIEW THE SUBMISSIONS, THE A SSESSING OFFICER MADE FOLLOWING TWO ADDITIONS/DISALLOWANCES: 1. IN ABSENCE OF DOCUMENT IN SUPPORT OF IDENTITY AND GENUINENESS OF THE TRANSACTIONS, THE SUNDRY CREDITO RS AMOUNTING TO 5,12,74,226/- HELD AS UNEXPLAINED. 2. IN ABSENCE OF SUPPORTING DOCUMENTS/VOUCHERS, OTHER EXPENSES OF 12,21,83,650/- WERE DISALLOWED. 3 ITA NO.6689/DEL/2016 3. BEFORE THE LEARNED CIT(A), THE ASSESSEE MADE DETAI LED SUBMISSION AND DOCUMENTS. RELYING ON THE SUBMISSION S AND DOCUMENTS OF THE ASSESSEE, THE LEARNED CIT(A) DELE TED BOTH THE ADDITIONS IN DISPUTE. REGARDING THE ADDITION OF SUN DRY CREDITORS, THE LEARNED CIT(A) OBSERVED THAT THE ASSESSING OFFI CER HAS NOT MADE ANY ENQUIRY IN RESPECT OF THE CREDITORS FROM T HE BANK OR FROM THE CREDITORS AND HE HAS ALSO NOT DOUBTED THE GENUINENESS OF THE PURCHASES FROM THOSE CREDITORS. THE RELEVANT FINDING OF THE LEARNED CIT(A) IS REPRODUCED AS UNDER: 6.3 I HAVE CONSIDERED THE FACTS OF THE CASE, ASSES SMENT ORDER, WRITTEN SUBMISSION OF THE APPELLANT COMPANY FILED D URING THE COURSE OF APPELLATE PROCEEDINGS. I HAVE ALSO PERUSED THE C ASE LAWS RELIED UPON BY THE APPELLANT COMPANY IN SUPPORT OF ITS CAS E. THE IMPUGNED ADDITION WAS MADE BY THE ASSESSING OFFICER ON THE G ROUND THAT THE APPELLANT COMPANY DID NOT PROVE THE IDENTITY AND GE NUINENESS OF THE SUNDRY CREDITORS. IN THE COURSE OF APPELLATE PROCEE DINGS, THE APPELLANT COMPANY HAS SUBMITTED THAT ADDITION MADE IN RESPECT OF THE SUNDRY CREDITORS IS NOT SUSTAINABLE AS THE PART IES/CREDITORS ARE THE REGULAR CREDITORS AND THEIR GENUINENESS AND IDE NTITIES HAVE ALREADY BEEN ASSESSED IN PAST. FURTHER ALL THE PAYM ENTS TO THESE CREDITORS HAVE BEEN MADE THROUGH ACCOUNT PAYEE CHEQ UES AND THERE IS NO ELEMENT OF CASH INVOLVED. THE AR OF THE APPEL LANT COMPANY HAS ALSO PRODUCED SAMPLE COPIES OF LEDGER ACCOUNT A ND INVOICES DURING THE APPELLANT PROCEEDINGS. 6.3.1 I HAVE PERUSED ALL THE FACTS AND DOCUMENTS SU BMITTED BY THE APPELLANT COMPANY AND FOUND NO DEFICIENCY IN THEIR ORIGINALITY. FURTHER I HAVE NOTICED THAT THE ASSESSING OFFICER H AS NOT MENTIONED ANY SECTION OR PROVISIONS OF THE INCOME TAX ACT, 19 61 UNDER WHICH HE HAS MADE SUCH ADDITIONS. THE ASSESSMENT ORDER IS VAGUE IN THIS REGARD. 6.3.2 I HAVE ALSO NOTICED THAT THE ASSESSING OFFICE R HAS NOT CONDUCTED ANY ENQUIRY EITHER FROM THE BANK OR FROM THE CREDITORS BEFORE PROCEEDING FURTHER. ALL THE DETAILS SUCH AS ADDRESS, REGISTRATION NUMBER, ETC ARE MENTIONED ON THE INVOI CES. THE ASSESSING OFFICER COULD DIG OUT ALL OTHER DETAILS R EQUIRED IN THIS CONNECTION FROM THE ASSESSMENT RECORDS WHICH IS ALR EADY IN HIS POSSESSION. FURTHER THE ASSESSING OFFICER HAS NOT D OUBTED THE 4 ITA NO.6689/DEL/2016 GENUINENESS OF THE PURCHASES OF THE APPELLANT COMPA NY. ONCE PURCHASES ARE ACCEPTED BY ASSESSING OFFICER, THEN T HERE IS NO QUESTION OF DOUBTING THE GENUINENESS OF THE CREDITO RS. 6.3.3 THEREFORE, THE ADDITION MADE AMOUNTING TO RS. 5,12,74,226/- IS NOT SUSTAINABLE AND HENCE THE SAME IS LIABLE TO BE DELETED. GROUND RAISED IN APPEAL IS ALLOWED. 4. FURTHER, THE DISALLOWANCE OF OTHER EXPENSES WAS DE LETED MAINLY ON THE GROUND THAT ACCOUNTS OF THE COMPANY W ERE AUDITED AND EXPENDITURE WERE MET THROUGH PROPER BANKING CHA NNEL AND NO CASH ELEMENT WAS INVOLVED, THE GENUINENESS OF TH E EXPENDITURE COULD NOT BE DOUBTED. THE RELEVANT FINDING OF THE L EARNED CIT(A) IS REPRODUCED AS UNDER: 7.3 I HAVE CONSIDERED THE FACTS OF THE CASE, ASSES SMENT ORDER, WRITTEN SUBMISSIONS OF THE APPELLANT FILED DURING T HE APPELLANT PROCEEDINGS. I HAVE ALSO PERUSED THE CASE LAWS RELI ED UPON BY ASSESSING OFFICER AND APPELLANT IN SUPPORT OF THEIR VIEWS. THE IMPUGNED ADDITION WAS MADE BY THE ASSESSING OFFICER ON THE GROUND THAT THE APPELLANT COMPANY HAS FAILED TO PRO VE THE JUSTIFICATION OF THESE EXPENSES AND SUBSTANTIATE TH E CLAIM WITH ANY DOCUMENTARY EVIDENCES. I HAVE NOTICED THAT THE APPE LLANT COMPANY HAS PROVIDED COPIES OF BANK STATEMENTS AND AUDITED ACCOUNTS DURING THE ASSESSMENT PROCEEDINGS TO THE ASSESSING OFFICER THROUGH WHICH THESE EXPENSES HAS BEEN PAID. THE ASSESSING O FFICER HAS ALLEGED THAT COMPLETE DETAILS OF BREAKUP OF THE EXP ENSES HAS NOT BEEN PROVIDED TO HIM BUT I HAVE NOTICED THAT THE SA ME HAS ALREADY BEEN GIVEN IN THE AUDITED PROFIT & LOSS ACCOUNT OF THE APPELLANT COMPANY. 7.3.1 I HAVE ALSO NOTICED THAT THE ASSESSING OFFICE R HAS DISALLOWED SOME OF EXPENSES SUCH AS POWER AND FUEL, COMMUNICAT ION EXPENSES, ETC FOR WHICH NO JUSTIFICATION IS REQUIRED. FURTHER FROM THE COMPARISON OF THE EXPENSES INCURRED IN THE CURRENT YEAR WITH T HAT OF PREVIOUS YEAR EXPENSES, I HAVE NOT FOUND ANY MAJOR VARIANCE. IT IS SURPRISING THAT THESE DETAILS ARE THE PART OF AUDITED BALANCE SHEET AND PROFIT & LOSS ACCOUNT WHICH IS ON RECORDS OF THE ASSESSING O FFICER BUT HE STILL OVERLOOKS THE SAME WITHOUT PROVIDING ANY SPECIFIC F INDINGS. 7.3.2 AS THE ACCOUNTS OF THE APPELLANT COMPANY ARE AUDITED ACCOUNTS, THE POSSIBILITY OF PERSONAL ELEMENT IN TH ESE EXPENSES IS 5 ITA NO.6689/DEL/2016 OVERRULED. AS THE EXPENDITURES ARE MET THROUGH PROP ER BANKING CHANNELS AND NO CASH ELEMENT IS PRESENT IN CASE IN HAND, THEREFORE THE GENUINENESS OF THESE .EXPENDITURES CANNOT BE DO UBTED. THERE IS NO REASON TO DISTURB THE OPERATIONAL RESULTS OF THE COMPANY ESPECIALLY WHEN THE CORRESPONDING INCOME HAS BEEN A CCEPTED BY THE ASSESSING OFFICER. 7.3.3, ACCORDINGLY, IN THE BACKGROUND OF THE AFORES AID DISCUSSIONS AND PRECEDENT AND IN THE LACK OF ANY SPECIFIC FINDI NGS, I HOLD THAT THE ADDITION MADE ON ACCOUNT OF EXPENDITURE DESERVES TO BE DELETED. GROUND RAISED IN APPEAL IS ALLOWED. 5. BEFORE US, THE LEARNED DR SUBMITTED THAT THE ASSES SEE PRODUCED ADDITIONAL EVIDENCES BEFORE THE LEARNED CI T(A) AND HE HAS DECIDED THE APPEAL WITHOUT PROVIDING ANY OPPORT UNITY TO THE ASSESSING OFFICER TO REBUT THOSE ADDITIONAL EVIDENC ES AS REQUIRED UNDER RULE 46A OF INCOME TAX RULES, 1962. HE ALSO S UBMITTED THAT IF THE LEARNED CIT(A) WAS OF THE OPINION THAT CERTA IN INQUIRIES WERE REQUIRED TO BE MADE, HE HIMSELF WOULD HAVE MADE THO SE INQUIRIES OR DIRECTED TO THE ASSESSING OFFICER FOR CARRYING O UT THOSE INQUIRIES. ACCORDING TO HIM, THE LEARNED CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITION IN VIEW OF THE DECISION OF TH E HONBLE DELHI HIGH COURT IN THE CASE OF CIT-II VS. M/S. JAN SAMPARK ADVERTISING MARKETING PVT. LTD., PASSED IN ITA NO. 525/2014, DA TED 11 TH MARCH, 2015 . HE SUBMITTED THAT THE MATTER MAY BE RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER FOR DECIDING A FRESH. 6. THE LEARNED AR THOUGH RELIED ON THE ORDER OF THE L EARNED CIT(A), HOWEVER, DID NOT OBJECT FOR RESTORING THE M ATTER TO THE FILE OF THE LD. ASSESSING OFFICER. 7. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE RE LEVANT MATERIAL ON RECORD. WE FIND THAT THE ASSESSING OFFI CER HAS MADE ADDITION OF THE SUNDRY CREDITORS OF 5,12,74,226/- AND 6 ITA NO.6689/DEL/2016 DISALLOWANCE OF OTHER EXPENSES OF 12,21,83,650/- MAINLY ON THE GROUNDS OF NO DETAILS FILED BY THE ASSESSEE. THE AS SESSEE FILED CERTAIN DETAILS IN RESPECT OF THE SUNDRY CREDITORS AND OTHER EXPENSES. IT IS EVIDENT FROM THE ORDER OF THE LEARN ED CIT(A) THAT NO OPPORTUNITY HAS BEEN PROVIDED TO THE ASSESSING OFFI CER TO REBUT ON THE DETAILS WHICH WERE FILED BEFORE THE LEARNED CIT(A). IN OUR OPINION, THE LEARNED CIT(A) HAS NOT TAKEN THE DETAI LS FILED BY THE ASSESSEE BEFORE HIM AS ADDITIONAL EVIDENCES AND NOT FOLLOWED THE PROCEDURE LAID DOWN IN RULE 46A OF INCOME TAX RULES , 1962. FURTHER, IN VIEW OF THE DECISION OF THE HONBLE DEL HI HIGH COURT IN THE CASE OF JAN SAMPARK ADVERTISING AND MARKETING PVT. LTD. (SUPRA), IF THE LEARNED CIT(A) IS OF THE OPINION TH AT CERTAIN INQUIRIES ARE REQUIRED TO BE CARRIED OUT IN THE FAC TS AND CIRCUMSTANCES OF THE CASE, HE SHOULD CARRY OUT THOS E INQUIRIES RATHER THAN DELETING THE ADDITION. 8. BEFORE US, BOTH THE PARTIES HAVE ALSO AGREED THAT ISSUE MAY BE DECIDED AFRESH BY THE ASSESSING OFFICER. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FEEL IT APPROPRIA TE TO RESTORE THIS ISSUE TO THE FILE OF THE LEARNED ASSESSING OFF ICER FOR DECIDING AFRESH AFTER TAKING INTO ACCOUNT DOCUMENTARY AND OT HER EVIDENCES IN SUPPORT OF THE ADDITION OF SUNDRY CREDITORS AND DISALLOWANCE OF OTHER EXPENSES. THE ASSESSING OFFICER MAY CARRY OUT INQUIRIES WHICH ARE REQUIRED IN THE FACTS AND CIRCUMSTANCES O F THE CASE, BUT HE SHOULD PROVIDE ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE FOLLOWING PRINCIPLE OF NATURAL JUSTICE. TH E GROUNDS OF THE APPEAL OF THE REVENUE ARE ACCORDINGLY ALLOWED FOR S TATISTICAL PURPOSES. 7 ITA NO.6689/DEL/2016 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLOWE D FOR STATISTICAL PURPOSES. ORDER IS PRONOUNCED IN THE OPEN COURT ON 10 TH DECEMBER, 2019. SD/- SD/- ( H.S. SIDHU ) ( O.P. KANT ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 10 TH DECEMBER, 2019. RK/-(D.T.D.) COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI