ITO, New Delhi V. Shri Girish Kumar Chhabra, Delhi

ITA 727/DEL/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7045 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 05-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3); 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C, NEW DELHI BEFORE SHRI P. M. JAGTAP, ACCOUNTANT MEMBER AND MS. SUCHITRA KAMBLE, JUDICIAL MEMBER ITA NO.727/DEL/2015 ASSESSMENT YEAR : 2010-11 ITO, WARD- 47, NEW DELHI. VS. GIRISH KUMAR CHHABRA, 2125, TILAK BAZAR, DELHI. PAN : AADPC0260F (APPELLANT) (RESPONDENT) DEPARTMENT BY : SHRI ARUN KUMAR YADAV, SR.DR ASSESSEE BY : NONE DATE OF HEARING : 10-07-2018 DATE OF PRONOUNCEMENT : 13-07-2018 O R D E R PER P. M. JAGTAP, AM : THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A)- XXV, NEW DELHI DATED 03.11.2014 AND THE GROUNDS RAI SED BY THE REVENUE THEREIN READ AS UNDER :- 1. WHETHER ON THE FACTS IN THE CIRCUMSTANCES OF TH E CASE OF LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.69,53,350/- MADE BY THE AO ON ACCOUNT OF ADDITION U/S 41(1) OF THE ACT, IN VIOLATION OF RULE 46A BY ADMIT TING FRESH EVIDENCE AND NOT CALLING FOR A REMAND REPORT IN RESPECT OF THE CONFIRMATIONS SUBMITTED BY ASSESSEE. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.69,53,350/- WITHOUT APPRECIATING THE FACTS THAT IN SPITE OF PROVIDING AMPLE OPPORTUNITIES TO FURNISH THE CON FIRMATIONS OF SUNDRY CREDITORS, THE ASSESSEE HAD ONLY FURNISHED COPIES OF LEDGER ACCOUN T AND WHICH WAS NOT CONFIRMED BY THE CREDITORS. 2 ITA NO.727/DEL/2015 2. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUA L WHO FILED HIS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION ON 05.01.20 11 DECLARING A TOTAL INCOME OF RS.4,84,236/-. IN THE BALANCE SHEET FILED ALONG WITH THE SAID RETURN, CERTAIN CREDITORS AND LOAN CREDITORS WERE SHOWN BY THE ASSE SSEE. IN ORDER TO VERIFY THE SAID CREDITORS, LETTERS U/S 133(6) WERE ISSUED BY T HE ASSESSING OFFICER TO SOME OF THE CREDITORS. OUT OF THE SAID LETTERS, LETTERS SE NT TO TWO CREDITORS NAMELY SHREE GANESH ENTERPRISES AND M/S REEMA POLYCHEM WERE RETU RNED BACK UNSERVED BY THE POSTAL AUTHORITIES. WHEN THIS FACT WAS CONFRON TED BY THE ASSESSING OFFICER TO THE ASSESSEE SEEKING THE LATERS EXPLANATION IN THE MATTER, THE ASSESSEE FAILED TO PROVE THAT THE LIABILITY TOWARDS THE SAID TWO CR EDITORS AS SHOWN IN THE BALANCE SHEET AS ON 31.03.2010 WAS ACTUALLY IN EXISTENCE. THE ASSESSING OFFICER, THEREFORE, INVOKED THE PROVISIONS OF SECTION 41(1) OF THE ACT AND MADE AN ADDITION OF RS.69,53,350/- TO THE TOTAL INCOME OF T HE ASSESSEE IN THE ASSESSMENT COMPLETED U/S 143(3) VIDE ORDER DATED 28.03.2013. 3. THE ADDITION MADE BY THE ASSESSING OFFICER U/S 4 1(1), INTER-ALIA, WAS CHALLENGED BY THE ASSESSEE IN THE APPEAL FILED BY T HE ASSESSEE BEFORE THE LD. CIT(A). DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE THE LD. CIT(A), IT WAS SUBMITTED BY THE ASSESSEE THAT SHREE GANESH ENT ERPRISES WAS ONE OF HIS TWO PROPRIETARY CONCERNS AND SINCE THE SAID CONCERN WAS NOT OPERATIONAL, THE FUNDS AVAILABLE WITH THE SAME WERE TRANSFERRED TO OTHER P ROPRIETARY CONCERN, NAMELY, 3 ITA NO.727/DEL/2015 M/S SUBHASH CHAND KATHURIA. IT WAS CONTENDED ON BE HALF OF THE ASSESSEE THAT THE LIABILITY APPEARING IN THE NAME OF SHREE GANESH ENTERPRISES THUS WAS NOT THE TRADE LIABILITY AND SINCE THE SAME WAS VERY MUCH IN EXISTENCE, THE ADDITION MADE BY THE ASSESSING OFFICER U/S 41(1) WAS NOT JUSTIFIE D. IT WAS ALSO BROUGHT TO THE NOTICE OF THE LD. CIT(A) BY THE ASSESSEE THAT THE L ETTER SENT BY THE ASSESSING OFFICER TO THE SAID PARTY U/S 133(6) WAS RETURNED U NDELIVERED BY THE POSTAL AUTHORITIES WITH THE REMARK INSUFFICIENT ADDRESS. IT WAS POINTED OUT THAT THE COMPLETE ADDRESS OF THE SAID PARTY WAS FURNISHED BE FORE THE ASSESSING OFFICER AND THERE WAS NO PROPER EFFORTS MADE BY THE POSTAL AUTHORITIES TO DELIVER THE LETTER SENT BY THE ASSESSING OFFICER. EVIDENCE IN THE FORM OF COPY OF ACCOUNT OF SHREE GANESH ENTERPRISES, BANK STATEMENT OF THE SAI D PARTY GIVING THE COMPLETE ADDRESS AS WELL AS CONFIRMATION WAS ALSO FILED BY T HE ASSESSEE BEFORE THE LD. CIT(A) TO SUPPORT AND SUBSTANTIATE HIS CASE THAT TH E LIABILITY IN THE NAME OF THE SAID CONCERN WAS VERY MUCH IN EXISTENCE. THIS DOCU MENTARY EVIDENCE FILED BY THE ASSESSEE FOR THE FIRST TIME BEFORE HIM WAS FORW ARDED BY THE LD. CIT(A) FOR VERIFICATION AND COMMENT OF THE ASSESSING OFFICER. IN THE REMAND REPORT SUBMITTED TO THE LD. CIT(A), THE ASSESSING OFFICER DID NOT OFFER ANY ADVERSE COMMENT ON THE EVIDENCE FILED BY THE ASSESSEE. ACC ORDING TO THE LD. CIT(A), THE SAID EVIDENCE WAS SUFFICIENT TO ESTABLISH THAT THE LIABILITY APPEARING IN THE NAME OF SHREE GANESH ENTERPRISES, ASSESSEES ANOTHE R CONCERN WAS VERY MUCH 4 ITA NO.727/DEL/2015 IN EXISTENCE AND THE ADDITION MADE BY THE ASSESSING OFFICER BY INVOKING SECTION 41(1) WAS NOT SUSTAINABLE. 4. AS REGARDS THE LIABILITY OF RS.35,06,550/- APPEA RING IN THE NAME OF M/S REEMA POLYCHEM, THE ASSESSEE SUBMITTED BEFORE THE L D. CIT(A) THAT THE SAID PARTY WAS A TRADE CREDITOR HAVING REGULAR TRANSACTI ONS WITH THE ASSESSEE EVEN DURING THE YEAR UNDER CONSIDERATION. A CONFIRMATIO N ISSUED BY THE SAID PARTY SHOWING SUCH TRANSACTIONS AS WELL AS THE EXISTENCE OF CLOSING BALANCE OF RS.35,06,550/- WAS ALSO FILED BY THE ASSESSEE BEFOR E THE LD. CIT(A). WHEN THE SAID EVIDENCE FILED BY THE ASSESSEE FOR THE FIRST T IME WAS FORWARDED BY THE LD. CIT(A) FOR VERIFICATION AND COMMENT OF THE ASSESSIN G OFFICER, THE LATTER DID NOT OFFER ANY ADVERSE COMMENT ON THE SAME IN THE REMAND REPORT SUBMITTED TO THE LD. CIT(A). LD. CIT(A) ACCORDINGLY HELD BY RELYING ON THE SAID EVIDENCE THAT THE LIABILITY IN THE NAME OF M/S REEMA POLYCHEM WAS VERY MUCH IN EXISTENCE AND THE ADDITION MADE BY THE ASSESSING OFFICER BY I NVOKING SECTION 41(1) WAS NOT SUSTAINABLE. HE ACCORDINGLY DELETED THE ENTIRE ADDITION OF RS.69,53,350/- MADE BY THE ASSESSING OFFICER U/S 41(1) OF THE ACT. AGGRIEVED BY THE ORDER OF THE LD. CIT(A) ON THIS ISSUE, THE REVENUE HAS PREFE RRED THIS APPEAL BEFORE THE TRIBUNAL. 5. AT THE TIME OF HEARING FIXED BEFORE THE TRIBUNAL ON 10.07.2018, NONE HAS APPEARED ON BEHALF OF THE ASSESSEE. IT IS NOTED TH AT THERE WAS A SIMILAR NON- 5 ITA NO.727/DEL/2015 COMPLIANCE ON BEHALF OF THE ASSESSEE WHEN THIS APPE AL WAS FIXED FOR HEARING EARLIER ON 07.02.2018 03.05.2018. THIS APPEAL OF T HE REVENUE IS, THEREFORE, BEING DISPOSED OF EX-PARTE QUA THE RESPONDENT-ASSESSEE AFTER HEARING THE ARGUMENTS OF THE LD. DR AND PERUSING THE RELEVANT M ATERIAL AVAILABLE ON RECORD. THE MAIN GRIEVANCE AS PROJECTED BY THE REVENUE IN T HE GROUNDS RAISED IN THIS APPEAL IS THAT THE ADDITION MADE BY THE ASSESSING O FFICER U/S 41(1) HAS BEEN DELETED BY THE LD. CIT(A) VIDE HIS IMPUGNED ORDER B Y RELYING ON THE FRESH EVIDENCE FILED BY THE ASSESSEE WITHOUT GIVING ANY O PPORTUNITY TO THE ASSESSING OFFICER TO VERIFY THE SAME, WHICH IS IN VIOLATION O F RULE 46A OF THE INCOME TAX RULES, 1962. IT IS, HOWEVER, OBSERVED FROM THE IMP UGNED ORDER OF THE LD. CIT(A) THAT THE ENTIRE EVIDENCE FILED BY THE ASSESS EE TO SHOW THE GENUINENESS AND EXISTENCE OF BOTH THE CREDITORS WAS FORWARDED B Y THE LD. CIT(A) TO THE ASSESSING OFFICER FOR VERIFICATION AND COMMENT. AS SPECIFICALLY NOTED BY THE LD. CIT(A) IN HIS IMPUGNED ORDER, NO ADVERSE COMMEN T WHATSOEVER WAS OFFERED BY THE ASSESSING OFFICER ON THE SAID EVIDENCE IN TH E REMAND REPORT SUBMITTED TO THE LD. CIT(A). IT IS THUS CLEAR THAT OPPORTUNITY WAS SPECIFICALLY GIVEN BY THE LD. CIT(A) TO THE ASSESSING OFFICER TO VERIFY THE ADDIT IONAL EVIDENCE FILED BY THE ASSESSEE IN SUPPORT OF ITS CASE ON THE ISSUE RELATI NG TO THE ADDITION MADE U/S 41(1) AND THIS POSITION CLEARLY EVIDENT FROM THE OR DER OF THE LD. CIT(A) IS NOT REBUTTED OR CONTROVERTED EVEN BY THE LD. DR. SINCE THERE WAS NO ADVERSE 6 ITA NO.727/DEL/2015 COMMENT OFFERED BY THE ASSESSING OFFICER ON THE ADD ITIONAL EVIDENCE FILED BY THE ASSESSEE IN SUPPORT OF ITS CASE AND THE SAID EV IDENCE WAS SUFFICIENT TO ESTABLISH THAT BOTH THE CONCERNED CREDITORS WERE GE NUINE AND IN EXISTENCE AS ON 31.03.2010, WE ARE OF THE VIEW THAT THE ADDITION MA DE BY THE ASSESSING OFFICER ON ACCOUNT OF THE SAID CREDITORS BY INVOKING SECTIO N 41(1) IS RIGHTLY DELETED BY THE LD. CIT(A) VIDE HIS IMPUGNED ORDER. WE, THEREF ORE, UPHOLD THE IMPUGNED ORDER OF THE LD. CIT(A) ON THIS ISSUE AND DISMISS T HE APPEAL FILED BY THE REVENUE. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 13 TH DAY OF JULY, 2018. SD/- SD/- (SUCHITRA KAMBLE) (P. M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 13-07-2018. SUJEET COPY OF ORDER TO: - 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT 4) THE CIT(A) 5) THE DR, I.T.A.T., NEW DELHI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, NEW DELHI