VKM Logistics P.Ltd, New Delhi V. ITO, Ward-26(4), New Delhi

ITA 7457/DEL/2019

AI Insights

The case involves VKM Logistics P. Ltd., the appellant, contesting the additions made by the Assessing Officer (AO) during the assessment year 2015-16. The AO had made additions based on discrepancies between the receipts reported in the ITR and those in Form 26AS, and questioned the genuineness of trade payables amounting to Rs. 85,20,556. The assessee's failure to comply with notices and provide necessary documentation led to the AO completing the assessment under section 144 of the Income Tax Act. The Commissioner of Income Tax (Appeals) upheld the AO's decision, which was later confirmed by the Tribunal. The Tribunal noted the assessee's non-compliance and lack of evidence to counter the AO's findings.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 113369 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 20-09-2022
• Assessment Year: 2015-2016
• Appeal Filed On: 10-09-2019
• Laws Referred To: Income Tax Act, 1961, Indian Evidence Act, 1972
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Income from undisclosed sources; Additional evidence; TDS; FORM 26AS; Bogus
• Section: 131; 68; 271(1)(c); 144; 142(1); 133(6); 194C; 143(2); 69A

Judgement Text

I.T.A.No.7457/Del/2019 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “H” NEW DELHI BEFORE SHRI G.S. PANNU, HON’BLE PRESIDENT AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER आ .अ.स ं /.I.T.A No.7457/Del/2019 /Assessment Year: 2015-16 VKM Logistics P. Ltd., 611, Pragati Tower, Rajinder Place, New Delhi. ब म Vs. ITO Ward 26(4) New Delhi. PAN No. AAKCS4517M अ Appellant /Respondent िनधा रतीक ओरसे /Assessee by None राज वक ओरसे /Revenue by Shri M. Baranwal, CIT DR & Shri Sanjay Kumar, CIT DR स ु नवाईक तारीख/ Date of hearing: 03.02.2023 उ ोषणाक तारीख/Pronouncement on 11.04.2023 आदेश /O R D E R PER C.N. PRASAD, J.M. This appeal is filed by the assessee against the order of the Ld. Commissioner of Income Tax(Appeals)-24, New Delhi dated 20.03.2019 for the AY 2015-16. 2. The assessee in its appeal raised the following grounds: - 1. “The Ld.CIT(Appeals) has erred in law and in facts by adding the difference of TDS deducted by the clients of the appellant estimating 8% of the reimbursement of the expenses the appellant will give all supporting documents as additional evidence during the course of the proceeding to I.T.A.No.7457/Del/2019 2 show that it was nothing but the reimbursement by the clients of the appellant specially the duty. 2. The Ld.CIT(Appeals) has erred in law and in fact that all the Trade payable are having the Name, Address, PAN No., and hence the addition u/s 68 cannot be made assessee has discharged his onus of proof. 3. Purchases made from the trade payable has been accepted by the AO, thus the genuinity of the Trade payable stands established. 4. The AO has not issued the summons u/s 131 r.w.s. 133(6) to the Trade payables.” 3. Even though the notice was served on the assessee, none appeared on behalf of the assessee nor any adjournment was moved. This appeal is disposed off on hearing the Ld. DR on merits. The Assessing Officer by order dated 19.12.2017 u/s 144 of the Act determined the income of the assessee at Rs.94,89,713/- as against loss of Rs.63,814/- declared by the assessee in its return of income filed on 20.10.2016. In the course of assessment proceedings the Assessing Officer issued several notices including notice u/s 143(2) to the assessee and the assessee did not comply with the statutory notices issued by the Assessing Officer left with no alternative the assessment was completed u/s 144 of the Act by the Assessing Officer. While computing the assessment the Assessing Officer made the following additions: - Sl.No. Amount(Rs.) 1) The difference in receipts as per ITR and as per 26AS 10,32,971/- 2) Addition towards bogus trade payables u/s 68 85,20,556/- I.T.A.No.7457/Del/2019 3 4. The assessee preferred appeal before the Ld.CIT(Appeals). The Ld.CIT(Appeals) issued several notices fixing the date of hearing and the notices returned un-served. Since the notice returned un-served the Ld.CIT(Appeals) informed the date of posting to the assessee telephonically and in response to the same the assessee requested adjournment and also filed power of attorney of the Authorized Representative to represents his case. Thereafter, even though notices were issued posting the case for hearing. None appeared even before the Ld.CIT(Appeals). The Ld.CIT(Appeals) after considering the materials on record disposed off the appeal observing as under: - “4.2.1 In Ground No. 1 the appellant has contended that the AO erred in law by not providing proper opportunity on being heard. In the Statement of Facts the appellant has submitted as under: “4. Subsequent notices were send to attend case on 17 th October (One day before Diwali) and on 6 th November. On receipt assessee tried to engage their consultant, but they denied due to their pre- engagements in festival in festive week and filing of Income tax return and Tax Audits. 5. Further notices was issued to represent the case, however. The company was suddenly strike-off by Ministry of Corporate affairs, resulting in to seizure of bunk accounts and sudden halt to all ongoing business activities of company, .in the mid of pressure from all side, appellant prepared all details and filed its submission vide speed post which send to the Assessing Officer on December, 2017”. 4.2.2 However, on perusal of the assessment order I find that the AO granted a number of opportunities to the appellant during the course of assessment proceedings. In I.T.A.No.7457/Del/2019 4 this connection, the AO has recorded in die assessment order: “3. Further, the notice u/s 143(2) of the Income Tax Act. 1961 was issued on 09.10.2017 fixing the case for 17.10.2017. But the assessee has not made the compliance of notice issued u/s 142(1) of the Income Tax Act, 1961. 4. Later on, show cause notice for penalty u/s 271(1)(b) of the Income Tax Act. 1961 was issued on 27.10.2017 whereby the case was asked to stated why the penalty for non-compliance of notice issued ids 142(1) of Income Tax Act may not imposed. The case was fixed for hearing on 06.11.2017. However, this notice also remained un-complied. Therefore, penalty u/s 271(1)(b) of Income-tax Act was imposed of Rs. 10,000/-. 5. Fresh notice ids 142(1) dated 15.11.2017 was again issued on and duly served upon the assessee. However, again the assessee has not made compliance thereof. 6. The assessee on 06.12.2017 has sent a letter through email and sought adjournment. In response thereof the case of the assessee was adjourned for 11.12.2017. But the assessee again has not made compliance thereof on 11.12.2017. Thereafter, the assessee again sought adjournment through letter sent by email. In response thereof the case of the assessee was adjourned for 15.12.2017. But again on 15.12.2017, no compliance was made. 7. The assessee has not made the compliance of statuary notice issued u/s 142(1), 143(2), and show cause notice I have left no alternative but to complete the assessment u/s 144 of Income tax on the basis of material available on records and to my best judgment." 4.2.3 Considering the facts stated above 1 hold that there is no merit in the contention of the appellant as the AO provided ample opportunities to the appellant during the course of assessment proceedings to explain its case and substantiate the correctness of the return of income. Since the appellant failed to make compliance to statutory notices issued u/s 142(1), 143(2) and show cause notice the AO was left with no alternative but to complete the assessment by I.T.A.No.7457/Del/2019 5 invoking the provisions of section 144 of the Act on the basis of material available on record to his best judgment. I further hold that the action of the AO of invoking the provisions of section 144 of the Act to make assessment on the basis of material available to his best judgment is justified. Since ample opportunities have been provided to the appellant the contention of the appellant is rejected and accordingly Ground No. 1 of appeal is dismissed. 4.3.1 Ground No. 2 relates to the addition of Rs. 10,32,971/- on account of income from undisclosed sources made by the AO on the basis of information available on 26AS. On due perusal 1 find that the AO while making this addition has recorded his observations/findings as under: “8.1 However, the assessee has shown receipt of Rs, 75, 70,267/- in ITR against the receipt of Rs.2,04,82,410/- as recorded in 26AS as mentioned above. Rut the assessee has neither provided the party wise details of receipt as shown in the Income tax return nor give any reply why the receipt of Rs. 2,04,82,410/- was not disclosed in the ITR, even after sufficient opportunities as mentioned above, were provided to the assesses. 8.2 Further, I would like to stale that as per section 114(g) of Indian Evidence Act, 1972, stated that evidence which could be and is not produced would, if produced, he unfavorable to the person withholds it. Thus, is clear that the assesses is having evidence of party wise details of payment received/accrued of Rs. 2,04.82.410/- but has not produced the same in the assessment proceeding. It shows that same is not favorable to the assessee. 8.3 Further, I would like to state that s per information available on 26AS. TDS u/s 194C of Income tax (contractor receipt) has been deducted on payment accrued/received by the assessed I deem these receipt as business receipt. I deem 8% of these receipt i.e. Rs.10,32,971/- (8% of Rs. 1.29,12,143/-) as undisclosed income of the assessee for the year under consideration under section 69A of Income Tax Ad, 1961. 1 am satisfied that (he assessee has concealed its income. The penalty u/s 271 (I)(c) of Income Tax Act is initiated separately.” I.T.A.No.7457/Del/2019 6 4.3.2 In the Statement of Facts the appellant has contended that the AO has arbitrarily added all amounts shown credited in Form 26AS as income to the appellant though major part includes duty paid on behalf of client. In the ground of appeal the appellant has contended that the AO has arbitrarily added 8 percent of reimbursement of expenses on which TDS was deducted by the clients to income of the assessee though it was duly paid by the appellant on behalf of its client and has all supporting documents. 4.3.3 On due consideration 1 find that the appellant is not correct in its contention in the Statements of Facts as the AO has not added all amounts shown credited in Form 26AS as income of the appellant. It is noticed that the AO has treated 8% of Rs.1,29,12,143/- which was the difference between the amount paid /reflected in Form 26AS(Rs. 2,04,82,410/-) and the amount of receipts shown in its accounts (Rs.75,70,267/-) which comes to the tune of Rs. 10,32,971/- as undisclosed income of the appellant. During the appellate proceedings, written submission was not filed to counter the findings of the AC) in the assessment order and the appellant did not avail of opportunity to present its case by making compliance to the notices issued from this office. No evidence was produced during the appellant proceedings to substantiate the claim that the amount of Rs.1,29,12,143/- was actually reimbursement of expenses and was duly paid by the appellant on behalf of its client. Therefore, I find no reason to interfere with the order of the AO on this point and the addition of Rs.10,32,971/- made by the AO as undisclosed income of the appellant is confirmed. Thus, Ground No. 2 of appeal is dismissed. 4.4.1 Ground No. 3 relates to the addition of Rs. 85,20.556/- on account of trade payable holding it to be non-genuine by the AO. While making the addition the AO has recorded in the assessment order as under: "9. The assessee has shown trade payable of Rs. 5,0,5/- but has not provide any details like name, address, PAN and nature of transactions etc even after sufficient opportunities as mentioned above were provided to the assessee. As the assessee has not provided any details about the trade payable, / am not able to verify the genuineness of the trade payable. I.T.A.No.7457/Del/2019 7 9.1 Further, 1 would like to state that the assessee must have the complete of details of trade payable but not produced to same during the assessment proceeding. It shows that the details of trade payable are not favorable to the assessee. 9.2 Hence, in view of above fads, 1 am of the view that trade payable of Rs. 85,20,556/- are not genuine, and bogus in view of the terms of section 68 of Income tax Act I added Rs. 85.20,556/ in the income of the assessee u/s 68 of Income tax Act. I am also satisfied that the assessee has filed inaccurate particulars of income. Hence, penalty u/s 271(1)(c) is being initiated separately.” 4.4.2 In the Statement of Facts the appellant has contended that trade payable shown in the balance sheet of the company duly audited by the Chartered Accountant has been totally disallowed by the AO. In the ground of appeal the appellant has contended that the AO has arbitrarily added trade payable to income of the assessee though it was genuine and appellant has all supporting documents. 4.5 On due consideration I find that the appellant has not proved the genuineness of trade payable during the appellate proceedings. During the appellate proceedings, written submission was not filed to counter the findings of the AO in the assessment order and the appellant did not avail of opportunity to present its ease by making compliance to the notices issued from this office. No evidence was produced during the appellant proceedings to substantiate the claim that trade payable to the tune of Rs. 85,20,556/- is genuine. Therefore, I find no reason to interfere with the order of the AO on this point and the addition of Rs.85,20,556/- on account of bogus trade payable made by the AO is ' confirmed. Thus, Ground No. 3 of appeal is dismissed. 5. Even before us the assessee could not produce any evidences or explanations to rebut the findings of the Assessing Officer and the Ld.CIT(Appeals), therefore, in the absence of any evidences and explanations to rebut the findings of the Assessing Officer and the I.T.A.No.7457/Del/2019 8 Ld.CIT(Appeals), we see no infirmity in the order passed by the Ld.CIT(Appeals) in sustaining the additions made by the Assessing Officer in respect of difference in receipts as per ITR and as per 26-AS and also the addition u/s 68 of the Act in respect of trade creditors. The grounds raised by the assessee are dismissed. 6. In the result, appeal of the assessee is dismissed. Order pronounced in the open court on 11/04/2023 Sd/- Sd/- (G.S. PANNU) (C.N. PRASAD) PRESIDENT JUDICIAL MEMBER Dated: 11/04/2023 *Kavita Arora, Sr. P.S. Copy of order sent to- Assessee/AO/Pr. CIT/ CIT (A)/ ITAT (DR)/Guard file of ITAT. By order Assistant Registrar, ITAT: Delhi Benches-Delhi