Subhash Chander Gupta, Rohtak V. DCIT Central Circle-II, Gurgaon

ITA 7655/DEL/2019

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 7481 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 9 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2014-2015
• Appeal Filed On: 17-09-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 147; 145; 37; 201; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “G” DELHI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER I.T.As. No.7654, 7655 & 7656/DEL/2019 Assessment Years 2013-14, 2014-15 & 2015-16 Sh. Subhash Chander Gupta, 33, Sampla Mandi, Rohtak, Haryana. vs. DCIT, Central Circle-II, Gurgaon. TAN/PAN: AHUPG5848B (Appellant) (Respondent) I.T.As. No.7657 & 7658/DEL/2019 Assessment Years 2014-15 & 2015-16 M/s. Starline Clothing (P) Ltd., H.No. 298, Block F, Gali No.14, Hari Nagar Extn. Part-II, Badarpur, New Delhi. vs. Central Circle-II, Gurgaon. TAN/PAN: AAUCS4428F (Appellant) (Respondent) Appellant by: Shri Somil Agarwal, Adv. Shri Deepesh Garg, Adv. Respondent by: Shri H.K. Choudhary, CIT-DR Date of hearing: 08 06 2022 Date of pronouncement: 14 07 2022 O R D E R PER PRADIP KUMAR KEDIA, A.M.: The captioned Appeals arises from the respective order of CIT(A) for different assessment years tabulated hereunder: I.T.As. No.7654, 7655, 7656, 7657 & 7658/Del/2019 2 ITA No. A.Y. Assessee Assessment order date CIT(A) Order Appeal by 7654/Del/2019 2013-14 Shri Subhash Chander Gupta 26.12.2017 CIT(A)- 3, Gurgaon, order dated 23.07.2019 Assessee 7655/Del/2019 2014-15 Shri Subhash Chander Gupta 26.12.2017 CIT(A)- 3, Gurgaon, order dated 23.07.2019 Assessee 7656/Del/2019 2015-16 Shri Subhash Chander Gupta 26.12.2017 CIT(A)- 3, Gurgaon, order dated 23.07.2019 Assessee 7657/Del/2019 2014-15 M/s. Starline Clothing P. Ltd. 26.12.2017 CIT(A)- 3, Gurgaon, order dated 23.07.2019 Assessee 7658/Del/2019 2015-16 M/s. Starline Clothing P. Ltd. 26.12.2017 CIT(A)- 3, Gurgaon, order dated 23.07.2019 Assessee 2 . Th e g rou nd s o f ap p eal raised b y th e assesse e in ITA No .7 65 4 /Del/2 0 1 9 read s as u n d er: ITA No .7 6 5 4 /Del/2 0 19 (Assessm ent Yea r 2 0 1 3-1 4) “ 1 . T h a t h a v i n g r e g a rd t o t h e f a c t s a n d c i rc u m s t a nc e s o f t h e c a se , L d . CI T (A ) h a s e r re d i n l a w a n d o n f a c t s i n co n f i r m i n g t h e a c t i o n o f L d . A O i n a s s u m i n g j u r i s d i c t i o n u / s . 1 5 3 C a n d t h a t t o o f o r t h i s y e a r a n d f u rt h e r e r r e d i n p a s si n g t h e i m p ug n e d a s s e ss m e n t o r d e r, m o re so wh e n ‘ sa t i sf a c t i o n ’ h a s no t b e e n re c o r d e d b y A O o f t h e se a rc h e d p e r so n a n d wh e n t h e re w a s n o i n c ri m i n a t i n g d o c u m e n t wa s f o u n d . 2 . T h a t i n a n y c a s e a n d i n a n y v i e w o f t h e m a t t e r, a c t i o n o f L d . CI T (A ) i n c o n f i r m i n g t h e a c t i o n o f L d . A O i n a ssu m i n g j u ri sd i c t i o n a n d f r a m i n g t h e i m p u g n e d a s s e s sm e n t o rd e r u / s . 1 5 3 C, i s b a d i n l a w a n d a g a i n st t h e f a c t s a n d c i rc um st a n c e s o f t h e c a s e a n d t h e s a m e i s n o t s u st a i n a b l e o n v a ri o u s l e g a l a n d f a c t u a l g r o u n d s. I.T.As. No.7654, 7655, 7656, 7657 & 7658/Del/2019 3 3 . T h a t h a v i n g r e g a rd t o t h e f a c t s a n d c i rc u m s t a n ce s o f t h e c a se , L d . CI T (A ) h a s e rr e d i n l a w a n d o n f a c t s i n ex e r c i si n g h i s j u ri sd i c t i o n i n m a k i n g a d d i t i o n o f R s . 3 2 , 0 6 , 9 6 8 / - (i . e . 5 % o f R s. 6 , 4 1 , 3 9 , 3 5 7 / - ) o n a c c o u n t o f a l l e g e d c o m m i s si o n /b r o k e r a g e a s b u si n e s s i n c o m e a n d t h a t t o o w i t h o u t g i v i n g sh o w c a u s e n o t i c e i n t h i s r e g a r d a n d i m p u g n e d a d d i t i o n m a d e b y L d . C I T (A ) i s b a d i n l a w a s n o i n c ri m i n a t i n g m a t e ri a l h a s b e e n f o u n d a s a re s u l t o f se a rc h w a r r a n t i n g s u c h a d d i t i o n a n d b y r ec o r d i n g i n c o rr e c t f a c t s a n d f i n d i n g s a n d m e r e l y o n t h e b a sis o f su r m i se s a n d c o n j e c t u re s a n d w i t h o u t g i v i n g t h e o p p o rt u n i t y o f b e i n g h e a r d a n d wi t h o u t o b s e rv i n g t h e p ri n c i p l e s o f n a t u ra l j u s t i c e . 4 . T h a t i n a n y c a se a n d i n a n y v i e w o f t h e m a t t e r , a c t i o n o f L d . CI T (A ) i n m a k i n g a d d i t i o n o f R s. 3 2 , 0 6 , 9 6 8 / - o n a c c o u n t o f a l l e g e d c o m m i s si o n / b r o k e ra g e a s b u s i n e s s i n c o m e , i s b a d i n l a w a n d a g a i n s t t h e f a c t s a n d c i rc u m st a n c e s o f t h e c a se a n d t h e sa m e i s o u t s i d e t h e p u r v i e w o f t h e i m p u g n e d p r o c e e d i n g s u / s. 1 5 3 C o f t h e A c t . 5 . T h a t i n a n y c a s e a n d i n a n y v i e w o f t h e m a t t e r , a d d i t i o n m a d e b y L d . CI T (A ) i n t h e i m p u g n e d o rd e r a r e b e y o n d j u ri sd i c t i o n a n d i l l e g a l a l so f o r t h e re a so n t h a t th e se c o u l d n o t h a v e b e e n m a d e s i n c e n o i n c ri m i n a t i n g m a t e ri a l h a s b e e n f o u n d a s a r e su l t o f s e a r c h . 6 . T h a t h a v i n g re g a r d t o t h e f a c t s a n d c i r c u m st a n c es o f t h e c a se , L d . CI T (A ) h a s e r re d i n l a w a n d o n f a c t s i n co n f i r m i n g t h e a c t i o n o f L d . A O i n p a s s i n g t h e i m p u g n e d a ss e s sm e n t o r d e r wi t h o u t t h e re b e i n g re q u i si t e a p p ro v a l i n t e r m s o f s e c t i o n 1 5 3 D a n d i n a n y c a se a p p r o v a l i f a n y i s m e c h a n i c a l w i t h ou t a p p l i c a t i o n o f m i n d a n d i s n o a p p ro v a l i n t h e e y e s o f l a w. 7 . T h a t h a v i n g r e g a rd t o t h e f a c t s a n d c i rc u m s t a n ce s o f t h e I.T.As. No.7654, 7655, 7656, 7657 & 7658/Del/2019 4 c a se , L d . CI T (A ) h a s e r r e d i n l a w a n d o n f a c t s i n no t r e v e r si n g t h e a c t i o n o f L d . A O i n c h a r g i n g i n t e r e s t u / s. 2 3 4 B o f I n c o m e T a x A c t , 1 9 6 1 . 8 . T h a t t h e a p p e l l a n t c r a v e s t h e l e a v e t o a d d , m o d if y , a m e n d o r d e l e t e a n y o f t h e g r o u n d s o f a p p e a l a t t h e t i m e o f h e a ri n g a n d a l l t h e a b o v e g r o u n d s a r e wi t h o u t p re j u d i c e t o e a c h o t h e r . ” 3 . Wh en th e mat ter was cal led fo r h ea rin g , ld . co u nsel fo r th e assesse e re ferred to su b stan t iv e g ro un d s no .3 , 4 and 5 and su b mit ted th a t o n ce th ese g ro u n d s are d eter min ed o n th e b asis o f fac ts o n reco rd , ad ju d icat io n o f o th er g ro un d s wo uld n o t b e n ecessi ta ted . 4 . On facts , th e asse ssee i s en g ag ed as a d ealer in fab ric atio n o f clo th / fab ric as p ro prietary co n cer n M/s. Sh ri Ram Ex p o rts. As sta ted , th e assess e e p erfo rmed jo b wo rk fo r on e M/s. O rien t Cra ft Ltd . an d receiv ed jo b wo rk in co me fro m Orien t Cra fts Ltd . in co n sid eratio n o f j o b work carried o u t. Th e Assess ing Officer h o wev er ch allen g ed th e v ery ex isten ce o f th e p ro p rieta ry co n cern Sh ri Ram Ex p o rt wh ich h as clai med to h av e b een do ne jo b work fo r M/ s. Orien t Cr afts. Th e Assess in g Officer, in es sen ce, h e ld th e jo b wo rk in co me rep o rted b y th e assessee h ere in as sh am an d mere ly an ey ewa sh . Th e p ro p rietary co n cern o f th e assess ee p ro v id ed jo b wo rk serv ices to M /s . Sa i Ex p o rt wh ich is a lso cla i med to b e a p ap er co mp an y op erated b y o wn ers o f Orien t Crafts Ltd . Co n se q u en tly , th e Assessin g Offi cer d isa llo wed th e ex p en ses b oo k ed by Orien t Craft, i .e . , b en efi ci ary o f th e p u rp o rted jo b wo rk serv ices fro m Sh ri R am Ex p o rts as b o gu s and co n seq u en tly mad e an ad d itio n o f Rs.6 ,4 1 ,3 9 ,3 5 7 /- bein g receip t fro m Sa i Ex p o rts, o n p ro tectiv e b asis in th e h an d s o f th e assesse e I.T.As. No.7654, 7655, 7656, 7657 & 7658/Del/2019 5 h erein . Th e Assessin g Officer in t er a lia n o ted th at si mil ar ad d itio n in th e h a n d s o f M/s . Orien t Cra ft L td . in q u est io n h as b een carried o u t to ward s ex p en ses cla i med o n acco u nt o f jo b wo rk , on su b stan tiv e b asis an d th u s th e ad d i tio n is mad e o n p ro tectiv e b asis in th e h an d s o f th e assesse e h ere in . T h e CIT(A), in first ap p eal, mo d ified th e ad d i tio n an d restric ted th e ad d itio n in th e h an d s o f th e assessee a t 5 % o f th e to tal b o g u s jo b work in co me b o ok ed in th e n ame o f Orien t Cra ft L td . b y th e ass essee . Th u s, th e d isal lo wan ces was b ro ug h t d own fro m R s.6 ,4 1 ,3 9 ,3 5 7 /- to Rs.3 2 ,0 6 ,9 6 8 /- fo r Assessmen t Y ear 2 0 1 3 -1 4 in q u estio n . Simi larly , d is al lo wan ce were scale d d own fro m Rs.6 ,8 6 ,3 4 ,6 1 9 /- to Rs.3 9 ,3 1 ,7 3 1 /- fo r Assessmen t Year 2 0 14 -15 in ITA No .7 65 5 /Del/2 0 1 9 . On id en tic al fo o tin g , th e d isa llowan ce was b ro ug h t do wn fro m 1 9 ,6 5 ,2 8 ,03 3 /- to Rs.9 8 ,2 6 ,4 02 /- b y th e CIT(A) in Assess men t Year 2 0 1 5 -1 6 in ITA No .7 65 6 /Del/2 0 1 9 . 5 . In th is fa ctu a l b a ck d rop , th e ld . c o u n sel fo r the as sessee referred to th e d ec isio n ren d ered b y th e Co -o rd in ate B en ch in th e case o f th e rec ip i en t o f th e serv ice s M/s. Orien t Cra ft Ltd . v s. DCIT, ITA No .3 3 1 0 /Del/2 0 1 9 Assessmen t Yea r 2 0 1 3 -1 4 o rd er d a ted 2 4 .0 9 .20 2 1; ITA No .3 3 1 1 /Del/ 2 0 19 Assessmen t Yea r 2 0 1 4- 1 5 o rd er d a ted 24 .0 9 .2 02 1 an d ITA No .3 3 1 2 /Del/2 0 1 9 Assessmen t Yea r 2 01 5 -1 6 o rder d a ted 2 4 .09 .2 02 1 to sub mit th at in all th ree assess men t y ears, t h e Trib u n al o n ex amin a tio n o f fac ts, i n th e cas e o f th e rec ip ien t o f serv ices fo u n d th e ex p en d itu re c la i med b y th e co rresp o nd in g comp an y to b e g en u in e. On app raisal of d o cu men tary ev id e n ces, th e Trib u n al fo u n d th e g en u in en ess o f jo b wo rk carried ou t b y Shri Ra m Ex p orts, a p ro p rietary co n cern o f th e ass essee . I.T.As. No.7654, 7655, 7656, 7657 & 7658/Del/2019 6 5 .1 Th e relev an t o p erativ e p arag rap h s o f th e o rd er o f th e Trib u n al were adv erted in th is reg ard wh ich is rep ro du ced h ereu n d er: “ 3 7 . I t i s t h u s se e n f ro m t h e e v i d e n c e s p l a c e d b e f or e u s a n d re l i e d u p o n b y L d . Co u n s e l f o r t h e a s s e s s e e t h a t t he j o b w o r k e r M / s S h ri R a m E x p o rt h a s ra i s e d i n v o i c e s o n t h e a s ses s e e c o m p a n y a n d p a y m e n t h a v e b e e n m a d e b y t h e a s s e s se e c o m p a n y t o t h e j o b wo r k e r t h ro u g h a c c o u n t p a y e e c h e q u e s a n d t a x h a v i n g b e e n d e d u c t e d a t s o u rc e a n d d o c u m e n t s a t p a g e 5 9 8 to 6 0 5 , & 9 0 8 - 1 6 1 3 o f t h e p a p e r b o o k e st a b l i sh t h e e x i st e n c e o f t h e j o b wo r k e r a n d t h e j o b wo r k c a r ri e d o u t b y M / s. S h ri R am E x p o r t s . W e h a v e a l s o se e n t h e e v i d e n c e s re f e r r e d a t p a g e 2 97 4 t o 2 9 7 6 o f t h e p a p e r b o o k , w h i c h a l so e st a b l i s h t h e j o b w o rk d o n e b y M / s S h ri R a m E x p o rt . W e h a v e a l so r e f e r re d t o t h e c o p i es o f t h e re l e v a n t d o c u m e n t s f i l e d b e f o r e t h e l o we r a u t h o ri t ie s f ro m t h e W o r k e r’ s p e r so n a l F i l e s s u c h a s A d h a r Ca r d , A p p l i ca t i o n f o r m , a p p o i n t m e n t l e t t e r, j o i n i n g r e p o r t , E S I Ca r d , F a m i ly p h o t o s, P F F o r m - 1 1 , 1 6 & 2 a s p e r P F ru l e s, I D p ro o f , M e d i c a l t e st r e p o r t e t c . a n d sa m p l e c o p y o f m u st e r r o l l o f t h e a l l t h e e m p l o y e e s, e m p l o y e d b y t h e j o b w o rk e r f o r t w o m o n t h s f o r a l l th e y e a r s i n v o l v e d a n d so a l s o we h a v e s e e n s a l a r y s h e e t f o r t wo m o n t h s o n s a m p l e b a si s , o n a c c o u n t o f p a y m e n t o f w a g e s a n d a c t u a r i a l c e rt i f i c a t e . S i m i l a rl y p a g e s 1 4 7 9 t o 1 4 9 6 o f t h e p ap e r b o o k i s t h e sa m p l e c o p y o f b o n u s r e g i s t e r sh o w i n g a c t u a l p ay m e n t p r o o f o f b o n u s t o t h e e m p l o y e e s o f j o b wo rk e r s a n d p a p e r b o o k p a g e 1 4 9 7 t o 1 5 0 2 i s t h e sa m p l e c o p y o f L e a v e r e g i s t e r of t h e e m p l o y e e o f t h e j o b wo r k e r s. S i m i l a r l y p a p e r b o o k pa g e 1 5 0 3 t o 1 5 1 8 i s t h e c o p y o f m o n t h w i se P F a n d E S I d e d u c t i o n a n d d e p o si t a n d sa m p l e c o p y o f t w o m o n t h s c h a l l a n o f e ac h y e a r a l o n g wi t h l e d g e r a c c o u n t o f P F , o t h e r e v i d e n c e s o f t h e p a p e r b o o k a t p a g e s 1 5 0 3 t o 1 5 1 8 , 1 5 1 9 - 1 5 3 1 , 1 5 3 2 - 1 5 4 9 , 15 5 0 - 1 5 5 8 I.T.As. No.7654, 7655, 7656, 7657 & 7658/Del/2019 7 & 1 5 6 5 - 1 5 7 7 , 1 5 5 9 - 1 5 6 4 & 1 5 7 8 - 1 5 8 4 , 1 5 9 0 - 1 6 1 3 , 1 5 5 9- 1 5 6 4 , 1 5 7 8 - 1 5 8 4 a n d 1 5 8 5 - 1 5 8 9 a l l a re t h e e v i d e n c e s o f M /s S h r i R a m E x p o r t c l e a r l y e st a b l i sh t h a t g e n u i n e n e s s o f j o b wor k c h a r g e s i n c u rr e d b y t h e a s s e s s e e c o m p a n y t h ro u g h M / s S h ri Ra m E x p o r t a n d t h e r e f o re t h e d i sa l l o wa n c e m a d e i n t h e a s s e ss m en t o r d e r a n d c o n f i rm e d b y C I T (A ) i s n o t su st a i n a b l e e v e n o n m e ri t . T h e a d v e r se o b s e r v a t i o n s m a d e b y t h e A . O . i n t h e a s s e ssm e n t o r d e r h a v e b e e n m e t b y t h e a s s e s se e o n e b y o n e a n d p a p e r b o o k p a g e s 2 9 7 6 t o 2 9 7 8 a n d we h a v e t a k e n o u r se l v e s t o t h e s e ad v e r s e o b se r v a t i o n s a n d re sp o n s e o f t h e a s s e s s e e a n d w e a gre e wi t h t h e L d . Co u n se l f o r t h e a s s e ss e e t h a t t h e a d v e r se o b se rv a t i o n s m a d e b y t h e A . O . a r e n o t o f su b st a n c e a n d m i sp l a c e d o n fa c t s. 3 8 . CI T (A ) h a v e m e n t i o n e d i n h i s o r d e r t h e a d v e r se o b se r v a t i o n s o f t h e A . O . o n l y w h i c h i n o u r o p i n i o n a re m i sp l a c e d o n f a c t s. C o n t e n t i o n o f CI T ( A ) t h a t e v i d en c e f i l e d b y t h e a s s e s se e se l f - se rv i n g d o c u m e n t s a n d c i r c u m s t a n ti a l e v i d e n c e l e a d s t o t h e c o n c l u s i o n o f A . O . , a re b a l d a s s e rt i o n. I t wo u l d b e e n o u g h f o r u s t o s a y t h a t v o l u m i n o u s d o c u m e n t a r y e vi d e n c e s f i l e d b y t h e a s se s s e e a s re f e r re d a b o v e a n d c o n si d er e d b y u s c l e a rl y e st a b l i sh t h e g e n u i n e n e s s o f t h e j o b w o r k ex p e n s e s c o v e r e d b y t h e g ro u n d s o f a p p e a l u n d e r c o n si d e ra t i on . We h a v e g o n e t h ro u g h t h e a r g u m e n t s o f t h e a s s e ss e e i n r e sp ec t o f o b se r v a t i o n s m a d e b y CI T (A ) a s c o n t a i n e d a t p a g e 4 t o 6 o f t h e sy n o p si s f i l e d b e f o r e u s a n d we f i n d t h a t t h e e v i d en c e s f i l e d b y t h e a s se s s e e t o p ro v e g e n u i n e n e s s o f t h e j o b w o rk ha v e n o t b e e n f o u n d f a u l t w i t h b y CI T (A ) a n d t h e r e i s n o c o r r o b o ra t i v e e v i d e n c e p ro d u c e d a g a i n st t h e a s s e s s e e . W e f u rt h e r f i n d t h a t CI T (A ) m i s- a p p r e c i a t e d t h e n a t u re o f j o b w o r k b e i n g d o n e b y t h i s j o b wo r k e r a n d wa s n o t re l a t e d t o t h e a s s e s s e e c o m p a n y o r i t s d i r e c t o r s. S t a t e m e n t o f t h e wi f e o f t h e p ro p r i et o r c a n n o t b e u s e d a g a i n st t h e a s s e s s e e . I n t h e r e su l t g r o u n d s o f a p p e a l o f t h e I.T.As. No.7654, 7655, 7656, 7657 & 7658/Del/2019 8 a s s e ss e e i n t h i s r e g a r d a r e a l l o w e d & t h e a d d i t i o n o f R s . 6 , 4 1 , 3 9 , 3 5 7 i s h e r e b y d e l e t e d . ” 5 .2 Th e ld . co u n sel fo r th e ass essee su b mit ted th a t wh ere a clear fin d in g o f fact h a s b een reco rd ed b y th e Co -o rd in ate Ben ch o f Trib u n al in th e h a n d s o f Orien t Crafts, i .e. , u ser o f th e jo b wo rk serv ices th a t th e j o b wo rk ch arg es in cu rred b y th e Orien t Cra ft th ro u gh assessee are g en u in e, th e wh o le alleg a tio n ag ain st th e Assessee also is b elied an d fad es in to o b liv io n an d d o es n o t su rv iv e. Th e ld . co u n sel acco rd in g ly u rg ed fo r d elet io n o f th e ad d itio n su sta in ed b y th e CIT(A) in resp ect o f Assess men t Year 2 0 13 -14 , 2 0 1 4-1 5 an d 2 0 15 -16 as p er cap t io n ed ap p eals. 5 .3 Th e ld . DR fo r th e Rev en u e, o n th e o th er h and , relied u p on th e o rd ers o f th e l o wer au th o rities a n d co n ten d ed th at ap art fro m o n go in g d ispu te o n b on a fid es o f in co me d ec lared th e n atu re and g en u in en ess o f ex pen ses in cu rred by th e assessee-comp an y h as n o t b een ex amin ed b y th e Assess in g Offic er a t a ll . Th e Assessin g Officer h as merely mad e an ad d it io n o n p ro tect iv e basis in v iew o f su b stan tiv e ad d i tio n s carried o u t in th e case o f Orien t Craft Ltd . I t was th u s su b mit te d th at th e ma tt er sh o u ld , at b est, b e resto red to th e fi le o f th e Assessin g Officer fo r v erifica tio n o f th e n atu re o f th e ex p en ses cl ai med wh ich are h ig h ly d o ub tfu l an d i n ex p licab le as p er c erta in o b serv atio n s mad e b y t h e Assessin g Offic er. 5 .4 In th e rejo in d er, t h e ld . co u n sel fo r th e assessee su b mi t ted th at n o ap p eal h as b een fil ed b y th e Rev en u e seek ing v erific at io n o f ex p en ses an d th e assess ee is en ti t l ed to reli ef as c lai med h av in g reg ard to th e cl ear o b serv atio n s mad e in th e co u rse o f Or ien t Craft Ltd . in rel at io n to serv ices r en d ered b y th e asses see-co mp an y . I.T.As. No.7654, 7655, 7656, 7657 & 7658/Del/2019 9 6 . In th e b ack d ro p o f resp ect iv e arg u me n ts, we n o t ice th a t th e Co -o rd in ate Ben ch o f Trib u n al in ITA No .3 31 0 ; 3 0 11 & 3 3 12 /Del/2 0 1 9 in th e case o f Ori en t Craft L td . v s. DCI T, Cen tra l Circ le-II, Gu rg ao n v id e th ree s ep arat e o rd ers all da ted 2 4 .0 9 .20 21 h av e g iv en a cle ar fin d in g to wards g en u in en ess o f jo b wo rk ch arg es in cu rred b y th e Orien t Craft L td . th ro u gh the assess ee- co mp an y h erein . Th e Co -o rd in ate Ben ch h as th u s deleted th e co rresp o nd in g ad d itio n s in th e h an d s o f th e Orien t Craft Ltd ., i. e. , recip ien t o f th e serv ices fro m t h e assesse e carr i ed o u t on su b stan tiv e b as is . 7 . Th e Co -o rd in ate b en ch , o n ap p raisal o f th e fac ts carrie d o u t in th e c ase o f th e recip i en t, h as re n d ered a fav o u rable fin d in g . Hen ce, th e b asis fo r ad d itio n s mad e in th e h an d s o f th e assessee an d later mo d i fied b y th e CIT(A) is i n co n sisten t with th e o rd er o f Co -o rd in ate Ben ch an d th u s can n o t b e cou n ten an ced . Th e ad d itio n s were ma d e b y th e AO to th e ex ten t o f th e jo b work receip t b i lled to Orien t Cra ft L td . wh ich were red uced to 5 % th ereo f b y th e CIT(A). Hen ce, n o case was mad e o u t o n th e n atu re o f ex p en ses in cu rred b y th e assessee h erein . Co n sequ en tly , th e p lea o f th e Rev en u e fo r resto ra tio n o f th e ma t ter to th e Assessin g Officer fo r ex amin at io n o f co rresp o nd in g ex p en ses do es n o t eman a te fro m th e assess men t o rd er an d th erefo re cann o t be en terta in ed . 7 . In th e resu lt, a l l th e th ree ap p eals o f th e assess ee in ITA No. 7 6 54 , 7 6 5 5 , 7 65 6 /Del/ /2 0 1 9 are al lo wed . 8 . Th e g rou nd s o f ap p eal raised b y th e assessee in IT A No . 7 6 57 /Del/2 0 1 9 read s as u n d er: I.T.As. No.7654, 7655, 7656, 7657 & 7658/Del/2019 10 ITA No .7 6 5 7 /Del/2 0 19 (Assessm ent Yea r 2 0 1 4-1 5) 1 T h a t h a v i n g r e g a rd t o t h e f a c t s a n d c i r c u m st a n c e s o f t h e c a s e , L d . CI T (A ) h a s e r re d i n l a w a n d o n f a c t s i n c o n f i r mi n g t h e a c t i o n o f L d . A O i n a s su m i n g j u r i s d i c t i o n u / s 1 5 3 C a n d t h at t o o f o r t h i s y e a r a n d f u r t h e r e r re d i n p a s s i n g t h e i m p u g n e d a s s es s m e n t o r d e r, m o re so wh e n ‘ sa t i sf a c t i o n ’ h a s n o t b e e n re c o r d e d by A O o f t h e se a rc h e d p e r s o n a n d wh e n t h e r e w a s n o i n c ri m i n a t i n g d o c u m e n t wa s f o u n d . 2 . T h a t i n a n y c a s e a n d i n a n y v i e w o f t h e m a t t e r , a c t i o n o f L d . CI T (A ) i n c o n f i rm i n g t h e a c t i o n o f L d . A O i n a s s u m in g j u r i sd i c t i o n a n d f r a m i n g t h e i m p u g n e d a s s e s sm e n t o r d e r u / s 1 5 3 C , i s b a d i n l a w a n d a g a i n st t h e f a c t s a n d c i rc u m st a n c e s o f t h e c a s e a n d t h e sa m e i s n o t s u st a i n a b l e o n v a r i o u s l e g a l a n d f a c t u a l g ro u n ds. 3 . T h a t h a v i n g re g a r d t o t h e f a c t s a n d c i rc u m s t a n ce s o f t h e c a se , L d . CI T (A ) h a s e r re d i n l a w a n d o n f a c t s i n e x e rc i si n g h i s j u ri sd i c t i o n i n m a k i n g a d d i t i o n o f R s. 1 , 8 8 , 2 4 8 / - (i . e . 5 % o f R s. 3 7 , 6 4 , 9 5 4 / - ) o n a c c o u n t o f a l l e g e d c o m m i s si o n / b ro k e ra g e a s b u si n e s s i n c o m e a n d t h a t t o o wi t h o u t g i v i n g sh o w c au se n o t i c e i n t h i s re g a rd a n d i m p u g n e d a d d i t i o n m a d e b y L d . CI T (A) i s b a d i n l a w a s n o i n c ri m i n a t i n g m a t e ri a l h a s b e e n f o u n d a s a re su l t o f se a rc h wa r r a n t i n g su c h a d d i t i o n a n d b y r e c o rd i n g i nc o r r e c t f a c t s a n d f i n d i n g s a n d m e r e l y o n t h e b a si s o f su r m i s e s a nd c o n j e c t u r e s a n d wi t h o u t g i v i n g t h e o p p o r t u n i t y o f b e i n g h e a rd an d wi t h o u t o b se r v i n g t h e p ri n c i p l e s o f n a t u ra l j u st i c e . 4 T h a t i n a n y c a se a n d i n a n y v i e w o f t h e m a t t e r, ac t i o n o f L d . CI T (A ) i n m a k i n g a d d i t i o n o f R s. 1 , 8 8 , 2 4 8 / - o n a c c ou n t o f a l l e g e d c o m m i s si o n / b ro k e r a g e a s b u si n e s s i n c o m e , i s b a d i n l a w a n d a g a i n st t h e f a c t s a n d c i rc u m st a n c e s o f t h e c a se a n d t h e sa m e i s o u t si d e t h e p u r v i e w o f t h e i m p u g n e d p ro c e e d i n g s u / s 1 5 3 C o f t h e I.T.As. No.7654, 7655, 7656, 7657 & 7658/Del/2019 11 A c t . 5 . T h a t h a v i n g r e g a rd t o t h e f a c t s a n d c i rc u m s t a n c es o f t h e c a se , L d . CI T (A ) h a s e r r e d i n l a w a n d o n f a c t s i n n o t re ve r s i n g t h e a c t i o n o f L d . A O i n re j e c t i n g t h e b o o k s o f a c c o u n t s u / s 1 4 5 (3 ) o f t h e A c t . 6 . T h a t i n a n y c a se a n d i n a n y v i e w o f t h e m a t t e r, a d d i t i o n m a d e b y L d . CI T (A ) i n t h e i m p u g n e d o r d e r a r e b e y o n d j u r i s d ic t i o n a n d i l l e g a l a l s o f o r t h e r e a so n t h a t t h e se c o u l d n o t h av e b e e n m a d e si n c e n o i n c r i m i n a t i n g m a t e ri a l h a s b e e n f o u n d a s a r e s u l t o f se a rc h . 7 . T h a t h a v i n g r e g a rd t o t h e f a c t s a n d c i rc u m s t a n c es o f t h e c a se , L d . CI T (A ) h a s e r re d i n l a w a n d o n f a c t s i n c o n f i r mi n g t h e a c t i o n o f L d . A O i n p a s si n g t h e i m p u g n e d a s s e s s m e n t o r d e r wi t h o u t t h e re b e i n g re q u i si t e a p p ro v a l i n t e r m s o f s e c t i o n 1 5 3 D an d i n a n y c a se a p p r o v a l i f a n y i s m e c h a n i c a l wi t h o u t a p p l i c a t i o n of m i n d a n d i s n o a p p r o v a l i n t h e e y e s o f l a w. 8 . T h a t h a v i n g r e g a rd t o t h e f a c t s a n d c i rc u m st a n c es o f t h e c a se , L d . CI T (A ) h a s e r r e d i n l a w a n d o n f a c t s i n n o t re ve r s i n g t h e a c t i o n o f L d . A O i n c h a r g i n g i n t e r e st u / s 2 3 4 B o f In c o m e T a x A c t , 1 9 6 1 . 9 . T h a t t h e a p p e l l a n t c r a v e s t h e l e a v e t o a d d , m o d if y , a m e n d o r d e l e t e a n y o f t h e g r o u n d s o f a p p e a l a t t h e t i m e o f h e a r i n g a n d a l l t h e a b o v e g ro u n d s a re wi t h o u t p r e j u d i c e t o e a c h o t he r . ” 9 . On th e simil ar li n es as in th e case o f Su bh ash Chan d er Gu p ta, th e as sesse e h as p red o min an t ly p ressed Gro u nds No .3 , 4 an d 5 and su b mit ted th at th e p rese n t co n tro v ersy h av in g b een set tled b y th e Co - o rd in ate Ben ch d e cis io n , o th er g ro u nd s n eed n o t n ecessari ly b e ad j u d icated . In th e su b ject mat ter of ap p eal fo r AY I.T.As. No.7654, 7655, 7656, 7657 & 7658/Del/2019 12 2 0 14 -15 cap tio n ed ab o v e, th e ld . c o u n sel p o in ted o ut th at th e assesse e, in th e in stan t c ase , h as rais ed b ills fo r su p p ly o f fab ri cs to M/s. Orien t Cra ft s Ltd . wh ich , in tu rn , h as b oo ked p urch ases o f Rs.3 7 ,6 4 ,9 5 4 /- mad e fro m th e asses see-co mp an y in stead o f job wo rk serv ices ren d ered in th e case o f Su b h ash Ch an der Gu p ta. Lik ewise , su p p ly has b een carried o u t in Assessmen t Ye ar 2 0 15 -16 amo u n tin g to R s.1 , 0 0 ,8 2 ,43 6 /- also . T h e CIT(A) h as co mp u ted th e ad d itio n o f Rs.1 ,8 8 ,2 4 8 /- an d Rs.5 ,0 4 ,1 2 2 /- fo r Assessmen t Years 2 0 14 -15 an d 2 01 5 -1 6 in q u estio n b ei n g 5 % o f th e in vo ices rais ed o n Orien t Cra ft Lt d si mi lar to Su b h ash Ch an d er Gu p ta case. 1 0 . In th e b ack d rop o f th ese fac ts , th e a l leg at io n o f n o n g en u in e p u rch ases o f fab ric mad e b y th e o rien t Cra ft L td . fro m th e assesse e h erein h as b een rev ersed by th e Trib u n al with fo llo win g o b serv atio n s: 4 6 . T h e m a t e r i a l wh e n re c e i v e d f ro m t h e a b o v e s a i d c o n c e r n , i s e v i d e n c e d wi t h t h e h e l p o f A n n e x u r e - D r e p l y l e t te r 0 8 . 1 2 . 2 0 1 7 i . e . p u r c h a se d i n v o i c e o f f a b ri c , f a b r i c r e c e i p t n ot e , g a t e p a s s i n wa rd e t c , e n c l o s e d i n t h e p a p e r b o o k a t P B 1 3 2 8 - 15 5 9 (w h i c h i s a l re a d y e n c l o s e d i n t h e p a p e r b o o k f o r A . Y . 2 0 1 1 - 1 2 i n a s s e s s e e ’ s o w n c a s e ) o n s a m p l e b a si s . A p a rt f ro m t h i s, t h e m a te r i a l / f a b ri c p u rc h a s e d f r o m t h e a b o v e c o n c e r n h a s b e e n u se d i n th e p r o d u c t i o n o f g a r m e n t s wh i c h h a s b e e n so u g h t t o b e e x p l a i n e d b y t h e a s se s s e e w i t h t h e h e l p o f d e t a i l e d c h a rt a s p e r A n n e x u r e - C a s a s s e ss e e ’ s r e p l y l e t t e r 0 8 . 1 2 . 2 0 1 7 (P B 1 2 3 6 - 1 3 2 7 ) (w h i c h i s a l re a d y e n c l o s e d i n t h e p a p e r b o o k f o r A . Y . 2 0 1 1 - 1 2 i n a s s e s s e e ’ s o w n c a se s h o wi n g t h e sa l e s m a d e b y t h e a s se s s e e c o mp a n y a n d t h e g a rm e n t s p ro d u c e d i n w h i c h t h e m a t e ri a l / f a b ri c p u rc h a s e d f r o m t h e a b o v e p a rt i e s h a v e b e e n u s e d . 4 7 . F u r t h e r , s e v e ra l e v i d e n c e s we r e f i l e d b y t h e a sse s se e a l o n g I.T.As. No.7654, 7655, 7656, 7657 & 7658/Del/2019 13 wi t h t h e a b o v e s a i d re p l y t o b u t t re s s i t s a rg u m e n t s t h a t t h e p u rc h a s e s w e r e m a d e f ro m t h e a b o v e sa i d c o n c e r n a n d t h e s a m e a r e a l so e n c l o s e d i n t h e p a p e r b o o k a t A n n e x u r e - D re p l y l e t t e r 0 8 . 1 2 . 2 0 1 7 P B 1 3 2 8 - 1 5 5 9 (w h i c h i s a l r e a d y e n c l o se d i n t h e p a p e r b o o k f o r A . Y . 2 0 1 1 - 1 2 i n a s s e s s e e ’ s o w n c a se a n d t h e s e e v i d e n c e s a re c o p y o f b a n k re a l i z a t i o n c e rt i f i c a t e , e x p o r t sa l e s i n v o i c e s, p a c k i n g l i st , s h i p p i n g / a i r wa y b i l l , p u rch a se i n v o i c e o f f a b ri c f r o m a b o v e s t a t e d p a rt y , l o r ry r e c e i p t s, f a bri c r e c e i p t n o t e f r o m st o r e a n d f a b r i c i n sp e c t i o n r e p o rt . T h e c o p i e s o f p u r c h a s e i n v o i c e s f r o m t h e a b o v e s a i d p a rt y o n s a m p l e b a s i s w e re a l so p l a c e d b e f o r e L d . A O a p a rt f r o m c o m p l e t e b o o k s o f ac c o u n t s wh i c h we r e p r o d u c e d t o L d . A O . S u c h s a m p l e c o p i e s of t h e p u rc h a s e i n v o i c e s a r e a l so e n c l o se d i n t h e p a p e r b oo k a t P B 1 3 2 8 - 1 5 5 9 (w h i c h i s a l r e a d y e n c l o se d i n t h e p a p e r bo o k f o r A . Y . 2 0 1 1 - 1 2 i n a ss e s se e ’ s o w n c a s e ). A p a rt f r o m t h i s, a c h a rt s h o wi n g t h e st a n d a rd i n p u t / o u t p u t ra t i o , a s p r e s c ri b e d b y th e S t a n d a rd I n p u t / O u t p u t N o rm s u n d e r h a n d b o o k o f p ro c e d u re Vo l u m e —I I o f f o re i g n t r a d e p o l i c y , p u b l i s h e d b y t h e M i n i st r y o f C o m m e r c e , w a s a l so e n c l o s e d wh i c h i s e n c l o s e d h e re wi t h a t A n n e x u re – A a n d A n n e x u r e - D r e p l y l e t t e r 1 2 . 1 2 . 2 0 1 7 P B 2 3 1 5 - 2 3 2 6 & 23 4 1 - 2 3 7 7 , (w h i c h i s a l re a d y e n c l o se d i n t h e p a p e r b o o k f o r A .Y . 2 0 1 1 - 1 2 i n a s s e ss e e ’ s o w n c a se . P B 2 3 2 1 - 2 3 2 2 i s t h e d e t a i l s o f s a l e o f p i e c e s o n s am p l e b a s i s a l o n g w i t h c o n su m p t i o n o f f a b ri c i n m e t e r s a n d st a nd a rd i n p u t / o u t p u t n o rm s, (w h i c h i s a l r e a d y e n c l o se d i n t h e p a pe r b o o k f o r A . Y . 2 0 1 1 - 1 2 i n a s s e s s e e ’ s o wn c a se ) . P B 2 3 3 0 i s t h e d e t a i l o f r e c o n c i l i a t i o n o f p u rc h a se q u a n t i t y a n d v a l u e o f o p e n i n g st o c k o f f a b ri c , p u r c h a se , c o n su m pt i o n , c o st o f f a b ri c so l d a n d c l o si n g st o c k , (w h i c h i s a l re a d y e nc l o se d i n t h e p a p e r b o o k f o r A . Y . 2 0 1 1 - 1 2 i n a s s e ss e e ’ s o wn c a s e ). I.T.As. No.7654, 7655, 7656, 7657 & 7658/Del/2019 14 P B 2 3 3 6 - 2 3 4 0 d e t a i l o f c o m p a ri s o n b e t we e n o t h e r g a rm e n t e x p o rt e r a n d t h e a p p e l l a n t c o m p a n y f o r m a t e ri a l c o ns u m p t i o n a s a p e rc e n t a g e o f s a l e s , (w h i c h i s a l r e a d y e n c l o se d in t h e p a p e r b o o k f o r A . Y . 2 0 1 1 - 1 2 i n a ss e s se e ’ s o w n c a se ) . P B 2 3 4 1 - 2 3 7 7 i s t h e s t a n d a r d i n p u t / o u t p u t n o r m s as p r e s c r i b e d u n d e r h a n d b o o k o f p r o c e d u re v o l u m e – I I o f F o r e i g n T ra d e P o l i c y p u b l i sh e d b y M i n i s t ry o f C o m m e r c e , (w h i c h i s a l re a dy e n c l o s e d i n t h e p a p e r b o o k f o r A . Y . 2 0 1 1 - 1 2 i n a s s e s s e e ’ s o wn ca se ) . 4 8 . I n o t h e r wo r d s, L d . Co u n se l su b m i t t e d t h a t t h e f a c t t h a t t h e p u r c h a s e s we r e m a d e f r o m t h e a b o v e s a i d c o n c e rn w a s p r o v e d a n d e st a b l i s h e d b y t h e a s s e ss e e f ro m t h e d e t a i l e d de sc ri p t i o n c o n t a i n e d i n t h e a b o v e s a i d r e p l y d a t e d 0 6 . 1 2 . 2 0 1 7 (P B 2 8 9 - 2 9 1 ), 0 8 . 1 2 . 2 0 1 7 (P B 2 9 2 - 2 9 3 ) & 1 2 . 1 2 . 2 0 1 7 (P B 2 9 4 - 2 9 5 ) a n d w i t h t h e h e l p o f s e v e ra l e v i d e n c e s, w h i c h a r e p a rt o f t he p a p e r b o o k a t P B 4 1 7 - 4 1 9 , 4 2 0 - 4 8 9 1 0 4 4 - 1 0 4 5 , 1 1 5 9 - 1 1 8 6 , 1 1 8 7 - 1 2 3 5 2 3 1 3 - 3 8 3 2 (w h i c h i s a l re a d y e n c l o s e d i n t h e p a p e r b o o k fo r A . Y . 2 0 1 1 - 1 2 i n a ss e s se e ’ s o w n c a se . 4 9 . T h e r e f o r e , i t wa s n o t j u s t i f i e d o n t h e p a rt o f L d . A O t o h a v e t r e a t e d t h e p u rc h a s e s o f f a b ri c a s n o n g e n u i n e t r a n sa c t i o n / p u rc h a s e s . I n f a c t wi t h o u t t h e p u r c h a s e s , i t w a s n ot p o s si b l e t h a t t h e p ro d u c t i o n c o u l d h a v e b e e n m a d e a n d si n c e t h e ex p o rt s we r e m a d e , t h e p ro d u c t i o n s we r e m a d e a n d t h a t a l s o su p p or t s t h e c a se o f p u r c h a s e s m a d e b y t h e a p p e l l a n t . T h e re f o re , i t is h u m b l y p r a y e d a n d re q u e st e d t h a t t h e a c t i o n o f L d . A O i n ma k i n g s u r m i s e t h a t t h e p u r c h a s e s m a d e b y t h e a s se s se e f r o m t h e a bo v e sa i d c o n c e r n i s n o t g e n u i n e , i t i s su b m i t t e d w i t h g r e a t re s p e c t i s m i sc o n c e i v e d o n f a c t s a n d i t i s p r a y e d t h a t t h e a d di t i o n m a d e m a y p l e a se b e d e l e t e d . 1 1 . On read in g th e ap pell at e o rd er o f th e Trib u n al, i t i s seen th at I.T.As. No.7654, 7655, 7656, 7657 & 7658/Del/2019 15 assesse e i. e. , Starl i n e Clo th in g Pv t. Ltd . is a lso in clu d ed as o n e o f th e v en d o r co mp an ies to Orien t Cr aft an d th u s all th e o b serv atio n s mad e b y th e Co -o rd in ate B en ch sh all mu ta t is mu ta n d is ap p ly to v en d or co mp an ies in clu d in g th e ass essee co mp an y h erein . In th e lig h t o f th e fac tu al fin d in g g iv en b y th e Co -o rd in ate Be n ch in th e case o f co n su mer co mp an y , i. e. Ori en t Cra ft Ltd . , th e b asis fo r ad d itio n s mad e i n th e h an d s o f th e v en do r assessee fo r th e Assessmen t Years 2 0 1 4 -1 5 an d 201 5 -16 in q u estio n d oes n o t su rv iv e an y mo re. 1 2 . In th e resu lt, b o th th e cap t io n ed ap peals o f the ass esse e in ITA No .7 65 7 & 7 65 8 /Del/2 0 1 9 are al lo wed . 1 3 . In th e co mb in ed re su lt, al l th e fiv e c ap tio n ed ap p eals o f th e assesse e are a llo wed . Order pronounced in the open Court on 14/07/2022. Sd/- Sd/- [SAKTIJIT DEY] [PRADIP KUMAR KEDIA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: /07/2022 Prabhat Copy forwarded to: 1. Appellant 2. Respondent 3. CIT(A) 4. CIT 5. DR Assistant Registrar