Aanchal Impex Pvt Ltd, New Delhi V. ITO WARD - 1(1), New Delhi

ITA 9089/DEL/2019

AI Insights

The case involves M/s Anchal Impex Pvt. Ltd., which appealed against the order of the CIT(A)-I, New Delhi, concerning the assessment year 2007-08. The primary contention was regarding the addition made under section 68 of the Income Tax Act, 1961, which was initially set at Rs.1,75,14,747 due to alleged discrepancies in transactions with KCSK. The ITAT found that the entire operation was a facade to inflate the company's turnover for extraneous reasons. Consequently, the ITAT reduced the disallowance to 5% of the total transactions, acknowledging some level of genuine business activity.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 131589 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 27-02-2023
• Assessment Year: 2007-2008
• Appeal Filed On: 24-11-2019
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income
• Section: 131; 68

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘A’, NEW DELHI Before Dr. B. R. R. Kumar, Accountant Member Sh. Yogesh Kumar US, Judicial Member ITA No. 9089/Del/2019 : Asstt. Year: 2007-08 M/s Anchal Impex Pvt. Ltd., DMRN & Associates, 106-107, Maharaja Agrasen Shopping Complex, Sector-9, Rohini, Delhi-110085 Vs. Income Tax Officer, Ward-1(1), New Delhi-110002 (APPELLANT) (RESPONDENT) PAN No. AABCH4719H Assessee by : Sh. R. R. Singla, Adv. Revenue by : Sh. Kanv Bali, Sr. DR Date of Hearing: 28.02.2023 Date of Pronouncement: 23.05.2023 ORDER Per Dr. B. R. R. Kumar, Accountant Member: The present appeal has been filed by the assessee against the order of ld. CIT(A)-I, New Delhi dated 22.10.2019. 2. The assessment order is very sketchy and full of errors. On page 2 of the assessment order, the AO has observed that the addition is made u/s 68 whereas on page 3 of the assessment order, the AO has observed that the addition is made on account of excess interest paid. 3. The relevant part of the Assessment Order is as under: “ As per the ADIT (Inv) letter statement of Surendar Gupta Director of HR- TMJ6T Pvt. Ltd. was recorded on oath u/s 131 of the income tax act on 04.05.2011. In his statement he has stated that he is the director of HPT Pvt. Ltd. which is presently known as Aanchal Impex Pvt. Ltd. As per his ITA No. 9089/Del/2019 Anchal Impex Pvt. Ltd. 2 statement he has claimed that the HRT Pvt. Ltd has sold goods to KCSK in the FY 2006- 07 and some goods are also purchased from KCSK. Sh. Surender Gupta was asked to furnish the details of transaction between KCSK HR Timber Pvt. Ltd. He furnished the copy of ledger account of bills and vouchers of goods sold to KCSK. As per the details filed by him HRT Pvt. Ltd had a debit balance of Rs. 14,44,480/- on 07.01.2007 and Rs. 1,82,55,379/- as on 31.03.2007 of KCSK. The details of bills and vouchers are as under: SI. No. Date Amount 1 61.01.2007 9,28,067/- 2 01.01.2007 13,93,059/- 3 02.01.2007 8,70,026/- 4 03.01.2007 8,85,364/- 5 04.01.2007 7,71,134/- 6 05.01.2007 9,47,919/- 7 05.01.2007 2,59,360/- 8 05.01.2007 9,75,289/- 9 06.01.2007 10,83,651/- 10 06.01.2007 10,76,638/- 11 06.01.2007 10,17,881/- 12 08.01.2007 10 , 20,914/- 13 08.01.2007 11,97,512/- 14 02.02.2007 12,21,481/- 15 05.03,2007 13,15,212/- 16 05.03.2007 12,41,128/- 17 07.03.2007 13,10,112/- Total 1,75,14,747/- From the above, it is clear that details filed by Sh. Mohit Bansai who is the partner of KCSK and Sh. Surender Gupta who is director of HRT Pvt. Ltd. cannot be taken as correct because there is a categorical mismatch in the statement given by Sh. Mohit Bansai vis-à-vis Sh. Surender Gupta so far as the transaction between them are concerned.......In spite of repeated opportunity the assessee has not submitted any details. As the assessee has not submitted any details in spite of repeated notices issued to assessee. In view of above I am left with no other alternative except making an addition of Rs.1,75,14,747/- u/s 68 of the income tax act 1961. ITA No. 9089/Del/2019 Anchal Impex Pvt. Ltd. 3 Subject to the above remarks, the income of the assessee company is computed as under: Business Income (as per return of income) Nil Add: Disallowance on account of excess interest paid, as discussed above. Rs.1,75,14,747 Total Income Rs.1,75,14,747 4. Before the ld. CIT(A), it was replied by the director that the company had sold some goods to Kishan Chand Suresh Kumar in the financial year 2006-07 and some goods also purchased. An amount of Rs. 1,82,55,379/- was stated to be receivable as sundry debtor as on 31.03.2007 in the books of the company. These facts are quite according to the copy of ledger account submitted by the assessee company. Shri Mohit Bansai, Proprietor Kishan Chand Suresh Kumar has confirmed that his firm had purchased goods from the company HR Timber Private Limited. Based on the facts, the ld. CIT(A) disallowed 25% of the total purported purchases. 5. We have gone through the entire facts, we find that the entire operation is made for “increasing the turnover” of the companies without any real business. The fictitious augmentation of the turnover is for extraneous reasons. Hence, keeping in view the entire facts which are very specific to the instant case, since the role of the assessee could not be negated, we restrict the disallowance to 5% of the total transactions. ITA No. 9089/Del/2019 Anchal Impex Pvt. Ltd. 4 6. In the result, the appeal of the assessee is allowed for statistical purpose. Order Pronounced in the Open Court on 23/05/2023. Sd/- Sd/- (Yogesh Kumar US) (Dr. B. R. R. Kumar) Judicial Member Accountant Member Dated: 23/05/2023 *Subodh Kumar, Sr. PS* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR