KRISHAN KUMAR MITTAL, Rewari V. ITO WARD - 1, Rewari

ITA 9368/DEL/2019

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 2817 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-04-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 15-04-2024
• Assessment Year: 2014-2015
• Appeal Filed On: 04-12-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH MAHAJAN
• Section: 2; 40A(3); 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “C” DELHI BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI SUDHIR PAREEK, JUDICIAL MEMBER I.T.A. No.9368/DEL/2019 Assessment Year 2014-15 Shri Krishan Kumar Mittal S/o. Shri Munni Lal, Prop. M/s. Mittal Trading Co., Railway Road, Kosli Vs. ITO Ward – 1, Rewari, Haryana TAN/PAN: ABGPK 2647 C (Appellant) (Respondent) Appellant by: -None- Respondent by: Shri Rajesh Mahajan, Sr. D.R. Date of hearing: 16 04 2024 Date of pronouncement: 25 04 2024 O R D E R PER PRADIP KUMAR KEDIA-AM: The captioned appeal has been filed by the assessee against the order of the Commissioner of Income Tax (Appeals)-Rohtak (‘CIT(A)’ in short) dated 11.10.2019 arising from the assessment order dated 21.10.2016 passed by the Assessing Officer (AO) under Section 143(3) of the Income Tax Act, 1961 (the Act) concerning Assessment Year 2014- 15. 2. The grounds of appeal raised by the assessee read as under: 1. “ Tha t th e or de r c o mmiss io ne r of inc o me tax (Ap pe als ) G ur g a on- 1, u /s 25 0 date d 1 1. 10. 2 01 9 i s ba d in law a nd o n f ac ts of th e c a se , fo r v a rious re a so ns an d he n c e the s am e ma y kind ly be qu as h e d a nd in a ny c a se , th e i mpu gn e d add iti on s be d e le t e d. 2. T he A .O e rr ed i n la w a s we l l a s on the f a cts o f the c a se in fr amin g th e asse ss m en t u/ s 14 3 (3 ) w i tho ut affo r din g ad e qu at e an d r ea so na bl e o ppo rt u nit y a nd ev e n w ith ou t c om ply ing w ith c o nfi rm ing s uc h ac t ion o f the A .O . Th e imp u gne d o r de r h av in g b e e n p as se d in G ros s b re ac h of na tu ra l J u s tic e , k indly b e qu as h ed. 3.1 T he Ld A .O e r r e d i n law as w e ll a s on th e fac ts, in mak in g a dd ition o f Rs.4 7,9 1,8 45/ - u /s 40A (3 ) of the I nc ome T ax Act for c ash I.T.A. No.9368/Del/2019 2 p urc ha se ma d e by a p pe l lant . The Ld . C I T (A ) e rre d in c o nfi rmin g s uc h a dd iti o n m a de by A. O . 3.2 T ha t the Ld A .O h as e rre d in n ot ap pre c iati ng t he fac ts an d d ocu me nt su bm it te d du ri n g the Asse ss me n t p ro c e e din g. T he L d C IT (A ) e rre d i n c on fir ming t h e ac t ion of A.O . 4.1 T he L d A O e rre d i n la w as w e ll a s o n th e fac t s o f the c a se in m ak ing a d -h oc ad di ti on of Rs .2 , 74 , 893/ - b y dis all o win g 1/ 6 of v a rious e x pe n se s d e bit e d in the P / L ac c o unt fo r w ant o f v ou c h e rs, o n e s ti m ate ba si s. T he Ld C I T (A ) e rr ed i n c o nfi rm ing t he Ac tion of A.O . 4.2 T he Ld A. O h as n ot app re c iate d the doc u me nt s ub mitte d a t th e time o f a ss e ss me n t p roc e e din g. T he Ld C I T ( A ) als o e rr e d in n ot a ppre c iat ing the d oc ume n t sub mitte d at ti me o f he ari n g. 5. T ha t the c on c lusi o n and inf e re nc e of L d AO b ase d o n su sp i c i ou s, C onje c tur e s, s ur mi se s an d e x tran e ou s an d ir re le v a nt c o ns ide ra ti on s. T he Ld C I T( A ) e r re d in c o nfir m in g the sa me ; 6. T ha t r e lie f pr ay e d fo r, m ay k in dly be all ow ed an d th e o rd e r of the L d. C IT (A ) m a y k indl y be q ua she d, se t asi de , an nulle d or m odi fie d; 7. T ha t af ore s ai d gr o un d of app eal a re w ith ou t pre ju di c e to e a ch o the r ; 8. T ha t a p pe ll an t c rav e to v ary , alt e r, ame n d o r ad d t o th e a for e sa id g ro un d of ap pe a l b e fo re or at th e tim e of he a ri ng o f th e ab ov e a ppe al. ” 3. When the matter was called for hearing none appeared for the assessee. The matter was accordingly proceeded e x parte owing to the fact that several opportunities granted in the past have remained unavailed by the assessee. 4. As per the grounds of appeal, the assessee has challenged the action of the CIT(A) on two grounds; (i) Addition of Rs.47,91,845/- under section 40A(3) of the Act towards cash purchases allegedly made by the assessee. (ii) Ad-hoc addition of Rs.2,74,893/- being disallowance of 1/6 th of various expenses debited in the P/L account on estimated basis. I.T.A. No.9368/Del/2019 3 5. On perusal of the case records, it is noted that the CIT(A) has confirmed the addition under section 40A(3) of the Act on the ground that the exception available under section 6DD(k) of the Income Tax Rules is not available to the assessee owing to the fact that the assessee has failed to establish relationship of principal and agent between the assessee and one Shri Balaji Traders i.e. the firm from whom purchases in cash have been made in violation of provision of section 40A(3) of the Act. Similarly, ad-hoc disallowance of Rs.2,74,893/- out of expenses has made by the Assessing Officer have been confirmed on the ground that assessee has failed to substantiate the expenses with documentary evidences. 6. On a closure look, it is observed that the reason for disallowance is lack of substantiation of the plea raised. From the assessment order, it is noticed that the assessee in its defense has in te r a lia stated that the firm has no Bank account for transfer of payment otherwise than cash and the cash was paid to Balaji Trader who in turn had to pay the farmers in cash. The Assessing Officer has not dealt with the factum of non- availability of Bank account of the firm. The CIT(A) has endorsed the action of the Assessing Officer without dealing with the plea of the assessee. A reasoned order on the additions under section 40A(3) as well as estimated disallowance would be just and proper in the circumstances. 7. Both the issues are accordingly restored and sent back to the file of the CIT(A) for fresh adjudication in accordance with law after giving opportunity to the assessee. It shall be open to assessee to adduce such evidences and explanations as may be considered expedient. The assessee is cautioned to fully co-operate in the assessment proceedings without demur, failing which, the AO shall be at liberty to pass order such order as it may think fit in accordance with law. I.T.A. No.9368/Del/2019 4 8. In the result, appeal of the assessee is allowed e x pa r te for statistical purposes. Order pronounced in the open Court on 25/04/2024 Sd/- Sd/- [SUDHIR PAREEK] [PRADIP KUMAR KEDIA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 25/04/2024 Priti Yadav, Sr.PS* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT(A) 4. CIT 5. DR Assistant Registrar