ACIT Circle-21(1), New Delhi V. Real Impact Pvt Ltd, New Delhi

ITA 9459/DEL/2019

• Counselvise Citation: [2023] 101 COUNSELVISE.COM (IT) 9625 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 11 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 02-10-2023
• Assessment Year: 2016-2017
• Appeal Filed On: 08-12-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Non compliance; Bogus
• Section: 6; 28; 133(6); 143(1); 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘H’, NEW DELHI Before Shri Saktijit Dey, Hon’ble Vice President & Dr. B. R. R. Kumar, Accountant Member ITA No. 9459/Del/2019 : Asstt. Year: 2016-17 The ACIT, Circle -21(1), New Delhi Vs Real Impact Pvt. Ltd., A2/38, 3 rd Floor, Safdarjung Enclave, New Delhi 110029 (APPELLANT) (RESPONDENT) PAN No. AAECR 6354 B Assessee by : Sh. Manpreet Singh Kapoor, CA Revenue by : Sh. Amit Katoch, Sr. DR Date of Hearing: 03.10.2023 Date of Pronouncement: 08.12.2023 ORDER Per Dr. B. R. R. Kumar:- The present appeal has been filed by the Revenue against the order of Ld. CIT(A)-7, New Delhi dated 11.09.2019. 2. The Revenue has raised the following grounds of appeal are as under:- 1. "Th e CIT( A) , i n f act s an d cir c um st a nc es of t he ca se , ha s er red in a c cept i ng t h e a d di ti o na l ev i den ce f il ed u nd er Rul e 46( 1)( d) wit h out giv i n g i n de p en den t fi ndi ng a nd wit h out a ppr ecia ti ng t h e fa ct t h at sev er al op port u ni ti es a s per as sessm ent ord er w er e g ive n t o b e a ss ess ee t o f il e all n ec ess ary d oc um ents. " 2. Th e CIT (A ) , i n fa ct s a nd circ um sta nc es o f t h e ca s e, ha s erre d in a c cepti n g t he a ss es s ee c on t ent i o n t ha t t h e pa ym en t i n resp ect of M/ s. F or- A C om pa n y Lt d . ha s al re ad y be en ma de d uri ng t h e im pu gn ed y ea r d es pit e t h e fa ct t hat as p er Pa r a 4.3 o f t he a ppell at e or der , t h e C I T(A) m enti ons t h at t he p aym ent wa s m a d e i n s ub se qu ent y ea rs w hi ch i s p er ver se. ITA No. 9459/Del/2019 Real Impact Pvt. Ltd., 2 3. Th e CIT (A ) , i n fa ct s a nd circ um sta nc es o f t h e ca s e, ha s e rre d in a cc ept i ng t he a ss es s ee co nt enti on t hat all d et a il s i n r es pe ct of M/ s. F or- A C om pa ny Lt d. w er e s ubm itt ed duri ng th e a ss ess m e nt pr oc eedi ng s d es pi t e t h e fac t t ha t no co nfirm at i o n ha s be en o bt ai ned b y t he ass es see fr om t h e sa i d en t it y a lo ng wit h r el ev a nt det ail s of p ur cha s e a nd cu st o m d ut i es pai d." 4. "Th e CIT( A) , i n f act s an d cir c um st a nc es of t he ca se , ha s er red in ob s er vi n g i n p a ra 4.4 of t he a ppe llat e or d er t hat t he AO ha s overl ook ed t h e evi d enc es f ur ni sh ed b y the a ss ess ee d es pit e th e f a ct t h at t he e ntit y M/ s . For -A Com pa ny Lt d. w as a ppeari n g as credit or i n t h e book s o f t he as se ss ee a s on 31.03 .2 016 w hi c h i s perv er s e. " 5. "Th e CIT( A) , i n f act s an d cir c um st a nc es of t he ca se , ha s er red in a cc epti ng t he a ss es s ee su bmi s si o n in par a 3 .1 of t he a ppel l at e or der t ha t t he cr ed it or s c oul d not ha ve r ecei ve d n ot ices i s su ed u/ s 133( 6 ) d es pit e t he f ac t t hat t he as se ss e e' s ow n su bm i s si o n t hat t h es e credi t ors c oul d ha ve s hi ft ed a n d it w as a dut y of t he asse s see t o su bmi t co nfi rm at i o ns duri n g t he a ss es sm ent pr oc eedi n gs ." 6. "Th e CIT( A) , i n f act s an d cir c um st a nc es of t he ca se , ha s er red in ac c epti ng t h e c o nt ent i ons o f t he as s esse e as per p ara 4.5 of a pp ell a t e ord er wit ho ut e ven ca ll i n g f or th e d etail s fr om t he cr e di t ors or m aki ng i n depen dent enq uir y a s t o t he gen ui ne n ess of t h e a ddi ti on al i n f or m ati on su bmit t ed und er Ru l e 46A duri ng t h e a ppell at e pr oc eedi ng s." 7. "Wh et h er i n f act s a nd c ir cu mst anc e s of t he c as e, t h e o bs erva ti on of CIT( A) vi d e par a 4.7 of t h e ap pe ll at e or der i s p er verse des pi t e t he fa ct t hat t he a ssessee ha s cl earl y fil ed writ t e n s ub mis si on s dur i n g t he ap pel lat e pr o ceedi ng s th e as sess m en t ye ar wis e c es sat i on o f li a bi lit y i n r es pe ct of som e cr e dit or s. F ur ther t h e CIT( A) ha s n ot enq ui red whet her th e su ggest i o n of cr edi t ors ha s b ee n t r ea t ed a s i nc om e i n th e s ub sequ e nt y ears . " 8. "Th e CIT( A) , i n f act s an d cir c um st a nc es of t he ca se , ha s er red in ac c ept i n g t he a s ses se e s ub mis si on t h at t he bal an ce cr e di t ors a mo unti ng t o R s. 3 5,97, 680 shoul d not be tr eat ed a s cr edi t or s a s o n 31. 03 .2016 de sp it e t h e fa ct t hat t he p ay m ent s as per p a ra 4 .1 0 of t h e a pp ell a t e or der ha ve been m ade i n t h e s ub se qu ent y ear s an d t h at i t was t he d ut y of t he ass es see to f ur nis h c on firm at ion from t h es e b al a nc e cr edi t or s d ur i ng t he a s s es sm ent pr oce ed i n g s b ef or e t h e AO ." 9. "Wh et h er i n f act s a nd c ir cu mst an ce s of t he c as e, t h e o bs erva ti on of CIT (A ) i n para 4. 10 of t he a p pella t e order t hat a ddi ti on sho ul d no t b e m ad e i n r es pect of b ala nc e cr edi tors i s p er verse desp it e th e fa ct t hat t hese su nd ry cr edit or s w er e o ut st and i ng a s on 3 1.0 3. 20 16 a nd t ha t it w as t he du ty of t h e a ss ess ee t o pr ov i de c on firm at i on s irre sp ect i ve of t he f a ct of w hat ha s ha ppene d a ft er 31. 03.20 16. " ITA No. 9459/Del/2019 Real Impact Pvt. Ltd., 3 10. "Th e CIT( A) , i n f act s an d cir c um st a nc es of t he ca se , ha s er red in m er el y acce pti n g th e su bmi ssi o ns o f t he a ss es s ee wit ho ut c on ducti n g a n y i nd e p en den t enq uiry t o veri fy t he g en ui n eness of t h e s ub mis si on s m a d e b y t h e a s s es see w hic h i s ag ai n st t he r at i o a s l a i d d own b y H on' bl e D el hi Hi g h C ourt i n t he cas e o f CI T vs . Ja nsa m pa rk A dverti si ng & M a rk eti ng P vt . Lt d." 3. The assessee is a private limited company, during the year under consideration the company was engaged in the Service Sector. The assessee filed its return of income on 29.11.2016 declaring an income of Rs.3,47,32,676/-. The return was processed u/s 143(1) of the Income Tax Act, 1961. The case was selected for Limited scrutiny on the following issues: (a) Whether the sundry creditors are genuine. (b) Whether outward foreign remittance is from disclosed sources and appropriate withholding and reporting on obligations have been complied with. 4. The Assessing Officer examined a creditor namely “M/s. For-A Company Ltd.” whose credit balance as on 31.03.2016 was Rs.4,29,67,923/- and other 33 creditors having closing balance of Rs. 2,29,36,006/- by issuing notices u/s. 133(6). Owing to the non compliance by these 33 creditors and owing to non furnishing of requisite details with regard to M/s. For-A Company Ltd, the Assessing Officer added the outstanding amount of Rs.6,59,03,929/- to the total income of the assessee. 5. Aggrieved, the assessee filed appeal before the ld. CIT(A). ITA No. 9459/Del/2019 Real Impact Pvt. Ltd., 4 6. The assessee has filed application for furnishing the additional evidence under rule 46A dated 24.04.2019. The request was made before the CIT(A) for furnishing the additional evidence by way of complying the circumstances following under clause b of sub-rule 1 of Rule 46A of Income Tax Rule, 1962. 7. The Assessing Officer has furnished his remand report vide letter dated 06.05.2019 and submitted that the additional evidences furnished by the assessee cannot be submitted under Rule 46A of Income Tax Rule, 1962. 8. After receiving the rejoinder from the assessee against the remand report of the Assessing Officer, the ld. CIT(A) held that the assessee was prevented by sufficient cause from producing the evidence before the AO, and since the evidences are crucial for adjudication of appeal the same have been admitted. 9. Heard the arguments of both the parties and perused the material available on record. 10. We have gone through the order of the ld. CIT(A) in detail. The confirmation of M/s. FOR-A Company Limited from whom the assessee has purchased the equipment during the F.Y. relevant to the A.Y.2016-2017 is on record. M/s FOR-A Company Limited is a company incorporated in Tokyo and all the payments have been made in foreign currency to said company. The assessee has furnished the copy of bank statement and the details of payment which was made and M/s. FOR-A Company ITA No. 9459/Del/2019 Real Impact Pvt. Ltd., 5 Limited has also duly confirmed the same. The assessee has made the payment of the outstanding balance of Rs. 4,29,67,929/- to M/s. FOR-A Company Limited which was duly reflected in the bank statement of subsequent year. The assessee has already produced the confirmation of Sundry Creditors along with their PAN card, specifically bank statement and ledger account which was duly reflected in the payment of these creditors. Hence keeping in view the entire facts on record, we hold that no addition can be made on the outstanding balance pertaining to M/s. FOR-A Company Limited. The appeal of the Revenue on this issue is dismissed. 11. The assessee was enquired by the ld. CIT(A) to provide complete details of Sundry Creditors justifying each in respect of identity, creditworthiness and genuineness. The assessee filed primary details before the AO. Subsequently, the AO issued notices u/s 133(6) to creditors to confirm transactions with documentary evidence through e-mail ID. The notices were issued through ITBA Portal. The confirmation/reply were not received from all the parties regarding outstanding balances as on 31.03.2016. It was submitted that the AO had not issued any show cause notice before making any addition or intimation to the assessee for non-reply from the various parties and made addition without confronting the assessee about the non-receipt of the replies by the Assessing Officer. Absence of reply from the creditors do not entitle the Assessing Officer to treat the creditors as bogus without bringing any evidence on record to prove the payable are not indeed not required to be paid. ITA No. 9459/Del/2019 Real Impact Pvt. Ltd., 6 12. Further, the assessee has submitted the details of payment in also the remission carried on in the subsequent years. The details are as under:- S.No Name of Creditors Amount as on 31.03.2013 Pending since Cleared on Remarks 1 Amit Cine Services 5,24,115/- 01.04.2016 17.03.2018 Paid on 17.03.2018 2 P.M Communication 1,45,892/- 01.04.2016 01.03.2018 Cessation of liability as on 01.03.2018 3. Power Expenses 9,50,371/- 01.04.2016 31.03.2018 Paid on 31.03.2018 4. Rajwati Devi 2,32,084/- 01.04.2016 31.03.2018 Paid on 30.03.2018 5. RGB Vision 1,99,084/- 01.04.2016 01.03.2018 Cessation of liability as on 01.03.2018 6. S.S Media Communication 3,69,520/- 01.04.2016 01.03.2018 Cessation of liability as on 01.03.2018 7. Sarav Video Centre 7,29,042/- 01.04.2016 31.03.2017 31.03.2017 8. Softaline Studio Services 2,48,310/- 01.04.2018 31.03.2017 Paid on 30.3.2017 9. Suraj Technosonics 1,98,648/- 01.04.2018 06.09.2016 Paid on 06.09.2016 13. Hence keeping in view the facts of the case, decision of the ld. CIT(A), applicability of provisions of section 41(1) and the judgments in CIT v. Vardhman Overseas Ltd. in ITA No, ITA No. 9459/Del/2019 Real Impact Pvt. Ltd., 7 774/2009 decided on 23.12.2011, (2012) 343 ITR 408 (Del), the Delhi High Court, referring to the judgment in the case of Jay Engineering Works Ltd. v. CIT (2009) 311 TR 299 (Del) and applying the ratio laid down the case of CIT v. T. V. Sundaram Iyengar & Sons Ltd. (1996) 222 ITR 344 (SC) under sec. 28 of the IT Act, considered the applicability of clause (a) of sub- section (1) of section 41 as to what constitute remissions or cessation of trading liability, we decline to interfere with the order of the ld. CIT(A). 14. In the result, the appeal of the Revenue is dismissed. Order Pronounced in the Open Court on 08/12/2023. Sd/- Sd/- (Saktijit Dey) (Dr. B. R. R. Kumar) Vice President Accountant Member Dated: 08/12/2023 *NV, Sr. PS* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, DELHI