DCIT, New Delhi V. M/s. Firepro Wireless & Technologies Pvt. Ltd., New Delhi

ITA 970/DEL/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 7469 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 03-05-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 19-02-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MANOJ KUMAR CHOPRA
• Keywords: Bogus purchase; Opportunity of being heard; Additional evidence
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: B NEW DELHI BEFORE SMT DIVA SINGH, JUDICIAL MEMBER AND SH.L.P.SAHU, ACCOUNTANT MEMBER I.T.A .NO.-970/DEL /2014 (ASSESSMENT YEAR-2010- 11) D CIT , CENTRAL CIRCLE-11, NEW DELHI (APPELLANT) VS FIREPRO WIRELESS & T ECHNOLOGY PVT.LTD., C-160, OKHLA INDUSTRIAL AREA, PHASE-I, NEW DELHI-110020. PAN-AACCC6876D (RESPONDENT) APPELLANT BY SH . MANOJ KUMAR CHOPRA, SR. DR RESPONDENT BY NONE DATE OF HEARING 03 .0 5 .2016 DATE OF PRONOUNCEMENT 10 .0 6 .2016 O R D E R PER SMT. DIVA SINGH, JUDICIAL MEMBER THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE AS SAILING THE CORRECTNESS OF THE ORDER DATED 19.11.2013 OF CIT(A)-XXXI, NEW DELH I PERTAINING TO 2010-11 ASSESSMENT YEAR ON THE FOLLOWING GROUNDS:- 1. THE ORDER OF LD.CIT(A) IS NOT CORRECT IN LAW AND F ACTS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD.CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS.40,11,036/ - ON ACCOUNT OF PURCHASES WITHOUT GIVING AN OPPORTUNITY TO THE AO U NDER RULE 46A OF THE IT RULES. 3. THE APPELLANT CRAVES LEAVE TO ADD, AMEND ANY/ALL TH E GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF HEARING OF TH E APPEAL. 2. AT THE TIME OF HEARING, NO ONE WAS PRESENT ON BE HALF OF THE ASSESSEE. HOWEVER, THE LD.SR.DR SUBMITTED THE APPEAL CAN BE D ECIDED ON THE BASIS OF MATERIAL AVAILABLE ON RECORD AS THERE IS A VIOLATIO N OF THE STATUTORY RULES WHICH IS EVIDENT FROM THE RECORD ITSELF. THE RELEVANT FACTS OF THE CASE AS EMANATING FROM THE I.T.A .NO.-970/DEL /2014 PAGE 2 OF 5 ASSESSMENT ORDER ARE THAT THE CASE OF THE ASSESSEE COMPANY WAS CENTRALIZED CONSEQUENT TO A SEARCH U/S 132 OF THE INCOME TAX AC T, 1961 ON 24.09.2009. IN RESPONSE TO THE NOTICE ISSUED, RETURN DECLARING AN INCOME OF RS.2,79,15,485/- WAS FILED. THE ASSESSEE WAS REQUIRED VIDE NOTICE U/S 1 43(2)/142(1) AND QUESTIONNAIRE ETC. TO EXPLAIN THE DISCREPANCIES POINTED OUT IN TH E NOTICES. IN THE PRESENT PROCEEDINGS, WE SHALL CONFINE OURSELVES TO THE SPEC IFIC ISSUE RAISED IN THE PRESENT APPEAL. THE ISSUE UNDUE CONSIDERATION IS THE ADDIT ION OF RS.40,11,036/- MADE HOLDING PURCHASES AS BOGUS TO THE SAID EXTENT ON T HE FOLLOWING REASONING:- 7. BOGUS PURCHASES DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A SSESSEE COMPANY WAS REQUIRED TO SUBMIT DETAILS OF PURCHASES MADE. A LIST IN THIS REGARD HAS BEEN SUBMITTED BY THE ASSESSEE COMPANY. FROM THE LIST OF PURCHASES IT HAS BEEN PERUSED THAT IN THE CASE OF M .S PRIDE TECHNOLOGY COMPANY, NO ADDRESS IS MENTIONED IN THE LIST SUBMIT TED. IT IS FURTHER REITERATED THAT THE ASSESSEE COMPANY DID NOT FILE A NY FURTHER DETAIL. IN THE ABSENCE OF DETAILS IN RESPECT OF THE PERSON FRO M WHOM GOODS ARE PURCHASED, IT IS NOT FEASIBLE TO VERIFY THE GENUINE NESS OF PURCHASES. THEREFORE, THE AMOUNT OF PURCHASES MADE FROM M/S PR IDE TECHNOLOGY COMPANY ARE NOT CONSIDERED GENUINE AND DISALLOWED. AMOUNT OF RS.4011036/- IS ADDED BACK IN THE INCOME OF THE ASS ESSEE COMPANY. PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) ARE INI TIATED FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND FOR CONCEALING THE PARTICULARS OF INCOME. (ADDITION MADE RS.4011036/-) 3. THE LD. SR. DR INVITING ATTENTION TO PARA 4.4.2 OF THE IMPUGNED ORDER SUBMITTED THAT THE CIT(A) ACCEPTED INTOTO THE SUBMISSION OF THE ASSESSEE. CARRYING US THROUGH THE SUBMISSIONS IN PARA 4.4.2 A ND THE CONCLUSIONS IN PARA 4.4.3 HE SUBMITTED THAT NEITHER THE CIT(A) HAS RECO RDED ANY REASONS JUSTIFYING THE ADMISSION OF FRESH EVIDENCES NOR HAS HE CONFRONTED THE FRESH EVIDENCES TO THE AO AS PER THE STATUTORY MANDATE. NO ATTEMPTS WAS MADE TO OBTAIN A REMAND REPORT ALSO. IT WAS FURTHER SUBMITTED THAT THE CIT(A) HAS ALSO NOT CARED TO HIMSELF I.T.A .NO.-970/DEL /2014 PAGE 3 OF 5 EXAMINE THE CORRECTNESS AND VERACITY OF THE EVIDENC ES STATED TO BE FILED BEFORE HIM AND IN THE ABSENCE OF ANY DISCUSSION THEREON AND EX AMINATION THEREON AND OBTAINING OF THE REMAND REPORT AND THE REASONS FOR ADMITTING THE SAME, IT WAS HIS SUBMISSION THAT THERE WAS A CLEAR-CUT VIOLATION OF RULE 46A OF THE INCOME TAX RULES. ACCORDINGLY, IT WAS HIS SUBMISSION THAT THE ADDITION MADE BY THE AO DESERVES TO BE SUSTAINED AS THE DELETION HAS BEEN M ADE CONTRARY TO RULES AND FACTS AND THE FINDING CANNOT BE UPHELD. 4. WE HAVE HEARD THE SUBMISSIONS AND PERUSED THE MA TERIAL AVAILABLE ON RECORD. ON A CONSIDERATION OF THE SAME, WE FIND OU RSELVES IN AGREEMENT WITH THE SUBMISSIONS OF THE LD. SR. DR IN AS MUCH AS CLEAR-C UT VIOLATION OF RULE 46A IS EVIDENT ON RECORD ITSELF. RULE 46A READS AS UNDER: - 46A. (1) THE APPELLANT SHALL NOT BE ENTITLED TO PRODUC E BEFORE THE [DEPUTY COMMISSIONER (APPEALS)] [OR, AS THE CASE MAY BE, T HE COMMISSIONER (APPEALS)], ANY EVIDENCE, WHETHER ORAL OR DOCUMENTA RY, OTHER THAN THE EVIDENCE PRODUCED BY HIM DURING THE COURSE OF PROCE EDINGS BEFORE THE [ASSESSING OFFICER], EXCEPT IN THE FOLLOWING CIRCUM STANCES, NAMELY : (A) WHERE THE [ASSESSING OFFICER] HAS REFUSED TO ADMIT EVIDENCE W HICH OUGHT TO HAVE BEEN ADMITTED ; OR (B) WHERE THE APPELLANT WAS PREVENTED BY SUFFICIENT CAU SE FROM PRODUCING THE EVIDENCE WHICH HE WAS CALLED UPON TO PRODUCE BY THE [ASSESSING OFFICER] ; OR (C) WHERE THE APPELLANT WAS PREVENTED BY SUFFICIENT CAU SE FROM PRODUCIN G BEFORE THE [ASSESSING OFFICER] ANY EVIDENCE WHICH IS RELEVANT TO ANY GROUND OF APPEAL ; OR (D) WHERE THE [ASSESSING OFFICER] HAS MADE THE ORDER APPEALED AGA INST WITHOUT GIVING SUFFICIENT OPPORTUNITY TO THE APPELL ANT TO ADDUCE EVIDENCE RELEVANT TO ANY GROUND OF APPEAL. (2) NO EVIDENCE SHALL BE ADMITTED UNDER SUB-RULE (1 ) UNLESS THE [DEPUTY COMMISSIONER (APPEALS)] [OR, AS THE CASE MAY BE, T HE COMMISSIONER (APPEALS)] RECORDS IN WRITING THE REASONS FOR ITS A DMISSION. (3) THE [DEPUTY COMMISSIONER (APPEALS)] [OR, AS T HE CASE MAY BE, THE COMMISSIONER (APPEALS)] SHALL NOT TAKE INTO ACCOUNT ANY EVIDENCE PRODUCED UNDER SUB-RULE (1) UNLESS THE [ASSESSING OFFICER] HAS BEEN ALLOWED A REASONABLE OPPORTUNITY (A) TO EXAMINE THE EVIDENCE OR DOCUMENT OR TO CROSS- EXAMINE THE WITNESS PRODUCED BY THE APPELLANT, OR I.T.A .NO.-970/DEL /2014 PAGE 4 OF 5 (B) TO PRODUCE ANY EVIDENCE OR DOCUMENT OR ANY WITNESS IN REBUTTAL OF THE ADDITIONAL EVIDENCE PRODUCED BY THE APPELLANT. (4) NOTHING CONTAINED IN THIS RULE SHALL AFFECT THE POWER OF THE [DEPUTY COMMISSIONER (APPEALS)] [OR, AS THE CASE MAY BE, T HE COMMISSIONER (APPEALS)] TO DIRECT THE PRODUCTION OF ANY DOCUMENT , OR THE EXAMINATION OF ANY WITNESS, TO ENABLE HIM TO DISPOSE OF THE APPEAL , OR FOR ANY OTHER SUBSTANTIAL CAUSE INCLUDING THE ENHANCEMENT OF THE ASSESSMENT OR PENALTY (WHETHER ON HIS OWN MOTION OR ON THE REQUES T OF THE [ASSESSING OFFICER]) UNDER CLAUSE (A) OF SUB-SECTION (1) OF SE CTION 251 OR THE IMPOSITION OF PENALTY UNDER SECTION 271.] 5. IN THE FACTS OF THE PRESENT CASE, THE CIT(A) AFT ER SETTING OUT THE FACTS IN PARA 4.4.1 THAT THE AO IN THE ABSENCE OF ANY DETAILS HEL D THAT THE GENUINENESS OF THE PURCHASES FROM M/S PRIDE TECHNOLOGY COMPANY WHERE N EITHER ADDRESS OR DETAILS OF THE SAID SUPPLIER WERE PROVIDED MADE THE ADDITION H OLDING THE PURCHASES TO THAT EXTENT AS NOT VERIFIABLE. HOWEVER, AFTER CONSIDERI NG THE SUBMISSIONS OF THE ASSESSEE HE ACCEPTED THE ARGUMENTS THAT THE PURCHA SES MADE FROM THE SAID PARTY WERE IN FACTS IMPORTS ON WHICH CUSTOM DUTY HAS BEEN PAID. RELYING ON COPIES OF BILLS OF ENTRY, COMMERCIAL INVOICE FROM M/S PRIDE T ECHNOLOGY COMPANY, TAIWAN, AND OTHER DOCUMENTS NOT CONFRONTED TO THE AO HELD T HAT THE PURCHASES FROM THE SAID PARTY WERE GENUINE. WE FIND THAT IN THE FACTS OF THE PRESENT CASE THAT THE LD. CIT(A) HAS NOT CARED TO ADDRESS UNDER WHICH CLAUSE OF SUB-RULE (1) OF RULE 46A THE EVIDENCE WAS BEING ADMITTED. THE RULE CONTEMPLATES VARIOUS SITUATIONS UNDER WHICH THE ASSESSEE CAN BE PERMITTED TO LEAD FRESH E VIDENCES IN APPEAL BEFORE THE CIT(A) NAMELY (A); (B); (C) OR (D) OF SUB RULE (1) OF RULE 46A. HAVING SATISFIED THE PRIMARY CONDITION THE LAW REQUIRES THE CIT(A) IN TE RM OF SUB-RULE (2) OF RULE 46A TO PASS AN ORDER IN WRITING BRINGING ON RECORD THE REA SONS FOR ADMISSION OF THE FRESH EVIDENCES. THEREAFTER A DUTY IS CASTE UPON THE FIR ST APPELLATE AUTHORITY IN TERMS OF SUB-RULE (3) OF RULE 46A TO CONFRONT THE SAME TO TH E AO FOR REBUTTAL FOR WHICH A I.T.A .NO.-970/DEL /2014 PAGE 5 OF 5 REASONABLE OPPORTUNITY IS TO BE PROVIDED. THE SAID EXERCISE IS FOUND TO BE MISSING IN THE FACTS OF THE PRESENT CASE. IN THE AFORE-SAI D PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND OURSELVES IN AGREEMENT THAT TH ERE IS CLEAR-CUT VIOLATION OF RULE 46A. HOWEVER, WE DO NOT AGREE WITH THE REVENUES S UBMISSION THAT THE ADDITION IN THE CIRCUMSTANCES SHOULD BE SUSTAINED AS THE PRO CEDURAL SHORTCOMING CAN BE RECTIFIED BY RESTORING THE ISSUE BACK TO THE FILE O F THE CIT(A) BY SETTING ASIDE THE ORDER AND DIRECTING THE SAID AUTHORITY TO FIRST CO NFRONT THE FRESH EVIDENCES TAKEN ON RECORD TO THE AO AND THEREAFTER PASS A SPEAKING ORDER IN ACCORDANCE WITH LAW AFTER GIVING THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD. NEEDLESS TO SAY THAT MEETING THE SPECIFIC REQUIREMENTS SET OUT IN RULE 46A. ACCORDINGLY THE GROUNDS OF THE REVENUE ARE ALLOWED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 10 TH OF JUNE, 2016. SD/- SD/- (L.P.SAHU) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSIS TANT REGISTRAR ITAT NEW DELHI