Ankit Kapoor, New Delhi V. ITO, Ward-63(4), New Delhi

MA 183/DEL/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 2654 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 7 month(s) 21 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 27-10-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 08-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M BARNWAL
• Assessee Lawyers: P ROY CHOUDHARY
• Keywords: Principle of natural justice
• Section: 133(6); 13; 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH FRIDAY, NEW DELHI BEFORE SH. KUL BHARAT, JUDICIAL MEMBER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER (THROUGH VIDEO CONFERENCING) MA NO. 183/DEL/2019 (IN ITA NO. 7692/DEL/2018 : ASSTT. YEAR: 2014-15) SH. ANKIT KAPOOR, B-102, R.G. CITY CENTRE, PLOT NO. 4, MOTIA KHAN, PAHARGANJ, NEW DELHI-110055 VS INCOME TAX OFFICER, WARD-63(4), NEW DELHI-110002 (APPELLANT T (RESPONDENT) PAN NO. A UZPK1007E ASSESSEE BY : SH. P. ROY CHOUDHARY, CA REVENUE BY : SH. M. BARNWAL, SR. DR DATE OF HEAR ING: 24 . 09 .20 21 DATE OF PRONOUNCEMENT: 27 .10 .20 2 1 ORDER PER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER: THIS MISCELLANEOUS APPLICATION IS ARISING OUT IN IT A NO. 7692/DEL/2018 VIDE ORDER DATED 06.02.2019. 2. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADI NG AND EXPORT OF PROCESSED AND NON-PROCESSED EDIBLE PRODUC TS DURING THE YEAR. THE SALE OFF THE ASSESSEE WAS INCREASED F ROM RS.8.23 CRORES TO RS.58.81 CRORES. THE ASSESSING OFFICER HE LD THAT THERE WAS MORE THAN 700% GROWTH WHEREAS THE GP WENT DOWN BY 2.3%. BEFORE THE AO, THE ASSESSEE EXPLAINED THAT TH E REASON WAS DUE TO COMPUTATION IN THE MARKET. MA NO. 183/DEL/2019 ANKIT KAPOOR 2 3. ON GOING THROUGH THE FACTS, THE ASSESSING OFFICE R HELD AS UNDER: I AM NOT SATISFIED WITH THE SUBMISSION OF THE ASSE SSEE THAT DUE TO COMPETITION IN THE MARKET WHEN THE SALES INCREAS E MORE THAN 700%. IN THE ABSENCE OF PROPER SUBMISSION AND DETAI LS, I DISALLOW A SUM OF RS.2,00,000/- TO COVER THE LEAKAG E IN THE TRADING RESULTS AND IS ADDED TO THE INCOME OF THE A SSESSEE. 4. THE ASSESSING OFFICER FURTHER MADE ADDITION OF R S.5.14 CRORES ON ACCOUNT OF SUNDRY CREDITORS WHICH IS TH E TOTAL OUTSTANDING AMOUNT UNDER THE HEAD SUNDRY CREDITORS OWING TO NON-FURNISHING OF CONFIRMATIONS IN RESPONSE TO THE NOTICES ISSUED U/S 133(6) OF THE INCOME TAX ACT, 1961. WHIL E THE NOTICES HAVE BEEN ISSUED TO THE SUNDRY CREDITORS OF VALUE OF RS.2.58 CRORES OUT OF WHICH REPLIES HAVE BEEN RECEI VED FROM THE CREDITORS TO THE TUNE OF RS.1.30 CRORES, THE ADDITI ON SHOULD BE RIGHTLY OF RS.1.28 CRORES ONLY WHICH STANDS CORRECT ED BY THE LD. CIT(A). THIS IS AN APPARENT ERROR IN THE ASSESSMENT ORDER. FROM THE RECORD, WE FIND THAT THE FACT OF NON-RECEIPT OF THE RESPONSE FROM THE SUNDRY CREDITORS HAS NOT BEEN INTIMATED TO THE ASSESSEE NEITHER ANY SHOW CAUSE NOTICE HAS BEEN ISS UED BEFORE MAKING THE ADDITION WHICH IS A CLEAR INFRACTION OF THE PRINCIPLES OF NATURAL JUSTICE. 5. FURTHER, WE ALSO FIND THAT THE ASSESSING OFFICER MADE DISALLOWANCE OF RS.2 LACS OWING TO A LOW GROSS PROF IT AND ALSO RS.5 LACS ON ACCOUNT OF UNVERIFIABLE PURCHASES. AT THIS JUNCTURE, WE WOULD LIKE TO MENTION THAT ONCE AN AMOUNT HAS BE EN ADDED ON ACCOUNT OF TRADING RESULTS AND ON ACCOUNT OF GRO SS PROFIT & PURCHASES, THUS, DETERMINING THE TOTAL PROFIT FOR T HE YEAR, NO MA NO. 183/DEL/2019 ANKIT KAPOOR 3 FURTHER ADDITION ON ACCOUNT OF SUNDRY CREDITORS W HICH CONSTITUTES A PART OF PURCHASES CANNOT BE MADE IN P RINCIPLE. 6. DURING THE PROCEEDINGS, THE LD. CIT(A) CORRECTED THE ADDITION MADE ON ACCOUNT OF SUNDRY CREDITORS AND CONFIRMED THE ADDITION OF RS.1.27 CRORES. 7. THE MATTER CAME BEFORE THE TRIBUNAL, THE TRIBUNA L VIDE ORDER DATED 06.02.2019 CONFIRMED THE ORDER OF THE L D. CIT(A) AND HELD THAT THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE MATTER BE REMANDED BACK TO THE LD. CIT(A) FOR ISSUI NG FRESH NOTICE U/S 133(6) OF THE INCOME TAX ACT AND SUMMONS U/S 13 1 OFF THE I.T. ACT TO ALL THE PARTIES TO VERIFY THE TRANSACTIONS. 8. THE TRIBUNAL AFTER OBSERVING THAT THE ASSESSEE F AILED TO PRODUCE ANY DOCUMENTARY EVIDENCES AND CONFIRMATIONS FROM THE CREDITORS AFFIRMED THE ORDER OF THE LD. CIT(A). (PA RA NO. 10) 9. AGGRIEVED WITH THE ORDER OF THE TRIBUNAL, THE AS SESSEE FILED MA SEEKING RECTIFICATION OF THE ORDER U/S 254(2). T HE MAIN CONTENTION OF THE LD. AR WAS THAT THE TRIBUNAL IGNO RED HIS ARGUMENTS WHICH ARE AS UNDER: IT WAS NEVER ARGUED TO REMAND THE MATTER BACK TO TH E FILE OF THE LD. CIT(A) FOR ISSUING FRESH NOTICE. NO DUE COGNIZANCE WAS GIVEN TO THE ARGUMENTS TAKEN UP DURI NG THE HEARING THAT THE AO DID NOT ISSUE ANY SHOW CAUSE NOTICE AND DID NOT CONFIRM WITH THE SAME, THEREFORE, NO COGNIZANCE OF THESE NOTICE COULD BE TAKEN AND THEREFORE, THE ADDITIONS MADE BECOMES UNSUSTAINABLE AND SHOULD BE DELETED. THE FACT THAT NON-COMPLIANCE OF SECTION 133(6)/131 WAS NEVER CONFRONTED TO THE ASSESSEE AND NO OPPORTUNITY WAS MA NO. 183/DEL/2019 ANKIT KAPOOR 4 GIVEN TO THE ASSESSEE, WHICH CAN BE DECIPHERED FROM PARA 2 PAGE 8 OF THE ASSESSMENT ORDER. NON-CONSIDERATION AND NON-ADJUDICATION OF THIS ARGU MENT IS AN ERROR APPARENT FROM RECORD. 10. FURTHER, REFERRING TO THE PAGE NO. 11 OF THE OR DER OF THE ITAT, THE ASSESSEE HAS TAKEN UP ANOTHER GROUND OF R ECTIFICATION WHICH IS AS UNDER: ONE OF THE REASONS FOR CONFIRMING THE ADDITION BY T HE TRIBUNAL IS THAT NO CONFIRMATIONS WERE FILED BEFORE THE AO AND EVEN BEFORE THE ITAT. (PAGE 11) THE AO NEVER ASKED THE ASSESSEE TO FILE CONFIRMATIO NS. IT WAS CONTENDED BEFORE THE ITAT THAT THE ONLY REAS ON FOR MAKING THE ADDITION BY THE AO WAS NON-COMPLIANCE OF SECTION 133(6)/131. THE AO NEVER MENTIONED THE CONFIRMATION OR LACK OF IT AS THE REASON FOR ADDITION, FOR THAT MATTER, THE CONFI RMATIONS WERE NEVER ASKED AT ANY STAGE BY THE AO. SIMILARLY, THE LD. CIT(A) HAS ALSO NEVER ASKED FOR CONFIRMATIONS AND H ENCE THERE WAS NO OCCASION TO FILE THE SAME BEFORE THE T RIBUNAL. PAGE NO. 8 PARA NO. 2 CLEARLY MENTIONS THAT AS OTHER CREDITORS NOT ATTENDED ON THE ABOVE DATES AND THIS IS A TIME BARRING ASSESSMENT, I HAVE NO OTHER ALTERNATIVE BUT TO COMPLETE THE ASSESSMENT BY 31.12.2016 CLEARLY PROVES THAT NO OPPORTUNITY WAS GIVEN TO THE ASSESSEE. 11. VIDE ORDER DATED 27.02.2020, THE MA FILED BY TH E ASSESSEE HAS BEEN DISMISSED EX-PARTE HOLDING THAT SINCE THE COUNSEL OF THE ASSESSEE FAILED TO FILE AN AFFIDAVIT IN SUPPORT OF THE MA WHICH CLEARLY REVEAL THAT FALSE AVERMENTS HAVE BEEN MADE IN THE MISCELLANEOUS APPLICATION. MA NO. 183/DEL/2019 ANKIT KAPOOR 5 12. AGGRIEVED WITH THE DISMISSAL OF THE MA BY THE T RIBUNAL, THE ASSESSEE FILED WRIT BEFORE THE HONBLE HIGH COURT O F DELHI. THE HONBLE COURT VIDE ORDER DATED 23.07.2021 DIRECTED THE TRIBUNAL TO HEAR THE MA AFRESH. 13. DURING THE HEARING BEFORE US, THE LD. COUNSEL H AS REITERATED THE ARGUMENTS TAKEN UP IN WRITING EARLIE R AND ALSO FILED AFFIDAVIT IN SUPPORT OF HIS ARGUMENTS. WE HAV E GONE THROUGH THE ENTIRE RECORD BEFORE US AND THE CONTENT IONS OF THE ASSESSEE WITH REGARD TO THE SEQUENCE OF EVENTS TOOK PLACE DURING THE PROCEEDINGS BEFORE THE REVENUE AUTHORITI ES AND BEFORE THE TRIBUNAL. BASED ON THE FACTS ON RECORD, THE AFFIDAVIT OF THE COUNSEL, CONTENTS OF THE ORDER OF THE REVENU E, ARGUMENTS TAKEN BEFORE US, WE HOLD IT TO BE A FIT C ASE TO RECALL THE ORDER DATED 06.02.2019. THE CASE IS FIXED FOR H EARING ON 23.11.2021. 14. NO SEPARATE NOTICE WOULD BE ISSUED. 15. IN THE RESULT, THE MISCELLANEOUS APPLICATION OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27/10/2021. SD/- SD/- (KUL BHARAT) (DR . B. R. R. KUMAR) JUDICIAL MEMBER ACCOU NTANT MEMBER DATED: 27/10/2021 *SUBODH KUMAR, SR. PS* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR