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Income Tax Appellate Tribunal, DELHI BENCH “C”: NEW DELHI
Before: SHRI PRASHANT MAHARISHI & SHRI K.N.CHARY
O R D E R PER PRASHANT MAHARISHI, A. M. 1. This is an appeal filed by the ld ACIT against the order of the ld CIT(A)-4, New Delhi dated 27.06.2016 for the Assessment Year 2012-13. 2. The revenue has raised the following grounds of appeal:- “1. On the facts and circumstances of the case and in law, the Ld. CIT (A) has erred in deleting the addition made on account of share application money amounting to Rs. 2,00,00,000/-.
2. On the facts and circumstances of the case and in law, the Ld. CIT (A) has erred in deleting the addition made on account of trade payables amounting to Rs. 11,16,16,482/-.
3. On the facts and circumstances of the case and in law, the Ld. CIT (A) has erred in deleting the disallowance of expenses amounting to Rs. 50,53,407/-.
4. On the facts and circumstances of the case and in law, the Ld. CIT (A) has erred in admitting additional evidence during the appellate proceedings.”
3. The facts shows that the assessee is a company who filed return of income on 27.09.2012 showing income of Rs. 4775080/-. The assessment u/s 143(3) read with section 144 of the Act was made of Rs. 141445329/-. The ld AO made an addition of Rs. 2 crores on account share application money as the assessee did not give any information. The AO further made an addition of Rs. 111616842/- on account of increase in trade payable u/s 68 of the Act. The assessee did not furnish any information about the trade payables. The assessee incurred certain expenses amounting to Rs. 10106813/- for which the details were not supplied. The ld AO disallowed 50% of such expenditure.
4. On appeal before the ld CIT(A), he deleted the addition of Rs. 2 crores. Before him the assessee submitted the ledger account, income return, copy of the bank statement of lender. The above sum was received from the director of the Company Mr. Inderpal Singh Wadhwan. The ld CIT(A) held that as the assessee has shown the identity, creditworthiness and genuineness of the transaction the addition was deleted. With respect to the increase in creditors, assessee submitted confirmation and PAN of the creditors. The ld CIT(A) deleted the addition as book results i.e. gross profit, where these creditors are arising, was accepted. With respect to the expenditure the complete details were filed so he deleted the additions. Therefore, all the additions were deleted by the ld CIT(A), hence, the ld AO is in appeal.
Despite notice to the assessee non appeared, hence, the appeal is decided on the merits of the case, in absence of assessee, as per available information.
The ld DR vehemently supported the order of the ld AO on all these three counts. On ground No. 4 she submitted that AO did not get opportunity to examine the additional evidences.
We have carefully considered the contention of the ld DR and perused the orders of the lower authorities. At the outset it is to be noted that the ld CIT(A) has admitted the additional evidence for the reason that he has asked for the remand report from the ld AO. The ld AO did not reply till 08.06.2016 but the ld AO referred the matter to another AO. In para NO. 5 the ld CIT(A) noted that 1 ½ months is a sufficient time for the AO to respond to additional evidence. The ld AO did not submit the remand report and therefore, he accepted the additional evidence. In absence of any response from the ld AO, the ld CIT(A) admitted the additional evidence, no infirmity can be found in his order. Therefore, ground no. 4 of the appeal is dismissed.
With respect to ground No.1, the ld CIT(A) noted that sum of Rs. 2 croes have been received from the director of the company Shri Inderpal Singh Wadhwan. The money is paid from M/s. DNK creation who was having fund to subscribe to the share capital. The assessee submitted the ledger account, income tax returns and the copy of the bank statement of the director evidencing the payment for subscription to shares. Therefore, as per para No. 8 of the appellate order the ld CIT(A) deleted the addition as assessee has discharged its onus showing identity, creditworthiness and genuineness of the above share application money. The ld CIT(A) also noted that Inderpal Singh Wadhawan has filed his return of income and bank statement with two different banks. Money was received through RTGS. Assessee has proved the identity of the share holder showing, permanent account no and ward, where he is assessed. He is also the director of the company, filed a high return of income. In view of above findings, there is no infirmity in the order of the ld CIT(A) in deleting the above addition. Therefore, we confirmed the finding of the ld CIT(A) in deleting the above addition and dismissed ground No. 1 of the appeal.
Ground No. 2 is with respect deletion of the addition on account of trade payable of Rs. 111616842/-. Vide para No. 9 the ld CIT(A), he noticed that four creditors have advanced in respect of export of goods and filed their confirmation. Copy of foreign inward remittance, invoices and bills were also shown. Therefore, the addition to the extent of those four creditors was deleted. For other creditors, he noted that these are business creditors with whom regular transactions of purchase and sales are made. He relied upon the decision of the Hon’ble Delhi High Court in 2 Taxmann.com 134 for the proposition that sundry creditors cannot be added u/s 68 of the Act after the purchase are accepted. There is no indication that creditors are bogus and gross profit ratio of the assessee was not doubted. In view of this we do not find any infirmity in the order of the ld CIT(A) in deleting the addition of Rs. 1116165842/- on account of sundry creditors. Accordingly, ground No. 2 of the appeal is dismissed. 10. As per ground No. 3, with respect to the disallowance of the 50% of the expenditure of salary, bank interest and other expenditure, the ld CIT(A) noted in para No. 10 that assessee has submitted complete details of these