NAINA BALSAVER AHMED,NEW DELHI vs. ITO, WARD-31(4), NEW DELHI

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : SMC : NEW DELHI

BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA No.4755/Del/2018 Assessment Year: 2013-14 Naina Balsaver Ahmed, Vs ITO, N-69, N Block, Sainik Farms, Ward-31(4), New Delhi. New Delhi. PAN: ACHPB3033D (Appellant) (Respondent) Assessee by : Dr. M.K. Bhatt, CA Shri S.L. Anuragi, Sr. DR Date of Hearing : 08.08.2019 Date of Pronouncement : 13.09.2019 ORDER This appeal filed by the assessee is directed against the order dated 26th April, 2018 of the CIT(A)-11, New Delhi relating to assessment year 2013-14.

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therefore, issued notice u/s 133(6) to the following parties as per the addresses

provided by the assessee:-

S.No. Name of the Creditors & Addresses Amount Outstanding 1. M/s Ashish Gems Rs.3,41,199/- 2445/10, Beadon Pura, Karol Bagh, Delhi. 2. M/s Harish Kumar & Co. Rs.8,57,977/- 1111/12, Chhatta Madan Gopal, Maliwara Chandni Chowk, Delhi. 3. Om Shivam & Co. Rs.27,000/- D-63, shree Ganesh Colony, Vijay Kunj Garden, Mahesh Nagar, Jaipur.

above were received back with the remarks either ‘Left’ or ‘No such firm.’ Again

notices in these cases were issued at the new addresses provided by the assessee

which were also received back with the same remarks. So far as Ronak Jewellers

at Sl. No.4 is concerned, necessary information/confirmation was received and

found to be correct. So far as Sl.No.2 in the case of M/s Harish Kumar & Co. is concerned, the Assessing Officer noted that the said party, vide its reply dated 14th

December, 2015 stated that there is nothing due against the assessee and the

account balance as on 31.03.2013 is nil. The Assessing Officer, therefore,

confronted the same to the assessee and asked him to explain the discrepancies. The assessee vide letter dated 19th February, 2016 did not file any explanation to

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the query, but, changed her stand that her case falls u/s 44AD of the IT Act and,

therefore, the assessee is not required to maintain any books of account where the

net profit is declared equal to 8% of the total turnover or gross receipts in the

previous year on account of such business. However, the Assessing Officer did not

accept the above explanation of the assessee. He noted that the assessee has not

filed her return of income in accordance with section 44AD. The assessee has filed

her return of income in ITR-4 and filled in all relevant columns of return according

to the figures shown in her balance sheet filed during the course of assessment

proceedings. Rejecting the various explanations given by the assessee, the

Assessing Officer made addition of Rs.13,97,651/- to the total income. The

Assessing Officer also made addition of Rs.16,341/- u/s 14A to the total income

and, accordingly, determined the total income at Rs.25,05,660/-. In appeal, the

ld.CIT(A) confirmed the additions.

the Tribunal by raising the following grounds:-

“1. That the order of the learned Commissioner of Income Tax (Appeals), is arbitrary and bad in law. 2. That the Ld. Commissioner of Income Tax (Appeals) erred on facts and in laws by confirming the addition made by the Ld. Income Tax Officer by treating creditors as unexplained credit balance under section 68 of the Income Tax Act, despite the fact that Assessee is covered under section 44AD of Income Tax Act on presumptive basis, and not supposed to maintain books of accounts and prove the authenticity of the same. 3. That the assessee craves leave to add, alter, substitute or change any grounds of appeal.”

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4.1. The assessee has also filed the following additional ground:-

"The CIT (Appeals) has erred in law and on facts, while confirming the addition of Rs.13,97,651/- outstanding as on the balance sheet date on account of sundry creditors who had failed to comply with notices issued by the AO under section 133(6) of the Income Tax Act 1961, ignoring the vital fact that respective purchases from the parties and consequent sale of the goods has been accepted along with the closing stock. "

Referring to the decision of the Hon'ble Supreme Court in the case of NTPC 5.

Ltd., reported in 229 ITR 383, the ld. counsel for the assessee submitted that since

all material facts are already available on record and no new facts are required to

be investigated and the ground being purely a legal one, the additional ground

raised by the assessee should be admitted.

raised by the assessee is admitted.

perused the orders of the Assessing Officer and the CIT(A). I have also considered

the paper book filed on behalf of the assessee. I find the Assessing Officer made

addition of Rs.13,97,651/- to the total income of the assessee u/s 68 of the IT Act

on the ground that the various sundry creditors shown by the assessee either did

not respond to the notice issued u/s 133(6) or have stated that nothing is due from

the assessee. It is the case of the Assessing Officer that the sundry creditors

remained unexplained and their identity, credit worthiness and genuineness

remained unverified. It is the submission of the ld. counsel for the assessee that the

purchases from the respective parties were accepted and the sale of the assessee 4

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being the purchase from the above parties have not been doubted. Therefore,

merely because the creditors did not respond to the notice issued u/s 133(6) or have

stated to have no outstanding balance cannot make the sundry creditors

unverifiable. In his alternate argument, the ld. counsel for the assessee submitted

that given an opportunity, the assessee is in a position to substantiate his case

before the Assessing Officer to his satisfaction. He accordingly submitted that he

has no objection if the matter is restored to the file of the Assessing Officer for

fresh adjudication of the issue.

Officer and the CIT(A). He submitted that the assessee should not be given any

fresh innings since he could not substantiate sundry creditors either before the

Assessing Officer or before the CIT(A). Further, the assessee has changed her

stand before the Assessing Officer on the ground that she is to be covered u/s

44AD of the IT Act. He accordingly submitted that the ground raised by the

assessee should be dismissed.

deem it proper to restore the issue to the file of the Assessing Officer with a

direction to grant one more opportunity to the assessee to substantiate her case and

decide the issue as per fact and law. I hold and direct accordingly. The grounds

raised by the assessee is accordingly allowed for statistical purposes.

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