ITO, NEW DELHI vs. SHRI SANJEEV DANIA, DELHI

Date of Hearing : 15-06-2016 Date of Order : 15-06-2016

O R D E R PER H.S. SIDHU, JM

This appeal is filed by the Revenue is directed against the Order dated 30.4.2014 of the Ld. CIT(A)-XXIV, New Delhi relevant to assessment year 2010-11 on the following grounds:-

1. Deleting the addition of Rs. 34,26,278/- as the assessee has failed to produce sundry creditors / parties before the AO.

2. Deleting the addition of Rs. 75,000/- by stating that the addition was made merely on estimate

basis, whereas the facts was that no books of accounts alongwith bills/vouchers were produced by the assessee before the AO. 3. The assessment may be set aside and restore back to the AO for verification of the above facts. 4. The appellant craves the right to add, alter or amend any ground of appeal.

2. The brief facts of the case are that the assessee filed return declaring an income of Rs. 8,67,232/- on 14.10.2010. The statutory notice u/s. 143(2) of the Income Tax Act, 1961 (hereafter referred as the Act) was issued on 27.8.2011 and duly served upon the assessee, thereafter, other notices including notice u/s. 142(1) were issued. In response to the notice Assessee’s Authorised Representative attended the proceedings and filed the documents which have been examined.

Thereafter, the AO completed the assessment u/s. 143 of the I.T. Act, 1961 at an income of Rs. 44,83,400/- and made various additions vide order dated 11.3.2013.

3. Aggrieved by the aforesaid addition, assessee appealed before the Ld. CIT(A) who vide impugned order dated 30.4.2014 has allowed the appeal of the assessee.

4. Against the order of the ld. CIT(A), Revenue is in appeal before the Tribunal.

5. During the hearing, Ld. DR relied upon the order passed by the AO and reiterated the contentions raised in the grounds of appeal by the Department and stated that Assessing Officer had issued notices u/s 133(6) of the Act to the sundry creditors for establishing their identity and creditworthiness which were received back unserved. He further stated that AO also directed the assessee to produce all the creditors, but the assessee failed to produce them before the AO to verify the genuineness of the transactions in dispute. In the absence of the sufficient evidence and non-production of the creditors the AO has rightly had made the addition in dispute which has wrongly been deleted by the Ld. CIT(A). He further requested that the impugned order may be cancelled and the order of the AO may be restored or in the alternative matter may be set aside to the file of the AO with the directions to the Assessee to produce the creditors for necessary verification of the creditors.

6. On the contrary, Ld. Counsel of the Assessee relied upon the order of the Ld. CIT(A) and stated that AO issued notice u/s 133(6) to M/s Star Power Coating and M/s Hari Enterprises which were returned back by the postal authorities due to inadequate address and the notice u/s 133(6) of the Income Tax Act, issued to M/s Jai Mata Di Udyog was returned by the postal authorities with the remarks "to consult Bahadurgarh" meaning thereby the creditors are in existence. He further stated that assessee has furnished all other evidences for substantiating its claim before the AO as well as before the Ld. CIT(A) like copy of confirmation alongwith the copies of PAN card of the creditors duly confirmed by them alongwith the other documentary evidence for substantiating the claim of the assessee which the Ld. CIT(A) has mentioned in the impugned order. Thereforee, he requested that ld. CIT(A) has passed a well reasoned order on the basis of the documentary evidence filed by the assessee before the Assessee as well as before the ld. CIT(A) and the impugned order may be upheld.

7. I have heard both the parties and perused the records, especially the order of the Ld. First Appellate Authority. After perusing the impugned order of the Ld. CIT(A), I find that Ld. CIT(A) has elaborately discussed the issues in dispute vide his impugned order dated 30.4.2014 vide para no. 5 to 6 at pages 4 to 6 and held as under:-

“5. I have carefully considered the submission made by the AR of the appellant and assessment order. I have also verified the assessment records of the appellant. It is noted that the Assessing Officer had issued notices u/s 133(6) through speed post to the following creditors on 14.02.2013 requesting the creditors to furnish the copy of account of the appellant for the relevant assessment year, the PAN No and the balance outstanding in their books of accounts.

Sl.No. Name & address of sundry Amount creditors. outstanding as on 31.3.2010 1 Star Power Coating, 1/17, Main Rs. 1,84,947/- Najafgarh Road, New Delhi 2 Hari Enterprises, Khera Road, Rs. 3,64,445/-

Vill. Siraspur, Delhi – 42 3 Jai Mata Di Udyog, 34 KM Rs. 28,76,886/- Stone, Rohtak Road, Bahadurgarh Total Rs. 34,26,278/-

The notice u/s 133(6) to M/s Star Power Coating and M/s Hari Enterprises were returned back by the postal authorities due to inadequate address. The notice u/s 133(6) of the Income Tax Act, issued to M/s Jai Mata Di Udyog was returned by the postal authorities with the remarks " to consult Bahadurgarh". Thereafter, the Assessing Officer requested the appellant to produce the aforesaid creditors along with the requisite details vide letter dated 26.02.2013. In response the appellant furnished the copy of confirmation alongwith the copies of PAN card of the creditors duly confirmed by them vide letter dated 4.3.2013. Subsequently, the copy of confirmation of accounts of the creditors were also received by the Assessing Officer from the creditors namely Star Power Coating on 09.03.23013, Hari Enterprises on 20.3.2013 and Jai Mada Di Udyog on 20.3.2013 wherein the creditors provided the copy of accounts alongwith the their proof of identity and PAN Nos. The appellant also furnished copies of his bank statements to prove that the payments were made to these creditors during the relevant assessment year through cheques against the purchases made from them. However, it seems that the Assessing Officer did not proceed further and without verifying the genuineness of these creditors and their accounts with the appellant, hastily completed the assessment uls 143(3) vide his order dated 11.3.2013 which was despatched for service through speed post on 25.03.2013. This is in clear violation of the principle of natural justice. It is further noted that these creditors are old creditors and during the relevant assessment year a few transactions of purchases were made by the appellant from these parties. In the case of Hari Enterprises, the outstanding balance of credit amount as on 01.04.2009 was Rs. 6,24,937/- and during the relevant assessment year, the appellant has made payments to MIs Hari Enterprise through his bank account at Punjab National Bank (Account No 4081002101003073). The PAN No of MIs Hari Enterprises was also provided and as per the PAN No ASTPR5345N, Shri Pradeep Rana, was the proprietor of M/s Hari Enterprises. Even the confirmation of accounts from M/s Hari Enterprises, was furnished independently through post to the Assessing Officer 0(20.03.2013. . he Assessing Officer has not given any finding about the in-genuineness of the transactions with MIs Hari Enterprises. Similarly, in the case of M/s Mata Di Udyog, Smt. Neena Verma was found to be the proprietor of , the concern and her PAN No was AEAPV3268H.ln the books of account of the appellant the opening credit balance as on 01.04.2009 in the name of Jai Mata Di Udyog has been shown at Rs. 35,58,603.54. The payments against purchases made from Jai Mat Di Udyog were made by the appellant through his bank account at Punjab National bank. The purchases made from Jai Mata Di Udyog and the payments made against these purchases were not disputed by the Assessing Officer during the course of assessment. In the case of Star Power Coating, the confirmation of account was received by the Assessing Officer twice i.e. on 04.03.2013 and on 09.03.2013. Again the purchases and payments were made against the purchases has not been disputed by the Assessing Officer. On these facts and circumstances of the case, I am of the considered opinion that the Assessing Officer has erred in treating the outstanding credit amount against the above mentioned three creditors as unexplained cash credit u/s. 68 of the Income Tax Act, and therefore, addition made on this account of Rs. 34,26,278/- is directed to be deleted.

It is further noted that during the relevant assessment year the appellant has paid Insurance Premium to LlC on the following dates:

1. 30.04.2009 Policy No 115164188 Rs. 25,000

Besides the appellant ha also paid premium against medi claim policy to New India Insurance Co Ltd. as follows:

From the above it is evident that the appellant has rightly claimed the deduction uls 80-C and 80-D of the Income Tax Act, and therefore, the Assessing Officer is directed to allow the aforesaid claim of deduction of Rs. 1,05,550/- to the appellant.

It is further noted that the Assessing Officer has disallowed a lump sum amount of Rs. 75,000/- on account of various expenses debited in the P & L account such as business promotion, commission on sales, conveyance expenses, freight and forwarding expenses, printing and stationary expenses etc. merely on estimate basis and without pointing out a single voucher of expense which was not accounted for by the appellant. Therefore, I am unable to sustain the estimated addition of Rs. 75,000/- made by the Assessing Officer and accordingly, the Assessing Officer is directed to delete the addition of Rs. 75,000/-.

7.1 After perusing the finding of the Ld. CIT(A), I am of the view that Ld. CIT(A) has passed a well reasoned and speaking order, because AO issued notice u/s 133(6) to M/s Star Power Coating and M/s Hari Enterprises which were returned back by the postal authorities due to inadequate address and the notice u/s 133(6) of the Income Tax Act, issued to M/s Jai Mata Di Udyog was returned by the postal authorities with the remarks "to consult Bahadurgarh" meaning thereby the creditors are in existence. I also find that assessee has furnished all other evidences for substantiating its claim before the AO as well as before the Ld. CIT(A) like copy of confirmation alongwith the copies of PAN card of the creditors duly confirmed by them alongwith the other documentary evidence for substantiating the claim of the assessee which the Ld. CIT(A) has mentioned in the impugned order. Therefore, in my considered opinion, CIT(A) has passed a well reasoned order on the basis of the documentary evidences filed by the assessee and rightly deleted the additions in dispute, which does not require interference on my part, hence, I uphold the order of the Ld. CIT(A) and dismiss the Appeal filed by the Revenue.