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Income Tax Appellate Tribunal, DELHI BENCH “D”, NEW DELHI
Before: SHRI H.S. SIDHU & SHRI O.P. KANT
Date of Hearing : 18-05-2016 Date of Order : 02-06-2016 ORDER PER H.S. SIDHU, JM Revenue has filed the appeal against the Order dated 12.9.2013 passed by the Ld. Commissioner of Income Tax (Appeals)-XXV, New Delhi pertaining to assessment year 2009-10 on the following ground:-
On the facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the penalty u/s. 271(1)(c) of the I.T. Act, 1961 levied on account of unexplained creditors, ignoring the fact that the assessee had failed to prove the genuineness of the creditors.
The facts narrated by the Revenue Authorities are not disputed by both the parties, therefore, the same are not repeated here for the sake of convenience.
Ld. DR relied upon the order of the AO and reiterated the contentions raised in the grounds of appeal.
4. At the time of hearing, Ld. Counsel of the Assessee Sh. Ashish Chadha, Advocate stated that the quantum on which the penalty has been imposed, has already been deleted by the ITAT. Ld. CIT(A) by following the order of the ITAT order dated 26.8.2013 has rightly deleted the penalty in dispute, therefore, impugned order may be upheld. He has also filed the copy of the order dated 26.8.2013 passed by the ITAT, Delhi Bench ‘H’ in (AY 2009-10) in assessee’s own case.
We have carefully considered the submissions and perused the records.
We find that in assessee’s own case in for A.Y. 2009-10 vide order dated 26.8.2013, the Tribunal had adjudicated the issue vide para no. 11 to 16 at pages 6 to 9 and deleted the addition in this regard. The Tribunal has held as under:-
11. With regard to this issue, having heard the rival contentions and having perused the relevant material placed on record, we find that undisputedly, the amounts in question are outstanding as sundry creditors for the last three years. This is evident from the ledger accounts of the creditors, as placed in the paper book at pages 44-57. As such, there is no infirmity in the stand taken by Students Book Depot, Ranchi and Unicate Publishers & Distributors, Pune, that they did not have any transaction with the assessee during the year. No credit having given in the books of the assessee during the year under consideration, the provisions of Section 68 of the Act are obviously not attracted. Then, it is only by way of surmise that the Ld. CIT (A) has observed that: “…..the above four trade creditors has not demanded any money from the assessee for a long time and it is also apparent that the above four parties would have squared off or written off the balances in the name of the assessee and, as such, there is a remission or cessation of the liability of the assessee……..
However, since undisputedly, the amounts are still outstanding, it cannot be said that they have been either written off or squared off or that any benefit has been derived by the assessee. For doing so, the provisions of Section 41 (1) of the Act are also not attracted and no addition therein is envisagable. Then, the amounts in question pertained to sundry creditors of the assessee, they being on account of purchases of the assessee. As such also, no addition is called for, since the purchases or the sales have not been disputed by the Assessing Officer. Thus, in keeping with ‘CIT vs. Pancham Das Jain’, 205 CTR (All) 444, no addition is called for.
Then, in the books of account of the assessee, no mistake or defect, whatsoever was pointed out by the Assessing Officer. Therefore, just because confirmations were not filed, according to ‘YFC Projects (P) Ltd. vs. DCIT’, 134 TTJ 167 (Del), no addition can be made. Further, to support the proposition that amounts representing purchases made on credit do not attract the provisions of Section 68 of the Act, ‘ACIT vs. Han Singer Gutkha (P) Ltd.’, 9 DTR (Luc) (Trib.) 604 has rightly been relied on. Then, as observed, since the purchases have been accepted as genuine, balances remaining outstanding at the end of the year against such purchase cannot be treated as a bogus liability and addition made on that basis cannot be sustained as held in ‘JCIT vs. Mathura Dass Ashok Kumar’, 101 TTJ (All) 810. In ‘CIT vs. Smt. P.K.
Noorjehan’, 237 ITR 570 (SC), it has been held that as per the provisions of Section 68 of the Act, it is not mandatory that in case the assessee fails to satisfy the Assessing Officer about the outstanding credits, the same are mandatorily required to be added as income of the assessee and that Section 68 of the Act gives a 4 discretion of the Assessing Officer in this regard; and that the Assessing Officer has to take into account the overall facts. In the present case, as discussed, on considering the facts of the case, the provisions of Section 68 of the Act are not attracted and considering the overall facts, no addition is called for under the Section.
Further, as considered in the order dated 30.09.2011 passed by this Bench (authored by the JM) in the case of ‘M/s Divine International’ for Assessment Year 2001-02, in the case of the assessee these creditors represent the outstanding amount on account of the purchases. There can be three alternative allegations against the assessee. One can be that these credits represent the credit for earlier years. If that be the case, no addition can be made in this year under Section 68 of the Act. The second allegation can be that these credits represent the purchases for which payments have been made by the assessee during the year itself. If this is so, the onus will be on the department to establish that assessee has made payment to these creditors. This is not even the allegation of the assessing officer, much less his case against the assessee. The third allegation can be that these credits do not represent the purchases which have been made by the assessee. The implication of this will be that the purchases debited in the trading account are not genuine to that extent and accordingly, that the trading account is not correct. However, as discussed, the trading results of the assessee have been accepted and considering the overall facts of the case, as dwelt upon, no addition u/s 68 of the Act is called for.
Further, even on the principle of consistency, no addition is called for and the claim is to be allowed, as held in ‘Radha Soami Satsang vs. CIT’, 193 ITR 321 (SC), ‘CIT vs. Neo Poly Pack (P)
Ltd.’, 245 ITR 492 (Del) and ‘CIT vs. Dalmia Promoters Developers (P) Ltd.’, 281 ITR 346 (Del).
Still further, evidently, it was not scrutiny assessments for Assessment Years 2007-08 and 2008-09, that u/s 143 (3) of the Act, these creditors were accepted by the department. Therefore, the facts and circumstances for the year under consideration remaining entirely unchanged, consistency is required to be maintained for the year under consideration also.
For the above discussion, finding the grievance sought to be raised by the assessee in this regard to be justified, we accept the same. Accordingly, the order of the Ld. CIT (A) on this issue is cancelled an the Assessing Officer is directed to allow the claim of the assessee.”
5.1 We also find that Ld. CIT(A) has adjudicated the issue in dispute vide para no. 4.00 at page no. 3 of the impugned order dated 12.9.2013. For the sake of convenience, we are reproducing the para no. 4.00 as under:-
4.00 I have gone through the submissions made by the appellant and the arguments advanced during the course of appellate proceedings. There is no gainsaying the fact that the Hon’ble Delhi ‘H’ Bench, New Delhi vide dated 26.8.2013 pronounced its judgment in favour of the appellant as is apparent from the relevant extract of its order quoted in italics above. Para 11 of the Hon’ble ITAT’s order was also referred to whereunder it was held by the Hon’ble ITAT that the sundry creditors reflected in the books of account of the appellant were genuine outstanding balances. On the strength of the above facts the Hon’ble ITAT Delhi H-Bench had felt inclined to allow that ground of appeal. In the face of foregoing facts the penalty order dated 12.6.2012 passed by the Ld. ACIT Circle 29(1), New Delhi could not be sustained, the quantum addition which resulted in the imposition of penalty under consideration having been knocked down by the Hon’ble ITAT Delhi. When the foundation goes everything goes. Accordingly, the penalty order is considered to have abated.
5.2 Keeping in view of the facts and circumstances of the case, we find that the addition on which the penalty in dispute was levied, which has been deleted by the ITAT vide order dated 26.8.2013 in (2009-10), as aforesaid, therefore, the penalty in dispute will not survive. Therefore, Ld. CIT(A) has rightly deleted the penalty in dispute. Hence, we do not find any infirmity in the order of the Ld. CIT(A), therefore, we confirm the impugned order of the Ld. Commissioner of Income Tax (Appeals) in this case in deleting the levy of penalty.
In the result, the appeal filed by the Revenue stands dismissed.
Order pronounced in the Open Court on 02/06/2016.