ITO, GURGAON vs. SH. RAKESH KUMAR SAINI, GURGAON

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘F’, NEW DELHI

BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT EMBER

ITA No. 1686/Del/2014 Assessment Year: 2008-09

Income Tax Officer, vs. Sh. Rakesh Kumar Saini, Ward-1(3), New Delhi Prop. M/s RK Industries, N-246, South City-1, Gurgaon (PAN:ALTPK0229P) (APPELLANT) (RESPONDENT)

Department by : Sh. Shravan Gotru, Sr. DR Assessee by : None

Date of Hearing : 07-04-2016 Date of Order : 06-05-2016

ORDER PER H.S. SIDHU, J.M.

The Department has filed this Appeal which emanates

from the Order dated 29.01.2014 of Ld. CIT(A)-2, Faridabad

pertaining to assessment year 2008-09 on the following

grounds:-

ITA NO.1686/Del/2014 2

i. On the facts and the circumstances of the case, the Ld.

CIT(A) has erred in facts and in law by admitting the additional

evidences during the appellate proceedings under Rule 46A /

despite the facts that none of the conditions laid down in Rule

46A are applicable to the case.

ii. The Ld. CIT(A) has erred in deleting addition of

Rs.2,84,784/- out of addition of Rs,3,56,002/- made by the

AO on account of non deduction of TDS on freight payments,

ignoring the fact that the assessee could not produce all cash

vouchers even during the course of appellate proceedings.

iii. The Ld. CIT(A) has erred in deleting the addition of

Rs.1,02,080/- made by the AO on account of non deduction of

TDS on rental payments, ignoring the facts that no rent

agreement to justify that the rent of Rs.1,02,080/- out of total

rent paid amounting to Rs.2,40,000/- was paid by him to other

persons.

iv. The Ld, CIT(A) has erred in admitting the additional

evidences w.r.t. addition of Rs.1,25,547/- made by the AO on

account of non declaration of receipts in 1TR, when the same

ITA NO.1686/Del/2014 3

were not produced before the AO during the assessment

proceedings even after affording the ample opportunities and

accordingly deleting the additions made by the AO.

v. The Ld. CIT(A) has erred in deleting the addition made by

the AO on account of capital introduced of Rs.10,00,000/- on

the basis of additional evidences produced during the appellant

stage when the assessee failed to prove the creditworthiness

and genuineness o the gift during the assessment proceedings.

vi. The Ld. CIT(A) has erred in deleting addition of

Rs.6,65,890/- out of additions of Rs.l 1,06,367/- made by the

AO on account of unexplained addition to Building Account, c

the basis of additional evidences produced during the appellate

stage.

vii. The Ld. C1T(A) has erred in deleting addition of

Rs.16,26,647/- made by the AO i account of unexplained

additions to Plant and Machinery on the basis of additioi

evidences produced during the appellate stage.

ITA NO.1686/Del/2014 4

viii. That the appellant craves for the permission to add, delete

or amend the grounds appeal before or at the time of hearing

of appeal.

return declaring income of Rs. 4,18,693/- on 30.9.2008. The

case was processed u/s. 143(1) of the I.T. Act and

subsequently the case was selected for scrutiny and

accordingly, statutory Notices were issued and served upon

the assessee. In response to the notices, Ld. AR of the

Assessee attended the assessment proceedings and filed

necessary details. After consdiering the documents, the AO

determined the income of the assessee at Rs. 55,56,821/- by

making various additions vide order dated 30.12.2010 passed

u/s. 143(3) of the I.T. Act, 1961.

dated 31.12.2010 passed u/s. 143(3), assessee filed an appeal

before the Ld. First Appellate Authority, who vide impugned

Order dated 29.01.2014 had decided the issues in dispute in

favour of the assessee by partly allowing the appeal of the

Assessee.

Revenue is in appeal before the Tribunal.

ITA NO.1686/Del/2014 5

AO and reiterated the contentions raised by the Revenue in the

grounds and requested that Appeal of the Revenue may be

allowed.

by the Registered AD post, in spite of the same, assessee, nor

his authorized representative appeared to prosecute the

matter in dispute, nor filed any application for adjournment.

Keeping in view the facts and circumstances of the present

case and the issue involved in the present Appeal, we are of

the view that no useful purpose would be served to issue

notice again and again to the assessee, therefore, we are

deciding the present appeal exparte qua assessee, after

hearing the Ld. DR and perusing the records.

available with us, especially the impugned order.

evidences u/r 46A raised vide ground no. (i). We find that Ld.

First Appellate Authority has elaborately discussed the issue in

dispute by considering the submissions of the assessee and

adjudicated the same vide para no. 3.2 to 3.4 at pages 4 to 5

in his impugned order. The said relevant paras of the

impugned order are reproduced as under:-

ITA NO.1686/Del/2014 6

“3.2 I have considered the facts of the case

together with the submissions of the appellant and

the remand report of the AO on the issue

admissibility of additional evidence. As per the

report of the AO dated 30.3.2012, the appellant was

provided adequate opportunity to submit the

evidence, but he failed to do so. On this basis, the

AO has stated the additional evidence may not be

admitted at this stage. The appellant, on the other

hand, stated that most of the documents were given

to the AO on 25.11.2010, 13.12.2010 and

27.12.2010 respectively. These documents were

given to him directly as a result of which the

appellant coulcknot get acknowledgement regarding

the same. The appellant in his strong words stated

that the file was misplaced by the AO for which

blame was put on the assessee.

3.3.In order to resolve the issue of admissibility of

additional evidence, I perused the assessment

records. As per the order sheet entries forming a

part of the assessment record, the first hearing was

conducted on 01.12.2010 on which Shri Dinesh

Kumar, the learned counsel of the appellant

ITA NO.1686/Del/2014 7

appeared and was asked to file certain details. The

case was adjourned to 06.12,2010, which was

further adjourned to 09.12.2010 on which date the

learned counsel of the appellant, Shri Dinesh Kumar

appeared. A written reply was furnished on that

date. The AO sought a number of details in addition

to the books of account and the case was adjourned

to 13.12.2010. There is no mention of the progress

of assessment proceedings on 13,12.2010. There is

only one order-sheet entry which appears on

28.12.2010 on which date, Shri Dinesh Kumar, the

learned & counsel of the appellant was asked to

submit 12 details, which included audit report of

assessment years 2007-08 and 2008-09, purchase

bill of vehicles, materials for building, plant and

machinery, receipts in respect of payment of rent,

confirmation regarding addition to capital, proof of

deduction u/s 80L, housing loan certificate, secured

loan proof, reasons for low GP, the non-deduction of

tax, date-wise capital account and to give an

explanation regarding non-declaration of receipts

from Jindal Mectec and M/s Timplex Industries. For

filing voluminous details, the appellant was given

ITA NO.1686/Del/2014 8

only one day and the case was adjourned to

29.12.2010. There is no record as to what happened

on that date, but the assessment order was passed

on 30.12.2010.

3.4.Thus, from the details of the order-sheet

entries, it is evident that the AO asked for a lot of

details on 28.12.2010 and finally passed the

Assessment order on 30.12.2010. The appellant

was given only one day to provide voluminous

details, which was almost impossible for him. In

view of the inadequate time provided by the AO to

the appellant for furnishing details during the course

of assessment proceedings, as is evident from the

assessment record, I hold that it would be in the

interest of justice and fair play to admit the

additional evidence filed during the course of

appellate proceedings. Hence, the additional

evidence given by the appellant during appellate

proceedings is hereby admitted.”

8.1 After going through the aforesaid finding of the Ld.

CIT(A) on the issue in dispute, we are of the view that the Ld.

First Appellate Authority has rightly admitted the additional

evidences and thereafter passed a well reasoned order which

ITA NO.1686/Del/2014 9

does not need any interfere on our part. Hence, we uphold the

order of the Ld. CIT(A) on this issue and dismiss the ground no

(i) raised in the Revenue’s Appeal.

2,84,784/- out of addition of Rs. 3,56,002/- made by the AO

on account of non-deduction of TDS on freight payment raised

vide ground no. (ii) is concerned, we find that Ld. First

Appellate Authority has elaborately discussed the issue in

dispute by considering the submissions of the assessee and

adjudicated the same vide para no. 6.3 to 6.4 at pages 6 to 7

in his impugned order. The said relevant paras of the

impugned order are reproduced as under:-

“6.3 Para 3 is on account of addition of

Rs.5,96,002/- on account of two factors. The first

factor is non-deduction of TDS on freight of

Rs.3,56,002/- and the second factor is on account of

non-deduction of TDS on rental payment

amounting, in all, Rs.2,4O,000/-. The AO, in his

report dated 30.03.2012 stated the following

with regard to these additions:

"The contention of the assessee has been

considered carefully. In this regard, it is

submitted that the assessee has only

ITA NO.1686/Del/2014 10

filed Rent Agreement with Sh. Om

Prakash at the time of appellate

proceedings. As regards, rent agreement

with other parties vis-a-vis Sh. Pawan

Kumar and Sh. Mahesh Kumar, has not

been furnished by the assessee neither

at the time of assessment proceedings

nor at the time of appellate proceedings.

As regards, freight the assessee has not

filed any ledger account so as to support

his claim that the freight was paid to

individual tempo or three wheeler in cash

and payment to a single party did not

exceed Rs. 20,000/-. As the assessee has

failed to produce documentary evidences

in regard to his claim towards rent and

freight paid, the AO has rightly made

addition of Rs. 5,96,002/-."

6.4 The appellant in his rejoinder dated

05.08.2013 submitted that the freight did not entail

TDS since it was paid to individual tempo on daily

basis and that not a single party received more than

Rs.20,OOO/- per annum so as to make it necessary

ITA NO.1686/Del/2014 11

to deduct TDS on the said payments. On a perusal

of cash vouchers, it is found that the appellant could

not produce all cash vouchers as a result of which it

is held that 20% of the total payment was in excess

of Rs.20,OOO/- to a single party. Thus, 20% of the

total freight payment amounting to Rs.71,218/- is

disallowed as per provisions of Section 40(a)(ia) of

the Income Tax Act.”

9.1 After going through the aforesaid finding of the Ld.

CIT(A) on the issue in dispute, we are of the view that the Ld.

First Appellate Authority has passed a well reasoned order on

this issue which does not need any interfere on our part.

Hence, we uphold the order of the Ld. CIT(A) on this issue and

dismiss the ground no (ii) raised in the Revenue’s Appeal.

of Rs. 1,02,080/- made by the AO on account of non-

deduction of TDS on rental payment raised vide ground no.

(iii) is concerned, we find that Ld. First Appellate Authority has

elaborately discussed the issue in dispute by considering the

submissions of the assessee and adjudicated the same vide

para no. 6.5 at page 7 in his impugned order. The said

relevant paras of the impugned order are reproduced as

under:-

ITA NO.1686/Del/2014 12

“6.5. As regards, non-deduction of TDS on rent

payments, the appellant gave rent agreement in

respect of Shri Om Prakash and rent receipt in

respect of Shri Pawan Kumar and Shri Mahesh

Kumar. In case of Shri Om Prakash, the agreement

signed in 2005 showed a rental payment of

Rs.9500/- per month. It also provided for a 10%

annual increase. If 10% annual increase is added to

the rental payment of Rs.9,500/- per month, the

total amount exceeds Rs.1,20,OOO/- p.a for the

year under consideration. Hence the AO was right in

invoking the provisions of Section 40(a)(ia) in

respect of rental payment to Shri Om Prakash. As

regards the other two rental payments, I agree with

the appellant that the total payment was less than

Rs.1,20,OOO/- p.a. and thus TDS provisions were

not to be invoked. Hence the addition on account of

non-deduction of TDS in respect of rental payment

is restricted to the payments made to Shri Om

Prakash. Hence, the addition made by the AO in

Para 3 of the assessment order is partly allowed.”

ITA NO.1686/Del/2014 13

10.1 After going through the aforesaid finding of the Ld.

CIT(A) on the issue in dispute, we are of the view that the Ld.

First Appellate Authority has passed a well reasoned order on

this issue which does not need any interfere on our part.

Hence, we uphold the order of the Ld. CIT(A) on this issue and

dismiss the ground no (iii) raised in the Revenue’s Appeal.

evidences w.r.t. addition of Rs. 1,25,547/- made by AO on

account of non-declaration of receipts in ITR raised vide

ground (iv) is concerned, we find that Ld. First Appellate

Authority has elaborately discussed the issue in dispute by

considering the submissions of the assessee and adjudicated

the same vide para no. 6.7 to 6.8 at page 8 in his impugned

order. The said relevant paras of the impugned order are

reproduced as under:-

“6.7.The addition in Para 5 of the order is on

account of non-declaration of receipts of

Rs.16,759/- from M/s Timplex Industries and

Rs.l,08,815/- from M/s Jindal Mectec. This was

detected by the AO consequent upon the matching

of receipts as per Form No. 26AS with the receipts

shown by the appellant in his return of income.

ITA NO.1686/Del/2014 14

6.8. During the course of appellate proceedings, the

appellant gave a detailed paper book in which a

copy of sales register for the period 01.04.2007 to

31.03.2008 was given. As per the sale register duly

reconciled by the appellant, the gross sale for the

period under consideration were Rs.1,67,79,883/-.

Out of these receipts, the appellant had also

included receipt of Rs.1,08,815/- from M/s Jindal

Mectec and Rs.16,759/- received from M/s Timplex

Industries. Hence, there is no force in the

contention of the AO, that these two amounts were

not shown by the appellant in his return of income.

Thus the addition made in Para 5 of the assessment

order is hereby deleted. The appellant gets relief

accordingly.”

11.1 After going through the aforesaid finding of the Ld.

CIT(A) on the issue in dispute, we are of the view that the Ld.

First Appellate Authority has passed a well reasoned order on

this issue which does not need any interfere on our part.

Hence, we uphold the order of the Ld. CIT(A) on this issue and

dismiss the ground no (iv) raised in the Revenue’s Appeal.

ITA NO.1686/Del/2014 15

the AO on account of capital introduced of Rs. 10,00,000/- on

the basis of additional evidences produced during appellate

proceedings raised vide ground no. (v) is concerned, we find

that Ld. First Appellate Authority has elaborately discussed the

issue in dispute by considering the submissions of the

assessee and adjudicated the same vide para no. 6.9 to 6.11

at pages 8 to 10 in his impugned order. The said relevant

paras of the impugned order are reproduced as under:-

“6.9 The addition in Para 6 is in respect of Rs. 10

lacs received by the appellant from his father, Shri

Ram Kishan Saini. This addition was made in view

of the fact that the appellant failed to prove the

genuineness of transaction and credit-worthiness of

his father. During the course of appellate

proceedings, the appellant gave additional evidence

which was examined by the AO. The AO in his

report dated 30.03.2012 submitted the following

with regard to this addition:

"The contention of the assessee is not

acceptable as the assessee has not filed any

documentary evidence to certify that the

amount was received as gift from his father.

ITA NO.1686/Del/2014 16

Neither Sh. Ram Kishan Saini has complied

with the summon u/s 131 dated 12.03.2012,

to enable this office to examine

creditworthiness and genuineness of the gift,

nor any gift deed in this regard has been

furnished. Therefore the addition of Rs. 10

Lacs has rightly been made by the AO.”

6.10. The additional documents given by the

appellant- were examined by the under-signed as

well. The documents included an affidavit from the

father of the appellant, namely, Shri Ram Kishan

Saini as per which he gifted an amount of Rs. 10

lacs to his son-in-law and the appellant, Shri Rakesh

Kumar Saini vide account payee cheque No. 00432

dated 23.03.2006 drawn on Indian Overseas Bank,

Rewari. Shri Ram Kishan Saini, also stated in his

affidavit that this amount was received by him on

24.09.2005, on account of sale proceeds of his

parental property and land, in Rewari, outside

municipal area. Shri Ram Kishan Saini further

submitted in his affidavit that he had provided the

bank statement, pass-book and copy of land records

and also attended personally along with the

ITA NO.1686/Del/2014 17

appellant and his learned counsel at the office of

Shri G.L. Meena, ITO on 19.03.2012 at 11.00 A.M.

However, the ITO did not accept the copies from

him since he forgot to his Income Tax Return. Along

with his affidavit, Shri Ram Kishan Saini gave a

copy of his bank account as per which the amount

of Rs. 10 lacs was debited to his account on

23.03.2006. This amount was received by the

appellant in his bank account on 27.03.2006. As an

evidence of the sale of land, the appellant gave a

copy of the Sale Deed as per which the said land

was sold on 14.11.2005.

6.11.1 have considered the facts of the case

together with the remand report of the AO and the

detailed submissions of the appellant together with

the evidence filed by the learned counsel for the

appellant. The appellant not only gave the affidavit

of Shri Ram Kishan Saini, father of the appellant,

but also, a copy of the relevant bank accounts from

which the money had been withdrawn and

deposited to the bank account of the appellant

together with the evidence regarding the source

from which the money was received by his father.

ITA NO.1686/Del/2014 18

Considering all these evidences. I hold that the

appellant has been able to prove the genuineness of

transaction and the creditworthiness of the lender.

Hence, the addition of Rs. 10 lacs made by the AO

on account of capital introduced by the appellant is

hereby deleted.”

12.1 After going through the aforesaid finding of the Ld.

CIT(A) on the issue in dispute, we are of the view that the Ld.

First Appellate Authority has passed a well reasoned order on

this issue which does not need any interfere on our part.

Hence, we uphold the order of the Ld. CIT(A) on this issue and

dismiss the ground no (v) raised in the Revenue’s Appeal.

AO of Rs. 6,65,890/- out of additions of Rs. 11,06,367/- on

account of unexplained addition to building account, on the

basis of additional evidences raised vide ground no. (vi) is

concerned, we find that Ld. First Appellate Authority has

elaborately discussed the issue in dispute by considering the

submissions of the assessee and adjudicated the same vide

para no. 6.12 to 6.13 at page 10 in his impugned order. The

said relevant paras of the impugned order are reproduced as

under:-

ITA NO.1686/Del/2014 19

“6.12 The AO made an addition of

Rs.11,06,367/- in Para 7 of his order on

account of addition made to buildings. During

the course of appellate proceedings, the

appellant gave details of the said additions

along with relevant bills/vouchers. The AO on

examination of the said details stated the

following in his report dated 30.03.2012:

“The assessee has not filed any proof of

sale of these assets neither at the time of

assessment proceedings nor at the time

of appellate proceedings. In absence of

any such proof and explanation/ the AO

has rightly made additions to the retuned

income of the assessee on account of

additions to Plant and Machinery and

Building. Further, the assessee has

neither produced the books of accounts

during the assessment proceedings nor

during the remand proceedings. It is thus

not verifiable that the cash utilized for

purchase of new assets was from the sale

proceeds of old assets."

ITA NO.1686/Del/2014 20

6.13.The relevant supports given by the

appellant to substantiate additions to building

during the year under consideration was also

examined by the under-signed. On a perusal of

relevant supports the same were found to be

in order. However, there was one major

discrepancy noted on a perusal of relevant

bills/vouchers. The discrepancy was in respect

of a bill of M/s Gaurav Steels, which was for an

amount of Rs. 48,947/- instead of Rs.

4,89,424/-. When asked to give an explanation

of the difference between the two, the

appellant was not in a position to explain the

difference. As a result, the difference between

the two accounts, to the tune of Rs.

4,40,477/-, is regarded as unexplained

investment and is thus added to the income of

the appellant. Thus the addition with regard to

Para 7 is limited to this amount. The appellant,

accordingly, gets partial relief.”

ITA NO.1686/Del/2014 21

13.1 After going through the aforesaid finding of the Ld. CIT(A) on the issue in dispute, we are of the view that the Ld. First Appellate Authority has passed a well reasoned order on this issue which does not need any interfere on our part. Hence, we uphold the order of the Ld. CIT(A) on this issue and dismiss the ground no (vi) raised in the Revenue’s Appeal. 14. Apropos issue relating to deletion of addition of Rs. 16,26,647/- made by the AO on account of unexplained additions to Plant and Machinery on the basis of additional evidences raised vide ground no. (vii) is concerned, we find that Ld. First Appellate Authority has elaborately discussed the issue in dispute by considering the submissions of the assessee and adjudicated the same vide para no. 6.14 at page 11 in his impugned order. The said relevant paras of the impugned order are reproduced as under:- “6.14 The addition in Para 8 of the assessment order, to the tune of Rs.16,26,647/-, in on account of addition to plant and machinery. During the course of appellate proceedings, the appellant gave detailed break-up of the said addition along with relevant bills/vouchers, which were found to be in order. The AO'S comments with regard to addition in Para 8 of the order have already been incorporated in his report while discussing addition made in Para 7 of the order. Accordingly, the addition made by the AO in Para 8 of the order stands deleted. Ground No.4 of the appeal is thus partly allowed.”

ITA NO.1686/Del/2014 22

14.1 After going through the aforesaid finding of the Ld. CIT(A) on the issue in dispute, we are of the view that the Ld. First Appellate Authority has passed a well reasoned order on this issue which does not need any interfere on our part. Hence, we uphold the order of the Ld. CIT(A) on this issue and dismiss the ground no (vii) raised in the Revenue’s Appeal. 15. In the result, the Revenue’s Appeal stands dismissed.

Order pronounced in the Open Court on 06/05/2016.

Sd/- Sd/- (PRASHANT MAHARISHI) (H.S.SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER

Dated: 06/05/2016

*SR BHATNAGAR*