HSK INFRA PRIVATE LIMITED,DELHI vs. ACIT, CIRCLE-11(2), NEW DELHI

At the outset Ld. Counsel for the assessee submitted that he would like to press ground No. 3 only. Accordingly, ground of appeal No. 1 and 2 are dismissed as not pressed.

The Ld. Counsel for the assessee submitted that the only issue in the present appeal regarding an addition of Rs.11,66,47,930/- made by the Ld. AO invoking provisions of the section 68 of the Act. It was submitted that the assessee company is engaged in the business of civil construction, acting as sub-contractor. The ld. Counsel drew our attention to para 3.4 from pages 3 to 7 of the assessment order. The Ld. AO had held that sundry creditors namely Sh. Manoj Kumar and M/s. Narender Building materials suppliers having closing balances of Rs.5,46,81,707- and Rs.6,19,66,223/- respectively were bogus sundry creditors. The Ld. AO had drew above conclusions as the assessee had failed to provide complete bills and vouchers qua above parties. The said two parties also did not respond to summons u/s. 131 issued by the Ld. AO. The Ld. AO also give similar opportunity to the assessee to present the said persons, which also went uncompiled. Before the Ld. First Appellate Authority also the assessee did not make adequate compliances as evident from para 8.3 of the order. Consequently, reliance was placed upon the findings of the Ld. AO.

The Ld. Counsel argued that the impugned sundry creditors are not bogus parties. It was submitted that the parties are genuine who could not make due compliances before the lower authorities. The Ld. Counsel through an extensive paper book, placed on records, attempted to convince us regarding genuineness of the transactions, identity of the parties and their credit worthiness as required u/s. 68 of the Act. It was also submitted that the balances qua impugned parties have been cleared in the subsequent year. Page | 3

Per contra the Ld. DR placed reliance upon the order of lower authorities. It was vehemently argued that the assessee and / or its associate parties have not complied with the statutory requirement of lower authorities and therefore, cannot be given any leniency at this stage. It was also submitted that the documents referred by the assessee now through its paper book, in toto, were not made available to the Ld. AO.

We have heard rival submissions and in the light of material available on records. We have noted that as per facts recorded by the Ld. AO in his order, he had given opportunities to the assessee and its associates, for filing the required details which were not satisfactorily filed by the assessee leading to him making the impugned addition. We have however noted that the order passed by the Ld. AO is not a speaking order and clear facts have not been brought on records before making the impugned addition. There are also indications of no enquiries conducted by the Ld.AO at his own end. Before the Ld.First Appellate Authority also the conduct of the assessee was far from satisfactory as far as submission of any details and / or evidences is concerned, leading to dismissal of the appeal. We have also noted from para 9.3 of the appellate order that the Ld. CIT(A) has also not given a reasoned finding and has merely relied upon non compliance before the Ld. AO.

We have thus noted that inadequate submission of details and evidences, before the lower authorities qua identity and creditworthiness of parties and genuineness of transactions and respect of the two sundry creditors lies at the core of the controversy. Before us the Ld. Counsel for the assessee also admitted that couple of documents comprising part of paper book, were not available to the Ld. AO. The Ld. Counsel also submitted that the two sundry creditors can now present themselves before the Ld AO and / or furnish a confirmation regarding the veracity of transactions and receipt of money from the assessee. We are therefore of the view that ends of justice would be met if the assessee is given one last opportunity to present its case and file all supporting evidences before the Ld.AO. We have also noted that the Ld. DR also concurred with the view that the matter may be set aside to the Ld. AO for readjudication. The assessing officer is the primary authority under the income tax act to be examine facts of a case in the light of available evidences before determining correct taxable income of a tax payer. We therefore set aside the order of lower authorities on this issue and we direct the Ld. AO to readjudicate the matter de novo by examining the matter afresh in accordance with law and by passing a Page | 5 speaking order. Reliance in this regard is placed upon the decision of Hon’ble Apex Court in the case of TIN box 249 ITR 216. The Ld. AO shall give opportunities of being heard to the assesse and it shall be bounden upon the assesse to comply with the notices issued by the Ld. AO. Any non-compliance on the part of the assesse can be adversely viewed. The assessee shall be at liberty to produce on or any evidence in support of its contentions to defend its case. Accordingly, all the grounds of appeal raised by the assessee on this issue are allowed for statistical purposes.

In the result, appeal of the assessee is allowed for statistical purposes.