V R PROCUREMENT CORPORATION PVT LTD,NEW DELHI vs. ITO WARD - 26(1), NEW DELHI
What did the Tribunal hold?
The Tribunal found an inconsistency in the AO's approach, as he accepted purchases and payments but doubted only the outstanding balances. The assessee was granted an opportunity to submit further details.
What were the facts?
The assessee's appeal concerned additions made by the AO on outstanding balances from two creditors, M/s Transbaltic Associates Pvt. Ltd. and M/s Delhi Plastchem Pvt. Ltd. The AO doubted these outstanding amounts as notices to these entities were unserved and the assessee failed to produce their principal officers.
What were the issues?
Whether the AO was justified in making additions on outstanding balances without proper verification, and if the assessee was denied a fair opportunity to present evidence.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘H’, NEW DELHI
Before: Shri Saktijit Dey, Hon’ble & Dr. B. R. R. Kumar
ORDER Per Dr. B. R. R. Kumar:- The present appeal has been filed by the assessee against the order of Ld. CIT(A)-9, New Delhi dated 15.07.2019. 2. The assessee has raised the following grounds of appeal are as under:-
1. The Hon'ble CIT (A) has not followed the law of natural justice while confirming additions and disallowances by the Ld. A.O.
2. That the impugned Appeal Order is bad in law, illegal, and in violation of rudimentary principal of contemporary jurisprudence.
3. That the said learned CIT (A)-9, New Delhi has not followed instruction no. 20/2003 dated 23.12.2003 issued by CBDT regarding issue of appellate order within 15 days of last hearing of case, order passed on 15.07.2019 and was heard on 15.04.2019.
4. That the Hon'ble Commissioner of Income Tax (Appeal) has erred in law and on facts by confirming the addition of closing outstanding balances of Rs. 1,44,77,695/- It was alleged by the LD. A.O. that the V R Procurement Corporation P Ltd. assessee has failed to discharge its onus of proving the identity, their credit worthiness and genuineness of the transactions with M/s Transbaltic Associates Pvt. Ltd. (closing balance Rs. 1,21,99,690/-) and M/s Delhi Plastchme Pvt. Ltd. (closing balance Rs. 22,78,005/-). Whereas appellant requested Hon'ble CIT (A)-9 to give anopportunity.
Brief facts of the case as noted from the impugned order are that the AR of the assessee was asked by the AO to file the details regarding sundry creditors having their name and address. The AR furnished relevant details of loans, advances, investment expenditure byway of penalty or fine, closing stock and also the copy of account, name and addresses of creditors. Notices u/s 133(6) and/or summons u/s 131 of the Act were issued to the concerned entities to ascertain the identity, creditworthiness, genuineness and correctness of the creditors.
Notice u/s 133(6) issued to two concerns namely M/s. Transbaltic Associates pvt. Ltd. And M/s. Delhi Plastchem Pvt. Ltd. were received back unserved. Therefore the assessee was asked vide show cause notice dated 08.12.2017 to produce these persons/ principal officer of these entities along with relevant details on 15.12.2017. The AR sought for some more time and again the case was fixed for hearing on 18.12.2017. The AO passed the order on 31.03.2015 u/s. 143(3).
Aggrieved, the assessee filed appeal before the ld. CIT(A).
The ld. CIT(A) affirmed the order of the Assessing Officer on the grounds that the assessee failed to produce the principal offices of these entities before the AO.
V R Procurement Corporation P Ltd.
Before us the assessee submitted that M/s. Transbaltic Associates pvt. Ltd. has indeed supplied fabric and resen to the tune of Rs. 6,48,39,730/- and an amount of Rs. 5,26,40,092/- has already been paid during the year and the AO has made addition of Rs. 1,21,99,690/- which is outstanding as on 31.03.2015. We find that while the AO has accepted the purchases and also payment to the tune of Rs. 5,26,40,092/-, the AO has doubted the outstanding payments only. Similarly, with regard to M/s. Delhi Plastchem Pvt. Ltd. the total purchases were to the tune of Rs. 2,12,94,090/- and the amounts already paid were to the tune of Rs. 1,90,16,090/- and the AO doubted only the outstanding payments of Rs. 22,78,005/-which itself is an inconsistency within.
The ld. AR prayed the given a chance the assessee would submit the entire details before the JAO. The prayer is acceptable as no prejudice would be caused to the Revenue. Hence, the matter is remanded to the file of the JAO for the limited purpose of verification of the purchases and sales alongside payments made by the assessee.
In the result, the appeal of the assessee is allowed for statistical purpose. Order Pronounced in the Open Court on 08/12/2023.
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