ITO, New Delhi v. M/s East West Products Ltd., New Delhi

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : B : NEW DELHI BEFORE SHRI I.P. BANSAL JUDICIAL MEMBER AND SHRI SHAMIM YAHYA ACCOUNTANT MEMBER ITA NO.5490/DEL/2010 ASSESSMENT YEAR : 2007-08 ITO WARD 11 (1) ROOM NO.321 CR BUILDING NEW DELHI. VS. EAST WEST PRODUCTS LTD. 415 VIKAS DEEP BUILDING LAXMI NAGAR DISTRICT CENTRE NEW DELHI. PAN : AAACE6200D (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : MS BANITA DEVI NAOREM SR. DR ORDER PER I.P. BANSAL JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE REVENUE. IT IS DIRECT ED AGAINST THE ORDER OF THE CIT (A) DATED 21 ST SEPTEMBER 2010 FOR ASSESSMENT YEAR 2007-08. GROUNDS OF APPEAL READ AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE & IN LAW THE ORDER OF THE CIT (A) IS WRONG PERVERSE ILLEGAL & AGAINST THE PROVISIONS OF LAW WHICH IS LIABLE TO BE SET ASIDE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT (APPEALS) HAS ERRED IN DELETING ADDITION OF ` 6 26 800/- MADE ON ACCOUNT OF TRADING LIABILITY NO LONGER IN EXISTENCE IGNORING:- A) THAT DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE FAILED TO FILE ANY CONFIRMATION FROM M/S JAGDAMBA TRADING COMPANY THE ALLEGED CREDITOR DESPITE ALLOWING AMPLE TIME. ITA NO.5490/DEL/2010 2 DESPITE ALLOWING AMPLE TIME. B) THAT NOTICE U/S 133 (6) SENT THROUGH POST TO THE SAI D ALLEGED CREDITOR RECEIVED BACK UNSERVED. THE OTHER NOTICE U/S 133 (6) SENT THROUGH NOTICE SERVER WHO REPORTED THAT THE FIRM HAS CLOSED DOWN. C) THAT DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE COY HAS ITSELF ADMITTED THAT THE SAID FIRM HAS CLOSED DOWN AS PER SALES TAX RECORDS & ITS SALES TAX REGISTRATION NUMBER HAS ALSO BEEN CANCELLED. D) THAT NO NEW ADDRESS OF THE FIRM HAS BEEN FURNISHED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS WHEN NON-SERVING OF THE NOTICES U/S 133 (6) HAS BEEN CONFRONTED TO THE ASSESSEE COY DURING THE ASSESSMENT PROCEEDINGS. E) THAT IN THE APPELLATE PROCEEDINGS THE DATE OF PAYMENT CHEQUE TO THE ALLEGED CREDITOR HAS BEEN MENTIONED AS 10.09.09 WHEREAS DATE OF PASSING OF THE ORDER U/S 143 (3) IS 14.12.2009. IT IS NOT AT ALL UNDERSTANDABLE THAT THEN WHY THE ASSESSEE HAS FAILED TO FILE CONFIRMATION BEFORE THE A.O. F) THE CIT (A) HAS ERRED IN ADMITTING THE SAID ADDITIONAL EVIDENCE IN THE FORM OF CONFIRMATION WITHOUT ALLOWING AN OPPORTUNITY TO THE A.O. TO HAVE A LOOK AT THE SAME IN THE CONTRAVENTION OF RULE 46A. THERE IS NO JUSTIFICATION IN ACCEPTING THE SAID ALLEGE D CONFIRMATION WHEN THE A.O. HAS ALLOWED SUFFICIENT TIM E TO THE ASSESSEE TO PRODUCE THE SAME DURING THE ASSESSMENT PROCEEDINGS. 3. THE APPELLANT CRAVES LEAVE TO ADD TO ALTER OR AMEND ANY GROUNDS OF THE APPEAL RAISED ABOVE AT THE TIME OF THE HEARING. 2. NOTICE OF HEARING WAS SENT TO THE ASSESSEE HOWEVER N ONE WAS PRESENT ON THE FIXED DATE OF HEARING THEREFORE WE PROCEEDED TO DECIDE THE PRESENT APPEAL EX PARTE QUA THE ASSESSEE AFTE R HEARING LEARNED DR AND AFTER CONSIDERING THE MATERIAL AVAILA BLE ON OUR RECORD. ITA NO.5490/DEL/2010 3 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD SHOWN A CREDITOR M /S JAGDAMBA TRADING COMPANY FOR A SUM OF ` 6 26 800/-. THE ASSESSE E WAS REQUIRED TO FILE CONFIRMATION AND A LETTER U/S 133 ( 6) WAS ALSO ISSUED FOR VERIFICATION OF THE CREDITOR WHICH WAS RECEIVED BACK UNSERVED. NOTICE WAS ALSO SENT THROUGH NOTICE SERVER WHO REPORTED THAT T HE FIRM WAS CLOSED. THE ASSESSEE ALSO DID NOT FILE ANY CONFIRMATION. THE ASSESSEE WAS REQUIRED TO SUBMIT EXPLANATION IN THIS REGARD AND THE ASSESSEE SUBMITTED COPY OF ACCOUNT OF THE SAID CONCERN FOR THE LAST TWO YEARS. IT WAS SUBMITTED THAT NO TRANSACTION HAS BEEN ENTERED BY T HE ASSESSEE WITH THE SAID CONCERN DURING THE RELEVANT FINANCIAL YEAR. AS PER SALES- TAX RECORD THE FIRM HAD CLOSED AND SALES-TAX REGISTRA TION WAS CANCELLED. IT WAS SUBMITTED THAT LAST TRANSACTION WAS E NTERED INTO BY THE ASSESSEE WITH THE SAID CONCERN ON 12 TH JANUARY 2006 AND THE AMOUNT OUTSTANDING IS STILL LEGALLY ENFORCEABLE AGAINST THE ASSESSEE COMPANY. HOWEVER THE ASSESSING OFFICER DID NOT ACCEPT SUCH CLAIM OF THE ASSESSEE AND INVOKED THE PROVISIONS OF SECTION 41 (1) AND ADDED THE SAID AMOUNT TO THE INCOME OF THE ASSESSEE. LEARNED CIT (A) HAS FOUND THAT ACCORDING TO THE LAST ENTRY DATED 12 TH JANUARY 2006 THE ASSESSEE HAD MADE PAYMENT TO THE SAID PARTY FOR A SUM OF ` 15 LAC. THEREFORE HE FOUND THAT PERIOD OF LIMITATION FOR R ECOVERY OF THE SAID AMOUNT WOULD IN ANY CASE BE EXPIRED ON 12 TH JANUARY 2009 THEREFORE DISALLOWANCE COULD NOT BE MADE IN ASSESSMENT YEAR 2007-0 8. THE ASSESSEE ADDITIONALLY FILED CONFIRMATION FROM THE SAID P ARTY WHICH WAS DATED 15 TH SEPTEMBER 2009 STATING THEREIN THAT THEY HAD RECEI VED THE OUTSTANDING DUE OF ` 6 26 800/- VIDE CHEQUE ON 10 TH SEPTEMBER 2009 FROM THE ASSESSEE. IN SUPPORT THE ASSESSEE HAD ALSO FILED C OPY OF ITS BANK ACCOUNT NO.01202320002889 IN HDFC BANK AND IN THESE CIRCUMSTANCES LEARNED CIT (A) HAS DELETED THE ADDITIO N. THE REVENUE IS AGGRIEVED HENCE IN APPEAL. ITA NO.5490/DEL/2010 4 4. LEARNED DR RELYING UPON THE ASSESSMENT ORDER PLEAD ED THAT THE ADDITION HAS RIGHTLY BEEN MADE BY THE ASSESSING OFFICER AND LEARNED CIT (A) HAS WRONGLY DELETED THE ADDITION. 5. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF LEARN ED DR AND CAREFULLY GONE THROUGH THE ASSESSMENT ORDER AS WELL AS TH E ORDER OF THE CIT (A). NO EVIDENCE HAS BEEN BROUGHT ON RECORD BY THE ASSESSING OFFICER TO SHOW THAT THERE WAS A CESSATION OF LIABILITY IN THE ASSESSMENT YEAR UNDER CONSIDERATION. AS AGAINST THAT IT HAS BEEN SHOWN BY THE ASSESSEE THAT LAST ENTRY WAS MADE BY THE ASSESSEE WITH THE SAI D PARTY ON 12 TH JANUARY 2006 AND THEREFORE EVEN THE LIMITATION TO CLAIM THAT AMOUNT HAD NOT EXPIRED. IT IS NOT THE CASE OF THE RE VENUE THAT THE SAID AMOUNT WAS WRITTEN OFF TO THE PROFIT & LOSS ACCOUNT BY THE ASSESSEE BY TREATING IT AS ITS RECEIPTS. MOREOVER THE ASSESSEE HAS SHO WN THE EVIDENCE TO THE LEARNED CIT (A) THAT THE SAID AMOUNT WAS PAID BY IT TO THE SAID PARTY ON 10 TH SEPTEMBER 2009. IN SUPPORT OF SUCH CLAIM COPY OF BANK ACCOUNT WAS ALSO FURNISHED. KEEPING IN VIEW A LL THESE FACTS WE ARE OF THE OPINION THAT LEARNED CIT (A) HAS RIGHTLY DELETED THE ADDITION AND NO INTERFERENCE IS CALLED FOR FROM OUR SIDE. 6. IN THE RESULT THE APPEAL FILED BY THE DEPARTMENT IS DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 11.02.20 11. SD/- SD/- [SHAMIM YAHYA] [I.P. BANSAL] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED 11.02.2011. DK ITA NO.5490/DEL/2010 5 COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT TRUE COPY BY ORDER DEPUTY REGISTRAR ITAT DELHI BENCHES DATE OF DICTATION 09.02.2011 DATE OF PRESENTATION OF THE DRAFT ORDER TO THE MEMBER 10.02.2011 DATE OF RETURN FROM THE BENCH AFTER PRONOUNCEMENT &SIGNING DATE OF DISPATCH OF THE ORDER TO THE BENCH