ACIT Circle-20 (1), v. T.S. Overseas,

ITA 2286/DEL/2008 | 2003-2004
Pronouncement Date: 26-05-2010 | Result: Allowed

Appeal Details

RSA Number 228620114 RSA 2008
Assessee PAN AAAFT3527D
Bench Delhi
Appeal Number ITA 2286/DEL/2008
Duration Of Justice 1 year(s) 11 month(s) 14 day(s)
Appellant ACIT Circle-20 (1),
Respondent T.S. Overseas,
Appeal Type Income Tax Appeal
Pronouncement Date 26-05-2010
Appeal Filed By Department
Order Result Allowed
Bench Allotted H
Tribunal Order Date 26-05-2010
Date Of Final Hearing 26-05-2010
Next Hearing Date 26-05-2010
Assessment Year 2003-2004
Appeal Filed On 12-06-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H : NEW DELHI BEFORE SHRI C.L. SETHI JM AND SHRI R.C.SHARMA AM ITA NO. 2286/DEL/2008 ASSESSMENT YEAR : 2003-04 ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 20(1) ROOM NO. 308F VIKAS BHAVAN NEW DELHI VS. M/S T.S. OVERSEAS 61 VEER NAGAR DELHI (PAN: AAAFT 3527D) (APPELLANT) (RESPONDENT) APPELLANT BY : MS. MONA MOHANTY SR. DR RESPONDENT BY : SHRI S.K. AGGARWAL CA. ORDER PER R.C.SHARMA AM : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) DATED 06.02.2008 FOR THE AY 2003-04 IN THE MATTER OF ORD ER PASSED BY THE AO U/S 143(3) OF THE IT ACT WHEREIN THE FOLLOWING TWO GRO UNDS HAVE BEEN TAKEN BY THE REVENUE. 1. THE CIT(A) ERRED IN LAW AND ON FACTS IN DELETIN G THE ADDITION OF RS. 57 10 487/- MADE BY THE ASSESSING OFFICER ON ACCOUN T OF EXPENDITURE INCURRED ON DESIGN AND SAMPLE FABRICAT ION AND FINISHING. 2. THE LD. CIT(A) ERRED IN LAW IN ADMITTING AND ENT ERTAINING THE ADDITIONAL EVIDENCE IN CONTRAVENTION OF RULE 46A. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PER USED. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS ENGAGED IN MANUFACTURING A ND EXPORT OF READYMADE GARMENTS. DURING THE COURSE OF SCRUTINY ASSESSMEN T THE AO FOUND THAT THE ASSESSEE CLAIMED FABRICATION EXPENSES OF RS. 65.81 LACS EMBROIDERY EXPENSES OF RS. 41.98 LACS AND SAMPLE CHARGE OF RS. 6.41 LACS. IN ORDER TO VERIFY THE GENUINENESS OF THE EXPENSES CLAIMED SUMMONS U/S 13 1 DATED 7.02.2006 WAS ISSUED BY THE AO ON THE ADDRESSES PROVIDED BY THE ASSESSEE. THESE PARTIES WERE MENTIONED BY THE AO AT PAGE NO. 2 3 & 4 OF HIS ORD ER. THE AO OBSERVED THAT IN 2 RESPONSE TO THE NOTICES SENT TO THE PARTIES MENTION ED AT PAGE NO. 4 NOTICES CAME BACK UNSERVED WITH THE REMARKS AS NO PERSON FOUND . THE AO GIVEN AN OPPORTUNITY TO THE ASSESSEE TO PROVIDE NEW ADDRESSE S CONFIRMATION OR TO PRODUCE THE PARTIES FOR VERIFICATION. IN RESPECT OF SOME OF THE PARTIES THE ASSESSEE HAS FILED CONFIRMATION WHEREIN THE AO FOUND THAT PERMANENT A CCOUNT NUMBER WAS IN RESPECT OF INDIVIDUAL PARTIES WHEREAS SUPPLIERS WER E FIRM ACCORDINGLY HE DECLINED THE CLAIM OF EXPENSE OF RS. 46 60 963/- IN RESPECT OF PAYMENT MADE TO M/S ANUJ GARMENTS AND M/S SHABNAM GARMENTS. THE AO FURTHER O BSERVED THAT APART FROM THESE NEITHER ANY CONFIRMATION IN REGARD TO FOLLO WINGS WERE PROVIDED NOR THEY WERE PRODUCED FOR VERIFICATION: S.NO. NAME OF THE PARTIES AMOUNT INVOLVED (RS.) 1. K.K. ENTERPRISES 49 901 2. NISHA CREATION 1 11 946 3. SAKSHI ENTERPRISES 2 82 725 4. RASS CHEMICALS 78 887 5. BASHIR AHMAD 1 06 871 6. UNIQUE ART 1 29 717 7. AMBEY DYING 94 211 8. UMA DESIGN 1 95 266 TOTAL 10 49 524 3. CONTENTION OF THE ASSESSEE WAS THAT ALL THE PART IES ARE GENUINE AND ARE NOT TRACEABLE DUE TO ONE REASON OR THE OTHER HENCE PAY MENTS MADE TO THESE PARTIES SHOULD NOT BE DISALLOWED. HOWEVER THE AO DID NO T AGREE WITH THE ASSESSEES SUBMISSION AND DISALLOWED THE EXPENSES OF RS. 67.10 LACS. 4. IN AN APPEAL FILED BEFORE THE CIT(A) THE CIT(A) FOUND THAT ASSESSEE HAS FURNISHED CONFIRMATION WITH REGARD TO PURCHASES MAD E FROM M/S ANUJ GARMENTS AND M/S SHABNAM GARMENTS AND THE CIT(A) FOUND THAT PERMANENT ACCOUNT NUMBER WAS ALLOTTED IN THE NAME OF THE INDIVIDUALS WHO ARE PROPRIETOR OF THESE CONCERNS THEREFORE AO HAS WRONGLY OBSERVED THAT W RONG PAN WAS FURNISHED BY THE SUPPLIERS. ACCORDINGLY HE DELETED THE ADDITIO N WITH REGARD TO PURCHASES MADE FROM THESE TWO PARTIES. WITH REGARD TO OTHER PAYM ENTS THE CIT(A) OBSERVED THAT 3 MOST OF THE PAYMENTS WERE MADE TO THE PARTIES BY AC COUNT PAYEE CHEQUE AND ONLY A VERY MEAGER AMOUNT WAS PAID IN CASH THEREFORE G ENUINENESS OF THE PURCHASES WAS DULY ESTABLISHED. 5. AGGRIEVED BY THIS ORDER OF THE CIT(A) REVENUE I S IN FURTHER APPEAL BEFORE US AND ALSO TAKEN A GROUND WITH REGARD TO ADMITTING ADDITIONAL EVIDENCE IN CONTRAVENTION OF RULE 46A. 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND CAR EFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND FORM THE RECORD THAT DISALLOWANCE OF PURCHASES WAS MADE BY THE AO AS MOST OF THE PARTIE S WERE NOT TRACEABLE AND THE SUMMONS ISSUED TO THEM WERE RETURNED BACK UNSERVED WITH THE REMARKS THAT NO PERSON FOUND. HOWEVER BEFORE THE CIT(A) THE ASSE SSEE HAS FURNISHED CONFIRMATION OF SOME OF THE PARTIES ON THE PLEA THA T ASSESSEE HAS BEEN ABLE TO TRACE OUT FOUR PARTIES. THE CIT(A) ALSO OBSERVED IN HIS ORDER THAT ASSESSEE HAS FURNISHED A STATEMENT AND OTHER PROOFS WITH REGARD TO SUPPLIE S MADE BY THESE PARTIES AND THE FACT THAT TDS HAS BEEN DEDUCTED FROM THE BILLS WHER EVER APPLICABLE RAISED BY THESE PARTIES. THE PHOTOCOPIES OF FORM NO. 16-A ISSUED TO THE PARTIES AND COPIES OF FORM NO. 26-C WERE ALSO PLACED BEFORE THE CIT(A) . IT IS UNDISPUTED FACT THAT THESE DOCUMENTS WERE NOT PLACED BEFORE THE AO NOR THE CIT(A) HAS CALLED FOR ANY REMAND REPORT FROM THE AO BY SENDING THESE DOCUMENT S TO HIM. THUS IT AMOUNTS TO VIOLATION OF RULE 46A EVEN NO FINDING HAS BEEN GIVEN BY THE CIT(A) WITH REGARD TO VERIFICATION OF THESE DOCUMENTS TO FIND O UT GENUINENESS OF THE PURCHASES. WITH REGARD TO THE PURCHASES MADE FROM M/S ANUJ GAR MENTS AND M/S SHABNAM GARMENTS WE ARE INCLINED TO AGREED WITH THE OBSERV ATION OF THE CIT(A) TO THE EFFECT THAT SINCE THESE FIRMS ARE PROPRIETOR CONCER NS OF SHRI KISHAN LAL SINGH AND MOHD. SHAKUR THEREFORE PAN WERE TO BE ALLOTTED IN THEIR PERSONAL NAME IN THEIR INDIVIDUAL CAPACITIES AND WHICH WOULD NOT CORROBORA TE WITH THE FIRMS NAME. BUT AT THE SAME TIME NOT ONLY PAN IS TO BE SEEN BUT THE GENUINENESS OF TRANSACTION OF PURCHASES AS A WHOLE IS REQUIRED TO BE VERIFIED FOR ALLOWING THE ASSESSEES CLAIM IN RESPECT OF THESE TWO PARTIES. HOWEVER COPIES OF IN COME TAX RETURNS AND OTHER DETAILS OF THESE PERSONS WERE ALSO FURNISHED BEFORE THE CIT(A) WHICH WERE NOT 4 FILED BEFORE THE AO NOR THE CIT(A) HAS SENT THE DO CUMENTS FILED BEFORE HIM FOR AOS COMMENTS BEFORE DELETING THE DISALLOWANCE. IN THE INTEREST OF JUSTICE AND FAIR PLAY THE MATTER IS RESTORED BACK TO THE FILE OF THE AO FOR DECIDING THE ISSUE AFRESH AFTER GIVING DUE OPPORTUNITY TO THE ASSESSE E. THE ASSESSEE IS ALSO DIRECTED TO FILE ALL THE DOCUMENTS BEFORE THE AO TO SUBSTANT IATE THE GENUINENESS OF EXPENDITURE INCURRED. WE DIRECT ACCORDINGLY. 7. IN THE RESULT THE APPEAL OF THE REVENUE IS ALLO WED FOR STATISTICAL PURPOSES. DECISION PRONOUNCED IN THE OPEN COURT ON 26 TH MAY 2010. SD/- SD/- (C.L. SETHI) (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 26.05.2010. SRB COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT DEPUTY REGISTRAR 5