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Subhash Chandra Khurana 30/41, Ganga Vihar Colony Rishikesh Vs. ITO Ward-1 Rishikesh
June, 06th 2014
                                         1                     ITA NO. 3165/DEL/13

                    DELHI BENCH: `G' NEW DELHI

                          I.T.A .No. 3165 /Del/2013(AY-2009-10)

     Subhash Chandra Khurana   vs ITO
     30/41, Ganga Vihar Colony      Ward-1
     Rishikesh                      Rishikesh
     AAXPK5393B                     (RESPONDENT)
                 Appellant by  Sh. Ajeet Dhawan, ADV
                 Respondent by Sh. Ramesh Chndra, CIT DR


      This appeal has been filed by the assessee against the order of Ld. CIT(A)
1, Dehradun dated 4th November, 2013 for A. Y 2009-10.
2.    Brief facts of the case are that the assessee, in the relevant assessment year,
carried on the business of scrap dealer of broken glass, sheet glass and general
scrap. He had filed his return of income declaring total income of Rs.4,28,980/-.
The assessment was completed/ at a total income of Rs.14,39,980/-, inter-alia,
making an addition of Rs.10 lacs u/s 68 in respect of amount outstanding against
M/s Affain Steel Pvt. Ltd. SIDCUL, Haridwar.
3.    Ld. CIT(A) dismissed the assessee's appeal.
4.    Being aggrieved with the order of Ld. CIT(A), the assessee is in appeal
before us and has taken following grounds of appeal:-
      "1.   Because the Ld. CIT(A) has erred in confirming the addition of
            Rs.10,00,000.00 made by the AO on mere surmises conjecture and
                                        2                    ITA NO. 3165/DEL/13

      2.    Because the AO has accepted the entire Trading transaction of the
            creditors M/s Affain Steel (P) Ltd. and the confirmation of the
            creditor is also on the record of the AO and the CIT()A even after
            noting the same has acted arbitrarily by to contain the addition.
      3.    Because the entire addition deserve to be deleted as the appellant
            never agreed to any addition and the observation of the AO to the
            contrary is erroneous and absolutely wrong.
      4.    Because the addition of Rs.10,00,000/- deserve to be deleted."

5.    In all the four grounds, the only issue is regarding addition of Rs. 10 lacs
u/s 68. Brief facts apropos this issue are that Assessing Officer noticed that
assessee had shown several parties as creditors. He requisitioned the copies of
accounts of various parties by issuing notice u/s 133(6) of the Income-tax-Act.
He has observed that in the case of one party viz M/s Affain Steel Pvt. Ltd.
SIDCUL, Haridwar, no reply was received. Therefore, the assessee was required
show cause as to why credit balance appearing against this party may not be
treated as bogus liability at Rs.10 lacs and may not be added to assessee's
income. He has further observed as under:-
      " The assessee could not submit any explanation in this regard and finally
      agreed for the addition, therefore, an addition of Rs.10,00,000/- is being
      made to the income of the assessee."

6.    He, accordingly, made an addition of Rs.10 lacs.
7.    Before Ld. CIT(A) the assessee had submitted as under:-
      "1.1 The assessee's submission in appeal on this point is summarized
           Affain Steel (P) Ltd. had duly responded to the Ao's notice and had
           confirmed assessee's debit balance in its books of account. The
           reply had been delivered in the AO's office by the Overnight Express
           Courier vide airway bill NO. 7753810971 on 21/11/2011. In view of
           this, there was no jurisdiction for the addition."
                                        3                     ITA NO. 3165/DEL/13

8.    Ld. CIT(A) confirmed the addition, inter-alia, observing that by agreeing
that the amount of cash credit be treated as his income, assessee suggested that
the cash credit was not genuine. He further observed that it was not assessee's
case that the confession had not been made or it had been made under duress.
9.    Ld. Counsel Shri Ajit Dhawan for the assessee filed before us copy of
confirmation of accounts for the period from 1st April 2008 to 31st March 2009
and 1st April 2009 to 31st March 2010 from M/s Affain Steel Pvt. Ltd. contained
from paper book page no. 1 to 3 of paper book.            With reference to this
confirmations, Ld. Counsel pointed out that there had been regular transactions
with this party and the payments have been made through banking channels.
Therefore, there was no question of making addition u/s 68. Ld. Counsel further
pointed out that as far as the findings of lower revenue authorities regarding
agreed addition are concerned, the same are not correct. In this regard, Ld.
Counsel referred to Statement of Facts filed before Ld. CIT(A) wherein, inter-
alia, it was stated as under:-
            " The fact however are that the credit balance of Rs.10,00,000/-
            standing in the appellant's books of accounts to the credit of M/s
            Affain Steel Pvt. Ltd was duly confirmed by the creditor vide its
            letter dated 13/12/2011 addressed too the Ld. AO which for the rush
            of papers in his office during the relevant time couldn't reach the
            appellant's file. Moreover, the appellant had vehemently contested
            the proposed addition of Rs.10,00,000/- and had never agreed to its
            inclusion in his total income.
10.   He further referred to grounds of appeal no. 4 taken before CIT(A) which
reads as under:-
      "4.    That the observation of the Ld. AO in his order about the appellant
             having agreed for the additions made by the Ld. AO to his total
             income is incorrect and any record to tht effect in the order sheet on
             the proceedings' file is incorrect and in gross breach of trust.
                                         4                     ITA NO. 3165/DEL/13

11.   Ld. Counsel submitted that Ld. CIT(A) did not consider these pleadings
and ground and merely confirmed the addition. Ld. Counsel further submitted
that the party belonged to Haridwar and PAN details were given in the
confirmation and since both, the creditor as well as assessee, were under same
jurisdiction, therefore, there was no difficulty in making necessary verifications.
12.   Ld. DR relied on the order of Ld. CIT (A) and submitted that the addition
had been made on the basis of assessee's confession.
13.    We have considered the rival submissions and have perused the records of
the case. From the statement of facts and grounds of appeal filed before Ld.
CIT(A), noted earlier, it is evident that confirmation of statement of A/c sent by
(M/s Affine Steels (P) Ltd) to Assessee was before Assessing Office as the same
had been delivered on 21st November, 2011 and the Assessment Order was
passed on 29/12/2011. However, the Assessing Officer has observed that no
reply had been received.      Therefore, there is apparent contradiction in the
findings recorded by Assessing Officer and the documents on record.              Ld.
CIT(A) has taken note of confirmation but without considering the specific
ground raised before him held that assessee had agreed for the addition.
Therefore, the confirmation filed by the party has not been considered by both the
lower revenue authorities. The Assessee had duly discharged its primary onus by
furnishing the necessary confirmation along with details. We find from the
confirmation that all the transactions were through bank account and there were
regular dealings with the party. The AO had not disputed the purchases from the
party and, therefore, when all the relevant details regarding creditor were
furnished by Assessee, no addition was warranted. However, since necessary
verification of confirmation has not been done, therefore, as agreed by both the
parties, we restore this matter to the file of Assessing Officer for the purposes of
                                             5                     ITA NO. 3165/DEL/13

examining the confirmation filed by the M/s Affain Steel Pvt. Ltd. and if no
discrepancy is found there then no addition is called for.
14.      In the result, the assessee's appeal is allowed for statistical purposes.

The order is pronounced in the open court on 4th of June 2014.

    Sd/-                                                           Sd/-
(C. M. GARG)                                                 (S.V.MEHROTRA)

JUDICIAL MEMBER                                          ACCOUNTANT MEMBER

Dated:        04/06/2014
*R. Naheed*

Copy forwarded to:
1.                              Appellant
2.                              Respondent
3.                              CIT
4.                              CIT(Appeals)
5.                              DR: ITAT

                                                          ASSISTANT REGISTRAR
                                                                ITAT NEW DELHI
6   ITA NO. 3165/DEL/13
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