$~R-58
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision: 13th August, 2014
+ ITA 56/2002
DALMIA CEMENT (BHARAT) LTD. ..... Appellant
Through Mr. Simran Mehta, Advocate.
versus
THE COMMISSIONER OF INCOME TAX..... Respondent
Through Mr. Kamal Sawhney, Sr. Standing
Counsel.
CORAM:
HON'BLE MR. JUSTICE SANJIV KHANNA
HON'BLE MR. JUSTICE V. KAMESWAR RAO
SANJIV KHANNA, J. (ORAL)
This appeal by the assessee-Dalmia Cement (Bharat) Ltd. relates
to assessment year 1982-83 and was admitted to hearing vide order
dated 15th July, 2002, on the following substantial question of law:-
"Whether the Tribunal was justified in
sustaining the addition of Rs.1,99,000/- and
Rs.49,750/-, respectively made by the Assessing
Officer and the CIT (Appeals)"
2. The assessment for the assessment year 1982-83 was completed
under Section 143 of the Income Tax Act, 1961 (Act, for short) vide
order dated 29th March, 1985. Subsequently, it was reopened under
Section 148 read with Section 147 of the Act and return declaring ,,nil
income was filed on 16th April, 1993. The reopening was necessitated
ITA 56/2002 Page 1 of 11
in view of the appellate orders passed in the proceedings for the
assessment year 1985-86. We shall refer to the said order
subsequently.
3. The appellant-assessee, as an exporter, was issued import
licence, dated 12th March, 1981, bearing
No.P/W/2940019/C/XX/781/D/180. As per the terms, the appellant-
assessee could import goods valued at Rs 5,00,000/- under the licence
or could have assigned the licence to an actual user of the imported
goods. In the latter case, the appellant-assessee was required to ensure
complete documentation and file papers before the Chief Controller of
Imports and Exports. The appellant-assessee had claimed that the
aforesaid licence of Rs.5,00,000/- was assigned to M/s. United
Engineers & Traders (Regd.), Ghaziabad (for short, "UET"), a
partnership firm, under an agreement dated 19th February, 1981, on
receipt of premium of Rs.37,500/-. It is an admitted and accepted case
that the appellant-assessee could not file necessary documentation for
utilization before the Chief Controller of Imports and Exports.
Believing that the appellant-assessee had sold the imported goods in
the open market and earned unaccounted income, the assessments for
the year in question were reopened. The Assessing Officer made an
addition of Rs.1,99,000/- and Rs 49,750/-, observing that the assessee
had not been able to show that the goods in question were actually
ITA 56/2002 Page 2 of 11
imported by UET and were utilised by them. The Assessing Officer in
this regard relied upon documents as well as the statement of Joginder
Singh, a partner of UET. He also relied upon the statement of G.
Kapoor, a partner of M/s. H.M. Doyal & Co., who had purportedly
acted as an agent of UET.
4. The aforesaid addition was confirmed by the Commissioner of
Income Tax (Appeals) and by the Tribunal in the impugned order dated
24th August, 2001.
5. Learned counsel for the appellant-assessee has submitted that the
findings recorded by the authorities and the Tribunal are perverse and
contrary to the material on record. He has highlighted that the
Assessing Officer himself had accepted genuineness of all the invoices
under the same import licence. Our attention was drawn to the
documents placed on record, which include a letter dated 19th
February, 1981, written by the appellant-assessee to UET and states
that the appellant assessee would issue a letter of authority in favour of
UET and all costs, charges and expenses, including charges for
opening of the letter of credit and all other bank charges, would be
borne and paid by UET; a letter dated 19th February, 1981 written by
UET by which they had made part payment to the appellant-assessee
and required them to issue a letter of authority in favour of M/s. H.M.
Doyal & Co; another letter dated 20th February, 1981 was written by
ITA 56/2002 Page 3 of 11
UET stating that they were making payment of Rs.15,000/- and a letter
of authority be issued in favour of M/s. H.M. Doyal & Co.; and a copy
of letter of authority dated 25th March, 1981. Our attention was drawn
to the invoice dated 3rd June, 1981 for the import of consignment under
the aforesaid import licence issued by a company in Sweden in favour
of M/s. H.M. Doyal & Co., the bill of lading issued in the name of the
United Bank of India and M/s. H.M. Doyal & Co., which was also
dated 3rd June, 1981. Reference was made to the invoice which was
accepted by the Assessing Officer and was dated 3 rd July, 1981 in the
name of M/s. H.M. Doyal & Co. and the bill of lading in respect of the
said invoice, also dated 3rd July, 1981.
6. The invoice dated 3rd July, 1981, and import thereon, which has
been accepted by the Assessing Officer, refers to the same import
licence, but this would not show that the import made under the
invoice in question dated 3rd June, 1981 was genuine and the material
imported under the invoice dated 3rd June, 1981 was not sold in the
open market. In respect of the invoice dated 3 rd July, 1981, the
Assessing Officer did not make any addition after noticing that there
was a letter from Asia Transport Company, addressed to UET that
categorically stated that the imported goods had been cleared through
them and had been transported to Delhi. They had forwarded a lorry
ITA 56/2002 Page 4 of 11
receipt after endorsement in favour of UET. It was stated by Asia
Transport Company that goods had been imported by UET and had
been sent by them to the said party as clearing and forwarding agents.
It is apparent that Asia Transport Company had supported the claim of
the appellant-assessee in respect of the said invoice and the Assessing
Officer gave benefit of doubt in respect of the said consignment. As
recorded below, we have reservations on this finding and cannot regard
and treat the said finding as conclusive and binding for the
consignment covered under invoice dated 3rd June, 1981. Moreover the
facts are distinguishable as for the invoice dated 3rd June, 1981, there
was no letter of the clearing agent. The imported consignment covered
by the invoice dated 3rd June, 1981 consisted of 12 packages. The
Assessing Officer has specifically noted and recorded that UET in their
affidavit dated 15th February, 1985 had stated that they had not
imported the goods in question under the said invoice. In fact, they
had stated that they had not imported the goods under any of the two
invoices. In categorical terms, they had denied any import whatsoever.
The assessment order further records that during the course of
proceedings for the assessment year 1985-86, statement on oath was
made by Joginder Singh that UET had not affected any
import under the aforementioned import licence. Commissioner of
Income Tax (Appeals) went into details, as before
ITA 56/2002 Page 5 of 11
him the assessee had relied upon the letter of credit as well as the
statement of accounts, which was obtained by the Assessing Officer
from M/s. H.M. Doyal & Co. in support of his contention that the
transaction covered by invoice dated 3rd June, 1986 was also genuine
and no addition was justified. Commissioner of Income Tax (Appeals)
noticed that the statement of accounts furnished by M/s. H.M. Doyal &
Co. started from 10th September, 1981 and the transaction in question
or the invoice in question was dated 3rd June, 1981. Bill of lading was
dated 3rd June, 1981 and the letter of credit, which was opened with
United Bank of India was also dated 3rd June, 1981. The statement of
accounts, furnished by M/s. H.M. Doyal & Co. did not show any
opening balance as on 10th September, 1981. Thus the statement of
account furnished by M/s H.M Doyal & Co. would not help decide the
issue in favour of the appellant-assessee or exonerate them. The
Commissioner of Income Tax (Appeals) referred to the statement of G.
Kapoor dated 18th March, 1988 that the endorsement on the letter of
credit had been done by his uncle, who was a partner in the firm, M/s.
H.M. Doyal & Co.; G. Kapoor had denied any business relationship or
connection prior or later to the said transaction. In his statement, G.
Kapoor had stated that money was received by demand draft, which
was brought by Sunderlal and Mool Chand Gupta. Commissioner of
Income Tax (Appeals) made specific reference to the statement of
ITA 56/2002 Page 6 of 11
Joginder Singh dated 17th March, 1988 in which he had denied having
imported any goods or making any payment. Joginder Singh had
stated that blank letter heads were signed by him as actual user of the
goods and this was done on consideration of a 2% commission. He
denied any business dealing with M/s. H.M. Doyal & Co.
Commissioner of Income Tax (Appeals) emphasised that the appellant-
assessee had not furnished utilisation of the licence on behalf of the
UET in the statement submitted to the Chief Controller of Imports and
Exports. Commissioner of Income Tax (Appeals) observed that the
bill of lading for the import had been endorsed by the appellant-
assessee in favour of UET. This indicated and showed that they were
aware of the import in question and plea to the contrary should not be
accepted. He also recorded a finding that the appellant-assessee had
not been able to show that in which account of Rs.37,500/- purportedly
received by them was credited and the appellant-assessee had pleaded
inability to produce the said accounts on the ground that the books
were not traceable.
7. The appeal filed by the appellant-assessee was dismissed by the
Tribunal primarily relying upon the findings recorded by the
Commissioner of Income Tax (Appeals) and also noticing that
Joginder Singh had clearly denied having made any import under the
licence in question. Specific reference was made to the affidavit filed
ITA 56/2002 Page 7 of 11
by Joginder Singh.
8. Learned counsel for the appellant-assessee has submitted that the
statement of Joginder Singh, his affidavit and the statement of G.
Kapoor of M/s. H.M. Doyal & Co. should not have been taken into
consideration and should have been ignored as the appellant-assessee
was not given any opportunity to cross-examine and was not
confronted with the aforesaid statements/affidavit. Impugned order
passed by the Tribunal does not reveal that any such contention was
raised. Appellant-assessee has filed grounds of appeal raised before
the Tribunal, but we find that no such assertion or contention was
raised therein. In fact, it was pleaded that the statement and affidavit
of Joginder Singh should not be accepted because there were
documents supporting import of goods against the invoice dated 3rd
July, 1981 and payments made to M/s. H.M. Doyal & Co. by UET, by
way of demand drafts, were duly recorded in the books of accounts of
M/s. H.M. Doyal & Co. for the period between 10th September, 1981
onwards. Further, in respect of the invoice dated 3rd July, 1981, M/s.
Asia Transport Company had duly confirmed the import of goods.
9. As noticed above, in respect of the consignment covered by the
second invoice dated 3rd July, 1981, no addition has been made by the
Assessing Officer primarily for the reason that M/s. Asia Transport
Company had confirmed having sent the lorry receipt for transportation
ITA 56/2002 Page 8 of 11
of goods along with their bill to UET. In these circumstances, the
appellant-assessee was given benefit and no addition was made in
respect of this invoice. However, in regard the invoice dated 3rd June,
1981, there was no evidence or material whatsoever. It is noticeable
that the statement of accounts furnished by M/s. H.M. Doyal & Co. did
now show any opening balance as on 10th September, 1981. G.
Kapoor, in his statement recorded on oath under Section 131 of the
Act, had stated that they were purely a trading concern and had
dealings with four companies. They used to make local purchases at a
petty scale. They were not importing goods and the firm, i.e. M/s.
H.M. Doyal & Co., had not been dealing in purchase or sale of import
licences. G. Kapoor categorically denied having made any import
under the licence in question. However, he has accepted that the letter
of credit facility was opened by the firm with Union Bank of India and
payments were made by them for the release of documents. He
accepted that they had acted as an agent of UET, but the transaction
was through Mool Chand Gupta, who was known to his uncles friend ,
Sardari Lal Talwar, but he was not able to tell or state to whom the
documents were handed for imported goods. The said Sardari Lal
Talwar had expired. G. Kapoor could not answer the question as to
how he had endorsed documents in favour of Dalmia International, i.e.
the assessee. He denied having any business connection or relations
ITA 56/2002 Page 9 of 11
with UET prior or later to this transaction. Joginder Singh, in his
statement recorded under Section 131 of the Act, had stated that they
were manufacturing cranes and power winches and had a turnover of
Rs.1.5 lacs to Rs. 2 lacs. Sometimes, they purchased imported material
for their manufacturing operations. They had procured import licences
upto 1970-71 but thereafter no licences had been procured by them.
Their firm had not purchased any import licence after 1970-71 up till
1982-83, but some persons had approached him for signatures, as
actual user for importing goods under the licences, and he had
received, commission @ 2% in cash on the goods imported, but he had
never used the said goods and did not even know what goods were
imported. Letters, purportedly written by UET to the appellant-
assessee, were shown and it was stated by Joginder Singh that he had
signed blank letter heads of the firm and given it to different parties,
who had approached him to sign as actual user of the goods imported.
He denied having known any concern like "Dalmia International" or
"Dalmia Cement (Bharat) Ltd". He also denied having sent the
demand draft of Rs.15,000/- to Dalmia International. He further denied
having dealings with M/s H.M. Doyal & Co. during 1981-82.
10. The main focus and contention of the learned counsel for the
appellant-assessee is that once invoice dated 3rd July, 1981 was
accepted and no addition was made, then no addition was justified in
ITA 56/2002 Page 10 of 11
respect of the invoice dated 3rd June, 1981. We have considered the
said contention and examined the facts and material, but do not find
any merit in the same. In fact, we feel that the Assessing Officer was
rather liberal in accepting the case of the appellant-assessee in respect
of the invoice dated 3rd July, 1981 and this cannot be a ground or
justification for not making any addition in respect of the invoice dated
3rd June, 1981. The conduct of M/s. H.M. Doyal & Co. relied upon by
the counsel for appellant assessee does not inspire confidence or
absolve them. In fact, statement of G. Kapoor goes against the
appellant-assessee. We do not, in these circumstances, think that the
order of the Tribunal requires interference on the ground that there was
no evidence or material, or that the order is perverse.
11. The question of law is accordingly answered against the
appellant-assessee and in favour of the respondent-Revenue. The
appeal is dismissed. There will be no order as to costs.
SANJIV KHANNA, J.
V. KAMESWAR RAO, J.
AUGUST 13, 2014
NA
ITA 56/2002 Page 11 of 11
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