$~11
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% DECIDED ON: 02.12.2013
+ ITA 132/2011, C.M. APPL.1020/2011
USHA IRON & FERRO METAL CORP LTD ..... Appellant
Through: Mr. Prakash Kumar, Advocate.
versus
CIT ..... Respondent
Through: Mr. Rohit Madan, Advocate.
CORAM:
HON'BLE MR. JUSTICE S. RAVINDRA BHAT
HON'BLE MR. JUSTICE NAJMI WAZIRI
MR. JUSTICE S.RAVINDRA BHAT (OPEN COURT)
1. The assessee in this appeal under Section 268 of the Income
Tax Act urges that two questions of law arises for consideration.
The first, it is submitted, pertains to the correctness of the ITAT
directions to add Rs.22 lakhs towards alleged bogus freight and
forwarding expenditure by an estimating exercise. The second
question of law urged is that the lower authority fell into error in
adding Rs.6,84,22,895/- on account of outstanding credit balance in
the name of one M/s Smriti Sales Private Limited.
2. The facts necessary for the purpose of deciding the present
appeal are that on 14.02.2001, the appellant's premises and other
group companies numbering about 250 - were subject to search and
ITA 132/2011 Page 1
seizure proceedings. Subsequently, the appellant and the other
concerns which were subject to the search were issued with notice on
30.08.2001 under Section 158 (BC) requiring the furnishing of return
of income including undisclosed income for the period 1.4.1990 to
14.2.2001. Apparently, during the course of the proceedings having
regard to the complexity of accounts, special audit under Section 142
(2) (A) of the Income Tax Act were also ordered. Though, this Court
is not directly concern with details of those facts, yet to the extent it is
relevant is worth noticing that the appellant did not cooperate with the
Special Auditors who had to proceed with some difficulty and
nevertheless filed the report within the time allocated.
3. On 16.10.2013, the Assessing Officer framed the assessment
order directing a total addition of Rs.9,71,23,895/-. The appellant in
these proceedings challenges the addition on account of alleged bogus
freight and forwarding expenditure to the tune of Rs.22 lakhs for the
said period and towards unexplained cash credit - added back by the
Assessing Officer and upheld by the CIT to the tune of
Rs.6,84,22,895/-.
4. It is urged that so far as the addition of Rs.22 lakhs goes, the
Assessing Officer and the higher authorities fell into error in relying
solely on the testimony and deposition of one Vineet Bhargava who
stated that the freight expenses did not reflect actual expenditure or
transactions. It was sought to be highlighted that the pre condition
for adding back such amounts or disallowing the expenditure so that it
could attract Section 68 was the exactitude with which the transaction
could be pin pointed. The counsel further submitted that the
ITA 132/2011 Page 2
deposition of Vaibhav Bhargava cannot be termed as conclusive in
these circumstances since the answer to question no.5 relied upon by
the Assessing Officer and other officials nowhere indicated that the
expenditure he was referring to pertains to the appellant.
5. On the second issue, i.e., the addition of Rs.6,84,22,895 under
Section 68 of the Act, learned counsel urged that this amount was
reflected even in the previous balance sheet, as on 31.3.2000 and is
subject to regular assessment. It was submitted that in these
circumstances, the Assessing Officer dealt with this amount and
concluded that the same have to be added back under Section 68 of
the Act.
6. We notice from the reading of the assessment order - which is a
fairly detailed one and has discussed threadbare the evidence placed
before the authorities. The reference to the sum of Rs.22 lakhs was
in the context of amounts claimed to have been spent towards freight
and forwarding charges. Although, the succeeding question and
answers had mentioned specific companies, neither could the
appellant dispute nor is it disputed before us that the sum of Rs.22
lakhs pertains only to the appellant company. This was what was
claimed as actual freight and forwarding charges which the concerned
employee Vineet Bhargava clearly disclaimed in the course of his
deposition. The appellant does not dispute that the Vineet Bhargava
could have been subjected to cross examination. His testimony
remained unrebutted and unchallenged. In these circumstances, the
addition in the opinion of this Court cannot be termed as unwarranted
or contrary to law.
ITA 132/2011 Page 3
7. So far as the addition of Rs.6,84,22,895/- goes, there is no
dispute in the first place to the fact that an amount was received
towards the credit balance. However, the appellant's submission
today appears to be that this credit balance had been reflected in the
previous years' books and also subjected to assessment. That too in
the opinion of this Court cannot be determinative because as on
14.02.2001 as well as in the revised income tax returns and the
relative supporting documents filed by the assessee, said amount
appeared and was claimed. That such amount remained
unchallenged in the previous proceedings, in the opinion of this
Court, no way shifted the burden of proving what the appellant
claimed as a credit of Rs.6,84,22,895/- as on the date of search and
seizure. It was concededly unable to substantiate such credit in
favour of third party concerned, i.e., M/s Smriti Sales Pvt. Ltd. That
concern appears to have been a bogus one and part of the Usha Group
Devices to claim unwarranted expenditure and thus reduce tax
burden.
8. In view of the above discussion, this Court is satisfied that no
question of law arises for interpretation in this appeal; the same is
consequentially dismissed with no order as to costs.
S. RAVINDRA BHAT
(JUDGE)
NAJMI WAZIRI
(JUDGE)
DECEMBER 02, 2013/vks/
ITA 132/2011 Page 4
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