IN THE INCOME TAX APPELLATE TRIBUNAL
(DELHI BENCH ` G', NEW DELHI)
BEFORE SHRI N. K. SAINI, ACCOUNTANT MEMBER
AND SHRI KULDIP SINGH, JUDICIAL MEMBER
I.T.A. No. 3432/Del/2015
Assessment year : 2006-07
Sh. Rakesh Kumar Bhargava, Vs. ITO, Ward 19(2),
Prop. M/s. Mapytron Systems, New Delhi
17, Narinder Bhawan,
448, Ring Road, Azadpur
Delhi 110 033
GIR / PAN:AAGPB6366G
(Appellant) (Respondent)
Appellant by : Ms. Ira Gupta, Adv.
Respondent by : Shri Sujit Kumar, Sr. DR
Date of hearing : 24.08.2015
Date of pronouncement : 17.09.2015
ORDER
PER KULDIP SINGH, JM:
Appellant assessee, by filing the present appeal has sought to set aside
the impugned order dated 29.08.2014 passed by Ld. CIT(A) XXII, New
Delhi for the Assessment Year 2006-07 on the sole effective ground that
"Ld. CIT(A) XXII has erred in holding that credit of Rs.9,14,516/- (Rupees
Nine Lac, Fourteen Thousand Five Hundred Sixteen Only) from 11 sundry
creditors were bogus and thereby upheld the addition made by the A.O. of
Rs.9,14,516/-.
2 ITA No.3432/Del/2015
2. The brief facts of the case are: during the processing of income tax
return filed by the assessee for the Assessment Year 2006-07, declaring an
income of Rs.1,38,320/-, the case was put under scrutiny through CASS and
consequently, notice u/s 143(2) dated 19.10.2007 was issued. The assessee
attended the assessment proceedings from time to time and claimed his
sundry creditors to the following effect:-
1 M/s. Mayur Electronics Rs.28,159/-
2 M/s. Verma Engineering Works Rs.1,59,955/-
3 M/s. S.L.B. Exports Ltd. Rs.48,430/-
4 M/s. J.K. Tube Co. Rs.24,248/-
5 M/s. N.K.A. RCC Pipes Sup. Rs.2,57,283/-
6 M/s. Ved Generators Rs.1,49,377/-
7 M/s. Katyal B.M.S. Rs.18,750/-
8 M/s. R. K. Enterprises Rs.83,326/-
9 M/s. Natraj Sanitary & P Rs.68,354/-
10 M/s. Walia Fabricators Rsa.72,368/-
11 M/s. Rajni Build. M. Sup. Rs.4,500/-
Rs.9,14,750/-
3. To ascertain the genuineness and creditworthiness, the assessee was
required to furnish names, complete address and amount of creditors vide
questionnaire dated 07.01.2008. The assessee filed his reply dated
29.01.2008 but failed to furnish requisite information. Then, vide letter
dated 01.07.2008, the assessee was asked to furnish confirmation of
3 ITA No.3432/Del/2015
creditors, which he has furnished pertaining to the period 1998-99 to 2001-
02 and further submitted that all these payments are pending since 2000-01
due to delay of payment from M/s. NBC Corpn. Ltd. In order to verify the
claim made by the assessee, notices u/s 133(6) of the Act were issued for
confirmation from the parties concerned. Pursuant to the notices issued u/s
133(6), M/s. J. K. Tube Co. and M/s. S.L.B. Exports Ltd. have denied to
have any business transaction with the assessee during the relevant period of
2005-06 and 2006-07. However, the assessee has filed confirmation
regarding following sundry creditors:-
1 M/s. Mayur Electronics Rs.28,159/-
2 M/s. Verma Engineering Works Rs.1,59,955/-
3 M/s. N.K.A. RCC Pipes Sup. Rs.2,57,283/-
4 M/s. Ved Generators Rs.1,49,377/-
5 M/s. Katyal B.M.S. Rs.18,750/-
6 M/s. R. K. Enterprises Rs.83,326/-
7 M/s. Natraj Sanitary & P Rs.68,354/-
8 M/s. Rajni Build. M. Sup. Rs.4,500/-
4. The assessee has also furnished some copies of bills in support of
claim of creditors but the copies of bills pertaining to M/s. Ved Generators,
Sumit Katyal and N. K. Agarwal do not reflect charging of interest nor any
such instruction have been given. Consequently, A.O. arrived at the
conclusion that Inspector of Income Tax of the concerned ward be deputed
for inquiry report of M/s. R, J, Enterprises Verma Engineering works, Natraj
4 ITA No.3432/Del/2015
Sanitary and Hardware Paints and Ved generators and the same sundry
creditors are not existing at the given address. Consequently, the A.O.
arrived at the conclusion that there is no liability of assessee towards the
claimed sundry creditors and the claim of Rs.9,14,750/- is a bogus liability
and liability which has ceased to exist. Ld. CIT(A) vide impugned order,
upheld the order passed by the A.O. Feeling aggrieved, the appellant, has
come up before Tribunal by way of the present appeal.
6. Ld. A.R. for the assessee challenged the impugned order by
contending inter alia that A.O. as well as Ld. CIT(A) have erred in holding
that all the eleven sundry creditors as claimed by the assessee, are not
existing and the entries claimed by the assessee are bogus one; that the A.O.
has not filed any affidavit to the effect that the assessee has failed to produce
such sundry creditors, therefore, the confirmation letters as detailed at page 5
of the impugned order have been wrongly treated as stereotyped; that the
assessee has not been given sufficient time to file reply nor it was asked to
produce such sundry creditors nor he was confronted with the confirmations
field by sundry creditors, and prayed for setting aside the impugned order.
8. On the other hand, Ld. D.R. relied upon the order of A.O. as well as
Ld. CIT(A) and contended that since out of eleven sundry creditors claimed
by the assessee, two were found to be not existing and confirmations made
by eight sundry creditors were found to be stereotyped, nor any material has
been placed on record to support the confirmations, the assessee has no
liability towards the said eleven creditors and the claim of Rs.9,14,750/- was
bogus one and the A.O. has rightly made the addition of Rs.9,14,750/- and
prayed for dismissal of the present appeal of the assessee.
5 ITA No.3432/Del/2015
9. Undisputedly, M/s. J. K. Tubes and S.L.B. Exports Ltd. have denied
the claim of transaction with the assessee whereas, remaining nine parties
were called upon to supply the information during assessment proceedings
and remand proceedings u/s 133(6) of the Act. However, the notices sent to
them have been received back unserved and without compliance. For ready
reference, the outcome of the notices issued to the assessee is reproduced as
under:-
S.No. Name & address status
1 Shri Yrav Dewal Returned back unserved
Prop. M/s. Natraj Sanitary Hardware & Paints, by the postal
Miyawali Nagar, New Rohtak Road, Delhi-110 087 authorities.
2 Shri R. K. Aggarwal Returned back unserved
Prop. M/s R K Enterprises by the postal
2nd Floor, 1528, Bhagirath Palace authorities.
Delhi-110006
3 Shri Sumit Kr. Katyal Returned back unserved
Prop. M/s S K Katyal B M Suppliers by the postal
Derawal Nagar, G. T. Road, Delhi110009 authorities.
And
2/21, Roop Nagar, Delhi-110007
4 Shri Ved Prakash Neither letter received
Prop. M/s Ved Generators back nor any
Shop No.9, New Market, Opp. OBC Nangloi, Delhi- compliance to the letter.
110041
5 Shri Madan Lal Returned back unserved
Prop. M/s Rajni Building Material Supplier Badli by the postal
Village, Outer Ring Road, Delhi. authorities.
6 Shri Narinder Kumar Aggarwal Prop. M/s N K Neither letter received
Aggarwal A-80 DDA Colony, back nor any
Khayola, Delhi-110018. compliance to the
letter.
7 Shri Mohan Lal Verma Neither letter received
Prop. M/s Verma Engineering Works back nor any
Flat No. 91, Pocket B-5, Sector-18, Rohini, Delhi- compliance to the
110085. letter.
8 Shri Akash Bhargava Prop.M/sMayur Electronics & Returned back unserved
Electricals New Railway Road, Gurgaon-122001. by the postal
authorities.
6 ITA No.3432/Del/2015
9 Shri H S Walia Prop. M/s Walia Steel Works & Steel Returned back unserved
by the Fabricators, Palam Vihar, Polom-Delhi by the postal
authorities.
Road, Gurgaon, Haryana
10. We have heard authorized representatives of the parties to the appeal
and gone through documents placed on record in the light of the facts and
circumstances of the case.
11. Keeping in view the undisputed fact that the assessee has placed
before Assessing Officer the confirmations made by his nine sundry
creditors as required u/s 133(6) of the Act, documents relied upon by the
parties and submissions made before the Bench, we are of the considered
view that Ld. CIT(A) has erred in passing the impugned order dated
29.08.2014 in affirming the addition of Rs.9,14,750/- made by the A.O. vide
order dated 16.12.2008 for the following reasons:-
i) that both, the A.O. as well as Ld. CIT(A) being judicial
authorities, were under obligation to adhere to the rule of natural
justice by providing opportunity of being heard to the assessee to
produce nine sundry creditors whose confirmations have been duly
placed on record during assessment / remand proceedings;
ii) that when the assessee has discharged its onus u/s 68 of the Act
by providing confirmation letter from the sundry creditors, the onus
stands shifted to the A.O. to controvert the same by bringing cogent
evidence on record, that the said parties are not existing and their
creditworthiness and genuineness is highly doubtful. The A.O. has
rather summarily dismissed the confirmation letters on the sole
7 ITA No.3432/Del/2015
ground that the same are stereotyped and has never given findings that
the confirmation filed by the assessee in respect of the nine sundry
creditors are fake one and of non existing entities;
iii) that no doubt Inspector, income tax deputed by the A.O.
reported that M/s. R. K. Enterprises, Natraj Sanitary and Verma
Engineering works are non-existing, but the assessee has never been
provided opportunity to produce them, or to fill their latest addresses
but outrightly, ignored the confirmations and business transactions
submitted by the assessee;
iv) that notices sent to nine parties detailed at page 20 of the
impugned order are shown to have been received back unserved but
thereafter, no opportunity has been provided to the assessee to provide
their latest address or to produce the parties before the A.O. nor any
effort has been made to serve them through substitute service;
v) that confirmation filed by assessee pertaining to nine parties /
sundry creditors detailed at page 20 of the impugned order ought not
to have been rejected merely on the ground that the letters sent to
them by the A.O. have been received back unserved except with
thorough probe;
vi) that it is abundantly clear from the facts on record that A.O. has
failed to verify confirmations filed by the assessee rather rejected the
same on the basis of conjectures and surmises.
12. In view of what has been discussed above, the impugned order dated
29.08.2014 passed by ld. CIT(A) affirming the addition of Rs.9,14,750/-
made by A.O. vide order dated 16.012.2008 is not sustainable in the eyes of
8 ITA No.3432/Del/2015
law, hence, hereby set aside. Consequently, the case is restored to the file of
A.O. for verification of confirmations filed by assessee by providing
opportunity of being heard to the assessee.
12. In the result, appeal field by the assessee is allowed for statistical
purposes.
13. Order pronounced in the open court on 17th Sep., 2015.
Sd./- Sd./-
( N. K. SAINI) (KULDIP SINGH)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Date: 17.09. 2015
Sp
Copy forwarded to:-
1. The appellant
2. The respondent
3. The CIT
4. The CIT (A)-, New Delhi.
5. The DR, ITAT, Loknayak Bhawan, Khan Market, New Delhi.
True copy.
By Order
(ITAT, New Delhi).
S.No. Details Date Initials Designation
1 Draft dictated on 24/8 Sr. PS/PS
25/8,
2 Draft placed before author Sr. PS/PS
4,7,10/9
Draft proposed & placed before the
3 JM/AM
Second Member
Draft discussed/approved by Second
4 AM/AM
Member
5 Approved Draft comes to the Sr. PS/PS 17/9/15 Sr. PS/PS
6 Kept for pronouncement 17/9 Sr. PS/PS
7 File sent to Bench Clerk 17/9 Sr. PS/PS
Date on which the file goes to Head
8
Clerk
9 Date on which file goes to A.R.
10 Date of Dispatch of order
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