Income Tax Appellate Tribunal - Delhi
Acit Circle-57(1), New Delhi vs Subhash Chand Jain, New Delhi on 23 May, 2023
THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'G', NEW DELHI
Before Dr. B. R. R. Kumar, Accountant Member
Sh. Yogesh Kumar US, Judicial Member
ITA No. 8017/Del/2019 : Asstt. Year: 2015-16
ACIT, Vs. Subhash Chand Jain,
Circle-57(1), 121/A, Old Tejab Mill,
New Delhi Bhola Nath Nagar, Shahdara,
New Delhi-110032
(APPELLANT) (RESPONDENT)
PAN No. AALPJ0540P
Assessee by : Sh. Sourbh Jindal, CA
Sh. Chirag Nagpal, Adv.
Revenue by : Sh. Ram Dhan Meena, Sr. DR
Date of Hearing: 23.02.2023 Date of Pronouncement: 23.05.2023
ORDER
Per Dr. B. R. R. Kumar, Accountant Member:
The present appeal has been filed by the Revenue against the order of the ld CIT(A)-19, New Delhi dated 03.07.2019.
2. The Revenue has raised the following grounds of appeal:
"1. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs.9,49,682/- made by the AO u/s 40A(3) where the assessee during the assessment proceedings had failed to furnish the documentary evidence like bills or mode of payment. The assessee did not furnish the bank account details relating to the direct expenses made on the purchase of construction material. Further, it is not clear from the order of the Ld. CIT(A), whether all the bills/vouchers of expenses claimed were seen and verified.2 ITA No. 8017/Del/2019
Subhash Chand Jain
2. On the facts and in the circumstances of the case, the Ld. CIT(A) has failed to note the total impact on the revenue as the assessee was having two separate books of accounts for two separate businesses. The Ld. CIT(A) without giving justified reasons deleted the addition of Rs. 18,12,451/-.
3. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in not considering the Inspector's report which found out that others who purchased flat in the same year in cash (which cannot be proven) paid around Rs. 18,00,000/- whereas assessee had shown payment of Rs.15,50,000/-.
4. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in ignoring the facts of the case as produced by AO while disallowing the amount of Rs.1,68,78,821/- as bogus purchases. The six parties accounts as mentioned therein were not confirmed by such parties and Ld. CIT(A) has not mentioned in his order that such verified accounts were furnished before him and entries in Parties accounts were of regular in nature along with supporting documentary evidences to prove genuineness of transactions."
Disallowance u/s 40A(3):
3. The AO held that, "the assessee has claimed direct expenses ( Purchase of construction material) of Rs. 31,65,607/- . The assessee could not produce bills of the said expenditure no r the bank account de tails proving payment by cheque/RTGs. 30% of such expenditure is being disallo wed u/s 40A( 3)."
[Additio n of Rs. 9,49,682/-]
4. The ld. CIT(A) deleted the addition on the grounds holding that the books of accounts have been produced before the AO, the payments of amounts in cash over the specified limit has 3 ITA No. 8017/Del/2019 Subhash Chand Jain not been established and there was no basis for ad-hoc disallowance of 30%. Since, the order of the ld. CIT(A) is on sound rationale, we decline to interfere with the order of the ld. CIT(A).
Addition of Rs.18,12,451/-:
5. The AO held that, "6. In JCS co nstructio n's balance sheet pro prietor opening capital 1st April 2014 was (-19,57,702/-) again the proprieto r withdrew Rs. 1,70,369/- . On 31st march 2015 pro prieto r capital was Rs. (- 18,88,255.35). In A.Y. 2015- 16 S h. Subhash Jain also bought 1 prope rty wo rth Rs. 1.40 crore despite claiming loss in constructio n business. Interest expe nses of Rs. 16,94,906/- and bank charge Rs. 117545 there fore , is being disallowed as under this circumstances business nexus o f inte rest expenses can neve r e xist. [Additio n - Rs. 18,12,451/-]"
6. The ld. CIT(A) deleted the addition holding that, the order of the AO is cryptic, the assessee has not purchased any property as alleged by the AO, there is no justifiable ground to disallow the interest expenses as the assessee has earned taxable income of Rs.18,87,970/- and doing regular business. There were no evidence brought on record by the AO to prove that the amount has been utilized for personal purpose and other than business purpose. Hence, we decline to interfere with the order of the ld. CIT(A).4 ITA No. 8017/Del/2019
Subhash Chand Jain Addition of Rs.2,50,000/-:
7. The AO held that, "9. You received the whole amount in cash from the buye r of your prope rty in 11/47 Teliwara what yo u claim to be Rs.15,50,000/- . But from inspecto r re port it has been found that o thers who purchased flat in the same year paid around Rs. 18,00,000/- measuring same area in the same complex. "
[Additio n o f Rs. 2,50,000/-]
8. We have gone through the grounds raised by the revenue on this issue "3 . On t h e fa ct s an d in t h e ci r cu m st an c es o f t h e ca s e, t h e Ld . CI T( A ) h a s e rr e d i n n ot c on sid e r in g t h e In sp e ct o r ' s r ep o rt wh i ch f ou n d ou t t h at ot h e r s wh o p u r c h as ed flat in th e s am e y ea r i n ca sh ( w h i ch c a nn ot b e p r o ve n) p aid a r ou n d R s . 1 8, 0 0 ,0 0 0/ - wh e r e as a ss e s s e e h ad sh o wn p ay m en t of R s .1 5 ,5 0, 0 0 0/ - . "
9. Apparently, the revenue itself is not very sure of the receipt of the cash nor there was any evidence. The ld. CIT(A) deleted the addition holding that there was no basis for such allegation. Hence, we decline to interfere with the order of the ld. CIT(A).
Bogus Purchases, Sundry Creditor:
10. The AO held as under:
"Jain Chappal Sto re [Obse rve d with Balance shee t, P&L Account of lain Chappal Sto re alo ne).
From the assessment procee dings it has been found that in assessee's balance sheet assessee has sho wn sundry creditors worth Rs. 3.21 Crore . During the proce eding assessee was aske d to 5 ITA No. 8017/Del/2019 Subhash Chand Jain produce confirmation from the parties along with their PAN and address. He complied to the same and produced confirmatio n from the sundry credito rs.
In the given addre sses notice u/s 133(6) was sent. To the surprise of this o ffice no response from the sundry creditors was receive d apart from Welcome Footware. Le tters to Columbus International, Revel footwe ar, Techno mech India Rubber, Jain Associates, VB Minerals Resin Pvt. Ltd. have been received back by this o ffice due to non delivery.
To Check the genuinene ss of the confirmation assessee submitted, those were scrutinized tho roughly by this office . It was noticed that confirmation from Columbus international Pvt. Ltd. Galaxy footwear, Hallelu CLM footwear LLP, Mano cha Polymer, Oswal Industries, VB minerals contain the same signature. The re are the three e ntities unde r the Initials Galaxy. Assessee has pro vided confirmatio n from these three partie s. Ho wever, o utstanding amount for three parties of galaxy as pe r confirmation does not match with the amount shown in assessee subm ission. Footwe ar ( Klick) India Pvt. Ltd. is o ne o f assessee's sundry credito rs. On 24.02.2015 he purchased pro duct worth Rs 35,54,589/- against vo ucher no.V 3- 420,421,422 as state d in his confirmatio n from Klick I ndia. Assessee did not produce these vouche rs yet. As per assessee submission V B Mine rals & Resin is his sundry cre ditor's with credit outstanding Rs. 89,760/ -. As per the Confirmation form V.B. Minerals it has sho wn credit balance outstanding against assessee name of Rs 4,78,240/ - i.e . he is a creditors for him. Based on these circumstantial evide nces assessee is re quested to show cause why all the purchases made from these parties will not be disallowe d as the y seems to be bogus-prima facie . The assessee could not produce any proo f to prove purchases from below mention sundry creditors ge nuine.
11. So purchase being disallowe d in A.Y. 2015- 16:-6 ITA No. 8017/Del/2019
Subhash Chand Jain Party Name Name Klick India Rs. 35,54,589/-
VB Resin Rs. 30,28,715/- Galaxy Foo twear Rs. 21,38,790/- Manocha Po lymer Rs. 71,05,440/- Oswal I ndustries Rs. 5,77,440/- Hallelu CLM foo twear LLP Rs. 4,73,847/- Total amount Rs. 1,68,78,821/-
12. These Purchases of Rs. 1,68,78,821/- is being held as bogus and being adde d to the total income of the assessee ."
[Additio n o f Rs. 1,68,78,821/-]
11. The ld. CIT(A) deleted the additions holding that All payments that have been made by cheque or by RTGS. The payments to these very parties have been made even in the subsequent year against purchases made. The transactions with these parties have been running well into subsequent year(s). The quantitative tally of the appellant has not been disturbed. The VAT payments as have been made ignored by the A.O. The appellant has regular transactions with these parties not only in the earlier year but also in the subsequent year. The A.O has not disturbed the transactions with these parties. Infact, the carrying on business of the appellant has been duly accepted as per the assessment order dated 20.12.2018 for A.Y. 2016-17. These very parties (trade creditors) have transactions in the subsequent which have not been doubted.
12. The books of accounts of the appellant which are audited have been duly accepted. I find that the A.O has no basis to 7 ITA No. 8017/Del/2019 Subhash Chand Jain disallow purchases made from this parties totaling to Rs. 1,68,78,821/- as bogus in this year, when the existence of the seller has not been denied and continuing transactions from this year have been accepted as genuine in the subsequent year.
13. We find that the assessee has failed to discharge the primary onus of proving the purchases as genuine against the discrepancies found out by the Assessing Officer viz., the signature and mismatch of the credit balances.
14. Hence, we remand the matter to the file of the AO to provide an opportunity to the assessee to submit the relevant documents with complete details. The appeal of the assessee on this ground is allowed for statistical purpose.
15. In the result, Ground Nos. 1, 2 & 3 of the appeal is dismissed and Ground No. 4 is allowed for statistical purpose.
Order Pronounced in the Open Court on 23/05/2023.
Sd/- Sd/-
(Yogesh Kumar US) (Dr. B. R. R. Kumar)
Judicial Member Accountant Member
Dated: 23/05/2023
*Subodh Kumar, Sr. PS*
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR