Bharat Bhushan Nayyar, New Delhi vs Department Of Income Tax

ITO, Ward 29 (3), vs. Shri Bharat Bhushan Nayyar, New Delhi. N & B Medical Products & Co., 1935/112, Fountain, Electric Market, Chandni Chowk

(PAN : AADPN0250A)

(APPELLANT) (RESPONDENT)

ASSESSEE BY : Shri Kapil Goel, Advocate REVENUE BY : Shri Amit Jain, Senior DR

Date of Hearing : 09.06.2015 Date of Pronouncement : 12.06.2015

ORDER

PER GEORGE GEORGE K. :

The appeal, at the instance of the department, is directed against the

order of the Commissioner of Income-tax-XXV, New Delhi dated

28.09.2011. The relevant assessment year is 2008-09.

2. The assessee is the proprietor of M/s N&B Medical Products & Co.

The return of income was e-filed on 30.09.2008 declaring income of

Rs.2,24,160/-. The return was processed u/s 143 (1) on 26.02.2009.

Subsequently, the case was selected for scrutiny under CASS. A notice u/s 2 ITA Nos.5508/Del./2011

143(2) dated 04.08.2009 was sent at the address given by the assessee and the

said notice was returned back. Later on, various notices u/s 143(2) were

issued and the same were returned with the remarks "left without address".

The notice was also served by affixture on 25.09.2009. Another notice u/s

143 (2) dated 21.09.2010 was personally served at Gurgaon's address to the

assessee on 21.09.2010 fixing the case for 08.10.2010. In response to this

notice, Mr. Mohit Sharma, CA/AR of M/s. ANM Associates Chartered

Accountants filed a letter dated 08/10/2010, along with annexure consisting

of 8 pages, which included P&L, Balance Sheet, without Audit Report. Later

on, the case was adjourned to different dates but nobody appeared on behalf

of the assessee. Finally, the case was listed for 24.12.2010 and a copy of the

notice was also sent to the AR of the assessee. This notice was also remained

uncomplied with. The Assessing Officer asked the assessee to produce books

of account along with vouchers but the same were not produced for

examination and even no voucher whatsoever was furnished by the assessee.

The Assessing Officer noticed that the assessee has not declared his bank

account maintained in ICICI Bank, wherein total deposits are Rs.19,37,545/-

which included cash deposits as mentioned in AIR information. Even after

affording sufficient time and ample opportunity, the assessee could not

explain the sources of deposits made in this account. The Assessing Officer

also observed that the assessee deliberately had not produced books of

accounts with vouchers if any maintained and had not declared the two bank 3 ITA Nos.5508/Del./2011

accounts during the assessment proceedings. In these circumstances, the

Assessing Officer completed the assessment u/s 143(3) of the Act on a total

income of Rs.26,10,875/- on 29.12.2010.

3. Aggrieved, the assessee preferred an appeal to the ld. CIT (A) who,

vide order dated 28.09.2011, partly allowed the appeal of the assessee.

4. Against the order of the CIT (A), the revenue is in appeal before us.

5. The first ground is against the deletion of addition of Rs.13,73,349/-

made by Assessing Officer u/s 43B of the Act.

6. The assessee had claimed the expenditure of Rs.13,73,349/- as custom

duty and the same was debited in the P&L account and there was nothing

payable. Before the ld. CIT (A), ld. Counsel for the assessee submitted that

there was no liability in the balance sheet but the Assessing Officer had made

the disallowance by mistake and no such addition had been made in the

computation of income by the Assessing Officer as there is no liability as

provided u/s 43B. It is submitted by the assessee that the Assessing Officer

was not justified to make the addition without any valid and proper reasons.

Ld. CIT (A) deleted the addition by observing as under :-

"I have considered the addition of the AO and the submissions of the assessee and I find considerable merit in the submission of the assessee that since there is no liability, the provisions of section 43B is not attracted. After considering all the facts and circumstances of the case, I am of the view that there is considerable merit in the submission of the assessee and accordingly, the addition made by the AO is deleted."

4 ITA Nos.5508/Del./2011 7. We have heard the rival submissions and perused the material on

record. On perusal of balance sheet and the Custom Duty payable ledger, we

notice that nothing was payable as on the year end. Since entire Custom Duty

was paid, provision of Section 43B has no application. Therefore, CIT (A)

was justified in deleting the addition of Rs.13,73,349/-. It is ordered

accordingly. Ground No.1 is rejected.

8. Ground No.2 is against the deletion of addition of Rs.18,43,181/- made

by the Assessing Officer on account of undisclosed cash deposited.

9. The Assessing Officer had received the AIR information regarding the

cash deposits in the ICICI bank account of the assessee of Rs.19,37,545/- and

in the Axis Bank account of the assessee of Rs.50,000. The Assessing

Officer has made the addition of the entire cash deposits in both the bank

accounts. Before the CIT (A), ld. Counsel for the assessee submitted that the

Assessing Officer was not justified to make the addition without any valid

and proper reasons of the entire cash deposits. It was submitted that both the

savings bank accounts were in the joint name of the assessee and his wife,

Mrs. Neenu Nayyar. It was also submitted that all the transactions were for

the purpose of business of his wife for which separate returns were filed. Ld.

Counsel submitted that alternately, the additions of the entire cash deposits

should not be made and at the best, the addition of the peak credit of the

ICICI bank account on 17.04.2007 of Rs.1,44,364/- should be made. It is also

submitted that the deposit in the Axis Bank account was out of the same 5 ITA Nos.5508/Del./2011

money relating to the cash deposits and withdrawals in the ICICI bank

account. Ld. CIT (A), after going through the submissions made by the

assessee, partly confirmed the addition as under :-

"6.3 I have considered the addition of the AO and the submissions of the assessee and I find considerable merit in the submission of the assessee that the AO is not justified to make the addition of the entire cash deposits in the bank accounts when there are frequent and simultaneous cash deposits and withdrawals in the main bank account with ICICI bank account. The total cash deposits in both the bank accounts of Rs.19,87,545/- (Rs 19,37,5451- (+) Rs 50,000/-) and the AO has made the addition of both the amounts vide Ground Nos. 5 & 6.

6.4. After considering all the facts and circumstances of the case, I am of the view that the ends of justice will be met if the peak credit of ICICI bank account of Rs 1,44,364/- is considered for addition as there has been circulation of the same money in the form of frequent cash deposits and withdrawals in both the accounts and accordingly, the addition to the extent of Rs.1,44,364/- is confirmed and the balance amount of Rs.18,43,181/- (Rs.19,87,545/- (-) Rs.1,44,364/-) is deleted."

10. We have heard the rival submissions and perused the material on

record. We find that the ld. CIT (A) restricted the disallowance to

Rs.1,44,364/- only with an observation that ends of justice would be met, if

the peak credit of ICICI bank account of Rs.1,44,364/- was considered for

addition as there had been circulation of the same money in the form of

frequent cash deposits and withdrawals in both the accounts. Admittedly,

these two bank accounts are not disclosed in assessee's balance sheet. The

Assessing Officer in the course of assessment proceedings afforded sufficient 6 ITA Nos.5508/Del./2011

opportunities to assessee to explain the source of deposits. However, there

was non-compliance on the part of the assessee warranting the Assessing

Officer to make the addition. The CIT (A) order is brief and cryptic. The

CIT (A) had only taken the peak credit of ICICI bank while reducing addition

to Rs.1,44,364/-. Moreover, we find that the CIT (A) has not asked for the

remand report from the Assessing Officer. In view of the above, we are of

the opinion that in the interest of justice and equity, the matter be restored to

the file of the Assessing Officer on this issue to decide afresh after providing

an opportunity of being heard to the assessee. It is ordered accordingly.

Ground No.2 is allowed for statistical purposes.

11. Ground No.3 is against the deletion of addition of Rs.2,99,170/- made

by Assessing Officer on account of unconfirmed sundry creditors.

12. The assessee had declared the sundry creditors of Rs.29,91,703/- and

the Assessing Officer has made the estimated disallowance @ 10% of

Rs.2,99,170/- of the sundry creditors on the ground of non-submission of the

details to cover up the unverified purchases. Before the ld. CIT (A), it was

submitted by the assessee that the Assessing Officer was not justified to make

the addition without any valid and proper reasons. Ld. CIT (A) deleted the

addition as under:

"7.3. I have considered the addition of the AO and the submissions of the assessee and I find considerable merit in the submission of the assessee that the AO is not justified to make such estimated and ad-hoc addition without collecting 7 ITA Nos.5508/Del./2011

proper evidence against the assessee and accordingly, the addition made by the AO is deleted."

13. We have heard the rival submissions and perused the material on

record. We find that the Assessing Officer made the addition of 10% of the

sundry creditors on the ground that the assessee had not furnished the

confirmations from the sundry creditors although the same were specifically

asked for. We observed from the order of the ld. CIT (A) that the ld. CIT (A)

deleted the addition without going through any evidences filed by the

assessee and also not asked for any remand report from the Assessing Officer.

In this view of the matter and in the interest of justice and equity, we feel it

appropriate to restore the matter to the file of the Assessing Officer on this

issue to decide afresh after providing an opportunity of being heard to the

assessee. It is ordered accordingly. Ground No.3 is allowed for statistical

purposes.

14. In the result, the appeal of the revenue is partly allowed for statistical

purposes.

Order pronounced in open court on this 12th day of June, 2015.

Sd/- sd/- (N.K. SAINI) (GEORGE GEORGE K) ACCOUNTANT MEMBER JUDICIAL MEMBER

Dated the 12th day of June, 2015 TS 8 ITA Nos.5508/Del./2011

Copy forwarded to: 1.Appellant 2.Respondent 3.CIT 4.CIT(A)-XXV, New Delhi. 5.CIT(ITAT), New Delhi. AR, ITAT NEW DELHI.