Bitek Electronics Ltd.,, New Delhi vs Department Of Income Tax

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: 'A' NEW DELHI BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER AND SHRI J. S. REDDY, ACCOUNTANT MEMBER I.T.A. No. 5688/Del/2012 Assessment Year: 2007-08 ITO Vs. M/s Bitek Electronics Ltd. Ward 3(1), C-330, Street No. 9, New Delhi. Majlis Park, New Delhi-110033. PAN: AAACB3683K (APPELLANT) (RESPONDENT)

Revenue by: Ms. Y. Kakkar, CIT. DR. Assessee by: Shri. K. G. Sharma, CA. Date of Hearing: 21/05/2015 Date of Pronouncement: 19th/06/2015

ORDER

PER J. S. REDDY, AM:

This is an appeal filed by the revenue directed against the order of CIT

(Appeals)- IV, New Delhi, dated 06.08.2012 for the Assessment Year 2007-08.

2. The assessee filed its return of income for the A.Y. 2007-08 on

31.10.2007 declaring an income of Rs.3,41,270/-. The AO passed an order u/s

144 of the Income Tax Act on 30.12.2009 assessing the total income at

Rs.37,67,318/-.

I.T.A. No. 5688/Del/2012 2

3. Aggrieved, the assessee carried the matter in appeal. The first appellate

authority granted part relief.

4. Aggrieved the Revenue is in appeal on the following grounds;

5. We have heard Ms. Y. Kakkar, the DR on behalf of the Revenue and Shri

K. G. Sharma, the ld. counsel on behalf of the assessee.

6. On careful consideration of the facts and circumstances of the case, a

perusal of the paper on record and orders of the authorities below as well as

case law cited we hold as follows;

7. Ground No. 1 is on the issue of admission of additional evidence by the

ld. CIT(A) under Rule 46A.

8. The ld. DR relied on the decision of jurisdictional High Court in the case

of Manish Buildwell. The assessee relied on the order of ld. CIT(A).

9. We find that admittedly the AO has not served any notice on the assessee

company. The first appellate authority at Para 4.8 held as follows:

"4.8 I have carefully considered the assessment order, remand reports of the AO and submissions made by the ld. AR alongwith the documents placed on record. As submitted by the ld. Ar, the appellant company is a closely held company and two Directors, namely Mr. and Mrs. Prakash V. Batra hold 99.9% of the shares of the company. The appellant company and its Directors underwent financial strife and a spate of litigations filed by creditors etc. during the period under consideration as a result of which the I.T.A. No. 5688/Del/2012 3

company was on the verge of closure. This fact is also mentioned by the ld. CIT(A)-VI, New Delhi in her order dated 28.05.2010 in Appeal No. 47/09-10 in the case of Shri Prakash V. Batra as follows: "During the proceedings before me, it was submitted that the assessee is the Managing Director of M/s Bitek Electronics Ltd. and earned Director's remuneration of Rs.96,000/- from the company. The company is closely held company and other Director is his wife. The assessee is Managing Director of company as well as shareholder holding 40% equity share capital of M/s Bitek Electronics Ltd. and remaining shares in the name of family members which suffered financial crunchy and in order to remain in the business the Directors raised secured loans and also unsecured loans from various bank. " In view of the above, it is submitted that the notices issued by the AO were not received by the appellant, which has resulted in the ex-parte assessment order u/s 144 framed by the AO coming to the additional evidence, it is pointed out by the ld. AR that the said evidences could not be produced during the assessment proceeding due to non- receipt of notices as mentioned above. The AO has also not furnished any evidence of service of the above notices. In any case, it is not in doubt that the said evidences are very much related to the issues on which additions have been made by the AO in the ex-parte order and to the grounds of appeal raised by the appellant. The said evidences were also duly forwarded to the AO for examination thrice by the ld. CIT(A)-VI, New Delhi during the remand proceedings. In view of the above, the additional evidences are admitted under Rule 46A in the interest of natural justice."

10. We find that no infirmity in this decision of the first appellate authority,

thus ground no. 1 is dismissed.

11. Ground No. 2 is against the deletion of addition of 30% of sundry

creditors. The ld. CIT(A) dealt with issue at Para 4.10 of his order. He held that

the AO has conducted inquiries and verified the claim of the assessee during the

remand proceedings. Confirmations were received by the AO from the parties I.T.A. No. 5688/Del/2012 4

the AO has not brought out any adverse material in the remand report except to

say that vouchers were not produced and certain payments to M/s Knight Queen

Marketing Pvt. Ltd. was made in cash of less than Rs.20,000/- each.

12. In our view disallowance of 30% of sundry creditors on ad hoc basis is

arbitrary. We do not understand how such addition can be made by the AO. The

factual findings of the ld. CIT(A) could not be controverted by the ld. DR. Thus

this ground of the Revenue is dismissed.

13. Ground no. 3 is against the deletion of ad hoc disallowance of 30% of

expenses on estimate basis. At Para 4.13 at page 25 the first appellate authority

held as follows:

"4.13 Coming to ground no. 7 relating to disallowance of 30% of expenses on estimate totalling Rs.6,06,454/-, the records show that the necessary registers and details were produced by the appellant before the AO during the remand proceeding. The said expenses relate to salary, insurance paid to insurance companies on vehicles and stock, advertisement, legal and professional charges and telephone charges etc. The ld. AR has submitted that TDS has been deducted wherever required under the law, the details of which were produced before the AO except for interest of Rs.46,298/- paid Cholamandalam DBS. The AO has not pointed out any specific defects in the books of account, except making some flimsy comments in the remand report, despite the fact that the ld. CIT(A)-VI had remanded the matter to the AO for examination as many as three times. In view of the above, disallowance to the extent of Rs.46,298/- paid to Cholamandalam DBS without TDS is confirmed. The balance addition of Rs.5,60,156/- is deleted."

I.T.A. No. 5688/Del/2012 5 14. We find no infirmity in this factual finding hence we dismiss the ground

no. 3.

15. Ground No. 4 is general in nature.

16. In the result, the appeal of the Revenue is dismissed.

Order pronounced in the open Court on 19th/06/2015.

Sd/- Sd/-

(DIVA SINGH ) (J. S. REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 19/06/2015

*AK VERMA*

Copy forwarded to:

1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT

ASSISTANT REGISTRAR