Indo Scottish, New Delhi vs Department Of Income Tax

ITO, Ward 33(2) vs. Indo Scottish Room No. 206B, 974/1, Dhaka Plaza, C.R. Building, I.P. Estate Arya Samaj Road, New Delhi. Karol Bagh, New Delhi. (PAN AABF15836P) (Appellant) (Respondent)

Appellant by : Smt. Parminder Kaur, Sr. DR Respondent by :Shri Sanjiv Sapra, CA

Date of Hearing :15.4.2015 Date of pronouncement :6.5.2015

ORDER

PER G.C. GUPTA,VICE PRESIDENT

This appeal by the revenue for the assessment year 2008-09 is directed

against the order of the CIT(A). The ground of appeal No. 1 is as under :

1. " On the facts and in the circumstances of the case, the CIT(A) has erred in law and on facts in deleting the addition of Rs. 16,50,000/-

made by the Assessing Officer on account of cash paid to Shri Sukhdev Singh."

2. Ld. DR submitted the amount of Rs. 16.5 lacs was paid by the assessee firm

to its partner Shri Sukhdev Singh in cash and Shri Sukhdev Singh in turn has given

this amount to M/s. Pushan Properties and Developers (P) Ltd. as unsecured loan.

She submitted that there was no documentary evidences of the payment of Rs. 16.5 ITA No. 4872/Del/2012 ITO vs. Indo Scottish

lacs by the assesee to Shri Sukhdev Singh. She relied on the order of the AO. Ld.

Counsel for the assessee submitted that the cash payment made by the assessee to

its partner has been assessed as income in the hands of the assessee. He submitted

that there is no law to assess the cash withdrawal of a partner as income in the

hands of the assesee firm.

3. We have considered the rival submissions and have perused the order of the

Ld. CIT(A). We find that the basic facts in this case are not in dispute. The assessee

firm has paid Rs. 16.5 lacs to its partner Shri Sukhdev Singh and the necessary

entries were passed in the regular books of account of the assessee firm. The cash

entry of Rs. 16.5 lac was reflected in the ledger account of Shri Sukhdev Singh in the

books of account of the assessee firm, copy of which has been filed by the assessee

before the CIT(A). The CIT(A) in these facts held that AO did not properly appreciate

the facts of the case and that the entries were explained and addition was deleted.

The cash payment made by the assesee firm to its partner was genuine and duly

reflected in the accounts book of assessee firm and was fully explained and

therefore no case of addition of this amount as income in the hands of the assessee

firm is made out by the revenue and there being no merit in the ground No. 1 of the

revenue, the same is dismissed.

4. The ground of appeal No. 2 of the revenue is as under :-

2. "On the facts and in the circumstances of the case, the CIT(A) has erred in law and on facts in deleting the addition of Rs. 14,69,061/-

made by the Assessing Officer on account of purchase made for non business purpose."

2 ITA No. 4872/Del/2012

ITO vs. Indo Scottish

5. Ld. DR referred to the relevant portion of the assessment order in support of

the case of the revenue. She referred to the portion of the assessment order

wherein the AO has recorded that notices issued u/s 133 (6) of the Act to some of

the parties from whom purchases were made were returned as unserved by the

postal authorities. She submitted that the onus was on the assessee to prove the

genuineness of the purchases of building material and the assessee has failed in this

case to do so and therefore the addition made was justified. Ld. Counsel for the

assessee submitted that the sales figure of building material as well as the closing

stock figures thereof have been accepted by the AO and therefore to disallow part of

the purchases of building material was not justified. He submitted that in case there

was any discrepancy in the accounts, the AO should have restore to the provision of

section 145 of the Act and not to disallow the part of purchases of building material,

which were duly reflected in the regular books of account of the assesee maintained

in the normal course of business.

6. We have considered the rival submissions and have perused the order of the

AO and CIT(A). We find that the CIT(A) has passed a well reasoned speaking order

on this issue. The CIT(A) has given a finding that there is no basis for holding by the

AO that these transactions of purchases were not for business purposes of the

assessee. The purchases were supported by the purchase bills produced by the

assessee. The complete postal address of the seller parties were furnished to the

AO. The CIT(A) has recorded that during the relevant year the assessee has

diversified and started the business of supplying construction material and entered

into the MOU with M/s. Pushan Properties and Developers Pvt. Ltd. and therefore

the finding of the AO that the purchase transactions were for the purpose of non

3 ITA No. 4872/Del/2012 ITO vs. Indo Scottish

business was not correct. There being no mistake in the order of the CIT(A) on this

issue. The same is confirmed and the ground No. 2 of the revenue is dismissed.

7. In the result, the appeal of the revenue is dismissed.

Order pronounced in the open court on 6th May, 2015.

sd/- sd/-

(N.K. SAINI) (G.C. GUPTA) ACCOUNTANT MEMBER VICE PRESIDENT

Dated: the 6th May, 2015 'veena'

Copy of the Order forwarded to:

1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR 6. Guard File By order Dy. Registrar

4 ITA No. 4872/Del/2012 ITO vs. Indo Scottish

Sl. Description Date No.

1. Date of dictation by the Author 15.4.2015

2. Draft placed before the Dictating Member 15.4.2015

3. Draft placed before the Second Member

4. Draft approved by the Second Member

5. Date of approved order comes to the Sr. PS

6. Date of pronouncement of order

7. Date of file sent to the Bench Clerk

8. Date on which file goes to the Head Clerk

9. Date of dispatch of order

5