Pr. Commissioner Of Income Tax-4 v. M/S. Ggc Constructions Pvt. Ltd

$~34 IN THE HIGH COURT OF DELHI AT NEW DELHI +ITA 325/2022 & CM APPLs. 40145-46/2022 PR. COMMISSIONER OF INCOME TAX-4..... Appellant Through:Mr.Zoheb Hossain, Sr.StandingCounsel for Revenue with Mr. VipulAgrawal & Mr. Parth Semwal, Jr.Standing Counsels. versus M/S. GGC CONSTRUCTIONS PVT. LTD...... Respondent Through:None. %Date of Decision: 13[th]September, 2022 CORAM: HON'BLE MR. JUSTICE MANMOHAN HON'BLE MS. JUSTICE MANMEET PRITAM SINGH ARORA J U D G M E N T MANMEET PRITAM SINGH ARORA, J (ORAL): CM APPL. 40145/2022 In view of the averments made in the application, the delay of 59 days in re-filing the present appeal is condoned. Accordingly, the present application stands disposed of. CM APPL. 40146/2022 Exemption allowed, subject to all just exceptions. Accordingly, present application stands disposed of. ITA 325/2022 1.The present Income Tax Appeal has been filed seeking a direction forsetting aside the order dated 30[th]July, 2019, passed by the Income Tax ITA 325/2022 Appellate Tribunal (‘ITAT’) in ITA No. 1258/Del/2016 for the AssessmentYear (‘AY’) 2012-13. 2.Learned Senior Standing Counsel for the Appellant-Revenue, statesthat the ITAT erred in upholding Commissioner of Income Tax (Appeals)’s[‘CIT(A)’] order dated 29[th]December, 2015, deleting the addition of Rs.17,20,728/- made by the Assessing Officer (‘AO’), on account of businessloss of futures and options claimed by the Assessee, which was not claimedin the original return. He states that the business loss could not have beenallowed as there is no provision under the Income Tax Act, 1961(the ‘Act’)to enable an Assessee to make an amendment in the return of income duringassessment proceedings, without revising the return in accordance withSection 139(5) of the Act. He states that the AO had rightly disallowed thebusiness losses, since the Assessee failed to file a revised return claiming theloss, by placing reliance on the decision of the Supreme Court in the case ofGoetze India Ltd. vs. CIT, [2006] 284 ITR 223 (SC). 3.He states that ITAT erred in partly upholding the CIT(A)’s orderdeleting the addition of Rs. 4,33,89,909, which was made by the AO on thepresumption that the sundry creditors of the said amount as reflected in thebalance sheet represent bogus expenses. He states that the AO rightlydisallowed the said amount on the basis of the enquiry conducted by the AO,which revealed that the claim of the Assessee on account of the expensesincurred by it on purchase of the material to the extent of the aforesaidamount could not be substantiated by reliable documentary evidence and itwas not supported by the suppliers. 4.He further states that the ITAT erred in upholding the CIT(A)’s order deleting the addition of Rs. 70,79,504/- made by the AO on account of staticcreditors as the ITAT failed to appreciate that the Assessee had in its writtenreply surrendered the said amount and offered the same for taxation. Hestated that in view of the voluntary admission of the Assessee no furtherenquiry was required to be conducted by the AO with respect to theaforesaid amount. 4.He further states that the ITAT erred in upholding the CIT(A)’s order deleting the addition of Rs. 70,79,504/- made by the AO on account of staticcreditors as the ITAT failed to appreciate that the Assessee had in its writtenreply surrendered the said amount and offered the same for taxation. Hestated that in view of the voluntary admission of the Assessee no furtherenquiry was required to be conducted by the AO with respect to theaforesaid amount. 5.We have heard the learned Senior Standing Counsel for Revenue andperused the paper book. It would be relevant to note at the outset that theAO had disallowed a sum of Rs. 4,83,89,009/- on account of bogus expensesafter taking into account the amount of sundry creditors recorded in theaccounts under the head of sundry creditors. The Assessee filed arectification application under Section 154 of the Act highlighting that thesaid figure is erroneous and the correct figure is Rs. 4,33,89,009/-. It wasstated that the same was a typographical error. The AO failed to pass orderson the said rectification application. Since the mistake was apparent fromthe record, the CIT(A) while allowing the appeal corrected the said amountand deleted the sum of Rs. 50,00,000/- on account of typographical error.The learned counsel states that there is no dispute with respect to the saiddeletion. 6.The learned ITAT upheld the order of the CIT(A) permitting theAssessee to claim the losses on account of futures and options after takingnote that the said loss had been duly set off by the Assessee in its auditedaccounts and therefore, it was clearly a mistake. It noted that whilecomputing taxable income, the Assessee had made an error in the returnwhich was rectified by filing a revised computation of income during theassessement proceedings. The appellate authorities further held that this ITA 325/2022 Page 3 of 7 error could have been rectified by the AO himself by computing the correctincome of Assessee. The reliance placed by the ITAT on the judgment ofthis Court in CIT vs. Jai Parabolic Springs Ltd., [2008] 306 ITR 42 iscorrect. In this appeal as well, the learned counsel for the appellant has notdisputed that it was a case of mistake which led to the Assessee not claimingthe set of losses while computing the taxable income in the return. 7.With respect to the disallowance of the addition of Rs. 4,33,89,009/-,which was the amount reflected by the Assessee as its sundry creditors, theCIT(A) observed that the AO had made the said addition in the absence ofconfirmation from the sundry creditors after concluding that the said figurecorrespond to the value of bogus purchases. The CIT(A) sought the bankstatement of the Assessee, which evidenced payments made through accountpayee cheques to most of the creditors in subsequent years. The CIT(A)noted that the outstanding sundry creditors pertain to Assessee’s project J-174, (Saket), New Delhi, in respect whereof there were legal disputespending with the owner of the property. The CIT(A), therefore, afterperusing the record and after satisfying itself with respect to the genuinenessof the sundry creditors and noting the fact that the said sundry creditors hadbeen paid through bank transactions, except the sundry creditors for theSaket Project, deleted the addition made by the AO. The ITAT as well afterperusing the record was satisfied with respect to the genuinenessof theclaim of the Assessee with respect to sundry creditors to the extent of Rs.3,81,03,519/- and to this extent it upheld the deletion made by the CIT(A).With respect to the sundry creditors for a sum of Rs. 52,85,490/- whichpertained to the Saket Project, the CIT(A) has remanded back the matter to ITA 325/2022 the AO for verification. ITA 325/2022 the AO for verification. In this appeal, the learned counsel has not disputed the aforesaidconcurrent findings of the appellate authorities to the effect that the evidenceplaced on record by the Assessee evidenced payments to the sundrycreditors in the subsequent years. The AO after opining on the genuinenessof the purchases, disallowed the sundry creditors and held the creditors to bedoubtful. ITAT and CIT(A) satisfied itself with respect to the genuinenessof the sundry creditors through bank statements and thereafter deleted theaddition. The learned counsel for the Revenue has been unable to bring outany deficiency in the said concurrent finding of the appellate authorities.The learned counsel's endeavor to urge this Court to examine the issue ofbogus purchases by perusing the bills and statements of alleged suppliers inthese proceedings cannot be accepted. This Court in exercise of itsjurisdiction under Section 260A of the Act is confined to hearing substantialquestions of law and interference on the finding of facts is not warranted if itinvolves re-appreciating of evidence. 8.The learned counsel has not been able to point out any perversity inthe finding of facts. We therefore, find no infirmity in the orders of theappellate authorities deleting the addition made on account of bogusexpenses corresponding to the sundry creditors. 9.With respect to the disallowance on account of static creditors, theCIT(A) observed that the AO had failed to take into account the submissionsfiled by the Assessee retracting its earlier surrender and filing before the AOdocuments to show that the said creditors were not static and had beencleared/squared up/adjusted or written off in the subsequent period. The ITA 325/2022 CIT(A) noted that the documents filed show that creditors to the tune of Rs.16,62,575/- which were written off, had been declared by the Assessee asincome in FY 2014-15 and the Assessee had placed on record documentsand ledger accounts which evidence that the creditors were not static. TheCIT(A) observed that the AO had neither mentioned any discrepancy in thesaid documents nor questioned the veracity of the said documents placedbefore it. The CIT(A) concluded that the AO could not have relied on theinitial letter of surrender to make this addition in the absence of any otherdocuments. The ITAT concurred with the findings of the CIT(A) and heldthat the AO could not have relied upon initial letter for making such anaddition when to the knowledge of the AO the Assessee had retracted thesaid letter during the assessement proceedings. The ITAT noted that thedepartment representative had not brought on record any material on recordto contradict the fact findings of the CIT(A) on this issue and accordinglyupheld the said deletion. In this appeal as well, the learned counsel for theRevenue has not brought to our attention any material to indicate that thefinding of the appellate authorities is incorrect. His sole contention was thatsince the Assessee initially had surrendered the income, no further enquirywas required to be conducted by the AO. He, however, could not point anyinfirmity in the findings of the CIT(A) while deleting the said addition. 10.Further, qua the disallowance of losses during assessment proceeding,this Court in the case of Jai Parabolic (Supra), at Para 9 has framed thefollowing question of law for determination i.e., “Whether the Tribunal wasright in law in allowing relief of Rs. 15,58,500 in the assessment year underconsideration when no such claim was made by the Assessee in the return ofincome”, thereafter, at paragraph 13 a reference was made to the decision of ITA 325/2022 10.Further, qua the disallowance of losses during assessment proceeding,this Court in the case of Jai Parabolic (Supra), at Para 9 has framed thefollowing question of law for determination i.e., “Whether the Tribunal wasright in law in allowing relief of Rs. 15,58,500 in the assessment year underconsideration when no such claim was made by the Assessee in the return ofincome”, thereafter, at paragraph 13 a reference was made to the decision of ITA 325/2022 the Supreme Court in the case of National Thermal Power Co. Ltd. v. CIT,[1998] 229 ITR 383, wherein the Court has held that, the tribunal dealingwith appeals has wide powers and the purpose of the assessmentproceedings is to assess the correct tax liability of an Assessee in accordancewith law. The tribunal should not be prevented from considering questionsof law arising in assessment proceedings although not raised earlier. 11.Further, as per the Circular No. 14(XL-35) of 1955 dated 11[th]April,1955, as well the Department has been directed to assist a taxpayer wherethe proceedings or other particulars before AO indicate that some refund orrelief is due to the Assessee. 12.We, therefore, find that in the present appeal, the appellate authoritieshave returned concurrent findings of fact by deleting the additions made bythe AO. The ITAT is the final fact finding authority and no material hasbeen placed on record to contradict the findings of the appellate authorities,therefore, no substantial question of law arises for consideration in thepresent appeal. Accordingly, the same is dismissed. MANMEET PRITAM SINGH ARORA, J SEPTEMBER 13, 2022/msh MANMOHAN, J