ACIT, DEHRADUN V. M/S. OBERAI AUTO SALES, DEHRADUN

ITA 3045/DEL/2017

AI Insights

The case involves multiple appeals by M/s. Oberoi Auto Sales and the Revenue against the orders of the Commissioner of Income Tax (Appeals)-2, Agra, concerning reassessments for the assessment years 2007-08 to 2011-12. The primary issues revolved around the rejection of the assessee's books of accounts and the estimation of income based on undisclosed sales and VAT liabilities. The Tribunal examined the discrepancies in the turnover reported in the original and revised returns filed in response to notices under Sections 139(1) and 148 of the Income Tax Act, 1961, following a survey by the Commercial Taxes Department which indicated suppressed sales.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 847438 (ITAT-DEHRADUN)
• Duration Of Justice: 8 year(s) 10 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2026
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Dehradun
• Assessment Year: 2007-2008
• Appeal Filed On: 15-05-2017
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AMAR PAL SINGH
• Assessee Lawyers: SANJAY ARORA; PALLAVI
• Keywords: Set aside; Business income; Revised return; Rejection of books of accounts; Competent authority; Initiation of penalty proceedings
• Section: 147; 148; 143(3); 271(1)(c); 43B

Judgement Text

"ITA No.3745/Del/2017 & Others IN THE INCOME TAX APPELLATE TRIBUNAL DEHRADUN “DB” BENCH: DEHRADUN BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER & SHRI MANISH AGARWAL, ACCOUNTANT MEMBER [THROUGH VIRTUAL MODE] ITA No.3745/Del/2017 (ASSESSMENT YEAR 2007-08) M/s. Oberoi Auto Sales 108-Haridwar Road, Dehradun-248001 PAN-AAAFO8558P Vs. DCIT Circle-2, Dehradun (Appellant) (Respondent) ITA No.3045/Del/2017 (ASSESSMENT YEAR 2007-08) ACIT Circle-2, Dehradun Vs. M/s. Oberoi Auto Sales 108-Haridwar Road, Dehradun-248001 PAN-AAAFO8558P (Appellant) (Respondent) ITA No.3746 to 3749/Del/2017 (ASSESSMENT YEARs 2008-09 to 2011-12) M/s. Oberoi Auto Sales 108-Haridwar Road, Dehradun-248001 PAN-AAAFO8558P Vs. DCIT Circle-2, Dehradun (Appellant) (Respondent) Assessee by Shri Sanjay Arora, CA & Ms. Pallavi, CA Department by Shri Amar Pal Singh, Sr.DR Date of Hearing 15.01.2026 Date of Pronouncement 25.03.2026 Printed from counselvise.com ITA No.3745/Del/2017 & Others O R D E R PER MANISH AGARWAL, AM: The captioned appeals by the above captioned Assessees and the Revenue arise from the respective orders of the Commissioner of Income Tax (Appeals)-2, Agra [Camp at Dehradun] [“Ld.CIT(A)”] passed under s. 250 of the Income Tax Act, 1961 [the Act] emanating from respective assessment orders passed by the Assessing Officer [“AO”] tabulated hereunder: Sr. Nos. ITA Nos. CIT(A)-30, Delhi Order dated Assessment Order dated Passed under s. 1. 3745/Del/2017 [AY-2007-08] 31.10.2016 31.03.2014 143(3)/148 of the Income Tax Act, 1961. 2 3045/Del/2017 [AY-2007-08] -do- -do- -do- 3. 3746/Del/2017 [AY 2008-09] -do- -do- -do- 4. 3747/Del/2017 [AY 2009-10] -do- -do- -do- 5. 3748/Del/2017 [AY 2010-11] -do- -do- -do- 6. 3749/Del/2017 [AY 2011-12] -do- -do- -do- 2. Since all these appeals filed by the assessee and the Revenue are with respect to one assessee and issues raised in captioned appeals are common therefore, all appeals are decided by a common order. Printed from counselvise.com ITA No.3745/Del/2017 & Others 3. First we take cross appeals of the assessee and the Revenue in ITA No.3745/Del/2017 and ITA No.3045/Del/2017 for Assessment Year 2007-08. ITA No.3745/Del/2017 & ITA No.3045/Del/2017 [Assessment Year 2007-08] 4. Brief facts of the case are that the assessee is a dealer of Skoda vehicles and filed its return of income on 31.10.2007, declaring NIL income. The assessment was completed vide order dated 18.12.2009 u/s 143(3) at NIL income. Thereafter, a survey was conducted by the Commercial taxes Department on 07.08.2012 at the business premises of the assessee wherein it was found that the assessee has suppressed its sales therefore, case of the assessee was re-opened u/s 147 of the Act after recording satisfaction and obtaining prior approval from the Competent Authority. In response to the notice issued u/s 148 on 16.01.2013, assessee filed return of income on 24.05.2013 showing loss of INR 78,14,478/-. It is observed by AO that in the original return filed u/s 139(1), the turnover was declared at INR 9,98,61,579/- and G.P rate declared was of 10.14% and net profit was declared at INR 5,61,770/- which was adjusted against the brought forward unabsorbed loss. As against this, in the return filed in response to notice u/s 148 of the Act, assessee has declared sales of INR 15,04,52,836/- and net loss of INR 78,14,478/-. During the course of assessment proceedings, assessee explained the difference between the turnover declared in original return and in revised return. After considering the same, AO passed the reassessment Printed from counselvise.com ITA No.3745/Del/2017 & Others order wherein after invoking the provision of section 145(3), Gross profit rate @ 4.45% was applied on the turnover declared in the revised return at INR 15,04,52,836/- resulting into the addition of INR 66,95,151/-. 5. Besides this, as per the information supplied by the Commercial Tax Department, gross turnover of the assessee for the year under appeal was reported at INR 26,84,35,694/-. Therefore, the AO treated the differential amount of INR 11,79,82,858/- as undisclosed sales of the assessee and made separate addition of the said difference. The AO further made the addition of INR 1,47,47,857/- being notional VAT @ 12.5% alleged as collected on undisclosed sales and had not deposited. The assessee also shown VAT liability payable of INR 62,55,656/- in the revised return which since has not been paid and therefore, the same was disallowed u/s 43B of the Act. Accordingly, total income of the assessee was computed at INR 13,57,94,500/-. 6. Against the said order, assessee filed appeal before Ld.CIT(A) who partly allowed the appeal of the assessee and direct the AO to apply net profit rate of 4.45% on the gross sales reported by the Commercial Taxes Department at INR 26,84,35,694/- and confirmed the disallowances made u/s 43B of the Act for non-payment of VAT liability. Printed from counselvise.com ITA No.3745/Del/2017 & Others 7. Against the said order, both Revenue and the assessee are in appeal before the Tribunal by taking following Grounds of appeal:- ITA No.3045/Del/2017 [AY 2007-08] [Revneue’s appeal] 1. “That the ld.CIT(A) has erred in law and on facts while allowing the relief to the assessee on account of difference in sales. 2. That the order of the ld.CIT(A) be set aside and the order of the A.O. be restored.” ITA No.3045/Del/2017 [AY 2007-08] [Revenue’s appeal] 1. “That the impugned order dated 31.10.2016, passed u/s 250(6) of the Act by the Hon'ble CIT(A) is erroneous as the same is based on surmises, conjectures, incorrect facts and incorrect application of law. 2. That on the facts and circumstances of the case and in law, the Hon'ble CIT(A)/Ld. AO have erred in rejecting the books of accounts of the Appellant by resorting to the provisions of Section 145(3) of the Act, inter alia because; a. The rejection of books of accounts of the Appellant is based on conjectures, surmises, as no deficiencies have been pointed out in the books of accounts. b. The books of accounts have been rejected without proving that it lacks correctness and completeness in any manner. c. Neither the CIT(A) nor the Ld. AO made any attempt to verify the expenses debited to Appellant's revised profit & loss account which were genuine and duly supported by evidence. 3. That the Hon'ble CIT(A) has erred in upholding an addition of Rs. 21,003,513/- made on account of VAT liability disallowed u/s 43B of the Act inter alia because: a. The appellant did not debit any amount towards sales tax in its Profit and Loss account, and therefore, such VAT liability did not affect the taxable profits of the Appellant. b. The VAT liability amounting to Rs.62,55,656/- has arisen as a result of the VAT order, post the VAT survey and the same has since been paid. Printed from counselvise.com ITA No.3745/Del/2017 & Others c. The additional VAT liability amounting to Rs.14,747,857/- is on account of the alleged undisclosed sales amounting to Rs.117,982,858/-, the addition for which is made without any basis and cogent reasoning. 4. The initiation of penalty proceedings u/s 271(1)(c) of the Act is illegal in so far as there was neither any willful concealment of income nor did the appellant furnish inaccurate particulars of income. The above grounds of appeal are without prejudice to each other. The Appellant reserves its right to add, alter, amend or withdraw any ground of appeal either before or at the time of hearing.” 8. The solitary Ground of appeal taken by the Revenue and Ground of appeal No.2 raised by the assessee are on the same issue of estimation of income from trading activity therefore, they are taken together for consideration. 9. The assessee vide letter dated 19.03.2025 has filed the modified revised Grounds of appeal however, from the perusal of the same, it is observed that in these Grounds of appeal, assessee has raised one additional Ground of appeal, challenging the addition on account of undisclosed turnover by placing reliance on the order passed by the Assessing officer, Commercial Taxes Department which was passed subsequent to the order of Ld. CIT(A) and filing the appeal. Since this order was not available when the order of Ld. CIT(A) was passed therefore, the modified Grounds of appeal filed by the assessee are not admitted and the appeal is decided based on the original Grounds of appeal taken alongwith appeal memo filed. Printed from counselvise.com ITA No.3745/Del/2017 & Others 10. With respect to the rejection of the books of accounts and estimation of income, Ld.AR for the assessee filed a detailed submission which reads as under:- Printed from counselvise.com ITA No.3745/Del/2017 & Others Printed from counselvise.com ITA No.3745/Del/2017 & Others Printed from counselvise.com ITA No.3745/Del/2017 & Others Printed from counselvise.com ITA No.3745/Del/2017 & Others Printed from counselvise.com ITA No.3745/Del/2017 & Others Printed from counselvise.com ITA No.3745/Del/2017 & Others Printed from counselvise.com ITA No.3745/Del/2017 & Others 11. Ld.AR also filed the copy of the order passed by DCIT-6, Doiwala, Dehradun passed u/s 25(7) r.w.s. 31 of VAT Act dated 09.08.2017 and submits that in the said order, the turnover of the assessee was accepted at INR 14,95,02,129/- and therefore, there is no element of alleged undisclosed turnover. He therefore, requested for the deletion of the additions made by AO on account of estimation of profits as well as of the alleged unrecorded sales. 12. On the other hand, Ld. Sr. DR for the Revenue heavily placed reliance on the order of AO and submits that a survey was carried out by the Commercial Taxes Department wherein the assessee was found indulged into undisclosed sales which facts was further confirmed from the difference in turnover declared in the return of income filed u/s 139(1) of the Act and return filed in response to notice u/s 148 of the Act. Ld. Sr. DR submits that AO has rightly invoked the provision of section 145(3) of the Act. Regarding the application of the G.P rate, ld. Sr. DR submits that AO has applied G.P rate of 4.45% which was declared by the assessee in its revised return of income therefore, there is no error on the part of the AO. Regarding the action of Ld. CIT(A) in directing to apply profit rate as Printed from counselvise.com ITA No.3745/Del/2017 & Others against the addition of gross undisclosed turnover, ld. Sr. DR submits that the matter may be decided in the light of the order of Commercial Taxes Department placed on records by the assessee. He prayed accordingly. 13. Heard the contentions of both the parties and perused the material available on record. In the instant case, it is observed that the assessee has declared different amount of turnover firstly, in the original return, the total sales was declared at INR 9,98,61,579/- and G.P rate was declared at 10.14% thereafter, in response to notice issued u/s 148, the assessee has declared total sales of INR 15,04,52,836/- and declared the G.P rate of 4.45%. Now before us, an order of VAT authorities dated 09.08.2017 is filed. As per this order, total turnover of the assessee was of INR 14,95,02,129/-. Three different turnover was reported which clearly shows that the books of accounts of the assessee do not present true and correct state of affairs of the assessee and therefore, action of the AO in invoking the provision of section 145(3) of the Act is hereby upheld. Now coming to the estimation of income, the assessee itself has declared G.P rate @ 4.45% in the return filed in response to notice issued u/s 148 of the Act on the turnover of INR 15,04,52,836/- thus, we find no error in the same. 14. With respect of the Revenue’s appeal challenging the action of Ld. CIT(A) in applying the GP rate as against the addition of gross Printed from counselvise.com ITA No.3745/Del/2017 & Others amount of undisclosed sales made by the AO, we find that VAT authorities have accepted the turnover of INR 14,95,02,129/- as against the turnover reported earlier to the AO of INR 26,84,35,694/- based on which AO has made the addition of undisclosed turnover of INR 11,79,82,858/-. Now, since the VAT authorities have accepted the turnover of INR 14,95,02,129/- which is less than the turnover of INR 15,04,52,836/- declared by the assessee in the return filed in response to notice u/s 148, thus question of any addition towards undisclosed turnover does not arise. 15. With these observations, the Ground of appeal No.2 raised by the assessee and only Ground of appeal raised by the Revenue are dismissed. 16. Ground of appeal No.3 raised by the assessee is with respect to the disallowable u/s 43B of the Act of INR 2,10,03,513/- comprising of VAT of INR 1,47,47,857/- computed on alleged undisclosed turnover and INR 62,55,656/- declared by the assessee as VAT payable in the return of income filed in response to notice u/s 148 of the Act. 17. Before us, the assessee has filed written submissions in this regard wherein it is stated that after the order of VAT authorities, there is no undisclosed turnover remained therefore, the disallowance of notional VAT payable at INR 1,47,47,857/- on Printed from counselvise.com ITA No.3745/Del/2017 & Others undisclosed turnover has no legs to stand. Regarding disallowance of INR 62,55,656/- made u/s 43B for non-payment of VAT, claim of the assessee was that this amount of VAT liability stood paid before filing of revised return. Assessee further, claimed that AO has invoked the provision of section 145(3) of the Act and estimated the income therefore, no further addition/disallowance is required to be made. He prayed accordingly. 18. Per contra, the Revenue contended that assessee had admittedly not deposited the amount of INR 62,55,656/- before filing of the return of income u/s 139(1) of the Act and therefore, the AO has rightly disallowed u/s 43B of the Act. 19. Heard the contentions of both the parties and perused the of appeal No. material available on record. while deciding the assessee’s ground of appeal No.2, we have already held that there was no undisclosed turnover and the Commercial Taxes Department also has accepted the turnover of INR 14,95,02,129/- in the order passed dated 09.08.2017, therefore, once there was no undisclosed sales, question of any notional VAT liability does not arise. Accordingly, disallowance made of notional VAT liability of INR 1,47,47,857/- is hereby, deleted. 20. Regarding disallowance u/s 43B for VAT payable of INR 62,55,656/- declared by the assessee in the final accounts filed Printed from counselvise.com ITA No.3745/Del/2017 & Others alongwith the return of income filed in response to notice issued u/s 148 of the Act, it is observed that the said amount was payable at the last day of previous year relevant to assessment year under appeal and was not paid on or before the due date of filing of return u/s 139(1) i.e. on 31.10.2007 and therefore, in terms of provisions of section 43B of the Act, AO has rightly disallowed the same, we order accordingly. However, the same could be allowed in the year of the payment on the basis of payment. With these observations, Ground of appeal No.3 raised by the assessee is dismissed. 21. In the result, appeal of the Revenue is dismissed and appeal of assessee is partly allowed. ITA No.3746/2017 [AY-2008-09] 22. Ground of appeal No.1 raised by the assessee is general in nature, hence not adjudicated. 23. Ground of appeal No.2 raised by the assessee is with respect to the application of provision of section145(3) of the Act. 24. Heard the contentions of both the parties and perused the material available on record. It is observed that the assessee declared turnover of INR 7,92,35,147/- and declared G.P. rate of 4.9% in the return filed u/s 139(1) of the Act on 30.09.2008. Thereafter, in response to notice u/s 148 of the Act, assessee filed return on 24.05.2013 wherein assessee declared turnover of INR Printed from counselvise.com ITA No.3745/Del/2017 & Others 13,00,45,433/- and G.P. rate at 5.44%. It is further observed that in the original return, assessee has declared net loss of INR 51,28,345/- whereas in return filed in response to notice u/s 148, assessee declared loss of INR 92,91,485/-. It is further observed that difference in the turnover was declared by the assessee only after the survey conducted by the Commercial Taxes Department. All these facts lead to belief that the books of accounts of the assessee are not maintained properly and therefore, we find no error in the order of Ld.CIT(A) in sustaining the application of provision of section 145(3) of the Act. Accordingly, Ground of appeal No.2 raised by the assessee is rejected. 25. Ground of appeal No.3 is with respect to the disallowance u/s 43B of the Act of unpaid liability of INR 1,10,30,530/-. 26. Heard the contentions of both the parties and perused the material available on record. The assessee in the return filed in response to notice u/s 148 of the Act has declared VAT liability of INR 1,10,30,530/- and since the said amount is collected from the customers and was not paid on or before the due date of filing the return u/s 139(1) of the Act as provided in section 43B of the Act, therefore, the AO has rightly made the disallowance. Assessee’s claim that said amount was paid before filing of revised return i.e. in response to notice u/s 148 does not discharge the assessee from the application of provisions of section 43B of the Act for non-payment Printed from counselvise.com ITA No.3745/Del/2017 & Others of the statutory due on or before the due date of filing of return u/s 139(1) of the Act which is allowable on payment basis only. With this observation, Ground of appeal No.3 raised by the assessee is dismissed. 27. In the result, appeal of the assessee is dismissed. ITA Nos.3747 to 3749/Del/2017 [AYs 2009-10, 2010-11, 2011-12] 28. All these Grounds of appeal taken by the assessee are common with the grounds of appeal taken for Assessment Year 2007-08 & 2008-09 wherein under identical circumstances, rejection of books of accounts and disallowance u/s 43B the Act towards VAT payable were upheld by us herein above. Since the facts are identical therefore, the aforesaid observations in AY 2007-08 and AY 2008-09 in ITA Nos. 3745 & 3746/DDN/2017, which are Mutatis Mutandis applied in these appeals also. Thus, by respectfully following the said observations all the appeal of the assessee in ITA Nos.3747 to 3749/Del/2017 for A.Yrs 2009-10, 2010-11, 2011-12 are dismissed. 29. In the result, captioned three appeals of the assessee are dismissed. Printed from counselvise.com ITA No.3745/Del/2017 & Others 30. In the final result, all the appeals of the assessee in ITA Nos. 3745 to 3749/Del/2017 for Assessment Years 2007-08 to 2011-12 and appeal of the Revenue in ITA No.3045/Del/2017 for Assessment Year 2007-08, all are dismissed. Order pronounced in the open Court on 25.03.2026. Sd/- Sd/- Sd/- Sd/- (SATBEER SINGH GODARA) (MANISH AGARWAL) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 25.03.2026 *Amit Kumar,Sr. PS* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI Printed from counselvise.com "