M/s Piron Designs (P) Ltd., Delhi V. ACIT, New Delhi

CO 127/DEL/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2917 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 14 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 05-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 21-06-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RANU MUKHARJEE
• Keywords: Rejection of books of accounts; Income from undisclosed sources
• Section: 69C; 143(3); 68

Judgement Text

1 IN THE INCOME TAX APPELATE TRIBUNAL DELHI BENCH C: NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 3700/DEL/2015 A.Y.: 2011-12 ACIT, CC-17, VS. M/S PIRON DESIGNS (P) LTD. ROOM NO. 356, SS-20, 2 ND FLOOR, ADITYA MEGA MALL 2-E, ARA CENTRE, CBD GROUND EAST, DELHI-32 F-26/124, SECTOR-7, JHANDEWALAN EXTN., NEW DELHI (PAN: AAECP7010N) (APPELLANT) (RESPONDENT) C.O. NO. 127/DEL/2018 (IN ITA NO. 3700/DEL/2015) A.Y. 2011-12 M/S PIRON DESIGNS (P) LTD. VS. ACIT, CC-17, SS-20, 2 ND FLOOR, ADITYA MEGA MALL ROOM NO. 356, CBD GROUND EAST, DELHI-32 2-E, ARA CENTRE, JHANDEWALAN EXTN., (PAN: AAECP7010N) NEW DELHI (APPELLANT) (RESPONDENT) DEPARTMENT BY : SMT. RANU MUKHARJEE, SR. DR. ASSESSEE BY : SH. VED JAIN, ADV., SH. ASHISH G OEL, CA SH. RISHABH JAIN, CA O R D E R PER H.S. SIDHU, JM THIS APPEAL IS FILED BY THE REVENUE AGAINST THE IMPUG NED ORDER DATED 25.03.2015 PASSED BY THE LD. CIT(A) -25 DELHI RELEVAN T TO ASSESSMENT YEAR 2 2011-12 AND THE ASSESSEE HAS FILED THE CROSS OBJECTION IN RESPECT OF THE ADDITION CONFIRMED BY THE LD. CIT(A). 2. THE GROUNDS RAISED BY THE REVENUE IN ITS APPEAL REA D AS UNDER: 1. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AS WELL AS ON FACTS IN ALLOWING THE RELIEF OF 50% OF THE TOTAL ADDITION OF RS. 33,09,000/- MADE BY AO ON ACCOUN T OF BOGUS EXPENSES AND RECIPTS FROM M/S ESAJV. 2. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AS WELL AS ON FACTS IN DELETING THE ADDITION OF RS. 24,37,500/- MADE BY AO ON ACCOUNT OF UNEXPLAINED CASH DEPOSITS U/S 68 OF THE INCOME TAX ACT. 3. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AS WELL AS ON FACTS IN DELETING THE ADDITION OF RS. 19,75,000/- MADE BY AO ON ACCOUNT OF UNEXPLAINED SHARE PREMIUM U/S 69A OF THE INCOME TAX ACT. 4. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AS WELL AS ON FACTS IN DELETING THE ADDITION OF RS. 36,30,143/- MADE BY AO ON ACCOUNT OF BOGUS EXPENSES AND UNACCOUNTED INCOME U/S 69C OF THE INCOME TAX ACT. 5. (A)THE ORDER OF THE CIT(A) IS ERRONEOUS AND NOT TENAB LE IN LAW AND ON FACTS. (B)THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY / ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COU RSE OF THE HEARING OF THE APPEAL. 3. THE GROUND RAISED IN THE ASSESSEES CROSS OBJECTION RE AD AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER PASS ED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) [CIT( A)] IS BAD BOTH IN THE EYE OF LAW AND ON FACTS. 3 2. (I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT (A) HAS ERRED BOTH ON FACTS AND IN LAW, IN CONFIRMING THE ADDITION MADE BY AO AMOUNTING TO RS. 16,54,500/- BEI NG 50% OF THE AMOUNT OF INCOME FROM SERVICES RENDERED TO M/S E SAJV D-ART INDO INDIA P LTD. (II) THAT THE ADDITION HAS BEEN CONFIRMED ARBITRARIL Y @50% WITHOUT THERE BEING ANY BASIS FOR THE SAME 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CI T (A) HAS ERRED BOTH ON FACTS AND IN LAW, IN CONFIRMING THE ADDITION BY GROSSLY INDULGING IN SURMISES AND CONJECTURES WITHOUT THER E BEING ANY DIRECT ADVERSE MATERIAL AGAINST THE ASSESSEE, BA SED ONLY ON SUSPICION. 4. THE RESPONDENT CRAVES LEAVE TO ADD AMEND ON ALTER ANY OF THE GROUNDS OF CROSS OBJECTION. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING, TRADING, ASSEMBLY, DE SIGNING, INSTALLATION OF FURNITURE AND ALSO PROVIDING ARCHITECTURE SERVICES. THE ASSESSEE HAS FILED ITS RETURN OF INCOME ON 29.09.2011 DECLARING AN INCOME OF RS. 6,45,030/-. THE AO HAS COMPLETED THE ASSESSMENT AT RS. 1,19,96,670/- U/S. 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT ACT) VIDE HIS OR DER DATED 28.01.2014 BY MAKING VARIOUS ADDITION AND DISALLOWANCES. AGAINST T HE ORDER OF THE AO, THE ASSESSEE APPEALED BEFORE THE LD. CIT(A), WHO VIDE HIS IMPUGNED ORDER DATED 25.03.2015 DELETED THE VARIOUS ADDITIONS EXCEP T THE ONE WHERE HE GAVE A PARTIAL RELIEF. AGGRIEVED BY THE ORDER OF TH E LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. THE ASSESSEE HAS ALSO F ILED CROSS OBJECTION IN RESPECT OF THE ADDITION CONFIRMED BY THE LD. CIT(A ). 5. THE GROUND NO. 1 IN REVENUES APPEAL AND GROUND N O. 2 AND 3 IN ASSESSEES CROSS OBJECTION IS COMMON WHICH IS RELATING TO ADD ITION OF RS.33,09,000/- MADE BY THE ASSESSING OFFICER IN RESPECT O F THE SERVICE 4 CHARGES RECEIVED BY THE ASSESSEE FROM M/S ESAJV D-ART IND O INDIA PVT. LTD. THE CIT(A) HAS GIVEN RELIEF OF 50% OF THE TOTAL ADDITION. A SIMILAR ADDITION WAS MADE BY THE ASSESSING OFFICER IN THE CASE OF PIRON EDUCATION PVT. LTD. A SISTER CONCERN OF THE ASSESSEE COMPANY ON THE SAME REASONING AS STATED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. THE LD. CIT(A) IN THAT CASE HAS ALSO GIVEN RELIEF OF 50% OF THE TOTAL ADDITION. WE HAVE DECIDED THE APPEAL IN THE CASE OF ACIT VS. PIRON EDUCA TION PVT. LTD. (ITA NO. 3699/DEL/2015) (AY 2011-12) VIDE OUR ORDER DATE D 31.10.2018, WHEREBY WE HAVE HELD THAT THIS ADDITION IS UNSUSTAINAB LE ON THE GROUND THAT THE ASSESSEE HAVING INCLUDED THE SERVICE CHARGES IN I TS INCOME, THE SAME AMOUNT CANNOT BE ADDED AGAIN. IT WAS AGREED BY B OTH THE LEARNED DR AND AR THAT THE FACTS OF THE PRESENT CASE ARE IDEN TICAL TO THE FACTS IN THE CASE OF PIRON EDUCATION PVT. LTD. THIS ENTIRE AMO UNT OF RS. 33,09,000/- FORMS PART OF THE RECEIPT DECLARED BY THE ASSESSEE AS ITS INCOME IN THE PROFIT & LOSS ACCOUNT OF THE YEAR UNDER CONSIDERATION. ACCO RDINGLY FOLLOWING THE REASONING GIVEN IN OUR ORDER DATED 31.10.2018 IN THE CASE OF ACIT VS. PIRON EDUCATION PVT. LTD.(SUPRA), WE DIRECT THE ASSESSIN G OFFICER TO DELETE THE ENTIRE ADDITION ON THIS ACCOUNT. IN THE RESULT GROU ND NO. 1 OF REVENUES APPEAL IS DISMISSED AND GROUND NO. 2 AND 3 OF ASSESSEES C ROSS OBJECTION IS ALLOWED. 6. GROUND NO. 2 IN REVENUES APPEAL IS REGARDING THE DELETION OF THE ADDITION OF RS. 24,37,500/- MADE BY THE AO ON ACCOUNT OF UNEXPLAINED CASH DEPOSITS. IT WAS AGREED BY BOTH THE PARTIES THAT THIS ISSUE IS IDENTICAL TO THE ISSUE IN THE CASE OF ACIT VS. PIRON EDUCATION PVT. LTD. (ITA NO. 3699/DEL/2015) (AY 2011-12), WHERE THE ASSESSING OFFICER HAS MADE SIMILAR ADDITION ON THE SAME REASONING. IN THE SAID A PPEAL IN THE CASE OF ACIT VS. PIRON EDUCATION PVT. LTD. (AY 2011-12) VIDE ORDER DATED 31.10.2018, WE HAVE HELD THAT THE ADDITION IS UNSUSTA INABLE AS THE CASH DEPOSITED IS AS PER THE BOOKS OF ACCOUNTS BEING REGULARLY MAINTAINED BY THE 5 ASSESSEE. SINCE THE FACTS ARE IDENTICAL FOLLOWING OUR O RDER AND THE REASONING IN THE ABOVE SAID ORDER WE UPHOLD THE ORDER OF THE LD. CIT(A) IN DELETING THIS ADDITION AND ACCORDINGLY, THIS GROUND IS DISMISSED. 7. GROUND NO. 3 IN REVENUES APPEAL IS REGARDING DE LETION OF ADDITION OF RS. 19,75,000/- MADE BY AO ON ACCOUNT OF UNEXPLAINED SHARE PREMIUM. AS PER THE ASSESSMENT ORDER THE ASSESSEE HAS PAID UP CAPITAL OF RS. 1,25,000/- HOWEVER IT HAS SECURITY PREMIUM OF RS. 19,75,000/-. S INCE THE ASSESSEE HAS NOT GIVEN DETAILS OF EQUITY SHARE HOLDER OF THE COMPAN Y AND HAS ALSO NOT PROVIDED ANY JUSTIFICATION AS TO ON WHAT BASIS AND HOW THE VALUE OF EACH SHARE HAS ATTRACTED A PREMIUM OF RS. 148. THE ASSESSING O FFICER ON THIS BASIS HELD THE SHARE PREMIUM REPRESENTS UNACCOUNTED INCOM E OF THE ASSESSEE. THE LD. CIT(A) HAS DELETED THIS ADDITION HOLD ING THAT THIS SHARE PREMIUM OF RS. 19,75,000/- IS OPENING BALANCE COMING F ROM THE EARLIER YEARS. THE ASSESSEE HAS GIVEN EXPLANATION TO THE AO BU T THE AO HAS NOT EVEN CARED TO GO THROUGH THE BALANCE SHEET OF THE ASS ESSEE COMPANY. BEFORE US THE LD. DR COULD NOT CONTROVERT THE ABOVE FA CTS. FROM THE BALANCE SHEET OF THE ASSESSEE COMPANY IT IS EVIDENT THAT THERE I S NO INCREASE IN THE SHARE CAPITAL AS WELL AS SHARE PREMIUM DURING THE YEAR. SINCE NO AMOUNT HAS BEEN RECEIVED DURING THE YEAR, THE PROVISION OF S ECTION 68 ARE NOT APPLICABLE. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTAN CES, WE UPHOLD THE ORDER OF THE LD. CIT(A) ON THE ISSUE IN DISPUTE OF DE LETING THIS ADDITION AND ACCORDINGLY THIS GROUND NO. 3 OF REVENUES APPEAL IS DI SMISSED. 8. GROUND NO. 4 IN REVENUES APPEAL IS REGARDING DELE TION OF ADDITION OF RS. 36,30,143/- MADE BY AO ON ACCOUNT OF BOGUS EXPENSES. ON THE ISSUE OF THE OBSERVATIONS MADE BY THE ASSESSING OFFICER IN THE ASSESSM ENT ORDER THAT THE ASSESSEE WAS NOT CARRYING OUT ANY ACTIVITIES ON THE BASIS OF THE SURVEY REPORT IT WAS SUBMITTED BY THE LEARNED AR THAT THE OBSERVATIONS OF THE AO ARE FACTUALLY INCORRECT. THE ASSESSEE HAS BEEN CARRYING ON ITS ACTIVITIES AND IT HAS PROVIDED ALL THE DETAILS IN SUPP ORT THEREOF AS ASKED FOR 6 BY THE AO DURING THE COURSE OF THE ASSESSMENT PROCEEDIN GS WHICH INCLUDED THE LIST OF FACULTY, TRAINING PROGRAM, COURSE MATERIA L AND SUPPORTING BILLS ETC. IT WAS FURTHER SUBMITTED THAT THE AO HAS NOT POINT ED OUT ANY SPECIFIC ERROR OR MISTAKE IN THE DETAILS SUBMITTED BY THE ASSESSE E. IT WAS FURTHER ARGUED THAT THE AO IS MAKING A GENERAL OBSERVATION IG NORING THE FACTS AND THE EVIDENCES ON RECORD. IT WAS ALSO SUBMITTED THAT ALL THE DETAILS AND INFORMATION WERE AVAILABLE AT THE TIME OF SURVEY ALSO AND IT IS NOT THE CASE OF THE ASSESSING OFFICER THAT THE BOOKS OF ACCOUNTS AND OT HER DETAILS WERE NOT AVAILABLE AT THE TIME OF SURVEY. IN FACT SURVEY R EPORT IF ANY HAS NOT BEEN SHARED OR CONFRONTED TO THE ASSESSEE AT ANY TIME. IT WAS ALSO SUBMITTED THAT NO INCRIMINATING MATERIAL OR EVIDENCE WHAT SO EV ER WAS FOUND DURING THE COURSE OF THE SURVEY. IT WAS SUBMITTED THAT THE AL LEGATION OF THE AO IN THE ASSESSMENT ORDER IS TOTALLY FALSE. WE HAVE EXAMINE D THE ORDER PASSED BY THE AUTHORITIES BELOW AND THE DETAILS PLACED ON RE CORDS. ONGOING THROUGH THE SAME WE FIND THAT THE CONTENTION OF THE LEARNED AR IS CORRECT. THE ASSESSEE IS CARRYING ON REGULAR BUSINESS AND ALL THE EXPE NSES HAVE BEEN ACTUALLY INCURRED. FURTHER THE ASSESSING OFFICER HAS MADE THE DISALLOWANCE ARBITRARILY IGNORING THE FACT THAT ASSESSEE HAS ACTUALLY CARRIED OUT THE BUSINESS. AS REGARD THE SURVEY REPORT ON GOING THROUG H THE ASSESSMENT ORDER WE NOTE THAT THOUGH THE ASSESSING OFFICER IS MAKI NG A REFERENCE TO THE SURVEY REPORT BUT IS IGNORING THE FACT THAT THE ALLEG ATIONS MADE ARE GENERIC AND IN THE LIGHT OF EVIDENCES SUBMITTED BY THE ASSESSEE BEFORE HIM HOW HE HAS IGNORED THE SAME. IT IS IMPORTANT TO POINT OUT THAT THE ASSESSING OFFICER HAS NOT REJECTED THE BOOKS OF ACCOUNTS NOR HAS HELD THAT THE ASSESSEE IS NOT CARRYING ANY BUSINESS. THE EXPENSES INCURRED ARE ACCOUNTED FOR IN THE BOOKS OF ACCOUNT AND THERE IS NO MATERIAL BROUGHT ON T HE RECORD THAT THESE EXPENSES HAVE NOT BEEN ACTUALLY INCURRED. SINCE THE FACTS ARE IDENTICAL FOLLOWING OUR ORDER AND THE REASONING IN THE ABOVE S AID ORDER WE UPHOLD THE 7 ORDER OF THE LD. CIT(A) IN DELETING THIS ADDITION. AND THIS GROUND IS DISMISSED. 9. GROUND NO. 5 IN REVENUES APPEAL AND GROUND NO. 1 AND 4 IN ASSESSEES CROSS OBJECTION ARE GENERAL IN NATURE AND HENC E NEED NO ADJUDICATION. 10. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMISSED AND CROSS OBJECTION OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 05-11-2018. SD/- SD/- [L.P. SAHU] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 05/11/2018 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4.CIT (A) 5. DR , ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES