M/s. Amrapali Zodiac Developers Pvt. Ltd., Noida V. DCIT, New Delhi

CO 138/DEL/2015

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3752 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 9 month(s) 4 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 18-02-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 31-05-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 14-05-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SANJAY GOYAL
• Keywords: Bogus purchase; Income from undisclosed sources; Search and seizure
• Section: 153A; 131; 132; 2; 139

Judgement Text

PAGE | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A : NEW DELHI BEFORE SHRI H.S.SIDHU , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 5271/DEL/2014 (ASSESSMENT YEAR: 2010 - 11 ) DCIT, CENTRAL CIRCLE - 7, NEW DELHI VS. AMRAPALI ZODIAC DEVELOPERS PVT. LTD, C - 56/40, SECTOR - 62, NOIDA PAN: AAICA1193M (APPELLANT) (RESPONDENT) CO NO. 138/DEL/2015 (IN ITA NO. 5271/DEL/2014) (ASSESSMENT YEAR: 2010 - 11 ) AMRAPALI ZODIAC DEVELOPERS PVT. LTD, C - 56/40, SECTOR - 62, NOIDA PAN: AAICA1193M VS. DCIT, CENTRAL CIRCLE - 7, NEW DELHI (APPELLANT) (RESPONDENT) REVENUE BY : SHRI SANJAY GOYAL, CIT DR. ASSESSEE BY: NONE DATE OF HEARING 18/02/2019 DATE OF PRONOUNCEMENT 18 /02/ 20 1 9 O R D E R PER PRASHANT MAHARISHI , A. M. 1. THIS APPEAL IS FILED IN CASE OF ASSESSEE M/S AMRAPALI ZODIAC DEVELOPERS PRIVATE LIMITED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 7, NEW DELHI (THE LEARNED AO) AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) 1, NEW DELHI DATED 11/7/2014 FOR ASSESSMENT YEAR 2010 11. THE LEARNED AO HAS FILED THE APPEAL ON THE FOLLOWING SUBSTANTIAL GROUNDS 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT A HAS ERRED IN LAW IN CANCELLING THE ASSESSMENT AND HANDLING THE ASSESSMENT ORDER ON THE GROUND THAT THE ASSESSMENT ORDER UNDER PAGE | 2 SECTION 153C IS TO BE FRAMED WITHIN THE CONFINES OF THE MATERIAL FOUND DURING THE SEARCH 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT A HAS ERRED IN DELETING THE ADDITION OF DISALLOWANCE OF RUPEES TO 3501838/ MADE BY THE ASSESSING OFFICER ON ACCOUNT OF BOGUS PURCHASES WHICH WERE CAPITALIZED. 2. ASSESSEE HAS FILED THE CROSS OBJECTION ON THE ISSUE THAT ON THE FACTS OF THE CASE AND IN LAW THE NOT ICE UNDER SECTION 153C OF INCOME TAX ACT, 1961, ISSUED IN THIS CASE IS ILLEGAL AND WITHOUT JURISDICTION AND ACCORDINGLY THE SAID NOTICE AND ALSO THE ASSESSMENT ORDER PASSED ON THE FOUNDATION OF SUCH NOTICE ARE LIABLE TO BE QUASHED. 3. THE BRIEF FACTS OF THE C ASE SHOW THAT ASSESSEE IS A COMPANY INCORPORATED ON 18/12/2009 AND IS ENGAGED IN THE BUSINESS OF BUILDING, CONSTRUCTION AND DEVELOPMENT OF RESIDENTIAL/COMMERCIAL PROJECTS. THE ASSESSEE FILED ITS RETURN OF INCOME UNDER SECTION 139 OF THE INCOME TAX ACT ON 15/10/2010 DECLARING INCOME OF INR 51,000. SUBSEQUENTLY SEARCH AND SEIZURE OPERATION U/S 132 OF THE INCOME TAX ACT WAS CARRIED OUT ON 9/9/2010 IN AMRAPALI GROUP OF CASES AND THE ASSESSEE WAS ONE OF THE ASSESSEES OF THAT GROUP AND THEREFORE NOTICE UNDER SECTION 153C WAS ISSUED TO THE ASSESSEE ON 12/4/2012 TO FILE THE RETURN OF INCOME. THE ASSESSEE SUBMITTED VIDE LETTER DATED 23/4/2012 OFFERING THE RETURN ORIGINALLY FILED UNDER SECTION 139 (1) OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE LEARNED AO NOTED THAT ASSESSEE HAS CLAIMED EXPENDITURE ON ACCOUNT OF PURCHASES FROM CERTAIN PARTIES WHO WERE INVOLVED IN MERELY ISSUE OF PURCHASE BILLS AND EFFECTING PAYMENTS THROUGH BANKING CHANNEL FOR COMMISSION AND NOT ACTUALLY SUPPORTED WITH PHYSICA L TRANSFER OF GOODS. SUCH INFORMATION WAS FOUND DURING THE COURSE OF SEARCH ON 9/9/2010 WHERE LEDGER ACCOUNT OF VARIOUS PARTIES WERE SEIZED AT PAGE NUMBER 77 ONWARSD OF THE PARTIES FROM WHOM THE ASSESSEE HAS PURCHASED MATERIAL TOTALLING TO RUPEES 4487 02688. THE LEARNED ASSISTANT DIRECTOR OF INCOME TAX/INVESTIGATION, NEW DELHI VERIFY THE VERACITY OF THE TRANSACTION AND ASKED THE DIRECTOR OF ULTRA HOME CONSTRUCTIONS PRIVATE LTD TO FURNISH THE COLLATERAL EVIDENCE LIKE BILL OF TRANSPORT, TOUR LAKH RECEIPT S, DETAILS OF DESTINATION AND UTILISATION OF THE PAGE | 3 MATERIAL. IT WAS NOT FURNISHED AND THE STATEMENT UNDER SECTION 132 (4) WAS RECORDED WHERE THE ASSESSEE AGREED TO SURRENDER THE ABOVE AMOUNT AS UNACCOUNTED INCOME OF MESSERS ULTRA HOME CONSTRUCTIONS PRIVATE LTD ON ACCOUNT OF BOGUS EXPENSES. FURTHER DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE SUMMONS U/S 131 WERE ALSO ISSUED TO THESE PARTIES WHICH RETURNED UNSERVED WITH REMARKS THAT THERE ARE NO SUCH ADDRESSES. THE INSPECTOR WAS ALSO DEBITED TO FIND OUT THE ADDRESSES IN BUSINESS PREMISES OF THE SUPPLIERS. IT WAS REPORTED THAT THEY DO NOT EXIST AND LOCAL ENQUIRIES ALSO SUPPORTED THE ABOVE FINDING. THEREFORE THE LEARNED ASSESSING OFFICER WAS OF THE VIEW THAT ASSESSEE IS ENGAGED IN LARGE - SCALE INFLATION O F EXPENSES IN ITS BOOKS OF ACCOUNTS THROUGH BOGUS EXPENSES. THEREFORE DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS OF THE PURCHASES. THE ASSESSEE SUBMITTED SOME OF THE DETAILS OF THE SUM OF THE PARTIES. THE L EARNED ASSESSING OFFICER ISSUED SUMMONS TO THEM AT THE GIVEN ADDRESS HOWEVER IT RETURNED BACK UNSERVED. THE ASSESSEE WAS FURTHER ASKED ABOUT THE ENQUIRIES CONDUCTED BY THE AO AND THE ISSUE OF SUMMONS U/S 131 WHICH RETURNED BACK AND THE REPORT OF THE INSPE CTOR WHEREIN IT WAS FOUND THAT THE PARTIES ARE NOT GENUINE. THE ASSESSEE DID NOT FILE ANY REPLY AND THEREFORE THE LEARNED ASSESSING OFFICER DISALLOWED A SUM OF INR 12 000378 BEING PURCHASES FROM BANSAL TRADING CO AND INR 1 5101460 FROM SHIV SALES CORP FRO M THE CLOSING STOCK WORK IN PROGRESS CARRIED FORWARD. ACCORDINGLY THE CLOSING WORK IN PROGRESS WAS REDUCED TO THE BOGUS PURCHASES ENTERED INTO BY THE ASSESSEE. CONSEQUENTLY ASSESSMENT UNDER SECTION 143 (3) SECTION 153C OF THE ACT WAS PASSED ON 26/03/2013 . 4. ASSESSEE AGGRIEVED WITH THE ORDER OF THE LEARNED ASSESSING OFFICER CHALLENGED THE SAME BEFORE THE LEARNED CIT A ON 20 STATING THAT THE NOTICE UNDER SECTION 153C IS WITHOUT JURISDICTION AND THE DISALLOWANCE OF 23501838/ ON ACCOUNT OF ALLEGED BOGUS PURC HASES IS BEYOND THE SCOPE OF JURISDICTION OF PROVISIONS OF SECTION 153C READ WITH SECTION 153A OF THE INCOME TAX ACT 1961. WITH RESPECT TO THE PROCEEDINGS UNDER SECTION 153C OF THE INCOME TAX ACT WIDE PARA NUMBER 3.3 OF HIS ORDER OF THE LEARNED CIT APPEAL EXAMINED THE FACT THAT THE WHETHER THE ASSESSING PAGE | 4 OFFICER CAN TRAVEL BEYOND THE SATISFACTION RECORDED. HE HELD THAT THE ASSESSMENT IS TO BE FRAMED ONLY WHEN THE AO COMES TO THE FINDING THAT THE MATERIAL FOUND BELONGS TO THE OTHER PERSON AND INDICATES OR E STABLISHES INCOME THAT HAS NOT BEEN DISCLOSED IN THE INCOME TAX RETURNS FILED. ACCORDING TO HIM THIS IMPLIES THAT THE AO IS TO LIMITS ACTION WITHIN THE CONFINES OF THE MATERIAL FOUND. HE HELD THAT SECTION 153C DOES NOT PERMIT ROVING ENQUIRIES NOR CONFER S OMNIBUS POWERS ON THE REVENUE TO ASSESS OR REASSESS THE INCOME. HE HELD THAT WHEN THE FACT OF MATERIAL THE BASIS ON WHICH THE PROCEEDING WAS INITIATED IS VERIFIED AND DOES NOT LEAD TO THE CONCLUSION OF UNDISCLOSED INCOME, THE PROCEEDING AS TO BE CLOSED OR DROP. THEREFORE HE HELD THAT THE LEARNED ASSESSING OFFICER DID HAVE THE JURISDICTION TO INITIATE PROCEEDINGS UNDER SECTION 153C, BUT HAVING VERIFIED THE MATERIAL BELONGING TO THE APPELLANT, AND NOT FINDING ANY UNDISCLOSED INCOME ON THAT BASIS, SHOULD H AVE CLOSE THE PROCEEDINGS. HE FURTHER CANCELLED THE ACTION OF THE LEARNED ASSESSING OFFICER IN EXCLUDING THE ABOVE EXPENDITURE FROM THE WORK IN PROGRESS. HOWEVER HE DIRECTED THE LEARNED ASSESSING OFFICER TO MAKE AVAILABLE ALL ADVERSE MATERIAL AND TO ALLO W NECESSARY OPPORTUNITY TO THE APPELLANT TO EXPLAIN REBUT THE EVIDENCE DURING THE ASSESSMENT PROCEEDINGS FOR ASSESSMENT YEAR 12 13 AND SUBSEQUENT YEARS WHEN THE EXPENDITURE EMBEDDED IN THE WORK IN PROGRESS WILL BE CONSIDERED FOR COMPUTING THE INCOME OF T HE APPELLANT AS PER THE PERCENTAGE OF COMPLETION METHOD AND TAKE ACTION ACCORDING TO THE LAW THEN. 5. THE REVENUE AGGRIEVED WITH THE ABOVE ORDER HAS PREFERRED THIS APPEAL BEFORE US. THE LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENTLY STATED THAT THE LEARNED C IT A HAS GROSSLY ERRED IN EXAMINING THE PROVISIONS OF SECTION 153C OF THE INCOME TAX ACT. HE SUBMITTED THAT THE SEARCH AND SEIZURE ACTION TOOK PLACE ON 9/9/2010 AND THE ASSESSMENT YEAR INVOLVED IS ASSESSMENT YEAR 2010 11. FOR THAT ASSESSMENT YEAR THE TIME LIMIT FOR ISSUE OF NOTICE U/S 143 (2) WAS UP TO 30/9/2010 AND THEREFORE THIS IS AN ASSESSMENT PASSED UNDER SECTION 143 (3) OF THE INCOME TAX ACT AND THE ASSESSING OFFICER IS EMPOWERED TO LOOK INTO THE WHOLE GAMUT OF COMPUTATION OF INCOME OF THE ASSES SEE IRRESPECTIVE OF THE MATERIAL FOUND PAGE | 5 DURING THE COURSE OF SEARCH OR NOT. THEREFORE HE STATED THAT THE LEARNED CIT APPEAL SHOULD NOT HAVE HELD THAT THE JURISDICTION AS ASSUMED BY THE ASSESSEE UNDER SECTION 153C OF THE INCOME TAX ACT IS BAD IN LAW. WITH RESPECT TO THE ADDITION INVOLVED HE SUBMITTED THAT THE WHOLE ISSUE HAS BEEN EXTENSIVELY INVESTIGATED BY THE INVESTIGATION WING OF THE INCOME TAX DEPARTMENT AS WELL AS THE LEARNED ASSESSING OFFICER AND BOTH THE PARTIES ARE FOUND TO BE NOT EXISTING AT ALL AN D THEREFORE THE BOGUS PURCHASES HAVE BEEN ACCOUNTED BY THE ASSESSEE IN ITS BOOKS OF ACCOUNTS IN CLOSING WORK IN PROGRESS WHICH IS REQUIRED TO BE REDUCED TO BE CARRIED FORWARD TO THE NEXT YEAR. HE FURTHER STATED THAT THE LEARNED CIT APPEAL IS GROSSLY ERRED IN DIRECTING THE LEARNED ASSESSING OFFICER TO A TAKE THE ACTION ONLY FOR ASSESSMENT YEAR 12 13. HE SUBMITTED THAT WHEN THE BOGUS EXPENDITURES HAVE BEEN BOOKED DURING THE YEAR THE RELEVANT CLOSING STOCK IS REQUIRED TO BE EXCLUDED FROM CARRY FORWARD. HE FURTHER STATED THAT THE IDENTICAL ISSUE HAS BEEN CONSIDERED BY THE COORDINATE BENCH IN CASE OF THE ASSESSEE FOR ASSESSMENT YEAR 2011 12 WHEREIN THE WHOLE ISSUE HAS BEEN SET ASIDE BACK TO THE FILE OF THE LEARNED ASSESSING OFFICER WITH A DIRECTION WHERE T HE ASSESSEE HAS FAILED TO PRODUCE SUCH PARTIES WITHOUT ADEQUATE OPPORTUNITY. HE STATED THAT THE COORDINATE BENCH DIRECTED THE LEARNED ASSESSING OFFICER TO CONFRONT THE ASSESSEE WITH THE REPORT OF THE INCOME TAX INSPECTOR AS WELL AS GRANT OPPORTUNITY TO TH E ASSESSEE TO PROVE THE ALLEGED BOGUS PURCHASES AS GENUINE BY PRODUCING THE PARTIES. HE SUBMITTED THAT THE SIMILAR DIRECTION AT THE MOST IF THE ADDITION IS NOT CONFIRMED CAN BE GIVEN. 6. DESPITE NOTICE TO THE ASSESSEE NONE APPEARED, AND THEREFORE THE ISSUE I S DECIDED ON THE MERITS OF THE CASE AS PER INFORMATION AVAILABLE ON RECORD. ON CAREFUL PERUSAL OF THE ORDER SHEET OF THE APPEAL IT IS APPARENT THAT ON 21/08/2018, 3RD MAY 2018, 28/02/2018 NONE APPEARED ON BEHALF OF THE ASSESSEE. FURTHER ON 14/8/2017 AND 18/10/2017 THE ASSESSEE SHOT IN ADJOURNMENT AND THEREAFTER DID NOT APPEAR AT ALL. UNDER THESE CIRCUMSTANCES WE DID NOT HAVE ANY OTHER OPTION BUT TO DECIDE THE APPEAL OF THE REVENUE AND THE CROSS OBJECTION OF THE ASSESSEE. PAGE | 6 7. WE HAVE CAREFULLY CONSIDERED THE CONTENTIONS OF THE LEARNED CIT DEPARTMENTAL REPRESENTATIVE AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES. IN THE PRESENT CASE IMPUGNED ASSESSMENT YEAR INVOLVED IS 2010 11. THE ASSESSEE FILED ITS RETURN OF INCOME ON 15/10/2010. THE SEARCH TOOK PLACE ON 9/9/2010. THEREFORE ON THE DATE OF SUCH THE ASSESSMENT FOR ASSESSMENT YEAR 2010 11 WAS PENDING. AS THE ASSESSMENT WAS PENDING THE LEARNED ASSESSING OFFICER WAS EMPOWERED TO LOOK INTO THE WHOLE GAMUT OF COMPUTATION OF INCOME FOR THAT ASSESSMENT YEAR EVEN IF THERE IS NO INCRIMINATING MATERIAL, THERE IS NO SATISFACTION AVAILABLE. THE CHART SHOWN AT PAGE NUMBER 10 OF THE ORDER OF THE LEARNED CIT APPEAL ALSO SATISFIES THE ABOVE CONDITION. THEREFORE ON THE DATE OF THE SEARCH THE ASSESSMENT FOR ASSESSMENT YEAR 2010 11 WAS PENDING AND THEREFORE, THE LEARNED ASSESSING OFFICER IS CORRECT IN PASSING AN ASSESSMENT ORDER AND THE LEARNED CIT A HAS CARRIED IN HOLDING THAT THE LEARNED ASSESSING OFFICER SHOULD HAVE CLOSE THE PROCEEDINGS. ACCORDINGLY GROUND NUMB ER 2 OF THE APPEAL OF THE LEARNED ASSESSING OFFICER IS ALLOWED AND THE ORDER PASSED BY THE LEARNED ASSESSING OFFICER U/S 153C READ WITH SECTION 143 (3) OF THE INCOME TAX ACT IS UPHELD. 8. COMING TO THE GROUND NUMBER 3 OF THE APPEAL OF THE LEARNED ASSESSING OF FICER WHERE THE LEARNED CIT A DELETED THE ADDITION OF DISALLOWANCE OF RUPEES TO 3501838/ MADE BY THE ASSESSING OFFICER ON ACCOUNT OF BOGUS PURCHASES WHICH WERE CAPITALISED HOLDING THAT THE LEARNED AO IS DIRECTED TO TAKE NECESSARY ACTION ONLY IN ASSESSME NT YEAR 2012 13 AND SUBSEQUENT YEARS. THE IDENTICAL ISSUE HAS BEEN DECIDED BY THE COORDINATE BENCH IN THE CASE OF THE ASSESSEE FOR ASSESSMENT YEAR 2011 12 IN ITA NUMBER 5272/DEL/2014 WIDE ORDER DATED 24/8/2017. IN PARA NUMBER 13 THE COORDINATE BENCH HAS HELD THAT: - IN THE GIVEN CIRCUMSTANCES, WE ARE OF THE CONSIDERED VIEW THAT THOUGH THE AO HAS MADE A DISCREET ENQUIRY THROUGH INSPECTOR SO AS TO THE EXISTENCE OF THE FIRM FROM WHOM THE ASSESSEE ALLEGED TO HAVE PURCHASED THE RAW MATERIAL, BUT AT THE SA ME TIME AO CATEGORICALLY RECORDED THE OBSERVATION IN PARA 5.6(E) THAT THE ASSESSEE HAS FAILED TO PRODUCE SUCH PARTIES IN SPITE OF REPEATED OPPORTUNITIES GIVEN TO THEM BUT NO SUCH ADEQUATE OPPORTUNITY ALLEGEDLY PROVIDED BY THE AO TO THE ASSESSEE IS VISIBLE ON THE RECORD, PARTICULARLY WHEN EXAMINED IN THE LIGHT OF THE FACT THAT THE PAGE | 7 LEARNED CIT (A) HAS CATEGORICALLY MENTIONED IN THE IMPUGNED ORDER THAT THE ASSESSEE HAS FILED ALL THE REQUISITE EVIDENCES AGAIN WITHOUT HIGHLIGHTING THE SAID PIECE OF EVIDENCE. EV EN THE ASSESSEE HAS NOT BEEN CONFRONTED WITH THE REPORT OF THE INCOME TAX INSPECTOR DATED 23/11/2012 AND 26/2/2013 RELIED UPON BY THE AO. SO THE IMPUGNED ORDER IS LIABLE TO BE SET ASIDE TO REMAND THE SAME TO THE FILE OF THE AO WHO SHALL PROVIDE ADEQUATE O PPORTUNITY TO THE ASSESSEE TO PROVE THE ALLEGED BOGUS PURCHASES. 9. IN VIEW OF THE ABOVE CATEGORICAL FINDING OF THE COORDINATE BENCH FOR ASSESSMENT YEAR 2011 12 WE ALSO SET ASIDE THE WHOLE ISSUE BACK TO THE FILE OF THE LEARNED ASSESSING OFFICER WITH A DIRE CTION TO THE ASSESSEE TO PRODUCE THE PARTIES AND PROVE THE PURCHASES FROM THESE 2 PARTIES AS GENUINE. 10. ACCORDINGLY THE APPEAL FILED BY THE LEARNED ASSESSING OFFICER IS ALLOWED WITH ABOVE DIRECTION IS FOR STATISTICAL PURPOSES. 11. IN VIEW OF OUR ABOVE DIRECTION THAT THE PROCEEDINGS UNDER SECTION 153C OF THE INCOME TAX ACT IS WITH JURISDICTION AND IS IN ORDER THE CROSS OBJECTION FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 18/2/2019. - SD/ - - SD/ - ( H.S.SIDHU ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 8 / 02 / 2019 COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI