M/s. Devyani Internatioanl Ltd., New Delhi V. ACIT, New Delhi

CO 292/DEL/2015

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 3686 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 5 month(s) 19 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 23-04-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 03-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Search and seizure
• Section: 143(3); 153A; 14A; 133(6); 131; 132; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : B : NEW DELHI BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER ITA NOS.857 TO 859 & 861/DEL/2015 ASSESSMENT YEARS : 2006-07 TO 2008-09 & 2010-11 ACIT, CENTRAL CIRCLE-7, NEW DELHI. VS. DEVYANI INTERNATIONAL LTD., R/O F.2/7, OKHLA INDUSTRIAL AREA, PHASE-I, NEW DELHI. PAN: AABCD5534A CO NOS.291 & 292/DEL/2015 (ITA NOS.858 & 859/DEL/2015 ASSESSMENT YEARS : 2007-08 & 2008-09 DEVYANI INTERNATIONAL LTD., R/O F.2/7, OKHLA INDUSTRIAL AREA, PHASE-I, NEW DELHI. PAN: AABCD5534A VS. ACIT, CENTRAL CIRCLE-7, NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI AKSHAT JAIN, CA DEPARTMENT BY : MS RACHNA SINGH, CIT, DR DATE OF HEARING : 18.04.2018 DATE OF PRONOUNCEMENT : 23.04.2018 ITA NOS.857 TO 859 & 861/DEL/2015 CO NOS.291 & 292/DEL/2015 2 ORDER PER R.S. SYAL, VP: THIS BATCH OF SIX APPEALS CONSISTING OF FOUR BY TH E REVENUE AND THE TWO CROSS OBJECTIONS BY THE ASSESSEE RELATE TO THE ASSESSMENT YEARS 2006- 07 TO 2008-09 & 2010-11. SINCE SOME COMMON ISSUES A RE RAISED IN THESE APPEALS, WE ARE, THEREFORE, PROCEEDING TO DISPOSE T HEM OFF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. ASSESSMENT YEAR 2006-07 2. THE ONLY ISSUE RAISED BY THE REVENUE IN THIS APP EAL IS AGAINST THE DELETION OF ADDITION OF RS.3,67,14,462/-. 3. SUCCINCTLY, THE FACTUAL MATRIX OF THE CASE IS T HAT A SEARCH AND SEIZURE OPERATION U/S 132 OF THE INCOME-TAX ACT, 1961 (HERE INAFTER ALSO CALLED `THE ACT) WAS CARRIED OUT ON M/S JAIPURIA GROUP OF CASE S ON 27.03.2012. NOTICE U/S 153A OF THE ACT WAS ISSUED TO THE ASSESSEE, PU RSUANT TO WHICH A RETURN OF INCOME WAS FILED. THE ASSESSING OFFICER OBSERVE D THAT HUGE ADVERTISEMENT EXPENSES WERE CLAIMED TO HAVE BEEN INCURRED. ON BEING ITA NOS.857 TO 859 & 861/DEL/2015 CO NOS.291 & 292/DEL/2015 3 CALLED UPON TO FURNISH THE DETAILS OF THE PARTIES F ROM WHOM ADVERTISEMENT WORK WAS ALLEGEDLY GOT DONE, THE ASSESSEE FURNISHED A LIST. THE INVESTIGATION WING, IN ORDER TO VERIFY THE GENUINEN ESS OF THE ADVERTISEMENT EXPENSES, PICKED UP 16 PARTIES ON RANDOM BASIS AND ISSUED SUMMONS U/S 131 OF THE ACT. 14 PERSONS REPLIED TO THE SUMMONS OUT OF 16 PARTIES AND ALL OF THEM ACCEPTED THE GENUINENESS OF THE TRANSACTION S. THE ASSESSING OFFICER NOTICED THAT NO TAX AT SOURCE WAS DEDUCTED. APART FROM THAT, IT WAS FURTHER OBSERVED THAT THE ASSESSEE DECLARED TO HAVE PAID A SUM OF RS.4,43,650/- TO M/S RAMENDRA ENTERPRISES AND RS.3, 94,79,646/- TO M/S YUM RESTAURANTS MARKETING PVT. LTD. TOWARDS ADVERT ISEMENT EXPENSES. NOTICES WERE ISSUED U/S 133(6) OF THE ACT TO THESE TWO PARTIES. IN THE ABSENCE OF ANY COMPLIANCE FROM THEM, THE ASSESSING OFFICER MADE AN ADDITION OF RS.3,67,14,462/-, AFTER REDUCING AN AMO UNT OF RS.50 LAC SHOWN TO HAVE BEEN DUE. THE LD. CIT(A) DELETED THE ADDIT ION, AGAINST WHICH THE REVENUE HAS COME UP BEFORE THE TRIBUNAL. ITA NOS.857 TO 859 & 861/DEL/2015 CO NOS.291 & 292/DEL/2015 4 4. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE REL EVANT MATERIAL ON RECORD. IT IS SEEN THAT THE ASSESSING OFFICER MADE AN ADDITION OF RS.3.67 CRORE IN RESPECT OF ADVERTISEMENT EXPENSES CLAIME D TO HAVE BEEN INCURRED IN RESPECT OF TWO PARTIES, NAMELY, M/S RAMENDRA ENT ERPRISES AND M/S YUM RESTAURANTS MARKETING PVT. LTD., TO BOTH OF WHOM N OTICES WERE ISSUED U/S 133(6) BUT REMAINED UNCOMPLIED WITH. APART FROM IS SUING SUCH NOTICES, THE ASSESSING OFFICER DID NOT CONDUCT ANY FURTHER INQUI RY. HE SIMPLY PROCEEDED TO MAKE THE ADDITION WITHOUT ASCERTAINING THE GENUI NENESS OR OTHERWISE OF THESE TRANSACTIONS. HIS INFERENCE OF NON-GENUINENE SS OF THE TRANSACTIONS WAS BASED SIMPLY ON NON-COMPLIANCE BY THESE TWO PAR TIES, WHOSE COMPLETE PARTICULARS WERE WITH HIM. IN CASE OF NON-COMPLIANC E, THE AO OUGHT TO HAVE DEPUTED INSPECTOR OR GOT THE ENQUIRY CONDUCTED BY A NY OTHER MEANS BEFORE JUMPING TO THE CONCLUSION OF THE NON-GENUINENESS OF THE TRANSACTIONS. IT IS FURTHER PERTINENT TO NOTE THAT ADDITIONS WERE MADE IN SIMILAR WAY IN OTHER YEARS OF THE ASSESSEE COMPANY. SUCH AN ISSUE CAME U P FOR CONSIDERATION BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2009- 10 AND 2011-12. VIDE ORDER DATED 06.04.2018, THE T RIBUNAL, IN ITA NO.860 ITA NOS.857 TO 859 & 861/DEL/2015 CO NOS.291 & 292/DEL/2015 5 AND 862/DEL/2015 AND C.O. NOS.293 AND 294/DEL/2015, HAS UPHELD THE DELETION OF SIMILAR ADDITIONS MADE IN RESPECT OF `A DVERTISEMENT EXPENSES INCURRED BY THE ASSESSEE FOR WHICH NOTICES WERE ISS UED U/S 133(6) OF THE ACT BUT NO COMPLIANCE WAS MADE. SINCE THE FACTS AND C IRCUMSTANCES OF THE INSTANT GROUND ARE MUTATIS MUTANDIS SIMILAR, RESPECTFULLY FOLLOWING THE PRECEDENT, WE UPHOLD THE IMPUGNED ORDER IN DELETING THIS ADDITION. 5. IN THE RESULT, THE APPEAL IS DISMISSED. ASSESSMENT YEAR 2007-08 . 6. THE FIRST ISSUE RAISED BY THE REVENUE IN ITS APP EAL IS AGAINST THE DELETION OF ADDITION OF RS.5,14,72,157/- MADE BY TH E ASSESSING OFFICER ON ACCOUNT OF `ADVERTISEMENT EXPENSES. BOTH THE SID ES ARE IN AGREEMENT THAT THE FACTS AND CIRCUMSTANCES OF THIS GROUND ARE SIMI LAR TO THOSE OF THE ASSESSMENT YEAR 2006-07. FOLLOWING THE VIEW TAKEN HEREINABOVE, WE UPHOLD THE IMPUGNED ORDER IN DELETING THIS ADDITION . 7. THE NEXT ISSUE RAISED BY THE REVENUE IN ITS APPE AL IS AGAINST REDUCING THE ADDITION U/S 14A OF THE ACT. THE ASSESSEE IN I TS CROSS OBJECTION IS ITA NOS.857 TO 859 & 861/DEL/2015 CO NOS.291 & 292/DEL/2015 6 AGGRIEVED AGAINST THE SUSTENANCE OF ADDITION U/S 14 A TO THE TUNE OF RS.13,89,653/-. 8. THE FACTS APROPOS THIS ISSUE ARE THAT THE ASSESS ING OFFICER COMPUTED DISALLOWANCE U/S 14A OF THE ACT AT RS.1,24,88,043/- . THE LD. CIT(A) NOTICED IN PARA 4.3.18 OF THE IMPUGNED ORDER THAT T HE ASSESSEE HAD ITSELF DISALLOWED RS.13,89,653/-, BEING, 0.5% OF AVERAGE INVESTMENTS AND ADDED IT BACK IN THE COMPUTATION OF TOTAL INCOME. HE FOUN D THAT THE ASSESSING OFFICER DID NOT RECORD ANY SATISFACTION BEFORE PROC EEDING TO MAKE ANY DISALLOWANCE U/S 14A OF THE ACT. IN THE ABSENCE OF RECORDING OF SUCH A SATISFACTION, THE LD. CIT(A) RESTRICTED THE DISALL OWANCE TO RS. 13,89,653/- AND DELETED THE REMAINING ADDITION. BOTH THE SIDES ARE IN APPEAL ON THEIR RESPECTIVE STANDS. 9. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE REL EVANT MATERIAL ON RECORD. THE LD. AR CONTENDED THAT THE LD. CIT(A) W RONGLY RECORDED THE FACT ABOUT THE ASSESSEE HAVING SUO MOTU DISALLOWED RS. 13,89,653/-. RELYING ON THE TRIBUNAL ORDER FOR THE A.YS. 2009-10 AND 2011-1 2 PASSED IN THE ITA NOS.857 TO 859 & 861/DEL/2015 CO NOS.291 & 292/DEL/2015 7 ASSESSEES OWN CASE, THE LD. AR CONTENDED THAT NO I NCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH AND, HENCE, T HE ADDITION SUSTAINED U/S 14A OF THE ACT CANNOT BE UPHELD BECAUSE OF THE JUDG MENT OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA (2016) 380 ITR 573 (DEL). IT IS NOTICED THAT THE ASSESSEE FILED SIMILAR CRO SS OBJECTIONS FOR THE ASSESSMENT YEARS 2009-10 AND 2011-12 AND TH E TRIBUNAL, RESPECTFULLY FOLLOWING THE JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT IN KABUL CHAWLA (SUPRA) PREFERRED TO DELETE SUCH ADDITIONS. 10. IT IS, NO DOUBT, TRUE THAT NO ADDITION CAN BE MADE U/S 14A OF THE ACT IN RESPECT OF COMPLETED ASSESSMENTS AS ON THE DATE OF SEARCH IF NO INCRIMINATING MATERIAL IS FOUND. IN SUCH A SCENARI O, THE AMOUNT OF INCOME FINALLY DETERMINED IN THE ORIGINAL ASSESSMENT IS LI ABLE TO BE REPEATED IN THE ASSESSMENT MADE U/S 153A OF THE ACT. THE LD. CIT(A ) IN THE INSTANT CASE HAS RECORDED A FINDING THAT THE ASSESSEE ITSELF DIS ALLOWED RS.13,89,653/- U/S 14A OF THE ACT, WHICH HAS BEEN ASSAILED ON BEHALF O F THE ASSESSEE. ON A PERTINENT QUERY, THE LD. AR COULD NOT PRODUCE A COP Y OF THE COMPUTATION OF ITA NOS.857 TO 859 & 861/DEL/2015 CO NOS.291 & 292/DEL/2015 8 INCOME OR ITS ORIGINAL ASSESSMENT ORDER, WHICH WAS STATED TO HAVE BEEN PASSED U/S 143(3) OF THE ACT ON 30.12.2009 TO DEMO NSTRATE THAT NO SUCH DISALLOWANCE WAS OFFERED BY THE ASSESSEE AND FURTHE R THAT A RETURN WAS ACTUALLY FILED U/S 139 OF THE ACT FOR THE YEAR UNDE R CONSIDERATION. UNDER THESE CIRCUMSTANCES, WE SET ASIDE THE IMPUGNED ORDE R AND REMIT THE MATTER TO THE FILE OF ASSESSING OFFICER FOR EXAMINING, FIR STLY, IF THE ASSESSEE FILED ITS RETURN U/S 139 OF THE ACT OR OFFERED DISALLOWAN CE OF RS.13.89 LAC IN THE ORIGINAL RETURN OR ANY SUCH ADDITION WAS MADE. IF IT IS FOUND THAT NO RETURN WAS FILED OR THE DISALLOWANCE WAS SO OFFERED OR AN ADDITION MADE IN THE ORDER U/S 143(3) OF THE ACT THAT, THEN, SUCH A DISA LLOWANCE HAS TO BE REPEATED IN THE ASSESSMENT MADE U/S 153A READ WITH SECTION 143(3) OF THE ACT. IN THE OTHERWISE SCENARIO, THE RATIO LAID DOWN IN THE CASE OF KABUL CHAWLA (SUPRA) WILL APPLY AND THE ADDITION WILL STAND DELETED. TH E GROUND RAISED BY THE REVENUE IS, THEREFORE, DISMISSED AND THAT TAKEN BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ITA NOS.857 TO 859 & 861/DEL/2015 CO NOS.291 & 292/DEL/2015 9 11. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED AND THE C.O. FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . ASSESSMENT YEAR 2008-09 12. THE FIRST ISSUE RAISED IN THIS APPEAL BY THE RE VENUE IS AGAINST THE DELETION OF ADDITION OF RS.5,04,24,777/- ON ACCOUNT OF `ADVERTISEMENT EXPENSES. AS THE FACTS ARE, ADMITTEDLY, SIMILAR, FOLLOWING THE VIEW TAKEN HEREINABOVE, WE UPHOLD THE IMPUGNED ORDER IN DELETI NG THE ADDITION. 13. THE OTHER GROUND RAISED BY THE REVENUE AND THE ONLY ISSUE RAISED BY THE ASSESSEE IN ITS CROSS OBJECTION IS AGAINST THE ADDITION U/S 14A OF THE ACT. THE FACTS AND CIRCUMSTANCES OF THIS ISSUE ARE, AGAI N, SIMILAR TO THE PRECEDING YEAR. FOLLOWING THE VIEW TAKEN FOR THE ASSESSMENT YEAR 2007-08, WE SET ASIDE THE IMPUGNED ORDER AND REMIT THE MATTER TO TH E FILE OF ASSESSING OFFICER FOR EXAMINING THE ISSUE IN THE WAY DIRECTED ABOVE. THUS, THE GROUND TAKEN BY THE REVENUE IS DISMISSED AND THAT B Y THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ITA NOS.857 TO 859 & 861/DEL/2015 CO NOS.291 & 292/DEL/2015 10 14. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED AND THE C.O. FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . ASSESSMENT YEAR 2010-11 15. THE ONLY GROUND TAKEN BY THE REVENUE IS AGAINST THE DELETION OF ADDITION OF RS.1,44,56,578/- ON ACCOUNT OF UNEXPLAI NED `ADVERTISEMENT EXPENSES. 16. AS THE FACTS ARE, ADMITTEDLY, SIMILAR, FOLLOWIN G THE VIEW FOR THE IMMEDIATELY PRECEDING ASSESSMENT YEARS DISCUSSED HE REIN SUPRA , WE UPHOLD THE IMPUGNED ORDER IN DELETING THE ADDITION. 17. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 23.04.201 8. SD/- SD/- [K. NARASIMHA CHARY] [R.S. SYAL] JUDICIAL MEMBER VICE PRESIDENT DATED, 23 RD APRIL, 2018. DK ITA NOS.857 TO 859 & 861/DEL/2015 CO NOS.291 & 292/DEL/2015 11 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.