ACIT, New Delhi V. M/s. Harsha Interior Decorators (Pvt.) Ltd., New Delhi

ITA 1071/DEL/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65836 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 20-09-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 02-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RIS GILL
• Keywords: Unexplained expenditure; Depreciation; Document seized; Validity of assessment; Documents seized
• Section: 69C; 143(3); 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: C NEW DELHI BEFORE SHRI U.B.S.BEDI, JUDICIAL MEMBER AND SHRI J.S.REDDY, ACCOUNTANT MEMBER I.T.A .NOS-1068-1073/DEL./2012 (ASSESSMENT YEARS -2003-04 TO 2008-09) ACIT, VS HARSHA INTERIOR DECORATORS (P) LTD., CENTRAL CIRCLE-21,ROOM NO.-344, A-1/82, 2 ND FLOOR, ARA CENTRE, E-2, HASTSAL ROAD, UTTAM NAGAR, JHANDEWALAN EXTN., NEW DELHI-55. NEW DELHI. PAN-AABCH2590Q (APPELLANT) (RESPONDENT) (C.O. NOS.-173-178/DEL/2012) (IN I.T.A .NOS-1068-1073/DEL./2012) (ASSESSMENT YEARS -2003-04 TO 2008-09) HARSHA INTERIOR DECORATORS (P) LTD., VS ACIT, A-1/82, 2 ND FLOOR, CENTRAL CIRCLE-21,ROOM NO.-344, HASTSAL ROAD, UTTAM NAGAR, ARA CENTRE, E-2, JHAND EWALAN EXTN., NEW DELHI. NEW DELHI-55. PAN-AABCH2590Q APPELLANT BY: SH. RIS GILL, CIT DR RESPONDENT BY: SH. KAPIL GOEL, ADV. DATE OF HEARING:-23.10.2012 DATE OF PRONOUNCEMENT:-31.10.2012 ORDER PER BENCH ALL THESE APPEALS BY THE REVENUE ARE DIRECTED AGAIN ST THE COMMON ORDER OF THE LD. CIT(A)-II, DELHI DATED 21.10.2008 PASSED FOR AY S 2003-04, 2004-05, 2005-06, 2006-07, 2007-08 & 2008-09. C.O. NOS.-173-178/DEL/2012 (IN I.T.A .NOS-1068-1073/DEL./2012) 2 BRIEFS FACTS OF THE CASE:- 2. THE ASSESSEE COMPANY BELONGS TO THE THAPAR GROUP OF CASES. ACTION U/S 132 OF THE INCOME TAX ACT, 1961 WAS CARRIED ON IN THE C ASE OF SH. B.K.DHINGRA, SMT. POONAM DHINGRA & M/S MADHUSUDAN BUILDCON PVT. LTD. ON 20.10.2008. ON THE BASIS OF DOCUMENTS FOUND DURING THE COURSE OF SEARC H, PROCEEDINGS WERE INITIATED IN THE CASE OF ASSESSEE COMPANY U/S 153C. THE AO MADE ADDITIONS ON ACCOUNT ON UNEXPLAINED PURCHASES, DISALLOWANCE ON EXPENDITURE, AMONG OTHER ADDITIONS/DISALLOWANCES. THE FIRST APPELLATE AUTHOR ITY IN HIS ORDER HAS DELETED THESE ADDITIONS ON MERITS. 3. AGGRIEVED, THE REVENUE IS ON APPEAL ON THE FOLLO WING GROUNDS FOR THE AYS 2003-04, 2004-05, 2005-06, 2006-07, 2007-08 & 2008- 09:- (1) THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS .26,46,193/- MADE BY THE ASSESSING OFFICER U/S 69C OF THE INCOME TAX ACT , 1961 ON ACCOUNT OF UNEXPLAINED PURCHASES. (2) THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN LAW AND ON FACTS IN ACCEPTING THE TRANSACTIONS OF SALE AND PURCHASE MADE IN CASH AS GENUINE. (3) THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.3,27,72 3/- MADE BY THE ASSESSING OFFICER BY WAY OF 100% DISALLOWANCE OF EX PENDITURE AND DEPRECIATION CLAIMED BY THE ASSESSEE. (4) THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN LAW AND ON FACTS IN HOLDING THAT THE STATEMENTS OF VARI OUS PERSONS WITHOUT C.O. NOS.-173-178/DEL/2012 (IN I.T.A .NOS-1068-1073/DEL./2012) 3 BEING CONFRONTED TO THE ASSESSEE HAD NO EVIDENTIARY VALUE AND THEY DID NOT HAVE ANY CONNECTION WITH THE ASSESSEE. (5) (A) THE ORDER OF THE CIT(A) IS ERRONEOUS AND N OT TENABLE IN LAW AND ON FACTS. (B) THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR A MEND ANY/ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURS E OF THE HEARING OF THE APPEAL. 4. THE ASSESSEE FILED THE FOLLOWING CROSS-OBJECTION S:- (1) THAT IN VIEW OF THE FACTS & CIRCUMSTANCES OF TH E CASE AND IN LAW THE CIT(A) HAS ERRED IN NOT HOLDING THAT THE NOTICE ISSUED U/S 153C AND THE ASSESSMENT ORDER PASSED U/S 153C/143(3) ARE ILL EGAL, BAD IN LAW, WITHOUT JURISDICTION AND BARRED BY TIME LIMITATION. (2) THAT THE DOCUMENTS FOUND DURING SEARCH PROCEED INGS, AS REFERRED TO IN THE SATISFACTION NOTE, DO NOT BELONG TO ASSES SEE AS THE SAME WERE PART OF WORKING PAPERS OF THE C.A SH. B.K.DHINGRA I N WHOSE OFFICE THE SEARCH WAS CONDUCTED. HENCE, THE NOTICE ISSUED U/S 153C, BASED ON SAID DOCUMENTS, IS ILLEGAL, BAD IN LAW AND WITHOUT JURISDICTION. (3) THAT ADMITTEDLY, AS RECORDED IN THE SATISFACTI ON NOTE, NO SEIZED DOCUMENTS RELATED TO THE RELEVANT ASSESSMENT YEAR W AS FOUND AND THE SEIZED PAPER REFERRED IN THE SAID SATISFACTION NOTE WERE DULY REFLECTED IN THE REGULAR BOOKS OF A/C AND NO INCRIMINATING MATER IAL WAS FOUND. HENCE THE NOTICE ISSUED U/S 153C IS ILLEGAL, BAD IN LAW & WITHOUT JURISDICTION. (4) THAT IN VIEW OF THE FACTS & CIRCUMSTANCES OF T HE CASE THE CIT(A) HAS ERRED ON FACTS AND IN LAW IN HOLDING THAT THE A SSESSMENT HAS BEEN FRAMED IN CONFORMITY WITH STATUTORY PROVISION OF SE CTION 153C R/W SECTION 153A OF THE ACT, IGNORING THE FACTS THAT N O INCRIMINATING C.O. NOS.-173-178/DEL/2012 (IN I.T.A .NOS-1068-1073/DEL./2012) 4 MATERIAL AT ALL HAD BEEN FOUND. AUDITED BOOKS OF A CCOUNT, FOR THE ASSESSMENT YEAR 2006-07, WHICH WERE PRODUCED BEFORE THE CONCERNED ASSESSING OFFICER FOR COMPLETING THE ASSESSMENT U/S 143(3) OF THE INCOME TAX ACT, WERE SEIZED ILLEGALLY. (5) THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT(A) HAS ERRED IN FACTS AND ON LAW IN UPHOLDING T HE VALIDITY OF ASSESSMENT PARTICULARLY WHEN THE SEIZED DOCUMENT WE RE NEVER HANDED OVER TO THE A.O. WHO FRAMED THE ASSESSMENT AND THE ADDITIONS MADE ARE ILLEGAL, BAD IN LAW & WITHOUT JURISDICTION. (6) THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E AND THE PROVISIONS OF THE LAW, THE LD. CIT(A) HAS ERRED IN NOT CONSIDERING THE FACT THAT THE ASSESSMENT PROCEEDINGS FOR THE YEAR U NDER APPEAL WAS NOT PENDING ON THE DATE OF THE RECORDING OF SATISFACTIO N U/S 153C OF THE ACT AND ACCORDINGLY THE SAME DID NOT ABATE FOR THE PURP OSE OF INITIATION OF PROCEEDINGS U/S 153C AND AS SUCH THE ASSESSMENT BEI NG BAD IN LAW DESERVES TO BE QUASHED. (7) THAT THE RESPONDENT RESERVES THE RIGHT TO ADD/ AMEND/ALTER THE GROUNDS OF CROSS OBJECTION. 5. AFTER HEARING BOTH PARTIES, WE FIND THAT SIMILAR ISSUES, ON THE SAME SET OF FACTS HAS COME UP BEFORE THE A BENCH OF THE TRIBUNAL IN THE CASE OF ACIT, CENTRAL CIRCLE-21 VS M/S BLUE LUXURY INDEX PVT. LTD. IN ITA NOS.-5495-5500/DEL./2011 WITH CO NOS. 31-36/DEL./2011 ORDER DATED 13.06.2012 . BOTH PARTIES AGREE THAT THE FINDING OF THE TRIBUNAL IN THE CASE OF M/S BLUE LUX URY INDEX PVT. LTD, (SUPRA) COVER THE ISSUE ON HAND. C.O. NOS.-173-178/DEL/2012 (IN I.T.A .NOS-1068-1073/DEL./2012) 5 6. THE TRIBUNAL AT PARA 6 TO PARA 8 OF THAT ORDER I N ITA NO.-5495- 5500/DEL./2011, ITS HELD AS FOLLOWS:- 6. WE HAVE HEARD THE LEARNED DR AND HAVE GONE THRO UGH THE FACTS OF THE CASE. INDISPUTABLY & AS POINTED OUT BY THE LD. CIT(A), THE ENTIRE PURCHASES ADDED BY THE AO ARE ACCOUNTED FOR IN THE BOOKS OF ACCOUNT. THE AO, WITHOUT REJECTING THE BOOKS RESULTS ADDED T HE ENTIRE PURCHASES, SOURCE OF WHICH, ACCORDING TO LEARNED CI T(A), WAS DULY EXPLAINED. LIKEWISE, THE LEARNED CIT(A) FOUND THAT SALES HAD BEEN MADE BY ACCOUNT PAYEE CHEQUES AND DULY REFLECTED IN STOCK REGISTERS AND SUPPORTED BY SALES AND PURCHASE VOUCHERS. THE L D. CIT(A) ITA NOS.5495 TO 5500/DEL/2011 & CO NOS. 31 TO 36/DEL./2 0118 ALSO FOUND THAT THE AO IN HIS REMAND REPORT DID NOT COMMENT AD VERSELY ON THE SUBMISSIONS OF THE ASSESSEE IN RESPECT OF PURCHASES AND SALES. ACCORDINGLY, THE LD. CIT(A) DELETED THE AFORESAID A DDITIONS IN THESE SIX ASSESSMENT YEARS. WHILE INTERPRETING THE PROVISIONS OF SEC. 69C OF THE ACT, HONBLE JURISDICTIONAL HIGH COURT IN RADHIKA C REATION (SUPRA) HELD THAT THE FOCUS OF SECTION 69C IS ON THE 'SOURC E' OF SUCH EXPENDITURE AND NOT ON THE AUTHENTICITY OF THE EXPE NDITURE ITSELF. IN THAT CASE ALSO IT WAS AN ADMITTED POSITION THAT THE EXPENDITURE WAS SHOWN BY THE ASSESSEE IN ITS REGULAR BOOKS OF ACCOU NT AND IT WAS BECAUSE OF THIS REASON THAT THE ITAT OBSERVED AS UN DER: 'AS THE EXPENDITURE WAS ACCOUNTED IN THE REGULAR BO OKS, THE SOURCE IS OBVIOUSLY EXPLAINED. THE PROVISIONS OF SECTION 69C ARE NOT APPLICABLE AS THERE WAS NO UNACCOUNTED EXPENDITURE.' [EMPHASIS SUPPLIED]' 6.1 HONBLE HIGH COURT, ACCORDINGLY, HELD THAT SECTION 69C REFERS TO THE SOURCE OF THE EXPENDITURE AND NOT TO THE E XPENDITURE ITSELF. CONSEQUENTLY, THE AO WAS CLEARLY WRONG IN TREATING THE SAID EXPENDITURE AS UNEXPLAINED EXPENDITURE UNDER SECTIO N 69C OF THE SAID ACT AND THE LOWER APPELLATE AUTHORITIES WERE RIGHT IN THEIR CONCLUSIONS IN DELETING THE SAID ADDITION, HONBLE COURT CONCLU DED. 6.2 IN THE INSTANT CASE BEFORE US, INDISPUTABLY, THE PURCHASES AND SALES ARE ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS. T HUS, SOURCE OF THE EXPENDITURE INCURRED IN PURCHASES IS OBVIOUSLY EXPL AINED. IN THE LIGHT OF VIEW TAKEN IN THE THEIR AFORESAID DECISION BY TH E HON'BLE JURISDICTIONAL HIGH COURT ,ESPECIALLY WHEN THE REVE NUE DID NOT PLACE ANY MATERIAL BEFORE US, CONTROVERTING THE AFORESAID FINDINGS OF FACTS RECORDED BY THE LD. CIT(A) SO AS TO ENABLE US TO TA KE A DIFFERENT VIEW IN THE MATTER, WE HAVE NO BASIS TO INTERFERE. IN VI EW THEREOF, GROUND NOS.1 & 2 IN THE APPEAL ARE DISMISSED. C.O. NOS.-173-178/DEL/2012 (IN I.T.A .NOS-1068-1073/DEL./2012) 6 7. AS REGARDS DISALLOWANCE OF EXPENSES IN THESE SIX ASSESSMENT YEARS, THE LD. CIT(A) FOUND THAT IN THE ASSESSMENT OF THE ASSESSEE FOR AY 2002-03, NO DISALLOWANCE OF EXPENSES WAS MADE WH ILE THE AO ,IN THE YEARS UNDER CONSIDERATION, DID NOT POINT OUT AN Y ITEM OF EXPENDITURE, WARRANTING DISALLOWANCE. IN THESE CIRCUMSTANCES, AND IN THE ABSENCE OF ANY B ASIS, WHEN THE REVENUE DID NOT EVEN IDENTIFY ANY SPECIFIC AMOUNT O F EXPENDITURE, WHICH WAS NOT RELATED TO THE BUSINESS OF THE ASSESS EE, WE ARE NOT INCLINED TO INTERFERE. THEREFORE, GROUND NO 3 IN TH ESE APPEALS IS ALSO DISMISSED. 8. IN VIEW OF OUR AFORESAID FINDINGS, REJECTING THE APPEALS OF THE REVENUE, THE GROUNDS RAISED BY THE ASSESSEE IN THEI R COS BECOME PURELY ACADEMIC AND THEREFORE, DO NOT SURVIVE FOR O UR ADJUDICATION. 7. THIS DECISION WAS FOLLOWED BY THE ITAT IN THE CA SE OF ANUPMA LINKS PVT. LTD. IN ITA NOS.-4135-4140/DEL./2011 ORDER DATED 12 .10.2012 AS WELL AS IN THE CASE OF AA TESTRONICS SOLUTIONS IN ITA NOS. 4233-4228/DE L./2010 ORDER DATED 20.10.2012. HENCE, ON MERITS THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE. 8. CONSISTENT WITH THE VIEW TAKEN IN THE DECISION, WE UPHOLD THE ORDERS OF COMMISSIONER OF INCOME TAX (APPEALS) AND DISMISS TH E APPEALS OF THE REVENUE. COMING TO THE CROSS-OBJECTIONS, THE LD. COUNSEL FOR THE ASSESSEE STATED THAT THEY FILED THE SAME SUPPORTED OF THE ORDER OF THE COMMIS SIONER OF INCOME TAX (APPEALS). ON LEGAL ISSUES, IT WAS SUBMITTED THAT THE GROUNDS WOULD BECOME ACADEMIC IF THE MERITS ARE DECIDED IN THE ASSESSEES FAVOUR AND HEN CE HE WOULD NOT PRESS THE SAME. HENCE, IN VIEW OF OUR DECISION ON MERITS, THE CROSS -OBJECTIONS ARE DISMISSED AS NOT PRESSED. C.O. NOS.-173-178/DEL/2012 (IN I.T.A .NOS-1068-1073/DEL./2012) 7 9. IN THE RESULT, THE APPEALS OF THE REVENUE AS WEL L AS CROSS-OBJECTIONS OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31.10.2012. SD/- SD/- (U.B.S.BEDI) (J.S.REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 31/10/2012 *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI