Sharuk Passi (Prop. M/s. Pascos), New Delhi V. DCIT, New Delhi

ITA 1105/DEL/2015

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 2394 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2005-2006
• Appeal Filed On: 24-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SALIL AGRAWAL
• Keywords: Search and seizure; Document seized; Wrong claim; Difference of opinion; Documents seized; Change of opinion
• Section: 143(3); 153A; 14A; 64; 131; 148; 132

Judgement Text

1 ITA NO. 1105 & 4292/DEL/2016 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: G NEW DELHI BEFORE SHRI N. K. BILLAIYA, ACCOUNTANT ME MBER AND MS SUCHITRA KAMBLE, JUDIC IAL MEMBER ITA NO. 1105/DEL/2015 ( A .Y 2005-06) SHARUK PASSI (PROP. M/S. PASCOS) 1/23B, ASAF ALI ROAD NEW DELHI AAGPP7030F (APPELLANT) VS DCIT CENTRAL CIRCLE-20 NEW DELHI (RESPONDENT) ITA NO. 4292/DEL/2016 ( A.Y 2012-13) ACIT CENTRAL CIRCLE-8, ROOM NO. 333, ARA CENTRE, JHANDEWALAN, EXTN. NEW DELHI (APPELLANT) VS SHARUK PASSI 15, SUNDER NAGAR NEW DELHI AAGPP7030F (RESPONDENT) APPELLANT BY SH. SALIL AGRAWAL, ADV RESPONDENT BY SH.H. K. CHOUDHARY, CIT(DR) ORDER PER SUCHITRA KAMBLE, JM THESE TWO APPEALS ARE FILED BY THE ASSESSEE AND THE REVENUE AGAINST THE ORDER DATED 16/1/2015 & 5/5/2016 PASSED BY CIT(A)-2 4, NEW DELHI FOR ASSESSMENT YEARS 2005-06 & 2012-13 RESPECTIVELY. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- (ITA NO. 1105/DEL/2015 A.Y. 2005-06) 1.1. THE ORDER OF THE LEARNED COMMISSIONER OF INCO ME TAX (A) IS ARBITRARY, AGAINST LAW AND FACTS ON RECORD. DATE OF HEARING 17.02.2020 DATE OF PRONOUNCEMENT 19.03.2020 2 ITA NO. 1105 & 4292/DEL/2016 1.2 THE LEARNED COMMISSIONER OF INCOME TAX (A) HAS ERR ED IN NOT CONSIDERING THE FACT THAT THE ASSESSMENT WAS REOPENED U/S 148 O F THE INCOME TAX ACT, 1961, ON THE BASIS OF GENERAL ALLEGATION WITHOUT AN Y INCRIMINATING MATERIAL AGAINST THE ASSESSEE AND WAS REOPENED AFTER THE EXP IRY OF THE TIME LIMIT PRESCRIBED UNDER THE INCOME TAX ACT, 1961 AND AS SU CH THE ASSESSMENT ORDER SO FRAMED IS BAD IN LAW 1.3 THE LEARNED COMMISSIONER OF INCOME TAX (A) HAS NOT CONSIDERED THE FACT THAT THE ASSESSING OFFICER HAS ERRED IN NOT PASSING THE SPEAKING ORDER ON THE OBJECTION FILED BY THE ASSESSEE AGAINST THE REASON RECORDED FOR REOPENING OF THE CASES BEFORE MAKING THE ADDITIONS AND HAS COMPL ETED THE ASSESSMENT IN HASTE WITHOUT APPRECIATING THE FACTS, MATERIAL AND SUBMISSION PLACED ON RECORD. 1.4 THE LEARNED COMMISSIONER OF INCOME TAX (A) HAS ERR ED IN PASSING THE ORDER WITHOUT PROVIDING THE COPY OF THE INCREME NTING DOCUMENT ON THE BASIS OF WHICH THE CASE HAVE BEEN REOPENED U/S 148 OF THE INCOME TAX ACT, 1961 1.5 THE LEARNED COMMISSIONER OF INCOME TAX (A) HAS ERR ED IN MAKING THE DISALLOWANCE OF REBATE AND DISCOUNT GIVEN BY THE AS SESSEE TO THE CUSTOMER AMOUNTING TO RS. 87,17,271/- IGNORING THE FACTS, PR ACTICE PREVALENT IN THE TRADE, DOCUMENTARY EVIDENCE AND THE PROVISIONS OF I NCOME TAX ACT. 1.6 THE LEARNED COMMISSIONER OF INCOME TAX (A) HAS ERR ED IN SUSTAINING THE ADDITION ON THE BASIS OF ASSUMPTION AND PRESUMPTION AND HAS ALSO ERRED IN MENTIONING THAT THE FRESH ARGUMENT HAVE BEEN TAKEN BY THE ASSESSEE WHICH IS CLEARLY AGAINST THE FACTS ON RECORD 1.7 THAT THE APPELLANT CRAVES LEAVE TO ADD, APPEAL BEFO RE OR AT THE TIME OF HEARING. (ITA NO. 4292/DEL/2016 A.Y. 2012-13) 1. THE ORDER OF LD. CIT(A) IS NOT CORRECT IN LAW AND F ACTS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT (A) HAS ERRED IN DELETING THE ADDITION FOR BOGUS CLAIM OF REBATE/INC ENTIVE/DISCOUNT AMOUNTING 3 ITA NO. 1105 & 4292/DEL/2016 TO RS.98,12,000/- 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT (A) HAS ERRED IN DELETING THE ADDITION FOR INFLATED CLAIM OF TRANSPO RTATION EXPENSE AMOUNTING TO RS.28,57,378/-. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT (A) HAS ERRED IN DELETING THE ADDITION REGARDING BOGUS/INFLATED CLAI M OF NEW VEHICLE EXPENSE AMOUNTING TO RS.41,69,303/-. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT (A) HAS ERRED IN DELETING THE DISALLOWANCE OF TRAVELLING EXPENSES AM OUNTING TO RS.48,19,079/-. 6. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE C IT(A) HAS ERRED IN HOLDING THAT THE REGULAR BOOKS OF ACCOUNT SEIZED DURING SEARCH DO NOT FORM INCRIMINATING DOCUMENT EVEN IF ITS ENTRI ES ARE FOUND FALSE ON INVESTIGATION. 7. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT (A) HAS ERRED IN DELETING THE DISALLOWANCE OF PERSONAL EXPENSES AMOU NTING TO RS.10,00,000/-. 8. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CI T(A) HAS ERRED IN RELYING ON THE ORDER OF HONBLE HIGH COURT DELHI IN CASE OF KABUL CHAWLA, WHEN THE ADDITION WAS BASED ON INVESTIGATIO N OF SEIZED DOCUMENTS. 9. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT (A) HAS ERRED IN HOLDING THAT THE REGULAR BOOKS OF ACCOUNT SEIZED DURING SEARCH DO NOT FORM INCRIMINATING DOCUMENT. 10. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT (A) HAS ERRED IN DELETING THE DISALLOWANCE U/S 14A AMOUNTING TO R S.9,77,686/-. ONTHE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT (A) HAS ERRED IN NOT APPRECIATING THE FACT THAT GIVING THE OPPORTUNITY T O THE ASSESSEE BEFORE DISALLOWANCE TANTAMOUNT TO RECORDING SATISFACTION. 11. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT (A) HAS ERRED IN RELYING ON THE ORDER OF HONBLE HIGH COURT DELHI IN CASE OF KABUL CHAWLA. 4. WE ARE TAKING UP THE ASSESSMENT YEAR 2005-06 FIR ST. THE BRIEF FACTS ARE 4 ITA NO. 1105 & 4292/DEL/2016 THAT THE RETURN OF INCOME FOR ASSESSMENT YEAR 2005- 06 WAS FILED ON 26/10/2005 SHOWING INCOME OF RS. 18,30,19,501/- WHI CH WAS ASSESSED AT RS. 18,35,27,104/- U/S 143(3) OF THE INCOME TAX ACT, 19 61. THEREAFTER, THE CASE WAS REOPENED U/S 148 OF THE INCOME TAX ACT, 1961 ON THE BASIS THAT THE ASSESSEE MADE FALSE CLAIM OF DISCOUNT PASSED ON THE CUSTOMERS THROUGH SELF- MADE VOUCHERS AND BEARER CHEQUES WHICH WAS AGAINST THE FACTS ON RECORD. SUBSEQUENTLY, THE ASSESSING OFFICER MADE ADDITION O F RS. 87,17,271/- ON THIS ACCOUNT TO THE RETURN OF INCOME. 5. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASS ESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE. 6. THE LD. AR SUBMITTED THAT IN THIS CASE A SEARCH AND SEIZURE ACTION U/S 132(1) OF THE ACT TOOK PLACE IN FEBRUARY, 2012. TH E ASSESSEES CASE WAS REOPENED U/S 148 ON THE PRETEXT THAT THE ASSESSEE W AS MAKING FALSE CLAIM OF DISCOUNTS PASSED OF THE CUSTOMERS THROUGH SELF-MADE VOUCHERS AND BEARER CHEQUES. ON EXAMINATION OF THE BANK STATEMENT IN R ESPECT OF BANK ACCOUNT NO. 012700210006722, PNB, NEW DELHI FOR FINANCIAL Y EAR 2004-05 & 2005-06 BELONGING TO PASCOS, PROPRIETOR THROUGH SHARUK PASS I, IT WAS NOTICED BY THE ASSESSING OFFICER THAT THERE ARE NUMBER OF WITHDRA WALS IN CASH FROM THIS ACCOUNT. SUMMONS U/S 131 OF THE ACT WAS ISSUED TO THE ASSESSEE TO EXPLAIN THE NATURE OF BUSINESS AND ALSO THE ENTRIES FOR WIT HDRAWALS IN THE ABOVE BANK ACCOUNT. IN ASSESSEES STATEMENT RECORDED ON 16/3/ 2012, THE ASSESSEE EXPLAINED THAT THESE WITHDRAWAL ENTRIES ARE IN RESP ECT OF REBATE/DISCOUNT GIVEN TO BUYERS OF VEHICLES THROUGH BANKER CHEQUES. THE LD. AR SUBMITTED THAT THE ASSESSMENT IN THE CASE WAS COMPLETED U/S 143(3) AT INCOME OF RS.18,35,27,104/-. DURING THE COURSE OF ORIGINAL A SSESSMENT ALL THE DETAILS RELATING TO REBATE AND DISCOUNT WAS FILED. THERE W AS SPECIFIC QUERY RAISED BY THE ASSESSING OFFICER IN RESPECT OF THESE TRANSACTI ONS. FURTHER, THE DETAILS OF BANK ACCOUNT FROM WHICH PAYMENT WAS MADE, WAS ALSO FILED DURING THE COURSE OF ORIGINAL ASSESSMENT. IN THE ORIGINAL ASSESSMENT , THE ASSESSING OFFICER WAS 5 ITA NO. 1105 & 4292/DEL/2016 SATISFIED ABOUT THE GENUINENESS OF THE REBATE AND D ISCOUNT AND COMPLETED THE ASSESSMENT WITHOUT ANY ADVERSE INFERENCE. THE LD. AR RELIED UPON THE DECISION OF THE HON'BLE DELHI HIGH COURT IN CASE OF MARUTI SUZUKI INDIA LTD. VS. DCIT 356 ITR 209. THE LD. AR SUBMITTED THAT THE AS SESSEE IS ENGAGED IN THE TRADING OF TATA VEHICLES AS SUCH THE ASSESSEE OFFER S REBATE AND DISCOUNT TO THE CUSTOMERS FOR SALES PROMOTIONS. DOCUMENTARY EVIDENC E IN RESPECT OF THE TRANSACTION BEING SAMPLE COPY OF INVOICE, DELIVERY ORDER, TRANSFER VOUCHER WAS FILED DURING THE ORIGINAL ASSESSMENT PROCEEDINGS AS WELL AS SEC. 148 PROCEEDINGS BY THE ASSESSEE. THE LD. AR FURTHER SU BMITTED THAT THE OBSERVATION AT THE TIME OF RE-OPENING RELATING TO C HEQUES IN CASH BY FEW PERSONS ARE NOT TENABLE AS THESE PERSONS WERE NEITH ER THE EMPLOYEE OF THE ASSESSEE NOR RELATED TO THE ASSESSEE. THE ASSESSIN G OFFICER DID NOT MAKE ANY ADVERSE INFERENCE REGARDING THE FACT THAT EXPENSES ARE NEITHER IN THE NATURE OF PERSONAL EXPENSE NOR IN THE NATURE OF CAPITAL EXPEN DITURE. THUS, THE LD. AR SUBMITTED THAT THE ADDITIONS SUSTAINED BY THE CIT ( A) IS NOT CORRECT AND MAY BE QUASHED. 7. THE LD. DR SUBMITTED THAT THE REASONS HAD CATEG ORICALLY MENTIONED THAT THE ASSESSEE DID NOT DISCLOSE THE AMOUNT OF INCOME EARNED BY WAY OF CLAIM OF GENUINE DISCOUNT AND FAILED TO DISCLOSE FULLY AND T RULY ALL MATERIAL FACT IN THAT RESPECT. THE LD. DR FURTHER SUBMITTED THAT THERE I S NO CHANGE OF OPINION AS THE ORIGINAL ASSESSMENT LACKS PROPER ADJUDICATION O F THE MATERIAL AVAILABLE ON RECORD. THE LD. DR RELIED UPON THE DECISION OF THE HON'BLE SUPREME COURT IN CASE OF HONDA SEIL POWER PRODUCTS LTD. VS. DCIT 340 ITR 64 (SC) AND THE DECISION OF THE HONBLE DELHI HIGH COURT IN CASE OF NDTV VS. DCIT (2017) 84 TAXMAN.COM 136. 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. IT IS PERTINENT TO NOTE THAT SECTION 143 A SSESSMENT WAS COMPLETED IN RESPECT OF DISCOUNT AND REBATE WHICH WAS CATEGORICA LLY INQUIRED BY THE ASSESSING OFFICER DURING THE ORIGINAL ASSESSMENT. ALL THE DETAILS WERE BEFORE 6 ITA NO. 1105 & 4292/DEL/2016 THE ASSESSING OFFICER AND AFTER VERIFICATION ONLY T HE ASSESSING OFFICER PASSED ORIGINAL ASSESSMENT WITHOUT GIVING ANY ADVERSE FIND ING TO THAT EFFECT. IT IS PERTINENT TO MENTION THAT THE BANK STATEMENT CALLED FOR AND THE INFORMATION GIVEN BY THE BANK TO THE ASSESSING OFFICER ITSELF R EVEALS THAT THE TRANSACTION AND THE PAYMENTS WERE THE GENUINE PAYMENTS IN RESPE CT OF DISCOUNT AND REBATE. THERE IS NO DOUBT OR SUSPICIOUS ARISE FROM THE PERUSAL OF THESE DOCUMENTS. MERELY CREATING A DOUBT OF THE TRANSACT ION DOES NOT SUFFICE THE ASSESSING OFFICER TO REOPEN THE CASE U/S 148 OF THE ACT. THE ASSESSING OFFICER HAS TO GIVE PROPER REASONS IN CASE THOSE DOCUMENTS ARE NOT AT ALL PRODUCED IN THE ORIGINAL ASSESSMENT ITSELF. THE REASONS RECORD ED BY THE ASSESSING OFFICER U/S 148 ARE NOT COMPLETE REASONS AND LACK IN THE CO NTEXT OF INVOCATION OF SECTION 148 ITSELF. THEREFORE, THE REOPENING ITSEL F IS BAD AND HENCE THE ASSESSMENT IS BAD IN LAW. THE APPEAL OF THE ASSESSE E IS ALLOWED. 9. IN RESULT, APPEAL BEING ITA NO. 1105/DEL/2015 F ILED BY THE ASSESSEE IS ALLOWED. 10. AS REGARDS ITA NO. 4292/DEL/2016 FOR A.Y. 2012- 13, THE BRIEF FACTS ARE THAT THE SEARCH AND SEIZURE ACTION U/S 132 OF THE A CT WAS CONDUCTED ON PASCO GROUP OF CASES ON 17/2/2012. IN RESPONSE TO RETURN FILED U/S 153A OF THE ACT, THE DETAIL QUESTIONNAIRE WAS ISSUED CALLING FOR THE VARIOUS INFORMATION AND EXPLANATION BY THE ASSESSING OFFICER. THE ASSESSIN G OFFICER WHILE PASSING THE ORDER DISALLOWED THE EXPENSES OF RS. 98,12,000/- UN DER THE HEAD REBATE AND DISCOUNT, ALSO DISALLOWED RS. 28,57,378/- UNDER THE HEAD TRANSPORTATION EXPENSE, RS. 41,69,303/- UNDER THE HEAD NEW VEHICLE EXPENSES, RS.48,19,079/- UNDER THE HEAD TRAVELLING EXPENSES, RS. 10 LAKHS UNDER THE HEAD PERSONAL EXPENSES AND RS. 9,77,686/- U/S 14A O F THE INCOME TAX ACT, AS WELL AS ADDITION OF RS. 4,21,665/- WAS ALSO MADE IN RESPECT OF INTEREST INCOME. 11. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE AS SESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) PARTLY ALLOWED THE APPEAL O F THE ASSESSEE. 7 ITA NO. 1105 & 4292/DEL/2016 12. THE LD. DR RELIED UPON THE ASSESSMENT ORDER AS WELL AS THE ORDER OF THE CIT(A). THE LD. DR FURTHER SUBMITTED THAT THE CIT(A ) ERRED IN DELEING THE ADDITION FOR BOGUS CLAIM OF REBATE/INCENTIVE/DISCOU NT AMOUNT TO RS. 98, 12,000/-. THE DETAILS WERE NOT GIVEN BY THE ASSESS EE DURING THE ASSESSMENT PROCEEDINGS AND FROM THE PERUSAL OF THE EVIDENCE CA LLED FOR FROM THE BANKS, AS IT IS FOUND THAT THE DISCOUNT AND REBATE HAS NOT BE EN PROPERLY PROVED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS. THUS, THE LD. DR SUBMITTED THAT RELIANCE OF HONBLE HIGH COURT IN CASE OF KABUL CHA WLA IS NOT CORRECT ON PART OF THE CIT(A) . THEREFORE, THE LD. DR SUBMITTED THAT THE REVENUES APPEAL MAY BE ALLOWED AND THE ADDITION MAY BE SUSTAINED. 13. THE LD. AR SUBMITTED THAT SINCE THIS IS A REGUL AR ASSESSMENT AND THE SEARCH YEAR WHICH TOOK PLACE ON 17/2/2012, IT IS RE LEVANT TO MENTION THAT THERE IS NO INCRIMINATING DOCUMENT FOUND BY THE ASS ESSING OFFICER DURING THE SEARCH AND THE ADDITIONS IN ALL THAT RESPECT DOES N OT SUSTAIN. 14. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS PERTINENT TO NOTE THAT THERE IS NO I NCRIMINATING MATERIAL SHOWN BY THE ASSESSING OFFICER UPON WHICH THE ADDITION WAS M ADE. IN FACT, THE SEIZED LEDGER ACCOUNTS PERTAINS TO A.Y. 2011-12 ONLY AND T HEREFORE THE SAID MATERIAL CANNOT BE HELD AGAINST THE ASSESSEE FOR A.Y. 2012-1 3 AND ALSO CANNOT BE TERMED AS INCRIMINATING MATERIAL. WHILE MAKING THE ADDITIONS ON THESE DOCUMENTS, THE ASSESSING OFFICER HAS NOT SPECIFICAL LY POINTED OUT THAT THESE EXPENSE BUT HAS DISALLOWED ALL THESE EXPENSES ONLY ON AD-HOC BASIS WHICH IS NOT PERMISSIBLE UNDER THE INCOME TAX ACT. THEREFORE , THE ADDITIONS MADE ITSELF DOES NOT HAVE ANY FOUNDATION AS SUCH. THUS, THE APP EAL OF THE REVENUE DOES NOT SUSTAIN. IN RESULT, APPEAL BEING ITA NO. 4292/D EL/2016 FILED BY THE REVENUE IS DISMISSED. 8 ITA NO. 1105 & 4292/DEL/2016 15. IN RESULT, APPEAL OF THE ASSESSEE IS ALLOWED AN D APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 MARCH, 2020. SD/- SD/- (N. K. BILLAIYA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 18/03/2020 R. NAHEED COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 9 ITA NO. 1105 & 4292/DEL/2016 DATE OF DICTATION 17.02.2020 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 18.02.2020 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 1 9 . 0 3 .2020 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 1 9 . 0 3 .2020 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 1 9 . 0 3 .2020 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER