ITO, New Delhi V. M/s Aggarwal Paper Mart, New Delhi

ITA 1587/DEL/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3728 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 21-05-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 01-04-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MRS ANUSHA KHURANA
• Assessee Lawyers: MAHAVIR PRASAD
• Keywords: Unexplained investment; Additional evidence
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH A DELHI) BEFORE SHRI G.E. VEERABHADRAPPA, HONBLE VICE PRESIDENT AND SHRI A.D. JAIN, JUDICIAL MEMBER ITA NO. 1587 (DEL)2011 ASSESSMENT YEAR: 2007-08 INCOME TAX OFFICER, M/S. AGGARWAL PAPER MART, WARD 29(2), NEW DELHI. V. 900, CHAWRI BAZAR, DELHI-6. (APPELLANT) (RESPONDENT) APPELLANT BY: MRS. ANUSHA KHURANA, SR.DR RESPONDENT BY: SHRI MAHAVIR PRASAD, ADVOCATE ORDER PER A.D. JAIN, J.M. THIS IS DEPARTMENTS APPEAL FOR THE ASSESSMENT YEAR 2007-08, TAKING THE FOLLOWING GROUNDS:- 1. ON THE FACTS OF THE CASE AND IN THE CIRCUMSTANC ES OF THE CASE, THE LD. CIT(A) HAS ERRED IN RESTRICTING G.P. ADDITION TO ` 50,000/- AGAINST THE ADDITION MADE OF ` 6,04,088/- WITHOUT ASSIGNING ANY REASON AND ONLY ON CONSIDERATION THAT A PARTNER OF THE FIRM WAS ILL AND THAT WOULD HAVE AFFECTED TH E BUSINESS. 2.1 ON THE FACTS OF THE CASE AND IN THE CIRCUMSTAN CES OF THE CASE, THE LD. CIT(A) HAS ERRED IN IGNORING THE FACT THAT CAPITAL WAS INTRODUCED IN BUSINESS FROM A BANK ACCOUNT WHER EIN CASH OF ` 74,000/- WAS DEPOSITED AND SOURCE OF SUCH DEPOSIT W AS NOT EXPLAINED BY THE ASSESSEE. ITA 1587(DEL)11 2 2.2 ON THE FACTS OF THE CASE AND IN THE CIRCUMSTAN CES OF THE CASE, THE LD. CIT(A) HAS ERRED IN IGNORING THE FACT THAT THE AMOUNT OF ` 46,000/- INTRODUCED IN THE CAPITAL ACCOUNT OF THE ASSESSEE WAS FROM ONE TRANSFER FROM A BANK ACCOUNT OF SMT. KAUSHAL AGGARWAL IN DENA BANK WHEREIN CASH WAS DEPO SITED WHICH REMAINED UNEXPLAINED. 2.3 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS ERRED IN NOT SUSTAINING THE ADDITION AT LEAST UPTO ` 1,20,000/-( ` 74,000 + ` 46,000). 3. ON THE FACTS OF THE CASE AND IN THE CIRCUMSTANCE S OF THE CASE, LD. CIT(A) HAS ERRED IN COMPLETELY DELETING THE ADDITIO N OF ` 38,65,281/- MADE ON ACCOUNT OF UNEXPLAINED INVEST MENT IN PROPERTY WITHOUT CONSIDERING THE FACT THAT ASSESSEE COULD NOT FURNISH DETAILS WITH REGARD TO ACTUAL SOURCE OF SUC H INVESTMENT. 2. THE FIRST ISSUE IS THAT THE LD. CIT(A) ERRED IN RESTRICTING THE G.P. ADDITION FOR ` 6,04,088/- TO ` 50,000/-. 3. THE ASSESSEE IS IN THE BUSINESS OF TRADING OF PA PERS. IT SHOWED TOTAL TURN OVER OF ` 1,20,81,763/-. THE G.P. WAS OF ` 1,97,557/-. THE NET PROFIT WAS NIL. THE G.P. RATE WAS OF 1.63%. THIS WAS C ONSIDERED TO BE LOW AGAINST THE G.P. OF 3% OF THE EARLIER YEAR. THE A O OBSERVED THAT THE DETAILS WERE NOT SUBMITTED. AS SUCH, HE ESTIMATE D THE G.P. AT 5%. AN ADDITION OF ` 6,04,088/- WAS MADE. 4. BEFORE THE LD. CIT(A), THE AO SUBMITTED THAT SHR I ANIL AGGARWAL, THE MAIN PERSON OF THE ASSESSEE FIRM HAD BEEN SERIO USLY ILL, DUE TO WHICH, THE BUSINESS HAD SUFFERED. ITA 1587(DEL)11 3 5. THE LD. CIT(A) OBSERVED THAT THE BUSINESS OF THE ASSESSEE MIGHT HAVE SUFFERED DUE TO THE ILLNESS OF ITS MAIN PARTNE R, BUT IT IS UNBELIEVABLE THAT THERE HAD BEEN NO PROFIT IN THE BUSINESS, WHEN THE TURN OVER WAS OF ` 1,20,81,763/-; AND THAT THE ESTIMATE OF THE PROFIT @ 5% WAS ON A VERY HIGH SIDE AND IT SEEMED TO BE ARBITRARY AND ON AD-H OC BASIS. THE LD. CIT(A) CONFIRMED THE ADDITION TO THE EXTENT OF ` 50,000/- ON ESTIMATE BASIS. 6. THE GRIEVANCE OF THE DEPARTMENT IS THAT WHILE SO RESTRICTING THE ADDITION CORRECTLY MADE, THE LD. CIT(A) IGNORED THE FACT THAT THE CAPITAL WAS INTRODUCED IN THE BUSINESS FROM A BANK ACCOUNT, WHEREIN CASH OF ` 74,000/- HAD BEEN DEPOSITED, WHEREAS THE SOURCE OF THE CASH DEPOSIT HAD NOT BEEN EXPLAINED BY THE ASSESSEE AND THAT AN AMOU NT OF ` 46,000/- INTRODUCED IN THE CAPITAL ACCOUNT OF THE ASSESSEE W AS FROM THE BANK ACCOUNT OF SMT. KAUSHAL AGGARWAL IN DENA BANK, WHER EIN CASH HAD BEEN DEPOSITED THOUGH SUCH DEPOSIT REMAINED UNEXPLAINED . THE DEPARTMENT CONTENDS THAT THE LD. CIT(A) OUGHT TO HAVE SUSTAINE D THE ADDITION AT LEAST UPTO ` 1,20,000/-, I.E., ` 74,000/- + ` 46,000/-. ITA 1587(DEL)11 4 7. THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTH ER HAND, HAS CONTENDED THAT THE ASSESSEE HAD FILED AN APPLICATIO N FOR ADMISSION OF ADDITIONAL EVIDENCE BEFORE THE LD. CIT(A) AND THE M ATTER HAD BEEN REMANDED TO THE AO; THAT THE AO HAD SUBMITTED HIS R EMAND REPORT, WHICH HAD BEEN TAKEN INTO CONSIDERATION WHILE RIGHTLY RES TRICTING THE ADDITION TO ` 50,000/-. 8. IN THIS REGARD, IT IS SEEN THAT THE MATTER WAS R EMITTED TO THE FILE OF THE LD. CIT(A) AND THE AO HAD SUBMITTED HIS REMAND REPORT BEFORE THE LD. CIT(A). HOWEVER, SUCH REMAND REPORT HAS NOWHE RE BEEN DISCUSSED BY THE LD. CIT(A) IN THE IMPUGNED ORDER, RENDERING THE ORDER UNDER APPEAL NON-SPEAKING TO THIS EXTENT. IN SUCH A CI RCUMSTANCE, WE DEEM IT APPROPRIATE TO REMIT THIS MATTER TO THE FILE OF TH E AO TO BE DECIDED AFRESH IN ACCORDANCE WITH LAW, ON TAKING INTO CONSIDERATIO N THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE BEFORE THE LD. CIT(A ). THE ASSESSMENT ORDER, PERTINENTLY WAS PASSED U/S 144 OF THE I.T. A CT. 9. THE AO ALSO MADE AN ADDITION OF ` 38,65,281/-, ON ACCOUNT OF UNEXPLAINED INVESTMENT IN THE PROPERTY. 10. THE ASSESSEE HAD PURCHASED A DDA PLOT FOR ` 38,65,281/-. THE ADDITION WAS MADE ON THE GROUND THAT NO DETAILS WER E AVAILABLE. ITA 1587(DEL)11 5 11. BEFORE THE LD. CIT(A), THE ASSESSEE HAD SUBMITT ED THAT A LOAN OF ` 25,00,000/- HAD BEEN TAKEN FROM PUNJAB & SIND BANK AND THE BALANCE AMOUNT OF ` 11,97,010/- HAD BEEN PAID FROM THE ACCOUNT OF THE F IRM, I.E. ACCOUNT NO.1890 WITH PUNJAB & SIND BANK AND FURTHER , THE AMOUNT OF ` 1,68,271/- HAD BEEN CHARGED AS INTEREST. 12. THE LD. CIT(A) DELETED THE ADDITION. 13. HERE ALSO, IT IS SEEN THAT THOUGH THE LD. CIT(A ) HAS MADE REFERENCE TO THE REMAND REPORT OF THE AO, NO DETAIL THEREIN HAS BEEN CONSIDERED OR DEALT WITH. THIS REMAND REPORT IS ALSO NOT ON THE RECORD BEFORE US. ACCORDINGLY, AS IN THE EARLIER ISSUE, THIS MATTER I S ALSO REMITTED TO THE FILE OF THE AO, TO BE DECIDED AFRESH IN ACCORDANCE WITH LAW, ON CONSIDERING THE STAND TAKEN BY THE ASSESSEE BEFORE THE LD. CIT( A). 14. THE ASSESSEE SHALL BE AFFORDED ADEQUATE OPPORTU NITY BY THE AO, TO PROVE ITS CASE. THE ASSESSEE, NO DOUBT, SHALL CO- OPERATE IN THE FRESH ASSESSMENT PROCEEDINGS. 15. IN THE RESULT, FOR STATISTICAL PURPOSES, THE AP PEAL OF THE DEPARTMENT IS TREATED AS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 10.06.2011. ITA 1587(DEL)11 6 SD/- SD/- (G.E. VEERABHADRAPPA) (A.D. JAIN) VICE PRESIDENT JUDICIAL MEMBER DATED: 10.06.2011 *RM COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR TRUE COPY BY ORDER DEPUTY REGISTRAR