M/s Business Engineering & Software Technologies Ltd., New Delhi V. ITO, New Delhi

ITA 1719/DEL/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3744 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 10-06-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 08-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SRUJANI MOHANTY
• Assessee Lawyers: RISHABH KAPOOR S
• Keywords: Depreciation; Income from undisclosed sources; Principle of natural justice; Set aside
• Section: 271(1)(c); 143(3); 201; 68; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A : NEW DELHI DELHI BENCH A : NEW DELHI DELHI BENCH A : NEW DELHI DELHI BENCH A : NEW DELHI BEFORE SHRI G.E.VEERABHADRAPPA, VICE PRESIDENT AND BEFORE SHRI G.E.VEERABHADRAPPA, VICE PRESIDENT AND BEFORE SHRI G.E.VEERABHADRAPPA, VICE PRESIDENT AND BEFORE SHRI G.E.VEERABHADRAPPA, VICE PRESIDENT AND SHRI A.D.JAIN, JUDICIAL MEMBER SHRI A.D.JAIN, JUDICIAL MEMBER SHRI A.D.JAIN, JUDICIAL MEMBER SHRI A.D.JAIN, JUDICIAL MEMBER ITA NO.1719/DEL/2011 ITA NO.1719/DEL/2011 ITA NO.1719/DEL/2011 ITA NO.1719/DEL/2011 ASSESSMENT YEAR : 2002 ASSESSMENT YEAR : 2002 ASSESSMENT YEAR : 2002 ASSESSMENT YEAR : 2002- -- -03 0303 03 M/S BUSINESS ENGINEERING & M/S BUSINESS ENGINEERING & M/S BUSINESS ENGINEERING & M/S BUSINESS ENGINEERING & SOFTWARE TECHNOLOGIES LTD., SOFTWARE TECHNOLOGIES LTD., SOFTWARE TECHNOLOGIES LTD., SOFTWARE TECHNOLOGIES LTD., A AA A- -- -84, SECTOR 84, SECTOR 84, SECTOR 84, SECTOR- -- -58, 58, 58, 58, NOIDA NOIDA NOIDA NOIDA 201 301. 201 301. 201 301. 201 301. PAN NO.AABCB8824H. PAN NO.AABCB8824H. PAN NO.AABCB8824H. PAN NO.AABCB8824H. VS. VS. VS. VS. INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, WARD WARD WARD WARD- -- -3(1), 3(1), 3(1), 3(1), NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : MS. POONAM AHUJA, SHRI TARUN KUMAR, SHRI KUNAL NAGPAL AND SHRI RISHABH KAPOOR, ADVOCATES. RESPONDENT BY : MS.SRUJANI MOHANTY, SR.DR. ORDER ORDER ORDER ORDER PER A.D.JAIN, JM : PER A.D.JAIN, JM : PER A.D.JAIN, JM : PER A.D.JAIN, JM : THIS IS ASSESSEES APPEAL FOR AY 2002-03, TAKING TH E FOLLOWING GROUNDS:- 1. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANC ES OF THE CASE, LD.CIT(A) HAS ERRED IN LAW AND ON FACTS I N NOT DELETING THE PENALTY OF RS.4,43,490/- LEVIED BY LD. AO U/S 271(1)(C) WHEREAS MOST OF THE ADDITIONS/DISALLOWANC ES WERE DELETED BY LD.AO HIMSELF WHILE GIVING EFFECT T O THE ORDER PASSED BY HONBLE INCOME TAX APPELLATE TRIBUN AL IN QUANTUM PROCEEDINGS. 2. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE, LD.CIT(A) HAS ERRED IN LAW AND ON FACTS I N NOT QUASHING THE PENALTY ORDER PASSED BY LD.AO INTER AL IA ON THE GROUND THAT MANDATORY SATISFACTION WAS NOT RECO RDED AS PER LAW. 3. THAT IN ANY VIEW OF THE MATTER AND IN ANY CASE, ACTION OF LD.CIT(A) IN NOT QUASHING THE IMPUGNED PE NALTY ORDER IS BEYOND JURISDICTION, ILLEGAL, IN VIOLATION OF PRINCIPLES OF NATURAL JUSTICE, BARRED BY LIMITATION, BY RECORD ING ITA-1719/DEL/2011 2 INCORRECT FACTS AND FINDING AND CONTRARY TO LAW AND FACTS AND DESERVES TO BE QUASHED. 4. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE, LD.CIT(A) HAS ERRED IN LAW AND ON FACTS I N PASSING THE EX-PARTE ORDER THAT TOO WITHOUT GIVING ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE. 5. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE, LD.CIT(A) HAS ERRED IN LAW AND ON FACTS I N NOT QUASHING THE IMPUGNED PENALTY ORDER PASSED BY LD.AO THAT TOO WITHOUT DISCHARGING HIS BURDEN AS ENVISAGED UND ER THE LAW OF PROVING CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS BY THE ASSESSEE. 2. THE ASSESSEE HAD FILED ITS RETURN OF INCOME, DEC LARING INCOME OF `12,42,271/-. THE RETURN WAS ACCEPTED U/S 143(3) O F THE IT ACT. THE CASE WAS SELECTED FOR SCRUTINY. THE ASSESSMENT WAS COMPLETED U/S 144 OF THE ACT, MAKING ADDITIONS UNDER VARIOUS HEAD S, AT AN INCOME OF `45,72,384/-, AS AGAINST DECLARED LOSS OF `22,353/- . THE ADDITIONS/DISALLOWANCES MADE WERE AS FOLLOWS:- - ADDITION IN THE VALUE OF CLOSING STOCK OF WORK IN PROGRESS. 4,60,631/- - DISALLOWANCE OF PROFESSIONAL EXPENSES. 55,200 /- - DISALLOWANCE OF SALARY IN RESPECT OF PERSONS IN W HOSE CASES SECURITY DEPOSITS WERE FORFEITED. 4,25,185/- - EXPENDITURE DISALLOWED CLAIMED IN EXCESS OF 65.38 % OF EXPENSES CLAIMED IN THE LAST YEAR. 1,90,252/- - EXTRA SALARY OF MD DISALLOWED. 37,600/- - DISALLOWANCE OUT OF EXPENSES REMAINED UNVERIFIED. 1,94,337/- - DIFFERENCE IN SUNDRY DEBTORS. 1,75,366/- - ADDITIONS U/S 43-B FOR P.F. & ESI. 20,404/- - DEP. ON NEW ASSETS HELD AS INADMISSIBLE. 19,1 25/- - 80% OF DEP. ON GENERATOR, BUILDING, A.C.S AND OLD FURNITURE AND FITTINGS, HELD TO BE INADMISSIBLE. 4,34,632/ - - INCOME FROM UNDISCLOSED SOURCES U/S 68 ON ACCOUNT OF BOGUS LIABILITY SHOWN UNDER THE HAND SUNDRY CREDITORS. 5,31,790/- ITA-1719/DEL/2011 3 3. AGAINST THE AFORESAID ADDITIONS, THE ASSESSEE FILED AN APPEAL BEFORE THE LEARNED CIT(A). THE LEARNED CIT(A), VID E ORDER DATED 28.2.2007, CONFIRMED THE FOLLOWING ADDITIONS/DISALL OWANCES:- - DEPRECIATION ON NEW ASSETS. 19,125/- - INCREASE IN THE VALUE OF WIP. 4,60,631/- - LEGAL & PROFESSIONAL CHARGES. 55,200/- - ON ACCOUNT OF SALARIES. 4,25,185/- - ON ACCOUNT OF TRAVELING & CONVEYANCE, LEASE RENT, PRINTING & STATIONERY, REPAIR & MAINTENANCES, CAR RUNNING & MAINTENANCE, SECURITY CHARGES, ADVERTISEMENT AND MISC. EXPENSES. 97,168/- - DIFFERENCE IN TOTAL SUNDRY DEBTORS. 1,75,366 /- - U/S 43-B ON ACCOUNT OF ESI/PF 9,596/- ---------------- 12,42,271/- ---------------- 4. VIDE PENALTY ORDER DATED 31.3.2008, THE PENALTY OF `4,43,490/- WAS LEVIED ON THE ASSESSEE U/S 271(1)(C) OF THE IT ACT. 5. VIDE THE ORDER UNDER APPEAL, PASSED EX-PARTE QUA THE ASSESSEE, THE PENALTY IMPOSED BY THE AO WAS CONFIRMED, DISMIS SING THE APPEAL FILED BY THE ASSESSEE. 6. CHALLENGING THE IMPUGNED ORDER, THE LEARNED COUN SEL FOR THE ASSESSEE HAS CONTENDED THAT THE LEARNED CIT(A) HAS ERRED IN NOT DELETING THE PENALTY IMPOSED ON THE ASSESSEE, WHEN MOST OF THE ADDITIONS/DISALLOWANCES HAD BEEN DELETED BY THE AO HIMSELF WHILE GIVING EFFECT TO THE ORDER PASSED BY THE TRIBUNAL I N THE QUANTUM PROCEEDINGS. A COPY OF THE TRIBUNAL ORDER DATED 24 .7.2009, PASSED IN THE QUANTUM PROCEEDINGS, IN ITA NO.2008/DEL/2007 FO R AY 2002-03, IN THE APPEAL FILED BY THE ASSESSEE, HAS BEEN PLACED O N RECORD. ITA-1719/DEL/2011 4 7. THE LEARNED DR, ON THE OTHER HAND, HAS PLACED ST RONG RELIANCE ON THE IMPUGNED ORDER. 8. A PERUSAL OF THE TRIBUNAL ORDER (SUPRA) SHOWS TH AT MOST OF THE ADDITIONS/DISALLOWANCES HAVE BEEN SET ASIDE TO THE FILE OF THE AO BY THE ITAT. THE LEARNED COUNSEL FOR THE ASSESSEE HAS CON TENDED THAT WHILE GIVING EFFECT TO THIS ORDER, THE AO HAS HIMSELF DEL ETED MOST OF THE ADDITIONS/DISALLOWANCES MADE. IN VIEW OF THE ABOVE , SINCE THE ADDITIONS/DISALLOWANCES BY THE AO STAND REMITTED TO THE AO, WE DEEM IT APPROPRIATE TO REMIT THE PENALTY MATTER AT HAND ALSO TO THE AO, TO BE DECIDED AFRESH IN ACCORDANCE WITH LAW, IN ACCORDANC E WITH THE AFORESAID TRIBUNAL ORDER. ORDERED ACCORDINGLY. 9. IN THE RESULT, FOR STATISTICAL PURPOSES, THE APP EAL OF THE ASSESSEE IS TREATED AS ALLOWED. DECISION PRONOUNCED IN THE OPEN COURT ON CONCLUSION OF HEARING ON 10 TH JUNE, 2011. SD/- SD/- (G.E.VEERABHADRAPPA) (G.E.VEERABHADRAPPA) (G.E.VEERABHADRAPPA) (G.E.VEERABHADRAPPA) (A.D.JAIN) (A.D.JAIN) (A.D.JAIN) (A.D.JAIN) VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER DATED : 10.06.2011. VK. COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR