Dewan tyres LTd, Meerut V. ACIT, Meerut

ITA 1722/DEL/2007

• Counselvise Citation: 172220114 RSA 2007
• Duration Of Justice: 5 year(s) 1 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 24-04-2012
• Assessment Year: 2001-2002
• Appeal Filed On: 09-04-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Business income; Additional evidence; Non compliance
• Section: 43B; 244A; 68; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH C NEW DELHI) BEFORE SHRI RAJPAL YADAV AND SHRI K.D. RANJAN ITA NO. 1722/DEL/2007 ASSESSMENT YEAR: 2001-02 M/S. DEWAN TYRES LTD., VS. ASSISTANT CIT, BYE PASS ROAD, RITHANI, CIRCLE-1, MEERUT (UP). MEERUT. (PAN: AAACD6090D) (APPELLANT) (RESPONDENT) ITA NO. 1220/DEL/2007 ASSESSMENT YEAR: 2001-02 ASSISTANT CIT, VS. M/S. DEWAN TYRES LTD., CIRCLE-1, BYE PASS ROAD, RITHANI, MEERUT. MEERUT (UP). (PAN: AAACD6090D) (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI OP SAPRA , ADV. RESPONDENT BY: SHRI SAT PAL SIN GH, DR ORDER PER RAJPAL YADAV: JUDICIAL MEMBER THE ASSESSEE AND REVENUE ARE IN CROSS-APPEAL BEFOR E US AGAINST THE ORDER OF LEARNED CIT(APPEALS) DATED 01.12.2006 PASS ED FOR ASSESSMENT YEAR 2001-02. THE GROUNDS OF APPEAL TAKEN BY THE RESPECT IVE APPELLANTS READ AS UNDER: GROUNDS IN ASSESSEES APPEAL: 1. THAT NO JUSTIFICATION SUBSISTED ON THE PART OF THE A.O. IN REJECTING THE ACCOUNT BOOKS OF THE APPELLANT BY APP LYING SECTION 2 145(3) OF I.T. ACT. THE TRADING RESULTS AS DECLARED OUGHT TO HAVE BEEN ACCEPTED. 2. THAT WITHOUT PREJUDICE TO GROUND NO.1 ABOVE, THE ES TIMATE OF SALES AT RS.8,50,00,000 AND APPLICATION OF G.P. RAT E @ 13% THEREON THEREBY MAKING AN ADDITION OF RS.2,13,40,34 3 WERE ARBITRARY, UNJUST AND AT ANY RATE, WITHOUT PREJUDIC E, VERY EXCESSIVE. 3. THAT THE FOLLOWING ADDITIONS/DISALLOWANCES AS MADE BY THE A.O. AND CONFIRMED BY THE LEARNED CIT(APPEALS) ARE WHOLL Y UNJUSTIFIED OR AT ANY RATE, WITHOUT PREJUDICE, VERY EXCESSIVE. A)RS.4,62,30,148 DISALLOWANCE ACCOUNT OF EXPORT INC ENTIVES WRITTEN OFF. B) RS.1,67,74,502 DISALLOWANCE ON ACCOUNT OF INTERE ST PAID NOT FOR BUSINESS PURPOSES. C) DISALLOWANCE OF RS.6,65,500 ON ACCOUNT OF CESS P AYMENT AND RS.4,49,893 ON ACCOUNT OF GRATUITY BY INVOKING SEC. 43B OF THE I.T. ACT. D) RS.12,34,000 ADDITION ON ACCOUNT OF LONG TERM CAPITAL GAINS. 4) THAT THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN AS SESSING PROFIT ON SALE OF LAND AT RS.12,34,000 AS LONG TERM CAPITA L GAIN AND REJECTING THE CONTENTION OF THE APPELLANT THAT THE SAME REPRESENTED BUSINESS INCOME. 5) THAT THE AUTHORITIES BELOW WERE ALSO NOT AT ALL JUS TIFIED IN MAKING THE FOLLOWING ADDITIONS ON ACCOUNT OF UNEXPL AINED DEPOSITS/CREDITS; A) RS.37,00,000 ADDITION ON ACCOUNT OF EXPLAINED DEPOS IT IN THE NAME OF SH. VIVEK DEWAN U/S. 68 OF THE I.T. ACT. 3 B) RS.56,74,617 ADDITION ON ACCOUNT OF UNEXPLAINED CRE DIT BALANCE IN THE CASE OF M/S. CREDIT AGRICOLE INDOSUE Z UNDER THE HEAD SECURED LOANS, C) RS.32,599 AS MAINTAINED BY THE CIT(A) OUT OF THE AD DITION OF RS.18,63,361 MADE BY THE A.O. ON ACCOUNT OF UNEXPLAINED CREDIT BALANCE IN THE CASE OF IDBIFL UN DER HEAD SECURED LOANS. WITH PREJUDICE, THE ABOVE ADDITIONS AS MADE ARE VER Y EXCESSIVE. 6. THAT WITHOUT PREJUDICE TO GROUND NO.5 ABOVE, IF ANY ADDITION/OUT OF THE ABOVE WERE MAINTAINED, THE SAME COULD NOT LEGALLY BE ASSESSED UNDER THE HEAD INCOME FROM OTH ER SOURCES. VARIOUS OBSERVATIONS MADE BY THE AUTHORITIES BELOW IN THEIR RESPECTIVE ORDERS WHILE MAKING/CONFIRMING THE ABOVE ADDITIONS/DISALLOWANCES ARE EITHER INCORRECT OR ARE UNTENABLE. DETAILED WRITTEN ARGUMENTS AND THE PAPER BOOKS WERE FILED BEFORE THE CIT(A) FROM TIME TO TIME WHICH HAD EITHE R BEEN IGNORED OR HAD NOT BEEN GIVEN DUE WEIGHT. 7. THAT THE LEVY OF INTEREST U/S.234B, 234D AND 244A W AS ILLEGAL AND AT ANY RATE WITHOUT PREJUDICE, VERY EXCESSIVE. 8. THAT THE APPELLANT RESERVES ITS RIGHT TO ADD, AMEND /MODIFY THE GROUNDS OF APPEAL GROUNDS IN REVENUES APPEAL: 4 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(APPEALS) HAS ERRED IN LAW IN REDUCING THE ADDIT ION BY RS.18,63,361 ON ACCOUNT OF UNEXPLAINED CREDIT BALAN CE IN THE CASE OF M/S. IDBIFL UNDER THE HEAD SECURED LOANS IGNORING THE FACTS THAT ASSESSEE COMPANY DID NOT PRODUCE CONFIRMATION OF TH IS ACCOUNT AND RATES OF CONVERSATION OF FOREIGN CURRENCY ETC. BEFO RE THE A.O. 3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE T HE LEARNED CIT(APPEALS) HAS ERRED IN LAW WHILE DELETING/REDUCI NG THE AFORESAID ADDITION BY ACCEPTING ADDITIONAL EVIDENCE IGNORING THE RULES 46A OF INCOME-TAX RULES, 1962 2. THE LEARNED COUNSEL FOR THE ASSESSEE AT THE VERY OUTSET SUBMITTED THAT THE LEARNED ASSESSING OFFICER FAILED TO PROVIDE ADE QUATE OPPORTUNITY OF HEARING TO THE ASSESSEE AND DID NOT CONSIDER THE MA TERIAL SUPPLIED BY IT IN THE ASSESSMENT ORDER. HE PRAYED THAT IN VIEW OF THE ASS ESSEES ADJOURNMENT LETTER DATED 24.3.2004, ALL THE ISSUES DESERVE TO B E RESTORED ON THE FILE OF THE ASSESSING OFFICER. ON THE OTHER HAND, LEARNED DR AL SO POINTED OUT THAT THE REVENUE HAS PLEADED IN THE APPEAL THAT LEARNED CIT( APPEALS) HAS DELETED THE ADDITION BY ENTERTAINING ADDITIONAL EVIDENCE IN VIO LATION TO RULE 46A, IF THE ISSUES INVOLVED IN THE APPEALS OF THE ASSESSEE ARE TO BE SET ASIDE TO THE FILE OF THE ASSESSING OFFICER FOR WANT OF OPPORTUNITY OF HE ARING THEN THE ISSUES INVOLVED IN THE APPEAL OF THE REVENUE ALSO DESERVES TO BE REMITTED TO THE FILE 5 OF THE ASSESSING OFFICER BECAUSE THAT WILL TAKE CAR E THE VIOLATION OF RULE 46A FOR ENTERTAINING ADDITIONAL EVIDENCE. 3. WITH THE ASSISTANCE OF LEARNED REPRESENTATIVES, WE HAVE GONE THROUGH THE RECORD CAREFULLY. WE FIND THAT ASSESSEE HAS FI LED RETURN ON 31.10.2001. ACCORDING TO THE ASSESSEE, IT HAS DISCLOSED NET LOS S OF RS.750,18,323. LEARNED ASSESSING OFFICER HAS WRONGLY MENTIONED THA T THE ASSESSEE HAS SHOWN NIL INCOME. ON PERUSAL OF THE ASSESSMENT ORDE R, IT DOES NOT DISCERN THAT ON WHICH DATE, LEARNED ASSESSING OFFICER HAS S TARTED THE INVESTIGATION OF VARIOUS ISSUES, HOWEVER, FROM PERUSAL OF THE ASSESS EES PAPER BOOK, IT REVEALS THAT IN THE PAST, SUBMISSIONS AND SUPPORTING MATERI AL WERE SUBMITTED BY THE ASSESSEE ON 23.1.2004, 05.02.2004 AND 20.2.2004. IN THE COPY OF THE LETTER AVAILABLE ON PAGE 17 OF THE PAPER BOOK, ASSESSEE HA S NARRATED ALL THESE ASPECTS, HOWEVER, LEARNED ASSESSING OFFICER HAS PRO CEEDED TO OBSERVE AS UNDER: NON COMPLIANCE OF SHOW CAUSE DATED 15.03.2004. IN THE CASE SH. SANDEEP SAPRA, ADVOCATE AND SH. MA NOJ BATRA, ACCOUNTANT ATTENDED ON 15.03.2004 AND THEY HAVE FIL ED WRITTEN REPLY WITH DETAILS. SINCE THE REPLIES WITH DETAILS FILED ON VARIOUS DATES WERE 6 NOT ACCEPTABLE, THEREFORE, THE AUTHORIZED REPRESENT ATIVE HAVE BEEN REQUESTED TO FILE THE FOLLOWING DETAILS: 1. TO EXPLAIN THE METHOD OF ACCOUNTING REGARDING PURCH ASES AND SALES SUCH AS ON THE BASIS OF GOODS RECEIVED/DISPATCHED OR BILLS RECEIVED/DISPATCHED. I S THERE ANY CHANGE IN THIS METHOD FROM EARLIER YEARS.? IF Y ES, PLEASE EXPLAIN. 2. AS REGARDS THE EXPLANATION OF GROSS PROFIT, PLEASE FILE THE COMPARATIVE LIST OF ITEMS IN WHICH RATE VARIES WITH EVIDENCE & COPIES OF BILLS/VOUCHERS. 3. PLEASE EXPLAIN THE METHOD OF VALUATION OF CLOSING S TOCK PARTICULARLY RAW MATERIALS WHETHER ADOPTED LIFO OF FIFO. PLEASE FILE THE RELEVANT COPY OF BILLS IN YOU R SUPPORT. 4. PLEASE FILE A COPY OF PURCHASE BILLS IN THE CASE M/ S. GANGWAL INDIA LTD. 5. PLEASE FILE THE CONFIRMED COPY OF ACCOUNT IN THE CA SES OF M/S. DEWAN RUBBER INDIA LTD., M/S. DELIGHT STRUCTUR E PVT. LTD. AND M/S. RAJSHREE STRUCTURE (P) LTD. 6. COPY OF BANK PASSBOOK IN THE CASES OF SH. VIVEK DEWAN. 7. CONFIRMATION OF BANK BALANCE IN THE CASES OF M/S. C REDIT AGRICOLE INDOSUEZ AND IDBF. 8. AS REGARDS CLAIM UNDER SECTION 35D. PLEASE FILE: I) DATE OF ISSUE II) AMOUNT OF RIGHT ISSUE. ADJOURNED TO 24.03.2004 7 ON THE DATE FIXED FOR HEARING ON 24.03.2004 SOME ON E HAS ATTENDED AND REQUESTED FOR ADJOURNMENT. THE CASE WA S ADJOURN TO 29.03.2004 VERBALLY LOOKING TO THE LIMITATION WAS G OING TO BARRED BY 31.03.2004. SINCE NO ONE ATTENDED ON 29.03.2004, TH EREFORE, I TALKED TO MR. SANDEEP SAPRA ON TELEPHONE. DURING THE DISCU SSION HE HAS EXPRESSED HIS INABILITY TO FILE ANY REPLY ON THE AB OVE MENTIONED QUESTIONNAIRE. IT IS, THEREFORE, THE CASE IS DECIDE D ON THE MATERIALS AVAILABLE ON RECORD. 4. THE ASSESSEE HAS CONTENDED THAT THE OBSERVATIONS OF THE ASSESSING OFFICER ARE FACTUALLY INCORRECT. ITS MANAGING DIREC TOR HAD EXPIRED ON 19.3.2004 BECAUSE OF HEART-ATTACK AND AN ADJOURNMEN T WAS SOUGHT IN WRITING. THE ADJOURNMENT APPLICATION SUBMITTED ON 24.3.2004 READS AS UNDER: SIR, IT IS SUBMITTED THAT THE ABOVE MENTIONED CASE IS FI XED ON 24.3.04. HOWEVER, THE REPLY TO THE QUERIES RAISED BY YOUR HO NOUR ON 15.3.04 COULD NOT BE PREPARED AS THE MANAGING DIRECTOR OF T HE ASSESSEE CO. UNFORTUNATELY EXPIRED ON 19.3.04. THE KRIYA CEREMON Y IS ON THE 31.3.04. IT IS THEREFORE, REQUESTED THAT THE ABOVE MENTIONED CASE MAY KINDLY BE ADJOURNED FOR 29/3/04 BECAUSE OF THE PECULIAR CIRCU MSTANCES AS MENTIONED ABOVE. 8 THANKING YOU, SD/- ADVOCATE DATED 24/03/04 COUNSEL FOR THE ASSESSEE 5. ON DUE CONSIDERATION THE ASSESSMENT ORDER AS WEL L AS THE ADJOURNMENT APPLICATION, WE ARE OF THE VIEW THAT IN THE ASSESSM ENT ORDER, ASSESSING OFFICER HAS NOWHERE MENTIONED WHEN HE ISSUED 143(2) NOTICE, WHEN HE ISSUED QUESTIONNAIRE UNDER SEC. 142(1), HOW MUCH TI ME WAS GRANTED TO THE ASSESSEE FOR SUBMITTING ITS REPLY AND WHY THE WRITT EN SUBMISSIONS FILED EARLIER WERE NOT ACCEPTABLE, WHICH PERSUADED THE AS SESSING OFFICER TO ISSUE SHOW-CAUSE NOTICE ON 15.3.2004. ALL OF A SUDDEN, TH E MANAGING DIRECTOR HAD EXPIRED BECAUSE OF HEART-ATTACK AND DUE COMPLIANCE COULD NOT BE MADE. ASSESSING OFFICER HAS PASSED THE ASSESSMENT ORDER O N 29.3.04. IN OUR OPINION, CONSIDERING ALL THESE CIRCUMSTANCES, ASSES SEE DESERVES ONE MORE OPPORTUNITY OF HEARING FOR EXPLAINING VARIOUS ISSUE S WHICH PERSUADED THE ASSESSING OFFICER TO MAKE VARIOUS ADDITIONS. THEREF ORE, WE ALLOW BOTH THE APPEALS AND REMIT ALL THESE ISSUES TO THE FILE OF T HE ASSESSING OFFICER FOR READJUDICATION. THE ASSESSEE WILL BE AT LIBERTY TO SUBMIT ANY EVIDENCE IN SUPPORT OF ITS EXPLANATION AND ASSESSING OFFICER SH ALL GRANT DUE OPPORTUNITY OF HEARING TO THE ASSESSEE BEFORE READJUDICATING TH E ISSUE. THE OBSERVATIONS 9 MADE BY US WILL NOT IMPAIR OR INJURE THE CASE OF TH E ASSESSING OFFICER AND WOULD NOT CAUSE ANY PREJUDICE TO THE DEFENCE/EXPLAN ATION OF THE ASSESSEE. 12. IN THE RESULT, BOTH THE APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES. DECISION PRONOUNCED IN THE OPEN COURT ON 11.05.201 2 SD/- SD/- ( K.D. RANJAN ) ( RAJPAL YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 11/05/2012 MOHAN LAL COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR