M/s. Godwin Construction Pvt. Ltd., Meerut V. ACIT, Meerut

ITA 2026/DEL/2016

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 0630 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 8 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 13-04-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A K SAROHA
• Keywords: Unexplained expenditure; Loose papers; Set aside
• Section: 143(3); 153A; 251; 13; 68; 11

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI C BEN CH, NEW DELHI BEFORE MS. SUSHMA CHOWLA, JUDICIAL MEMBER SHRI N.K. BILLAIYA, ACCOUNTANT MEMBE R ITA NO. 2026/DEL/2016 [A.Y 2010-11] M/S GODWIN CONSTRUCTION PVT LTD VS. THE A.C.I.T A 151, DEFENCE COLONY CENTRAL CIRCLE MEERUT MEERUT PAN: AAEFG 1843 R (APPLICANT) (RESPONDENT) ASSESSEE BY : SHRI SANDEEP SAPRA, ADV DEPARTMENT BY : SHRI A.K. SAROHA, CIT- DR DATE OF HEARING : 16.12.2019 DATE OF PRONOUNCEMENT : 18.12.2019 ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER, THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME TAX [APPEALS] - IV, KANPUR D ATED 03.03.2016 PERTAINING TO ASSESSMENT YEAR 2010-11. 2 2. THE GRIEVANCES OF THE ASSESSEE READ AS UNDER: 1. THE APPELLANT IS A PVT. LTD. CO. CARRYING ON TH E BUSINESS OF COLONY DEVELOPMENT AND CONSTRUCTION AND FILED RETUR N OF INCOME DECLARING INCOME OF RS.32,35,290.THE ASSESSMENT FOR THE YEAR WAS COMPLETED UNDER SECTION 153A/ 143(3) OF THE IT A CT,1961 AT A TOTAL INCOME OF RS. 1,16,77,033/-. THE A.O. WHILE COMPLETING THE ASSESSMENT MADE ADDITIONS OF RS.11,41,743/-, RS .70,00,000/- AND RS.3,00,000/- UNDER SECTION 68 OF THE IT ACT. 2. AGGRIEVED BY THE ABOVE ADDITIONS THE APPELLANT F ILED AN APPEAL BEFORE THE LEARNED CIT APPEALS-IV, KANPUR WH O VIDE ORDER DATED 03.03.2016 HAS DELETED THE ADDITION OF RS.70, 00,000/-. HE HAS CONFIRMED THE ADDITION OF RS.3,00,000/-. HE HAS DIRECTED THE ASSESSMENT OF THE AMOUNT OF RS. 11,41,743/- IN THE HANDS OF M/S GODWIN HOSPITALITY PVT. LTD AND DELETED THE SAID AD DITION IN THE HANDS OF THE APPELLANT. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT A SEARCH OPERATION WAS CARRIED OUT AT THE PREMISES OF THE ASSESSEE ON 09.09.2010. STATUTORY NOTICES U/S 153A OF THE INCOME TAX ACT, 1 961 [HEREINAFTER REFERRED TO AS 'THE ACT' FOR SHORT] WERE ISSUED AND SERVED UPON THE ASSESSEE, PURSUANT TO WHICH THE ASSESSEE FILED ITS RETURN OF INCOME. 3 4. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEED INGS AND ON PERUSAL OF THE IMPOUNDED DOCUMENT, WHICH CONTAINS D ETAILS OF PAYMENT OF RS. 9 LAKHS TO ONE CONTRACTOR WHEREBY SI X LAKHS WAS PAID IN CHEQUE AND REMAINING RS. 3 LAKHS WERE PAID IN CASH. THE ASSESSING OFFICER FOUND THAT NONE OF THESE CASH PAYMENTS ARE REFLECTED IN THE PRINT OUTS OF CASH BOOK. THE ASSESSEE WAS ASKED TO SHOW CAUSE AS TO WHY THE AMOUNT OF RS. 3 LAKHS SHOULD NOT BE ADDED T O THE INCOME OF THE ASSESSEE AS UNEXPLAINED EXPENDITURE. ON RECEIV ING NO PLAUSIBLE REPLY, THE ADDITION OF RS. 3 LAKHS WAS MADE. 5. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C IT(A) BUT WITHOUT ANY SUCCESS. 6. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE STAT ED THAT DETAILED WRITTEN SUBMISSIONS WERE FILED BEFORE THE LD. CIT(A ) WHEREIN IT WAS STRONGLY CONTENDED THAT THE PAPER NEITHER CONTAINED THE NAME OF THE ASSESSEE NOR THE NAME OF ANY CONTRACTOR AND ALSO NO T THE NAME OF ANY EMPLOYEE. IT WAS FURTHER ARGUED THAT THE SAID DOCU MENT IS A DUMB DOCUMENT AND NO ADDITIONS CAN BE MADE ON THE BASIS OF THE SAME. 4 7. THE CONTENTION OF THE ASSESSEE DID NOT FIND ANY FAVOUR WITH THE LD. CIT(A) WHO UPHELD THE ADDITION MADE BY THE ASSE SSING OFFICER. THE RELEVANT FINDINGS OF THE LD. CIT(A) READ AS UNDER: 5.7 I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT O RDER, WRITTEN SUBMISSION' FILED AS WELL AS VERBAL ARGUMENTS MADE BY THE LD. A.R.. IT MAY BE SEEN THAT A.O. HAS CLEARLY MENTIONED IN THE ASSESSMENT ORDER THAT THERE ARE ENTRIES ON THE SEIZ ED PAPER WHICH RECORDS PAYMENT BY WAY OF CHEQUE AS WELL AS C ASH. THE APPELLANT DENY ONLY ABOUT THE CASH TRANSACTION <& D OES NOT DISPUTE THE ENTRY BY WAY OF CHEQUE. THE NOTING IN T HE PAPER CLEARLY SUGGESTS THAT APPELLANT HAD MADE CASH TRANS ACTION WHICH WERE NOT RECORDED IN ITS BOOKS OF ACCOUNT. THEREFOR E, I AM OF THE OPINION THAT THESE NOTING REPRESENT UNACCOUNTED CASH TRANSACTION AND I DO NOT AGREE WITH THE ARGUMENTS/S UBMISSION OF APPELLANT. CASES RELIED UPON BY LD. AR. ARE DISTING UISHABLE ON FACTS AND NOT APPLICABLE IN THE CASE. THEREFORE, AD DITION MADE BY A.O. ON THIS GROUND IS HEREBY CONFIRMED. 8. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE REIT ERATED WHAT HAS BEEN STATED BEFORE THE LOWER AUTHORITIES AND DREW O UR ATTENTION TO THE RELEVANT SUBMISSIONS MADE BEFORE THE LD. CIT(A) VID E LETTER DATED 27.01.2016 WHICH IS PLACED AT PAGES A TO E OF THE P APER BOOK. REFERRING TO THE IMPOUNDED DOCUMENT, THE LD. COUNSE L FOR THE ASSESSEE 5 POINTED OUT THAT THE SAME DOES NOT CONTAIN ANY DETA ILS RELATING TO THE PAYER OR PAYEE. THE LD. COUNSEL FOR THE ASSESSEE F URTHER STATED THAT EVEN THE CHEQUE AMOUNT MENTIONED THEREIN DOES NOT B ELONG TO THE ASSESSEE. 9. PER CONTRA, THE LD. DR SUPPORTED THE FINDINGS OF THE ASSESSING OFFICER. 10. WE HAVE GIVEN THOUGHTFUL CONSIDERATION TO THE ORDERS OF THE AUTHORITIES BELOW. EXHIBIT 58 OF THE PAPER BOOK IS THE IMPOUNDED DOCUMENT ON THE BASIS OF WHICH ADDITIONS HAVE BEEN MADE. IT IS TRUE THAT THE SAID DOCUMENT DOES NOT CONTAIN ANY NAMES, EITHER OF THE PAYER OR THE PAYEE. IT IS EQUALLY TRUE THAT FEW PA YMENTS HAVE BEEN MADE BY CHEQUES AND OTHERS ARE IN CASH. 11. THE FOLLOWING REPLY BEFORE THE LD. CIT(A) NEEDS SPECIAL MENTION: THE ID. A.O. FOR MAKING THE IMPUGNED ADDITION HAS REFERRED TO ANNEXURE-A-3 SEIZED FROM 199/1, GAGAN VIHAR, ROH TA ROAD, MEERUT, THE RESIDENTIAL PREMISES OF AN EMPLOYEE, MR . GYANENDRA, WHO WORK WITH THE APPELLANT AS AN ACCOUN T OFFICER. THE PHOTOCOPIES OF THE PAGES NOS. 1-9 OF ANNEXURE A -3 AS 6 REFERRED TO BY THE ID. A.O. ARE PLACED AT PAGE NO.5 6 TO 66 IN THE PAPER BOOK. THE NOTING OF THE ID. A.O. THAT NO REPLY REGARDING THE SAME WAS SUBMITTED BY THE APPELLANT I S FACTUALLY INCORRECT AS IN RESPONSE TO THE QUERY NO. 22 OF THE NOTICE DATED 09.10.2012 AS PER PAGE NOS.1-9 3, IMPOUNDED FROM 199/1, GAGAN VIHAR, ROHTA ROAD, MEERUT, WHICH IS THE DETAIL OF PAYMENT OF RS.9 LACS TO ONE OF THE CONTRA CTOR WHERE BY RS.6 LACS WAS PAID IN CHEQUE AND BALANCE IN CASH I.E RS50,000/-, RS.50,000/- ON 12.01.2009, RS.50,000/- ON 02.02.2010 RS.50,000/- ON 13.02.2010, RS.50,000/- ON 18.02.2010 AND RS.50,000/- ON 27.02.2010 NONE OF THESE CASH PAYMENTS ARE REFLECTED IN THE P RINTOUT OF CASH ' TAKEN ON 04.10.2010. TO SHOW CASUE WHY AMOUN T OF RS.3 LACS SHOULD NOT BE ADDED THE INCOME AS UNEXPLAINED EXPENDITURE IN VIDE PARA 22 OF REPLY DATED NIL IT HAS BEEN SUBMITTED AS UNDER:- THIS POINT NEEDS FOR THE CLARIFICATION AT YOUR EN D AS WE COULD NOT RELATE TO IT. IT MAY HOWEVER BE MENTIONED THAT MR. GYANENDRA, WHOSE PREMISES WAS SEARCHED WAS ALSO CONSTRUCTING HIS HOUSE AT THAT TIME AND HE MAY HAVE MADE CASH PAYMENTS FOR HIS HOUSE CONSTRUCTION. IT SEEMS THAT THE ID. A.O. HAS MADE ADDITION ON THE BASIS OF PAGE NO.3 OF ANNEXURE-A-3 AS REFERRED TO ABOVE, FRO M WHERE IT IS NOT AT ALL APPARENT THAT AS TO WHOM THE SAID LOOSE / 7 PAPERS RELATES. THE PAPER NEITHER CONTAINED THE NAM E OF THE APPELLANT NOR THE NAME OF ANY CONTRACTOR AND ALSO N OT THE NAME OF ANY EMPLOYEE. THE ID. A.O. IN THE BODY OF/ ASSESSMENT ORDER ALSO HAS NOT MENTIONED THE NAME OF THE CONTRACTOR BUT HAS ONLY MENTIONED THAT TO ONE OF THE CONTRACTOR. THE FINDINGS OF THE ID. A.O. IS TOTALL Y VAGUE. THE LOOSE PAPERS RELIED UPON BY THE ID. A.O. IS A DUMB DOCUMENT AND THE ADDITION! MADE ON THE BASIS OF SUCH DUMB DO CUMENT IS TOTALLY UNJUST AND UNWARRANTED AND' DESERVES TO BE DELETED. RELIANCE IS PLACED ON THE JUDGMENT IN THE CASE OF S MC SHARE 1 BROKERS LTD. VS. DEPUTY COMMISSIONER OF INCOME TAX (DELHI TRIBUNAL) (2007) 109 TTJ 0700 AS CITED HEREINABOVE. 12. THE CONTENTS OF THE AFORESAID REPLY CLEARLY CON TRADICTS THE FINDINGS OF THE ASSESSING OFFICER THAT NO REPLY WAS FILED BY THE ASSESSEE TO THE SHOW CAUSE NOTICE. IN OUR CONSIDERED OPINIO N, WHEN THE ASSESSEE HAS SPECIFICALLY DENIED THE CONTENTS OF TH E SAID DOCUMENT, THEN IT WAS INCUMBENT UPON THE ASSESSING OFFICER TO DEMONSTRATE THAT THE CHEQUE ENTRIES ARE FOUND IN THE BOOKS OF ACCOUN T OF THE ASSESSEE. IN THAT CASE, OTHER CONTENTS OF THE DOCUMENTS CANNO T BE BRUSHED ASIDE LIGHTLY. BUT UNTIL THIS IS PROVED/DEMONSTRATED, NO ADVERSE INFERENCE SHOULD BE DRAWN. WE, THEREFORE, IN THE INTEREST OF JUSTICE AND FAIR PLAY, RESTORE THIS ISSUE TO THE FILE OF THE ASSESSI NG OFFICER. THE 8 ASSESSING OFFICER IS DIRECTED TO EXAMINE THE REPLY OF THE ASSESSEE AND MAKE NECESSARY VERIFICATION AND ENQUIRY AND DECIDE THE ISSUE AFRESH AFTER GIVING REASONABLE AND FAIR OPPORTUNITY OF BEI NG HEARD TO THE ASSESSEE. ACCORDINGLY, GROUND NO. 1 IS ALLOWED FOR STATISTICAL PURPOSES. 13. FACTS RELATING TO GROUND NO. 2 ARE CONTAINED IN PARA 5.3 OF THE ORDER OF THE FIRST APPELLATE AUTHORITY AND THE SAME READ AS UNDER: 5.3 I FIND FORCE IN THE ARGUMENT OF LD. A.R. S INCE, PAPER 4A 6 SUGGEST PAYMENT BY WAY OF CHEQUE AS WELL AS CA SH AND THE CHEQUE ENTRIES PERTAIN TO M/S. GODWIN HOSPITALI TY (P) LTD.. THEREFORE IT IS LOGICAL TO INFER THAT CASH TRANSACT ION WOULD ALSO PERTAIN TO SAME ENTITY. THEREFORE, I AM OF THE OPINION THAT THE CASH SHOULD NOT BE ASSESSED IN THE HANDS O F APPELLANT AND ADDITION IS THEREFORE DELETED HERE. HOWEVER, SI NCE IT HAS BEEN INFERRED THAT IT PERTAINS TO M/S. GODWIN HOSPI TALITY PVT.LTD., THE A.O. IS DIRECTED TO ASSESS IT, IN THE HANDS OF M/S. GODWIN HOSPITALITY PVT.LTD. FOR A.Y. 2010-11. 14. THE ASSESSEE IS AGGRIEVED BY THE DIRECTIONS OF THE LD. CIT(A) TO ASSESS THE INCOME IN THE HANDS OF GODWIN HOTEL PVT LTD. IT IS THE SAY OF THE LD. COUNSEL FOR THE ASSESSEE THAT ONCE THE L D. CIT(A) HAS DELETED THE ADDITION IN THE HANDS OF THE ASSESSEE, GRIEVANC E OF THE ASSESSEE IS 9 OVER. THE LD. CIT(A) DIRECTED THE ASSESSING OFFICE R IN ASSESSEES APPEAL TO MAKE ADDITIONS IN THE HANDS OF SOME OTHER ASSESS EE. RELIANCE WAS PLACED ON THE DECISION OF THE CO-ORDINATE BENCH IN THE CASE OF SHRI SANJAY THAKUR IN ITA NOS. 3785 & 3786/DEL/2015 DATE D 12.07.2018. 15. PER CONTRA, THE LD. DR STRONGLY SUPPORTED THE F INDINGS OF THE LD. CIT(A). 16. WE HAVE GIVEN THOUGHTFUL CONSIDERATION TO THE O RDERS OF THE AUTHORITIES BELOW. WE HAVE CAREFULLY PERUSED FORM N O. 35 BEING APPEAL MEMO BEFORE THE FIRST APPELLATE AUTHORITY. THE ASSESSEE HAS CHALLENGED THE ADDITION OF RS. 11,41,743/- AND WHIL E DECIDING THIS GROUND, THE LD. CIT(A) HELD THAT CASH SHOULD NOT BE ASSESSED IN THE HANDS OF THE APPELLANT AND THE ADDITION, IS THEREFO RE, DELETED HERE. 17. ONCE THE LD. CIT(A) HAS DECIDED THE GROUND IN F AVOUR OF THE ASSESSEE, THE LD. CIT(A) SHOULD NOT HAVE GIVEN ANY DIRECTION TO THE ASSESSING OFFICER TO MAKE ADDITIONS IN THE HANDS OF SOME OTHER ASSESSEE. SIMILAR ISSUE WAS DECIDED BY THE CO-ORDI NATE BENCH IN ITA NOS. 3785 & 3786/DEL/2015 [SUPRA]. THE RELEVANT FI NDINGS READ AS UNDER: 10 9. WE HAVE GIVEN THOUGHTFUL CONSIDERATION TO THE O RDERS OF THE AUTHORITIES BELOW. IT IS NOT IN DISPUTE THA T THE ASSESSMENT ORDER FRAMED U/S 153C OF THE ACT WAS QUA SHED BY THE FIRST APPELLATE AUTHORITY. BEFORE THE AMEND MENT BY FINANCE [NO. 2] ACT, 2014 THE PROVISIONS OF SECTION 251 READ AS UNDER: IN DISPOSING OF THE APPEAL, THE COMMISSIONER (APPEA LS) AS THE CASE MAY HE, HAS FOLLOWING POWERS : (I) TO CONFIRM, REDUCE, ENHANCE OR ANNUAL TH E ASSESSMENT (II) TO CONFIRM, CANCEL, ENHANCE OR REDUCE TH E PENALTY IMPOSED ; AND (III) IN OTHER CASES TO PASS SUCH ORDERS IN TH E APPEAL AS HE THINKS FIT. THE COMMISSIONER (APPEALS), AS THE CASE MAY BE, WIL L NOT PASS ANY ORDER ENHANCING THE TAX LIABILITY OR A PENALTY OR REDUCING THE AMOUNT OF REFUND WITHOUT GIVING A REASONABLE OPPORTUNITY TO THE APPELLANT OF BEING HE ARD. HE MAY PASS ORDERS ON MATTERS WHICH MAY NOT HAVE BE EN REFERRED TO HIM . EXPLANATION. IN DISPOSING OF AN APPEAL, THE COMMISSIONER (APPEALS) MAY CONSIDER AND DECIDE ANY MATTER ARISING OUT OF THE PROCEEDINGS IN WHICH THE ORDER APPEALED AGAINST WAS PASSED, EVEN IF SUCH MATTER WA S NOT RAISED BEFORE BY THE APPELLANT [SECTION 251 ]. 11 10. IT CAN BE SEEN FROM THE ABOVE THAT THIS PROVISI ON EMPOWERS THE APPELLATE AUTHORITY IN AN APPEAL AGAIN ST THE ORDER OF ASSESSMENT TO CONFIRM, ENHANCE OR ANNUL TH E ASSESSMENT. BEFORE 1.6.2001, THERE WAS ONE MORE PO WER AND THE SAME READS AS UNDER: OR HE MAY SET ASIDE THE ASSESSMENT AND REFER THE C ASE BACK TO THE AO FOR MAKING FRESH ASSESSMENT IN ACCORD ANCE WITH THE DIRECTIONS. 11. THE CBDT IN ITS CIRCULAR HAS ALSO CLARIFIED THA T THE POWER OF THE APPELLATE COMMISSIONER DOES NOT INCLUD E THE POWER TO SET ASIDE THE ASSESSMENT. 12. IN OUR CONSIDERED OPINION, ACTION OF THE FIRST APPELLATE AUTHORITY HAS NO SANCTION OF LAW AS POWER S OF THE CIT(A) HAVE BEEN SET OUT IN SECTION 251 OF THE ACT. THE CIT(A) HAS NO POWER TO SEND THE MATTER BACK TO THE F ILE OF THE AO FOR MAKING FRESH DECISION ON THE ISSUE. ONCE THE ASSESSMENT ORDER WAS QUASHED THE CIT(A) HAS TRANSGRE SSED THE POWER GIVEN TO HIM U/S 251(1) OF THE ACT BY GIVI NG DIRECTION TO THE AO TO TAKE ACTION U/S 147/148 OF THE ACT. SUCH DIRECTIONS ARE UNCALLED FOR AND DESERVE TO BE EXPUNGED FROM THE FINDINGS OF THE FIRST APPELLATE AUTHORITY. WE ACCORDINGLY DIRECT THE AO TO READ THE ORDER OF THE FIRST APPELLATE AUTHORITY WITHOUT DIRECTION TO TAKE ACTION U/S 147/148 OF THE ACT. 12 18. ON FINDING PARITY ON THE FACTS, WE DIRECT THE A SSESSING OFFICER TO READ THE ORDER OF THE FIRST APPELLATE AUTHORITY WIT HOUT THE DIRECTIONS GIVEN IN PARA 5.3 OF HIS ORDER MENTIONED ELSEWHERE. GROUND NO. 2 IS, ACCORDINGLY, ALLOWED. 19. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN I TA NO. 2026/DEL/2016 IS PARTLY ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 18.12. 2019. SD/- SD/- [SUSHMA CHOWLA ] [N.K. BILLAIYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 18 TH DECEMBER, 2019 VL/ COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI 13 DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 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.P S/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGIST RAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER