Gatti & Piccolo India Pvt. ltd., New Delhi V. ITO, New Delhi

ITA 2219/DEL/2011

• Counselvise Citation: 221920114 RSA 2011
• Duration Of Justice: 5 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 20-10-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 04-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SALIL MISHRA
• Assessee Lawyers: C N GUPTA
• Keywords: Additional evidence
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C DELHI BEFORE SHRI C.L. SETHI AND SHRI K.G. BANSAL ITA NO. 2219(DEL)/2011 ASSESSMENT YEAR: 2007-08 GATTI & PICCOLO INDIA PVT. LTD., INCOME-TAX OFFICER, C/O KAILASH SUSHIL &ASSOCIATES, VS. C O. WARD 12(1), 1A(K-429/135), ADARSH NAGAR NEW DELHI. EXTN., GT KARNAL ROAD, NEW DELHI. PAN: AACCG3318E (APPELLANT) (RESPON DENT) APPELLANT BY : SHRI C.N. GUPTA, ADVOCATE RESPONDENT BY: SHR I SALIL MISHRA, DR DATE OF HEARING : 20.10.2011 DATE OF PRONOUNCEMENT : 25.10.2011. ORDER PER K.G. BANSAL : AM THE ASSESSEE HAS TAKEN UP FOUR GROUNDS IN THIS APPEAL. GROUND NOS. 1 AND 2 REGARDING NON-ISSUANCE OF NOTICE U/S 14 3(2) HAVE NOT BEEN PRESSED BEFORE US. GROUND NO. 4 IS RESIDUARY IN NATURE, WHICH HAS NOT BEEN ARGUED BEFORE US. THEREFORE, THESE GROUNDS ARE D ISMISSED. 1.1 GROUND NO. 3 IS THAT THE ESTIMATION OF THE INC OME AT RS. 53,98,926/- IS ARBITRARY, CAPRICIOUS AND EXCESSIVE. ITA NO. 2219(DEL)/2011 2 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE HAD FILED ITS RETURN ON 31.10.2007, DECLARING LOSS OF RS. 47,62,263/-. TH E ASSESSEE DID NOT MAKE COMPLIANCE TO NOTICES ISSUED U/S 143(2) AND 142( 1) OF THE INCOME-TAX ACT, 1961 (THE ACT FOR SHORT). THEREFORE, ASSESSMENT WAS FRAMED ON 18.12.2009 U/S 144 OF THE ACT. 2.1 ON PERUSAL OF THE BALANCE-SHEET OF THIS YEAR AN D OF IMMEDIATELY PRECEDING YEAR, IT WAS FOUND THAT LOAN FUNDS I NCREASED FROM RS. 39,01,865/- TO RS. 65,58,894/-. NO EVIDENCE WAS FILED REGARDING FRESH LOANS OF RS. 27,57,029/-. FURTHER, IT WAS FOUND THAT THE ASSESSEE CLAIMED EXPENSES OF RS. 1,53,64,419/- AGAINST GROSS RECE IPTS OF RS. 1,06,02,156/-. IT WAS REQUIRED TO SHOW CAUSE AS TO WHY 50% OF T HE EXPENSES MAY NOT BE DISALLOWED. NO EXPLANATION HAS BEEN FURNISHED, T HEREFORE, THE EXPENSES TO THE EXTENT OF RS. 67,82,210/- HAVE NOT BEEN ALLOWE D IN COMPUTATION OF INCOME. THUS, THE TOTAL INCOME HAS BEEN COMPUTE D AT RS. 56,76,976/-. 2.2 THE ASSESSEE RAISED GROUNDS BEFORE THE LD. CIT(APPEALS) THAT SUFFICIENT OPPORTUNITY WAS NOT GRANTED TO THE A SSESSEE BEFORE PASSING EX- PARTE ORDER U/S 144. IT APPEARS THAT IT ALSO FIL ED SOME ADDITIONAL EVIDENCE ON WHICH THE LD. CIT(APPEALS) OBTAINED THE REMA ND REPORT FROM THE ITA NO. 2219(DEL)/2011 3 ASSESSING OFFICER. THEREAFTER, THE IMPUGNED ORDER HAS BEEN PASSED AFTER CONSIDERING THE ORDER AND SUBMISSIONS MADE DURIN G THE COURSE OF FIRST APPELLATE PROCEEDINGS. 2.3 IN REGARD TO ADDITION U/S 68, IT WAS SUBMI TTED THAT THE CREDITS REPRESENT INCREASE IN UNSECURED LOANS FROM THE D IRECTORS, WHOSE IDENTITIES ARE KNOWN. THEY ARE ALSO ASSESSED TO INCOME-TA X. HOWEVER, THE LD. CIT(APPEALS) DID NOT ACCEPT THESE SUBMISSIONS. I T IS MENTIONED THAT NO CONFIRMATION LETTER HAS BEEN FILED AND IN ABSEN CE THEREOF THE CREDITWORTHINESS OF THE LENDERS AND GENUINENESS OF THE TRANSACTIONS DO NOT STAND ESTABLISHED. THEREFORE, THE ORDER OF THE A O IN THIS MATTER WAS UPHELD. 2.4 COMING TO DISALLOWANCE OF EXPENSES, IT WAS SUBMITTED THAT THE TOTAL EXPENDITURE HAS BEEN DETERMINED BY THE AO AT RS. 1,53,64,419/- BY AGGREGATING THE DEBIT ENTRIES, BEING OPENING STOCK , PURCHASES, CUSTOM DUTY ETC. THE SALES IN THIS YEAR HAVE INCREASED B Y 14 TIMES VIS--VIS THE SALES OF LAST YEAR. NO DISALLOWANCE WAS MADE IN THE PROCEEDINGS OF LAST YEAR. THE GROSS PROFIT RATIO DETERMINED ON THE BASIS OF THE ORDER OF THE AO COMES TO 60% AS AGAINST 12.5% LAST YEAR. THERE FORE, IT WAS AGITATED THAT ITA NO. 2219(DEL)/2011 4 THE ADDITION MAY BE DELETED. THE LD. CIT(APP EALS) CONSIDERED THE FACTS OF THE CASE AND SUBMISSIONS MADE BEFORE HI M. IT IS MENTIONED THAT IN SPITE OF REPEATED OPPORTUNITIES, THE ASSESS EE DID NOT PRODUCE BOOKS OF ACCOUNT AND BILLS AND VOUCHERS IN THE COURSE OF ASSESSMENT. IN ABSENCE OF EVIDENCE, THE EXPENSES CANNOT BE ALLOWED MERELY O N ARGUMENTS. HOWEVER, TAKING INTO ACCOUNT SOME SPECIFIC SUBMISSIONS RE GARDING OPENING STOCK, THE DISALLOWANCE WAS RESTRICTED TO RS. 74,04,209 /-. THUS, THE GROUND WAS PARTLY ALLOWED. 3. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE MAD E A LIMITED PLEA THAT THE ORDERS OF LOWER AUTHORITIES HAVE NOT BEEN PA SSED AFTER VERIFYING VARIOUS EVIDENCES AVAILABLE WITH THE ASSESSEE, WHICH COULD NOT BE PRODUCED BEFORE THE AO AS SUFFICIENT TIME WAS NOT GRANTED FOR COMPLIANCE IN THE ASSESSMENT PROCEEDINGS. ON TH E OTHER HAND, THE LD. DR SUBMITTED THAT DETAILS WERE NOT FURNISHED EVEN BE FORE THE LD. CIT(APPEALS). HAVING CONSIDERED THE RIVAL SUBMISS IONS, WE ARE OF THE VIEW THAT THE BOOKS OF ACCOUNT AND SUPPORTING VO UCHERS NEED TO BE EXAMINED FOR ASSESSING THE INCOME ON A JUST AND P ROPER BASIS. THEREFORE, THE MATTER IS RESTORED TO THE FILE OF THE AO FOR MAKING A FRESH ASSESSMENT AFTER HEARING THE ASSESSEE. THE ASSES SEE IS ALSO DIRECTED TO ITA NO. 2219(DEL)/2011 5 PRODUCE ALL NECESSARY EVIDENCE TO SUPPORT THE RET URN AND SUCH FURTHER EVIDENCE AS IS IN ITS POSSESSION AND WHICH IS REQUIRED BY THE AO. 4. IN THE RESULT, THE APPEAL IS TREATED AS ALLOW ED FOR STATISTICAL PURPOSES. SD/- SD/- (C.L. SETHI) (K.G.BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER SP SATIA COPY OF THE ORDER FORWARDED TO:- GATTI & PICCOLO INDIA PVT. LTD., NEW DELHI. ITO, CO. WARD 12(1), NEW DELHI. CIT(A) CIT THE DR, ITAT, NEW DELHI. ASSISTANT REGISTRAR.