JCIT (OSD), New Delhi V. Sh. Suresh Kumar Kukreja, New Delhi

ITA 2322/DEL/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97837 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 5 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-11-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 21-10-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 09-05-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Rejection of books of accounts; Capital asset; Business income; Depreciation
• Section: 2(14); 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `G NEW DELHI BEFORE SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER I.T.A.NO.2322/DEL/2011 ASSESSMENT YEAR : 2007-08 JCIT (OSD), VS SHRI SURESH KUMAR KUKREJA, CIRCLE 26(1), L-19, RAJOURI GARDEN, NEW DELHI. NEW DELHI. (PAN: AAKPK0073B) (APPELLANT) (RESPONDENT) APPELLANT B Y: SHRI SUJIT KUMAR, SR. DR RESPONDENT BY : SHRI GAUT AM JAIN, ADVOCATE DATE OF HEARING: 21.10.2015 DATE OF PRONOUNCEMENT: O R D E R PER CHANDRAMOHAN GARG, J.M. THIS APPEAL BY THE REVENUE HAS BEEN DIRECTED AGAINS T THE ORDER OF THE CIT(A)-XXIV, NEW DELHI DATED 27.2.2011 IN ASSESSEE S APPEAL NO.298/2010- 11 FOR AY 2007-08. 2. THE MAIN GROUNDS RAISED BY THE REVENUE READ AS F OLLOWS:- RESTRICTING THE ADDITION TO BUSINESS PROFITS AT R S. 10,00,000/- AS AGAINST OF RS. 41,90,024/- MADE BY T HE AO, WITHOUT GIVING ANY JUSTIFICATION FOR THE SAME DESPI TE HOLDING THAT THE AO WAS JUSTIFIED IN INVOKING THE P ROVISION OF SECTION 145(3) OF THE I.T. ACT IN; REJECTING THE TRADING RESULTS OF THE ASSESSEE AND THAT THE ASSESSEE FAILE D TO JUSTIFY ITA NO.3310/DEL/12 AY: 2009-10 2 THE STEEP RISE IN VARIOUS EXPENSES AND ASSESSEES F AILURE TO PRODUCE ANY DOCUMENTARY EVIDENCE OR PROOF OF EXPENS ES TO SUBSTANTIATE HIS CLAIM THAT THERE WAS OTHERWISE LOS S SUFFERED. 2. DIRECTING THE AO TO MEASURE THE SHORTEST POSSI BLE AERIAL DISTANCE OF THE LAND AND IN CASE IT IS IN TH E AREA UPTO A DISTANCE OF 2 KMS FROM THE GUNNOR MUNICIPAL LIMIT S WHILE UPHOLDING THE AOS FINDINGS BUT IGNORING THE FACT THAT IN THE AOS REMAND REPORT IT WAS CLARIFIED THA T THE LAND AREA OF 5 ACRE 6 KANAL & 4 ACRE 1 KANAL 15 MAR IA FALLS WITHIN 2 KMS FROM THE END OF THE MUNICIPAL LIMITS. GROUND NO.1 3. APROPOS GROUND NO.1, WE HAVE HEARD ARGUMENTS OF BOTH THE SIDES AND CAREFULLY PERUSED THE MATERIAL PLACED ON RECORD BEF ORE US. LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSE SSING OFFICER NOTICED THAT THE LAND FALLS WITHIN THE CATEGORY OF CAPITAL ASSET S AS DEFINED IN SECTION 2(14)(III)(B) OF THE INCOME TAX ACT, 1961 (FOR SHOR T THE ACT), THEREFORE, THE SALE OF AGRICULTURAL LAND IS CONSIDERED FOR CAPITAL GAIN TAX PURPOSE AND HE RIGHTLY WORKED OUT LONG TERM CAPITAL GAIN AND THE SAME WAS CORRECTLY ADDED TO THE INCOME OF THE ASSESSEE. LEARNED DEPARTMENTAL REPRE SENTATIVE VEHEMENTLY CONTENDED THAT THE CIT(A) GRANTED RELIEF TO THE ASS ESSEE WITHOUT ANY SOLID REASONING OR BASIS, THUS THE SAME MAY BE SET ASIDE BY RESTORING THAT OF THE ASSESSING OFFICER. ITA NO.3310/DEL/12 AY: 2009-10 3 4. REPLYING TO THE ABOVE, LEARNED COUNSEL OF THE AS SESSEE POINTED OUT THAT THE ASSESSING OFFICER MADE ADDITION ON WRONG APPRECIATI ON OF FACTS AND INCORRECT APPLICATION OF LAW WHICH WAS CORRECTED BY THE CIT(A ) ON COGENT AND JUSTIFIED REASONING AND HENCE, THE IMPUGNED ORDER MAY BE UPHE LD ON THIS ISSUE. HE HAS ALSO DRAWN OUR ATTENTION TOWARDS CBDT CIRCULAR NO. 17/2015 DATED 6.10.2015 THE AMENDED PRESCRIBED DISTANCE TO BE MEASURED AE RIALLY, APPLIED PROSPECTIVELY IN RELATION TO ASSESSMENT YEAR 2014-1 5 AND ONWARDS. FOR THE PERIOD PRIOR TO ASSESSMENT YEAR 2014-15, IT WAS HEL D THAT THE DISTANCE BETWEEN MUNICIPAL LIMIT AND AGRICULTURE LAND IS TO BE MEASU RED HAVING REGARD TO SHORTEST ROAD DISTANCE. ACCEPTING THE DECISION OF HON'BLE B OMBAY HIGH COURT (NAGPUR BENCH) IN I.T.A. NO. 151/2013 IN THE CASE OF SMT. M ALTIBAI R. KADU CBDT HAS ISSUED SAID CIRCULAR ON 6.10.2015 ON THIS ISSUE OF DISTANCE MEASUREMENT. 5. ON CAREFUL CONSIDERATION OF ABOVE, WE NOTE THAT THE CIT(A) GRANTED RELIEF TO THE ASSESSEE BY OBSERVING AS FOLLOWS:- 4. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, REMAND REPORT OF THE AO, SUBMISSION F REJOINDER OF THE APPELLANT AND PERUSED THE RECORD. IT IS EVIDENT FRO M THE REMAND REPORT INCLUDING THE TEHSILDAR'S REPORT THAT THE KHEWAT NO. 1002/987, KHATA NO. 1229 AND KHEWAT NO. 898, KHATA NO. 1154, 1156, 1158 ARE NOT AGRICULTURA L LANDS AT ALL. THE FACTS MENTIONED IN THE AO'S REMAN D REPORT IN RESPECT OF THESE TWO KHEWATS AS EXTRACTED UNDER WERE NOT CONTROVERTED WITH ANY DOCUMENTARY EVIDENCES BY THE APPELLANT: I) KHEWAT NO. 1002/987, KHATA NO. 1229 IS HAVING THE AREA OF 3 KANAL & 4 MARLA IS VACANT LAND IN WHICH THE ST ONES WERE LYING TO CONSTRUCT THE ROAD, IS COVERED WITH B OUNDARY ITA NO.3310/DEL/12 AY: 2009-10 4 WALL FROM WHICH IT IS NOTICED THAT THE ROAD IS BEIN G DEVELOPED FOR PLOTTING DEVELOPMENT IN THE LAND. FUR THER, SUBMITTED NO AGRICULTURAL ACTIVITIES ARE BEING CARR IED OUT THEREIN. THE STATUS AS ON THE REPORT IS SAME SINCE LAST YEAR. HOWEVER, IN THE REVENUE RECORD, THE KIND OF LAND IS NOTED AS PER CHOICE (CHAAHI DARJ HAI). II) KHEWAT NO. 898, KHATA NO. 1154, 1156, 11 58 HAVING AREA 9 KANAL, THE LAND, PRIOR TO 2006 WAS US ED TO KEEP ANIMALS FOR MILK PURPOSE. AT PRESENT, THE LAN D IS COVERED WITH BOUNDARY WALL AND IS HAVING PIECES OF BRICKS AND NO CROP IS GROWN IN THE SAID LAND WHILE IN THE RECORD, THE KIND OF LAND RECORDED IS AS (KISM CHAAHI BHOOMI DARJ HA THE LAND HAS NOT BEEN IN ANY USE SINCE 2006. THUS, IT IS HELD THAT THE CAPITAL GAINS WORK ED OUT ON TRANSFER OF THESE LANDS (KHEWAT NO. 1002/987, KHATA NO. 1229 AND KHEWAT NO. 898,KHATA NO. 1154, 1156, 1158) ARE HELD JUSTIFIED AS THESE LANDS, BEING NON-AGRICU LTURAL LANDS, ARE CAPITAL ASSETS IN ACCORDANCE WITH THE S ECTION 2(14) OF THE ACT AND THUS THE AO'S FINDINGS IN THIS REGARD ARE THUS UPHELD. 4.1 THE NOTIFICATION NO. 9447 DATED 06.01.1994 SPEC IFIES THE AREA UPTO A DISTANCE OF 2.00 KILOMETERS (KMS) F ROM THE GUNNOR MUNICIPAL LIMITS IN ALL DIRECTION. IT MEANS THAT THE DISTANCE HAS TO BE MEASURED FROM THE BOUNDARY OF TH E MUNICIPAL LIMIT. IN PRINCIPLE, I DO AGREE WITH THE VIEW OF THE VIEW_OF THE AO, STATED IN THE REMAND REPORT, TH AT GUNNOR TOWN AND VILLAGE PANCHI GUJRAN HAVE COMMON BOUNDARY AND INSPECTORS OF INCOME TAX AND THE REVEN UE AUTHORITIES OF GUNNOR MEASURED THE DISTANCE OF LANDS OTHER THAN LANDS MENTIONED IN PARA 4 ABOVE ( LANDS OTHER THAN KHEWAT NCK 1002/987, KHATA NO. 1229 AND KHEWAT NO. 898, KHATA NOLL54, 1156, 11581. FROM THE OFFIC E OF THE TEHSILDAR BY VEHICLE, WHICH MAY BE MORE THAN 6 KMS. THEREFORE, THE SHORTEST POSSIBLE AERIAL DISTANCE OF LANDS OTHER THAN LANDS MENTIONED IN PARA 4 ABOVE, FOR THE PURPOSE OF CAPITAL GAINS, HAS TO BE TAKEN FROM THE BOUNDARY OF MUNICIPAL LIMIT OF GUNNOR. THE AO IS THEREFORE, DIRECTED TO MEASURE THE SHORTEST POSSIBL E AERIAL DISTANCE OF LANDS OTHER THAN LANDS MENTIONED IN PAR A 4 ITA NO.3310/DEL/12 AY: 2009-10 5 ABOVE ALONG WITH THE APPELLANT AND IN CASE IT IS IN THE AREA UPTO A DISTANCE OF 2.00 KILOMETERS (KMS) FROM THE G UNNOR MUNICIPAL LIMITS, THE AO'S FINDINGS IN THIS REGARD REMAIN UPHELD OTHER WISE NOT. IN THESE CIRCUMSTANCES, THIS ISSUE IS SET ASIDE FOR LIMITED PURPOSE FOR VERIFICATION BY T HE AO TO CONSIDER THE ISSUE IN LINE WITH THE ABOVE DIRECTION S. 5. THE NEXT ISSUE IS IN RESPECT OF WORKING OF BUSINESS INCOME. BEFORE GOING INTO THE MERITS OF THE ADDITIO NS MADE BY THE AO IN THIS CASE, IT WOULD BE WORTHWHILE TO E XAMINE THE VERACITY OF ACTION OF THE AO TO INVOKE SECTION 145(3) OF THE ACT. THE DECISION OF THE AO TO INVOKE SECTION 1 45(3) OF THE ACT IS BASED ON HIS OBSERVATIONS THAT THE APPEL LANT HAS SUPPRESSED HIS GROSS PROFIT (GP) TO AVOID THE TAX I NCIDENCE ON SURRENDERED INCOME DURING THE SURVEY OPERATIONS, AS NORMALLY; THERE IS NO LOSS IN THE EXPORT BUSINESS. THE AO FURTHER OBSERVED THAT THE APPELLANT HAS FAILED TO P RODUCE EXPORT ORDERS COMPELLING HIM TO SELL GOODS AT PRE- NEGOTIATED PRICE. HOWEVER, THE AO HAS REJECTED BOOK S OF ACCOUNTS EVEN WHEN THE SAME WAS NOT PRODUCED BEFORE HIM DURING THE SCRUTINY PROCEEDINGS. 6. IN VIEW OF ABOVE CONCLUSION OF THE CIT(A), AT THE O UTSET, WE NOTE THAT THE CIT(A) HAS UPHELD FINDINGS OF THE ASSESSING OFFICER ON TWO COUNTS VIZ., FIRST, THE CAPITAL GAINS WORKED OUT ON TRANSFER OF LANDS W AS HELD JUSTIFIED AS THESE LANDS, BEING NON-AGRICULTURAL LANDS, ARE CAPITAL AS SETS IN ACCORDANCE WITH SECTION 2(14) OF THE ACT AND SECOND, THAT THE ASSESSING OFF ICER, IN HIS REMAND REPORT, RIGHTLY STATED THAT GUNNOR TOWN AND VILLAGE PANCHI GUJRAN HAVE COMMON BOUNDARY AND DISTANCE MEASURED FOR OTHER LANDS (OTH ER THAN LANDS IN QUESTION) FROM THE OFFICE OF THE TEHSILDAR BY VEHICLE WAS MOR E THAN 6 KMS. WITH THESE OBSERVATIONS, THE CIT(A) DIRECTED THE ASSESSING OFF ICER TO MEASURE THE SHORTEST POSSIBLE DISTANCE OF LANDS, OTHER THAN MENTIONED IN PARA 4 OF THE CIT(A) ORDER, THE CIT(A) IN PRINCIPLE DECIDED THAT THE ORDER OF T HE ASSESSING OFFICER WILL ITA NO.3310/DEL/12 AY: 2009-10 6 REMAIN UPHELD IF THE DISTANCE FROM MUNICIPAL LIMIT TO LANDS IS UPTO 2.00 KMS, OTHERWISE THE SAME WOULD NOT HOLD THE FIELD. THE C IT(A) AFTER LAYING DICTA IN PRINCIPLE, RESTORED THE ISSUE TO THE FILE OF THE AS SESSING OFFICER FOR LIMITED PURPOSES OF FACTUAL VERIFICATION AND WE ARE UNABLE TO SEE ANY PERVERSITY OR ANY OTHER VALID REASON TO INTERFERE WITH THE SAME. BEF ORE WE PART WITH THE DISCUSSION ON THIS ISSUE, IT IS RELEVANT TO MENTION THAT THE ASSESSING OFFICER WILL ALSO TAKE INTO CONSIDERATION THE BINDING CIRCULAR N O. 17/2015 DATED 6.10.2015 OF THE CBDT (SUPRA) WHILE VERIFYING THE FACTS AND WHIL E APPLYING THE LAW IN PURSUANCE TO THE ORDER OF THE FIRST APPELLATE AUTHO RITY. ACCORDINGLY, WE UPHOLD THE CONCLUSION OF THE CIT(A) WITH THE DIRECTION TO THE ASSESSING OFFICER, AS SET OUT ABOVE. THEREFORE, GROUND NO. 1 OF THE REVENUE BEING DEVOID OF MERITS IS DISMISSED. GROUND NO.2 7. APROPOS GROUND NO. 2 OF THE REVENUE, WE HAVE HEA RD THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED THE RELEVANT MATE RIAL PLACED ON RECORD, INTER ALIA, ASSESSMENT ORDER, IMPUGNED ORDER OF CIT(A) AN D OTHER RECORDS. LD. LD. DR POINTED OUT THAT THE ASSESSING OFFICER IN FIRST PARA AT PAGE 4 HAS REJECTED THE BOOKS OF ACCOUNTS OF THE ASSESSEE U/S 145(3) OF THE ACT AND THIS ACTION OF THE ASSESSING OFFICER HAS BEEN UPHELD BY THE CIT(A) IN LAST OPERATIVE PARA OF THE IMPUGNED ORDER WHEREIN IT IS HELD THAT THE ASSESSIN G OFFICER WAS JUSTIFIED IN INVOKING THE PROVISIONS OF SECTION 145(3) OF THE AC T IN REJECTING BOOK RESULTS OF ITA NO.3310/DEL/12 AY: 2009-10 7 THE ASSESSEE AND THE ASSESSEE HAS ACCEPTED THIS CON CLUSION OF FIRST APPELLATE AUTHORITY AS HE HAS NOT FILED ANY CROSS APPEAL OR C ROSS OBJECTION AGAINST THESE OBSERVATIONS AND CONCLUSION OF THE AUTHORITIES BELO W. 8. LEARNED DEPARTMENTAL REPRESENTATIVE FURTHER POIN TED OUT THAT THE ASSESSING OFFICER WAS CORRECT IN MAKING CALCULATION OF PROFIT FROM BUSINESS WHEREIN THE ASSESSING OFFICER HAS TAKEN GP RATE OF 2.90% OF THE TURNOVER ON THE BASIS OF EARLIER YEAR G.P. RATE AT RS.7,70,486 BEIN G 2.90% OF THE TURNOVER OF RS.2,65,68,488 RELEVANT TO FINANCIAL PERIOD 2006-07 RELEVANT TO ASSESSMENT YEAR 2007-08. LEARNED DEPARTMENTAL REPRESENTATIVE HAS F URTHER DRAWN OUR ATTENTION TO PAGE 4 OF THE ASSESSMENT ORDER AND SUBMITTED THA T THE ASSESSING OFFICER FURTHER PROCEEDED TO MAKE LOGICAL AND CORRECT CALCU LATION OF PROFITS FROM BUSINESS WHEN AFTER CALCULATING GROSS PROFIT ON THE BASIS OF EARLIER YEAR RESULTS, HE ADDED THE SURRENDERED AMOUNT OF 85,10,000 PERTAI NING TO CASH IN HAND AND EXCESS STOCK AND ALLOWED DEDUCTION OF DEPRECIATION AND INTEREST AMOUNT RS. 6,73,538 AND RS.6,24,638 AND FINALLY CALCULATED THE NET BUSINESS INCOME AT RS.79,82,620 AND ALSO GAVE RECONCILIATION AND ADJUS TMENT OF THE AMOUNT OF RS.37,92,596 AS DECLARED BY THE ASSESSEE AS PROFIT AND GAINS FROM BUSINESS. LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENTLY POIN TED OUT THAT THE CIT(A) REDUCED THE ADDITION TO RS.10,00,000 WITHOUT ANY RE ASONING AND HENCE THE IMPUGNED ORDER MAY BE SET ASIDE BY RESTORING THAT O F THE ASSESSING OFFICER. ITA NO.3310/DEL/12 AY: 2009-10 8 9. LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT A S PER DICTA LAID DOWN BY HON'BLE HIGH COURT OF DELHI IN THE CASE OF CIT VS SURENDRA BUILDTECH PVT. LTD. IN I.T.A. NO. 141/2012 ORDER DATED 17.5.2012 AND SUBMITTED THAT IF THE CIT(A) RECORDS A FACTUALLY INCORRECT FINDING, THEN THE REVENUE/ASSESSEE , WHEN THEY PREFER AN APPEAL BEFORE THE ITAT, MUST PLACE N ECESSARY DOCUMENTS/PAPERS ON RECORD TO SHOW AND ESTABLISH THAT FACTUAL FINDIN GS WERE INCORRECTLY RECORDED BY THE FIRST APPELLATE AUTHORITY. LEARNED COUNSEL OF THE ASSESSEE SUPPORTED THE ACTION OF THE CIT(A). 10. ON CAREFUL CONSIDERATION OF ABOVE, AT THE OUTSE T, WE OBSERVE THAT THE ASSESSEE ACCEPTED THE CONCLUSION OF THE CIT(A) IN R EGARD TO REJECTION OF BOOK RESULTS U/S 145(3) OF THE ACT AS ADMITTEDLY THERE I S NO CROSS APPEAL BY THE ASSESSEE AGAINST SAID FINDINGS OF THE AUTHORITIES B ELOW. FURTHER, THE ASSESSEE, IN HIS GROUND NO. 5 BEFORE THE CIT(A), HAS AGITATED TH E ISSUE OF ADDITION OF RS. 41,90,024 BY SIMPLY ALLEGING THAT THE SAID ADDITION IS NOT WARRANTED BY THE CASE AND THE ADDITION SO MADE NEEDS TO BE DELETED. FROM THE FACTS EMERGED FROM THE ASSESSMENT ORDER AS NOTED BY THE ASSESSING OFFICER, IT IS APPARENT THAT THE ASSESSEE, DURING THE SURVEY, SURRENDERED AN AMOUNT OF RS.85,10,310 DURING SURVEY U/S 133A OF THE ACT CONDUCTED AT THE BUSINES S PREMISES OF THE ASSESSEE WHICH INCLUDE DIFFERENCE IN STOCK OF RS. 83,00,310 AND EXCESS CASH OF RS.2,10,000. THE ASSESSEE REPLYING TO THE QUESTION NO. 17 IN HIS STATEMENT RECORDED DURING SURVEY VOLUNTARILY SURRENDERED SAID AMOUNT OF RS.85,10,310 FOR ITA NO.3310/DEL/12 AY: 2009-10 9 TAXATION OVER AND ABOVE NORMAL PROFIT FOR THE FINAN CIAL YEAR AND ON THIS BASIS AND AFTER REJECTING THE BOOK RESULTS, THE ASSESSING OFFICER PROCEEDED TO ESTIMATE THE NORMAL PROFIT FROM BUSINESS BY ADOPTING GP RATE OF 2.90% OF TOTAL TURNOVER AMOUNTING TO RS.7,70,486 (BEING 2.90% OF TURNOVER O F RS.2,65,68,488) AND HE ADDED SURRENDERED AMOUNT OF RS.85,10,310 TO THIS ES TIMATED PROFIT AND ALSO ALLOWED DEDUCTION OF RS.6,73,538 ON ACCOUNT OF INTE REST CLAIMED AND RS.6,24,638 ON ACCOUNT OF DEPRECIATION AND CALCULAT ED THE NET BUSINESS PROFIT AT RS.79,82,630. FURTHERMORE, THE ASSESSING OFFICER A LSO ADJUSTED THE AMOUNT OF PROFIT AND GAINS FROM BUSINESS AS DECLARED BY THE A SSESSEE IN HIS RETURN AND ARRIVED AT THE FIGURE OF RS.41,90,024 WHICH WAS ADD ED TO THE RETURNED INCOME OF THE ASSESSEE. 11. DURING FIRST APPELLATE PROCEEDINGS, THE ASSESSE E SUBMITTED WRITTEN SUBMISSIONS, WHICH HAVE BEEN REPRODUCED BY THE CIT( A) IN PARA 3 OF THE IMPUGNED ORDER. ON CAREFUL PERUSAL OF THE SAME, WE CLEARLY OBSERVE THAT THE ASSESSEE HAS MAINLY CHALLENGED THE CONCLUSION OF TH E ASSESSING OFFICER WHEREIN HE REJECTED BOOKS OF ACCOUNTS OF THE ASSESSEE U/S 1 45(3) OF THE ACT. AT THE COST OF REPETITION, WE MAY AGAIN POINT OUT THAT THE CIT( A) HAS UPHELD REJECTION OF BOOKS OF ACCOUNTS AND SINCE THE ASSESSEE HAS NOT CH ALLENGED THIS ISSUE BY WAY OF EITHER CROSS APPEAL OR OBJECTION, THEN THIS ISSUE A TTAINS FINALITY. IN THE WRITTEN SUBMISSIONS, THE ASSESSEE HAS NOT POINTED OUT ANY M ISTAKE IN CALCULATION OF THE BUSINESS PROFIT MADE BY THE ASSESSING OFFICER. ITA NO.3310/DEL/12 AY: 2009-10 10 12. NOW, WE PROCEED TO ANALYSE THE ORDER OF THE CIT (A) WHEREIN HE RESTRICTED THE ADDITION TO RS.10,00,000 INSTEAD OF RS.41,90,02 4. FOR THE SAKE OF CLARITY IN OUR FINDINGS, THE RELEVANT OPERATIVE PART OF THE IM PUGNED ORDER ON THIS IS BEING REPRODUCED BELOW WHICH READS AS UNDER:- 5.2 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, REMAND REPORT OF THE ASSESSING OFFICER, SUBMISSION & REJOI NDER OF THE APPELLANT AND PERUSED THE RECORD. IT IS HELD THAT THE ASSESSING OFFICERS OBSERVATIONS AS MENTIONED IN THE IMPUGNED ORDER COUPLED WITH FINDINGS OF SURVEY WERE OF CONSEQUENCE TO JEOPARDIZE THE CORRECTNESS OF THE BOOKS OF ACCOUNTS , IF MAINTAINED BY THE APPELLANT THOUGH THE SAME WAS NEITHER PRODUC ED BEFORE THE AO OR ME. BOOKS OF ACCOUNTS ARE THUS HELD NON-R ELIABLE, WHICH IS ALSO BUTTRESSED BY THE FACT THAT THE EXCES S STOCK IN TRADE AND SURPLUS CASH WERE FOUND DURING SURVEY RESULTING DISCLOSURE OF INCOME OF RS. 85.10 LAKHS FOR RELEVANT YEAR. THU S IT IS HELD THAT THE AO WAS JUSTIFIED IN INVOKING THE PROVISIONS OF SECTION 145(3) OF THE ACT IN REJECTING THE TRADING RESULTS OF THE APPELLANT. FURTHER, IT IS NOTICED THAT THE GROSS PROFIT OF THE APPELLANT, AS EVIDENT FROM THE CHART OF 7 YEARS WHICH IS ANNEXED HERE WITH, VARIES FROM YEAR TO YEAR. THE REASONS FOR THE SAME ARE DIFFERENT YEAR TO YEAR. THE GP RATE HAS GONE UP TO 30.48% IN THE RELEVANT YEAR ONLY ON ACCOUNT OF DISCLOSURE OF INCOME OF RS. 85.10 LAKHS DURING SURVEY, OTHERWISE IT IS IN LOSS. IT IS NOTIC ED THAT THIS IS NOT THE FIRST YEAR IN WHICH THE INPUT COST HAS GONE UP SUBSTANTIALLY HIGHER IN LAST 7 YEARS. HOWEVER, THE APPELLANT DEMO NSTRATED THAT GOODS EXPORTED IN FINANCIAL YEAR (FY) 2008-09 WAS A T LESSER RATE THAN THE COST OF PURCHASES, WHICH RESULTED LOSS OF RS. 69.53 LAKHS. THE APPELLANT ARGUED THAT THE RECURRING LOSS FORCED HIM TO GIVE UP THIS EXPORT BUSINESS FROM 04.09.2009. FURTHER, T HE APPELLANT FAILED TO JUSTIFY THE STEEP RISE IN VARIOUS EXPENSE S AS POINTED OUT BY THE AO IN 3 RD PARA OF PAGE 4 OF THE IMPUGNED ORDER. NO DOCUMENTARY PROOF OF EXPENSES TO SUBSTANTIATE THE C LAIM WAS PRODUCED BEFORE ME TO CONTROVERT THE FINDINGS OF TH E AO. THEREFORE, KEEPING IN VIEW THE FACTS AND CIRCUMSTAN CES IN TOTALITY, I HEREBY UPHOLD THE ADDITION OF RS. 10.00 LAKHS OUT OF RS. 41,90,024/- DONE BY THE AO UNDER THE HEAD BUSINESS INCOME. THUS, THE ADDITION OF RS. 31,90,024/- / UNDER THE HEAD BUSINESS INCOME IS HEREBY DELETED. ACCORDINGLY, THE APPELLAN T GETS RELIEF. ITA NO.3310/DEL/12 AY: 2009-10 11 13. FROM THE ABOVE, IT IS APPARENT THAT THE CIT(A) UPHELD THE CONCLUSION OF THE ASSESSING OFFICER IN THE ADJUDICATION PART WHER EIN HE CONCLUDED THAT NO DOCUMENTARY PROOF OF EXPENSES TO SUBSTANTIATE THE C LAIM WAS PRODUCED BEFORE ME TO CONTROVERT FINDINGS OF THE ASSESSING OFFICER . WE FURTHER OBSERVE THAT IN THE LAST TWO SENTENCES, THE CIT(A) REDUCED THE ADDI TION TO RS. 10 LAKH AND GRANTED RELIEF OF RS.31,90,024 TO THE ASSESSEE WITH OUT POINTING OUT ANY CALCULATION MISTAKE OR ANY OTHER ALLEGATION AGAINST THE ACTION OF THE ASSESSING OFFICER. HENCE, WE ARE INCLINED TO HOLD THAT THE C IT(A) GRANTED RELIEF TO THE ASSESSEE WITHOUT RECORDING ANY FACTUAL FINDINGS AND THUS WE ARE UNABLE TO DRAW ANY CONCLUSION ABOUT THE CORRECTNESS OF IMPUGNED OR DER. IN THIS SITUATION, WE CANNOT EXPECT THE APPELLANT/REVENUE TO SHOW AND EST ABLISH THAT THE FACTUAL FINDINGS WERE INCORRECTLY RECORDED BY THE FIRST APP ELLATE AUTHORITY. HENCE, IN OUR HUMBLE UNDERSTANDING, THE BENEFIT OF RATIO OF THE O RDER OF HON'BLE HIGH COURT OF DELHI IN THE CASE OF CIT VS SURENDRA BUILDTECH PVT. LTD. (SUPRA) IS NOT AVAILABLE FOR THE ASSESSEE RESPONDENT. 14. ON THE BASIS OF FOREGOING DISCUSSION, WE ARE O F THE CONSIDERED VIEW THAT THE CIT(A) REDUCED THE ADDITION WITHOUT POINTING OU T ANY MISTAKE IN THE CALCULATION OF THE ASSESSING OFFICER AND WITHOUT RE CORDING ANY FINDINGS REGARDING CONCLUSION OF THE ASSESSING OFFICER WHICH IS AN INCORRECT APPROACH FOR A FIRST APPELLATE AUTHORITY. WE, THEREFORE, A RE OF THE OPINION THAT THIS ISSUE REQUIRES AFRESH ADJUDICATION AT THE END OF THE CIT( A) AND HENCE, WE RESTORE THIS ITA NO.3310/DEL/12 AY: 2009-10 12 GROUND TO THE FILE OF THE CIT(A) FOR READJUDICATION ON THIS SOLE ISSUE. NEEDLESS TO SAY THAT THE CIT(A) SHALL PROVIDE DUE OPPORTUNIT Y OF HEARING TO THE ASSESSEE AND SHALL DECIDE THE ISSUE WITHOUT BEING PREJUDICED FROM HIS EARLIER ORDER AND OUR OBSERVATIONS IN THIS ORDER. ACCORDINGLY, GROUN D NO. 2 OF THE REVENUE IS DEEMED TO BE ALLOWED FOR STATISTICAL PURPOSES. 15. IN THE RESULT, THE APPEAL OF THE REVENUE IS PA RTLY DISMISSED ON GROUND NO. 1 AND PARTLY DEEMED TO BE ALLOWED ON GROUND NO. 2. ORDER PRONOUNCED IN THE OPEN COURT ON 4.11.15. SD/- SD/- (L.P. SAHU) (C.M. GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 04 TH NOVEMBER, 2015 GS COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASSTT. REGISTRAR