Rajendra Engineering Udyog Pvt. Ltd., New Delhi V. ITO, New Delhi

ITA 268/DEL/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2765 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-07-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 08-06-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 17-01-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: F R MEENA
• Assessee Lawyers: ASHISH GOEL
• Keywords: Bogus Share capital; Unexplained investment; Opportunity of being heard; Non compliance; Assessment record
• Section: 142(1); 69; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F NEW DELHI BEFORE SHRI S. V. MEHROTRA, VICE PR ESIDENT AND SMT SUCHITRA KAMBLE, JUD ICIAL MEMBER I.T.A .NO.-268/DEL/2017 (A.Y 2010-11) RAJENDRA ENGINEERING UDYOG PVT. LTD. B-308, OKHLA INDUSTRIAL AREA, PHASE-1 NEW DELHI AACCR3357G (APPELLANT) VS ITO WARD 15(3), NEW DELHI (RESPONDENT) APPELLANT BY SH. VED JAIN, ADV & SH. ASHISH GOEL, CA RESPONDENT BY SH. F. R. MEENA, SR. DR ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER DATED 8/9/2016 PASSED BY THE CIT(A) 11, NEW DELHI FOR ASSESSMENT YEAR 2010-11. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A )J IS BAD BOTH IN THE EYE OF LAW AND ON FACTS. 2(I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LEARNED CIT(A) HAS DATE OF HEARING 08.06.2017 DATE OF PRONOUNCEMENT 03.07.2017 ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE OR DER PASSED BY THE AO UNDER SECTION 144 OF THE ACT DESPITE THE FACT TH AT NON-APPEARANCE BEFORE THE AO WAS ON ACCOUNT OF REASONS BEYOND THE CONTROL OF THE ASSESSEE. (II) THAT THE LEARNED CIT(A) HAS ERRED BOTH ON FACT S AND IN LAW IN CONFIRMING THE ADDITIONS MADE BY THE AO IN ORDER UN DER SECTION 144 OF THE ACT, DESPITE THE FACT THAT ALL EXPLANATION A ND EVIDENCES WERE DULY FILED BEFORE THE AO. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING ALL TH E ADDITIONS MADE BY THE AO WITHOUT GIVING ANY FINDING ON THE MERITS OF THE ADDITIONS SO MADE. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE AC TION OF AO IN REJECTING THE BOOKS OF ACCOUNTS DESPITE THE SAME HA VING BEEN PROPERLY KEPT BY THE ASSESSEE. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE AD DITION OF RS. 1,25,81,426/- BEING 10% OF GROSS SALES MADE BY THE AO WITHOUT THERE BEING ANY BASIS FOR THE SAME. 6. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE AD DITION OF RS.56,32,180/- BEING 10% OF THE JOB WORK CHARGES WI THOUT THERE BEING ANY BASIS FOR THE SAME. 7.(I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE AD DITION OF RS.27,50,000/- ACCOUNT OF SHARE CAPITAL, TREATING T HE SAME AS UNEXPLAINED.. (II) THAT THE ADDITION HAS BEEN MADE BY THE A O DESPITE THE ASSESSEE FILING ALL EXPLANATION AND EVIDENCES TO PROVE THE S AME. 8(I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE AD DITION OF RS.2,69,825/- ACCOUNT OF UNSECURED LOANS. (II) THAT THE ADDITION HAS BEEN MADE BY THE AO DESP ITE THE ASSESSEE FILING ALL EXPLANATION AND EVIDENCES TO PROVE THE SAME . 9(I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE ADDITION OF RS.85,80,320/- ACCOUNT OF SUNDRY CREDITORS. (II) THAT THE ADDITION HAS BEEN MADE BY THE AO DESPITE T HE ASSESSEE FILING ALL EXPLANATION AND EVIDENCES TO PROVE THE SAME. (III) THAT THE ADDITION HAS BEEN CONFIRMED IGNORING THE F ACT THAT SUNDRY CREDITORS ARISING OUT OF NORMAL BUSINESS PURCHASES, 100% ADDITION TREATING THE SAME AS BOGUS IS NOT CALLED FOR. 10(I). ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE ADDITION OF RS.1,61,22,818/- BEING INVESTMENT IN FIXED ASSETS. (II) THAT THE ADDITION HAS BEEN MADE BY THE AO DESP ITE THE ASSESSEE FILING ALL EXPLANATION AND EVIDENCES TO PROVE THE SAME. 3. THE RETURN OF INCOME OF RS.11,33,490/- WAS FILED BY THE ASSESSEE COMPANY ON 15/10/2010 WHILE E-FILING AND THE SAME W AS PROCESSED U/S 143(1) OF THE INCOME-TAX ACT. THE CASE WAS SELECTED FOR S CRUTINY NOTICE U/S 143(2) OF THE ACT WAS ISSUED ON 25/8/2011 AND WAS DULY SERVED ON THE ASSESSEE COMPANY. SUBSEQUENTLY, QUESTIONNAIRE DATED 27/7/20 12 ALONG WITH NOTICE U/S 142(1) WAS ISSUED TO THE ASSESSEE COMPANY. INI TIALLY, ON 25/10/2012 THE ASSESSEES REPRESENTATIVE ATTENDED THE ASSESSMENT P ROCEEDINGS. HOWEVER, THEREAFTER NON ATTENDED ON BEHALF OF THE ASSESSEE C OMPANY. THEREAFTER, QUESTIONNAIRE AND NOTICE U/S 142(1) WHERE AGAIN SUC CESSFULLY ISSUED ON 12/12/2012 AND 31/12/2012 AND DULY SERVED ON THE AS SESSEE COMPANY. THE ASSESSMENT RECORDS WERE LATER TO TRANSFER TO THE PR ESENT ASSESSING OFFICER ON 30/1/2013 TO FRESH NOTICE U/S 143(2) WAS ISSUED ON 31/1/2013. HOWEVER, NON COMPLIANCE WAS MADE BY THE ASSESSING COMPANY. SUBSEQUENTLY, WHILE SHOW CAUSE NOTICE DATED 1/2/2013 AND NOTICE U/S 142 (1). THE ASSESSEE COMPANY WAS INFORMED THAT IN THE EVENT OF NON COMPL IANCE IT WOULD BE PRESUMED THAT THEY HAD HAVE NO EXPLANATION TO OFFER ASSESSMENT ORDER U/S 144 WAS FINALIZED ON MERIT. WHILE CONSIDERING THE DOCU MENTARY EVIDENCE THE ASSESSING OFFICER HAS ASSESSED THE INCOME AS FOLLOW S:- NET PROFIT: (RS.) (RS) (A) 10% OF THE ASSESSEE GROSS SALES OF RS. 12,58,14 ,262/- 1,25,81,426/- (B) 10% OF THE JOB WORK CHARGES REC3EIVED OF RS.5,6 3,21,797/- 56,32,180/- (C) 100% OF UNEXPLAINED SHARE CAPITAL RECEIVED 27,50,000/- (D) 100% OF UNEXPLAINED UNSECURED LOAN RECEIVED 2,69,825/- (E) 100% OF BOGUS SUNDRY CREDITORS 85,80,320/- (F) 100% OF UNEXPLAINED INVESTMENTS IN FIXED ASSETS . 1,61,22,818/- TOTAL INCOME ASSESSED AT RS.4,59,36,569/- 4. AGGRIEVED BY THE SAME, THE ASSESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) HELD THAT THE A.O HAD NO OTHER ALTERNATIVE B UT DETERMINE THE TOTAL INCOME OF THE APPELLANT BY RESTORING TO THE METHOD OF ESTIMATION ONLY. THEREFORE, THE ADDITION MADE IN THE ASSESSMENT ORDE R WAS UPHELD BY THE CIT(A). 5. THE LD. AR SUBMITS THAT WHILE THE ASSESSING OFFI CER HAS NOT TAKEN INTO COGNIZANCE THAT ESTIMATION TOWARDS 100% OF UNEXPLAI NED INVESTMENT IN FIXED ASSETS CANNOT BE TAKEN AS THE SAME IS NOT AS PER TH E LAW. THEREFORE, THE LD. AR REQUESTED THAT ONE MORE OPPORTUNITY TO BE GIVEN TO THE ASSESSEE AND ALL THE FACTS RELATED TO THE ASSESSED INCOME MAY BE VERIFIE D BY THE ASSESSING OFFICER. THE LD. AR FURTHER SUBMITTED THAT THE ASSESSED INCO ME OF THE ASSESSEE AT RS.4,59,36,596/- AGAINST THE RETURN INCOME OF RS.11 ,33,490/- WITHOUT APPRECIATING THE MATERIAL ALREADY AVAILABLE IN RECO RD. THE ADDITION U/S 69 OF THE ACT OF RS.1,61,22,818/- ON ACCOUNT OF UNEXPLAIN ED INVESTMENT IN FIXED ASSETS BY THE ASSESSEE WITHOUT APPRECIATING THE EXP LANATION FURNISHED BY THE ASSESSEE BEFORE HIM IS NOT JUSTIFIED UNDER THE LAW AND THE SAME MAY BE DELETED. 6. THE LD. DR SUBMITTED THAT THE ASSESSING OFFICER HAS CATEGORICALLY GIVEN REASONS WHILE INVOKING SECTION 144 OF THE ACT. THE CIT(A) ALSO HAS TAKEN COGNIZANCE OF THE RELEVANT MATERIALS. HENCE, THE L D. DR SUBMITTED THAT THE APPEAL OF THE ASSESSEE BE DISMISSED. 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL T HE MATERIAL AVAILABLE ON RECORDS. AS PER SECTION 69 OF THE ACT, THE ADDITI ON ON ACCOUNT OF UNEXPLAINED INVESTMENT IN FIXED ASSETS BY THE ASSESSEE CANNOT B E SIMPLICITOR BE TAKEN AS 100% AS THE SAME HAS TO BE VERIFIED. THE CIT(A) HAS NOT TAKEN THE CONGNIZANCE OF THIS LEGAL POSITION. THE SAME NEEDS TO BE EXPLAI NED BY THE ASSESSEE TO THE ASSESSING OFFICER. SINCE THE ORDER UNDER SECTION 14 4 OF THE ACT WAS PASSED, THE ASSESSEE DID NOT HAVE THE OPPORTUNITY TO EXPLAIN TH E SAME. THEREFORE, IT IS JUST AND PROPER TO REMIT THIS ISSUE TO THE FILE OF THE A SSESSING OFFICER AND DECIDED AFRESH. NEEDLESS TO SAY THAT THE ASSESSEE BE GIVEN OPPORTUNITY TO BE HEARD. 9. IN RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLO WED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 03 RD JULY, 2017. SD/- SD/- (S. V. MEHROTRA) (SUCHITRA KAMBLE) VICE PRESIDENT JUDICI AL MEMBER DATED: 03/07/2017 R. NAHEED * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE 1. DRAFT DICTATED ON 08/06/2017 PS 2. DRAFT PLACED BEFORE AUTHOR 08/06/2017 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER .2017 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 03 .06.2017 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK 03 .06.2017 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.