DCIT CC-I, New Delhi V. Aggarwal Associates (Promoters) Ltd, New Delhi

ITA 2854/DEL/2008

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 5524 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 03-02-2010
• Assessment Year: 2002-2003
• Appeal Filed On: 05-09-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHOK PANDEY
• Assessee Lawyers: AMIT GOEL
• Keywords: Loose papers; Document seized; Documents seized
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A DELHI BEFORE SHRI K.G. BANSAL AND SHRI GEORGE MATHAN ITA NO. 2854(DEL)/2008 ASSESSMENT YEAR: 2006-07 ASSTT. COMMISSIONER OF INCOME M/S AGGARWAL ASSOCIATES TAX, CENTRAL CIRCLE-I VS. (PROMOTERS) LTD., 10, NEW JHANDEWALAN EXTN., NEW DELHI. RAJ DHANI ENCLAVE, VIKAS MARG, DELHI-92. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ASHOK PANDEY , CIT, DR RESPONDENT BY : SHRI AMIT GOEL, C .A. ORDER PER K.G. BANSAL : AM THIS APPEAL OF THE REVENUE EMANATES FROM THE O RDER OF THE CIT(APPEALS)-III, NEW DELHI, PASSED ON 6.6.2008 IN APPEAL NO. 301/07- 08 AND IT PERTAINS TO ASSESSMENT YEAR 2006-0 7. THE CORRESPONDING ORDER OF ASSESSMENT WAS FRAMED BY THE ASSISTANT COMMIS SIONER OF INCOME-TAX, CENTRAL CIRCLE-1, NEW DELHI, ON 28.12.2007 UND ER THE PROVISIONS OF SECTION 143(3) OF THE INCOME-TAX ACT, 1961. 2. GROUND NO. 1 IS AGAINST THE REDUCTION OF ADDITION ON ACCOUNT OF VALUATION OF CLOSING STOCK FROM RS. 49,45,093/- T O RS. 3,22,851/-. IN THE COURSE OF HEARING BEFORE US, BOTH THE PARTIES FAIRLY STATED THAT THIS ISSUE STANDS COVERED BY THE ORDER OF THE TRIBUNAL IN THE CASE OF THE ASSESSEE FOR ITA NO. 2854(DEL)/2008 2 ASSESSMENT YEARS 2002-03 AND 2003-04 IN ITA NO S. 2662(DEL)/2008, 2853 & 2846(DEL)/2008, DATED 15.12.2009, A CO PY OF WHICH WAS PLACED BEFORE US. IT WAS ALSO EXPLAINED THAT THE ASSESSEE HAD DECLARED TOTAL INCOME OF RS. 9,14,88,930/- FOR ASSESSMENT Y EAR 2007-08 AND TO EVIDENCE THIS FACT, A COPY OF THE ASSESSMENT OR DER DATED 21.12.2009 WAS PLACED ON RECORD. THUS, IT WAS CLARIFIED THAT CHANGE IN THE VALUE OF CLOSING STOCK DOES NOT MAKE IN THE OVERALL TA X LIABILITY OF THE ASSESSEE FOR THIS AND THE SUBSEQUENT YEAR. IN THE AFORESA ID ORDER OF THE TRIBUNAL, A FINDING WAS GIVEN THAT THE ADDITION IN THE VAL UE OF CLOSING STOCK, BASED ON AVERAGE SALE RATE IN RESPECT OF THE APARTM ENTS AT ALL FLOORS, WAS TOTALLY UNJUSTIFIED AND, THEREFORE, THE ADDITI ON WAS DELETED. IT MAY BE MENTIONED HERE THAT AS PER GROUND OF APPEAL, TH E LD. CIT(APPEALS) REDUCED THE ADDITION BY AN AMOUNT OF ABOUT RS . 46.22 LAKH. THE ASSESSEE DID NOT FILE APPEAL AGAINST THE ORDER OF THE LD. CIT(A). IN VIEW OF THE ORDER OF THE TRIBUNAL FOR EARLIER YEARS, THE RE SEEMS TO BE NO REASON TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A). HOWEVER, FOR READY REFERENCE, PARAGRAPH 10 OF THE ORDER OF THE TRIB UNAL, CONTAINING THE SUBSTANTIVE FINDING, IS REPRODUCED BELOW:- 10. ON THE FACTS OF THE CASE, WE FIND THAT ASSESSEE HAS SHOWN REASONABLE VALUE OF THE CLOSING STOCK AND FULLY ACCOUNTING FOR PROFIT BY FULLY DISCLOSING SALE ITA NO. 2854(DEL)/2008 3 CONSIDERATIONS. THERE IS NO DOUBT OR DISPUTE O N SALES. THE ASSESSEE ALSO SHOWED PROGRESSIVE INCOME IN THE SUCCEEDING YEARS. THERE WAS NO BENEFIT TO THE ASSESSEE IN UNDER-VALUING ITS CLOSING STOCK. THE REVENUE ALSO DID NOT DERIVE ANY BENEFIT BY TINKERING WITH THE VALUATION SHOWN BY THE ASSESSEE. ON THE FACTS OF THE CASE, WE ARE INCLINED TO ACCEPT THE VALUE SHOWN BY THE ASSESSEE, PARTI CULARLY WHEN EXPENDITURE RELATING TO COST AS WELL AS SAL ES HAVE BEEN ACCEPTED. THE ADDITION IN THE CLOSING STOCK, BASED ON AVERAGE SALE RATES OF ALL FLOORS, IN OUR CONSIDERED OPINION, IS TOTALLY UNJUSTIFIED AND IS DIRECTED TO BE DELETED IN ALL THE ASSESSMENT YEARS, UNDER CONSIDERATION. THERE IS NO QUESTION OF ALLOWING ANY SET OFF TO THE ASSESS EE AND IF ANY HAS ALREADY BEEN ALLOWED, THE SAME HAS TO BE WITHDRAWN. RESPECTFULLY FOLLOWING THE AFORESAID DECISION , THIS GROUND IS DISMISSED. 3. GROUND NO. 2 IS AGAINST THE DELETION OF ADDI TION OF RS. 21.00 LAKH, MADE BY THE AO IN RESPECT OF CERTAIN PAYMENTS M ADE BY THE ASSESSEE. THE LD. CIT(APPEALS) DELETED THE ADDITION BY OB SERVING THAT THIS VERY AMOUNT WAS ADDED BY THE AO IN THE ASSESSMENT F OR ASSESSMENT YEAR 2005-06, WHICH WAS UPHELD BY HIM AS THE PAYMEN TS RELATED TO THAT YEAR. IN VIEW OF THAT FINDING, THIS ADDITION WAS DELE TED ON THE GROUND THAT SAME ADDITION CANNOT BE MADE TWICE IN TWO DIFFERENT Y EARS. ITA NO. 2854(DEL)/2008 4 3.1 BEFORE US, WHILE THE LD. DR RELIED ON THE O RDER OF THE AO, HE FAIRLY SUBMITTED THAT THE PAYMENTS WERE MADE IN THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 2005-06 AND IT IS CLEAR FROM THE ORDER OF THE LD. CIT(A) THAT THE ADDITION WAS CONFIRMED IN THA T YEAR. THE LD. COUNSEL DID NOT BRING ANY EVIDENCE ON RECORD TO SHOW WHE THER THAT ORDER WAS ACCEPTED BY THE ASSESSEE OR NOT. NONETHELESS, H IS CASE WAS THAT IT IS CLEAR FROM THE ORDER OF THE LD. CIT(A) THAT ALL THE PAYMENTS PERTAINED TO ASSESSMENT YEAR 2005-06 AND THE ADDITION HAD BE EN SUSTAINED BY THE LD. CIT(A) IN THAT YEAR. THE FINDINGS OF THE LD. CIT(A) ARE CONTAINED IN PARAGRAPH 5.2 OF THE ORDER, WHICH IS REPRODUCED BELOW:- 5.2 I HAVE CONSIDERED THE SUBMISSIONS MADE BY T HE LD. AR AND HAVE PERUSED THE MATERIAL ON RECORD. WHEN THE SEIZED DOCUMENTS NO. 18 TO 23 OF ANNEXURE-A3 AND PAGE NO . 43 TO 46 OF ANNEXURE A-15 WERE CONFRONTED TO SMT. U MA AGGARWAL, DIRECTOR OF THE COMPANY DURING THE COURSE OF SEARCH OPERATIONS, IN REPLY TO QUESTION NO. 7 OF HER STATEMENT RECORDED ON 14.12.2005, SHE STATED THAT CASH PAYMENTS AGGREGATING TO RS. 18,05,000/-, OUT OF WHICH PAY MENTS OF RS. 18,00,000/- ARE DATED 11.12.2004 AND 13.12.20 04 AND PAYMENT OF RS. 5,000/- DATED 21.5.2005, WERE NOT RECORDED IN THE BOOKS OF ACCOUNT OF THE COMPANY. SIMILARL Y, WHEN SHE WAS CONFRONTED WITH PAGE NO. 28 TO 52 OF AN NEXURE A-8, IN REPLY TO QUESTION NO. 23 OF HER STATEMENT RECORD ED ON ITA NO. 2854(DEL)/2008 5 14.12.2005 SHE ADMITTED THAT PAYMENTS OF RS. 3,0 0,000/- TO SHRI PAWAN GUPTA MADE ON 18.01.2005 AND 28.0 1.2005 WERE NOT RECORDED IN THE BOOKS OF ACCOUNT OF THE COMPANY. IN REPLY TO QUESTION NO. 20 OF HER STATEMENT, SHE MADE A DISCLOSURE OF RS. 6.50 CRORES IN THE HANDS OF TH E APPELLANT COMPANY AND M/S SUNGLOW BUILDERS PVT. LTD. TO COVER THE CASH RECEIPTS NOT RECORDED IN THE BOOKS OF AC COUNT AND ALSO TO COVER CASH AND OTHER LOOSE PAPERS FOUND AND SEIZED DURING THE COURSE OF SEARCH OPERATIONS AT VAR IOUS PREMISES. IN HER SUBSEQUENT STATEMENT DATED 20.12.2005 , THE BREAK- UP OF RS. 6.50 CRORES WAS GIVEN AS RS. 5.00 CR ORES IN THE HANDS OF THE APPELLANT COMPANY AND RS. 1.50 CRORES IN THE HANDS OF THE APPELLANT COMPANY. APART FROM THIS, RS. 50 LACS WAS DISCLOSED UNDER SECTION 132(4) IN THE HANDS OF SMT. USHA AGGARWAL. IN THIS STATEMENT, IT WAS MENTI ONED THAT THE TOTAL AMOUNT OF RS. 7 CRORE WAS BEING OFFER ED AS ADDITIONAL INCOME FOR THE PERIOD RELEVANT TO TH E ASSESSMENT YEAR 2006-07 TO COVER ALL SEIZED RECORDS/PAPERS , CASH AND JEWELLERY. SUBSEQUENTLY, IN THE RETURN FOR THE ASSESSMENT YEAR 2006-07 FILED BY THE APPELLANT, AN ADDIT IONAL INCOME OF RS. 5.00 CRORES WAS SHOWN IN THIS REGARD. SINC E IN HER STATEMENT SMT. UMA AGGARWAL HAD STATED THAT R S. 5.00 CRORES WAS TO COVER, INTER-ALIA, ALL THE SEIZE D DOCUMENTS IT IMPLIES THAT THE SEIZED DOCUMENTS IN QUEST ION REFLECTING CASH PAYMENTS OF RS. 18 LACS AND RS. 3 LACS WE RE ALSO MEANT TO BE COVERED IN THE TOTAL DISCLOSURE OF RS. 5.00 C RORES. HOWEVER, THESE TRANSACTIONS BEING RELEVANT TO THE ITA NO. 2854(DEL)/2008 6 ASSESSMENT YEAR 2005-06, THE AO MADE ADDITION TOTALLING RS. 21 LACS IN THE ASSESSMENT YEAR 2005-06 SEPARATELY IN RESPECT OF CASH TRANSACTIONS RECORDED IN THESE DOCUMENTS. THUS, THE SAME INCOME HAS BEEN ADDED TWICE- ONC E IN THE ASSESSMENT YEAR 2006-07 (BEING PART OF RS. 5.00 CRORES) AND AGAIN IN THE ASSESSMENT YEAR 2005-06. IN TH E APPEAL ORDER DATED 27.5.2008 IN APPEAL NO. 300/07-0 8 FOR THE ASSESSMENT YEAR 2005-06 IN THE APPELLANTS CASE, I HAVE UPHELD THE AOS ACTION IN TAXING THESE CASH PAYMENTS IN THE ASSESSMENT YEAR 2005-06 TO WHICH THEY PER TAIN. IT IS THE FUNDAMENTAL PRINCIPLE OF TAXATION THE SAME INCOME CANNOT BE TAXED TWICE. AN INCOME HAS TO BE TAXED IN THE ASSESSMENT YEAR TO WHICH IT PERTAINS. SINCE THE INCOME REFLECTED IN THE SEIZED DOCUMENTS MENTIONED ABOV E ALREADY STANDS TAXED IN THE HANDS OF THE APPELLANT COMPA NY IN THE ASSESSMENT YEAR 2005-06, IN MY VIEW, THE SAME C ANNOT BE TAXED AGAIN IN THE ASSESSMENT YEAR 2006-07 T O WHICH IT CLEARLY DOES NOT PERTAIN AS PER THE SEIZED DOCU MENTS. THEREFORE, AN AMOUNT OF RS. 21 LACS FORMING PART OF DISCLOSURE OF RS. 5.00 CRORES CANNOT BE TAXED IN THE ASSESSMENT YEAR 2006-07. THE AO HAS COMPUTED T HE TOTAL ADDITION FOR THE ASSESSMENT YEAR 2006-07 ON THE BASIS OF SEIZED DOCUMENTS AT RS. 4,07,29,630/-. AS RE GARDS THE BALANCE AMOUNT OF RS. 92,70,370/- (RS. 5,00,00,00 0 RS. 4,07,29,630/-), THE SAME HAS ALSO BEEN TAXED BY THE AO IN THE ASSESSMENT YEAR 2006-07 IN VIEW OF DISCLOS URE OF RS. 5.00 CRORES MADE BY THE APPELLANT. THEREFORE, I N VIEW OF THE ITA NO. 2854(DEL)/2008 7 AOS ORDER FOR THE ASSESSMENT YEAR 2006-07 TH E INCOME OF RS. 21 LACS HAS BEEN TAXED TWICE AS THE S AME STANDS TAXED IN THE HANDS OF THE COMPANY IN THE ASSESSM ENT YEAR 2005-06 AND HENCE CANNOT FORM PART OF THE APP ELLANTS INCOME FOR THE YEAR 2006-07. ACCORDINGLY, TH E AO IS DIRECTED NOT TO TAKE AN AMOUNT OF RS. 21 LACS AS THE APPELLANTS INCOME FOR THE ASSESSMENT YEAR 2006 -07. THIS GROUND OF APPEAL IS, THEREFORE, ALLOWED. 3.2 FROM THE AFORESAID, IT IS CLEAR THAT THE AMOUNT COULD BE CONSIDERED ONLY IN ASSESSMENT YEAR 2005-06 AS THE PAYMENTS WERE MADE IN THE PERIOD 11.12.2004 TO 28.01.2005, BARRING A SMALL AMOUNT OF RS. 5,000/-, WHICH WAS PAID ON 21.05.2005. THIS SMALL AMOUNT ALSO GETS COVERED IN THE OVERALL SURRENDER O F RS. 5.00 CRORE, AS MENTIONED BY THE LD. CIT(APPEALS) IN HIS ORDER. THEREFORE, WE ARE OF THE VIEW THAT THERE WAS NO ERROR IN THE ORDER OF THE LD. CIT(APPEALS) WHICH REQUIRES CORRECTION FROM OUR SIDE. THUS , THIS GROUND IS ALSO DISMISSED. 4. IN THE RESULT, THE APPEAL IS DISMISSED. THE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 12 FEBRUARY, 2010. SD/- SD/- (GEORGE MATHAN) (K.G.BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE OF ORDER: 12TH FEBRUARY, 2010. SP SATIA ITA NO. 2854(DEL)/2008 8 COPY OF THE ORDER FORWARDED TO:- 1. M/S AGGARWAL ASSOCIATES (PROMOTERS) LTD., NEW DELHI. 2. ASSTT. CIT, CENTRAL CIRCLE-I, NEW DELHI. 3. CIT(A) 4. CIT, NEW DELHI. 5. DR, ITAT, NEW DELHI. ASSISTANT REGISTRA R.