ACIT, New Delhi V. Sh. Amrit Pal Singh, New Delhi

ITA 3537/DEL/2011

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3416 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 18-04-2017
• Assessment Year: 2003-2004
• Appeal Filed On: 14-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K JAIN
• Assessee Lawyers: R K KAPOOR; PRADEEP DINODI
• Keywords: Reopening of assessment; Search and seizure
• Section: 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: A NEW DELHI BEFORE SHRI G.D. AGRAWAL, HONBLE PRESIDEN T & SHRI K.N. CHARRY, JUDICIAL MEMBER ITA NOS.-3537 & 3538/DEL/2011 ( ASSESSMENT YEARS: 2003-04 & 2004-05) ACIT CIRCLE 31(1), ROOM NO.217, C.R. BLDG., NEW DELHI. VS AMRIT PAL SINGH G-24/2, MARINA ARCADE, CONNAUGHT PLACE, NEW DELHI. AARPS5236M ASSESSEE BY SH. PRADEEP DINODI, CA & SH. R.K. KAPOOR, CA REVENUE BY SH. S.K. JAIN, DR ORDER PER K. NARSIMHA CHARRY, J.M. BOTH THESE APPEALS ARE FILED CHALLENGING THE ORDERS DATED 10.05.2011 IN APPEAL NO. 342 & 343/2010-11 ON THE F ILE OF THE COMMISSIONER OF INCOME TAX (APPEALS)-XXVI, NEW DELH I. SINCE THE GROUNDS AND THE QUESTIONS INVOLVED IN BOTH THESE MA TTERS ARE ONE AND THE SAME IT IS CONVENIENT TO DISPOSE THEM OFF B Y WAY OF THE COMMON ORDER, BY TAKING THE FACTS RELATING TO THE A .Y. 2003-04. DATE OF HEARING 18.04.2017 DATE OF PRONOUNCEMENT 21.04.2017 2 ITA NOS.3537 & 3538/DEL/2011 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF OUTDOOR ADVERTISING UNDER THE NAME AND STYLE OF ADWEL ADVERTISING SERVICES. THE ASSESSEE HAD ORIGINALLY FILED RETURN DECLARING AN INCOME AT RS. 36,15,560/- FOR THE AY 2 003-04. THE RETURN WAS DULY ACCOMPANIED BY TAX AUDIT REPORT U/S 44AB AND AUDITED BALANCE SHEET AND PROFIT AND LOSS A/C AND W AS PROCESSED U/S 143(1). SEARCH AND SEIZURE OPERATIONS WERE CON DUCTED ON 27.08.2003 IN RESPECT OF ASSESSEES PREMISES AND RE LATED PERSONS/CONCERNS. THE ASSESSMENT WAS COMPLETED U/S 143(3)/153A BY THE ASSTT. COMMISSIONER OF INCOME TA X, CENTRAL CIRCLE 21, NEW DELHI, AT RS. 11,08,85,550/-, WHICH WAS FINALLY REDUCED TO RS. 64,86,280/- VIDE ORDER DATED 9.22.20 09 U/S 254/153A. SIMILARLY, FOR THE AY 2004-05, THE ASSES SMENT WAS COMPLETED ON 30.03.2006 AT RS. 1,97,76,120/- AGAINS T RETURNED INCOME OF RS. 18,07,650/-. IT WAS REDUCED TO RS. 1 8,32,875/- U/S 254/153 VIDE ORDER DATED 15.4.2010. HOWEVER, WHILE PROPOSING REOPENING OF ASSESSMENT, ASSESSING OFFICER ISSUED N OTICE U/S 148 OF THE ACT ON 30.03.2009 AND COMPLETED THE ASSESSME NT AT AN INCOME OF RS. 1,84,25,630/- BY MAKING AN ADDITION O F RS. 1,19,39,350/- FOR THE AY 2003-04 AND BY MAKING AN A DDITION OF 3 ITA NOS.3537 & 3538/DEL/2011 RS. 29,82,200/- FOR THE AY 2004-05. APPEALS PREFER RED BY THE ASSESSEE WERE ALLOWED DELETING THE ADDITIONS ON THE GROUND THAT THE ASSESSEE WAS FOLLOWING THE CASH SYSTEM OF ACCOU NTING AND RECEIPTS FROM M/S OGILVY & MATHER HAVE BEEN DULY AC COUNTED FOR AS INCOME IN AY 2004-05. 3. CHALLENGING THE IMPUGNED ORDERS THE REVENUE IS I N APPEAL BEFORE US IN THESE TWO APPEALS STATING THAT THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 1,19,39,350/- FOR THE AY 2003- 04 AND RS. 29,82,360/- FOR THE AY 2004-05 ADDED BY THE AO ON ACCOUNT OF OUTSTANDING BILLS. 4. IT IS THE ARGUMENT OF THE LD. DR THAT THE AO MAD E THE ADDITION IN RESPECT OF BOTH THE YEARS ON THE GROUND THAT WHEN ASKED TO RECONCILE THE PAYMENTS WITH THE COPY OF AC COUNT OF M/S OGILVY & MATHER THE ASSESSEE FAILED TO DO THE SAME, BUT WITHOUT LOOKING INTO THIS ASPECT THE LD. CIT (A) BOOK THE T HINGS FOR GRANTED AND OPINED THAT THE ADDITIONS ARE TO BE DELETED. H E FURTHER SUBMITTED THAT WHATEVER THE MATERIAL THE CIT (A) RE LIED UPON HAD TO BE FURNISHED TO THE AO FOR HIS DEFENSE OF THE AS SESSMENT ORDER BUT WITHOUT DOING SO LD. CIT (A) STRAIGHTAWAY REACH ED THE 4 ITA NOS.3537 & 3538/DEL/2011 CONCLUSION AS SUCH THEY ARE LIABLE TO BE REVERSED A ND THE ASSESSMENT ORDER HAS TO BE RESTORED. PER CONTRA, I T IS THE ARGUMENT OF THE LD. AR THAT THE ASSESSMENT ORDER PA SSED U/S 147 ITSELF AT PAGE NO. 2 CLEARLY SHOWS THAT THE ALLEGED AMOUNTS WERE SHOWN AS OUTSTANDING AMOUNTS AND SINCE THERE IS NO DISPUTE THAT THE ASSESSEE HAS BEEN FOLLOWING THE CASH SYSTEM OF ACCOUNTING, THERE IS NO BASIS FOR THE AO TO REOPEN THE ASSESSME NT AND TO MAKE THE ADDITIONS. HE FURTHER SUBMITTED THAT NO NEW MA TERIAL WAS AVAILABLE TO THE AO AND THE ASSESSMENT ORDER U/S 14 7 ITSELF READS THAT AO REOPENED THE ASSESSMENT SOLELY BASING ON TH E MATERIAL ALREADY AVAILABLE WITH HIM. HE PRAYED TO DISMISS T HE APPEALS. 5. AT THE OUTSET, IT MUST BE STATED THAT ABSOLUTELY THERE IS NO DISPUTE THAT THE ASSESSEE HAS BEEN FOLLOWING THE CA SH SYSTEM OF ACCOUNTING, ACCORDING TO WHICH THE AMOUNT CAN BE CH ARGED TO TAX ONLY ON RECEIPT BASIS. FURTHER IT IS NOT THE CASE OF THE REVENUE THAT DURING THE COURSE OF SEARCH ANY MATERIAL TO SH OW THAT THE ASSESSEE HAD ACTUALLY RECEIVED ANY AMOUNT RELATABLE TO THE OUTSTANDING BILLS. AO TABULATED THE AMOUNT TO BE A DDED AT PAGE NO. 2 OF THE ORDER DATED 28.12.2010 PASSED U/S 147 OF THE ACT. 5 ITA NOS.3537 & 3538/DEL/2011 FIFTH COLUMN OF THIS TABLE CLEARLY SHOWS THAT THE B ILL AMOUNT SHOWN IN FOURTH COLUMN WAS THE TOTAL OUTSTANDING AM OUNT. IN SUCH A CIRCUMSTANCE, ITS NOT KNOWN HOW THE AO CAN CONCLUDE THAT SUCH AN AMOUNT HAS TO BE TAXED OR IT ESCAPED FROM T AX. SINCE THE ASSESSEE IS FOLLOWING THE CASH SYSTEM OF ACCOUNTING , TAXATION OF THE OUTSTANDING AMOUNT DOES NOT ARISE. ADDED TO THIS, L D. CIT (A) OBSERVED THAT THESE AMOUNTS OF RS. 1,19,39,350/- RE LATABLE TO THE AY 2003-04 AND SUM OF RS. 29,82,200/- RELATABLE TO THE AY 2004- 05 HAD DULY BEEN ACCOUNTED FOR AS INCOME IN THE AY 2004-05. THE OBSERVATIONS AND CONCLUSIONS OF THE LD. CIT (A) ARE PERFECTLY LOGICAL AND LEGAL AND HIS REASONING IS IMPLACABLE. WE, THE REFORE, WHILE UPHOLDING THE SAME FIND THAT THESE APPEALS ARE DEVOID OF ANY MERITS AND ARE LIABLE TO BE DISMISSED. WE DO SO AC CORDINGLY. 6. IN THE RESULT, THE APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21.04.2017 SD/- SD/- (G.D. AGRAWAL) (K. NARSIMHA CHARR Y) HONBLE PRESIDENT JUDICIAL MEMBER DATED: 21.04.2017 *KAVITA ARORA 6 ITA NOS.3537 & 3538/DEL/2011 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT TRUE COPY ASSISTANT REGISTRAR ITAT NEW DELHI 7 ITA NOS.3537 & 3538/DEL/2011 DRAFT DICTATED ON 18.04.2017 DRAFT PLACED BEFORE AUTHOR 18.04.2017 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. APPROVED DRAFT COMES TO THE SR.PS/PS 21.04.2017 KEPT FOR PRONOUNCEMENT ON 21.04.2017 FILE SENT TO THE BENCH CLERK 21.04.2017 DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.