Rishi Electronics Ltd., Noida V. DCIT, New Delhi

ITA 3678/DEL/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 3791 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: 2006-2007
• Appeal Filed On: 07-06-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PARAMITA TRIPATHY
• Keywords: Principle of natural justice; Application of stay; Valuation report
• Section: 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F NEW DELHI BEFORE SHRI G.D. AGRAWAL, HONBLE PRESIDENT AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER STAY NO. 351/DEL/2017 (IN ITA NO. 3678/DEL/2017) AY: 2006-07 ITA NO. 3678/DEL/2017) AY: 2006-07 RISHI ELECTRONICS LTD., VS DCIT, C/O NANGIA & CO., CIRCLE-15(1), A-109, SECTOR-136, C.R. BUILDING, NOIDA. NEW DELHI. (PAN: AAACR6226N) (APPELLANT) (RESPONDENT) APPELLANT BY : S/SHRI PIYUSH KAUSHI, SAILESH KUMAR, ADVS. RESPONDENT BY : SMT. PARAMITA TRIPATHY, CIT DR DATE OF HEARING: 13.09.2017 DATE OF PRONOUNCEMENT: 31.10.2017 ORDER PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER THE ASSESSEE IS SEEKING STAY OF DEMAND OF RS. 10,03,97,680/- INCLUDING TAX AND INTEREST FOR ASSES SMENT YEAR 2006 07 BY MEANS OF THIS STAY PETITION. THE ASSES SEE IS ALSO AN APPEAL AGAINST THE ORDER PASSED BY THE LD. COMMISSI ONER OF INCOME TAX (APPEALS) 7, NEW DELHI WHEREIN VIDE OR DER DATED 15 TH MARCH 2017, THE ASSESSEES APPEAL WAS DISMISSED F OR ASSESSMENT YEAR 2006 07. STAY NO. 351/DEL/2017 (IN ITA NO. 3678/DEL/2017) 2 2. THE BRIEF FACTS OF THE CASE ARE THAT THE RETURN OF INCOME WAS FILED DECLARING A TOTAL INCOME OF RS. 50,21,540/- A ND BOOK PROFIT OF RS. 9,68,55,020/-. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143 (3) OF THE INCOME TAX ACT, 1961 (HEREIN AFTER CALLED THE ACT) AT A TOTAL INCOME OF RS. 56,14,502 AFTER MAKING A DISALLOWANCE ON ACCOUNT OF PROPERTY TAX CLAIMED TO HAVE BEEN PAID BY THE ASSESSEE BUT NOT SUPPORTED BY REQUISITE EVIDENCES. SUBSEQUENTLY, ON RECEIPT OF A TAX EVASION PETITION (TEP) ALLEGING THAT THERE HAD BEEN AN UNDERVALUATION OF SALE OF PR OPERTY SITUATED AT B 319, OKHLA INDUSTRIAL ESTATE, NEW D ELHI IN WHICH THE ASSESSEE, HEADED BY DIRECTOR SH. RAVINDER KUMAR RISHI WAS THE SELLER, THE ASSESSEES CASE WAS REOPENED UNDER SECTION 147 OF THE ACT. THE REASSESSMENT WAS COMPLETED AT A TOTAL INCOME OF RS. 20,87,14,502/- AFTER MAKING AN ADDITION OF RS. 20,3 1,00,000/- ON ACCOUNT OF ALLEGED DIFFERENCE BETWEEN THE CIRCLE RATE AND THE VALUE AS DISCLOSED BY THE ASSESSEE IN THE RETURN OF INCOME. 2.1 THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT (APPEALS) WHICH WAS DISMISSED. THE ASSESSEES APPLI CATION FOR STAY OF OUTSTANDING DEMAND WAS ALSO DISMISSED BY TH E LOWER AUTHORITIES AND NOW THE ASSESSEE HAS APPROACHED THE ITAT STAY NO. 351/DEL/2017 (IN ITA NO. 3678/DEL/2017) 3 SEEKING STAY OF DEMAND AS WELL AS RELIEF IN THE QUA NTUM ADDITION MADE AND CONFIRMED. 3. ARGUING FOR THE STAY OF DEMAND, THE LD. AUTHORIS ED REPRESENTATIVE SUBMITTED THAT THE CASE OF THE ASSES SEE WAS REOPENED BASED ON AN ALLEGED TAX EVASION PETITION P ROVIDED TO THE AO BY THE INCOME TAX INVESTIGATION WING ON THE BASIS OF A MERE SUSPICION OF CASH TRANSACTION OF RS. 20.31 CRO RES IN RESPECT OF SALE OF IMMOVABLE PROPERTY LOCATED AT OKHLA INDU STRIAL AREA, NEW DELHI WHICH WAS SOLD BY THE ASSESSEE DURING THE FINANCIAL YEAR 2005 06. THE LD. AUTHORISED REPRESENTATIVE S UBMITTED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, T HE ASSESSING OFFICER ALSO REFERRED THE MATTER FOR VALUATION OF T HE PROPERTY TO THE DIVISIONAL VALUATION OFFICER (DVO) UNDER SECTIO N 55A OF THE ACT. HOWEVER, WITHOUT EVEN WAITING FOR THE REPORT O F THE DVO, THE ASSESSMENT ORDER WAS PASSED AFTER MAKING AN ADDITIO N OF RUPEES 20.31 CRORES BEING THE AMOUNT ALLEGED TO HAVE BEEN RECEIVED BY THE ASSESSEE IN CASH IN THE TAX EVASION PETITION OV ER AND ABOVE THE DECLARED SALE CONSIDERATION OF RS. 12 CRORES. I T WAS SUBMITTED THAT THIS TRANSACTION OF SALE OF THE IMMOVABLE PROP ERTY WAS EARLIER DULY EXAMINED AND ACCEPTED BY THE ASSESSING OFFICER DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDING S UNDER STAY NO. 351/DEL/2017 (IN ITA NO. 3678/DEL/2017) 4 SECTION 143 (3) OF THE ACT. IT WAS FURTHER SUBMITTE D THAT THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT (AP PEALS) AND DURING THE PENDENCY OF THE APPELLATE PROCEEDINGS BE FORE THE FIRST APPELLATE AUTHORITY, THE REPORT OF THE DVO WAS RECE IVED WHEREIN THE VALUE OF THE AFORESAID PROPERTY WAS ASCERTAINED AT RS. 13.61 CRORES INSTEAD OF RS. 32.31 CRORES AS ASSESSED BY T HE AO IN THE REASSESSMENT ORDER. IT WAS FURTHER SUBMITTED THAT T HE LD. CIT (APPEALS) CALLED FOR A REMAND REPORT FROM THE AO WI TH REFERENCE TO THE VALUATION REPORT OF THE DVO AND, THEREAFTER, COMPLETELY IGNORING THE DVOS REPORT, CONFIRMED THE ADDITION M ADE AND DISMISSED THE ASSESSEES APPEAL. THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT PRIMA FACIE THERE WAS A STRONG CASE FOR COMPLETE STAY OF DEMAND AS THE ASSESSEE HAD MAD E FULL AND COMPLETE DISCLOSURE OF ALL THE MATERIAL FACTS BEFOR E THE AO DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS UNDER SECTION 143 (3) OF THE ACT WHICH WAS ACCEPTED BY THE AO WITHOUT ANY ADVERSE INFERENCE OR FINDING OF ANY KIND. IT WAS FURTHER SU BMITTED THAT IT WAS ONLY SUBSEQUENTLY, AFTER THE EXPIRY OF FOUR YEA RS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, THAT THE REASSESSM ENT PROCEEDINGS WERE INITIATED ON THE BASIS OF A TAX EV ASION PETITION FILED BY ONE OF THE SHAREHOLDERS OF THE ASSESSEE CO MPANY. IT WAS STAY NO. 351/DEL/2017 (IN ITA NO. 3678/DEL/2017) 5 ALSO SUBMITTED THAT EVEN THE VALUATION REPORT OF TH E DVO WAS BRUSHED ASIDE BY THE LD. CIT (APPEALS) AND THE ADDI TION WAS CONFIRMED. IT WAS FURTHER SUBMITTED THAT THE ADDITI ON HAD BEEN MADE WITHOUT ANY SUBSTANTIVE OR CORROBORATIVE EVIDE NCE FOR RECEIPT OF CASH. IT WAS ALSO SUBMITTED THAT THE DIF FERENCE IN VALUATION AS PER THE DVOS REPORT AND AS DISCLOSED BY THE ASSESSEE WAS ONLY RS. 1.61 CRORES AND, THEREFORE, T HE ADDITION WAS BAD IN LAW AND, THEREFORE, THE ASSESSEE/APPLICA NT HAD A STRONG CASE FOR COMPLETE STAY OF DEMAND. 4. THE LD. CIT DR OPPOSED THE STAY PETITION BUT SUB MITTED THAT THE ASSESSEES APPEAL COULD BE HEARD ON A PRIO RITY BASIS AND THE SAME COULD BE DISPOSED OF AT AN EARLY DATE WITH OUT GRANTING ANY STAY OF THE DEMAND. 5. AS BOTH THE PARTIES AGREED TO THE PROPOSAL OF TA KING UP THE ASSESSEES APPEAL ON MERITS AT THIS STAGE ITSELF, W E PROCEED TO HEAR ARGUMENTS OF BOTH THE PARTIES ON THE MERITS OF THE CASE. 6. THE LD. AUTHORISED REPRESENTATIVE REITERATED THE FACTS OF THE CASE AND SUBMITTED THAT THE ADDITION OF RS. 20.31 C RORES WAS MANIFESTLY BAD IN LAW BECAUSE THE COPY OF THE ALLEG ED TAX EVASION PETITION ALONG WITH THE ACCOMPANYING DOCUMENTS WAS NEVER STAY NO. 351/DEL/2017 (IN ITA NO. 3678/DEL/2017) 6 PROVIDED TO THE ASSESSEE DESPITE REPEATED REQUESTS. IT WAS ALSO SUBMITTED THAT THE ASSESSEE WAS NEVER GRANTED AN OP PORTUNITY TO CROSS EXAMINE THE COMPLAINANT EVEN THOUGH REPEATED REQUESTS FOR THE SAME WERE MADE BEFORE THE AO. THE LD. AUTHO RISED REPRESENTATIVE SUBMITTED THAT THE DEPARTMENT HAD VI OLATED THE PRINCIPLES OF NATURAL JUSTICE IN DENYING THE ASSESS EE ACCESS TO THE TAX EVASION PETITION AS WELL AS THE OPPORTUNITY TO CROSS EXAMINE THE COMPLAINANT AND, THEREFORE, THE ADDITIO N WAS LIABLE TO BE QUASHED AT THE THRESHOLD ITSELF. 6.1 ALTERNATIVELY, IT WAS SUBMITTED THAT ALTHOUGH T HE MATTER HAD BEEN REFERRED TO THE DVO, HIS REPORT WAS TOTALLY IG NORED AND THE ADDITION WAS MADE ENTIRELY ON THE BASIS OF THE CONTE NTS OF THE TAX EVASION PETITION WHEREAS IF THE DIFFERENCE BETWEEN THE VALUATION REPORT AND THE AMOUNT AS DISCLOSED BY THE ASSESSEE WAS TO BE COMPUTED, THE SAME WAS ONLY RS. 1.61 CRORES WHICH C OULD HAVE BEEN REASONABLY EXPLAINED BY THE ASSESSEE IF GIVEN AN OPPORTUNITY TO DO SO. STAY NO. 351/DEL/2017 (IN ITA NO. 3678/DEL/2017) 7 7. THE LD. CIT DR READ OUT EXTENSIVELY FROM THE ORD ER OF THE LD. CIT (APPEALS) AS WELL AS THE REASSESSMENT ORDE R AND HIGHLIGHTED THE FACT THAT THE ASSESSMENT WAS REOPEN ED ON THE BASIS OF TAX EVASION PETITION AND THUS THE ONUS WAS ON THE ASSESSEE TO SUBSTANTIATE THAT IT HAD NOT RECEIVED U NACCOUNTED CASH. THE LD. CIT DR SUBMITTED THAT, AT BEST, THE A PPEAL COULD BE RESTORED TO THE FILE OF THE ASSESSING OFFICER TO RE -EXAMINE THE CONTENTIONS OF THE ASSESSEE VIS-A-VIS THE DVOS REP ORT. 8. ON A SPECIFIC QUERY FROM THE BENCH, THE LD. AUTH ORISED REPRESENTATIVE AGREED TO THE PROPOSITION OF THE LD. CIT DR THAT THE ISSUE MAY BE RESTORED TO THE FILE OF THE ASSESS ING OFFICER FOR DE NOVO ADJUDICATION. 9. ACCORDINGLY, WE RESTORE THE ISSUE TO THE FILE OF THE AO FOR DE NOVO ADJUDICATION AND PASSING OF THE ORDER AFTER DULY C ONSIDERING THE REPORT OF THE DVO AND PROVIDING PROPER OPPORTUN ITY TO THE ASSESSEE TO PRESENT ITS CASE. 10. IN THE FINAL RESULT, THE STAY PETITION OF THE A SSESSEE IS DISMISSED AS HAVING BECOME INFRUCTUOUS IN VIEW OF THE ASSESSEES APPEAL HAVING BEEN RESTORED TO THE FILE OF THE AO A ND THE ASSESSEES APPEAL STANDS ALLOWED FOR STATISTICAL PU RPOSES. STAY NO. 351/DEL/2017 (IN ITA NO. 3678/DEL/2017) 8 ORDER PRONOUNCED IN THE OPEN COURT ON 31ST OCTOBER , 2017. SD/- SD/- (G.D. AGRAWAL) (SUDHANSHU SRIVASTAVA) PRESIDENT JUDICIAL MEMBER DT. 31ST OCTOBER, 2017 COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER ASSTT. REGISTRAR