ITO, New Delhi V. Sh. Gurbachan Singh Saluja, New Delhi

ITA 3734/DEL/2013

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5098 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 17-05-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 11-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARUN KUMAR YADAV SENIOR
• Assessee Lawyers: SAUMYA SINGH S
• Keywords: Gift; Additional evidence
• Section: 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH C : NEW DELHI) BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.3734/DEL./2013 (ASSESSMENT YEAR : 2009-10) ITO, WARD 23 (1), VS. SHRI GURBACHAN SINGH SALUJA, NEW DELHI. E 317, GREATER KAILASH I, NEW DELHI 110 048. (PAN : AARPS3934L) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SALIL KAPOOR & MS. SAUMYA SINGH , ADVOCATES REVENUE BY : SHRI ARUN KUMAR YADAV, SENIOR DR DATE OF HEARING : 03.08.2017 DATE OF ORDER : 08.08.2017 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : APPELLANT, INCOME TAX OFFICER, WARD 23 (1), NEW DE LHI (HEREINAFTER REFERRED TO AS THE REVENUE), BY FILI NG THE PRESENT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 18.03.2013 PASSED BY THE COMMISSIONER OF INCOME-TAX-XXIII, NEW DELHI, FOR THE ASSESSMENT YEAR 2009-10 ON THE GROUNDS INTER AL IA THAT :- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) HAS ERRED IN ACCEPTING THE ITA NO.3734/DEL./2013 2 ADDITIONAL EVIDENCE IN VIOLATION OF RULE 46A OF THE INCOME TAX ACT. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.29,23, 127/- MADE BY THE AO AS EXTRA PROFIT, BY APPLYING GROSS PROFIT RATE, ON THE BASIS OF AVERAGE OF THREE ASSESSMENT YEARS. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY THE AO OF RS.1,36,49,014/- ON ACCOUNT OF UNDISCLOSED INVESTMENT IN THE CAPITAL ACCOUNT, AS NO DOCUMENTARY EVIDENCE WAS FILED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDING, TO EXPLAIN THE SOURCE OF CAPITAL OF RS.1,36,49,014/-. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : DURING SCRUTINY PROCEEDIN GS, ASSESSING OFFICER NOTICED THE GROSS PROFIT OF RS.1,90,41,807/ - ON THE TURNOVER OF RS.57,95,49,704/- @ 3.29% AS AGAINST GROSS PROFI T RATE OF 4.19% IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR. FEEL ING DISSATISFIED WITH THE EXPLANATION FURNISHED BY THE ASSESSEE, THE AO ESTIMATED THE GROSS PROFIT @ 3.79% TO THE TUNE OF R S.2,19,64,934/- BEING THE AVERAGE GROSS PROFIT RATE FOR THE LAST TH REE ASSESSMENT YEARS AND THEREBY MADE AN ADDITION OF RS.29,23,127/ -. 3. AO FURTHER MADE AN ADDITION OFRS.1,36,49,014/- O N ACCOUNT OF UNDISCLOSED INVESTMENT U/S 69 OF THE ACT OUT OF TOTAL CAPITAL ACCOUNT OF RS.3,17,00,000/- AFTER ACCEPTING GIFT AM OUNT OF ITA NO.3734/DEL./2013 3 RS.1,80,50,986/- RECEIVED BY THE ASSESSEE FROM HIS DUBAI BASED SON. 4. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT ( A) BY WAY OF AN APPEAL WHO HAS PARTLY ALLOWED THE APPEAL. FEELI NG AGGRIEVED, THE ASSESSEE HAS COME UP BEFORE THE TRIBUNAL BY CHA LLENGING THE IMPUGNED ORDER PASSED BY THE LD. CIT (A). 5. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. GROUNDS NO.1 & 3 6. SO FAR AS QUESTION OF ENTERTAINING ADDITIONAL EV IDENCE IN VIOLATION OF RULE 46A OF THE INCOME-TAX RULES, 1962 (FOR SHORT THE RULES) AS CONTENDED BY LD. DR, IS CONCERNED, AO NO TICED THE TOTAL ADDITION TO THE CAPITAL ACCOUNT DURING THE YEAR UND ER ASSESSMENT TO THE TUNE OF RS.3,17,00,000/- OUT OF WHICH THE AO HA S ACCEPTED EXPLANATION RENDERED BY ASSESSEE AS TO THE AMOUNT O F RS.1,80,50,986/- BEING THE GIFT RECEIVED BY THE ASS ESSEE FROM HIS DUBAI BASED SON. HOWEVER, AO MADE AN ADDITION OF R EMAINING AMOUNT OF RS.1,36,49,014/- ON GROUND OF LACK OF EVI DENCE. 7. LD. AR FOR THE ASSESSEE DREW OUR ATTENTION TOWAR DS DOCUMENTS, AVAILABLE AT PAGES 61 TO 63 OF THE PAPER BOOK, VIZ., ITA NO.3734/DEL./2013 4 NOTE ON SOURCE EXPLAINING SOURCE OF CAPITAL INTROD UCED TO THE TUNE OF RS.3,17,00,000/- . PERUSAL OF THE NOTE OF SOURCE AS TO THE CAPITAL INTRODUCED BY THE ASSESSEE SHOWS THAT THE ENTIRE AM OUNT HAS BEEN TRANSFERRED BY THE ASSESSEE THROUGH THE BANKING CHA NNEL EITHER BY TRANSFERRING THE ACCOUNT FROM HIS OWN ACCOUNT OR AF TER TAKING THE LOAN FROM HIS WIFE. NOTE ON SOURCE AS TO CAPITAL I NTRODUCED BY THE ASSESSEE ARE DULY SUPPORTED WITH COPIES OF BANK STA TEMENT AND DETAILS OF TRANSFER FROM THE SAVING BANK ACCOUNT OF THE ASSESSEE TO THE BOOKS OF PROPRIETORSHIP CONCERNED. ALL THESE D OCUMENTS HAVE BEEN SUPPLIED BY THE ASSESSEE TO THE AO DURING ASSE SSMENT PROCEEDINGS WHICH HAVE NOT BEEN FURTHER QUESTIONED BY THE AO IN ANY MANNER. 8. LD. CIT (A) AFTER DULY PERUSING THE CREDIT ENTRI ES IN THE BANK ACCOUNTS FOUND THE CAPITAL INTRODUCED BY THE ASSESS EE TO THE TUNE OF RS.1,36,49,014/- FROM ACCOUNTED SOURCES, THAT TOO T HROUGH THE BANKING CHANNEL / ACCOUNTS. WHEN ALL THE DOCUMENTS RELIED UPON BY THE LD. CIT (A) TO DELETE THE ADDITION OF RS.1,3 6,49,014/- WERE PRODUCED BEFORE AO WHO HAS NOT QUESTIONED THE SAME, THERE IS NO QUESTION OF COMPLYING WITH THE PROCEDURE LAID DOWN UNDER RULE 46 OF THE RULES RELIED ON BY THE LD. CIT (A). SO, GRO UNDS NO.1 & 3 ARE DETERMINED AGAINST THE REVENUE. ITA NO.3734/DEL./2013 5 GROUDND NO.2 9. UNDISPUTEDLY, BOOKS OF ACCOUNT DULY AUDITED AND MAINTAINED BY THE ASSESSEE HAVE NOT BEEN REJECTED BY THE AO NO R HE FOUND ANY DISCREPANCY IN THE SAME. IT IS ALSO NOT IN DISPUTE THAT THE GROSS PROFIT RATE HAS BEEN ENHANCED BY THE AO MERELY ON T HE BASIS OF ESTIMATE / GUESS WORK BY TAKING AVERAGE FOR THE LAS T THREE YEARS WITHOUT RELYING UPON ANY EVIDENCE. IN THE BUSINESS , HOW PROFIT RATE CAN BE STATIC THROUGHOUT AS IT DEPENDS UPON VARIOUS FACTORS VIZ. HIGHER INPUT COST OF THE MATERIAL, MIS-MATCH IN DEM AND AND SUPPLY, EXPENSES ETC. MOREOVER, THE ASSESSEE CLAIMED THE P ERIOD 2007 TO 2009 AS WORST ECONOMICALLY DEPRESSED PERIOD DURING WHICH MANY BUSINESSES WERE COLLAPSED. 10. MOREOVER, IN A BUSINESS OF EXPORT AS IN THE CAS E OF ASSESSEE, VARIOUS FACTORS COME INTO FORCE TO DETERMINE THE GR OSS PROFIT. WHEN THE ENTIRE SALE OF THE ASSESSEE IS EXPORT SALE AND HE IS HAVING RECEIVED PAYMENT THROUGH BANKING CHANNEL AND HE HAS NO CLOSING AND OPENING STOCK-IN-TRADE AND AUDITED BOOKS OF ACC OUNT HAVE NEVER BEEN REJECTED BY THE AO, MERELY ALTERING THE GROSS PROFIT RATE BY TAKING THE AVERAGE GROSS PROFIT RATE OF LAST THR EE YEARS IS NOT PERMISSIBLE UNDER LAW. LD. CIT (A) BEFORE DELETING THE ADDITION ON ACCOUNT OF ESTIMATED GROSS PROFIT TAKEN INTO ACCOUN T ALL OF THE DETERMINING FACTORS AND AS SUCH, WE FIND NO ILLEGAL ITY OR PERVERSITY ITA NO.3734/DEL./2013 6 IN THE FINDINGS RETURNED BY THE LD. CIT(A), HENCE G ROUND NO.2 IS DETERMINED AGAINST THE REVENUE. 10. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, WE FI ND NO ILLEGALITY IN THE IMPUGNED ORDER AND PRESENT APPEAL FILED BY THE REVENUE IS HEREBY DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 8 TH DAY OF AUGUST, 2017. SD/- SD/- (N.K. SAINI) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 8 TH DAY OF AUGUST, 2017 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-XXIII, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.