M/s. Gee Ispat Pvt. Ltd., New Delhi V. CIT, New Delhi

ITA 3794/DEL/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3972 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 15-05-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 30-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJA RAM SAH
• Assessee Lawyers: PIYUSH KUMAR KAMAL ADVS
• Keywords: Search and seizure; Condonation of delay
• Section: 143(3); 263

Judgement Text

1 ITA NO. 3794/DEL/2014 & 420/DEL/2016 IN THE INCOME TAX APPELLA TE TRIBUNAL DELHI BENCH: C NEW DELHI BEFORE SHRI G. D. AGRAWAL, PRES IDENT AND MS SUCHITRA KAMBLE, JUDI CIAL MEMBER I.T.A .NO. 3794/DEL/2 014 (A.Y 2010-11) GEE ISPAT PVT. LTD. A-28, SECTOR-19, ROHINI NEW DELHI AACCG0954G (APPELLANT) VS DCIT CENTRAL CIRCLE-1 NEW DELHI (RESPONDENT) I.T.A .NO. 420/DEL/20 16 (A.Y 2010-11) DCIT CENTRAL CIRCLE-5 ROOM NO. 361, 3 RD FLOOR, ARA CENTRE, JHANDEWALAN EXTN. NEW DELHI (APPELLANT) VS GEE ISPAT PVT. LTD. R/O. A-28, SECTOR-19, ROHINI NEW DELHI AACCG0954G (RESPONDENT) APPELLANT BY SH. GAUTAM JAIN & PIYUSH KUMAR KAMAL, ADVS. RESPONDENT BY SH. RAJA RAM SAH, CIT DR ORDER PER SUCHITRA KAMBLE, JM THESE TWO APPEALS ARE FILED BY THE ASSESSEE AND THE REVENUE AGAINST THE ORDER DATED 10/1/2013 PASSED U/S 263 OF THE INCOME- TAX ACT, 1961 & ORDER DATE OF HEARING 07.12.2017 DATE OF PRONOUNCEMENT 18.01.2018 2 ITA NO. 3794/DEL/2014 & 420/DEL/2016 DATED 30/11/2015 PASSED BY CIT(A)-24 RESPECTIVELY F OR ASSESSMENT YEAR 2010- 11. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- I.T.A .NO. 3794/DEL/2014 1. THAT THE ORDER MADE BY THE LEARNED COMMISSIONER OF INCOME TAX, CENTRAL-I, NEW DELHI DATED 25.3.2014 HOLDING THAT O RDER OF ASSESSMENT DATED 29.12.2011 IS ERRONEOUS IN SO FAR AS IT IS PR EJUDICIAL TO INTEREST OF REVENUE IS WITHOUT JURISDICTION AND DESERVES TO BE QUASHED AS SUCH. 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX HAS FAILED TO APPRECIATE THAT ONCE THE ADDITION MADE ON THE BASIS OF DIARY MARKED AS ANNEXURE A- 1 SEIZED FROM SHRI SALEK CHAND GARG HAD BEEN MADE SUBJECT MATTER OF APPEAL BEFORE LEARNED COMMISSIONER OF INC OME TAX (APPEALS), THE ENTIRE ISSUE WAS SUBJECT MATTER OF APPEAL BEFOR E THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) AND AS SUCH TH E IMPUGNED ORDER IS BEYOND THE SCOPE OF POWERS OF LEARNED COMMISSIONER OF INCOME TAX IN VIEW OF PROVISIONS CONTAINED SECTION 263(L)(C) OF T HE ACT. 2.1 THAT THE FINDING OF THE LEARNED COMMISSIONER OF INC OME TAX THAT THE ISSUE OF ASSESSMENT OF UNDISCLOSED INCOME DETECTED ON ACC OUNT OF SUPPRESSION OF SALE RATE OF M.S. PLANT SOLD BY THE ASSESSEE T OTALLY AMOUNTING TO RS. 44,94,34,849/ AND THE TAXABILITY OF ENTIRE AMOUNT W AS NOT SUB-JUDICE IN THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) DATED 31.8.2012 IS FACTUALLY AND LEGALLY MISCONCEIVED AN D HENCE UNTENABLE. 3. THAT FURTHERMORE EVEN-OTHERWISE ORDER U/S 263 O F THE ACT DATED 25.3.2014 BY THE LEARNED COMMISSIONER OF INCOME TAX , CENTRAL-I, NEW DELHI HAS BEEN MADE WITHOUT SATISFYING THE STATUTOR Y PRECONDITIONS CONTAINED IN THE ACT AND IS THEREFORE WITHOUT JURIS DICTION AND THUS, DESERVES TO BE QUASHED AS SUCH. 3.1. THAT THE LEARNED COMMISSIONER OF INCOME TAX HA S FAILED TO APPRECIATE THAT ONCE THE LEARNED ASSESSING OFFICER ON EXAMINATION O F FACTS ON RECORD AND AFTER MAKING ALL POSSIBLE ENQUIRIES HAD HELD ONLY A DDITION IS TO BE MADE BY APPLYING NET PROFIT ON SALED THEN SUCH AN ORDER OF ASSESSMENT COULD NOT BE REGARDED AS ERRONEOUS IN AS MUCH AS PREJUDICIAL TO THE INTEREST OF REVENUE MERELY BECAUSE THE LEARNED COMMISSIONER OF INCOME TAX HAD A 3 ITA NO. 3794/DEL/2014 & 420/DEL/2016 DIFFERENT OPINION AND THAT TOO, WITHOUT HAVING ESTA BLISHED IN ANY MANNER THAT, VIEW ADOPTED BY THE LEARNED ASSESSING OFFICER WAS AN IMPOSSIBLE VIEW. 3.2. THAT THE FINDING OF LEARNED COMMISSIONER OF IN COME THAT THE ASSESSING OFFICER IS DIRECTED TO EXAMINE THE TAXABILITY OF TH E AMOUNT OF RS. 11,57,03,488/- IN THE HANDS OF THE ASSESSEE ON ACCO UNT OF UNACCOUNTED SALES MADE IS BASED ON FACTUALLY MISCONCEPTION AND , MISINTERPRETED OF PROVISION OF LAW AND IS THUS UNTENABLE. 3.3. THAT FURTHER THE LEARNED COMMISSIONER OF INCOM E TAX HAS ALSO FAILED TO APPRECIATE THAT, U/ S 263 OF THE ACT, AN ORDER OF A SSESSMENT CANNOT BE SET-ASIDE TO SIMPLY TO MAKE FURTHER ENQUIRIES AND T HEREAFTER PASS FRESH ORDER OF ASSESSMENT AND AS SUCH, IMPUGNED ORDER IS CONTRARY TO LAW AND HENCE, UNSUSTAINABLE. 3.4. THAT VARIOUS ADVERSE FINDINGS AND OBSERVATIONS RECORDED IN ORDER U/S 263 OF THE ACT WITHOUT GRANTING OPPORTUNITY ARE NOT ONL Y CONTRARY TO FACTS BUT ALSO LAW AND THEREFORE, UNSUSTAINABLE. IT IS THEREFORE PRAYED THAT, IMPUGNED ORDER MADE UN DER SECTION 263 OF THE ACT DATED 25.3.2014 BE HELD TO BE WITHOUT JURISDICT ION AND, THEREFORE BE QUASHED AND APPEAL OF THE APPELLANT BE ALLOWED. I.T.A .NO. 420/DEL/2016 1. THE ORDER OF THE LD.CIT(A) IS NOT CORRECT IN L AW AND ON FACTS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASES, THE LD.CIT(A) HAS ERRED IN APPRECIATING THAT THE ADDITION OF RS.11,57,03,448/- WAS MADE IN THE INCOME ORIGINALLY ASSESSED ON THE BASIS OF MATERIAL GATHER ED DURING THE SEARCH ON THE PREMISES OF COMMISSION AGENT OF THE ASSESSEE. 3. IN THIS CASE SEARCH AND SEIZURE ACTION WAS CARRI ED OUT ON THE ASSESSEE, TWO COMMISSION AGENTS NAMELY SH. SALEK CHAND GARG A ND SH. SABARMAL GOEL ON 17/01/2010. A DIARY WAS SEIZED FROM THE PREMISE S OF SH. SALEK CHAND GARG AND A STOCK REGISTER FROM THE ASSESSEES PREMI SES, WHICH ALLEGEDLY 4 ITA NO. 3794/DEL/2014 & 420/DEL/2016 CONTAIN QUANTITY-WISE DETAILS OF SALES MADE BY THE ASSESSEE. THE VARIOUS ADDITIONS WERE MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER, INCLUDING ADDITION OF RS. 8,37,60,000/- BEING UNDIS CLOSED GP AT THE RATE OF 10% OF THE UNDISCLOSED SALES. THE CIT(A) VIDE ORDER DATED 31.08.2012 UPHELD THE FINDING OF THE ASSESSING OFFICER THAT THE UNDIS CLOSED SALES IS RS. 83,76,00,000/- BUT RESTRICTED THE G.P. PERCENTAGE TO 5% OF THE UNDISCLOSED SALES. ACCORDINGLY, HE DETERMINED THE UNDISCLOSED G.P. AT RS. 4,18,80,000/-. THE ASSESSEE FILED APPEAL AGAINST THE ORDER OF THE CIT(A) ON THIS ISSUE. MEANWHILE, THE CIT(A) CENTRAL-1, NEW DELHI VIDE ORD ER U/S 263 DATED 25.03.2014, DIRECTED THE ASSESSING OFFICER TO CONSI DER THE ENTIRE UNDISCLOSED SALES AS UNDISCLOSED INCOME OF THE ASSESSEE, INSTEA D OF RESTRICTING THE PROFIT TO 10% OF THE UNDISCLOSED SALES. HOWEVER, THE CIT(A), CENTRAL-1, NEW DELHI ACCEPTED THE ASSESSEES CONTENTIONS THAT PART OF SU M OF THE AMOUNT OF UNDISCLOSED SALES DETERMINED BY THE ASSESSEE WAS AT TRIBUTABLE TO EXCISE DUTY, VAT, FREIGHT AND LABOUR AND DIRECTED THAT THE TOTAL UNDISCLOSED SALE WAS TO BE QUANTIFIED AT RS. 1 1,57,03,488/-. THE ASSESSING OF FICER VIDE HIS ORDER U/S 143(3) R.W.S. 263 OF THE INCOME TAX ACT, 1961 DATED 20/03/2015 GAVE EFFECT TO THE REVISION ORDER OF THE CIT(A) CENTRAL-1, NEW DEL HI. 4. THE LD. AR SUBMITTED THAT ORDER UNDER SECTION 26 3 OF THE ACT WAS PASSED ON THE BASIS OF SOME DIARY WHICH WAS ALLEGEDLY STAT ED TO BE INCRIMINATING MATERIAL BY THE REVENUE AND THE SAID DIARY FOUND IN THE POSSESSION OF THE THIRD PARTY WAS HELD NOT SUFFICIENT TO DRAW AN INFERENCE ABOUT THE ALLEGED UNDISCLOSED INCOME BY THE TRIBUNAL VIDE ORDER DATED 18/5/2015 IN ITA NO. 5550/DEL/2012 AND ALL THE ADVANCES WERE DELETED BY THE TRIBUNAL. THUS, NOTHING SURVIVES FOR THE ORDER U/S 263 OF THE ACT. THE LD. AR FURTHER SUBMITTED THAT THERE IS A DELAY OF 34 DAYS IN FILIN G OF THE APPEAL. 5 ITA NO. 3794/DEL/2014 & 420/DEL/2016 5. THE LD. DR VEHEMENTLY OPPOSED THE CONDONATION OF DELAY APPLICATION. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL T HE RECORDS. THE ASSESSEE HAS MADE OUT THE CASE FOR WHY THE DELAY HAS OCCURRE D. IT WAS DUE TO THE REASON THAT SINCE JANUARY 2014 THE ASSESSEE COMPANY WAS SH UT DOWN AND THE COMPANY LET OF ALL ITS EMPLOYEE ALONG WITH ACCOUNTS /TAXATION STAFF. THEREFORE, DELAY IS CONDONED. ON THE MERITS OF THE CASE, IT CA N BE SEEN THAT ORDER UNDER SECTION 263 OF THE ACT PASSED, WAS ON THE BASIS OF SOME DIARY WHICH WAS ALLEGEDLY STATED TO BE INCRIMINATING MATERIAL BY TH E REVENUE AND THE SAID DIARY FOUND IN THE POSSESSION OF THE THIRD PARTY WAS HELD NOT SUFFICIENT TO DRAW AN INFERENCE ABOUT THE ALLEGED UNDISCLOSED INCOME BY T HE TRIBUNAL VIDE ORDER DATED 18/5/2015 IN ITA NO. 5550/DEL/2012 AND ALL TH E ADVANCES WERE DELETED BY THE TRIBUNAL. THUS, ORDER U/S. 263 OF THE ACT PA SSED BY THE CIT IS SET ASIDE. THEREFORE, THE APPEAL OF THE ASSESSEE IS ALLOWED. AS RELATED TO REVENUE APPEAL, THE SAME WILL NOT SUSTAINED AS THE MAIN ISSUE IS AL READY DECIDED BY THE EARLIER DECISION OF THIS TRIBUNAL. 7. IN RESULT, APPEAL OF THE ASSESSEE IS ALLOWED AND APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH JANUARY, 2018 . SD/- SD/- (G. D. AGRAWAL) (SUCHITRA KAMBLE) PRESIDENT JUDICIAL MEMBER DATED: 18/01/2018 R. NAHEED * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 6 ITA NO. 3794/DEL/2014 & 420/DEL/2016 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE 1. DRAFT DICTATED ON 07/12/2017 PS 2. DRAFT PLACED BEFORE AUTHOR 11/12/2017 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 18.01.2018 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK 1 8 .01.2018 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.