M/s. D.S. Doors (P) Ltd., New Delhi V. ACIT, Faridabad

ITA 38/DEL/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6488 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 11 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 03-10-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 03-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIL KR SHARMA
• Assessee Lawyers: SAUBHAGYA AGGARWAL
• Keywords: Valuation report
• Section: 153A; 234B

Judgement Text

I.T.A .NO.-38/DEL/2014 D.S.DOORS P.LTD. VS ACIT IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: B NEW DELHI BEFORE SMT DIVA SINGH, JUDICIAL MEMBER AND SH.ANADI NATH MISHRA, ACCOUNTANT MEMBER I.T.A .NO.-38/DEL/2014 (ASSESSMENT YEAR-2007-08) D.S.DOORS P.LTD., C/O-M/S.RRA TAXINDIA, D-28, SOUTH EXTENSION, PART-I, NEW DELHI-110049. PAN-AAACD5805B ( APPELLANT) VS ACIT, CENTRAL CIRCLE-1, FARIDABAD. (RESPONDENT) ASSESSEE BY SH.SAUBHAGYA AGGARWAL, ADV. REVENUE BY SH.ANIL KR.SHARMA, SR.DR DATE OF HEARING 03 . 1 0.2016 DATE OF PRONOUNCEMENT 16 .1 2 .2016 ORDER PER DIVA SINGH, J.M. : THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE A SSAILING THE CORRECTNESS OF THE ORDER DATED 12.12.2013 OF THE CIT(A) (CENTRAL), GUR GAON PERTAINING TO 2007-08 AY WHEREIN THE PENALTY IMPOSED BY THE AO U/S 271(1)(C) HAS BEE N UPHELD. 2. THE LD.AR SUBMITTED THAT THE PENALTY PROCEEDINGS IN THE FACTS OF THE PRESENT CASE BECOME INFRUCTUOUS. INVITING ATTENTION TO THE CONS OLIDATED ORDER DATED 12.03.2015 IN ITA NO.1986 TO 1991 & 2053/DEL/2011 ALONGWITH ITA NOS.2 273 TO 2275 & 2052/DEL/2011 PERTAINING TO 2001-02 TO 2006-07 & 2007-08 ALONGWIT H 2004-05 TO 2007-08 AYS RESPECTIVELY IN THE CASE OF M/S. D.S.DOORS PVT.LTD. VS ACIT & M /S.D.S.WOODTECH PVT.LTD. VS ACIT, IT WAS SUBMITTED THAT THE ISSUES PERTAINING TO THE ASS ESSEES APPEAL IN THE QUANTUM PROCEEDINGS BEFORE THE ITAT WERE ADDRESSED BY THE CO-ORDINATE BENCH AT PAGES 9-18. THE ISSUES IN THE QUANTUM PROCEEDINGS, IT WAS SUBMI TTED HAVE BEEN BROUGHT OUT BY THE CO- ORDINATE BENCH IN PARA 1 PAGE 9 OF THE CONSOLIDATED ORDER PASSED IN THE ASSESSEES AND ITS GROUP COMPANIES AS UNDER:- 1. IN GROUND NOS. I AND 2, THE ASSESSEE HAS QUESTI ONED VALIDITY OF THE ASSESSMENT FRAMED UNDER SECTION 153A READ WITH SECT ION 143(3). IN GROUND NO. 5 THE VALIDITY OF ADDITION OF RS.24,00,000/- AS UNDISCLOSED INCOME HAS BEEN QUESTIONED. IN GROUND NO. 4, THE ADDITION OF RS. 72 ,00,000/- MADE ON ACCOUNT OF UNDISCLOSED STOCK OF THE ASSESSEE HAS BEEN QUEST IONED. IN GROUND NO. 5, THE PAGE 2 OF 4 I.T.A .NO.-38/DEL/2014 D.S.DOORS P.LTD. VS ACIT ACTION OF THE A.O. IN BRINGING TO TAX THE ASSESSEE' S SHARE OUT OF THE ALLEGED SURRENDER OF RS. 1.6 CRORES HAS BEEN QUESTIONED. G ROUND NOS. 6 AND 7 ARE AGAIN GENERAL IN NATURE SUPPORTING THE INVALIDITY O F ADDITIONS QUESTIONED IN GROUND NOS. 3 TO 5 HEREINABOVE. IN GROUND NOS. 8 AN D 9, THE VALIDITY OF ADDITION OF RS. 27,76,029/- ON ACCOUNT OF UNDISCLOSED INVEST MENT IN CONSTRUCTION UNDER SECTION 69B OF THE ACT BASED ON D.V.O. REPORT HAS B EEN QUESTIONED. IN GROUND NO. 10, THE ACTION OF THE AUTHORITIES BELOW IN NOT GRANTING THE BENEFIT OF TELESCOPING AS PER LAW HAS BEEN QUESTIONED. IN GROU ND NO.11, THE TOTAL ADDITION OF RS.1,23,76,029/- ON DIFFERENT HEADS DISCUSSED HE REINABOVE HAS BEEN QUESTIONED. THE ISSUE RAISED IN GROUND NO12 REGARD ING THE VALIDITY OF CHARGING OF INTEREST UNDER SECTIONS 234A, 234B AND 234C OF T HE ACT IS CONSEQUENTIAL IN NATURE. 2. HEARD AND CONSIDERED THE ARGUMENTS ADVANCED BY T HE PARTIES IN VIEW OF THE ORDERS OF THE AUTHORITIES BELOW, MATERIAL AVAIL ABLE ON RECORD AND THE DECISIONS RELIED UPON. 2.1 THE ITAT IN PARA 8 IT WAS SUBMITTED REJECTED TH E PLEA OF THE ASSESSEE THAT THERE WAS NO INCRIMINATING MATERIAL FOUND ADDRESSED IN GROUND NO.1 & 2 AND THE REMAINING ISSUES ADDRESSED VIDE GROUND NOS.3 TO 7 IT WAS SUBMITTED W ERE RESTORED TO THE AO WITH THE FOLLOWING OBSERVATIONS:- 8. HAVING GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW ON THE ISSUE RAISED IN GROUND NOS. 1 TO 7, WE FIND THAT DURING T HE COURSE OF SEARCH IN THE PREMISES OF THE ASSESSEE SEVERAL DOCUMENTS INCLUDIN G PRIMA FACIE INCRIMINATING MATERIAL WERE FOUND AND SEIZED. THUS, IT CANNOT BE SAID THAT THERE WAS NO INCRIMINATING MATERIAL FOUND DURING THE COUR SE OF SEARCH TO CONCUR WITH THE CONTENTION OF THE ASSESSEE THAT THE ASSESSMENT FRAMED UNDER SECTION 153 A OF THE ACT WAS NOT VALID. THE GROUND NOS. 1 AND 2 ARE THUS REJECTED. WE, HOWEVER, FIND SUBSTANCE IN THE CONTENTION OF THE LE ARNED AR THAT AN ADDITION CANNOT BE MADE SOLELY ON THE BASIS OF SURRENDERED AMOUNT DEHORS EVIDENCE IN CORROBORATION AND IGNORING SUBSEQUENT RETRACTIO N THERETO BY THE ASSESSEE WITH VALID REASON. HERE THE CASE BEFORE US IS THAT WHEN SURRENDERED INCOME WAS OBJECTED BY THE ASSESSEE WITH SUFFICIENT REASON THEN THE SAME SHOULD HAVE BEEN DULY CONSIDERED BY THE ASSESSING OFFICER AND LEARNED CIT(APPEALS) WHILE MAKING AND UPHOLDING THE ADDITIONS. THE ASSE SSEE VIDE SEVERAL LETTERS INCLUDING LETTER DATED 17.10.2008, 22.10.2006, 13.1 1.2008, 05.12.2008, 24.12.2008, 26.12.2008, WROTE TO THE ASSESSING OFFI CER AND WITH WRITTEN SUBMISSIONS DATED 28.01.2010, 24.01.2011 BEFORE THE LEARNED CIT(APPEALS) TRIED TO POINT OUT MANY DISCREPANCIES IN THE S TOCK TAKING ARID WORKING OUT THE UNDISCLOSED SALES AND PROFIT BY THE ASSESSING OFFIC ER BUT THE SAME HAVE BEEN IGNORED WITHOUT ASSIGNING ANY REASON. COPIES OF THE SE LETTERS HAVE BEEN MADE AVAILABLE AT PAGE NOS. 04 TO 22, 24 TO 44 OF THE PA PER BOOK. IN THE LETTER DATED 17.10.2008 FILED BEFORE THE ASSESSING OFFICER, THE ASSESSEE HAS SUBMITTED THAT ALL PURCHASES, PRODUCTION, SALE, EXPENDITURE, STOCK ETC. HAVE BEEN DULY ACCOUNTED FOR IN THE RETURN FILED. IN THE LETTER DATED 13.11.2008 TO THE ASSESSING OFFICER, THE ASSESSEE HAD REQUESTED FOR C OMPUTATION INDICATING HOW THE VALUE OF STOCK HAS BEEN ARRIVED AT SUCH A HUGE FIGURE SO THAT PROPER RECONCILIATION CAN BE FURNISHED AND SUBMITTED REPLY ON UNACCOUNTED SALES ALSO. IN THE LETTER DATED 05.12.2008 TO THE ASSESSING OFF ICER, THE ASSESSEE HAD SUBMITTED DOCUMENTS WISE AND YEAR-WISE DETAILS OF U NDISCLOSED INVESTMENT AND EXPENDITURE. IN LETTER DATED 14.12.2008 TO THE ASSESSING OFFICER THE ASSESSEE HAD RAISED OBJECTIONS WITH REGARD TO THE V ALUATION OF STOCK AND REQUESTED THAT ON THE BASIS OF THE SAID OBJECTIONS, VALUATION OF STOCK SHALL GET REDUCED TO RS.3.8 CRORES APPROXIMATELY. IN THE LETT ER DATED 26.12.2008 TO THE PAGE 3 OF 4 I.T.A .NO.-38/DEL/2014 D.S.DOORS P.LTD. VS ACIT ASSESSING OFFICER THE ASSESSEE POINTED OUT THAT THE AREA WHERE THE STOCK WAS LYING CANNOT BE ANY MEANS AND WAYS, STORE SUCH HUGE PILES OF STOCK AS ALLEGED. IN THIS LETTER, THE ASSESSEE ALSO SUBMITT ED THAT PROFIT EARNED ON ALLEGED UNACCOUNTED PURCHASES , SALES, PRODUCTION WAS UTILI ZED FOR PURCHASE OF STOCK FOUND AT THE TIME SEARCH. THE ASSESSING OFFICER HA S REPRODUCED THE CONTENTS OF THE SOME OF THE ABOVE STATED LETTER AND HAS REJE CTED THE SAME MAINLY ON THE BASIS THAT NO EVIDENCE WAS FILED IN SUPPORT. FOR IN STANCE, SOME LETTERS ARE DATED 24.12.2008 AND 26.12.2008 AND THE ASSESSMENT ORDER HAS BEEN PASSED ON 30.12.2008 (WRONGLY TYPED AS 30.12.2007). THE LE ARNED CIT(APPEALS) HAS ALSO NOT DEALT WITH THE CONTENTS OF THE ABOVE LETTE RS. WE THUS TO MEET THE END OF JUSTICE SET ASIDE THE ISSUES RAISED IN GROUND NOS. 3 TO 7 TO THE FILE OF THE ASSESSING OFFICER TO DECIDE THESE AFRESH AFTER VERI FYING THE CONTENTS OF THESE LETTERS AFTER AFFORDING ADEQUATE OPPORTUNITY OF BEI NG HEARD TO THE ASSESSEE. THE GROUND NOS. 3 TO 7 ARE THUS ALLOWED FOR STATISTICAL PURPOSES. 2.2 QUA THE ISSUES AGITATED IN GROUND NOS.8 & 9, IT WAS SUBMITTED THAT THE ASSESSEE SUCCEEDED BEFORE THE ITAT WHICH FACT IS EVIDENT FRO M THE FOLLOWING EXTRACT OF THE DECISION RELIED UPON:- 11. ON AN IDENTICAL ISSUE IN THE APPEALS FOR TH E ASSESSMENT YEARS 2001--02 TO 2006-07 HEREINABOVE, WE AFTER DISCUSSING IT IN D ETAIL HAS COME TO THE CONCLUSION THAT THE ACTION OF THE A.O. IN MAKING RE FERENCE TO THE D.V.O. FOR DETERMINATION OF THE VALUE OF THE PROPERTY WITHOUT REJECTING THE BOOKS OF ACCOUNT IS NOT JUSTIFIED AND NO ADDITION CAN BE MAD E ON THE BASIS OF SUCH VALUATION REPORTED BY THE DVO. THIS VIEW IS WELL S UPPORTED BY THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF SARGAM CINEMA VS CIT, (2010) 328 ITR 513 (SC). RESPECTFULLY FOLLOWING THE SAME WE DECID E THE GROUND NOS.8 AND 9 IN FAVOUR OF THE ASSESSEE WITH DIRECTION TO THE A.O TO DELETE THE ADDITION OF RS.27,76,029/- MADE IN THIS REGARD. 2.3 THE ISSUES ADDRESSED BY GROUND NO.10 IN THE QUA NTUM PROCEEDINGS, IT WAS SUBMITTED WERE ALSO REMANDED BY THE ITAT TO THE AO VIDE PARA 15 HOLDING AS UNDER :- 15. WE FIND THAT AN IDENTICAL ISSUE RASIED BEFORE THE LEARNED CIT(A) VIDE GROUND NO.4(H) HAS REMAINED TO BE ADJUDICATED UPON BY THE LEARNED CIT(A), WE THUS, IN THE INTEREST OF JUSTICE, REMAND THE MATTER TO THE FILE OF LEARNED A.O. TO ADDRESS THE ISSUE AFTER AFFORDING OPPORTUNITY OF BE ING HEARD TO THE ASSESSEE. 2.4 ACCORDINGLY, IN VIEW OF THE AFORE-MENTIONED PEC ULIAR FACTS AND CIRCUMSTANCES, IT WAS HIS SUBMISSION THAT THE PENALTY PROCEEDINGS BASED O N THE ADDITIONS WHICH WERE SUSTAINED BY THE CIT(A) BECOMES INFRUCTUOUS AS BY THE AFORESA ID ORDER OF THE ITAT EITHER THEY HAVE BEEN REMANDED OR DELETED AS ON DATE. THE LD. SR. D R CONSIDERING THE ORDER OF THE ITAT AND THE MATERIAL AVAILABLE ON RECORD RELIED UPON TH E IMPUGNED ORDER. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. CONSIDERING THE AFORESAID ORDER PASSED BY THE CO-OR DINATE BENCH DATED 12.03.2015 PAGE 4 OF 4 I.T.A .NO.-38/DEL/2014 D.S.DOORS P.LTD. VS ACIT WHEREIN THE ADDITIONS WHICH HAVE BEEN THE BASIS FOR INITIATING, LEVYING AND UPHOLDING THE PENALTY, WE FIND THAT THE PRAYER OF THE ASSESSEE HA S TO BE ACCEPTED. ONCE THE ADDITIONS MADE IN THE ASSESSMENT ORDER ARE EITHER DELETED OR ARE IN FLUX THEREBY SUBSTANTIALLY MODIFIED AS SOME OF THE ISSUES ARE RESTORED TO THE ASSESSING OFFICER. ACCORDINGLY, WE FIND THAT IN THE CIRCUMSTANCES, THE PENALTY ORDER SUSTAI NED BY THE CIT(A) HAS TO BE SET ASIDE HOLDING IT AS INFRUCTUOUS. THE APPLICABILITY OF SE CTION 271(1)(C) WOULD BE AN ISSUE FOR THE ASSESSING OFFICER TO DECIDE IN THE FRESH ROUND BY H IM SINCE AS FAR AS THE PRESENT PROCEEDINGS ARE CONCERNED THEY CANNOT BE UPHELD. A CCORDINGLY, IN VIEW OF THE ABOVE, THE PENALTY PROCEEDINGS IN THE PRESENT CASE BECOMES IN FRUCTUOUS. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES.. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 16 TH OF DECEMBER, 2016. SD/- SD/- (ANADI NATH MISHRA) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER *AMIT KUMAR/SUJEET* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT //TRUE COPY// ASSISTANT REGISTRAR ITAT NEW DELHI