Paramount Biotech Industries Ltd., New Delhi V. DCIT, New Delhi

ITA 4101/DEL/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3441 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 27-02-2017
• Assessment Year: 2002-2003
• Appeal Filed On: 22-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K JAIN
• Keywords: Unexplained cash credit; Principle of natural justice; Peak credit; Additional evidence
• Section: 143(3); 68; 148

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A : NEW DELHI BEFORE SHRI H.S.SIDHU , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 1878/DEL/2008 (ASSESSMENT YEAR: 2001 - 02 ) M/S. PARAMOUNT BIOTECH INDUSTRIES LTD, F - 7, THIRD FLOOR, EAST OF KAILASH, NEW DELHI PAN:AABCP9907D VS. DCIT, CIRCLE - 14(1), NEW DELHI (APPELLANT) (RESPONDENT) ITA NO. 4101/DEL/2015 (ASSESSMENT YEAR: 2002 - 03) M/S. PARAMOUNT BIOTECH INDUSTRIES LTD, F - 7, THIRD FLOOR, EAST OF KAILASH, NEW DELHI PAN:AABCP9907D VS. DCIT, CIRCLE - 14(1), NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. SD KABILA, ADV SH. PRAVESH SHARMA, ADV REVENUE BY: SH. SK JAIN, DR DATE OF HEARING 27/02 / 2017 DATE OF PRONOUNCEMENT 11 / 04 / 2017 O R D E R PER PRASHANT MAHARISHI, A. M. 1. THE APPEAL FOR ASSESSMENT YEAR 2001 - 02 IF FILED BY THE ASSESSEE AGAINST THE ORDER OF LD CIT(A) - XXVII, NEW DELHI DATED 01.03.2005, RAISING FOLLOWING GROUNDS OF APPEAL: - ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN LAW: - HOLDING THAT OUT OF AGRICULTURAL INCOME OF RS. 89,52,1987 - DECLARED BY THE ASSESSEE, INCOME OF RS. 86.90,6987 - IS NOT AGRICULTURAL BEING TAXABLE AS UNEXPLAINED CASH CREDIT U /S 68 OF THE ACT. PAGE 2 OF 6 HOLDING THAT AGRICULTURAL INCOME DERIVED FR OM LANDS BELONGING TO DIRECTORS & SHAREHOLDER/ EMPLOYEES ETC. TO WHOM MONEYS WERE ADVANCED BY THE COMPANY FOR PURCHASE OF LANDS AND FROM WHOM THE POSSESSION OF LAND WAS TAKEN BY THE COMPANY UNDER AN ARRANGEMENT, WAS NOT ELIGIBLE FOR EXEMPTION U/S 10(1) OF THE ACT. IN MAKING AN ARBITRARY ESTIMATE OF AGRICULTU RAL INCOME OF RS. 2,61,500 ONLY - . 2. THE ORDER OF THE LD CIT (A) IS EX - FACIE PERVERSE FOR THE FOLLOWING REASONS: THE LD CIT(A) HAS CAPRICIOUSLY AND ARBITRARILY IGNORED ALL EVIDENCES INCLUDING THE KHAS RA / KHATAUNI RECORDS OBTAINED FROM THE LAND REVENUE OFFICE AND DRAWN UNWARRANTED CONCLUSIONS BY HOLDING THAT THE APPELLANT EARNED ONLY RS.2,61,500 / - OF AGRICULTURAL INCOME FROM OVER 100 ACRES OF AGRICULTURAL LAND; THE LD CIT (A) BY THE APPELLANT DOE S NOT DISPUTE THAT AGRICULTURAL OPERATIONS WERE CARRIED OUT ON THE ENTIRE 37.26 HECTARES OF AGRICULTURAL LAND, BUT HE HOLDS THAT THE ASSESSEE HAS EARNED AGRICULTURAL INCOME ONLY FROM 5.31 HECTARES. THE ORDER OF THE LD CIT (A) IS PERVERSE AS IT IS BA SED ON CONJECTURES & SURMISES AND IGNORING VOLUMINOUS RELEVANT EVIDENCE TENDERED BY THE ASSESSEE. IN IGNORING THE LAND REVENUE RECORDS AND OTHER EVIDENCES WITH RESPECT TO HAVING GROWN AND SOLD FLORICULTURAL AND AGRICULTURAL CROPS AND ALSO IGNORING CO MPLETE EVIDENCE IN REGARD TO FARM EXPENSES AND LAND DEVELOPMENT EXPENDITURE IN EARLIER YEARS. THE LD. CIT(A) HOLDS ON THE ONE HAND THAT THE APPELLANT HAD EARNED AGRICULTURAL INCOME OF ONLY RS. 2,61,5007 - WHICH IS ONLY APPROXIMATELY 2.37% OF THE AGRIC ULTURAL INCOME CLAIMED IN THE RETURN. AND ON THE OTHER HAND HE ALLOWS AGRICULTURAL EXPENSES OF RS. 20,56,5037 - INCURRED TO EARN THIS INCOME, WHICH ARE NEARLY 10 TIMES AS MUCH AS THE AGRI CULTURAL INCOME OF RS. 2,61,500/ - . THE ORDER OF THE LD. CIT (A) IS PERVERSE IN IGNORING THE REMAND REPORT DETAILING THE EXAMINATION OF SHRI. R. S. SINGH. 3. THE LD. CIT(A) ERRED IN LAW IN SUMMARILY REJECTING ON THE AFFIDAVITS WITHOUT EXAMINING THE LAND OWNERS, WHO HAD AVERRED THAT THEY HAD GIVEN LANDS TO THE ASSESSEE C OMPANY FOR CULTIVATION. 2. THE BRIEF FACTS OF THE CASE IS THAT ASSESSEE IS A COMPANY WHO FILED ITS RETURN OF INCOME ON 30.10.2001 DECLARING LOSS OF RS. 2837920/ - . DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT IS NOTICED THAT THE ASSESSEE HAS CLAIMED AGRICU LTURAL INCOME EXEMPT U/S 10 OF RS. 895215198/ - BY CULTIVATION OF DIFFERENT TYPES OF FLOWERS AS WELL AS WHEAT, SUGARCANE, RICE, PULSES, MUSTARD AND OTHER CASH CROPS. DURING THE COURSE OF HEARING THE ASSESSEE WAS ASKED TO SUBSTANTIATE THE AGRICULTURAL INCOME , HOWEVER, LD ASSESSING OFFICER PAGE 3 OF 6 DISBELIEVED THE CLAIM OF THE ASSESSEE AND TAXED INCOME FROM AGRICULTURE AMOUNTING TO RS. 11008701/ - U/S 68. AFTER SETTING OF THE LOSS TOTAL INCOME WAS ALSO DETERMINED AT NIL. THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF TH E LD ASSESSING OFFICER PREFERRED AN APPEAL BEFORE THE LD CIT(A) WHO IN TURN CONFIRMED THE ADDITION OF RS. 8690698/ - U/S 68 WITH RESPECT TO AGRICULTURE INCOME GRANTING RELIEF TO THE ASSESSEE OF RS. 2056503/ - FOR THE REASON THAT ENTIRE INCOME CANNOT BE TAXED U/S 68 OF THE ACT WITHOUT EXCLUDING THE EXPENSES. THE ASSESSEE AGGRIEVED WITH THE ORDER OF THE LD CIT(A) AND HAS PREFERRED APPEAL BEFORE US RA ISING ABOVE GROUNDS. 3. THE LD AR DURING THE COURSE OF HEARING RAISED AN ADDITIONAL GROUNDS OF APPEAL BY APPLICATIO N DATED 06.06.2016 RAISING FOLLOWING GROUNDS OF APPEAL: - THE LD CIT(A) HAS ERRED IN COMPUTING THE AMOUNT OF PEAK CREDIT AT RS. 8952198/ - WITHOUT TAKING INTO ACCOUNT THE TOTAL EXPENDITURE OF RS. 5855933/ - CHARGED TO THE PROFIT AND LOSS ACCOUNT AND AGRICULTURAL INCOME OF RS. 261500/ - DETERMINED BY HIM. 4. THE ADDITIONAL GROUND RAISED BY THE ASSESSEE IS SUPPORTED BY AN APPLICATION UNDER RULE 11 OF THE ITAT RULES . THE APPLICATION SAYS THAT IT BRINGS OUT THE ALTERNATE DISPUTE OF THE APPELLANTS CLAIM FOR EXEMPTION U/S 10(1) OF THE ACT TO STATE THAT THE PEAK CR EDIT AT RS. 8952198/ - HAS BEEN DERIVED AT WITHOUT TAKING INTO ACCOUNT THE TOTAL EXPENDITURE OF RS. 5855933/ - DEBITED TO THE PROFIT AND LOSS ACCOUNT AS EXPENSES AND ALSO THE AGRICULTURAL INCOME OF RS. 261500/ - DETERMINED BY THE AO. THE ADDITIONAL GROUND IS LEGAL IN NATURE AND MORE OF A COMPUTATIONAL ISSUE WHERE NO NEW FACTS OR ADDITIONAL EVIDENCE ARE REQUIRED TO BE INVESTIGATED. 5. THE LD DR OBJECTED TO THE APPLICATION OF THE ADDITIONAL GROUND STATING THAT UNLESS THE ASSESSEE ACCEPTS THE ORDER OF THE LD ASSE SSING OFFICER THE ADDITIONAL COMPUTATIONAL GROUND CANNOT BE ADMITTED. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS. THE ASSESSEE HAS JUST PLEADED THAT IF THE AGRICULTURAL INCOME IS REQUIRED TO BE ADDED THEN ADDITION SHOULD HAVE ONLY BEEN AFTER REDUCING THE PEAK CREDIT BY THE AMOUNT ALREADY ACCEPTED BY THE LD AO AS A GRICULTURAL INCOME AND ALSO AFTER CONSIDERING THE AMOUNT OF EXPENDITURE INCURRED BY THE ASSESSEE ON AGRICULTURAL OPERATIONS. THIS GROUND ONLY SPEAKS ABOUT THE COMPUTATION AFTER EXAMINATION AND ASSESSMENT OF AGRICULTURAL INCOME. FURTHER THIS GROUND IS ON LY TECHNICAL RELATING TO COMPUTATION OF INCOME INVOLVED IN THE PAGE 4 OF 6 APPEAL, AS NO FURTHER FACTS ARE REQUIRED TO BE ADJUDICATED ON THIS , WE ADMIT THIS GROUND OF APPEAL. 7. THE ASSESSEE HAS ALSO MADE AN APPLICATION UNDER RULE 29 OF ITAT RULES FOR ADMISSION OF T HE FOLLOWING ADDITIONAL EVIDENCE. IT IS HUMBLE PRAYER OF THE UNDERSIGNED THAT THE FOLLOWING EVIDENCE MAY KINDLY BE TAKEN ON RECORD. 1. ASST. ORDER IN THE CASE OF RS SINGH PROP M/S. RS ENTERPRISES PASSED BY THE ITO BAREILLY FOR THE ASSTT. YEAR 2003 - 04 DA TED 18.11.2005 PAGE 1 - 2 2. COPY OF LETTER DATED 02.05.2005 FILED WITH AO PAGE 3 3. INDIAN EXPRESS REPORT PUBLISHED ON JULY 13, 2006 PAGE 4 4. ASSESSMENT ORDER U/S 143(3) IN THE CASE OF THE APPELLANT FOR AY 2003 - 04 PG 5 - 7 5. ASSESSMENT ORDER U/S 143(3) IN THE CASE OF THE APPELLANT FOR AY 2004 - 05 PG 8 - 9 6. ASSESSMENT ORDER U/S 143(3) IN THE CASE OF THE APPELLANT FOR AY 2005 - 06 PG 10 - 11 AS REGARDS EVIDENCE AT (1) IT HAS A DIRECT BEARING ON ALLEGATIONS MADE BY THE AO/CIT(A) REGARDING THE GENUINENESS OF TRANSA CTIONS WITH RS SINGH AND GENUINENESS OF RETURNS OF INCOME FILED BY HIM. 2. THE REPORT PUBLIC IN EXPRESS NEWS LINE HAS A DIRECT BEARING ON THE ACTIVITIES OF MEHRAULI FLOWERS COMMITTEE. THE AO HAS RELIED ON CERTAIN STATEMENTS OF THE REPRESENTATIVES OF THE MARKET - COMMITTEE. (3) THE LETTER DATED 02.05.2005 ADDRESSED TO THE AO RELATED TO THE AGE OF POPULAR TREES WITH REGARD TO WHICH THE LD CIT(A) HAS DRAWN CERTAIN INFERENCES. (4) ASSESSMENT ORDER U/S 143(3) FOR THE AY 2003 - 04 AND 2005 - 06 WHERE IN ALL THE THREE YEARS, THE ASSESSING OFFICER HAS ACCEPT THE CLAIM OF AGRICULTURAL INCOME AFTER DUE SCRUTINY. ALL THESE EVIDENCES HAVE COME INTO EXISTENCE AFTER THE PASSING OF THE IMPUGNED ORDER DATED 01.03.2005 BY THE LD CIT(A). THESE ITEMS OF EVIDENCES HAVE DIRECT RELEVANCE OF DECIDING THE ISSUES AND ALLEGATIONS/ FINDINGS IN THE IMPUGNED ORDER OF THE LD AO AND CIT(A). FOR THE REASON THESE EVIDENCE COULD NOT HAVE BEEN PRODUCED BEFORE THE LOWER AUTHORITIES. ALL THESE PIECES OF EVIDENCE ARE OBJECTIVE IN CHARACTER AND ARE NECESSARY FOR THE DISPOSAL OF THE APPEAL 8. THEREFORE ON THE BASIS OF THE ABOVE APPLICATION THE LD AR VEHEMENTLY CONTESTED THAT THE ABOVE ADDITIONAL EVIDENCES GOES TO THE ROOT OF THE MATTER AND THEY ARE COME INTO EXISTENCE AFTER PASSING OF THE ORDER OF THE LD CIT(A) AND HAVE DIRECT RELEVANCE TO THE ISSUE INVOLVED. THEREFORE, THEY MAY BE ADMITTED. 9. THE LD DR VEHEMENTLY OBJECTED TO THE ADMISSION OF THE ABOVE EVIDENCE SUBMITTING THAT THESE EVIDENCES ARE NOT RELEVANT FOR DECIDING THE ISSUE. 10. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE RELEVANT EVIDENCES. WE ARE ALSO OF THE VIEW THAT WHEN THE GENUINENESS OF THE PAGE 5 OF 6 TRANSACTION WITH RESPECT TO AGRICULTURAL INCOME IS RAISED AND FURTHER THEY ARE NEWSPAPER REPORTS AS WELL AS SUBSEQUENT ASSESSMENT ORDERS WHERE THE AGRICULTURAL INCOME OF THE A SSESSEE HAS BEEN ESTABLISHED AND ACCEPTED EMPHATICALLY BY REVENUE THESE ORDERS DO HAVE RELEVANCE ON THE ISSUE. IN VIEW OF THIS AS ASSESSEE IS PREVENTED BY SUFFICIENT CAUSE TO PRODUCE THESE EVIDENCE BEFORE THE LOWER AUTHORITIES WE ACCORDINGLY ADMIT THEM AND ACCORDINGLY REMIT THE ISSUE BACK TO THE FILE LD ASSESSING OFFICER TO DECIDE IN ACCORDANCE WITH THE LAW ALONG WITH THE ADDITIONAL GROUND. 11. IN VIEW OF OUR DECISION ON ADMISSION OF ADDITIONAL EVIDENCES AND ADDITIONAL GROUND RAISED BY THE APPELLANT AND FU RTHER AS ALL THE GROUNDS OF APPEAL OF THE ASSESSEE ARE RELATED TO CHARGEABILITY OF AGRICULTURAL INCOME, WE DEEM IT FIT AND PROPER AND IN THE INTEREST OF JUSTICE TO SET ASIDE THE ALL THE GROUNDS OF APPEAL INCLUDING ADDITIONAL GROUND TO THE FILE OF THE LD AO WITH A DIRECTION TO REEXAMINE THE WHOLE ISSUES IN VIEW OF ADDITIONAL EVIDENCE AND AFTER GRANTING PROPER OPPORTUNITY OF HEARING TO THE ASSESSEE. 12. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . 13. THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL FOR THE ASSESSMENT YEAR 2001 - 02: - 1. THE ORDER PASSED BY THE LD. CIT(A) IS ARBITRARY AND IN VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT( A) ERRED IN PASSING THE EX - P ARTE ORDER DESPITE THE FACT THAT APPELLANT'S REPRESENTATIVE HAD METICULOUSLY REPETITIVELY APPEARED BEFORE VARIOUS CLT(A)'S FROM 2005 ONWARDS AND PLACED VOLUMINOUS EVIDENCES ON RECORD, WHICH HAVE ALL BEEN IGNORED BY CIT(A) ALTOGETHER. 3. THE L.D CIT(A) HAS ERRED IN LAW AND ON FACTS BY HOLDING THAT THE IMPUGNED ASSESSMENT WAS VALIDLY REOPENED U/S 148 OF THE ACT BY IGNORING THE FACT THAT THE FACTS OF THE CASE FOR A. Y. 1999 - 2000 WERE ENTIRELY DIFFERENT. 4. THE L.D CIT(A) ERRED IN UPHOLDING THE VALIDITY OF THE IMPUGNED RE - ASSESSMENT ORDER EVEN THOUGH IT IS ADMITTED BY THE ASSESSING OFFICER THAT THE NOTICE UNDER SECTION 143(2) OF THE ACT WAS NEVER ISSUED OR SERVED ON THE ASSESSEE. 5. THE LD. CIT(A) ERRED ON THE FACTS AND IN LAW IN HOLDING THAT THE APPELLANT'S CLAIM OF EXEMPTION OF INCOME OF RS. 50,44,6157 - U/S 10(1) OF THE ACT 1961. 6. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN LAW BY PASSING THE ORDER WITHOUT APPLICATION OF MIND AND WITHOUT CONSIDERING THE SUBMISSION S (INCLUDING WRITTEN SUBMISSIONS) MADE BY APPELLANT DURING THE COURSE OF PROCEEDINGS AND RELEVANT EVIDENCE MATERIAL PLACED ON RECORD. 7. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN LAW BY BLINDLY FOLLOWING THE ORDER OF CIT(A) FOR A.Y 2001 - 02 ON THE PAGE 6 OF 6 MERITS OF THE CASE AND WITHOUT TAKING INTO ACCOUNT MATERIAL/ EVIDENCE ON RECORD, WHICH WAS ENTIRELY DIFFERENT FROM A.Y. 2001 - 02. 8. THAI THE C I T(A) ERRED IN DIRECTING THE A.O TO RE - COMPUTE INTEREST U/S 234B, 234C OF THE ACT . 9. THAT THE CIT(A) HAS ERRED IN INITIATING PENALTY PROCEEDING UNDER SEC. 271(L)(C) OF THE ACT. 14. THE PARTIES BEFORE US ADMITTED THAT THE ISSUE INVOLVED IN THIS APPEAL IS IDENTICAL TO THE ISSUE INVOLVED IN THE APPEAL OF THE ASSESSEE FOR AY 200 1 - 02 . IT WA S ALSO STATED THAT THE LD CIT (A) HAS ALSO FOLLOWED THE ORDER IN CASE OF ASSESSEE FOR THAT YEAR WHILE DECIDING THE APPEAL OF THIS YEAR . THE PARTIES ALSO ADVANCED THE SAME ARGUMENTS AS THEY WERE ADVANCED IN APPEAL OF ASSESSEE FOR AY 2001 - 02 . THEREFORE A FTER CAREFULLY CONSIDERING THEIR CONTENTION AND PERUSING THE ORDERS OF THE LOWER AUTHORITIES WE ALSO AGREE THAT THERE IS NO DIFFERENCE IN THE FACTS OF THE ISSUE INVOLVED . AS WE HAVE ALREADY SET ASIDE THE APPEAL OF THE ASSESSEE FOR AY 200 1 - 02 TO THE FILE OF THE ASSESSEE FOR REEXAMINATION OF THE WHOLE ISSUES AFTER CONSIDERING THE ADDITIONAL EVIDENCE AND ADDITION GROUND IN THAT APPEAL, WE ALSO DIRECT THE LD AO TO REEXAMINE THE ISSUES ACCORDINGLY FOR THIS YEAR TOO. 15. IN VIEW OF THIS APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 16. IN THE RESULT BOTH THE APPEAL OF THE ASSESSEE FOR AY 200 1 - 02 AND 200 2 - 03 ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRO NOUNCED IN THE OPEN COURT ON 1 1 / 0 4 / 2017 . - S D / - - S D / - ( H.S.SIDHU ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 1 / 0 4 / 2017 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI