ACIT, New Delhi V. M/s. AA Testronics Solutions Pvt. Ltd., New Delhi

ITA 4223/DEL/2012

• Counselvise Citation: 422320114 RSA 2012
• Duration Of Justice: 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2003-2004
• Appeal Filed On: 06-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRITHI LAL
• Keywords: Unexplained expenditure; Depreciation; Income from undisclosed sources
• Section: 69C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : A : NEW DELHI BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER ITA NOS.4223 TO 4228/DEL/2012 ASSESSMENT YEARS : 2003-04 TO 2008-09 ACIT, CENTRAL CIRCLE 21, ROOM NO.344, ARA CENTRE, E-2, JHANDEWALAN EXTENSION, NEW DELHI. VS. AA TESTRONICS SOLUTIONS PVT. LTD., K-19, RAJOURI GARDEN, NEW DELHI. PAN : AAGCA6247C CO NOS.372 TO 377/DEL/2012 (ITA NOS.4223 TO 4228/DEL/2012) ASSESSMENT YEARS : 2003-04 TO 2008-09 AA TESTRONICS SOLUTIONS PVT. LTD., K-19, RAJOURI GARDEN, NEW DELHI. PAN : AAGCA6247C VS. ACIT, CENTRAL CIRCLE 21, ROOM NO.344, ARA CENTRE, E-2, JHANDEWALAN EXTENSION, NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI KAPIL GOEL, ADVOCATE REVENUE BY : SHRI PRITHI LAL, SR.DR ORDER PER BENCH: THE APPEALS ARE FILED BY THE DEPARTMENT AND THE CRO SS OBJECTIONS BY THE ASSESSEE. THEY ARE DIRECTED AGAINST TH E ORDER DATED 14.05.2012 PASSED BY THE CIT (A)-II, DELHI, FOR ASSESSMEN T YEARS 2003- 04 TO 2008-09. ITA NOS.4223 TO 4228/DEL/2012 CO NOS.372 TO 377/DEL/2012 2 3. THE GRIEVANCE RAISED BY THE DEPARTMENT IN ALL ITS APPEALS IS AGAINST THE ACTION OF THE LD. CIT (A) IN DELETING T HE ADDITIONS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED PURCHAS E U/S 69C OF THE IT ACT AND IN DELETING THE DISALLOWANCE OF 100% OF EXPENDITURE AND DEPRECIATION CLAIMED BY THE ASSESSEE. 4. THE ASSESSING OFFICER HAD MADE DISALLOWANCES OF THE PU RCHASES CLAIMED BY THE ASSESSEE AND HAD TREATED THE SAME AS UNEXPLAINED/UNACCOUNTED EXPENDITURE U/S 69-C OF THE ACT. THE ASSESSEE MAINTAINED THAT THIS WAS NOT CORRECT SINCE PROFI T FROM SALE OF THE GOODS HAD ALREADY BEEN TAXED. 5. THE LD. CIT (A) DELETED THE ADDITIONS MADE U/S 69C OF THE ACT AND WHILE DOING SO, IT WAS OBSERVED, INTER ALIA, THA T THE ENTIRE PURCHASES OF VARIOUS AMOUNTS HAD BEEN DULY ACCOUNTED FO R BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT; AND THAT PERTINENTLY, T HE BOOKS OF ACCOUNT OF THE ASSESSEE HAD NOT BEEN REJECTED BY THE A SSESSING OFFICER, AND SO, THERE IS NO QUESTION OF ANY DISALLOWAN CES OF PURCHASES U/S 69C OF THE ACT. THE LD. CIT (A) PLACED RELIANCE ON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. M/S RADHIKA CREATION, RENDERED IN ITA NO.692/2009. THESE OBSER VATIONS WERE MADE BY THE LD. CIT (A) AFTER CALLING FOR A REMAND REPORT FROM THE ASSESSING OFFICER AND CONSIDERING THE SAME AND THE ASSESSEES REJOINDER THERETO. 6. BEFORE US, THE LD. COUNSEL OF THE ASSESSEE CONTENDED THAT THE MATTER IS COVERED IN FAVOUR OF THE ASSESSEE BY THE CASE OF ANUPAMA LINKS PVT. LTD., HEARD ON 04.10.2012. 7. THE LD. DR, ON THE OTHER HAND, HAS PLACED STRONG R ELIANCE ON THE IMPUGNED ORDER. ITA NOS.4223 TO 4228/DEL/2012 CO NOS.372 TO 377/DEL/2012 3 8. HAVING CONSIDERED THE WRITTEN SUBMISSIONS FILED ON BE HALF OF THE ASSESSEE AND THE CONTENTIONS OF THE LD. DR, IT IS SEEN TH AT THE MATTER IS INDEED COVERED IN FAVOUR OF THE ASSESSEE BY ANUPAMA LINKS PVT. LTD. (SUPRA). THE FIRST AND FOREMOST, THE SEARCH IN T HE CASE OF THE ASSESSEE IS THE SAME AS THAT IN ANUPAMA LINKS PVT. LTD.. THE ASSESSING OFFICER IN THE TWO CASES IS ALSO THE SAME. THE T RADE OF BOTH THE ASSESSEES IS ONE AND THE SAME I.E., TRADE OF TEXTILES. THEN, IN BOTH CASES, BOOKS AND STOCK REGISTER WERE FILED AND THE ASSESSING OFFICER DID NOT REJECT THE SAME. THE LD. CIT (A) HAS, AS NOTED HE REINABOVE, TAKEN INTO ACCOUNT THE FACT THAT ALL THE SALES MADE BY THE ASSESSEE STOOD RECORDED IN THE ASSESSEES BOOKS OF ACCOUNT, WHICH INCLU DED THE SALES AND PURCHASE VOUCHERS AND STOCK REGISTERS MAINTAINED BY THE ASSESSEE ON A DAY-TO-DAY BASIS. THESE BOOKS OF ACCOUNT WERE DUL Y PRODUCED BEFORE THE ASSESSING OFFICER AND THE ASSESSING OFFICER EXA MINED THEM, ON EXAMINATION, NO NEGATIVE OBSERVATION THEREAGAINST WAS RECORDED BY THE ASSESSING OFFICER. COMPLETE NAMES AND ADDRESSES OF THE PARTIES TO WHOM THE GOODS WERE SOLD WERE AVAILABLE WITH THE ASSESSIN G OFFICER. MOST OF THE CUSTOMERS WERE ASSESSED TO INCOME-TAX. SALES W ERE MADE AGAINST THE OPENING STOCK. THE PURCHASES MADE DURING THE YEAR AND THE SALES WERE BUT CONVERSION OF STOCK. THE PROFIT TH EREFROM HAD ALREADY BEEN TAXED. THE ASSESSING OFFICER DID NOT BRIN G ANYTHING ON RECORD TO INDICATE THAT THE SALE PROCEEDS REPRESENTED THE ASSESSEES INCOME FROM UNDISCLOSED SOURCES. THE SALE TRANSACTIONS W ITH M/S MICRON TEXTILES WERE GOT CONFIRMED BY THE ASSESSING OFFI CER ON A TEST CHECK BASIS. NO MORE INQUIRIES WERE MADE BY THE ASSESSIN G OFFICER THEREAFTER. THE ASSESSEES BOOKS OF ACCOUNT WERE AUDITED BOOKS OF ACCOUNT. THE TAX AUDIT REPORT WAS ON RECORD. THE A UDITORS HAD NOT MADE ANY NEGATIVE OBSERVATION THEREIN. ALL THESE FAC TS WERE DULY TAKEN INTO CONSIDERATION BY THE LD. CIT (A) AND IT W AS THEREUPON THAT THE ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE. ITA NOS.4223 TO 4228/DEL/2012 CO NOS.372 TO 377/DEL/2012 4 9. SO FAR AS IT REGARDS ANUPAMA LINKS PVT. LTD., (SUP RA), UNDER SIMILAR FACTS AND CIRCUMSTANCES, THE TRIBUNAL, FOLLOWIN G CIT VS. M/S RADHIKA CREATION, A JUDGEMENT DATED 30.04.2010, RE NDERED BY THE HONBLE DELHI HIGH COURT, HELD THE PROVISIONS OF SECT ION 69-C OF THE ACT TO BE NOT APPLICABLE. FURTHER, THE MATTER IS ALSO CO VERED BY BABULAL C. BORANA, 282 ITR 251 (BOM), WHICH IS ON SIMILAR LINES. 10. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY ERROR IN THE ORDERS PASSED BY THE LD. CIT (A) AND, ACCORDINGLY, THE SAME A RE CONFIRMED. THE GRIEVANCE RAISED BY THE DEPARTMENT BY WAY OF THE GROUNDS OF APPEAL TAKEN IS, THEREFORE, REJECTED. 11. IN VIEW OF THE GRIEVANCE OF THE DEPARTMENT IN I TS APPEALS HAVING BEEN SO REJECTED, THE CROSS OBJECTIONS RAISED BY THE ASSESSE E ARE RENDERED ONLY ACADEMIC AND THEY ARE DISMISSED AS SUCH. 12. IN THE RESULT, ALL THE APPEALS FILED BY THE DEPAR TMENT ARE DISMISSED AND ALL THE CROSS OBJECTIONS FILED BY THE ASSESSEE ARE DISMISSED AS INFRUCTUOUS. THE ORDER PRONOUNCED IN THE OPEN COURT ON 12.10.20 12. SD/- SD/- [T.S. KAPOOR] [A.D. JAIN] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED, 12.10.2012. DK ITA NOS.4223 TO 4228/DEL/2012 CO NOS.372 TO 377/DEL/2012 5 COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES