ACIT, New Delhi V. M/s. Jaguar Leasing Pvt. Ltd., New Delhi

ITA 446/DEL/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6988 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 26-07-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 24-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHUPESH KUMAR DHINGRA
• Assessee Lawyers: SULEKHA VERMA
• Keywords: Unexplained investment; Unexplained expenditure
• Section: 69C; 142(1); 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: D NEW DELHI BEFORE SMT DIVA SINGH, JUDICIAL MEMBER AND SH.L.P.SAHU, ACCOUNTANT MEMBER I.T.A .NO.-445 & 446/DEL/2014 (ASSESSMENT YEAR-2003-04 & 2004-05) ACIT, CENTRAL CIRCLE-17, NEW DELHI-110055. (APPELLANT) VS JAGUAR LEASING PVT.LTD., B-10, SHIVALIK, MALVIYA NAGAR, NEW DELHI. PAN-AABCJ3625J ( RESPONDENT) A SSESSEE BY MS. SULEKHA VERMA, CIT DR R EVENUE BY SH. BHUPESH KUMAR DHINGRA, CA ORDER PER DIVA SINGH, JM BY THESE TWO APPEALS THE REVENUE ASSAILS THE CORREC TNESS OF THE ORDERS DATED 13.11.2013 AND 18.11.2013 OF CIT(A)-II, NEW D ELHI PERTAINING TO 2003-04 AND 2004-05 AYS ON THE IDENTICAL GROUNDS. IT WAS A COMMON STAND OF THE PARTIES THAT THE ISSUES RAISED BY THE REVENUE IN BO TH THE YEARS ARE IDENTICAL AND ARE EMANATING FROM THE SAME SEARCH CONDUCTED UP ON THE ASSESSEE. ACCORDINGLY THE GROUNDS FROM ITA NO.445/DEL/2014 AR E REPRODUCED HEREUNDER FOR READY-REFERENCE:- 1. THE COMMISSIONER OF INCOME TAX (APPEAL) ERRED IN LAW AND ON FACTS OF THE CASES IN DELETING AN ADDITION OF RS.32 ,20,420/- ON ACCOUNT OF UNEXPLAINED EXPENDITURE U/S 69C OF THE IT. ACT. 2. THE COMMISSIONER OF INCOME TAX (APPEAL) HAS ERRE D IN LAW AND ON FACTS OF THE CASE IN DELETING AND ADDITION OF RS . 1,78,272/- ON ACCOUNT OF 50% DISALLOWANCE OF EXPENDITURE CLAIMED BY THE ASSESSES. DATE OF HEARING 26.07.2016 DATE OF PRONOUNCEMENT 26.09.2016 I.T.A .NO.-445 & 446/DEL/2014 PAGE 2 OF 6 3. (A) THE ORDER OF THE CIT (A) IS ERRONEOUS AND NO T TENABLE IN LAW AND ON FACTS. (B) THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AME ND ANY/ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF TH E HEARING OF THE APPEAL.' 2. ADDRESSING THE DEPARTMENTAL GROUND, THE LD.AR SU BMITTED RIGHT AT THE OUTSET THAT THE APPEALS OF THE REVENUE DESERVES TO BE DISMISSED FOLLOWING THE ORDERS OF THE ITAT IN ASSESSEES OWN CASE WHEREIN I DENTICAL ISSUES HAVE BEEN DECIDED IN FAVOUR OF THE ASSESSEE. COPY OF THE SAI D ORDER DATED 10.02.2016 IN ITA NO.447/DEL/2014 FOR 2005-06 AY WAS RELIED UPON. THE APPEAL WAS PASSED OVER SO AS TO AFFORD TIME TO THE LD.CIT DR TO GO TH ROUGH THE SAID ORDER. 2.1. IN THE SECOND ROUND, THE LD.CIT DR AFTER GOING THROUGH THE ORDER AND THE FACTS FAIRLY CONCEDED THAT THE POINTS AT ISSUE ARE COVERED. IT WAS HER SUBMISSION THAT THE CLAIM OF THE ASSESSEE HAS NOT B EEN ACCEPTED TO BE GENUINE PURCHASES AND THE RELIEF IS LIMITED TO THE BENEFIT OF AVAILABILITY OF FUNDS HAS BEEN GRANTED ON THE SALE OF GOODS CORRESPONDING TO UNEXPLAINED PURCHASES. IN THESE CIRCUMSTANCES, THE ISSUE IT WAS SUBMITTED CAN BE STATED TO BE COVERED BY THE ORDER OF THE ITAT. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. A PERUSAL OF THE SAME SHOWS THAT SEARCH WAS CONDUCTED AT THE PREMISES OF THE ASSESSEE ON 28.10.2008. WHICH FACT IS EVIDENT FROM THE MATERIAL ON RECORD AND COINCIDE WITH THE FACTS CONS IDERED BY THE CO-ORDINATE BENCH. NOTICE U/S 153A WAS ISSUED ON 29.03.2010 RE QUIRING THE ASSESSEE TO FURNISH THE RETURN OF INCOME. IN RESPONSE THERETO INCOME OF RS.5,318/- WAS DECLARED IN 2003-04 AY AND RS.6,125/- IN 2004-05 AY . A PERUSAL OF THE ORDER I.T.A .NO.-445 & 446/DEL/2014 PAGE 3 OF 6 OF THE CO-ORDINATE BENCH SHOWS THAT 2005-06 AY DECL ARED INCOME WAS RS.1,011/-. SUBSEQUENT TO THE ISSUANCE OF NOTICE U /S 143(2) AND 142(1) ETC. THE AO TOOK NOTICE OF THE FACT THAT THE ASSESSEE CO MPANY BELONGED TO THE THAPAR HOMES GROUP OF CASES. THE DIRECTOR OF THE COMPANY WAS MR.INDER DEV SHARMA, A CLOSE ASSOCIATE OF M/S THAPAR HOME GR OUP OF CASES. ONE OF THE MAIN ALLEGATIONS AGAINST THE GROUP IS THAT SEVERAL CONCERNS HAVE BEEN FLOATED BY THE GROUP WITH DUMMY DIRECTORS AND SHAREHOLDERS. THESE CONCERNS WERE CONSIDERED TO BE BASICALLY CAPITAL FORMATION CONCER NS WHICH IT WAS CONSIDERED HAD BUILD UP HUGE RESERVES & SURPLUS OVER THE YEARS . THESE RESERVE & SURPLUSES WERE FOUND TO HAVE BEEN DECLARED INVESTED IN STOCKS OF TEXTILES. AS AND WHEN CASH WAS REQUIRED THE STOCKS WERE CLAIMED TO BE SOLD AND THE MONEYS WERE UTILIZED FOR OTHER PURPOSES AS PER THE REQUIREMENTS. IN VIEW THEREOF THE GENUINENESS OF THE PURCHASES ETC. WAS N OT ACCEPTED AND THE AO REQUIRED THE ASSESSEE TO PROVE ITS TRADING ACTIVITI ES AND PRODUCE SALES TAX RECORD TO SUPPORT ITS CLAIM OF PURCHASES OF TEXTILE GOODS OF RS.32,20,420/- AND SALES OF RS.37,79,507/-. 4. THE ASSESSEE IN RESPONSE THERETO CLAIMED THAT SI NCE IT DEALT WITH ONLY TAX FREE GOODS THUS THERE WAS NO NECESSITY TO FILE ITS SALES TAX RETURN. IN THESE CIRCUMSTANCES, THE AO OBSERVED THAT APART FROM DECL ARATION OF THE ASSESSEE THERE WAS NO INDEPENDENT PROOF OF SALES/PURCHASES OF THE GOODS. NOTICING THE FACTS THAT ALL THE PURCHASES AND SALES WERE DECLARE D HAVING BEEN MADE IN CASH AND THE ASSESSEE DID NOT MAINTAIN ANY BANK ACCOUNT. AS PER THE RETURN THE ASSESSEE HAD DEALT WITH IN ITEMS SUCH AS PASHMINA SHAWLS, PASHMINA SHAWLS I.T.A .NO.-445 & 446/DEL/2014 PAGE 4 OF 6 PLAIN, SUITING AND SUIT LENGTH (3 MTR.). SINCE TH E ASSESSEE COULD NOT PROVE THE GENUINENESS OF ITS BUSINESS ACTIVITIES THE CLAIM OF GENUINENESS WAS NOT ACCEPTED. IT WAS ALSO NOTICED THAT THERE WAS NO NA ME OF THE COMPANY OR THE BRAND. CONSIDERING THE FACT THAT THE OPENING STOCK WAS OF THE PERIOD BEFORE THE BLOCK PERIOD OF SECTION 153A, THE PURCHASES OF RS.3 2,20,420/- WERE HELD TO BE BOGUS AND BROUGHT TO TAX AS AN UNEXPLAINED EXPENDIT URE IN 2003-04 AY AND 2004-05 AY THE PURCHASE OF RS.32,23,540/- WAS HELD TO BE OUT OF BOOKS AND BROUGHT TO TAX AS UNEXPLAINED EXPENDITURE U/S 69C. 4.1. ADMINISTRATIVE AND OTHER EXPENSES CLAIMED WE RE ALSO HELD TO BE NOT SUPPORTED WITH PROPER EVIDENCE. 50% OF THE SAME IN BOTH THE YEARS WAS DISALLOWED LEADING TO ADDITION OF RS.1,78,272/- AND 23,450/- IN 2003-04 & 2004-05 AYS RESPECTIVELY. 5. AGGRIEVED THE ASSESSEE CAME IN APPEAL BEFORE THE CIT(A). IT IS SEEN THAT THE DECISION OF THE CIT(A) FROM PARA 6.1 TO 6.17 SH OWS THAT THE AO WAS DIRECTED NOT TO MAKE ANY SEPARATE ADDITION ON ACCOUNT OF PUR CHASE OR EXPENDITURE. THE AO WAS INSTEAD DIRECTED TO WORK OUT THE PEAK F ROM THE ENTRIES FROM THE CASH BOOKS INCLUDING BANK TRANSACTIONS AND MAKE TH E ADDITIONS ACCORDINGLY. 6. AGGRIEVED BY THIS, THE REVENUE IS IN APPEAL BEFO RE THE ITAT. ON A CONSIDERATION OF THE ORDER OF THE ITAT PASSED BY TH E CO-ORDINATE BENCH IN ORDER IN ITA NO.447/DEL/2014, WE FIND THAT ON THESE ISSUE S THE FACT AND CIRCUMSTANCES ARE IDENTICAL. IT IS SEEN THAT THE F INDINGS REPRODUCED BY THE CO- ORDINATE BENCH IN PARAS 6.15 & 6.16 ARE VERBATIM. RESPECTFULLY FOLLOWING THE I.T.A .NO.-445 & 446/DEL/2014 PAGE 5 OF 6 SAME, THE DEPARTMENTAL APPEALS ARE DISMISSED. THE RELEVANT EXTRACT FROM THE AFORESAID ORDER IS RELIED UPON IS REPRODUCED HEREUN DER:- 4. WE HAVE HEARD LEARNED CIT (DR) AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE LEARNED COMMISSIONER OF IN COME TAX(APPEALS) UPHELD THE ACTION OF THE LEARNED ASSESSING OFFICER REGARDING PURCHASE & SALE AND THE EXPENSES, HOWEVER, SHE HAS DIRECTED ONLY TAKE THE PEAK OF THE ENTRIES AS UNEXPLAINED INVESTMENT IN EXPENDI TURE. THE RELEVANT PARAS (PARA NOS 6.15 & 6.16) OF LEARNED COMMISSIONE R OF' INCOME TAX (APPEALS) ARE REPRODUCED AS UNDER: '6.15. THEREFORE, CONTRARY TO THE CLAIMS OF THE APP ELLANT, WHEN IS OBVIOUS AND DISCERNIBLE' IS THAT THE APPELLANT WAS ONE OF THE SEVERAL ENTITIES IN THE WHOLE SCHEME OF NETWORK OF COMPANIES BELONGING TO THE THAPER-DHINGRA GROUP WHICH WERE US ED OF INFUSE UNACCOUNTED MONEY IN OTHER COMPANIES OF THE GROUP, THROUGH A WELL ORCHESTRATED ARRANGEMENT OF SEEMINGL Y 'ACCOUNTED' TRANSACTIONS, EMANATING FROM THEIR 'AUD ITED' FINANCIAL STATEMENT, BUT WHERE IN REALITY, THE ONLY ACTIVITY WAS OF 'BOOK BUILDING'. IN THESE CIRCUMSTANCES, THE CLAIM OF 'AU DITED BOOKS' NOTWITHSTANDING, THE BOOK RESULTS ARE REQUIRED TO B E REJECTED, SINCE THE NARRATION ARE ARTIFICIAL, SHAM AND NOT RE FLECTIVE OF THE ACTUAL BUSINESS/COMMERCIAL TRANSACTIONS. 6.16. THEREFORE, THE ACTION OF THE ASSESSING OFFICE R, IN DISREGARDING THE 'PURCHASES', THE 'SALES* AND 'EXPE NSE, IS UPHELD. SINCE THE APPELLANT COMPANY ALONG WITH THE OTHER COMPANIES ARE ALL 'IN-HOUSE' TO THE THAPAR-DHINGRA GROUP AND THERE IS A WIDESPREAD WEB OF INTER SE TRANSACTIONS AMONGST THEM, KEEPING THEIR SC OAR ATE JURIDICAL IDENTITY I N MIND, THE ENDS OF JUSTICE WILL BE MET IF IN EACH CASE, ADDITION OF THE PEAK OF FINANCIAL TRANSACTION, AS WORKED OUT FROM THE RELEV ANT CASH BOOK OF EACH ENTITY, IS MADE. THEREFORE, THE ADDITION MA DE BY THE ASSESSING OFFICER NEEDS TO BE REVISITED. IT MAY HE MENTIONED THAT WHILE THE REJECTION OF THE BOOKS AND THE BOOK RESULTS BY THE ASSESSING OFFICER IS CONFIRMED, RELIANCE IS BEING P LACED ON THE TRANSACTIONS TRAVERSING THE CASH BOOK, IRRESPECTIVE OF THEIR NOTATIONS, SINCE AMONGST THE INFLOW AND OUTFLOW OF CASH, TAX PAYMENTS MADE BY THE APPELLANT ARE INDEPENDENT AND VERIFIABLE. CONSEQUENTLY, NO SEPARATE ADDITION IS R EQUIRED TO BE MADE ON ACCOUNT OF PURCHASES OR EXPENDITURE. THE AS SESSING OFFICER IS DIRECTED TO WORK OUT THE PEAK FROM THE E NTRIES IN THE CASH HOOK, INCLUDING BANK TRANSACTIONS, OF THE APPE LLANT FOR THE RELEVANT YEAR AND MAKE A SINGULAR ADDITION OF THE S AID AMOUNT, AS UNEXPLAINED INVESTMENT/EXPENDITURE. AS A RESULT, GROUND 10 OF THE APPEAL AND THE ADDITIONAL GROUND OF APPEAL R ELATING TO THE FINDING OF THE ASSESSING OFFICER ON THE BOGUS NATUR E OF SALES' ARE DISMISSED AND GROUNDS 6 AND 7 OF THE APPEAL ARE PARTLY ALLOWED. I.T.A .NO.-445 & 446/DEL/2014 PAGE 6 OF 6 5. IN OUR OPINION, THE FINDINGS OF THE LEARNED COMM ISSIONER OF INCOME TAX (APPEALS) ON THE ISSUE IN DISPUTE ARE WE LL REASONED AND NO INTERFERENCE IS REQUIRED. SHE HAS NOT ACCEPTED THE CLAIM OF THE ASSESSEE OF HAVING THE PURCHASES AS GENUINE. SHE HA S PROVIDED THE BENEFIT OF AVAILABILITY OF FUNDS ON SALE OF THE GOO DS CORRESPONDING TO UNEXPLAINED PURCHASES, WHICH IS A JUDICIOUS APPROAC H. ACCORDINGLY, THE GROUNDS OF THE APPEAL OF THE REVENUE ARE DISMIS SED. 6.1. THUS SINCE FACTS AND CIRCUMSTANCES REMAINED TH E SAME, WE FIND NO GOOD REASON TO DECIDE FROM THE VIEW TAKEN BY THE CO-ORDI NATE BENCH IN ASSESSEES OWN CASE. RESPECTFULLY FOLLOWING THE SAME, THE DEP ARTMENTAL APPEALS ARE DISMISSED. 7. IN THE RESULT, THE APPEALS OF THE REVENUE ARE DI SMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 26 TH SEPTEMBER 2016. SD/- SD/- (L. P. SAHU) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR, ITAT NEW DELHI