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

ITA 447/DEL/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6840 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 07-01-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 24-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUNIL CHANDER SHARMA
• Keywords: Unexplained investment; Unexplained expenditure
• Section: 69C; 142(1); 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : B : NEW DELHI BEFORE SH. C.M. GARG, JUDICIAL M EMBER AND SH. O.P. KANT , ACCOUNTANT MEMBER ITA NO . 447 /DEL/ 2014 ASSESSMENT YEAR: 2005 - 06 ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 17, NEW DELHI VS. M/S. JAGUAR LEASING PVT. LTD., B - 10, SHIVALIK, MALVIYA NAGAR, NEW DELHI (PAN: AABCJ3625J) (APPELLANT) (RESPONDENT) APPELLANT BY SH. SUNIL CHANDER SHARMA, CIT(DR) RESPONDENT BY NONE DATE OF HEARING 07.01.2016 DATE OF PRONOUNCEMENT 10.02.2016 ORDER PER O.P. KANT , A . M. : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 19 TH NOVEMBER, 2013 OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - II, NEW DELHI , FOR ASSES SMENT YEAR 2005 - 06, RAISING FOLLOWING GROUNDS OF APPEAL: 1. THE COMMIS SIONER OF INCOME TAX(APPEALS) ERRED IN LAW AND ON FACT OF THE CASE IN DELETING AN ADDITION OF RS. 35,84,684/ - ON ACCOUNT OF UNEXPLAINED EXPENDITURE U/S 69C OF THE I.T. ACT. 2. THAT THE COMMISSIONER OF INCOME TAX(APPEALS) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING AND ADDITION OF RS. 2,11,786/ - ON ACCOUNT OF 50% DISALLOWANCE OF EXPENDITURE CLAIMED BY THE ASSESSEE. 3. (A) T HE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS) IS ERRONEOUS AND NOT TENABLE IN LAW AND ON FACTS. (B) THE APPELLANT CRAVE S LEAVE TO ADD, ALTER OR AMEND ANY/ ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF THE HEARING OF THE APPEAL. 2 ITA NO. 447/DEL/2014, AY - 2005 - 06 2. THE FACTS IN BRIEF ARE THAT A SEARCH WAS CONDUCTED IN THE PREMISES OF THE ASSESSEE ON 20.10.2008 . A NOTICE UNDER SECTION 153A OF THE INCOME - TAX ACT, 1961 (FOR SHORT THE ACT ) WAS ISSUED ON 29.0 3 .2013 FOR FILING RETURN OF INCOME. IN RESPONSE, THE ASSESSEE FILED RETURN OF INCOME ON 29.04.2010 DECLARING INCOME OF RS. 10,011/ - . SUBSEQUENTLY, NOTICE UNDER SECTION 143(2) & 142(1) OF THE ACT WERE ISSUED AND THE ASSESSMENT WAS COMPLETED. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE COMPANY BELONGS TO M/S. THAPAR HOME GROUP OF CASES HAVING ALLEGATION OF FLOATING THE COMPANY WITH DUMMY DIRECTORS AND SHAREHOLDERS . THE ASSESSING OFFICER FURTHER OBSERVED THAT CAPITAL WAS FORMED IN T HESE COMPANIES IN THE FORM OF RESERVE AND SURPLUS OVER THE YEARS AND WAS INVESTED IN THE STOCK OF TEXTILE AND WHENEVER CASH WAS REQUIRED THE STOCK WERE SOLD AND THE MONEY WA S UTILIZED FOR OTHER PURPOSES AS PER THEIR REQUIREMENT. THE ASSESSING OFFICER NOTICED THAT IN THE YEAR UNDER CONSIDERATION THE ASSESSEE COMPANY SHOWN PURCHASE OF TEXTILE GOODS OF RS. 35,84,684/ - AND SALES OF RS. 39,41,814/ - RESULTING INTO PROFIT OF RS. 12, 433.99/ - THE ASSESSING OFFICER FURTHER ASKED THE ASSESSEE TO PROVE ITS TRADING ACTIVITY AND PRODUCE SALES TAX RECORD. IN RESPONSE, THE ASSESSEE SUBMITTED THAT IT DEALT IN TAX FREE GOODS ONLY AND IT WAS NOT FILING ANY SALES TAX RETURN. THE ASSESSEE ALSO FAI LED TO PRODUCE PURCHASE AND SALES BILLS AND THUS, THE ASSESSING OFFICER HELD THE ENTIRE PURCHASE OF RS. 34,84,684/ - AS BOGUS AND UNEXPLAINED EXPENDITURE UNDER SECTION 69C OF THE ACT. FURTHER, THE ASSESSING OFFICER ALSO DISALLOWED 50% OUT OF THE ADMINISTRAT IVE AND OTHER EXPENSES OF RS. 4,23, 573/ - WHICH WORKS OUT TO RS. 2,11,786/ - . AGGRIEVED WITH THE ABOVE ADDITIONS, THE ASSESSEE FILED AN APPEAL BEFORE THE LEARNED 3 ITA NO. 447/DEL/2014, AY - 2005 - 06 COMMISSIONER OF INCOME TAX(APPEALS) WHO HAS DECIDED THE ISSUED IN PARAS 6.1 TO 6.17 OF HER APPE LLATE ORDER. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) DIRECTED THE AO NOT TO MAKE ANY SEPARATE ADDITIONS ON ACCOUNT OF PURCHASE OR EXPENDITURE BUT DIRECTED THE ASSESSING OFFICER TO WORK OUT THE PEAK FROM THE ENTRIES IN THE CASH BOOK, INCLUDING BANK TRANSACTION AND MAKE THE ADDITION ACCORDINGLY. AGGRIEVED FROM THE ABOVE FINDING OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS), THE REVENUE IS IN APPEAL BEFORE US. 3. NONE APPEARED ON BEHALF OF THE ASSESSEE, WHEREAS LEARNED CIT (DR) RELIED ON THE OR DER OF THE ASSESSING OFFICER. 4. WE HAVE HEARD LEARNED CIT (DR) AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) UPHELD THE ACTION OF THE LEARNED ASSESSING OFFICER REGARDING PURCHASE & SALE AND THE EXPENSES, HOWEVER, SHE HAS DIRECTED ONLY TO TAKE THE PEAK OF THE ENTRIES AS UNEXPLAINED INVESTMENT IN EXPENDITURE. THE RELEVANT PARAS (PARA NOS. 6.15 & 6.16) OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ARE REPRODUCED AS UNDER: 6.15 THER EFORE, CONTRARY TO THE CLAIMS OF THE APPELLANT, WHAT 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 USED TO INFUSE UNACCOUNTED M ONEY IN OTHER COMPANIES OF THE GROUP, THROUGH A WELL ORCHESTRATED ARRANGEMENT OF SEEMINGLY ACCOUNTED TRANSACTIONS, EMANATING FROM THEIR AUDITED FINANCIAL STATEMENT, BUT WHERE IN REALITY, THE ONLY ACTIVITY WAS OF BOOK BUILDING . IN THESE CIRCUMSTANCES, THE CLAIM OF AUDITED BOOKS NOTWITHSTANDING, THE BOOK RESULTS ARE REQUIRED TO BE REJECTED, SINCE THE NARRATION ARE ARTIFICIAL, SHAM AND NOT REFLECTIVE OF THE ACTUAL BUSINESS/COMMERCIAL TRANSACTIONS. 6.16 THEREFORE, THE ACTION OF THE ASSESSING OFFICER, IN DISREGARDING THE PURCHASES , THE SALES AND EXPENSES , 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 T HEIR SEPARATE JURIDICAL IDENTITY IN MIND, THE ENDS OF 4 ITA NO. 447/DEL/2014, AY - 2005 - 06 JUSTICE WILL BE MET IF IN EACH CASE, ADDITION OF THE PEAK OF FINANCIAL TRANSACTION, AS WORKED OUT FROM THE RELEVANT CASH BOOK OF EACH ENTITY, IS MADE. THEREFORE, THE ADDITION MADE BY THE ASSESSING OFFIC ER NEEDS TO BE REVISITED. IT MAY BE MENTIONED THAT WHILE THE REJECTION OF THE BOOKS AND THE BOOK RESULTS BY THE ASSESSING OFFICER IS CONFIRMED, RELIANCE IS BEING PLACED ON THE TRANSACTIONS TRAVERSING THE CASH BOOK, IRRESPECTIVE OF THEIR NOTATIONS, SINCE AM ONGST THE INFLOW AND OUTFLOW OF CASH, TAX PAYMENTS MADE BY THE APPELLANT ARE INDEPENDENT AND VERIFIABLE. CONSEQUENTLY, NO SEPARATE ADDITION IS REQUIRED TO BE MADE ON ACCOUNT OF PURCHASES OR EXPENDITURE. THE ASSESSING OFFICER IS DIRECTED TO WORK OUT THE PEA K FROM THE ENTRI E S IN THE CASH BOOK, INCLUDING BANK TRANSACTIONS, OF THE APPELLANT FOR THE RELEVANT YEAR AND MAKE A SINGULAR ADDITION OF THE SAID AMOUNT, AS UNEXPLAINED INVESTMENT/EXPENDITURE. AS A RESULT, GROUND 10 OF THE APPEAL AND THE ADDITIONAL GROUND OF APPEAL RELATING TO THE FINDING OF THE ASSESSING OFFICER ON THE BOGUS NATURE OF SALES ARE DISMISSED AND GROUNDS 6 AND 7 OF THE APPEAL ARE PARTLY ALLOWED. 5. IN OUR OPINION, THE FINDING S OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ON THE ISSU E IN DISPUTE ARE WELL REASONED AND NO INTERFERENCE IS REQUIRED. SHE HAS NOT ACCEPTED THE CLAIM OF THE ASSESSEE OF HAVING THE PURCHASES AS GENUINE. SHE HAS PROVIDED THE BENEFIT OF AVAILABILITY OF FUNDS ON SALE OF THE GOODS CORRESPONDING TO UNEXPLAINED PURCH ASES, WHICH IS A JUDICIOUS APPROACH . ACCORDINGLY, THE GROUNDS OF THE APPEAL OF THE REVENUE ARE DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. THE DECISION IS PRONOUNCED IN THE OPEN COURT ON 10 TH FEBRUARY , 2016 . SD/ - SD/ - ( C.M. GARG ) ( O.P. KANT ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 10 TH FEBRUARY , 2016 . RK/ - COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI