ITO, New Delhi V. M/s. Bhagat Steel & Forgings (P) Ltd., New Delhi

ITA 4515/DEL/2010

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 7101 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-12-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 26-12-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 12-10-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS ANUSHA KHURANA
• Keywords: Unexplained investment; Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : A : NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI I.P. BANSAL, JUDICIAL MEMBER ITA NOS.4515 & 4738/DEL/2010 ASSESSMENT YEAR : 2006-07 ITO, WARD 2 (4), ROOM NO.301, 3 RD FLOOR, CENTRAL REVENUE BUILDING, IP ESTATE, NEW DELHI. VS. BHAGAT STEEL & FORGINGS (P) LTD., H-27,SAINIK FARMS, NEW DELHI 44. PAN : AAACB1392B (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : MRS. ANUSHA KHURANA, SR. DR ORDER PER BENCH: THESE ARE APPEALS FILED BY THE REVENUE AND ARE DIREC TED AGAINST THE SEPARATE ORDERS OF THE CIT (A) DATED 30.08.2010 A ND 31.08.2010 FOR ASSESSMENT YEAR 2006-07. ITA NO.4515/DEL/2010 RELAT ES TO QUANTUM ADDITION AND ITA NO.4738/DEL/2010 RELATES TO CONCEALMENT PENALTY. THE GROUNDS APPEAL IN BOTH THE APPEALS READ AS UNDER:- ITA NO.4515/DEL/2010 1. THE LEARNED CIT (A) HAS ERRED IN LAW AND ON FACTS IN INVALIDATING THE NOTICE ISSUED U/S 143(2) IGNORING THE FACT THAT THE NOTICE IN THE CASE WAS ISSUED AT THE ADDRESS AVAILAB LE ON RECORD AND THE SAME WAS SERVED BY AFFIXTURE ON 28.11. 2007 WELL WITHIN THE STATUTORY TIME LIMIT SINCE NO PERSON TO RECEIVE THE NOTICE WAS AVAILABLE AT THE GIVEN ADDRESS. ITA NOS.4515 & 4738/DEL/2010 2 2. THE LEARNED CIT (A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.90,00,000/- ON ACCOUNT OF UNEXPLAIN ED INVESTMENT IGNORING THAT SOURCES OF THE SAID INVESTMENTS REMAINED UNVERIFIED BEFORE THE ASSESSING OFFICER. 3. THAT THE APPELLANT CRAVES LEAVE FOR RESERVING THE RIG HT TO AMEND, MODIFY, ALTER, ADD OR FOREGO ANY GROUND(S) OF APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL. ITA NO.4738/DEL/2010 1. THE LEARNED CIT (A) HAS ERRED IN LAW AND ON FACTS IN DELETING PENALTY IMPOSED AT RS.27,00,000/- U/S 271(1)(C) SINCE ADDITION OF RS.90,00,000/- ON ACCOUNT OF UNEXPLAINED INVESTMENT DE LETED BY LEARNED CIT (A) IN QUANTUM APPEAL HAS NOT BEEN ACCEPTE D BY THE DEPARTMENT AND APPEAL BEFORE HONBLE ITAT HAS BEEN FI LED. 2. THAT THE APPELLANT CRAVES LEAVE FOR RESERVING THE RIG HT TO AMEND, MODIFY, ALTER, ADD OR FOREGO ANY GROUND(S) OF APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL. 2. BY WAY OF AN ORDER FRAMED U/S 144, THE ASSESSING OFFI CER MADE AN ADDITION OF ` 90 LAC TO THE RETURNED LOSS OF ` 3,6 7,360/- THEREBY ASSESSING THE INCOME OF THE ASSESSEE AT ` 86,32,684/-. IT WAS NOTICED BY THE ASSESSING OFFICER THAT DURING THE YEAR THE ASSESSEE HAD MADE FRESH INVESTMENT OF ` 90 LAC AND AS NO DETAILS WERE AVA ILABLE WITH REGARD TO THOSE LIABILITIES, THE SAME WERE ADDED TO TH E INCOME OF THE ASSESSEE BY WAY OF AN EX PARTE ORDER. BEFORE CIT (A) I T WAS THE CASE OF THE ASSESSEE THAT NOTICE U/S 143(2) WAS SERVED BY AN AFFIX TURE AT THE OLD ADDRESS OF THE ASSESSEE DESPITE THE FACT THAT NEW ADDR ESS WAS AVAILABLE ON RECORD. THEREFORE, THE VALIDITY OF TH E ASSESSMENT WAS CONTESTED ON THE GROUND THAT NON-SERVICE OF NOTICE U/ S 143 (2) WITHIN THE PRESCRIBED TIME AND ADDITIONS WERE ALSO CONTESTED O N MERITS. LEARNED CIT (A) THOUGH HAS HELD THAT SERVICE BY AFFIX TURE COULD NOT BE CONSIDERED TO BE A VALID SERVICE, BUT HE HAS NOT STRUCK DOWN THE ASSESSMENT AND HAS ADVISED THE ASSESSING OFFICER TO EXERCISE C AUTION IN SERVICES OF NOTICES TO ALL ASSESSEES IN FUTURE AT CORREC T ADDRESSES. HOWEVER, HE HAS DELETED THE ADDITION ON MERITS. HE HA S NOTED THAT THE ITA NOS.4515 & 4738/DEL/2010 3 ASSESSEE WAS HAVING TOTAL CAPITAL OF ` 2,46,77,000/- THE DETAILS OF WHICH ARE AS UNDER:- (A) SHARE CAPITAL 24.75 LACS (B) SECURED LOAN (FROM ICICI BANK) 10.77 LAS (C) UNSECURED LOAN 12.25 LACS (D) ADVANCE AGAINST (SALE OF LAND FROM 2.00 CRORES AMAZING REALTER LTD.) ____________ 2,46,77,000/- ______________ 3. HE NOTICED THAT OUT OF THESE AMOUNTS THE ASSESSEE HAD ADVANCED AMOUNT OF ` 90 LAC TO ITS TWO SISTER CONCERNS, NAMELY, CROWN DEVELOPER RS.50 LACS AND CROWN BUILDTECH (P) LTD. RS.4 0 LAC. HE OBSERVED THAT THE ASSESSING OFFICER DID NOT MAKE ANY ADD ITION WITH REGARD TO AFOREMENTIONED CREDITS AND THE INVESTMENT O F ` 90 LAC IS FROM THE AFOREMENTIONED AMOUNT ONLY. HE HAS FURTHER NOTICED THAT THE ASSESSEE HAD RECEIVED ADVANCE OF ` 2 CRORE AGAINST THE SA LE OF LAND FROM AMAZING REALTOR LTD. WHO IS THE THIRD PARTY AND THE SAID AMOUNT OF ` 2 CRORE WAS RECEIVED BY THE ASSESSEE ON FOLLOWING D ATES:- DATE AMOUNT (RS.) CHEQUE NO. BANK NAME 23.4.2005 11,00,000 310456 DEPOSITED IN LORD KRISHNA BANK, FARIDABAD. 25.4.2005 89,00,000 153027 - DO - 23.9.2005 50,00,000 310495 - DO - 01.02.2006 50,00,000 553912 - DO 3.1 FROM THE AFOREMENTIONED AMOUNT OF ` 2 CRORE, TH E ASSESSEE HAD ADVANCED ` 90 LAC AS FOLLOWS TO ITS SISTER CONCERN:- 14.10.05 40,00,000 CROWN BUILDTECH (P) LTD. CH. NO. 25035 16.02.2006 50,00,000 CROWN DEVELOPERS TRFR. FROM BAN K ITA NOS.4515 & 4738/DEL/2010 4 4. HAVING REGARD TO THESE FACTS, LEARNED CIT (A) AFTE R REFERRING THE MATTER TO THE ASSESSING OFFICER FOR REMAND HAS DELETED T HE ADDITION. 5. NOTICE OF HEARING WAS SENT TO THE ASSESSEE, HOWEVER, N ONE WAS PRESENT ON THE DATE OF HEARING, THEREFORE, WE PROCEE DED TO DECIDE THESE APPEALS EX PARTE QUA THE ASSESSEE AFTER HEARING THE LEARNED DR. 6. THE LEARNED DR AFTER NARRATING THE FACTS, PLEADED THAT THE ASSESSMENT COULD NOT HAVE BEEN ANNULLED BY THE LEARNED CIT (A) ON THE GROUND OF NON-SERVICE OF NOTICE U/S 143 (2) WITHIN TH E PRESCRIBED PERIOD AS THE NOTICE WAS DULY SENT. THE SECOND OBJECTION OF T HE LEARNED DR WAS THAT CIT (A) WITHOUT HAVING RECEIVED ANY COMMENT S OF ASSESSING OFFICER ANNULLED THE REMAND REPORT REGARDING THE ME RITS OF THE ADDITION AND HAS WRONGLY DELETED THE ADDITION. 7. THUS, IT IS THE CASE OF THE LEARNED DR THAT LEARNED CIT (A) WAS WRONG IN ANNULLING THE ASSESSMENT ON THE GROUND OF NON- SERVICE OF NOTICE U/S 143 (2) AND THE ADDITION HAS ALSO WRONGLY B EEN DELETED ON MERITS 8. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE L EARNED DR. WE HAVE ALSO CAREFULLY GONE THROUGH THE ASSESSMENT ORDER AS WELL AS THE ORDER PASSED BY THE CIT (A). THE ORDER PASSED BY T HE ASSESSING OFFICER, AS MENTIONED EARLIER IS AN EX PARTE ORDER. THERE IS A REFERENCE OF REMAND PROCEEDINGS IN THE ORDER OF CIT (A) IN PAR A 3.2 OF HIS ORDER, BUT, HE HAS NOT MENTIONED WHETHER OR NOT THE ASSESSING O FFICER HAS COMMENTED UPON THE MERITS OF THE ADDITIONAL EVIDENCE SUBMITTED BY THE ASSESSEE ON FACTS THAT THE SOURCE OF THE SAID AMOUNT O F ` 90 LAC WAS ADVANCE RECEIVED BY THE ASSESSEE OF ` 2 CRORE AGAINST SALE OF LAND TO A THIRD PARTY. THOUGH LEARNED CIT (A) HAS REFERR ED THAT THE FIRST SERVICE OF NOTICE BY AFFIXTURE CANNOT BE HELD TO BE VALID, BUT, HE HAS NOT ITA NOS.4515 & 4738/DEL/2010 5 QUASHED THE ASSESSMENT ON THIS GROUND. LEARNED CIT (A) H AS DELETED THE ADDITION ON MERITS. THEREFORE, WE FIND THAT THE GROUND NO.1 RAISED BY THE DEPARTMENT IS MISCONCEIVED. SO FAR AS IT RELAT ES TO MERITS, WE FOUND THAT THE DETAILS WHICH HAVE BEEN PROVIDED IN T HE ABOVE PART OF THIS ORDER CLEARLY REVEAL THAT THE SOURCE OF THE ADVA NCE MADE BY THE ASSESSEE TO ITS SISTER CONCERNS IS ADVANCE RECEIVED AGAINST SA LE OF LAND AND THUS INVESTMENT MADE BY THE ASSESSEE WITH ITS SISTER CON CERNS STANDS EXPLAINED. NO CONTRARY EVIDENCE HAS BEEN PRODU CED BY THE REVENUE TO SUGGEST THAT WHAT HAS BEEN HELD BY LEARNED CIT (A) IS CONTRARY TO THE FACTS. THEREFORE, WE SEE NO JUSTIFICA TION IN INTERFERING WITH THE FINDINGS RECORDED BY THE LEARNED CIT (A) TH AT ADDITION ON MERIT WAS NOT SUSTAINABLE. THEREFORE, WE DECLINE TO INTERFE RE AND THE SECOND GROUND RAISED BY THE REVENUE IS ALSO DISMISSED. 9. IN THE RESULT, THE APPEAL WITH REGARD TO QUANTUM IS DISMISSED IN THE MANNER AFORESAID. 10. ITA NO.4738/DEL/2010 RELATES TO DELETION OF CONC EALMENT PENALTY LEVIED IN RESPECT OF AFOREMENTIONED ADDITION OF ` 90 LAC, THE DELETION OF WHICH HAS BEEN CONFIRMED. WHEN ADDITION ITSELF HAS BE EN DELETED, THERE IS NO QUESTION OF LEVY OF PENALTY AND WE HOLD T HAT LEARNED CIT (A) HAS RIGHTLY DELETED THE SAME. THEREFORE, THIS APPEAL FILED BY THE DEPARTMENT IS ALSO DISMISSED. 11. IN THE RESULT, BOTH THE APPEALS FILED BY THE REVE NUE ARE DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 29.12.20 11. SD/- SD/- [G.D. AGRAWAL] [I.P. BANSAL] VICE PRESIDENT JUDICIAL MEMBER DATED, 29.12.2011. DK ITA NOS.4515 & 4738/DEL/2010 6 COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES