SAAR INDUSTRIES LTD., NEW DELHI V. ITO, WARD- 7(1), NEW DELHI

ITA 4876/DEL/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 8410 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 09-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S L ANURAGI
• Keywords: Depreciation; Opportunity of being heard; Unabsorbed depreciation; Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH SMC : NEW DELHI) BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NOS. 4875 & 4876/DEL/2018 ASSESSMENT YEARS: 2008-09 & 2010-11 SAAR INDUSTRIES LTD. VS. ITO, WARD 7(1) C/O PRATAP VIKRAM & ASSOCIATES, ROOM NO. 305, CHARTERED ACCOUNTANTS, C.R. BUILDING, 212-213, 2 ND FLOOR, RAJENDRA JAINA I.P. ESTATE, TOWER-I, INDUSTRIAL AREA, NEW DELHI-1 WAZIRPUR, DELHI 110 052 (PAN: AABCS8871K) (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. PRATAP GUPTA, CA REVENUE BY : SH. S.L. ANURAGI, SR. DR. ORDER THE ASSESSEE HAS FILED THESE APPEALS AGAINST THE R ESPECTIVE ORDERS BOTH DATED 28.3.2018 OF THE LD. CIT(A)-15, NEW DELHI PERTAINING TO ASSESSMENT YEAR 2008-09 & 2010-11. SI NCE THE SIMILAR GROUNDS ARE INVOLVED IN THESE APPEALS, HENCE, THE A PPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CO MMON ORDER FOR THE SAKE OF CONVENIENCE. THE GROUNDS RAISED IN ITA NO. 4875/DEL/2018 (AY 2008-09) READ AS UNDER:- 1. THAT THE LEARNED CIT (APPEALS) - 15, DELHI HAS GROSSLY ERRED BOTH ON FACTS AND IN LAW AND WAS 2 WHOLLY UNJUSTIFIED IN DISMISSING THE APPEAL WITHOUT PROPERLY APPRECIATING THE FACTS OF THE CASE, WITHOU T GOING INTO THE MERITS OF THE CASE, WITHOUT CONSIDER ING THE SUBMISSIONS FILED AND WITHOUT ADJUDICATING THE GROUNDS OF APPEAL RAISED BY THE APPELLANT COMPANY IN A JUSTICIABLE MANNER AND THEREFORE, THE ORDER PASSED BY HIM DESERVES TO BE QUASHED. 2. THAT IN ANY CASE AND WITHOUT PREJUDICE TO THE ABOVE, THE AUTHORITIES BELOW HAVE GROSSLY ERRED AND WERE WHOLLY UNJUSTIFIED IN DISTURBING THE DECLARED PROFIT AND RESULTS BY MAKING AND SUSTAINING THE ADDITION OF RS. 1363907/- TO THE TOTAL INCOME RETURNED BY THE APPELLANT WITHOUT PROPERLY APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CAS E AND WITHOUT POINTING OUT ANY DEFECT / DISCREPANCY I N THE BOOKS OF ACCOUNT MAINTAINED BY THE APPELLANT AND WITHOUT EVEN INVOKING THE PROVISIONS OF SECTION 145(3) OF THE ACT AND THEREFORE, THE ORDERS SO PASSED BY THEM DESERVE TO BE QUASHED. 3. THAT IN ANY CASE AND WITHOUT PREJUDICE TO THE ABOVE, THE AUTHORITIES BELOW HAVE GROSSLY ERRED AND WERE WHOLLY UNJUSTIFIED IN THE FACTS AND 3 CIRCUMSTANCES OF THE CASE IN MAKING AND SUSTAINING AN ADDITION OF RS. 1363907/- BY TAKING THE COST OF CONSTRUCTION AT RS.796093/-, ON THE BASIS OF COST INCURRED UP TO 31.03.2007, AGAINST TOTAL SALE PROCEEDS OF RS.2400000/- AND THUS IN WORKING OUT THE GROSS PROFIT RATE OF 66.83% WHICH WAS NOT POSSIBLE TO ACHIEVE AND THEREFORE, THE ORDERS SO PASSED BY THEM DESERVE TO BE QUASHED. 4. THAT THE BASIS AND PREMISES AS ADOPTED BY THE AUTHORITIES BELOW WHILE FRAMING AND SUSTAINING THE ASSESSMENT ORDER WERE NOT WELL FOUNDED AND BORNE OUT BY THE FACTS PUT ON RECORD RATHER THEY WERE MISCONCEIVED, PERVERSE, ARBITRARY, UNJUSTIFIED, UNWARRANTED AND UNCALLED FOR IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW AND THEREFORE, THE ORDERS SO PASSED BY THEM DESERVE TO BE QUASHED. 5. THAT IN ANY CASE AND WITHOUT PREJUDICE, THE ORDERS PASSED BY THE AUTHORITIES BELOW ARE MISCONCEIVED, UNJUSTIFIED AND UNWARRANTED IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 4 THAT THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER, MODIFY OR DELETE ANY OR ALL OF THE GROUNDS O F APPEAL BEFORE OR AT THE TIME OF HEARING. 2. THE GROUNDS RAISED IN ITA NO. 4876/DEL/2018 (AY 2010- 11) READ AS UNDER:- 1. THAT THE LEARNED CIT (APPEALS) - 15, DELHI HAS GROSSLY ERRED BOTH ON FACTS AND IN LAW AND WAS WHOLLY UNJUSTIFIED IN DISMISSING THE APPEAL WITHOUT PROPERLY APPRECIATING THE FACTS OF THE CASE, WITHOU T GOING INTO THE MERITS OF THE CASE, WITHOUT CONSIDER ING THE SUBMISSIONS FILED AND WITHOUT ADJUDICATING THE GROUNDS OF APPEAL RAISED BY THE APPELLANT COMPANY IN A JUSTICIABLE MANNER AND THEREFORE, THE ORDER PASSED BY HIM DESERVES TO BE QUASHED. 2. THAT IN ANY CASE AND WITHOUT PREJUDICE TO THE ABOVE, THE AUTHORITIES BELOW HAVE GROSSLY ERRED AND WERE WHOLLY UNJUSTIFIED IN DISTURBING THE DECLARED PROFIT AND RESULTS BY MAKING AND SUSTAINING THE ADDITION OF RS. 1244334/- TO THE TOTAL INCOME RETURNED BY THE APPELLANT WITHOUT PROPERLY APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CAS E AND WITHOUT POINTING OUT ANY DEFECT / DISCREPANCY I N THE BOOKS OF ACCOUNT MAINTAINED BY THE APPELLANT AND WITHOUT EVEN INVOKING THE PROVISIONS OF SECTION 145(3) OF THE ACT AND THEREFORE, THE ORDERS SO PASSED BY THEM DESERVE TO BE QUASHED. 3. THAT IN ANY CASE AND WITHOUT PREJUDICE TO THE ABOVE, THE AUTHORITIES BELOW HAVE GROSSLY ERRED AND 5 WERE WHOLLY UNJUSTIFIED IN THE FACTS AND CIRCUMSTANCES OF THE CASE IN MAKING AND SUSTAINING AN ADDITION OF RS. 1244334/- BY TAKING THE COST OF CONSTRUCTION AT RS.572332/-, ON THE BASIS OF COST INCURRED UP TO 31.03.2007, AGAINST TOTAL SALE PROCEEDS OF RS. 1816666/- AND THUS IN WORKING OUT THE GROSS PROFIT RATE OF 78.50% WHICH WAS NOT POSSIBLE TO ACHIEVE AND THEREFORE, THE ORDERS SO PASSED BY THEM DESERVE TO BE QUASHED. 4. THAT IN ANY CASE AND WITHOUT PREJUDICE TO THE ABOVE, THE AUTHORITIES BELOW HAVE GROSSLY ERRED IN WORKING OUT AND SUSTAINING THE COST OF CONSTRUCTION AT RS.572332/- BY CONVERTING AREA OF 107.307 SQUARE METER INTO 1073.07 SQUARE FEET AND APPLYING THE RATE OF RS.533.36 PER SQUARE FEET AS COST OF CONSTRUCTION WHEREAS THE ACTUAL AREA WOULD BE 1155.12 SQUARE FEET (107.307 * 10.7646) AND THUS COST OF CONSTRUCTION HAS BEEN WORKED OUT ERRONEOUSLY AT RS.572332/- INSTEAD OF RS.616093/- RESULTING IN A HIGHER ADDITION OF RS.43761/-. 5. THAT IN ANY CASE AND WITHOUT PREJUDICE TO THE ABOVE, THE AUTHORITIES BELOW HAVE GROSSLY ERRED IN WORKING OUT AND SUSTAINING THE QUANTUM OF ADDITION AT RS. 1244334/- IGNORING THE FACT THAT THE APPELLA NT HAS ITSELF SHOWN A PROFIT OF RS.181666/- WHICH OUGH T TO HAVE BEEN DEDUCTED OUT OF THE TOTAL DIFFERENCE WORKED OUT BETWEEN COST OF CONSTRUCTION AND THE SALE CONSIDERATION AND THUS THIS HAS RESULTED IN DOUBLE ADDITION TO THE EXTENT OF RS. 181666/-. 6 6. THAT IN ANY CASE AND WITHOUT PREJUDICE TO THE ABOVE, THE AUTHORITIES BELOW HAVE GROSSLY ERRED AND WERE WHOLLY UNJUSTIFIED IN NOT ALLOWING THE SET OFF OF BROUGHT FORWARD UNABSORBED DEPRECIATION TO THE EXTENT OF RS. 132388/- WHICH WAS DULY SHOWN IN THE COMPUTATION OF THE TOTAL INCOME AND DULY DEPICTED I N THE ITR- 6 FILED BEFORE THE DEPARTMENT AND THUS THE INCOME HAS BEEN ASSESSED HIGHER BY RS. 132388/-. 7. THAT THE BASIS AND PREMISES AS ADOPTED BY THE AUTHORITIES BELOW WHILE FRAMING AND SUSTAINING THE ASSESSMENT ORDER WERE NOT WELL FOUNDED AND BORNE OUT BY THE FACTS PUT ON RECORD RATHER THEY WERE MISCONCEIVED, PERVERSE, ARBITRARY, UNJUSTIFIED, UNWARRANTED AND UNCALLED FOR IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW AND THEREFORE, THE ORDERS SO PASSED BY THEM DESERVE TO BE QUASHED. 8. THAT IN ANY CASE AND WITHOUT PREJUDICE, THE ORD ERS PASSED BY THE AUTHORITIES BELOW ARE MISCONCEIVED, UNJUSTIFIED AND UNWARRANTED IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 7 9. THAT THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER, MODIFY OR DELETE ANY OR ALL OF THE GROUNDS O F APPEAL BEFORE OR AT THE TIME OF HEARING. 3. I WILL FIRST TAKE UP THE ITA NO. 4875/DEL/2018 (AY 2008- 09) AND MY FINDING GIVEN THEREIN WILL APPLY MUTATIS MUTANDIS IN OTHER APPEAL, SINCE SIMILAR FACTS AND FINDINGS ARE PERMEATING IN OTHER APPEAL ALSO. 4. THE FACTS NARRATED BY THE REVENUE AUTHORITIES AR E NOT DISPUTED BY BOTH THE PARTIES, HENCE, THE SAME ARE NOT REPEAT ED HERE FOR THE SAKE OF CONVENIENCE. 5. AT THE TIME OF HEARING, LD. COUNSEL FOR THE ASSE SSEE STATED THAT THE LD. FIRST APPELLATE AUTHORITY HAS NOT GIVEN SUF FICIENT OPPORTUNITY TO SUBSTANTIATE ITS CLAIM AND PASSED THE EXPARTE ORDER. HE FURTHER SUBMITTED THAT AO WAS UNJUSTIFIED IN DISTURBING TH E DECLARED PROFIT AND RESULTS BY MAKING AND SUSTAINING THE ADDITION O F RS. 1363907/- TO THE TOTAL INCOME RETURNED BY THE APPELLANT WITHO UT CONSIDERING THE SUBMISSIONS AND WITHOUT POINTING OUT ANY DEFECT / DISCREPANCY IN THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE AND WITHOUT EVEN INVOKING THE PROVISIONS OF SECTION 145(3) OF THE AC T. HE FURTHER SUBMITTED THAT AO WHILE MAKING THE ADDITION OF RS. 1363907/- BY TAKING THE COST OF CONSTRUCTION AT RS. 796093/-, ON THE BASIS OF COST INCURRED UPTO 31.3.2007, AGAINST TOTAL SALE PROCEED S OF RS. 2400000/- AND THUS IN WORKING OUT THE GROSS PROFIT RATE OF 66.83% WHICH WAS NOT POSSIBLE TO ACHIEVE. HENCE, HE REQUES TED THAT THIS 8 MATTER MAY BE SET ASIDE TO THE FILE OF THE AO FOR FRESH ADJUDICATION, AFTER GIVING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 4. ON THE OTHER HAND, LD. DR HAS NOT RAISED ANY SER IOUS OBJECTION TO THE REQUEST OF THE LD. COUNSEL FOR THE ASSESSEE . 5. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORDS. AFTER PERUSING THE RELEVANT RECORDS AVAILABLE WITH ME AL ONGWITH THE ORDERS OF THE REVENUE AUTHORITIES, I AM OF THE CONSIDERED VIEW THAT LD. CIT(A) HAS NOT GIVEN SUFFICIENT OPPORTUNITY TO THE ASSESSEE IN SUBSTANTIATING ITS CLAIM AND AO HAS ALSO NOT PROPE RLY CONSIDERED THE SUBMISSIONS AND PROPERLY APPRECIATING THE FACTS AN D CIRCUMSTANCES OF THE CASE AND WITHOUT POINTING OUT ANY DEFECT / D ISCREPANCY IN THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE, WHILE FRAMING THE ASSESSMENT. THEREFORE, IN THE INTEREST OF JUSTICE , I AM SETTING ASIDE THE ISSUES IN DISPUTE TO THE FILE OF THE AO TO DECI DE THE SAME AFRESH, AFTER GIVING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE ASSESSEE IS ALSO DIRECTED TO FILE ALL THE NECE SSARY DOCUMENTS BEFORE THE AO AND DID NOT TAKE ANY UNNECESSARY ADJO URNMENT. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATISTICAL PURPO SES. 6. SINCE IN OTHER ITA NO. 4876/DEL/2018 (AY 2010-11 ), SIMILAR FACTS ARE PERMEATING AND SAME FINDING HAS B EEN GIVEN, THEREFORE, MY FINDING GIVEN ABOVE WILL APPLY MUTATIS MUTANDIS IN THIS APPEAL ALSO, BECAUSE THE FACTS AND CIRCUM STANCES OF 9 THE CASE ARE EXACTLY THE SAME, HENCE, THIS APPEAL I S ALLOWED FOR STATISTICAL PURPOSES. 7. IN THE RESULT, BOTH THE APPEALS OF ASSESSEE AR E ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 04-01-2019. SD/- (H.S. SIDHU) JUDICIAL MEMBER DT. 04.01.2019 SR BHATNAGAR COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT - TRUE COPY - BY ORDER, ASSISTANT REGISTRAR ITAT DELHI BENCHES