Suresh Aggarwal, New Delhi V. Addl. CIT, New Delhi

ITA 5362/DEL/2010

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6532 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 26-10-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 30-11-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N K BANSAL SENIOR
• Section: 142(1); 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G : NEW DELHI) BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.5362/DEL./2010 (ASSESSMENT YEAR : 2007-08) SHRI SURESH AGGARWAL, VS. ADDL.CIT, RANGE 34, PROP. : ROYAL APPLIANCES, NEW DELHI. 603/9, G.T. ROAD, SHAHDARA, DELHI 110 032. (PAN : ABZPA1042J) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VED JAIN, ADVOCATE REVENUE BY : SHRI N.K. BANSAL, SENIOR DR DATE OF HEARING : 26.10.2016 DATE OF ORDER : 09.12.2016 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : THE APPELLANT, SHRI SURESH AGGARWAL (HEREINAFTER RE FERRED TO AS THE ASSESSEE) BY FILING THE PRESENT APPEAL SOU GHT TO SET ASIDE THE IMPUGNED ORDER DATED 08.03.2010 PASSED BY THE C OMMISSIONER OF INCOME-TAX (APPEALS)-XXVII, NEW DELHI QUA THE AS SESSMENT YEAR 2007-08 ON THE GROUNDS INTER ALIA THAT :- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER PASSED BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS) CIT (A) IS BAD BOTH IN THE EYE OF LAW AND ON FACTS. ITA NO.5362/DEL./2010 2 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEANED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIR MING THE ACTION OF THE A.O. IN ARBITRARILY ESTIMATING THE IN COME OF THE ASSESSEE AT RS.34,88,158/- DESPITE THE ASSESSEE MAINTAINING PROPER BOOKS AND ACCOUNTS. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEANED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIR MING THE ADDITION DESPITE THERE BEING NO UNRECORDED TRANSACT ION ON RECORD FOUND DURING THE COURSE OF SURVEY. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEANED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN UPHOLD ING THE FOLLOWING INDEPENDENT ADDITIONS AND DISALLOWANCES IGNORING THE FACT THAT THE INCOME HAVING BEEN OFFER ED AT RS.30,00,000/- SUBSUMES ALL THE OTHER ADDITIONS AND DISALLOWANCES:- (I) AVERAGE OF LAST TWO YEARS 4,88,158/- (II) ON ACCOUNT OF PERSONAL USE 25,000/- (III) HOUSE HOLD EXPENSES 1,50,000/- 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEANED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIR MING THE ADDITION OF RS.25,000/- ON ACCOUNT OF PERSONAL USE. 6. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTE R ANY OF THE GROUNDS OF APPEAL. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THIS CASE ARE : ASSESSEE DECLARED RETURN OF INCOME QUA ASSESS MENT YEAR 2007-08 OF RS.13,98,780/- WHICH WAS SUBJECTED TO SC RUTINY AS THE SURVEY UNDER SECTION 133A OF THE INCOME-TAX ACT, 19 61 (FOR SHORT THE ACT) CARRIED OUT AT THE PREMISES OF ASSESSEE ON 12.02.2007. THEREAFTER, NOTICES U/S 143(2) AND 142(1) WAS ISSUE D CALLING UPON THE ASSESSEE TO FILE NECESSARY DETAILS ALONG WITH A UDIT REPORT U/S 44AB. ASSESSEE PUT IN APPEARANCE THROUGH HIS AUTHOR IZED ITA NO.5362/DEL./2010 3 REPRESENTATIVE. DURING THE SURVEY PROCEEDINGS, ASS ESSEE SURRENDERED RS.30,00,000/- FOR THE CURRENT ASSESSME NT YEAR WITH CONDITION THAT NO PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT READ WITH EXPLANATION 4 WILL BE INITIATED . 3. AO THEN PROCEEDED TO TAKE THE AVERAGE INCOME OF THE LAST 2 YEARS AT RS.4,88,158/- PLUS RS.30,00,000/- THE AMOU NT SURRENDERED DURING SURVEY PROCEEDINGS. AO ALSO PROCEEDED FOR D ISALLOWANCE FOR VIOLATION OF SECTION 40(A)(IA) (RS.7,74,517/-), LATE PAYMENT OF ESI (RS.16,433/-) AND PF (RS.1,47,546/-) AS PER AUD IT REPORT AND COMPUTATION OF INCOME AND MADE THE TOTAL ADDITION T O THE TUNE OF RS.9,38,496/-. AO ASSESSED THE TOTAL INCOME OF THE ASSESSEE AT RS.47,03,222/- U/S 143 (3) OF THE ACT. 4. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT ( A) BY WAY OF FILING THE APPEAL WHO HAS PARTLY ALLOWED THE APPEAL . FEELING AGGRIEVED, THE ASSESSEE HAS COME UP BEFORE THE TRIB UNAL BY WAY OF FILING THE PRESENT APPEAL. 5. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 6. UNDISPUTEDLY, DURING COMPULSORY SCRUTINY AND SUR VEY PROCEEDINGS U/S 133A, THE ASSESSEE HAS SURRENDERED AN AMOUNT OF ITA NO.5362/DEL./2010 4 RS.30,00,000/- WHO HAS EARLIER DECLARED HIS INCOME AT RS.13,98,780/- ON THE BASIS OF ACCOUNTS MAINTAINED IN THE ORDINARY COURSE OF BUSINESS; THAT DURING THE SURVEY PROCEEDI NGS, NO INCRIMINATING MATERIAL HAS COME ON RECORD SO AS TO PROVE ANY TRANSACTION OUTSIDE THE BOOKS OF ACCOUNT. 7. NOW, THE LD. AR FOR THE ASSESSEE CONTENDED THAT ASSESSEE WAS FORCED TO SUBMIT A LETTER OFFERING ADDITIONAL I NCOME OF RS.30,00,000/- WHICH IS NOT SUSTAINABLE ON THE FACE OF THE FACT THAT THERE IS NO DISCREPANCY IN THE BOOKS OF ACCOUNT SCR UTINIZED DURING SURVEY PROCEEDINGS. LD. AR FURTHER CONTENDED THAT THE OFFER OF THE ASSESSEE TO SURRENDER THE INCOME OF RS.30,00,000/- WAS A CONDITIONAL OFFER THAT NO PENALTY PROCEEDINGS U/S 2 71(1)(C) WILL BE INITIATED AGAINST THE ASSESSEE. HOWEVER, THE REVENU E HAS ACCEPTED THE OFFER AND MADE THE ADDITION OF RS.30,00,000/- A S PER SURRENDER MADE BY THE ASSESSEE AND ALSO INITIATED PENALTY PRO CEEDINGS. THE REVENUE CAN EITHER ACCEPT THE ASSESSEE'S SURRENDER AS A WHOLE OR REJECT IT BUT IT CANNOT ACCEPT THE SURRENDER IN PAR T IGNORING THE CONDITION ATTACHED WITH IT. 8. TO EXAMINE THE ARGUMENT ADDRESSED BY THE LD. AR, WE WOULD LIKE TO REPRODUCE THE LETTER DATED 13.03.2007 SUBMI TTED BY THE ASSESSEE DURING SURVEY PROCEEDINGS FOR READY PERUSA L AS UNDER :- ITA NO.5362/DEL./2010 5 'MARCH 13, 2007 THE DEPUTY COMMISSIONER OF INCOME TAX DEPARTMENT CIRCLE 34(1) NEW DELHI SURVEY U/S 133A DATED 12.02.2007 ON SH. SURESH AGARWAL PROP. M/S ROYAL APPLIANCES SIR, WITH REFERENCE TO THE ABOVE WE MAY SUBMIT THAT DURI NG THE POST SURVEY PROCEEDINGS, VARIOUS OBSERVATIONS W ERE MADE BY THE DEPARTMENT AND THE ASSESSEE HAS REPLIED TO ALL THE OBSERVATION AT VARIOUS OCCASIONS THROUGH HI S SUBMISSIONS, AS PER OUR RECORDS THERE IS NO DISCREP ANCY IN THE BOOKS OF ACCOUNTS AND THE RECORDS FOUND AT T HE TIME OF SURVEY. HOWEVER, JUST TO BY THE PEACE OF MIND TH E ASSESSEE IS READY TO SURRENDER INCOME OF RS.30,00, 000/- FOR THE CURRENT ASSESSMENT YEAR WITH A CONDITION TH AT NO PENALTY PROCEEDING U/S 271 (1)(C) RW EXPLANATION 4 WILL BE INITIATED AGAINST THE ASSESSEE. THIS SURRENDER I S ON ACCOUNT OF INCOME CALCULATED FROM THE DOCUMENTS/INFORMATIONS/MATERIAL IMPOUNDED BY THE DEPARTMENT UNDER THE HEAD STOCK/LOANS/ETC. ETC. SINCERELY SD/- COUNSEL OF THE ASSESSEE' 9. PERUSAL OF THE LETTER REFERRED TO ABOVE FAILS TO PROVE THE CONTENTION OF THE LD. AR THAT ASSESSEE WAS COERCED TO SUBMIT THE LETTER OFFERING ADDITIONAL INCOME OF RS.30,00,000/- BECAUSE THE SURVEY TOOK PLACE AT THE ASSESSEES BUSINESS PREMIS ES ON 12.02.2007 WHEREAS THE LETTER WAS SUBMITTED ON 13.0 3.2007 I.E. ONE ITA NO.5362/DEL./2010 6 MONTH AFTER THE SURVEY AND AS SUCH, THIS CONTENTION OF THE LD. AR OF THE ASSESSEE IS APPARENTLY NOT TENABLE. SO, IN THE SE CIRCUMSTANCES, THERE CANNOT BE ANY QUESTION OF COERCION MADE BY TH E REVENUE AUTHORITIES ON THE ASSESSEE TO SUBMIT SUCH LETTER. 10. HOWEVER, WE DO FIND FORCE IN THE SECOND CONTENT ION OF THE LEARNED COUNSEL THAT THE SURRENDER WAS CONDITIONAL I.E., WITH THE CONDITION THAT NO PENALTY PROCEEDINGS WOULD BE INIT IATED AGAINST THE ASSESSEE. WE ALSO AGREE WITH THE LEARNED COUNSEL TH AT THE REVENUE CAN EITHER ACCEPT OR REJECT THE ASSESSEE'S SURRENDE R IN TOTO AND THEREFORE, ONCE THE SURRENDER IS ACCEPTED, THEN IT SHOULD BE PRESUMED TO HAVE BEEN ACCEPTED WITH THE CONDITION T HAT NO PENALTY WOULD BE LEVIED. HOWEVER, AT PRESENT, THIS ARGUMEN T OF THE ASSESSEE IS PREMATURE BECAUSE NO PENALTY HAS BEEN L EVIED SO FAR BY THE REVENUE U/S 271(1)(C). THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE ADDITION OF RS.30,00,000/- ON THE BAS IS OF SURRENDERED AMOUNT AS PER ASSESSEES LETTER DATED 13.03.2007 IS RIGHTLY MADE BY THE ASSESSING OFFICER AND AFFIRMED BY THE LD. CIT ( A), HENCE THE SAME IS SUSTAINED. 11. LD. AR FOR THE ASSESSEE FURTHER CHALLENGED THE ADDITION OF RS.4,88,158/- BEING THE AVERAGE OF LAST TWO YEARS, RS.25,000/- ON ACCOUNT OF PERSONAL USE AND RS.1,50,000/- ON ACCOUN T OF HOUSEHOLD ITA NO.5362/DEL./2010 7 EXPENSES ON THE GROUND THAT THIS AMOUNT WAS PART AN D PARCEL OF RS.30,00,000/- AND ADDITION THEREOF CANNOT BE SEPAR ATELY MADE. 12. SO FAR AS ADDITION OF RS.4,88,158/- BEING THE A VERAGE OF LAST 2 YEARS MADE BY THE AO AND AFFIRMED BY THE LD. CIT (A) IS CONCERNED, WHEN THE AO HAS WORKED OUT THE PROFIT OF THE LAST 2 YEARS ON AVERAGE BASIS KEEPING IN VIEW THE SURRENDE RED INCOME OF RS.30,00,000/-, THERE IS NO SCOPE TO INTERFERE INTO THE FINDINGS RETURNED BY THE AO AND AFFIRMED BY THE LD. CIT (A). MOREOVER, THE AVERAGE PROFIT HAS BEEN COMPUTED BY THE AO ON THE B ASIS OF BOOKS OF ACCOUNTS OF THE ASSESSEE STATED TO HAVE BEEN MAI NTAINED IN THE REGULAR COURSE OF BUSINESS. SO, THE ADDITION OF RS .4,88,158/- IS ALSO SUSTAINABLE. 13. SO FAR AS THE QUESTION OF MAKING ADDITION OF RS .25,000/- AND RS.1,50,000/- ON ACCOUNT OF PERSONAL USE AND HOUSEH OLD EXPENSES MADE BY THE AO AND AFFIRMED BY LD. CIT (A) ARE CONC ERNED, WHEN THE ASSESSEE HAS ALREADY SURRENDERED AMOUNT OF RS.3 0,00,000/- APART FROM THE RETURNED INCOME OF RS.13,98,780/- AN D AVERAGE OF LAST 2 YEARS TO THE TUNE OF RS.4,88,158/- HAS ALREA DY BEEN ASSESSED BY THE AO, DISALLOWANCES MADE BY THE AO AND AFFIRME D BY THE CIT (A) ARE NOT SUSTAINABLE BECAUSE THEY SUBSUMES IN TH E SURRENDERED AMOUNT OF RS.30,00,000/-. MOREOVER, KEEPING IN VIE W THE SMALLNESS OF THE AMOUNT, WE HEREBY DELETE AMOUNT OF RS.25,000/- ITA NO.5362/DEL./2010 8 AND RS.1,50,000/- ON ACCOUNT OF PERSONAL USE AND HO USEHOLD EXPENSES. 14. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, WE HE REBY PARTLY ALLOW THE APPEAL FILED BY THE ASSESSEE. ORDER PRONOUNCED IN OPEN COURT ON THIS 9 TH DAY OF NOVEMBER, 2016. SD/- SD/- (G.D. AGRAWAL) (KULDIP SINGH) VICE PRESIDENT JUDICIAL MEMBER DATED THE 9 TH DAY OF DECEMBER, 2016 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT-XXVII, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.