M/s. Tinna Overseas Ltd., New Delhi V. DCIT, New Delhi

ITA 5389/DEL/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 4003 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 22-05-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 01-10-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIJAY VERMA
• Keywords: Wrong claim; Block assessment
• Section: 143(3); 132; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: D NEW DELHI BEFORE SHRI G.D. AGRAWAL, HONBLE PRESIDEN T & SHRI K.N. CHARY, JUDICIAL MEMBER ITA NOS.-5386 TO 5389/DEL/2014 ( ASSESSMENT YEARS: 2006-07 TO 2009-10) TINNA OVERSEAS LTD. 6, SULTANPUR, MANDIR ROAD, NEW DELHI. AAACT3586D VS DCIT CENTRAL CIRCLE 17 NEW DELHI. ASSESSEE BY SH. SALIL AGRAWAL, ADV. SH. SHAILESH GUPTA, ADV. REVENUE BY SH. VIJAY VERMA, CIT- DR ORDER PER BENCH ALL THESE APPEALS OF THE SAME ASSESSEE RELATE TO AS SESSMENT YEARS 2006-07 TO 2009-10 AND ARE THE CONSEQUENCE OF THE SEARCH PROCEEDINGS THAT TOOK PLACE ON 11.11.2010 IN TINNA GROUP OF CASES. FACTS INVOLVED ARE THE SAME. SO ALSO THE I SSUES INVOLVED. HENCE, WE FIND IT JUST AND CONVENIENT TO DISPOSE TH EM OFF BY WAY OF THIS COMMON ORDER. DATE OF HEARING 18.09.2017 DATE OF PRONOUNCEMENT 09.10.2017 2 ITA NOS. 5386 TO 5389/DEL/2014 2. BRIEFLY STATED FACTS ARE THAT A SEARCH AND SEIZU RE OPERATION U/S 132 OF THE INCOME TAX ACT, 1961 (FOR SHORT CALL ED AS THE ACT) ON 11.11.2010 WAS CONDUCTED IN TINNA GROUP OF CASES , WHEREIN VARIOUS BOOKS OF ACCOUNT/DOCUMENTS WERE SEIZED. PU RSUANT TO THE NOTICE ISSUED U/S 153C/153A OF THE ACT ON 19.11.201 2, ASSESSEE STATED THAT, THE ORIGINAL RETURN OF INCOME FILED U/ S 139 OF THE ACT MAY BE TREATED AS RETURN FILED IN THAT RESPECT. AO COMPLETED THE ASSESSMENT U/S 143(3) READ WITH SECTION 153C OF THE ACT BY ORDERS DATED 28.03.2013. FOR THE AY 2009-10 AO DISCUSSED THE ADDITIONS ON ACCOUNT OF THE ALLEGED BOGUS CLAIM OF EXPENDITUR E IN RESPECT OF PURCHASE OF BLOWN BITUMEN AND ALSO TRANSPORT EXPEN SES (FREIGHT INWARD CRUMB RUBBER) AND FOLLOWING THE SAME FOR T HE AYS 2006- 07 TO 2008-09 MADE SIMILAR ADDITIONS. 3. CHALLENGING THESE ADDITIONS ASSESSEE PREFERRED A PPEALS BEFORE THE LD. CIT (A) AND LD. CIT (A) DISMISSED THE APPEA LS BY WAY OF IMPUGNED ORDERS. THEREFORE, IN ALL THESE APPEALS T HE ASSESSEE IS CHALLENGING THE ADDITION RELATING TO THE TRANSPORT EXPENSES. 4. AT THE OUTSET, IN RESPECT OF THE APPEAL RELATING TO THE AY 2006-07, IT IS THE ARGUMENT OF THE LD. AR THAT THIS ASSESSMENT IS 3 ITA NOS. 5386 TO 5389/DEL/2014 TIME BARRED IN AS MUCH AS UNDER THE PROVISO TO SECT ION 153C, THE DATE OF SEARCH IS TO BE TAKEN AS THE DATE OF RECEIV ING THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED, FOR THE PURP OSE OF FRAMING OF ASSESSMENT U/S 153C OF THE ACT. HE SUBMITTED TH AT SINCE THE SEIZED PAPERS WERE HANDED OVER BY THE AO OF THE SEA RCHED PERSON TO THE AO OF THE OTHER PERSON ON 16/19.11.2012, ASS ESSMENTS COULD BE FRAMED FOR THE PRECEDING SIX YEARS I.E. AY S 2007-08 TO 2012-13, WHEREAS IN THE CASE ON HAND THE AO HAD FRA MED THE ASSESSMENTS FOR THE AY 2006-07 TO 2011-12. LD. AR PLACED RELIANCE ON THE DECISIONS REPORTED IN CIT VS. RRH S ECURITIES LTD. 380 ITR 612 AND PCIT VS. SURVER AGENCY PVT. LTD. IN ITA NO. 422/2017 DECIDED ON 17.08.2017 FOR THIS PRINCIPLE. 5. ON A CAREFUL CONSIDERATION OF THE MATTER, WE ARE CONVINCED THAT IN VIEW OF THE PROVISIONS CONTAINED IN THE FIR ST PROVISO TO SECTION 153C OF THE ACT IN THE LIGHT OF THE DECISIO NS OF THE HONBLE JURISDICTIONAL HIGH COURT REFERRED TO ABOVE, THE AS SESSMENT FOR THE AY 2006-07 IS TIME BARRED AND AO DID NOT HAVE JURIS DICTION TO FRAME SUCH ASSESSMENT. ON THAT SCORE, WE QUASH THE ASSESSMENT FOR THE YEAR 2006-07. 4 ITA NOS. 5386 TO 5389/DEL/2014 6. NOW COMING TO THE AY 2009-10, AO MADE AN ADDITIO N OF RS. 39,48,963/- ON ACCOUNT OF DISALLOWANCE OF TRANSPORT ATION EXPENSES AND A SUM OF RS. 30 LACS ON ACCOUNT OF BOGUS PURCHA SES. ON THIS ASPECT THE FACTS ARE THAT AT THE TIME OF SEARCH A C RIMINAL COMPLAINT DATED 18.12.2008 BY ONE BHUPINDER KUMAR SEKHRI ADDR ESSED TO THE COMMISSION OF POLICE (CHENNAI) WAS FOUND, WHERE IN IT WAS ALLEGED THAT THE COMPANY CLAIMED EXCESSIVE EXPENDIT URE DURING THE PERIOD BETWEEN 30.04.2005 AND 14.11.2008 AND SO ALS O THERE IS NO MAHESH ROADWAYS AT ALL. BASING ON THIS AND ALSO ON THE STATEMENT OF BHUPINDER KUMAR SEKHRI AO FOUND THAT 6 0% OF THE EXPENSES ARE EXCESSIVELY BOOKED. SO ALSO THE LD. C IT (A) IN HIS ORDER ON PARAGRAPH NO. 7.4 FOUND THAT THE BOOKING O F PURCHASE OF BLOWN BITUMEN IS BOGUS, SINCE IT IS NOT A SUITABLE RAW MATERIAL FOR THE PRODUCT MANUFACTURED BY THE CHENNAI AND SILVASS A DIVISIONS OF THE ASSESSEE COMPANY. IN THAT PROCESS LD. CIT ( A) CONFIRMED THE ADDITIONS MADE BY THE AO BESIDES AND ENHANCING THE ADDITION OF RS. 30 LACS MADE BY THE AO IN RESPECT OF THE PURCHA SE OF BLOWN BITUMEN FROM RS. 30 LACS TO 32,31,360/-. 5 ITA NOS. 5386 TO 5389/DEL/2014 6. IT IS THE ARGUMENT OF THE LD. AR THAT IN THIS MA TTER THOUGH A CRIMINAL COMPLAINT WAS FOUND AT THE TIME OF THE SEA RCH, ALONG WITH IT A FAMILY SETTLEMENT DATED 27.03.2009 RESOLVING T HE DISPUTES AMICABLY BEFORE THE HONBLE COMPANY LAW BOARD ORDER DATED 09.06.2009 WERE ALSO FOUND BUT THEY WERE NOT CONSID ERED BY THE AO. IT IS FURTHER CONTENDED BY THE LD. AR THAT THE COMPLAINT DATED 27.11.2008 WAS WITHDRAWN BY THE SAID BHUPINDER, AS SUCH, NOTHING CONTAINED IN THE COMPLAINT COULD BE CONSIDE RED. LASTLY, HE SUBMITS THAT THE COMPLAINT OF A DIRECTOR OF THE ASSESSEE COMPANY WHICH WAS WITHDRAWN SUBSEQUENTLY CANNOT BE A BASIS FOR DISALLOWANCE OF THE EXPENSES IN THE HANDS OF THE AS SESSEE COMPANY AND SECONDLY IN THE ABSENCE OF ANY MATERIAL INCRIMINATING OR CORROBORATING THE STATEMENT OF BHU PINDER KUMAR SEKHRI ONE OF THE DIRECTORS, CANNOT BE ACTED UPON. WHILE PLACING RELIANCE ON THE DECISIONS REPORTED IN CIT VS. SH HA RJEEV AGGARWAL (DELHI HIGH COURT) 241 TAXMANN 199, PCIT VS. MEETA GUTGUTIA (DELHI HIGH COURT) 395 ITR 526 AND PCIT VS. BEST IN FRASTRUCTURE (INDIA) P. LTD. (DELHI HIGH COURT) 397 ITR 82, LD. AR ARGUED THAT A STATEMENT RECORDED U/S 132(4) CAN FORM BASIS FOR A BLOCK ASSESSMENT ONLY IF SUCH STATEMENT RELATES TO ANY IN CRIMINATING 6 ITA NOS. 5386 TO 5389/DEL/2014 EVIDENCE OF UNDISCLOSED INCOME UNEARTHED DURING SEA RCH AND MERE STATEMENT CANNOT BE HELD AS UN INCRIMINATING MATERI AL AND ADDITIONS SOLELY ON THE BASIS OF STATEMENT RECORDED DURING THE COURSE OF SEARCH CANNOT BE MADE. HE ALSO PLACED RE LIANCE ON CIT VS. FAIR FINVEST LTD. (DELHI HIGH COURT) 357 ITR 14 6, CIT VS. GANGESHWARI METALS LTD. (DELHI HIGH COURT) 361 ITR 10, CIT VS. FCS INTERNATIONAL MARKETING LTD. (PUNJAB & HARYANA HIGH COURT) 203 CTR 601, ACIT VS. ANIMA INVESTMENT LTD. (3 RD MEMBER DELHI ITAT) 73 ITD 125, FOR THE PRINCIPLES THAT NO DISALL OWANCE COULD BE MADE OR SUSTAINED ON THE BASIS OF FIR OR STATEMENTS WITHOUT ENQUIRY BY THE AO AS TO THE CORRECTNESS OR OTHERWIS E OF THE CONTENTS OF SUCH FIR OR STATEMENT AND IN CASE OF AN Y DISALLOWANCE BASING ON SUCH STATEMENTS CAN BE SUSTAINED. 7. ON A CAREFUL CONSIDERATION OF THE MATTER, FIRSTL Y IN RESPECT OF THE OBSERVATIONS OF THE LD. CIT (A) IN PARAGRAPH NO . 7.4 THAT BLOWN BITUMEN IS NOT A SUITABLE RAW MATERIAL FOR PRODUCTI ON OF CRUMB RUBBER MODIFIER, WHEREAS ITS RAW MATERIAL IS NATURA L ASPHALT IS CONCERNED, RECORD DOES NOT SUPPORT THIS OBSERVATION OF THE LD.CIT (A). IN OUR OPINION ON THIS ASPECT THERE SHOULD HA VE SOME ENQUIRY 7 ITA NOS. 5386 TO 5389/DEL/2014 CONDUCTED BY THE AUTHORITIES BELOW AS TO WHETHER TH E BLOWN BITUMEN HAS GOT ANY ROLE IN THE MANUFACTURING OF CR UMB RUBBER MODIFIER, LET ALONE IT IS NOT A SUITABLE RAW MATERI AL. NEXTLY, INSOFAR AS THE EXISTENCE OR NON EXISTENCE OF MAHESH ROADWAY S IS CONCERNED, EXCEPT THE BALD STATEMENT THAT WAS MADE BY BHUPINDER IN THE COMPLAINT THAT MAHESH ROADWAYS DOES NOT EXIS T AT ALL, THE AO DID NOT MAKE ANY ENQUIRIES ON THAT ASPECT BY TAK ING STEPS UNDER LAW. SO ALSO THE AO RELIED UPON THE STATEMEN T OF BHUPINDER ON THE ASPECT OF ANY EXCESSIVE EXPENDITURE. IN ALL FAIRNESS THE AO SHOULD HAVE ENQUIRED THE TRUTH OR OTHERWISE OF THE STATEMENT OF BHUPINDER KUMAR SEKHRI INSTEAD OF BELIEVING IT TO B E A GOSPEL TRUTH. WE, THEREFORE, FIND THAT THERE IS WANT OF E NQUIRY ON THE PART OF THE AO IN RESPECT OF THE PURCHASE OF BLOWN BITUM EN AND ALSO ABOUT THE TRANSPORT CHARGES. SINCE WE BELIEVE THAT THE VERIFICATION OF THE FACT ON THIS ASPECT HAS A BEARING ON THE ASS ESSMENT OF THE INCOME OF THE ASSESSEE FOR THE RELEVANT YEARS, WE D EEM IT JUST AND NECESSARY TO SET ASIDE THESE TWO ISSUES TO THE FILE OF THE AO FOR ASCERTAINING THE TRUTH BY MAKING ENQUIRIES BY AFFOR DING AN OPPORTUNITY TO THE ASSESSEE TO PRODUCE THE RELEVANT DOCUMENTS, IF ANY. 8 ITA NOS. 5386 TO 5389/DEL/2014 8. WITH THIS VIEW OF THE MATTER, WE RESTORE THE ISS UES TO THE FILE OF THE AO FOR MAKING ENQUIRIES ON THE ASPECTS INDIC ATED ABOVE AND TO REACH A CONCLUSION AFTER AFFORDING AN OPPORTUNIT Y TO THE ASSESSEE TO PRODUCE THE EVIDENCE, IF ANY ON THOSE A SPECTS. 9. IN THE RESULT, THE ITA NO. 5386/DEL/2014 IS DISM ISSED AND ITA NOS. 5387 TO 5389/DEL/2014 ARE ALLOWED FOR STAT ISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 09.10.2017 SD/- SD/- (K.N. CHARY) (G.D. AGRAWAL) JUDICIAL MEMBER PRESIDENT DATED: 09.10.2017 *KAVITA ARORA COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT TRUE COPY ASSISTANT REGISTRAR ITAT NEW DELHI 9 ITA NOS. 5386 TO 5389/DEL/2014