ITO- 1, Uttrakhand V. M/s. Delicia Foods (India) Pvt. Ltd., Uttrakhand

ITA 5562/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 91134 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 12-06-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 14-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARWINDER KAUR
• Assessee Lawyers: V RAJ KUMAR
• Keywords: Unexplained cash credit; Income from undisclosed sources; Opportunity of being heard; Deemed to accrue or arise in india; Retrospective amendment; Tax effect
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B , NEW DELHI BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER AND SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO . 5 562 / DEL/201 3 ASSESSMENT YEAR: 20 10 - 11 INCOME TAX OFFICER - 1 , VS. M/S DELCIA FOOD (INDIA) PVT INCOME TAX OFFICE, LTD., VILL - PEERUMADARA, STATION ROAD, RAMNAGAR KASHIPUR UTTARAKHAND (PAN: AABCD6731F) (APPELLANT) (RESPONDENT) APPELLANT BY : S MT. PARWINDER KAUR, SR. DR RESPONDENT BY : SH . V. RAJ KUMAR, ADVOCATE DATE OF HEARING : 12 - 0 6 - 2015 DATE OF ORDER : 15 - 0 6 - 2015 ORDER PER H.S. SIDHU, J.M. THIS APPEAL BY THE DEPARTMENT IS DIRECTED AGAINST THE ORDER DATED 26 . 7 .201 3 OF L D. CIT(A) - II, DEHRADUN PERTAINING TO ASSESSMENT YEAR 20 10 - 11 . 2. THE GROUNDS RAISED IN THE APPEAL OF THE DEPARTMENT READ AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT (A) HAS COMPLETELY ERRED TO APPRECIATE THE IMPLICATIONS OF INCOME BEING OFFERED BY THE ASSESSEE ITSELF FOR TAXATION A ND ACTION TAKEN BY THE A.O. IT IS A CASE OF DEDUCTION U/S 80LC AND THE ASSESSEE DID NOT HAVE PROFIT FROM ELIGIBLE BUSINESS FOR CLAIMING DEDUCTION U/S 801C. THIS CREDIT ENTRY IN THE FORM OF INCOME FROM JOB RECEIPT WAS S H OWN IN PROFIT AND LOSS ACCOUNT AND DE DUCTION WAS CLAIMED ON THE SAME. THE LD. CIT (A) - II FAILED TO APPREC IATE THE INTENT OF THE ASSESSEE IN DOING SO. HE ENDED UP PAYING VIRTUALLY NO TAX ON THE AMOUNT HE INTRODUCED IN THE BOOKS ON ACCOUNT OF INCOME FROM JOB RECEIPTS. HE INTRODUCED HIS UNACCOU NTED MONEY IN THE GARB OF INCOME FROM JOB RECEIPTS ITA NO. 5562 / D EL /20 1 3 ( ITO VS. DELICIA FOODS (INDIA) PVT. LTD. 2 KNOWING FULLY WELL THAT BY DOING SO THERE WOULD NOT BE ANY TAX LIABILITY. HAD IT NOT BEEN A CASE OF DEDUCTION U/S 80 I C, THEN THE FINDING GIVEN BY LD. CIT WOULD HAVE BEEN ACCEPTABLE. THE MOTIVE OF THE ASSES SEE WAS NOT TO OFFER THE INCOME FROM JOB RECEIPT FOR TAX PURPOSES; RATHER THE MOTIVE WAS TO INTRODUCE UNACCOUNTED MONEY INTO THE BOOKS OF ACCOUNTS WITHOUT PAYING ANY TAX ON IT. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) - 11 HAS ERRED IN LAW TO APPRECIATE THE IMPLICATION OF THE ADDITION BY THE A.O. FOR REVENUE. THE A O. BROUGHT TO TAX THE UNACCOUNTED INCOME INTRODUCED BY THE ASSESSEE IN THE GARB OF JOB RECEIPTS. THE A.O. PROVED WITH DUE DILIGENCE THAT THE JOB RECEIPTS WERE NOT ACTUALLY INCOME ON ACCOUNT OF JOB RECEIPTS AND THE INCOME WAS DEEMED INCOME U/S 68 MEANING THEREBY THE ASSESSEE COULD NOT SET OFF BUSINESS LOSS AGAINST THIS INCOME. HE ALLOWED THE ASSESSEE TO CARRY FORWARD THE BUSINESS LOSS AND DETERMINED TAX LIABILITY ON THE DEEME D INCOME. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) - 1 1 HAS ERRED IN LAW AND FACTS TO HOLD THAT THE ASSESSEE HAS ALREADY OFFERED THE INCOME FROM JOB WORK FOR TAX IN ITS RETURN OF INCOME. NO DOUBT, THE INCOME HAS BEEN OFFERED FOR TAX, BUT THE SOURCE OF THE SAME HAS NOT BEEN SUBSTANTIATED BY THE ASSESSEE DESPITE AFFORDING IT A NUMBER AND AMPLE OPPORTUNITY OF BEING HEARD. THE LD. CIT (A) - II HAS NOT CONSIDERED THE SPIRIT AND CONCRETE GROUNDS OF ADDITION MADE BY THE ASSESSING OFFICER. THE ASSESSEE HAD SHOWN CASH CREDITS TO AVAIL THE DEDUCTION U/S 80 - IC OF THE INCOME TAX ACT, 1961. IF SUCH CASH CREDITS HAD NOT BEEN SHOWN BY THE ASSESSEE, IT WOULD NOT HAVE BEEN ELIGIBLE FOR DEDUCTION U/S 80 - IC. THE ASSESSING OFFICER HAS ESTABLISHED IN DETAILE D IN THE ASSESSMENT ORDER 'THAT THE ASSESSEE COULD NOT SUBSTANTIATE THE SOURCE OF CASH CREDITS AND HENCE, THE ASSESSING OFFICER TREATED THE CASH CREDITS AS UNEXPLAINED INCOME BY INVOKING THE PROVISIONS OF SECTION 68 OF THE INCOME TAX ACT, 1961. IT HAS ALSO BEEN EXPLAINED IN THE ASSESSMENT ORDER IN DETAILED ALONG WITH JUDICIAL PRONOUNCEMENTS THAT DEDUCTION U/S 80 - IC IS NOT ALLOWABLE ON THE UNEXPLAINED CASH CREDITS AND THE ASSESSEE WILL NOT BE ENTITLED TO CARRY FORWARD THE BUSINESS LOSS AND ACCORDINGLY DETERM INED TAX LIABILITY ON THE DEEMED INCOME. 4. THE FINDING GIVEN BY LD. CIT (A) - 11 THAT IF THE INCOME WAS OFFERED FOR TAXATION BY THE ASSESSEE THEN THERE WAS NO QUESTION OF INVOKING SECTION 68 IS LEGALLY INCORRECT. HIS FINDING IS TOTALLY INCONSISTENT WITH THE PROVISIONS OF THE SECTION 68. ITA NO. 5562 / D EL /20 1 3 ( ITO VS. DELICIA FOODS (INDIA) PVT. LTD. 3 3. AT THE TIME OF HEARING , SHRI V. RAJ KUMAR, ADVOCATE OF THE ASSESSEE STATED THAT THE TAX EFFECT IN THIS APPEAL IS LESS THAN RS.4,00,000/ - , THEREFORE, THE DEPARTMENT OUGHT NOT TO HAVE FILED THIS APPEAL IN VIEW OF THE CIRCULAR ISSUED BY THE CBDT AND THE PROVISIONS CONTAINED IN THE SECTION 268A OF THE INCOME TAX ACT, 1961 (HEREINAFTER TO BE REFERRED AS THE ACT). 4. ON THE OTHER HAND, L D. DR SUPPORTED THE ORDER OF AO , BUT COULD NOT CONTROVERT THIS FACT THAT THE TAX E FFECT IN THIS APPEAL IS LESS THAN RS. 4,00,000/ - . 5. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PARTIES AND THE MATERIAL ON RECORD, IT IS NOTICED THAT SECTION 268A HAS BEEN INSERTED BY THE FINANCE ACT, 2008 WITH RETROSPECTIVE EFFECT FROM 01/04/1999. THE RELEVANT PROVISIONS CONTAINED IN SECTION 268A READ AS UNDER: 268A. (1) THE BOARD MAY, FROM TIME TO TIME, ISSUE ORDERS, INSTRUCTIONS OR DIRECTIONS TO OTHER INCOME - TAX AUTHORITIES, FIXING SUCH MONETARY LIMITS AS IT MAY DEEM FIT, FOR THE PURPOSE OF REG ULATING FILING OF APPEAL OR APPLICATION FOR REFERENCE BY ANY INCOME - TAX AUTHORITY UNDER THE PROVISIONS OF THIS CHAPTER. (2) WHERE, IN PURSUANCE OF THE ORDERS, INSTRUCTIONS OR DIRECTIONS ISSUED UNDER SUB - SECTION (1), AN INCOME - TAX AUTHORITY HAS NOT FILED A NY APPEAL OR APPLICATION FOR REFERENCE ON ANY ISSUE IN THE CASE OF AN ASSESSEE FOR ANY ASSESSMENT YEAR, IT SHALL NOT PRECLUDE SUCH AUTHORITY FROM FILING AN APPEAL OR APPLICATION FOR REFERENCE ON THE SAME ISSUE IN THE CASE OF (A) THE SAME ASSESSEE FOR AN Y OTHER ASSESSMENT YEAR; OR (B) ANY OTHER ASSESSEE FOR THE SAME OR ANY OTHER ASSESSMENT YEAR; (3) NOTWITHSTANDING THAT NO APPEAL OR APPLICATION FOR REFERENCE HAS BEEN FILED BY AN INCOME - TAX AUTHORITY PURSUANT TO THE ORDERS OR INSTRUCTIONS OR DIRECTIONS I SSUED UNDER SUB - SECTION (1), IT SHALL NOT BE LAWFUL FOR AN ASSESSEE, BEING A PARTY IN ANY APPEAL OR REFERENCE, TO CONTEND THAT THE INCOME - TAX AUTHORITY HAS ACQUIESCED IN THE DECISION ON THE DISPUTED ISSUE BY NOT FILING AN APPEAL OR APPLICATION FOR REFERENC E IN ANY CASE. (4) THE APPELLATE TRIBUNAL OR COURT, HEARING SUCH APPEAL OR REFERENCE, SHALL HAVE REGARD TO THE ORDERS, INSTRUCTIONS OR DIRECTIONS ISSUED UNDER SUB - SECTION (1) AND THE CIRCUMSTANCES UNDER WHICH SUCH APPEAL OR APPLICATION FOR REFERENCE WAS F ILED OR NOT FILED IN RESPECT OF ANY CASE. ITA NO. 5562 / D EL /20 1 3 ( ITO VS. DELICIA FOODS (INDIA) PVT. LTD. 4 (5) EVERY ORDER, INSTRUCTION OR DIRECTION WHICH HAS BEEN ISSUED BY THE BOARD FIXING MONETARY LIMITS FOR FILING AN APPEAL OR APPLICATION FOR REFERENCE SHALL BE DEEMED TO HAVE BEEN ISSUED UNDER SUB - SECTION (1) AND THE PROVISIONS OF SUB - SECTIONS (2), (3) AND (4) SHALL APPLY ACCORDINGLY. 6 . IT IS NOT IN DISPUTE THAT T HE BOARD S INSTRUCTION OR DIRECTIONS ISSUED TO THE OTHER INCOME - TAX AUTHORITIES ARE BINDING ON THOSE AUTHORITIES, THEREFORE, THE DEPARTMENT OUGHT NOT T O HAVE FILED THE APPEAL IN VIEW OF THE ABOVE MENTIONED SECTION 268A SINCE THE TAX EFFECT IN THE INSTANT CASE IS LESS THAN THE AMOUNT PRESCRIBED FOR NOT FILING THE APPEAL. 7 . IT IS NOTICED THAT THE CBDT HAS ISSUED INSTRUCTION NO. 5/2014 DATED 10 TH JULY, 201 4, BY WHICH THE CBDT HAS REVISED THE MONETARY LIMIT TO RS. 4,00,000/ - FOR FILING THE APPEAL BEFORE THE TRIBUNAL. 8 . KEEPING IN VIEW THE CBDT INSTRUCTION NO. 5 OF 2014 DATED 10 TH JULY, 2014 AND ALSO THE PROVISIONS OF SECTION 268A OF INCOME TAX ACT, 1961 , W E ARE OF THE VIEW THAT THE REVENUE SHOULD NOT HAVE FILED THE INSTANT APPEAL BEFORE THE TRIBUNAL. WHILE TAKING SUCH A VIEW, WE ARE FORTIFIED BY THE FOLLOWING DECISIONS OF THE HON BLE PUNJAB & HARYANA HIGH COURT: 1. CIT VS. OSCAR LABORATORIES P. LTD. (2010) 32 4 ITR 115 (P&H); 2. CIT VS. ABINASH GUPTA (2010) 327 ITR 619 (P&H); 3. CIT VS. VARINDERA CONSTRUCTION CO. (2011) 331 ITR 449 (P&H) (FB). 9 . SIMILARLY, THE HON BLE DELHI HIGH COURT IN THE CASE OF CIT VS. DELHI RACE CLUB LTD. IN ITA NO. 128/2008, ORDER DATED 03.0 3.2011 BY FOLLOWING THE EARLIER ORDER DATED 02.08.2010 IN ITA NO. 179/1991 IN THE CASE OF CIT DELHI - III VS. M/S P.S. JAIN & CO. HELD THAT SUCH CIRCULAR WOULD ALSO BE APPLICABLE TO PENDING CASES. 1 0 . THUS, FROM THE RATIO LAID DOWN BY THE HON BL DELHI HIGH C OURT, IT IS CLEAR THAT THE INSTRUCTIONS ISSUED IN THE CIRCULARS BY CBDT ARE APPLICABLE FOR PENDING CASES ALSO. THEREFORE, BY KEEPING IN VIEW THE RATIO LAID DOWN IN THE AFORESAID REFERRED TO CASE, WE ARE OF THE CONSIDERED VIEW THAT ITA NO. 5562 / D EL /20 1 3 ( ITO VS. DELICIA FOODS (INDIA) PVT. LTD. 5 INSTRUCTION NO. 5 OF 201 4 DATED 10 TH JULY, 2014 ISSUED BY THE CBDT ARE APPLICABLE FOR THE PENDING CASES ALSO AND IN THE SAID INSTRUCTIONS, MONETARY TAX LIMIT FOR NOT FILING THE APPEAL BEFORE THE ITAT IS RS. 4,00,000/ - . 1 1 . IN VIEW OF THE ABOVE, WITHOUT GOING INTO MERIT OF THE CAS E, WE DISMISS THE APPEAL FILED BY THE REVENUE. 1 2 . IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 / 6 /201 5 . SD/ - SD/ - ( S.V. MEHROTRA ) ( H.S. SIDHU ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 15 / 6 /201 5 * SR BHATNAGAR* COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR