ACIT, New Delhi V. Sh. Ashwini Suri, New Delhi

ITA 5726/DEL/2011

• Counselvise Citation: 572620114 RSA 2011
• Duration Of Justice: 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-02-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 28-02-2012
• Assessment Year: 1990-1991
• Appeal Filed On: 22-12-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DEV JYOTI DAS
• Assessee Lawyers: ALOK PERIWAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A NEW DELHI BEFORE SHRI R.P. TOLANI AND SHRI S.V. MEHROTRA ITA NOS. 5724, 5725 & 5726/DEL/2011 ASSTT. YRS: 1988-89, 1989-90 & 1990-91 ACIT CIR. 12(1), VS. SHRI ASHWANI SURI, NEW DELHI. B-36, SAGAR APARTMENTS, 6, TILAK MARG, NEW DELHI-110001. PAN/GIR NO. CBKPS1815G (APPELLANT) ( RESPONDENT ) APPELLANT BY : MS. DEV JYOTI DAS CIT( DR) RESPONDENT BY : SHRI ALOK PERIWAL CA O R D E R PER R.P. TOLANI, J.M : THESE ARE REVENUES APPEALS AGAINST CIT(A)S CONS OLIDATED ORDER DATED 1-9-2011 RELATING TO A.Y. 1988-89, 1989-90 & 1990-91. SINCE COMMON GROUNDS ARE RAISED, ALL THESE APPEALS ARE HE ARD TOGETHER AND BEING DISPOSED OF BY THIS COMMON ORDER. FOLLOWING COMMON GROUND IS RAISED: ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HA ERRED IN DELETING THE ADDITION OF RS. 38, 37,703/- (A.Y. 1988-89); RS. 47,14,266/0 (A.Y. 1990-91); AND RS. 1,17,70,455/- (A.Y. 1991-92), MADE BY THE AO ON AC COUNT OF UNACCOUNTED RECEIPTS AND EXPENDITURE ON PROTECTIVE BASIS. 2. BRIEF FACTS ARE: THE ASSESSEE IS MANAGING DIRECT OR OF M/S GANGA AUTOMOBILES LTD.. SEARCH OPERATIONS WERE CARRIED ON AT THE BUSINESS PREMISES OF THE COMPANY AS ALSO THE RESIDENTIAL PRE MISES OF THE ASSESSEE ON 13-9-1990, WHICH LED TO THE INCOME-TAX PROCEEDINGS, WHICH ARE SUMMARIZED BY THE AO, FOR A.Y. 1988-89, AS UNDER: ITA 5724, 5725 & 5726/DEL/11 ACIT VS. ASHWANI SURI 2 THERE WAS A SEARCH BY THE INCOME TAX DEPARTMENT ON 13-09- 1990 AT THE BUSINESS PREMISES OF THE COMPANY AS ALS O AT THE RESIDENTIAL PREMISES OF SHRI AHWANI SURI, MANAGING DIRECTOR. SOME DOCUMENTS AND VALUABLE ASSETS WERE SEIZED FROM BOTH THE PREMISES. THERE WAS ALSO A SEARCH AT THE PREMISES O F ONE DOCTOR BY THE NAME OF DR. ASHWANI CHOPRA ON 20-09-1990 IN WHICH THE DEPARTMENT SEIZED CERTAIN DOCUMENTS WHICH DR. A SHWANI CHOPRA CLAIMED TO BE BELONGING TO SHRI ASHWANI SURI . UNDER THESE CIRCUMSTANCES, THE CASE WAS REOPENED BY THE T HEN ASSESSING OFFICER, THE DCIT, SPECIAL RANGE-16, NEW DELHI. IN THE MEANTIME, THE ASSESSEE FILED SETTLEMENT APPLICA TIONS VIDE SETTLEMENT APPLICATION NO. 8/3/577/90-IT DATED 08-0 3-1991 FOR ASSESSMENT YEARS 1987-88 TO 1991-92. THE HONBLE SE TTLEMENT COMMISSION VIDE ORDER DATED 08-12-1993 PASSED U/S 2 45D(1) OF THE I.T. ACT, 1961 ADMITTED APPLICATIONS FOR AYS 88-89, 89- 90 AND 90-91 AND REJECTED THE APPLICATIONS FOR AYS 87-88 AND 91-92. HOWEVER, THE ASSESSEE AGAIN FILED APPLICATIO NS BEFORE THE HONBLE SETTLEMENT COMMISSION VIDE NOS. 3/7/93/IT A ND 3/7/94-IT ON 12-03-94 FOR AYS 87-88 AND 91-92 RESPE CTIVELY, WHICH WERE ADMITTED BY THE HONBLE SETTLEMENT COMMI SSION VIDE ORDER DATED 29-12-1995 PASSED U/S 245D(1) OF T HE I.T. ACT 1961. SINCE THEN, THE ASSESSMENT PROCEEDINGS FOR TH E INSTANT ASSESSMENT YEAR WERE PENDING. HOWEVER, AS PER THE P ROVISIONS OF SUB-SECTION (2) OF SECTION 245HA, THE ASSESSMENT IS BEING FINALIZED AS UNDER: 2.1. ON THE BASIS OF FINDINGS IN THE ASSESSMENT ORD ER, AO MADE TWO TYPES OF ADDITIONS (I) INCOME OF M/S GANGA AUTOMOBILES LTD. ON PROTECTIVE BASIS; & (II) HOUSEHOLD EXPENSES. ADDITION IN RESP ECT OF M/S GANGA AUTOMOBILES LTD. WAS MADE ON PROTECTIVE BASIS IN TH E HANDS OF THE ASSESSEE BY FOLLOWING OBSERVATIONS: 4.4. THE ASSESSEE HAS FAILED TO SUBSTANTIATE ITS C LAIM BY NOT PRODUCING BOOKS OF ACCOUNTS AS ALSO BILLS/ VOUCHERS . THE EXPENDITURE AND INVESTMENT AS CLAIMED BY THE ASSESS EE REMAINS UNEXPLAINED. IT IS TO BE MENTIONED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN THE CASE OF M/S GANGA AUT OMOBILES LTD., IT HAS BEEN HELD THAT THE AFORESAID TOTAL REC EIPTS OF RS. ITA 5724, 5725 & 5726/DEL/11 ACIT VS. ASHWANI SURI 3 38,37,703/- IS THE INCOME OF THE COMPANY AS UNACCOU NTED INCOME AND ACCORDINGLY, THE SAME HAS BEEN TAXED IN THE HANDS OF THE COMPANY M/S GANGA AUTOMOBILES LTD. HOWEVER, IN ORDER TO PROTECT THE INTEREST OF REVENUE, THE SAID SUM OF RS. 38,37,703/- IS ALSO BEING TAXED ON PROTECTIVE BASIS IN THE HANDS OF THE ASSESSEE. 2.2. AGGRIEVED, ASSESSEE PREFERRED FIRST APPEAL BEF ORE THE CIT(A), WHO GAVE PART RELIEF IN RESPECT OF HOUSE-HOLD EXPENSES, WHICH IS NOT THE ISSUE BEFORE US. IN RESPECT OF INCOME FROM M/S GANGA AUTO MOBILES LTD., CIT(A) DELETED THE ADDITION WITH FOLLOWING OBSERVATIONS: 4.4. A COPY OF THE WRITTEN SUBMISSION WAS FORWARDE D TO THE DCIT, CIR. 12(1), NEW DELHI FOR VERIFICATION OF THE CONTENTION AND SUBMISSION OF THE REMAND REPORT. HOWEVER, DESPI TE REPEATED REMINDERS, THE REQUIRED REPORT HAS NOT BEE N SUBMITTED BY THE LD. AO. IT, THEREFORE, APPEARS THAT HE AO HA S NOTHING ADVERSE TO SAY IN THE MATTER. I AM, THEREFORE, INCL INED TO ALLOW THE APPEAL ON THIS GROUND TO THE APPELLANT SUBJECT TO THE DIRECTION THAT THE AO SHALL VERIFY THE CONTENTION O F THE APPELLANT AND IF THE SAME IS FOUND CORRECT, APPROPRIATE RELI EF SHALL BE ALLOWED. THE GROUNDS. 1 AND 2 OF ALL THE 3 APPEALS UNDER CONSIDERATION ARE ACCORDINGLY TREATED AS ALLOWED SU BJECT TO THE AFORESAID DIRECTIONS. 2.3. AGGRIEVED, REVENUE IS BEFORE US. 3. LD. DR CONTENDS THAT THE ORDER OF LD. CIT(A) IS NOT CORRECT INASMUCH AS THE OBSERVATION THAT THE REMAND REPORT WAS NOT S UBMITTED BY THE AO IS NOT CORRECT.. APPEAL FILED BY THE ASSESSEE FIRST CAME U P BEFORE CIT(A)-XV, NEW DELHI, WHO CALLED FOR THE REMAND REPORT FROM THE AO . THEREAFTER THE JURISDICTION OF APPEAL WAS TRANSFERRED TO CIT-IX, N EW DELHI. UNAWARE OF CHANGE IN JURISDICTION OF CIT(A), AO SUBMITTED A RE MAND REPORT DATED 2-2- 2010 WITH CIT(A)-XV. DUE TO THIS PECULIAR CIRCUMSTA NCE, CIT(A)-IX, WHO ITA 5724, 5725 & 5726/DEL/11 ACIT VS. ASHWANI SURI 4 PASSED THE APPELLATE ORDER, HELD THAT NO REMAND RE PORT IS FILED. CONTENTS OF OS REMAND REPORT DATED 2-2-2010 ARE AS UNDER: IN CONTEXT OF THE SAME, IT IS SUBMITTED THAT ON PE RUSAL OF THE RECORDS, THE YEAR WISE CLAIM OF PROTECTIVE ASSESSME NT IN THE INSTANT CASE IS AS UNDER: 1. A.Y. 1987-88 ADDITION ON PROTECTIVE BASIS IS RS . 13,64,556 2. AY 1988-89 ADDITION ON PROTECTIVE BASIS IS RS. 3 8,37,703 3. AY 1989-90 ADDITION ON PROTECTIVE BASIS IS RS. 4 7,14,266 4. AY 1990-91 ADDITION ON PROTECTIVE BASIS IS RS. 1,17,70,455 THE ABOVE MENTIONED ADDITIONS WERE MADE ON SUBSTANT IVE BASIS IN THE CASE OF M/S GANGA AUTOMOBILES LTD. AND AS PE R THE OFFICE RECORDS, THE SAME HAVE NOT BEEN CHALLENGED IN APPEA L TILL DATE. THIS FACT CAN BE FURTHER VERIFIED IN THE OFFICE OF YOUR GOOD SELF AS THE FIRST APPELLATE JURISDICTION VESTS WITH YOU. THE SAME IS FORWARDED TO YOUR GOOD SELF FOR NECESSA RY INFORMATION AS COMPLIANCE TO THE QUERY RAISED VIDE ABOVE MENTIONED LETTER. 3.1. LD. DR CONTENDS THAT THE INFORMATION FROM THE DEPARTMENT REVEALS THAT THE ASSESSEE I.E. M/S GANGA AUTOMOBILES LTD. H AS BEEN AVOIDING SERVICE OF ASSESSMENT ORDER AND DEMAND NOTICE IN RESPECT OF THE SUBSTANTIVE ASSESSMENTS. THE FACT THAT M/S GANGA AUTOMOBILES LT D. HAS ACCEPTED THESE ADDITIONS SUBSTANTIALLY IN THEIR HANDS AND NOT FILE D APPEAL, IS STILL NOT CLEAR. THE ASSESSMENTS WILL BE FINALIZED ONLY WHEN THE ASS ESSMENT ORDERS AND DEMAND NOTICES ARE RECEIVED BY M/S GANGA AUTOMOBILE S LTD. AND THE APPEAL PERIOD IS ALLOWED TO ELAPSE. IN THE ABSENCE OF THES E HAPPENINGS, IT CANNOT BE HELD THAT M/S GANGA AUTOMOBILES LTD. HAS ACCEPTED T HE ADDITIONS. CONSEQUENTLY AS A RULE, PROTECTIVE ASSESSMENTS HAV E TO SURVIVE TILL THEN. THE ITA 5724, 5725 & 5726/DEL/11 ACIT VS. ASHWANI SURI 5 ORDER OF CIT(A) IS BASED ON NON-CONSIDERATION OF TH E RELEVANT REMAND REPORT. IT IS PLEADED THAT LD. COUNSEL FOR THE ASSESSEE MAY THROW LIGHT ON THESE FACTS. 4. LD. COUNSEL FOR THE ASSESSEE WAS, THEREFORE, ASK ED TO MAKE A STATEMENT AT BAR WHETHER THE ORDERS OF THESE ASSESSMENTS YEAR S HAVE BEEN ACCEPTED BY M/S GANGA AUTOMOBILES LTD. AND/ OR THE SUBSTANTIVE ASSESSMENTS HAVE BECOME FINAL THERE AND APPEALS ARE NOT FILED. LD. C OUNSEL GAVE A FLAT REPLY, THAT HE IS NOT AWARE OF THE AFFAIRS OF M/S GANGA AU TOMOBILES LTD., THEREFORE, HE CANNOT COMMENT ABOUT THE SERVICE OF ORDERS, FINA LITY OF ASSESSMENTS AND THE FACT OF NON-FILING OF APPEALS BY M/S GANGA AUTO MOBILES LTD.. 5. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ADDITIONS IN QUES TION ARE MADE ON PROTECTIVE BASIS. CIT(A) HAS PASSED THE ORDER, DELE TING ADDITIONS, UNDER IMPRESSION THAT NO REMAND REPORT WAS FILED. AS THE FACTS EMERGE, THE REMAND REPORT WAS ON THE RECORD OF DEPARTMENT ALBEIT WITH CIT(A)-XV, NEW DELHI. THOUGH CIT(A) COULD NOT ASCERTAIN THE FACT ABOUT C ONCLUSION OF ADDITIONS IN THE HANDS OF M/S GANGA AUTOMOBILES LTD., NEVERTHELE SS HE DELETED THE ADDITIONS UNDER THE IMPRESSION THAT AO IS NOT GIVIN G ANY COMMENT. AS A GENERAL RULE PROTECTIVE ADDITIONS GO ALONG WITH THE FATE OF SUBSTANTIVE ADDITIONS UNLESS THEY ARE DELETED ON MERITS. IN THI S CASE THE ADDITIONS HAVE BEEN DELETED FOR WANT OF REMAND REPORT, WHICH IS ON RECORD. IN OUR VIEW, ON THESE FACTS THE CIT(A)S ORDER BECOMES UNTENABLE. 5.1. SINCE THE ASSESSEES COUNSEL IS NOT ABLE TO TE LL US A VERY IMPORTANT FACT ABOUT THE ACKNOWLEDGEMENT OF ADDITION IN THE HANDS OF M/S GANGA AUTOMOBILES LTD., WE ARE LEFT WITH NO CHOICE BUT TO REVERSE THE ORDER OF ITA 5724, 5725 & 5726/DEL/11 ACIT VS. ASHWANI SURI 6 CIT(A) AND RESTORE THE ADDITIONS AS MADE BY THE AO. IN VIEW THEREOF, REVENUES APPEALS ARE LIABLE TO BE ALLOWED. 6. IN THE RESULT, ALL THE THREE APPEALS FILED BY TH E REVENUE ARE ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 29-02-2012. SD/- SD/- ( S.V. MEHROTRA) ( R.P. TOLANI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED:29-02-2012. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR ITA 5724, 5725 & 5726/DEL/11 ACIT VS. ASHWANI SURI 7