ACIT, New Delhi V. M/s. Pearls Buildwell Infrastructure Ltd., New Delhi

ITA 6089/DEL/2016

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 7641 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 8 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2020
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2014-2015
• Appeal Filed On: 29-11-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MAMTA KOCHAR
• Keywords: Search and seizure; Opportunity of being heard; Wrong claim; Set aside
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F : NEW DELHI) BEFORE SHRI O.P. KANT, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.6087/DEL./2016 (ASSESSMENT YEAR : 2012-13) ITA NO.6089/DEL./2016 (ASSESSMENT YEAR : 2014-15) ACIT, VS. M/S. PEARLS BUILDWELL INFRASTRUCTURE LTD ., CENTRAL CIRCLE 27, 409 410, PADMA TOWER II, NEW DELHI. RAJENDRA PLACE, NEW DELHI. (PAN : AACCP7916R) (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SHRI MAMTA KOCHAR, CIT DR DATE OF HEARING : 19.02.2020 DATE OF ORDER : 28.08.2020 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : SINCE COMMON QUESTIONS OF FACTS AND LAW HAVE BEEN R AISED IN BOTH THE AFORESAID APPEALS, THE SAME ARE BEING D ISPOSED OFF BY WAY OF CONSOLIDATED ORDER TO AVOID REPETITION OF DI SCUSSION. 2. APPELLANT, ACIT, CENTRAL CIRCLE 27, NEW DELHI (H EREINAFTER REFERRED TO AS THE REVENUE) BY FILING THE PRESENT APPEALS SOUGHT TO SET ASIDE THE COMPOSITE IMPUGNED ORDER DATED 28.09. 2016 PASSED ITA NO.6087 &6089/DEL./2016 2 BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-31, NEW DELHI QUA THE ASSESSMENT YEARS 2012-13 & 2014-15 ON THE GROUN DS INTER ALIA THAT :- ITA NO.6087/DEL/2016 (AY 2012-13) 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING TH E EXPENDITURE (I.E. RS.3,78,58,892/-) TREATING THEM AS UNASCERTAINED TR ADE LIABILITIES WITHOUT GIVING ANY OPPORTUNITY TO THE AO FOR VERIFY ING THE SUBMISSIONS FILED BY AR WHICH HE HAS NOT SUBMITTED BEFORE AO. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN RESTRICTING THE ADDITION OF ADMINISTRATIVE & EMPLOYEE EXPENSES (I.E. RS.62,57,1 70/-) TO 10% IN ABSENCE OF ANY BILLS AND VOUCHERS, WHEN ASSESSEE HA S NOT PRODUCED THEM TO ENABLE THE AO TO POINT OUT DEFECTS. 3. THAT THE ORDER OF THE CIT(A) IS PERVERSE, ERRONE OUS AND IS NOT TENABLE ON FACTS AND IN LAW. 4. THAT THE GROUNDS OF APPEAL ARE WITHOUT PREJUDICE TO EACH OTHER. ITA NO.6089/DEL/2016 (AY 2014-15) 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN ISSUING DIR ECTIONS TO CONSIDER THE EXPENDITURE (I.E. RS.1,17,27,147/- ON ACCOUNT O F OTHER LIABILITIES, WHEN THE ASSESSEE HAS NOT PRODUCED ANY DOCUMENTS RE GARDING THE CLAIM. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN RESTRICTING THE ADDITION OF ADMINISTRATIVE & EMPLOYEE EXPENSES 25% OF RS.3,42,1 2,587/- (I.E. RS.85,53,147/-) TO 10% (RS.34,21,259/-) IN ABSENCE OF ANY BILLS AND VOUCHERS, WHEN ASSESSEE HAS NOT PRODUCED THEM TO EN ABLE THE AO TO POINT OUT DEFECTS. 3. THAT THE ORDER OF THE CIT(A) IS PERVERSE, ERRONE OUS AND IS NOT TENABLE ON FACTS AND IN LAW. 4. THAT THE GROUNDS OF APPEAL ARE WITHOUT PREJUDICE TO EACH OTHER. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : ASSESSEE COMPANY IS INTO THE BUSINESS OF ITA NO.6087 &6089/DEL./2016 3 REAL ESTATE AND CONSTRUCTION OF BUILDING ETC.. ON THE BASIS OF SEARCH AND SEIZURE OPERATION CONDUCTED U/S 132 OF THE INCO ME-TAX ACT, 1961 (FOR SHORT THE ACT) ON 20.06.2013 IN M/S. PA CL GROUP OF CASES WHEREIN PREMISES OF THE ASSESSEE COMPANY ALSO COVERED, PROCEEDINGS U/S 143 (3) WERE ALSO INITIATED AND STA TUTORY NOTICE U/S 153A/143(2) ALONG WITH DETAILED QUESTIONNAIRE WERE ISSUED AND SERVED REQUIRING THE ASSESSEE TO FILE THE RETURN. IN AY 2012-13, ASSESSING OFFICER (AO) MADE ADDITION OF RS.4,46,53, 043/- ON ACCOUNT OF BOGUS CLAIM OF EXPENDITURE UNDER THE HEA D OTHER LIABILITIES ON THE GROUNDS THAT THOUGH IN THE BALA NCE SHEET ASSESSEE COMPANY HAD SHOWN THIS AMOUNT AS OTHER LIABILITIES BUT HAS FAILED TO BRING ON RECORD ANY DOCUMENTARY EVIDENCE TO PROV E THE NATURE OF LIABILITIES, PARTY NAMES, ETC.. AO ALSO MADE ADDIT ION OF RS.62,57,170/- @ 25% OUT OF THE CLAIM BY THE ASSESS EE UNDER THE HEAD EMPLOYEES BENEFIT OF RS.1,83,16,027/- AND OT HER EXPENSES OF RS.67,12,654/- ON THE GROUND THAT THE ASSESSEE HAS FAILED TO BRING ON RECORD SUPPORTING VOUCHERS ETC. 3. IN AY 2014-15, AO MADE DISALLOWANCE OF RS.85,53, 147/- BEING 25% OF THE EXPENSES OF RS.3,42,12,587/- CLAIM ED BY THE ASSESSEE UNDER THE HEAD EMPLOYEES BENEFIT EXPENSE S AND OTHER EXPENSES ON THE GROUND THAT THE SAME ARE NOT SUPPOR TED WITH ANY VOUCHER OR OTHER EVIDENCE AND MADE ADDITION THEREOF . ITA NO.6087 &6089/DEL./2016 4 4. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT ( A) BY WAY OF FILING THE APPEALS WHO HAS PARTLY ALLOWED BOTH THE APPEALS FOR AYS 2012-13 & 2014-15. FEELING AGGRIEVED BY THE ORDER PASSED BY THE LD. CIT (A), THE REVENUE HAS COME UP BEFORE THE TRI BUNAL BY WAY OF FILING THE PRESENT APPEALS. 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. GROUND NO.1 OF ITA NO.6087/DEL/2016 (AY 2012-13) 6. AO DISALLOWED AN AMOUNT OF RS.4,46,53,043/- ON A CCOUNT OF BOGUS LIABILITIES AS THE ASSESSEE HAS FAILED TO BRI NG ANY EVIDENCE ON RECORD TO SUPPORT HIS CLAIM TO PROVE THE NATURE OF LIABILITIES, PARTY NAMES, ETC.. LD. CIT (A) OUT OF ADDITION OF RS.4,4 6,53,043/- DELETED THE EXPENDITURE OF RS.3,78,58,892/- BY TREA TING THE SAME AS UNASCERTAINED TRADE LIABILITIES. LD. DR FOR THE RE VENUE CONTENDED THAT THE DELETION HAS BEEN MADE BY THE LD. CIT (A) WITHOUT PROVIDING AN OPPORTUNITY OF BEING HEARD TO THE AO F OR VERIFYING THE SUBMISSIONS MADE BY THE LD. AR FOR THE ASSESSEE. L D. DR DELETED THE ADDITION OF RS.3,78,58,892/- MADE BY THE AO BY RETURNING FOLLOWING FINDINGS :- ITA NO.6087 &6089/DEL./2016 5 4.3 I HAVE CONSIDERED THE FINDINGS RECORDED BY THE LD. AO AS PER THE ASSESSMENT ORDER, THE SUBMISSION OF THE APPELLA NT THE POSITION OF THE LAW AND THE FACTS OF THE CASE ON RECORD. FOR TH E ASSESSMENT YEAR 2013-13, THE LD. AO DISALLOWED A SUM OF RS. 4,46,53 ,043/- AS BOGUS LIABILITIES. THE ID. AR CONTENDED THAT THE APPELLAN T WAS NOT CONFRONTED BEFORE THE SAID DISALLOWANCE WAS MADE. ON GOING THR OUGH THE DETAILS, IT IS SEEN THAT THE AFORESAID AMOUNT INCLUDED A SUM OF RS.65,14,000/-. THE LD. AR ARGUED THAT THE SAME REPRESENTS BALANCES ON ACCOUNT OF TRADE SUPPLIERS. FILING CONFIRMATIONS FOR THE SAID BALANCES, HE ARGUED THAT THE LIABILITIES WERE GENUINE. HOWEVER, HE ADMI TTED THAT THE CONFIRMATIONS WERE NOT FILED BEFORE THE LD. AO AS T HE APPELLANT WAS NEVER QUESTIONED ON THE OUTSTANDING LIABILITIES. ON GOING THROUGH THE CONFIRMATIONS FILED, CERTAIN DISCREPANCIES LIKE SIM ILAR SIGNATURE/HANDWRITING ETC. WERE NOTICED COUPLED WIT H THE FACT THAT THEY WERE NOT VERIFIED BY THE LD. AO. IN VIEW OF THE AB OVE, THEIR GENUINENESS REMAINED DOUBTFUL AND HENCE BECAUSE OF THIS REASON, I AM INCLINED TO UPHOLD THE ADDITION MADE BY THE LD. AO TO THE EXTEN T OF AFORESAID AMOUNT OF RS.65,14,000/-. DURING THE PROCEEDINGS B EFORE ME, THE LD. AR STATED THAT THE APPELLANT HAS NO OBJECTION TO TH E ABOVE. 4.3.1 AS REGARD THE AMOUNT OF RS.29,42,965/-, THE LD. AR SUBMITTING THE DETAILS, EXPLAINED THAT IT REPRESENTS VARIOUS R OUTINE LIABILITIES LIKE SALARY, TELEPHONE BILLS ETC. SINCE THESE LIABILITIE S ARE ASCERTAINED AND ARE TRADE LIABILITIES THE SAME CANNOT BE DISALLOWED . THE AO IS DIRECTED TO DELETE ADDITION TO THIS EXTENT. LIKEWISE, IN RES PECT OF THE BALANCE AMOUNT OF RS.3,51,96,077/-, ID. AR EXPLAINED THAT T HEY PERTAIN TO CONSTRUCTION PROJECT WHERE THE REVENUE HAS BEEN REC OGNIZED ON PROJECT COMPLETION BASIS. HE FURTHER SUBMITTED THAT OUT OF THE ABOVE, AN AMOUNT OF RS.3,49,15,926/- WAS PAID IN THE NEXT YEA R. IN THIS REGARD, I UPHOLD THE DISALLOWANCE OF THE UNPAID AMOUNT OF RS. 2,80,151/- (RS.3,51,96,077 - RS.3,49,15,926), HOLDING THE SAME TO BE UNASCERTAINED LIABILITY. ACCORDINGLY, THE GROUND NO . 1 OF ASSESSMENT YEAR 2012-13 IS PARTLY ALLOWED CONFIRMING THE ADDIT ION OF RS.67,94,151/- (RS.65,14,000/- + RS.2,80,151/-). 7. BARE PERUSAL OF THE FINDINGS RETURNED BY THE LD . CIT (A) IN PARA 4.3 & 4.3.1, EXTRACTED ABOVE, GOES TO PROVE TH AT THE LD. CIT(A) HAS NEITHER HIMSELF EXAMINED THE DOCUMENTS NOR HE H AS GOT THE SAME VERIFIED FROM THE AO BY CALLING REMAND REPORT RATHER ACCEPTED THE CONTENTION OF THE LD. AR FOR THE ASSES SEE AS A GOSPEL TRUTH AND PROCEEDED TO DELETE THE ADDITION. SO, WE AGREE WITH THE CONTENTIONS RAISED BY THE REVENUE THAT THE DELETION HAS BEEN MADE WITHOUT GIVING AN OPPORTUNITY OF BEING HEARD TO THE AO FOR ITA NO.6087 &6089/DEL./2016 6 VERIFYING THE SUBMISSIONS/EVIDENCE FILED BY THE ASS ESSEE. SO, IN THESE CIRCUMSTANCES, WE DEEM IT NECESSARY TO REMIT THE ISSUE BACK TO THE LD. CIT (A) TO DECIDE AFRESH IN ACCORDANCE W ITH LAW AFTER PROVIDING AN OPPORTUNITY OF BEING HEARD TO THE ASSE SSEE AS WELL AS AO, HENCE GROUND NO.1 OF AY 2012-13 IS DETERMINED I N FAVOUR OF THE REVENUE FOR STATISTICAL PURPOSES. GROUND NO.1 OF ITA NO.6089/DEL/2016 (AY 2014-15) 8. WHEN WE EXAMINE THE ASSESSMENT ORDER AS WELL AS IMPUGNED ORDER PASSED BY THE LD. CIT (A) IT HAS COME ON RECO RD THAT THIS GROUND IS MISCONCEIVED AND THE REVENUE HAS NO OCCAS ION TO COME UP BEFORE THE TRIBUNAL BY WAY OF RAISING THIS GROUN D AS NO SUCH ADDITION/DISALLOWANCE HAS BEEN MADE BY THE AO IN 20 14-15. PERUSAL OF PARA 4.4 OF THE IMPUGNED ORDER PASSED BY THE LD. CIT (A) SHOWS THAT THIS GROUND WAS THERE FOR ADJUDICATION B Y THE LD. CIT(A) IN AY 2013-14 WHEREIN HE HAS CONFIRMED THIS ADDITIO N. HOWEVER, LD. CIT (A) DIRECTED THE AO TO ALLOW THIS RELIEF TO THE NEXT YEAR I.E. 2014-15 WHERE THE SAID AMOUNT WAS ADDED BACK BY THE ASSESSEE. HOWEVER, LD. DR FOR THE REVENUE HAS NOT BROUGHT ON RECORD IF ANY APPEAL EFFECT HAS BEEN GIVEN TO THESE DIRECTIONS BY THE AO. WE ARE OF THE CONSIDERED VIEW THAT THE LD. CIT (A) HAS GIV EN CRYPTIC FINDINGS QUA THIS ISSUE AND DIRECTED THE AO WITHOUT HAVING ANY ITA NO.6087 &6089/DEL./2016 7 MATERIAL/EVIDENCE ON RECORD TO ALLOW THIS RELIEF TO THE ASSESSEE IN AY 2014-15. SO, IN THE INTEREST OF JUSTICE, THIS I SSUE IS ALSO ORDERED TO BE SET ASIDE TO THE LD. CIT (A) TO DECIDE AFRESH BY PROVIDING AN OPPORTUNITY OF BEING HEARD TO THE PARTIES. SO, GRO UND NO.1 OF AY 2014-15 IS DETERMINED IN FAVOUR OF THE REVENUE FOR STATISTICAL PURPOSES. GROUND NO.2 OF ITA NO.6087/DEL/2016 (AY 2012-13) ITA NO.6089/DEL/2016 (AY 2014-15) 9. AO MADE AN ADDITION OF RS.62,57,170/- AND RS.85, 53,147/- BY WAY OF DISALLOWANCE @ 25% ON ACCOUNT OF BOGUS EX PENDITURE CLAIMED UNDER THE HEAD BOGUS LIABILITIES ON THE G ROUND THAT NO SUPPORTING VOUCHER/EVIDENCE HAS BEEN PRODUCED BY TH E ASSESSEE. LD. CTI (A) RESTRICTED THE DISALLOWANCE TO 10% BY R ETURNING FOLLOWING FINDINGS :- 5.3 I HAVE CAREFULLY CONSIDERED THE FINDINGS RECOR DED BY THE LD. AO AS PER THE ASSESSMENT ORDER, THE FACTS OF THE CASE ON RECORD AND THE SUBMISSIONS MADE BY THE APPELLANT. AS CAN BE SEEN F ROM THE ASSESSMENT ORDER THE DISALLOWANCE HAS BEEN MADE BY THE LD. AO PURELY ON ADHOC BASIS AND WIH10UT POINTING OUT ANY DEFECT OR CONFRO NTING THE ASSESSEE ON THIS ISSUE. HOWEVER, CONSIDERING THE FACTS AND C IRCUMSTANCES OF THE CASE, I AM OF THE OPINION THAT THE ENDS OF JUSTICE WOULD MEET IF THE DISALLOWANCE IS RESTRICTED TO 10% AS AGAINST 25% DI SALLOWED BY THE ID. AO THE AO MAY GIVE SUITABLE RELIEF TO THE APPELLANT ACCORDINGLY. THUS, THE GROUND NOS.4 OF ASSESSMENT YEARS 2012-13 AND 20 13-14 AND NO. 3 OF 2014-15 IS PARTLY ALLOWED. 10. BARE PERUSAL OF THE FINDINGS RETURNED BY THE LD . CIT (A) GOES TO PROVE THAT DISALLOWANCE @ 25% MADE BY THE AO HAS BEEN RESTRICTED TO 10% MERELY ON THE BASIS OF WHIMS AND FANCIES AND ITA NO.6087 &6089/DEL./2016 8 WITHOUT PERUSING ANY RECORD. NO DOUBT, DISALLOWANC E HAS BEEN MADE BY THE AO ALSO PURELY ON AD HOC BASIS BUT ON F AILURE OF THE ASSESSEE TO SUPPORT THE CLAIM WITH ANY VOUCHER/EVID ENCE. IN THESE CIRCUMSTANCES, THE LD. CIT (A) WAS NOT EXPECTED TO RESTRICT THE DISALLOWANCE TO 10% ALSO ON AD HOC BASIS. SO, WE D EEM IT NECESSARY TO SET ASIDE THE ISSUE TO THE LD. CIT (A) TO DECIDE AFRESH IN ACCORDANCE WITH THE LAW BY PROVIDING OPPORTUNITY OF BEING HEARD TO THE PARTIES. SO, GROUND NO.2 OF AYS 2012-13 & 2 014-15 IS DETERMINED IN FAVOUR OF THE ASSESSEE FOR STATISTICA L PURPOSES. GROUNDS NO.3 & 4 OF ITA NO.6087/DEL/2016 (AY 2012-13) ITA NO.6089/DEL/2016 (AY 2014-15) 11. GROUNDS NO.3 & 4 OF AYS 2012-13 & 2013-14 ARE G ENERAL IN NATURE, HENCE DO NOT REQUIRE ANY SPECIFIC ADJUDICAT ION. 12. RESULTANTLY, BOTH THE APPEALS FOR AYS 2012-13 & 2014-15 FILED BY THE REVENUE ARE ALLOWED FOR STATISTICAL PU RPOSES. ORDER PRONOUNCED IN OPEN COURT ON THIS 28 TH DAY OF AUGUST , 2020. SD/- SD/- (O.P. KANT) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 28 TH DAY OF AUGUST, 2020 TS ITA NO.6087 &6089/DEL./2016 9 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-31, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.