M/s. Ashok Malhotra, Delhi V. ACIT, New Delhi

ITA 618/DEL/2016

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 0272 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 8 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-10-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 18-10-2022
• Assessment Year: 2004-2005
• Appeal Filed On: 04-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Income from undisclosed sources; Set aside
• Section: 147; 148; 143(3); 143(1); 142(2A); 13

Judgement Text

Page | 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI “E” BENCH: NEW DELHI BEFORE SHRI N.K.BILLAIYA, ACCOUNTANT MEMBER & SHRI KUL BHARAT, JUDICIAL MEMBER ITA Nos.618 & 619/Del/2016 [Assessment Years : 2004-05 & 2005-06] Himanshu Malhotra (Through Legal Heir of Late Ashok Malhotra), House No. 1310, Dr. Mukherjee Nagar, New Delhi-110033. PAN-AAPPM8352G vs ACIT, Central Circle-15, New Delhi. APPELLANT RESPONDENT Appellant by S/Shri Yasobant Das, Sr.Adv., Amol Sinha, Ashwani Kumar, Adv. Respondent by Shri Jeetender Chand, Sr.DR Date of Hearing 19.10.2022 Date of Pronouncement 19.10.2022 ORDER PER KUL BHARAT, JM : Both appeals filed by the assessee are directed against the order of Ld. CIT(A)-27, New Delhi, both dated 30.12.2015 for the assessment years 2004-05 & 2005-06 respectively. Both appeals filed by the assessee are being disposed off by this consolidated order for the sake of brevity and convenience. ITA No.618/Del/2016 [Assessment Year : 2004-05] 2. First we take up assessee’s appeal in ITA No. 618/Del/2016 pertaining to Assessment Year 2004-05. The assessee has raised following grounds of appeal:- 1. “That the Ld. CIT(A) has erred on facts and law by upholding the order of Ld. Assessing Officer is bad in law and on facts and circumstances of the case. 2. That the Ld. CIT(A) has erred on facts and law by upholding the reopening of completed assessment by the Ld. Assessing Officer is Page | 2 bad in law and on facts & circumstances of the case, as the same is based on flimsy grounds, conjuncture and surmises and is not as per the provisions and intention of law, hence the same is liable to be annulled. 3. That Ld. CIT Appeal has erred in law & facts by upholding the recommendation of special audit by the Ld. Assessing Officer is not as per law and facts & circumstances of the case and was only undertaken to gain time for completion of assessment and also to take assistance of outside independent agency to determine the income and the same was sanctioned by bypassing all the provisions of section 142(2A) of the Income Tax Act and hence the Assessment made is not as per law and is liable to be annulled. 4. That Ld. C1T Appeal has erred in law & facts by upholding the completion of assessment by the Ld. Assessing Officer on 24.08.2011 u/s 148 / 143(3), in which the notice u/s 148 was issued on 22.03.2010 is barred by limitation as per the provisions of section 153(2) of the Income Tax Act. Which states that : "That no order of assessment, re-assessment or re- computation/ shall be made u/s 147 after the expiry of 9 months from the end of financial year in which the notice u/s 148 was served." 5. That since the notice was served on 22.03.2010 and the assessment was to be made before 31.12.2010 and the assessment was made on 24.08.2011, which is clearly barred by limitation and hence the Assessment is liable to be annulled. That Ld. CIT Appeal has erred in law & facts by upholding the addition of Rs. 10,90,729/- on account of Income from Undisclosed sources disclose in the form of retail trading is not as per law and facts and circumstances of the case, as all details, supporting to the above were duly provided during the course of assessment proceedings and also all third party evidences relied by the Ld. Assessing Officer Page | 3 were never confronted to the assessee and hence is liable to be deleted. 6. That Ld. CIT Appeal has erred in law & facts by upholding the addition of Rs.22,99,000/- on account of Cessation of Liability of retail trading is not as per law and facts and circumstances of the case, as all details, supporting to the above were duly provided during the course of assessment proceedings and also all third party evidences relied by the Ld. Assessing Officer were never confronted to the assessee and hence is liable to be deleted. 7. That Ld. CIT Appeal has erred in law & facts by upholding the addition of Rs. 49,36,765/- on account of Undisclosed sources utilized for purchasing the Cars/Income disclosed by various entities in the form of car rental/disallowances against the car/drivers salary not disclosed is not as per law and facts and circumstances of the case, as all details, supporting to the above were duly provided during the course of assessment proceedings and also all third party evidences relied by the Ld. Assessing Officer were never confronted to the assessee and hence is liable to be deleted. 8. That Ld. CIT Appeal has erred in law & facts by upholding the addition of R s.90,000/- on account of Undisclosed sources declared in the shape of Dhaba income is not as per law and facts and circumstances of the case, as all details, supportings to the above were duly provided during the course of assessment proceedings and also all third party evidences relied by the Ld. Assessing Officer were never confronted to the assessee and hence is liable to be deleted. 9. That Ld. CIT Appeal has erred in law & facts by upholding the addition of Rs. 1,96,000/- on account of Income from Canteen as declared by the assessee is not as per law and facts and circumstances of the case, as all details, supportings to the above were duly provided during the course of assessment proceedings and also all third party evidences relied by the Ld. Assessing Officer Page | 4 were never confronted to the assessee and hence is liable to be deleted. 10. That the Ld. CIT Appeal has erred in law and facts by upholding the addition of Rs. 98,17,429/- on account of Income from Undisclosed sources in various bank accounts is not as per law and facts and circumstances of the cases, as all details, supporting to the above were duly provided during the course of assessment proceedings and also all third party evidences by the Ld. Assessing Officer were never confronted to the assessee and hence is liable to be deleted. 11. That Ld. CIT Appeal has erred in law & facts by upholding the addition of Rs.30,00,000/- on account of Undisclosed sources utilized in house hold expenses is not as per law and facts and circumstances of the case, as all details, supportings to the above were duly provided during the course of assessment proceedings and also all third party evidences relied by the Ld. Assessing Officer were never confronted to the assessee and hence is liable to be deleted. 12. That Ld. CIT Appeal has erred in law & facts by upholding the addition of Rs.40,000/- on account of Income credited in Balance Sheet on account of LIC Refund is not as per law and facts and circumstances of the case, as all details, supportings to the above were duly provided during the course of assessment proceedings and also all third party evidences relied by the Ld. Assessing Officer were never confronted to the assessee and hence is liable to be deleted. 13. That Ld. CIT Appeal has erred in law & facts by upholding the addition of Rs. 15,00,000/- on account of Cash Credits/Unexplained Investment is not as per law and facts and circumstances of the case, as all details, supportings to the above were duly provided during the course of assessment proceedings and also all third party Page | 5 evidences relied by the Ld. Assessing Officer were never confronted to the assessee and hence is liable to be deleted. 14. That Ld. CIT Appeal has erred in law & facts by upholding the Ld. Assessing has completed the assessment on the basis of certain documents which were never found at the premises or in possession of the assessee and the same were also never confronted with the assessee and hence the additions based on such documents is not as per law and are liable to be deleted. 15. That Ld. CIT Appeal has erred in law & facts by upholding the Ld. Assessing Officer has completed the assessment with only one intention to increase the assessed income at maximum level. While completing the assessment, the additions are made of the same items, more than once, by flouting the accounting principles and settled provisions of the law. Further, in case of such type of assessment, the settled method of calculating the undisclosed income has not been taken care of and hence the additions made are liable to be deleted. The appellant prays for leave to add, alter, modify and withdraw any of the grounds either before or at the time of hearing.” BRIEF FACTS OF THE CASE [ 3. Facts giving rise to the present appeal are that the assessee filed return of income declaring an income of Rs.8,14,680/- on 21.02.2005. The return was processed u/s 143(1) of the Income Tax Act, 1961 (“the Act”) on 12.03.2005. The case was re-opened for assessment u/s 148 r.w.s. 143(3) of the Act and the assessment was framed vide order dated 24.08.2011 and the case was referred under Special Audit u/s 142(2A) of the Act. After receipt of the Special Audit Report, the Assessing Officer (“AO”) framed the impugned assessment. Thereby, he assessed the income of the assessee at Rs.2,47,99,350/- after making various additions. Page | 6 4. Aggrieved against this, the assessee preferred appeal before Ld.CIT(A) who after considering the submissions, dismissed the appeal of the assessee. Thereby, he confirmed the additions made by the AO. 5. Aggrieved against the order of Ld.CIT(A), the assessee is in appeal before this Tribunal. 6. At the outset, Ld. Authorized Representative (“AR”) of the Assessee, Shri, Yasobant Das, Sr. Adv. submitted that the impugned assessment order is barred by time on account of facts firstly, the Special Audit Report, submitted by the Auditor was beyond the prescribed time of 180 days. Ld.AR of the assessee has placed on record a chart which is related to chronology of events, reproduced as under for the sake of clarity:- Date Particular Reference 30.03.2010 Notice u/s 148 of the Act was issued for initiating the reassessment proceeding. @Page 1 of Assessment Order 30.11.2010 DCIT, Central sent the recommendation for approval to the Ld. CIT, Central. @Page 4 of Assessment Order 06.12.2010 CIT, Central issued a notice to the assessee by giving an opportunity of hearing on 09.12.2010. Separate annexure as Annexure-1. 09.12.2010 The assessee appeared before CIT, Central and objected the reference for special audit. @Page 10 of Ld. CIT(A) order. 14.12.2010 The CIT ordered DCIT to initiate special audit in the case of the assessee. @Page 11 of Ld. CIT(A) order. 15/16.12.2010 The DCIT passed an order referring the case of assessee for special audit by M/ S.C & Associates. @Page 10 of Ld. CIT(A) order. 31.12.2010 The last date of passing the re-assessment order where the case could not have been referred for special audit, (i.e. 9 months) 14.06.2011 As per 142(2C) of the Act, the last date for submission of special audit report. (Limitation computed from Page | 7 27.06.2011 The special auditor report was submitted before the Ld. DCIT. @Page 15 ofLd. CIT(A) order. 12.08.2011 As per section 153(2) of the Act, the time limit for passing the assessment order was expiring on this date. 24.08.2011 The present assessment order has been passed with a delay of 12 days as the 60 day period for passing the assessment order after receiving the special audit report already expired on 12.08.2011. @Page 1 of Assessment Order 7. On the other hand, Ld. Sr. DR opposed these submissions and supported the orders of the authorities below. He submitted that the assessment is barred by time. He drew our attention to the order of Ld.CIT(A) in support of the contention that the assessee himself has stated before Ld.CIT(A). He drew our attention to the submissions made before Ld.CIT(A) by the assessee. 8. In re-joinder, Ld.AR for the assessee submitted that the submissions made before Ld.CIT(A) are factual incorrect. He drew our attention to the letter dated 10.07.2013 and reply to the said Remand Report by the assessee. 9. We have heard Ld. AR of the parities and perused the material available on record and gone through the orders of the authorities below. We find that there is no dispute with regard to the fact that the maximum time for submissions of Special Audit Report is six months i.e. 180 days. As per the chronology of events, Ld.AR for the assessee submitted that limitation for submission of Remand Report will be reckoned from 17.12.2010, a day after the order of Ld. DCIT for ordering for special audit. However, the Special Audit Report was submitted on 27.06.2011 which was delayed by 14 days and the assessment order was barred by time as it was delayed by 12 days as the 60 days have been passed and after receiving Special Audit Report. Thus, period Page | 8 for framing assessment order already expired on 12.08.2011 admittedly, the impugned assessment order was passed on 24.08.2011. After considering the material available on record and looking to the facts of the present case, moreover, it is also intimated by the Ld.AR for the assessee that other group cases have been restored to the file of Ld.CIT(A). We, therefore, set aside the order of Ld. CIT(A) and direct the AO to pass an order afresh after adjudicating the issue of limitation. Needless to say that Ld.CIT(A) will affords adequate opportunity of hearing to the assessee. Thus, Grounds raised by the assessee are allowed for statistical purposes. 10. In the result, the appeal of the assessee is partly allowed for statistical purposes only. ITA No. 619/Del/2016 [Assessment Year 2005-06] 11. Now, we take up the assessee’s appeal in ITA No. 619/Del/2016 pertaining to the Assessment Year 2005-06. The assessee has raised following grounds of appeal:- 1. “ That the order of Ld. Assessing Officer is bad in law and on facts and circumstances of the case. 2. That Ld. CIT Appeal has erred in law & facts by upholding the reopening of completed assessment by the Ld. Assessing Officer which is bad in law and on facts & circumstances of the case, as the same is based on flimsy grounds, conjectures and surmises and is not as per the provisions and intention of law, hence the same is liable to be annulled. 3. That Ld. CIT Appeal has erred in law & facts by upholding the recommendation of special audit by the Ld. Assessing Officer is not as per law and facts & circumstances of the case and was only undertaken to gain time for completion of assessment and also to Page | 9 take assistance of outside independent agency to determine the income and the same was sanctioned by bypassing all the provisions of section 142(2A) of the Income Tax Act and hence the made is not as per law and is liable to be annulled. 4. That Ld. CIT Appeal has erred in law & facts by upholding the completion of assessment by the Ld. Assessing Officer on 24.08.2011 u/s 148 / 143(3), in which the notice u/s 148 was issued on 22.03.2010 which is barred by limitation as per the provisions of section 153(2) of the Income Tax Act which states: “That no order of assessment, re-assessment or re- computation, shall be made u/s 147 after the expiry of 9 months from the end of financial year in which the notice u/s 148 was served” That since the notice was served on 22.03.2010 and the assessment was to be made before 31.12.2010 and the assessment was made on 24.08.2011, it is clearly barred by limitation and hence the Assessment is liable to be annulled. 5. That Ld. CIT Appeal has erred in law & facts by upholding the addition of Rs.27,60,465/ on account of Income from undisclosed sources disclosed in the form of retail trading which is not as per law and facts and circumstances of the case, as all details, supportings to the above were duly provided during the course of assessment proceedings and also all third party evidences relied by the Ld. Assessing Officer' were never confronted to the assessee and hence this addition is liable to be deleted. 6. That Ld. CIT Appeal has erred in law & facts by upholding the addition of Rs. 1,40,08,384/ on account of Income from Cessation of liability of retail trading which is not as per law and facts and circumstances of the case, as all details, supportings to the above were duly provided during the course of assessment proceedings and also all third party evidences relied by the Ld. Assessing Officer Page | 10 were never confronted to the assessee and hence liable to be deleted. 7. That Ld. CIT Appeal has erred in law & facts by upholding the addition of Rs.6,58,794/- on account of Income from undisclosed sources disclosed in the form of share income is not as per law and facts and circumstances of the case, as all details, supportings to the above were duly provided during the course of assessment proceedings and also all third party evidences relied by the Ld. Assessing Officer were never confronted to the assessee and hence the addition is liable to be deleted. 8. That Ld. CIT Appeal has erred in law & facts by upholding the addition of Rs.77,25,541/ on account of Income from Undisclosed sources utilized for purchasing the Cars/Income disclosed by various entities in the form of car rental/disallowances against the car/drivers salary not disclosed which is not as per law and facts and circumstances of the case, as all details, supportings to the above were duly provided during the course of assessment proceedings and also all third party evidences relied by the Ld. Assessing Officer were never confronted to the assessee and hence the addition is liable to be deleted. 9. That Ld. CIT Appeal has erred in law & facts by upholding the addition of Rs.96,000/- on account of Income from undisclosed sources declared in the shape of Dhaba income is not as per law and facts and circumstances of the case, as all details, supportings to the above were duly provided during the course of assessment proceedings and also all third party evidences relied by the Ld. Assessing Officer were never confronted to the assessee and hence the addition is liable to be deleted. 10. That Ld. CIT Appeal has erred in law & facts by upholding the addition of Rs. 1,60,682/- on account of Income from Canteen as declared by the assessee is not as per law and facts and circumstances of the case, as all details, supportings to the above Page | 11 were duly provided during the course of assessment proceedings and also all third party evidences relied by the Ld.Assessing Officer were never confronted to the assessee and hence is liable to be deleted. 1l. That Ld. CIT Appeal has erred in law & facts by upholding the addition of Rs. 1.87,72,347/ on account of Income from undisclosed sources deposited in various bank accounts is not as per law and facts and circumstances of the case, as all details, supportings, to the above were duly provided during the course of assessment proceedings and also all third party evidences relied by the Ld. Assessing Officer were never confronted to the assessee and hence the addition is liable to be deleted. 12. That Ld. CIT Appeal has erred in law & facts by upholding the addition of Rs.35,00,000/ on account of Income from sources utilized in house hold expenses is not as per law and facts and circumstances of the case, as all details, supportings to the above were duly provided during the course of assessment proceedings and also all third party evidences relied by the Ld. Assessing Officer were never confronted to the assessee and hence is liable to be deleted. 13. That Ld. CIT Appeal has erred in law & facts by upholding the addition of Rs.40,000/- on account of Income credited in balance sheet on account of LIC Refund is not as per law and facts and circumstances of the case, as all details, supportings to the above were duly provided during the course of assessment proceedings and also all third party evidences relied by the Ld. Assessing Officer were never confronted to the assessee and hence is liable to be deleted. 14. That Ld. CIT Appeal has erred in law & facts by upholding that the Ld. Assessing Officer completed the assessment on the basis of certain documents which were never found at the premises or in possession of the assessee and the same were also never Page | 12 confronted with the assessee and hence the additions based on such documents is not as per law and are liable to be deleted. 15. That Ld. CIT Appeal has erred in law & facts by upholding that the Ld. Assessing Officer completed the assessment with only one intention to increase the assessed income to maximum level. While completing the assessment, the additions are made of the same items, more than once, flouting the accounting principles and settled provisions of the law. Further, in case of such type of assessment, the settled method of calculating the undisclosed income has not been taken care of and hence the additions made are liable to be deleted. The appellant prays for leave to add, alter, modify and withdraw any of the grounds either before on at the time of hearing.” 12. We have heard Ld. AR for the assessee and Ld. Sr. DR for the Revenue and perused the material available on record and gone through the orders of the authorities below. It is stated by the Ld. AR for the assessee that the facts are similar and grounds taken by the assessee are identical. It is submitted that arguments made in ITA No.618/Del/2016 [Assessment Year 2004-05] may also be treated as grounds made in this appeal as well on the issue of limitation. As we have restored the issue of limitation to the file of Ld.CIT(A) for deciding it afresh by observing as under:- 9. “We have heard Ld. AR of the parities and perused the material available on record and gone through the orders of the authorities below. We find that there is no dispute with regard to the fact that the maximum time for submissions of Special Audit Report is six months i.e. 180 days. As per the chronology of events, Ld.AR for the assessee submitted that limitation for submission of Remand Report will be reckoned from 17.12.2010, a day after the order of Ld. DCIT for ordering for special audit. However, the Special Audit Report Page | 13 was submitted on 27.06.2011 which was delayed by 14 days and the assessment order was barred by time as it was delayed by 12 days as the 60 days have been passed and after receiving Special Audit Report. Thus, period for framing assessment order already expired on 12.08.2011 admittedly, the impugned assessment order was passed on 24.08.2011. After considering the material available on record and looking to the facts of the present case, moreover, it is also intimated by the Ld.AR for the assessee that other group cases have been restored to the file of Ld.CIT(A). We, therefore, set aside the order of Ld. CIT(A) and direct the AO to pass an order afresh after adjudicating the issue of limitation. Needless to say that Ld.CIT(A) will affords adequate opportunity of hearing to the assessee. Thus, Grounds raised by the assessee are allowed for statistical purposes.” 13. For the same reasoning, the order of Ld.CIT(A) is hereby, set aside and Ld.CIT(A) is directed to adjudicate the issue of limitation. Thus, grounds raised by the assessee are allowed for statistical purposes. 14. In the result, the appeal of the assessee is allowed for statistical purposes. 15. In the final result, both appeals of the assessee are allowed for statistical purposes. Order pronounced in the open Court on 19 th October, 2022. Sd/- Sd/- (N.K.BILLAIYA) (KUL BHARAT) ACCOUNTANT MEMBER JUDICIAL MEMBER * Amit Kumar * Page | 14 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI