M/s. Dugman Engineers (P) Ltd., New Delhi V. ACIT, New Delhi

ITA 6324/DEL/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74281 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 27-02-2014
• Assessment Year: 1997-1998
• Appeal Filed On: 21-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIDHI SRIVASTAVA
• Keywords: Rejection of books of accounts; Search and seizure; Initiation of penalty proceedings
• Section: 234B; 68; 132; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: B NEW DELHI BEFORE SHRI.G.D.AGRAWAL, HONBLE VICE PRESIDENT AND SHRI U.B.S.BEDI, JUDICIAL MEMBER I.T.A .NO.-6324/DEL/2012 (ASSESSMENT YEAR-1997-1998) M/S DUGMAN ENGINEERS (P.) LTD., D-4, RECTANGLE-I, SAKET DISTT. CENTRE, SAKET, NEW DELHI-110017. PAN-AAACD0430E (APPELLANT) VS ACIT, CENTRAL CIRCLE-21, NEW DELHI. (RESPONDENT) APPELLANT BY: SH. GAUTAM JAIN, CA RESPONDENT BY: SMT. NIDHI SRIVASTAVA, SR. DR ORDER PER U.B.S.BEDI, JM THIS IS AN APPEAL OF THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER PASSED BY LD. CIT(A)-II, NEW DELHI DATED 23.10.2012 RELEVANT TO A SSESSMENT YEAR 1997-98 WHEREBY BESIDES CHALLENGING CONFIRMATIONS OF ADDITI ONS OF RS.10,00,000/- AND REJECTION OF BOOKS OF ACCOUNTS OF THE ASSESSEE COMP ANY BY INVOKING SECTION1 45(3), THE ASSESSEE HAS ALSO CHALLENGED CONFIRMATIONS OF A DDITION OF RS.28,77,283/- BY SEPARATELY INVOKING SECTION 68 OF THE ACT AND IN AD DITION, CHALLENGE IS ALSO AGAINST SUSTAINING THE LEVY OF INTEREST U/S 234B OF THE INC OME TAX ACT. 2. THE FACTS INDICATE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CONSTRUCTION OF RESIDENTIAL AND COMMERCIAL PROPERTI ES. SEARCH AND SEIZURE 2 I.T.A .NO.-6324/DEL/2012 OPERATIONS U/S 132 WERE CONDUCTED ON THE ASSESSEE O N 17.07.1999. SINCE THE ASSESSEE NEITHER ATTENDED THE ASSESSMENT PROCEEDING S NOR PRODUCED THE BOOKS OF ACCOUNTS AND OTHER DOCUMENTS CALLED BY THE AO; THE ORIGINAL ASSESSMENT WAS COMPLETED U/S 144 ON 16.03.2000 AT RS.60,48,983/- A FTER MAKING AN ADDITION OF RS.20,00,000/- AND RS.40,48,983/- ON ACCOUNT OF INC OME FROM BUSINESS U/S 145(3) AND UNEXPLAINED LOANS AND ADVANCES U/S 68 RESPECTIV ELY. WHILE CIT(A) DELETED THE ENTIRE ADDITION AS PER HIS ORDER DATED 26.02.2001; THE TRIBUNAL AS PER ITS ORDER DATED 05.02.2009 RESTORED THE MATTER TO THE AO BY MAKING CERTAIN OBSERVATION AS INCORPORATED BY LD. CIT(A) IN PARA 2 OF PAGE 2 OF THE APPEAL ORDER. 3. IN THE SECOND ROUND, THE AO SOUGHT EXPLANATION A BOUT ASSESSEES AVAILABILITY OF THE BOOKS OF ACCOUNTS BUT UPON NOT GETTING A SPE CIFIC RESPONSE, COMPLETED THE ASSESSMENT BY REJECTING THE BOOK RESULTS U/S 145(3) BY MAKING ADDITION OF RS.10,00,000/- AND RS.28,77,283/- U/S 145(3) AND SE CTION 68 RESPECTIVELY. 4. AGGRIEVED BY THE ABOVE SAID ORDER, THE ASSESSEE FILED THE APPEAL AND RAISED FOUR GROUNDS WHERE TWO GROUNDS RELATED TO SECTION 2 34B AND INITIATION OF PENALTY PROCEEDINGS U/S 271(1)(C) WHEREAS EFFECTIVE GROUNDS WERE WITH REGARD TO REJECTION OF BOOK RESULTS AND ADDITION OF RS.10,00,000/- AND ADDITION OF RS.28,77,283/- MADE U/S 68 OF THE INCOME TAX ACT. 5. IN THE WRITTEN SUBMISSIONS FILED DURING THE APPE LLATE PROCEEDINGS, THE AR HAS ARGUED THAT ADDITIONS WERE AD HOC AND NOT IN ACCORD ANCE WITH THE DIRECTION OF THE 3 I.T.A .NO.-6324/DEL/2012 ITAT; THAT BOOKS OF ACCOUNTS WERE NOT AVAILABLE WIT H THE ASSESSEE; THAT NO ADVERSE MATERIAL HAS BEEN BROUGHT ON RECORD TO DOUBT THE VE RACITY OF THE AUDITED ACCOUNTS; THAT THE APPELLANT HAD BEEN CONSISTENTLY FOLLOWING THE PERCENTAGE COMPLETION METHOD OF ACCOUNTING WHICH HAD BEEN ACCEPTED BY CIT (A) IN THE APPEAL AGAINST THE FIRST ROUND OF ASSESSMENT; THAT WITH REGARD TO THE ADDITION MADE U/S 68, CONFIRMATION HAS BEEN FILED; AND THAT WHILE THE IN ITIAL ONUS ON THE ASSESSEE HAD BEEN DISCHARGED; THE AO HAD FAILED TO MAKE ANY INQU IRY AND COMPLETED THE ASSESSMENT ON THE BASIS OF MERE SUSPICION. 6. LD. CIT(A) WHILE CONSIDERING BUT NOT ACCEPTING T HE PLEA HAS CONCLUDED TO UPHOLD THE ORDER OF THE AO BY DISMISSING THE APPEAL OF THE ASSESSEE AS PER PARA 5.1 TO 5.7 OF THE ORDER AT PAGES 3 & 4. 7. WHILE AGGRIEVED, ASSESSEE IS IN FURTHER APPEAL A ND WHILE REITERATING THE SUBMISSIONS AS MADE BEFORE THE LOWER AUTHORITIES, I T WAS PLEADED THAT ORDER OF LD. CIT(A) IS NOT SUSTAINABLE BEING NOT LEGALLY VALID. IT WAS FURTHER SUBMITTED THAT BOOKS OF ACCOUNTS WERE WITH THE AUTHORITIES WHO SEI ZED THEM AND THIS FACT WAS DULY DISCLOSED TO THE AO AS WELL AS TO CIT(A) BUT B OTH OF THEM DID NOT APPROPRIATELY CONSIDERED THE PLEA OF THE ASSESSEE A ND HAS JUST CONCLUDED TO MAKE/CONFIRM THE IMPUGNED ADDITIONS. SINCE BOOKS O F ACCOUNTS WERE SEIZED AND ARE WITH THE SAME AUTHORITIES WHICH FACT WAS DULY DISCLOSED TO THE AO AS WELL AS TO THE CIT(A) BUT BOTH OF THEM HAVE IGNORED THE PLEA O F THE ASSESSEE EITHER TO 4 I.T.A .NO.-6324/DEL/2012 SUMMON BOOKS FROM THE AUTHORITIES IN WHOSE POSSESSI ON BOOKS WERE AFTER HAVING SEIZED DURING THE SEARCH. SO IT WAS STRONGLY PLEAD ED THAT IN THE INTEREST OF JUSTICE AND TO HAVE FAIR PLAY, ORDERS OF THE AUTHORITIES BE LOW SHOULD BE SET ASIDE AND MATTER MAY BE RESTORED BACK TO THE FILE OF THE AO WITH THE DIRECTION TO RE-DECIDE THE CASE AFRESH AFTER TAKING POSSESSION OF THE BOOKS OF ACCO UNTS, WHICH WERE WITH THE INCOME TAX AUTHORITIES OTHER THAN AO, TO EXAMINE TH E CASE AND PASS APPROPRIATE AND JUSTIFIABLE ORDER AND LD. DR ON THIS PLEA OF T HE ASSESSEES COUNSEL DID NOT RAISE ANY SERIOUS OBJECTION IN CASE THE MATTER IS R ECONSIDERED AND RE-DECIDED AFRESH, HOWEVER OTHERWISE PLEADED FOR CONFIRMATION OF THE I MPUGNED ORDER. 8. WE HAVE HEARD BOTH THE SIDES AND CONSIDERED THE MATERIAL AVAILABLE ON RECORD. WE HAVE ALSO GONE THROUGH THE ORDERS OF TH E AUTHORITIES BELOW AND FIND THAT PLEA OF THE ASSESSEE FOR SETTING ASIDE THE MAT TER ON THE FILE OF THE AO IS JUST AND APPROPRIATE BECAUSE DURING THE SEARCH, BOOKS OF ACC OUNTS HAVE BEEN SEIZED AND THERE IS NOTHING PLACED ON RECORD TO SHOW THAT SUCH BOOKS OF ACCOUNTS HAVE EVER BEEN HANDED OVER TO THE ASSESSEE AND ASSESSEE HAD A LONG BEEN CONTESTING FOR VERIFICATION OF THE ACCOUNTS FROM THE BOOKS OF ACCO UNTS BEING HELD WITH THE TAX AUTHORITIES. THEREFORE IN THE INTEREST OF JUSTICE AND FAIR PLAY IN THE MATTER, WE FIND IT JUST AND APPROPRIATE, TO SET ASIDE THE MATTER AN D RESTORE ON THE FILE OF THE AO WITH THE DIRECTION TO RE-DECIDE THE CASE AFRESH AFTER GI VING DUE OPPORTUNITY TO THE ASSESSEE. WE HOLD AND DIRECT ACCORDINGLY. 5 I.T.A .NO.-6324/DEL/2012 9. SINCE CHARGING OF INTEREST U/S 234B IS CONSEQUEN TIAL SO IT ALSO GETS SET ASIDE. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE GETS ACCEPTED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 07 .03 .2014. SD/- SD/- (G.D.AGRAWAL) (U.B.S.BEDI) HONBLE VICE PRESIDENT JUDICIAL MEMBER DATED: 07 / 03/2014 *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI