ITO, New Delhi V. M/s. Diamond Proteins P. Ltd., New Delhi

ITA 643/DEL/2012

• Counselvise Citation: 64320114 RSA 2012
• Duration Of Justice: 2 year(s) 7 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 23-07-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 07-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARWINDER KAUR
• Assessee Lawyers: ASHWANI TANEJA
• Keywords: Unexplained investment; Additional evidence; Assessment record
• Section: 147; 131; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : B NEW DELHI BEFORE S HRI I.C. SUDHIR , J.M. AND SHRI J.SUDHAKAR REDDY, A.M. ITA NO. 643 /DEL/20 12 ASSESSMENT YEAR : 200 3 - 04 ITO, WARD 10(3) VS. DIAMOND PROTEINS P.LTD. ROOM NO. 199C E 27, KAMLA NAGAR NEW DELHI NEW DELHI 110 007 PAN: AABCD 6035 A C.O.NO. 97 /DEL/20 13 (IN ITA 643 /DEL/20 12 ) AY: 200 3 - 04 M/S DIAMOND PROTEINS PVT.LTD. VS. ITO, WARD 10(3) NEW DELHI NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY: - SHRI ASHWANI TANEJA, ADV. DEPARTMENT BY: - SMT. PARWINDER KAUR, SR.D.R. O R D E R PER J.SUDHAKAR REDDY, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE REVENUE DIRECTED AGAINST THE ORDER OF LD.CIT(APPEALS) - IV, NEW DELHI DT. 14.12.2011 PERTAINING TO THE ASSESSMENT YEAR 2003 - 04 ON THE FOLLOWING GROUNDS. 1. THE LD.CIT(A) HAS ERRED ON FACTS AND IN CIRCUMSTANCES OF THE CASE BY DELETING THE ADDITION OF RS.55,02,380/ - MADE BY THE AO ON ACCOUNT OF UNEXPLAINED INVESTMENT. 2. THE CIT(A) HAS ERRED ON FACTS AND IN CIRCUMSTANCES OF THE CASE BY ADMITTING THE SUBMISSIONS OF THE ASSESSEE WITHOUT VERIFYING THE SAME BY WAY OF CALLING THE ASSESSMENT RECORD OR A REMAND REPORT UNDER RULE 46A OF THE I.T.RULES. ITA NO. 643/DEL/2012 & C.O. 97/DEL/2013 AY 2003 - 04 DIAMOND PROTEINS PVT.LTD . PAGE 2 OF 7 1.1. THE C.O. HAS BEEN FILED ON THE FOLLOWING GROUNDS. 1. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTI ON OF LD.AO IN REOPENING THE IMPUGNED ASSESSMENT THAT TOO WITHOUT ASSUMING JURISDICTION AS PER LAW AND WITHOUT RECORDING VALID REASONS AND WITHOUT COMPLYING WITH THE MANDATORY CONDITIONS OF PROVISIONS OF SECTIONS 147 TO 153 OF THE INCOME TAX ACT, 1961. 2. THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER, THE ACTION OF LD.CIT(A) IN CONFIRMING ;THE ACTION OF LD.AO IN REOPENING THE IMPUGNED CASE AND IN FRAMING THE IMPUGNED ASSESSMENT U/S 147/144 WHICH IS BAD IN LAW, UNJUSTIFIED, AGAINST THE PRINCIPLES OF NATURA L JUSTICE AND VOID AB INITIO MORE SO REASONS RECORDED ARE INVALID IN THE EYES OF LAW AND NO VALID SATISFACTION U/S 151 HAS BEEN OBTAINED BEFORE ISSUANCE OF NOTICE U/S 148. 2. WE FIRST TAKE UP THE APPEAL OF THE REVENUE. 3. FACTS IN BRIEF: - THE ASSESSEE IS A COMPANY ENGAGED IN CARRYING ON BUSINESS OF TRADING IN BOOKS AND MACHINES . IT FILED ITS RETURN OF INCOME ON 30.6.2003 DECLARING NIL INCOME UNDER THE REGULAR PROVISIONS OF THE ACT, AFTER ADJUSTING CARRY FORWARD UNABSORBED DEPRECIATI ON AND DECLARING BOOK PROFIT OF RS.94,644/ - U/S 115 JB OF THE ACT. THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT. A NOTICE U/S 148 WAS ISSUED ON 23 RD OCTOBER,2009. IN RESPONSE A LETTER WAS FILED DT. 5 TH NOVEMBER,2009 STATING THAT THE RETURN FILED EARLI ER MAY BE TAKEN AS RETURN IN RESPONSE TO THE NOTICE U/S 148 OF THE ACT. 3.1 . THE AO REJECTED THE OBJECTIONS FILED BY THE ASSESSEE ON THE REOPENING. HE COMPLETED THE ASSESSMENT BY ADDING AN AMOUNT OF RS.55,27,737/ - AS UNEXPLAINED INVESTMENT. 3.2 . AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APPEAL. ITA NO. 643/DEL/2012 & C.O. 97/DEL/2013 AY 2003 - 04 DIAMOND PROTEINS PVT.LTD . PAGE 3 OF 7 3.3. THE FIRST APPELLATE AUTHORITY UPHELD THE REOPENING OF THE ASSESSMENT. ON MERITS HE ALLOWED THE CLAIM OF THE ASSESSEE. 4. AGGRIEVED THE REVENUE FILED AN APPEAL AND THE ASSESSEE FILED A C.O. ON REO PENING. 5. THE LD. SR. D.R. SMT. PARWINDER KAUR, SUBMITTED THAT THE LD.CIT(A) AT PAGE 9 OF HIS ORDER, ADMITTED ADDITIONAL EVIDENCE. SHE ARGUED THAT THE ASSESSEE HAD NOT FILED ANY EVIDENCE OR DOCUMENT BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS EXCEPT FILING OBJECTIONS FOR REOPENING THE ASSESSMENT U/S 147 OF THE ACT. SHE DREW THE ATTENTION OF THE BENCH TO THE LAST PAGE OF THE ASSESSMENT ORDER AND SUBMITTED THAT IN THE ABSENCE OF ANY DETAILS FILED, THE CLAIM OF THE ASSESSEE REMAINED U NVERIFIED. SHE PRAYED THAT THE ISSUE SHOULD BE SET ASIDE TO THE FILE OF THE AO FOR FRESH ADJUDICATION, IN VIEW OF A FRESH CLAIM MADE BY THE ASSESSEE. SHE RELIED ON THE JUDGEMENT OF HON BLE HIMACHAL PRADESH HIGH COURT IN THE CASE OF CIT VS. SHREE KANGRA STEEL PVT.LTD. REPORTED IN 320 ITR 691, AND SUBMITTED THAT THE AO SHOULD BE GIVEN AN OPPORTUNITY. 5.1. THE LD.COUNSEL FOR THE ASSESSEE SHRI ASHWANI TANEJA, ON THE OTHER HAND OPPOSED THE CONTENTIONS AND POINTED OUT THAT THE ASSESSEE IN THE CASE OF KC FIB RES FORWARDED ALL THE DOCUMENTS TO THE AO. HE DREW THE ATTENTION OF THE BENCH TO PARA 5 OF THE LD.CIT(A) S ORDER AND SUBMITTED THAT THE FACTS ARE SO APPARENT AND ALL THE INFORMATION WAS VERY MUCH IN THE POSSESSION OF THE AO AND SETTING ASIDE THE MATTER TO THE AO FOR FRESH ADJUDICATION WOULD BE UNJUST AND UNNECESSARY. ITA NO. 643/DEL/2012 & C.O. 97/DEL/2013 AY 2003 - 04 DIAMOND PROTEINS PVT.LTD . PAGE 4 OF 7 6. RIVAL CONTENTIONS HEARD. ON A CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, ON PERUSAL OF ORDERS OF THE LOWER AUTHORITIES AND THE CASE LAWS CITED, WE HOLD AS UNDER. 7. THE LD.CIT(A) AT PARA 5 OBSERVED AS FOLLOWS. S PER THE FACTS OF THE CASE, THE AMOUNT OF RS.55,02,380/ - COMMUNICATED BY THE ITO, WARD 5(4), NEW DELHI VIDE LETTER DT. 27.3.2006 CONSISTED OF SALE COSNDIERATION OF LAND OF RS.22,50,000/ - AND AMOUNTS RECEIVED FROM EIGHT PARTIES ON SALE OF STOCK AND FIXED ASSETS OF RS.32,52,380/ - . AS PER LETTERS DT. 20.3.2006 AND 27.3.2006 SUBMITTED BY THE ASSESSEE COMPANY TO THE ITO, WARD 5(4), NEW DELHI IN RESPONSE TO SUMMONS U/S 131 ISSUED BY THE ABOVE ITO IN THE COURSE OF T HE ASSESSMENT PROCEEDINGS IN THE CASE OF M/S K.C.FIBRES LTD., WHICH FORMS PART OF THE ASSESSMENT ORDER OF THE ASSESSEE COMPANY, THE COPIES OF SALE DEED IN RESPECT OF SALE OF LAND OF RS.22.50 LACS AND CONFIRMATION OF EIGHT PARTIES IN RESPECT OF SALE OF STOC K ETC. OF RS.32.52 LACS WERE DULY FILED BY THE ASSESSEE COMPANY WITH THE ITO, WARD 5(4), NEW DELHI WHO HAD FORWARDED THESE DOCUMENTS TO THE AO OF THE ASSESSEE COMPANY. 7.1 . THEREAFTER HE EXTRACTED THE LETTERS REFERRED TO ABOVE DATED 20.3.2006 AND WRITTEN SUBMISSIONS DT. 25.11.2011 AND CONCLUDED AS FOLLOWS. PERUSAL OF THE ABOVE CHART CLEARLY SHOWS THAT THE ASSESSEE COMPANY RECEIVED RS.55,02,380/ - DURING THE YEAR UNDER CONSIDERATION CONSISTING OF RS.22,50,000/ - ON ACCOUNT OF SALE OF FACTORY LAND RS.7,50,000 / - AS LOAN FROM M/S SWARNIM CREDIT & HOLDING LTD. AND THE BALANCE OF RS.25,02,380/ - ON ACCOUNT OF SALE OF BOOKS ETC. OUT OF THE AMOUNT OF RS.55,02,380/ - , THE ASSESSEE HAS GIVEN LOAN OF RS.16,00,000/ - TO M/S SWARNIM INVESTMENT & FINANCE PVT.LTD. AND RS.39, 00,000/ - WAS INVESTED AS SHARE APPLICATION MONEY IN M/S K.C.FIBRES LTD. AS REGARDS THE SALE OF LAND, TWO CHEQUES OF RS.17.50 LACS AND RS.5 LACS TOTALING RS.22.50 LACS WERE RECEIVED BY THE ASSESSEE ON ACCOUNT OF SALE OF FACTORY LAND. THUS, NO PART OF THE ABOVE SALE CONSIDERATION CONSISTED OF SMALL DENOMINATION DDS OF RS.19,500/ - EACH. COPY OF THE CONVEYANCE DEEDS AND BANK STATEMENTS IN RESPECT OF ABOVE SALE WERE ALSO DULY SUBMITTED TO THE AO. THE AO HAS NOT MADE ANY ADVERSE COMMENTS WITH REGARD TO THE AB OVE SALE OF LAND AND THE AO HAS ALSO NOT MADE ANY INDEPENDENT ENQUIRY TO DISPUTE THE CLAIM OF THE ASSESSEE IN THIS REGARD. IN VIEW OF THE ABOVE, THE ABOVE AMOUNT OF RS.22.50 LACS CANNOT BE HELD TO BE UNEXPLAINED RECEIPT/INVESTMENT BY THE ASSESSEE. FURTHE R, THE LOAN OF RS.7,50,000/ - FROM M/S SWARNIM CREDIT & HOLDING LTD. IS BY WAY OF SINGLE CHEQUE AND IS DULY SUPPORTED BY CONFIRMATION OF LEDGER ACCOUNT BY THE ABO V E ITA NO. 643/DEL/2012 & C.O. 97/DEL/2013 AY 2003 - 04 DIAMOND PROTEINS PVT.LTD . PAGE 5 OF 7 PARTY FILED BEFORE THE AO AND NO ADVERSE COMMENT IN THIS REGARD HAS BEEN MADE BY THE AO. T HEREFORE, THE ABOVE AMOUNT OF RS.7,50,000/ - CANNOT BE HELD AS UNEXPLAINED RECEIPT/INVESTMENT BY THE ASSESSEE. AS REGARDS, THE AMOUNT OF RS.25,02,380/ - RECEIVED ON ACCOUNT OF SALE OF BOOKS AND MACHINERY, AS PER THE TABULAR CHART REPRODUCED ABOVE, THE COP Y OF LEDGER ACCOUNT IN THE BOOKS OF THE ASSESSEE AND CONFIRMATION OF PURCHASE BY THE BUYER PARTIES HAVE BEEN DULY FURNISHED BEFORE THE AO. THE AMOUNTS RECEIVED ARE ALSO BY SINGLE CHEQUES OF LARGER DENOMINATIONS, EXCEPT RS.3,80,000/ - RECEIVED ON 9.10.2002 FROM M/S MANAS PUBLICATION, RS.2,46,000/ - RECEIVED FROM M/S INDIAN PUBLISHER AND DISTRIBUTORS ON 9.10.2002, RS.2,47,000/ - RECEIVED FROM M/S OFFICER BOOKS ON 9.10.2002 AND RS.1,90,000/ - RECEIVED FROM M/S GOEL POLYMERS PVT.LTD. ON 9.10.2002 WHICH ARE BY WAY OF TOTAL 111 SMALL DDS OF RS.19,500/ - EACH AND THESE DDS HAD BEEN PURCHASED BY PAYMENT OF CASH BY VARIOUS PARTIES AS PER DETAILS GIVEN IN THE ASSESSMENT ORDER. IN RESPECT OF THE ABOVE SALE PROCEEDS TOTALING RS.10,63,000/ - (RS.3,80,000/ - + RS.2,46,000/ - + RS.2,47,000/ - ) WHICH WAS RECEIVED BY SMALL DENOMINATION DDS, THE ASSESSEE HAS FURNISHED CONFIRMATION FROM THE PURCHASER PARTIES ALONG WITH LEDGER ACCOUNT COPIES BEFORE THE AO AS MENTIONED ABOVE. THE ASSESSEE HAS ALSO FURNISHED COMPLETE ADDRESS OF ALL THE ABOVE MENTIONED FOUR PURCHASER PARTIES ALONG WITH THEIR PAN DETAILS IN EACH OF THE ABOVE CASES. 7.2. LD.CIT(A) FURTHER OBSERVED THAT THE AMOUNT OF RS.10.63 LAKHS FORM PART OF THE REGULAR SALES RECORDED IN THE BOOKS AND HENCE CANNOT BE TERMED AS UNEXPLAINE D RECEIPT/INVESTMENT IN THE HANDS OF THE ASSESSEE. HE OBSERVED THAT MOST OF THESE DOCUMENTS AND EVIDENCES WERE SUBMITTED BEFORE THE AO AND THE AO HAS NOT MADE ANY ADVERSE COMMENTS. NO INDEPENDENT ENQUIRY WAS CONDUCTED BY THE AO. IN ANY EVENT THE AMOUNT O F RS.10.63 LAKHS COMPRISING OF SMALL DENOMINATION DEMAND DRAFTS OF RS.19,500/ - EACH WERE SENT BACK TO THE AO FOR VERIFICATION. THE OTHER ADDITIONS WERE DELETED. 7.3 . THE LD.D.R. COULD NOT CONTROVERT ANY OF THE FACTUAL FINDINGS RECORDED BY THE LD.CIT(A). 7.4. IN VIEW OF THE ABOVE DISCUSSION THE REQUEST OF THE LD.CIT,D.R. FOR SETTING ASIDE THE MATTER TO THE FILE OF THE AO FOR DE NOVO ADJUDICATION IS DEVOID OF MERIT. ITA NO. 643/DEL/2012 & C.O. 97/DEL/2013 AY 2003 - 04 DIAMOND PROTEINS PVT.LTD . PAGE 6 OF 7 7.5 . IN THE RESULT WE UPHOLD THE ORDER OF THE LD.CIT(A) AND DISMISS THIS APPEAL OF THE REV ENUE. 8 . COMING TO THE CROSS OBJECTION FILED BY THE ASSESSEE, WE ARE OF THE OPINION THAT IN VIEW OF OUR DECISION IN THE REVENUE S APPEAL ON MERITS , ADJUDICATING THE SAME WOULD BE AN ACADEMIC EXERCISE AND HENCE WE DISPOSE OF THE C.O. AS INFRUCTUOUS AND DIS MISS THE SAME . 9 . IN THE RESULT, BOTH THE REVENUE S APPEAL AS WELL AS THE ASSESSEE S CROSS OBJECTION ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH SEPTEMBER, 2014. SD/ - SD/ - ( I.C.SUDHIR ) ( J. SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: THE 24 TH SEPTEMBER, 2014 *MANGA ITA NO. 643/DEL/2012 & C.O. 97/DEL/2013 AY 2003 - 04 DIAMOND PROTEINS PVT.LTD . PAGE 7 OF 7 COPY OF THE ORDER FORWARDED TO: 1.APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT(A); 5.DR; 6.GUARD FILE BY ORDER ASST. REGISTRAR