Appeal details
Counselvise Citation
[2022] 103 COUNSELVISE.COM (IT) 9480 (ITAT-DELHI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
3 year(s) 1 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
30-10-2022
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
A
Next Hearing Date
12-10-2022
Assessment Year
2003-2004
Appeal Filed On
29-10-2019
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “A” DELHI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER & SHRI NARENDER KUMAR CHOUDHRY, JUDICIAL MEMBER I.T.As. No.8494 & 8495/DEL/2019 Assessment Years 2003-04 & 2004-05 Deputy Commissioner of Income Tax, Central Circle-27, New Delhi. Vs. M/s. Apoorva Extrusion Pvt. Ltd., 110, 1 st Floor Bhanot Corner, Pamposh Enclave, Greater Kailash-I, New Delhi. TAN/PAN: AAACA2120L (Appellant) (Respondent) Appellant by: Shri M.P. Rastogi Adv Shri Rajeev Kumar CA Respondent by: Shri P. Praveen Sidharth, CIT-DR Date of hearing: 13 10 2022 Date of pronouncement: 31 10 2022 O R D E R PER SHAMIM YAHYA, A.M. Th ese ap p eals b y th e Rev en u e are d irected ag a in st th e o rd ers o f th e Co mmi ssio n er o f In co me Tax (Ap p eals)-XXIX, New Delh i (‘CIT(A)’ in sh o rt) d ated 0 9 .0 8 .2 0 19 fo r th e a fo resaid assess men t y ears. Sin ce th e i ssu es are co mmo n an d b o th th e appeals were h eard to g eth er th ey are b ein g d isp o sed o ff b y way of th is co n so lid ated o rd er. 2 . Th e co mmo n g ro u nd s raised re ad as u n d er: 1 . W h e t h e r o n t h e f a c t s a n d i n t h e c i rc u m st a n c e s of t h e c a se a n d i n l a w t h e L d . C I T (A ) w a s l e g a l l y j u st i f i e d i n ho l d i n g t h a t t h e a d d i t i o n s m a d e i n t h e c o u r s e o f p r o c e e d i n g s u / s 1 5 3C o f t h e I.T.A. No.8494 & 8495/Del/2019 2 I n c o m e T a x A c t , 1 9 6 1 w e r e n o t w a r ra n t e d h a v i n g r e g ard t o t h e j u d g m e n t o f t h i s c o u rt i n CI T V s. Ka b u l Ch a w l a (3 8 0) I T R 5 7 3 . 2 . W h e t h e r o n t h e f a c t s a n d t h e c i rc u m st a n c e s o f th e c a se a n d i n l a w t h e L d . CI T (A ) wa s l e g a l l y j u st i f i e d i n no t a p p r e c i a t i n g t h a t R e v e n u e h a s f i l e d v a r i o u s S L P s a ga i n s t t h e d e c i si o n o f t h e j u ri sd i c t i o n a l H i g h Co u rt i n CI T V s. Ka b u l Ch a w l a i n A p e x Co u r t a n d t h e d e c i s i o n s a r e p e n d i n g a n d h e n c e , t h e i s su e h a s n o t a t t a i n e d f i n a l i t y . 3 . W h e t h e r o n t h e f a c t s a n d i n t h e c i rc u m s t a n c e s of t h e c a se , t h e L d . CI T (A ) h a s e r re d i n l a w a n d o n f a c t s i n d i r ec t i n g t h e A O t o c o n f i n e a s s e ss m e n t o n t h e b a si s o f a l r e a d y c o m p le t e d a s s e ss m e n t e v e n t h o u g h t h e a d d i t i o n s w e r e m a d e b y th e A O wh i l e f r a m i n g a ss e s sm e n t u / s 1 5 3 C o f t h e A c t o n t h e i ss u e w h i c h w a s n o t e x a m i n e d i n e a rl i e r a s s e ss m e n t c o m p l e t e d u / s 1 43 (3 ) o f t h e I n c o m e t a x A c t , 1 9 6 1 . 4 . T h e o rd e r o f t h e C I T (A ) i s e r ro n e o u s a n d n o t t en a b l e i n l a w a n d o n f a c t s . ” 3 . Fo r th e sak e o f referen ce , we are referrin g to th e o rd ers o f Rev en u e’s Au th o ritie s fo r Assess men t Year 2 0 0 3 -0 4 . 4 . Pu rsu an t to se arch an d sei zu re o p erat io n in M /s. Fl ex Gro up o f co mp an ies , asse ssmen t u n d er Sectio n 1 5 3 C r.w. Sectio n 1 4 3(3 ) was in it iat ed ag ain st th e assess ee. Th e assessee is en g ag ed in th e b u sin ess o f in v est men t in sh ares an d secu rit ies, sale/ p u rch ase o f sh ares an d secu ri t ies an d o th er rela ted fin an c ial ac tiv it ies . Th e Assessin g Offi cer n o ted u p o n p eru sal o f th e p ro fi t an d lo ss acco u n t o f th e assessee co mp an y th at assess ee h as receiv ed Rs.7 0 ,5 5 ,6 4 0 o n acco u n t o f co mmiss i o n fro m M/s . Ak sh ay Trad in g Co rp o ratio n and M/s. R .R. Fin an cia l Co n stan ts Ltd . an d I.T.A. No.8494 & 8495/Del/2019 3 co n su ltan cy ch arg es o f Rs .6 7 ,0 0 ,0 00 /- fro m M /s. Dh aram Pa l & Saty a Pa l. Th e As sessin g Officer p r o ceed ed to in q u ire u p o n the n atu re o f serv ic e ren d ered by th e assessee . He rep ro d u ced th e assesse e’s su b miss io n as u n d er: “....it is submitted that the assessee is an investment company and duly registered as NBFC with the Reserve Bank of India and main business of the company is to invest and trade in shares, securities, debentures and allied financial instruments & activities. In view of the same the commission received on the securities towards sub broker ship of marketing of investments in share, securities and bonds etc. are within the preview of the business activities of the assessee company. These activities are incidental in the main business of investments in shares & securities. Since the commission were received on account of services rendered towards procurement of sales order & brokerage were received on account of services rendered towards sub-broker ship for marketing of investment in share, securities & bond etc. therefore the same may be treated as business income & not income from other sources.” 4 .1 Th ereafter th e Ass essin g Officer h e ld as u n d er: H o we v e r , t h e f o l l o wi n g f a c t o r s p e rt i n e n t t o t h e a s se s se e ’ s c a s e a r e si g n i f i c a n t : 1 ) T h e a ss e s se e c o m p a n y h a s n o i n f ra st ru c t u r e a t al l , n e i t h e r o w n e d n o r r e n t e d t o re n d e r se r v i c e s f o r wh i c h c o m m is si o n a n d c o n s u l t a n c y i n c o m e a r e c l a i m e d t o h a v e b e e n r e c e i v ed . 2 ) D u r i n g t h e y e a r , t h e a s se s s e e h a s d e b i t e d n e g l i g i b l e / n o m i n a l a m o u n t s o n a c c o u n t o f a d m i n i st r at i o n a n d o t h e r e x p e n se s (R s. 6 7 , 0 8 1 / - o n l y ) , t h e h i g h e st e x pe n d i t u re b e i n g o n a c c o u n t o f a u d i t a n d l e g a l e x p e n se s . S a l a r y a n d w a g e s e x p e n d i t u re t o o , i s a p a l t r y su m @ R s. 3 , 7 5 0 / - p . m . I.T.A. No.8494 & 8495/Del/2019 4 3 ) T h e re i s n o e x p e n d i t u re b y t h e a s se s s e e d u ri n g t h e y e a r, wh i c h c o u l d b e d i re c t l y o r i n d i r e c t l y a t t ri b u t e d t o g e n e ra t i o n o f i n c o m e f r o m c o m m i s si o n a n d c o n s u l t a n c y c h a r g e s. 4 ) T h e e x p r e s s n a t u r e o f b u si n e s s o r p ro f e s s i o n d ec l a re d b y t h e a s se s s e e i n F o r m No . 3 C D i s i n v e st m e n t i n sh a r es & se c u r i t i e s, s a l e / p u r c h a se o f sh a r e & s e c u r i t i e s. 5 ) N o e v i d e n c e h a s b e e n f u rn i s h e d b y t h e a s s e s se e s o a s t o p r o v e t h a t t h e r e c e i p t s i n t h e f o rm o f c o m m i s si o n an d c o n s u l t a n c y c h a rg e s c o m p r i s e d i n c o m e f ro m b u si n e s s. 6 ) T h e a s s e s se e h a s n o t f u rn i s h e d a n y e v i d e n c e t o sh o w t h a t t h e se r v i c e s h a v e b e e n r e n d e r e d b y h i m . I t a p p e a r s t h a t t h i s i n c o m e h a s b e e n e a rn e d b y o t h e r c o n c e r n o f t h e g r o up a n d h a s b e e n d i v e rt e d a s i n c o m e o f t h e a s se s s e e . I n t h e l i g h t o f t h e a b o v e , i t i s c l e a r t h a t t h e i n co m e e a r n e d b y t h e a s s e s s e e f r o m c o m m i s s i o n a n d c o n s u l t a n c y c h a r g es a m o u n t i n g t o R s. 1 , 3 7 , 5 5 , 6 4 0 / - i s n o t h i s b u si n e s s in c o m e a n d a c c o rd i n g l y , t h e s a m e i s t a x e d u n d e r t h e h e a d “ i n c om e f r o m o t h e r s o u r c e s. ” P e n a l t y p ro c e e d i n g s u / s. 2 7 1 (1 ) (c ) a re i n i t i a t e d se p a r a t e l y w i t h re s p e c t t o t h i s a d d i t i o n . ” 5 . Ag ain st th e ab o v e o rd er, th e assessee ap p ealed befo re th e CIT(A). Th e ld . C IT(A) h as elab o rately n o ted th e sub mi ssio n o f th e asses see . It was also n o ted t h at th e o rig in a l retu rn u n d er Sect io n 1 3 9 was filed o n 3 1 .1 0 2 0 03 wh ich was p ro cessed u n d er Sect io n 1 43 (1) an d assessmen t was co mp le ted u n der Sectio n 1 4 3 (3 ) o n 20 .1 2 .2 00 5 . Th e Assessin g Officer mad e the a ssess men t u n d er Sectio n 1 5 3C r.w. Sec tio n 1 4 3 (3 ) b y on ly sh iftin g th e h ead o f in co me fro m b u sin ess in co me to in co me fro m o th er so u rces. Th e ld . CIT(A) n oted th at fo r d o in g so th e Assessing Officer h as I.T.A. No.8494 & 8495/Del/2019 5 n o t referred to an y seized p ap ers/d o cu men ts. Th e l d. CIT(A) fu rth er referred to th e assess ee’s g ro u nd th at ad d itio n s mad e b y th e Assessin g Offi cer were n o t with re feren ce to any seized ma teri al an d th e d o cu men ts wh ich w ere se ized were no t fo r th e y ear u nd er co n siderat io n . In th is reg ard , th e assessee referred to th e ju d g men t o f Ho n ’b le Delh i High Co u rt in th e case o f CIT vs. Ka b u l Ch a wla , 3 80 ITR 57 3 (Delh i ). Co n sid erin g th e ab o v e, th e ld . CIT(A) accep t ed th e su b miss io n th at ad d i tio n h as n o t b een mad e b y re feren c e to an y in cri min atin g ma teri al fo un d d u ring search . He h eld as u n d er: 4 . 2 . I t w a s a l so n o t i c e d t h a t t h e s p e c i a l l e a v e p et i t i o n b e f o re t h e H o n ' b l e A p e x Co u r t a g a i n st t h e a b o v e j u d g m e n t o f D el h i H i g h Co u rt h a d a l s o b e e n r e j e c t e d . (S . L . P ( C ) No - 3 4 5 5 4 o f 2 0 1 5 [ 2 01 6] 3 8 0 I T R (s t ) 6 4 - E d ) . I n t h e i n s t a n t c a se , i t wa s f o un d t h a t t h e a d d i t i o n s m a d e b y t h e A O a r e n o t o n t h e b a si s o f m at e ri a l s e i z e d d u ri n g t h e c o u r se o f se a rc h . A s h e l d b y H o n ' b l e D e lh i H i g h Co u rt i n t h e a b o v e 2 j u d g m e n t s t h a t t h e c o m p l e t e d a ss e s sme n t c a n b e i n f e r r e d b y t h e A s se s si n g O f f i c e r wh i l e m a k i n g t h e a s s e s s m e n t u n d e r S e c t i o n 1 5 3 A / 1 5 3 C o n l y o n t h e b a si s o f s o m e in c ri m i n a t i n g m a t e ri a l u n e a rt h e d d u ri n g t h e c o u r se o f s e a r c h . I n t h e i n s t a n t c a se o f t h e a p p e l l a n t , t h e a s s e s s m e n t wa s c o m p l e t e d a n d sh i f t i n g o f c o m m i s si o n / c o n su l t a n c y i n c o m e f r o m b u s i n e s s i n c o m e t o t h e h e a d o f i n c o m e f r o m o t h e r s o u rc e s wa s n o t b a se d o n t h e ba si s o f a n y se i ze d m a t e ri a l . T h e r e f o re , t h e A s s e s s i n g O f f i c e r is d i re c t e d t o c o n f i n e i t s a s s e ss m e n t o n t h e b a s i s o f a l r e a d y c o m pl e t e d a s s e ss m e n t . 6 . Ag ain st ab o v e o rd er, th e R ev en u e h as fi led ap p eal b e fo re u s. Th e ld . Dep artmen tal R ep resen ta tiv e reli ed u po n th e o rd ers o f th e Assessin g Officer. We also n o ted that in th e g ro u nds o f ap p eal, I.T.A. No.8494 & 8495/Del/2019 6 Rev en u e h as no t d isp u ted th e fact th at th e assess men t is n o t b ased u p on an y in crimin atin g mat eria l fo u n d du rin g th e search b u t th e Rev en u e’s g riev ance is th at th e Rev e n u e h as fil ed SLP ag ain st th e d ecisio n o f Ho n ’b le Ju risd ic tio n al Hi g h Co u rt in the cas e o f Kab u l Ch awla (su p ra). Per co n tra, th e l d . co u n sel fo r th e assesse e su b mit ted th a t th e issu e h ere is fu l l y co v ered b y th e fo l lo win g case laws. i ) CI T v s . S i n g h a d T e c h n i c a l E d u c a t i o n a l S o c i e t y , 39 7 I T R 3 4 4 ( S C) i i ) CI T v s . K a b u l C h a w l a , 3 8 0 I T R 5 7 3 ( D e l h i ) i i i ) CI T v s. R . R . J. S e c u r i t i e s L t d . , 3 8 0 I T R 6 1 2 (D e l h i ) 7 . Th e ld . co u n sel fu rth er referred to th at n o n e o f th e i te ms referred b y th e Assessin g Offic er in its as sess men t o r d er in any case warran t th e c h an g e o f h ead ‘b u sin ess in co me to in co me fro m o th er so u rces’. Hen ce, th e ld . co u n sel fo r th e ass essee p lead ed th a t th e ass ess men t so framed is n o t su sta i n ab le in law. 8 . Up on carefu l co n sid erat io n , we n o t e th a t in th is cas e th e Assessin g Officer p u rsu an t to search an d seizu re h as o n ly ch an g ed th e h ead o f in co me fro m b u sin ess i n co me to in co me fro m o th er so u rces. In d o in g so , h e h as n o t referred to an y incri min a tin g ma teri al fo u n d d u rin g th e search . In th is v i ew o f th e ma tt er, th e ld . CIT(A) is co rrect th a t ad d it io n is n o t su stain ab le o n th e to u ch sto n e o f th e d ecisio n re ferred h erein ab o v e. The Rev en u e in its g ro u n d s o f ap peal a lso men t io n ed th at th e d ecisio n o f Ho n ’b le Delh i Hig h Co u rt in th e case o f K a b u l Ch a wla (su pra ) h as n o t b een accep ted b y th e Rev en u e an d the SLP h as b een fil ed b efo re th e Ho n ’b le Su p reme Co u rt. In o u r co n sid ered o p in ion th is d o es n o t warran t n o t fo llo win g th e ratio e man a tin g fro m th e d ecisio n o f I.T.A. No.8494 & 8495/Del/2019 7 Ho n ’b le Ju risd ict i o n al Hig h Co u rt as referred ab o v e. It i s an u n d isp u ted fact th at in th e p resen t c ase th e Assessin g Officer h as o n ly ch ang ed th e h ead o f th e in co me fro m b u sin ess in co me to in co me fro m o th er so u rces an d th is h a s n o t b een d o ne b y referen ce to an y seized i n crimin at in g mat eria l. Acco rd in g ly in th e b ack g rou nd o f th e a fo resaid d i scu ssio n an d p reced ents in o u r co n sid ered op in io n th ere is n o in fi rmi ty in th e o rder o f th e ld . CIT(A). Hen ce, w e u p h o ld th e sa me. Be fo re p art in g we may refer to th e p lead in g o f th e ld . co u n sel fo r th e assessee th at i n th e case o f th e assessee th e MAT p ro v isio n s were app licab l e an d in th at v iew o f th e mat te r th e tax effect i s b elo w th e limit o f CBDT circu lar fo r fi lin g ap p eal b efo re th e Trib u n al. We n o te th at sin ce we h av e alread y ad ju d icat ed u p o n th e is su e b y co n firmin g th e o rd er o f th e ld . CI T(A) we are n o t d ealin g with th is a sp ect as it is o n ly o f acad e mic i n terest . 9 . Th e ab o v e o rd er ap p lies mu t at is mu tan d is to b o th th e ap p eals. 1 0 . In th e resu lt, b o th th e ap p eals o f th e R ev en u e stan d d ismissed . Order pronounced in the open Court on 31/10/2022. Sd/- Sd/- [NARENDER KUMAR CHOUDHRY] [SHAMIM YAHYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 31/10/2022 prabhat
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