DCIT CENTRAL CIRCLE-2, Ranchi V. M/s Powertech Engineers,

ITSSA 78/RAN/2016

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 3776 (ITAT-RANCHI)
• Duration Of Justice: 1 year(s) 6 month(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 30-05-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 29-11-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R E SUNIL BABU CITA DHANBAD
• Keywords: Search and seizure; Document seized; Corroborative evidences; Documents seized
• Section: 143(3); 144

Judgement Text

1 IT (SS) A NO S . 77 TO 82 /RAN/ 201 6 IN THE INCOME TAX APPELLATE TRIBUNAL, RANCHI BENCH, RANCHI BEFORE SHRI N.S.SAINI , ACCOUNTANT MEMBER & SHRI PAVAN KUMAR GADALE , JUDICIAL MEMBER IT (SS) A NO S . 77 TO 82 /RAN/201 6 A .Y S . : 200 5 - 06, 2006 - 07, 2007 - 08 & 2008 - 09 , 2009 - 10 & 2010 - 2011 DY/ASST.CIT, CENTRAL CIRCLE - 2, RANCHI V S M/S POWERTECH ENGINEERS, 215, JAGDAMBA TOWER, 13, COMMERCIAL COMPLEX, PREET VIHAR, DELHI P AN NO. : A A IFP 1067 C (APPELLANT ) .. RESPONDENT REVENUE BY :SHRI R.E.SUNIL BABU, CIT(A), DHANBAD ASSESSEE BY : NONE DATE OF HEARING : 2 8 . 05 .201 8 DATE OF PRONOUNCEMENT : 30 .05 .201 8 O R D E R PER PAVAN KUMAR GADALE, JM : TH E SE ARE THE APPEALS FILED BY THE REVENUE AGAINST THE COMMON ORDER OF CIT(A) - 3 , PATNA , FOR ASSESSMENT YEARS 2005 - 06, 2006 - 07, 2007 - 08, 2008 - 09, 2009 - 10 & 2010 - 11. 2. NONE APPEARED ON BEHALF OF THE ASSESSEE , WHEN THE MATTER WAS CALLED FOR HEARING, NEITHER ANY ADJOURNMENT PETITION HAS BEEN FILED BY THE ASSESSEE. H OWEVER, THE LD. D R OF THE REVENUE HAS FILED AN APPLICATI ON FOR ADJOURNMENT APPLICATION AND THE 2 IT (SS) A NO S . 77 TO 82 /RAN/ 201 6 SAME WAS NOT PRESSED , ACCORDINGLY , THE BENCH PROCEEDED TO DISPOSE OFF THE APPEAL ON THE BASIS OF MATERIAL AVAILABLE ON RECORD AND CONSIDE RING THE SUBMISSIONS OF LD. DR . 3. SINCE ALL THE APPEALS ARE INTERCONNECTED AND THE ISSUES INVOLVED ARE COMMON, THEREFORE, WE THINK IT APPROPRIATE TO CONSIDER THE FACTS AND GROUNDS NARRATED IN IT (SS) A NO. 77 /RAN/201 6 (AY: 2005 - 06) . THE GROUNDS RAISED IN THE APPEAL FOR ASSESSMENT YEAR 2005 - 06 ARE AS UNDER : - 1 . UNDER THE FACTS AND CIRCUMSTANCE OF CASE, WHETHER THE CIT(A) ERRED IN DELETING THE ADDITION RS. 71,22,622/ - MERELY ON THE BASIS THAT THE PARTNERSHIP FIRM CAME INTO EXISTENCE IN THE A.Y. 2006 - 07. 2 . UNDER TH E FACTS AND CIRCUMSTANCE OF CASE, WHETHER THE CIT(A) ERRED IN RULING - OUT THE SEIZED MATERIAL MARKED QP - 24 CLEARLY INDICATED THE WORK ORDER OF THE COMPANY DATED 06.04.2004, 24.05.2004 AND 08.10.2004 ISSUED BY M/S RELIANCE ENERGY AND M/S BSES YAMUNA POWER LI MITED TO THE ASSESSEE FIRM. 3 . UNDER THE FACTS AND CIRCUMSTANCE OF CASE, WHETHER THE CIT(A) ERRED IN RULING - OUT THE SEIZED DOCUMENTS MARKED AS QP - 24 WHICH CONTAINS PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDING 31.03.2004 DULY SIGNED BY THE CHARTED ACCOUNTANT A ND PARTNERS OF THE FIRM ON 30.10.2004 AND WAS DULY CONFIRMED BY CHARTERED ACCOUNTANT. 4 . UNDER THE FACTS AND CIRCUMSTANCE OF CASE, WHETHER THE CIT(A) ERRED IN RULING - OUT THE SEIZED DOCUMENTS MARKED AS QP - 24 WHICH SHOWS TOTAL TURNOVER OF RS.2,34,56,612/ - FOR THE A.Y. 2004 - 05 AND FOR WHICH THE ASSESSEE FIRM WAS UNABLE TO PRODUCE ANY SUPPORTING EVIDENCE. 4 . BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CONTRACT JOB OF ELECTRIFICATION ETC. THERE WAS SEARCH AND SEIZURE ACTION IN THE CASE OF QUANTUM POWERTEC PVT. LTD., IN CONNECTION WITH MADHU KODA GROUP OF CASES ON 31.10.2009 AND SUBSEQUENT DATES. DURING THE COURSE OF SEARCH IN M/S QUANTUM POWERTEC PVT. LTD., VARIOUS 3 IT (SS) A NO S . 77 TO 82 /RAN/ 201 6 INCRIMINATING DOCUMENTS WERE FOUND AND SEIZED BELONGING TO ASSESSEE FIRM. CONSEQUENTLY, PROCEEDINGS U/S 153C OF THE ACT WAS INITIATED AND ASSESSMENT WAS FINALIZED DETERMINING TOTAL INCOME RS. 18,76,529/ - AS AGAINST NO RETURN OF INCOME FILED BY THE ASSESSEE. THE ASSESSMENT WAS FINALIZED EX - PARTE INVOKING THE PROVISION S OF SE CTION 144 OF THE ACT. 5 . AGGRIEVED BY THE ASSESSMENT ORDER , THE ASSESSEE HAS FILED AN APPEAL WITH THE CIT(A). I N THE APPELLATE PROCEEDINGS LD. AR OF THE ASSESSEE ARGUED THE GROUNDS AND REITERATED THE SUBMISSIONS AND LD.CIT(A) HAVING CONSIDERED THE FINDINGS AND THE SUBMISSIONS OF THE ASSESSEE DEALT ON THE DISPUTED ISSUE S . THE CIT(A) OBSERVED THAT T HE AO MERELY TOOK COGNIZANCE O F SEIZED DOCUMENTS QP - 24 AND WENT ON TO ESTIMATE PROFIT @ 8% OF TURNOVER SHOWN IN DOCUMENT QP - 24 WITHOUT CONSIDERING THE EVIDENCES FO R NON - EXISTENCE OF FIRM IN THESE TWO ASSESSMENT YEARS. ON THE OTHER HAND, THE ASESSEE HAS SHOWN BY WAY OF DOCUMENTARY EVIDENCE THAT THE FIRM WAS NOT IN EXISTENCE FOR A.Y. 2004 - 05 & 2005 - 06. LD. CIT(A) C ONSIDERING TH E SUBMISSION OF THE ASSESSEE, FOUND THAT THERE IS NO CASE FOR DETERMINATION OF INCOME OF ASSESSEE FOR A.Y. 2004 - 05 &2005 - 06 AS THE FIRM WAS NOT IN EXISTENCE AND DELETED THE ADDITIONS AND QUASHED THE ASSESSMENT ORDER. 6 . AGGRIEVED BY THE ORDER OF CIT(A), THE REVENUE HAS FILED AN APPEAL BEFORE THE TRIBUNAL. 7 . LD. DR BEFORE US SUBMITTED THAT THE CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY THE AO IRRESPECTIVE OF THE FACT THAT THE PARTNERSHIP FIRM 4 IT (SS) A NO S . 77 TO 82 /RAN/ 201 6 CAME INTO EXISTENCE PRIOR TO THE ASSESSMENT YEAR 2006 - 07 . SINCE THE ASSESSEE FIRM HAS FAILED TO PR ODUCE ANY SUPPORTING EVIDENCE AS REGARDS EXPENDITURE DEBITED TO PROFIT AND LOSS ACCOUNT, THERE IS NO OPTION LEFT WITH THE AO BUT TO ESTIMATE THE PROFIT OF THE FIRM AT 8% OF CONTRACT JOB AND RIGHTLY ADDED TO THE INCOME OF THE ASSESSEE. 8 . WE HAVE HEARD SUB MISSIONS OF LD. DR AND PERUSED THE MATERIAL ON RECORD. THE SOLE DISPUTED ISSUE RAISED BY THE REVENUE IS WITH RESPECT TO ADDITION MADE BY THE AO ESTIMATING THE 8% OF THE TOTAL PROFIT OF CONTRACT JOB. THE CIT(A) HAS QUASHED THE ASSESSMENT PROCEEDINGS AND ALL OWED THE APPEAL OF THE ASSESSEE. WE FIND THAT THE AO WHILE DEALING WITH THE DISPUTED ISSUE FOUND THAT THE ASSESSEE FIRM WAS IN EXISTENCE PRIOR TO THE ASSESSMENT YEAR 2006 - 07 . ON PERUSAL OF THE SEIZED MATERIALS, THE AO OBSERVED AS UNDER : - 6. PERUSAL OF THE SEIZED MATERIAL MARKED AS QP - 24 REVEALS THAT THERE IS STATE OF ACCOUNTS FOR THE FINANCIAL YEARS 2001 TO 2008 OF THE ASSESSEE FIRM. AS PER THIS STATEMENT, THE ASSESSEE FIRM HAS SHOWN GROSS TURNOVER AS UNDER : - ASST. YEAR GROSS TURNOVER AS PER RETURN OF IN COME FILED BY THE ASSESSEE IN RESPONSE TO SECTION 153C GROSS TURNOVER AS PER SEIZED DOCUMENT MARKED QP - 24 SUPPRESSED TURNOVER 2004 - 05 -- 2,34,56,512 2,34,56,512 2005 - 06 -- 3,95,70,235 3,95,70,235 2006 - 07 1,53,13,441 6,53,13,602 5,00,00,161 2007 - 08 3,71 ,67,362 10,29,67,363 6,58,00,001 2008 - 09 3,66,59,678 15,50,55,362 11,83,95,684 2009 - 10 27,78,60,098 27,78,60,098 -- 2010 - 11 18,03,21,608 18,03,21,608 -- 29,72,22,593 THE ASSESSEE DID NOT FURNISH ANY REPLY TO THE QUESTIONNAIRE BASED ON SEIZED MATER IALS, WHEREIN SPECIFIC REPLY WAS SOUGHT FOR REGARDING 5 IT (SS) A NO S . 77 TO 82 /RAN/ 201 6 QP - 24. FURTHER, A NOTICE WAS AGAIN SENT ON 03.12.2012, THE CONTENTS OF WHICH ARE AS UNDER : PLEASE REFER TO THE ASSESSMENT PROCEEDINGS U/S 153C / 143(3) OF THE I.T.ACT, 1961 FOR THE ASSESSMENT YEARS 2 004 - 05 TO 2010 - 11. IN CONNECTION WITH THE SAME, YOU ARE REQUIRED TO FURNISH THE FOLLOWING INFORMATION : 1. PERUSAL OF THE CASE RECORD FOR THE ASSESSMENT YEAR 2004 - 05 AND 2005 - 06 REVEALS THAT YOU HAVE NOT FILED RETURN OF INCOME. SCRUTINY OF THE SEIZED DOC UMENT MARKED QP - 24 , SEIZED IN THE CASE OF M/S QUANTUM POWERTECH PVT. LTD, THERE IS COPY OF STATEMENT OF ACCOUN T PREPARED BY CHAR TERED ACCOUNTANT AND SIGNED BY PARTNERS OF THE FIRM, WHICH CONCLUDES THAT THE FIRM WAS IN EXISTENCE AND WAS DOING WORK. IN THIS REGARD A CERTIFICATE OF CAPITAL ACCOUNT & SALES HAS ALSO BEEN PREPARED BY THE SAID CHARTERED ACCOUNTANT, COPY OF WHICH IS ENCLOSED FOR YOUR READY REFERENCE. YOU ARE, THEREFORE, ONCE AGAIN REQUESTED TO FURNISH THE COPY OF RETURN OF INCOME FOR THE ASSESSME NT YEARS 2004 - 05 AND 2005 - 06, ALONG WITH AUDIT REPORT. 2. FOR THE ASSESSMENT YEAR 2006 - 07, IN THE AUDIT REPORT THERE IS MENTION OF FIGURES FOR THE CURRENT YEAR AND AGAINST THE PRECEDING YEAR NO FIGURE HAS BEEN MENTIONED, WHICH MEANS THAT THE FIRM HAS NOT PERFORMED ANY WORK DURING THE PREVIOUS ASSESSMENT YEAR 2005 - 06 OR EARLIER, WHEREAS SEIZED DOCUMENT MARKED OP - 24 CONTAINS BALANCE SHEET. PROFIT AND LOSS ACCOUNT PREPARED BY A CHARTERED ACCOUNTANT FOR THE SAID ASSESSMENT YEAR, I.E. 2006 - 07 GIVING THAT NET W EALTH AND SALES AS PER THE BOOKS OF ACCOUNT AND BALANCE SHEET PRODUCED BEFORE THEM, AS DISCUSSED IN SUPRA. YOU ARE REQUIRED TO EXPLAIN AS TO WHY THE FIGURE SHOWN IN THE BALANCE SHEET / PROFIT 8S LOSS ACCOUNT BE NOT TAKEN INTO CONSIDERATION WHILE COMPUTING THE TOTAL INCOME FOR THE ASSESSMENT YEAR 2006 - 07. 3. THE SEIZED DOCUMENT MARKED QP - 24 FURTHER CONTAINS BALANCE SHEET / PROFIT & LOSS ACCOUNT FOR THE ASSESSMENT YEARS 2007 - 08 AND 2008 - 09 ALSO WHICH CONTAINS FIGURES DIFFERENT FROM THAT FILED BY YOU ALONG W ITH THE RETURN OF INCOME IN RESPONSE TO NOTICE U/S 153C. YOU ARE REQUIRED TO EXPLAIN AS TO WHY THE FIGURE SHOWN IN THE BALANCE SHEET / PROFIT & LOSS ACCOUNT BE NOT TAKEN INTO CONSIDERATION WHILE COMPUTING THE TOTAL INCOME FOR THE ASSESSMENT YEARS 2007 - 08 AND 2008 - 09. 4. YOU ARE FURTHER REQUIRED TO FURNISH COPY OF ASSESSMENT ORDER, IF ANY, PASSED FOR ANY OF THE ASSESSMENT YEARS. 6 IT (SS) A NO S . 77 TO 82 /RAN/ 201 6 5. YOU ARE ALSO REQUIRED TO FURNISH THE COPY OF PARTNERSHIP DEED. 6. YOU ARE ALSO REQUIRED TO FURNISH REPLY TO THIS OFFICE LETTER 4303 DATED 10.09.2011, WHICH HAS NOT BEEN COMPLIED BY YOU TILL DATE. NO SATISFACTORY OR SPECIFIC REPLY, WITH EVIDENCE, HAS BEEN FURNISHED BY THE ASSESSEE. 6.1 FROM THE PERUSAL OF RETURN OF INCOME FOR THE ASSESSMENT YEAR 2006 - 07 FILED IN RESPONSE TO NOTI CE U/S 153C OF THE I.T.ACT, 1961, IT IS FOUND THAT THE ASSESSEE FIRM WAS INCORPORATED ON 01.04.2005 RELEVANT TO ASSESSMENT YEAR 2006 - 07 AND FURTHER IN PART B OF THE AUDIT REPORT THE FIGURES FOR THE PRECEDING YEAR IS SHOWN AT NIL IN ALL ITEMS WHICH ALSO C ONFIRMS THAT THE ASSESSEE FIRM DID NOT PERFORM ANY WORK BEFORE ASSESSMENT YEAR 2006 - 07. 6.2 THE ASSESSEE HAS NOT FILED RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION. SEIZED MATERIAL MARKED QP - 24 (IN THE CASE OF M/S QUANTUM POWERTECH PVT. LTD), THERE I S COPY OF WORK ORDER DATED 6.4.2004, 24.05.2004 AND 8.10.2004 ISSUED BY M/S RELIANCE ENERGY, VIDE NO.EHV/2003 - 04/CTS - NOIDA/ EHV - ERECTION/ 01A AND EHV/ 2003 - 04/ CTS - NOIDA/ EHV - ERECTION/ 07 AND ND/2004 - 05/EPC - DISCOM/EHV - ERECTION/1312, AND BY M/S BSES YAMU NA POWER LIMITED ON 22.03.2005 VIDE NO.DSE/230584198, TO M/S POWERTECH ENGINEERS, EVIDENCING THAT THE ASSESSEE FIRM WAS PERFORMING CONTRACT JOBS PRIOR TO ASSESSMENT YEAR 2006 - 07 RELEVANT TO FINANCIAL YEAR 2005 - 06. FURTHER TO SUBSTANTIATE THIS CLAIM THERE IS COMPLETION REPORT SUBMITTED BY THE ASSESSEE FIRM ON ITS LETTER - HEAD CONFIRMING THE WORK ORDER, WHICH IS AS FOLLOWS : THIS IS CERTIFIED THAT 33/11 KV NEW GRID SUB - STATION AT CBDH(BYPL) VIDE WO NO. EHV/2004 - 05/EPC - DISCOM/EHV - ERECTION/1312 DAT ED 08.10. 2004 AND AMENDMENT NO.1 DATED 08.09.2005 HAS BEEN COMPLETED IN ALL RESPECTS ON15.01.2005 THUS, IT IS VERY MUCH APPARENT AND CRYSTAL CLEAR THAT THE ASSESSEE FIRM WAS IN EXISTENCE PRIOR TO THE ASSESSMENT YEAR 2006 - 07. 6.3 AS PER THE SEIZED MATERIAL MARKED AS QP - 24, WHICH CONTAINS THE AUDITED BALANCE SHEET AND TRADING, PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDING RELEVANT TO ASSESSMENT YEAR 2005 - 06 DULY SIGNED BY THE CHARTERED ACCOUNTANT AND PARTNERS OF THE FIRM ON 22.10.2005 AND DULY CONFIRMED BY THE CHARTER ED ACCOUNTANT, NAMELY MITTAL NATH ASSOCIATE, 9/6127, 1 ST FLOOR, KAUSHIK COMPLEX, MAIN ROAD, GANDHINAGAR, DELHI - 110031 ON 02.02.2007, THE ASSESSEE FIRM HAS SHOWN INCOME FROM CONTRACT JOB. TOTAL TURNOVER AS PER THIS DOCUMENT COMES TO 3,95,70,235/ - . AFTER DEB ITING EXPENDITURE UNDER DIFFERENT HEADS, NET PROFIT HAS BEEN WORKED OUT AT RS.5,67,586/ - . 7 IT (SS) A NO S . 77 TO 82 /RAN/ 201 6 SINCE THE ASSESSEE FIRM HAS FAILED TO PRODUCE ANY SUPPORTING EVIDENCE AS REGARDS EXPENDITURE DEBITED TO PROFIT AND LOSS ACCOUNT, THERE IS NO OPTION LEFT WITH THE ASS ESSING OFFICER BUT TO ESTIMATE THE PROFIT OF THE FIRM AT 8% OF CONTRACT JOB WHICH COMES TO RS.71,22,642/ - , WHICH IS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 9. HOWEVER, THE CIT(A) HAS MENTIONED IN THE APPELLATE ORDER THAT THE AO HAD NOT CONSIDERED TH E FACT THAT THERE WAS NO EXISTENCE OF ASSESSEE FIRM FOR A.Y.2004 - 05 & 2005 - 06. THE AO FURTHER FOUND THAT THE ASSESSEE FIRM HAS FAILED TO PRODUCE ANY SUPPORTING EVIDENCE AS REGARDS EXPENDITURE DEBITED TO PROFIT AND LOSS ACCOUNT. HOWEVER, THE CIT(A) OBSERVED THAT THE ASSESSEE HAS SHOWN BY WAY OF DOCUMENTARY EVIDENCE THAT THE FIRM WAS NOT IN EXISTENCE FOR A.Y.2004 - 05 & 2005 - 06. WE FIND SOME DIFFEREN CE OF OPINION BY BOTH THE AUTHORITIES BELOW AND THERE IS NO CONVINCING SUBMISSION S . HENCE , WE REMIT THE ENTIRE DISPUTED ISSUE TO THE FILE OF CIT(A), WHO SHALL VERIFY AND EXAMINE THE ISSUE AND PASS A SPEAKING ORDER AFTER PROVIDING ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE AND THE ASSESSEE SHALL COOPERATE IN SUBMITTING THE INFORMATION BEFO RE THE CIT(A). ACCORDINGLY, WE ALLOW THE GROUNDS OF APPEAL OF THE REVENUE FOR STATISTICAL PURPOSES. 10 . SIMILARLY IN APPEALS FOR ASSESSMENT YEARS 2006 - 07, 2007 - 08, 2008 - 09, 2009 - 10 & 2010 - 11 , FACTS AND ISSUES ARE SAME /SIMILAR AS TO THE APPEAL FOR ASSESSMENT YEAR 2005 - 06 . WE, THEREFORE ALSO REMIT THE ISSUE S RAISED IN THE APPEALS IN IT (SS) A NOS. 78 TO 82 /RAN/201 6 TO THE FILE OF CIT(A) AS PER OUR OBSERVATIONS MADE IN THE APPEAL FOR ASSESSMENT YEAR 2005 - 06 IN 8 IT (SS) A NO S . 77 TO 82 /RAN/ 201 6 IT (SS) A NO. 77 /RAN/201 6 AND ALLOW THESE APPEALS OF REVENUE F OR STATISTICAL PURPOSES. 11 . IN THE RESULT, APPEALS OF REVENUE FOR ASSESSMENT YEARS 2005 - 06 TO 20010 - 2011 ( I.E. IT (SS) A NOS. 77 TO 82 /RAN/201 6 ) ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 30 / 05 /201 8 SD/ - SD/ - ( N.S.SAINI ) ( PAVAN KUMAR GADALE ) ACCOUNTANT MEMBER JUDICIAL MEMBER RANCHI , DATED 30 / 05 /201 8 PRAKASH KUMAR MISHRA , SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, //TRUE COPY// SR.PS, ITAT, RANCHI 1. THE APPELLANT DY/ASST.CIT, CENTRAL CIRCLE - 2, RANCHI 2. THE RESPONDENT M/S POWERTECH ENGINEERS, 215, JAGDAMBA TOWER , 13, COMMERCIAL COMPLEX, PREET VIHAR, DELHI 3. THE CIT(A) CONCERNED 4. CIT , CONCERNED 5. DR, ITAT, RANCHI 6. GUARD FILE.