SAI CHANDRA CONSTRUCTION CO.,NEW DELHI V. DCIT, CENTRAL CIRCLE- 19, NEW DELHI

ITA 1201/DEL/2018

AI Insights

Sai Chandra Construction Co. appealed against the orders of the Commissioner of Income Tax (Appeals)-27, New Delhi, which confirmed the additions made by the Assessing Officer for the Assessment Years 2012-13 and 2014-15. The additions were based on undisclosed income identified during a search and seizure operation under section 132(1) of the Income Tax Act, 1961. The Tribunal dismissed the appeals, agreeing with the lower authorities that the additions were justified based on the incriminating documents and statements obtained during the search. The Tribunal also rejected the appellant's arguments regarding procedural improprieties and the initiation of proceedings under section 153C.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 474898 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SANJAY KUMAR BHARATI
• Keywords: Principle of natural justice; Loose papers; Bogus
• Section: 153; 153A; 22; 44AD; 153C

Judgement Text

" 1 ITA No. 1201 & 1202/Del/2018 Sai Chandra Construction Vs. DCIT IN THE INCOME TAX APPELLATE TRIBUNAL DELHI (DELHI BENCH ‘B’ NEW DELHI) BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND SH. YOGESH KUMAR U.S., JUDICIAL MEMBER ITA No. 1201/Del/2018 (A.Y. 2012-13) ITA No. 1202/Del/2018 (A.Y. 2014-15) Sai Chandra Construction Co. A-17, Ashok Vihar, Phase-II, New Delhi PAN: ABFFS0749E Vs. DCIT Central Circle-19 New Delhi Appellant Respondent Assessee by None Revenue by Sh. Sanjay Kumar Bharati, CIT DR Date of Hearing 13/01/2025 Date of Pronouncement 22/01/2025 ORDER PER YOGESH KUMAR, U.S. JM: The above two captioned Appeals are filed by the Assessee against the order of Commissioner of Income Tax (Appeals)-27 (‘Ld. CIT(A)’ for short) New Delhi, dated 16/01/2018 for the Assessment Year 2012-13 and 2014-15 respectively. 2. The Grounds of Appeal are as under: - 2 ITA No. 1201 & 1202/Del/2018 Sai Chandra Construction Vs. DCIT ITA No. 1201/Del/2018 (A.Y. 2012-13) “1. That learned C.I.T (Appeals) has erred in law as well as on facts of the case in confirming assessment U/s 143(3)/153© of the I.T. Act at Rs. 3703790/- against returned income of Rs. 3415790/- Thus the addition of 288000/- made by assessing officer and confirmed by CIT(Appeals) is totally wrong, illegal and excessive in nature. 2. That learned C.I.T (Appeals) has erred in law as well as on fact of the case in treating Rs. 3600000/- as contract income and making an addition of Rs. 288000/- being 8% of Gross contract income as income from undisclosed sources which is totally wrong, illegal and excessive in nature. 3. That initiation of proceedings u/s 153C of IT Act is totally wrong and illegal as No satisfaction Note was recorded by assessing officer of searched person which is mandatory requirement for initiation of proceeding u/s 153 of IT Act. Thus whole of proceeding U/s 153C and assessment made there under are totally wrong, illegal and excessive in nature. 4. That the learned CIT(Appeals) has wrongly relied on some figures written by third person as belonging to appellant firm evidencing No name, No signature of appellant or Third person. Thus allegation of assessing officer to estimate cash payment as gross contract receipt of appellant. Thus the assessment framed on estimate and wild guess work is totally wrong illegal and excessive in nature. 5. That learned C.I.T (appeals) has relied upon material gathered at the back of the appellant without confronting the same to the appellant, there by violating the principle of natural justice. Thus the addition made on violating the principle of natural justice is totally wrong and illegal. 3 ITA No. 1201 & 1202/Del/2018 Sai Chandra Construction Vs. DCIT 6. The C.I.T(Appeals) erred in law and on facts in confirming the validity of notice issued u/s 153C- a) While ignoring that no incriminating documents belonging to the appellant were found at the time of search undertaken on itsdirectors and others or in any other premises; b) Without appreciating that documents, which do not contain any material revealing undisclosed income therein, cannot be used so as to initiate action u/s 153C; c) While ignoring that no valuable belonging to the appellant was seized during the course of search and the term 'belonging to' does not mean 'relating to' or 'pertaining to' and it implies something more than a casual association for the legit application of s. 153C; d) While ignoring that it was clearly discernable from the satisfaction note that it had been reached by some other authority and simply repeated by the AO; e) While no enquiry was made by the AO before arriving at the said satisfaction; and f) Thus, the notice so issued without fulfilling the pre- requisite conditions of s. 153C is invalid and the assessment so made must be annulled being void ab- initio. 7. That learned C.I.T (Appeals) has further erred in law as well as on facts of the case in not adjudicating all grounds of appeal raised by appellant. Thus order by learned C.I.T (Appeals) without speaking order on all grounds is totally wrong, and illegal. 4 ITA No. 1201 & 1202/Del/2018 Sai Chandra Construction Vs. DCIT 8. That the appellant craves leave to add, delete or amend or rectify any ground or grounds of appeal at the time or before time of hearing.” ITA No. 1202/Del/2018 (A.Y. 2014-15) “1. That learned C.I.T (Appeals) has erred in law as well as on facts of the case in confirming assessment U/s 143(3)of the I.T. Act at Rs. 223460/- against returned income of Rs. 1351890/- thus the addition of 882570/- sustained by C.I.T(Appeals) is totally wrong, illegal and excessive in nature. 2. That learned C.I.T (Appeal) has erred in law as well as on fact of the case in confirming Rs. 11032137/- as contract receipt payment and making an addition of Rs. 882570/- being 8% of gross contract receipt as income from undisclosed sources which is totally wrong, illegal and excessive in nature. 3. That the learned CIT(Appeals) has wrongly relied on some figures on loose papers which have been written by third person as belonging of appellant firm evidencing No name, No signature of appellant or Third person. Thus allegation of assessing officer to treat cash payment as gross contract receipt of appellant. Thus the assessment framed is totally wrong illegal and excessive in nature. 4. That learned C.I.T (appeals) has relied upon material gathered at the back of the appellant without confronting the same to the appellant, there by violating the principle of natural justice. Thus the addition made on violating the principle of natural justice is totally wrong and illegal. 5. That learned C.I.T (Appeals) has further erred in law as well as on facts of the case in not adjudicating all grounds of appeal raised by appellant. Thus order by learned C.I.T (Appeals) without speaking order on all grounds is totally wrong, and illegal. 6. That the appellant craves leave to add, delete or amend or rectify any ground or grounds of appeal at the time or before time of hearing.” 5 ITA No. 1201 & 1202/Del/2018 Sai Chandra Construction Vs. DCIT 3. From going through the order sheets of the above captioned Appeals, it is found that right from filing of the present Appeals, neither the Assessee nor the Representative of the Assessee have appeared before the Tribunal. Considering the conduit of the Assessee, we deem it fit to decide the present Appeal on hearing the Ld. Departmental Representative. ITA No. 1201/Del/2018 4. Brief facts of the case as mentioned in the CIT(A) are as under:- “3. The facts, in brief, as discussed by AO, are that a search and seizure operation u/s 132(1) of I. T. Act was conducted by the Investigation Wing of the Department on 15.02.2014 in the AMQ group of cases. During the course of search operation, certain Incriminating documents/hard disk pertaining to the assessee l.e. M/s Sai Chandra Construction Co. were also found and seized. The case was centralized with AO u/s 127 of the Act and after recording the satisfaction note on 18.01.2016, AO issued notice u/s 153C of the Act on 21.01.2016 in the case of assessee. In response to sald notice, return declaring an Income of Rs.34,15,790/- was filed on 23.03.2016. During the assessment proceedings, It was observed by AO that the certain documents pertaining to property situated at D-343, Sector-47, Noida, were found and seized from the residential premises of Sh. L. K. Yadav, a key employee of the AMQ group. The said documents contained the details of cheque and cash amounts issued by Mr. Mukul Joshi, owner of the property for the purpose of the construction of the said property by the assessee. As discussed in para 5 of assessment order, the AO worked out the cheque amounts 6 ITA No. 1201 & 1202/Del/2018 Sai Chandra Construction Vs. DCIT aggregating to Rs.33,00,000/- and cash amounts at Rs.36,00,000/- paid on various dates of the year and Sh. L. K. Yadav, vide his statements dated 15.02.2014, also stated these cheques and cash amounts were paid by Mr. Mukul Joshi in connection with construction of this house at D-343, Sector-47, Noida. It was further stated by him that these payments were made to M/s Sai Chandra Construction Ltd., the assessee as contractor hired for construction of his house and details of payments were maintained by him only as and when money was received by him from Mr. Mukul Joshi and payments made to assessee company. Though the assessee objected during the assessment proceedings by submitting that the cash amount was not received by it, but the AO did not accept his version and concluded that the payments were made by Sh. Mukul Joshi to the assessee as the assessee company never denied of receiving the money from Mr. Mukul Joshi and secondly, it cannot be accepted the part of payments received in cheque are genuine and cash payments mentioned on the same document are bogus. In view of this, AO treated the amount of Rs.36,00,000/- received in cash by assessee as contracts receipts for construction of aforesaid house and invoking the provisions of section 44AD of I. T. Act, applied the rate of 8% on the gross receipts, which comes to Rs.2,88,000/- and added this amount as its additional income and completed the assessment proceedings.” 5. Aggrieved by the Assessment order, the Assessee preferred an Appeal before the Ld. CIT(A). The Ld. CIT(A) vide order dated 16/01/2018 dismissed the Appeal filed by the Assessee. Aggrieved by the order of the Ld. CIT(A), the Assessee preferred the present Appeal on the Grounds mentioned above. 7 ITA No. 1201 & 1202/Del/2018 Sai Chandra Construction Vs. DCIT 6. The Ld. Departmental Representative vehemently submitted that the order of the A.O. as well as the Ld. CIT(A) does not suffer from any infirmity or error. By relying on the orders of the Lower Authorities submitted that the Grounds of Appeal of the Assessee are devoid of merit, therefore, sought for dismissal of the Appeal. 7. We have heard the Ld. Departmental Representative and perused the material available on record. The Ld. CIT(A) while deciding the Appeal against the Assessee, adjudicated all the grounds of appeal including the Grounds on the procedural aspects. The relevant portion of the order of the Ld. CIT(A) are reproduced as under:- “7. The ground no. 1 taken by appellant is general in nature and pertains to the subsequent grounds taken by it, hence, need no adjudication. 8. As per ground no. 2, appellant has objected to the proceedings u/s 153C of I. T. Act undertaken by AO, by claiming that no satisfaction note was recorded by him which is mandatory requirement for initiation of proceedings u/s 153C of I. T. Act. However, the objection raised by appellant is misplaced and without any basis. As can be seen from the first paragraph of the assessment order, the satisfaction for invoking section 153C of I. T. Act in the case of appellant was recorded by AO on 18.01.2016 and after recording the satisfaction, notice u/s 153C was issued on 21.01.2016. The copy of the said satisfaction note has been filed by appellant itself during the appellate proceedings which is placed at page no. 12 of its paper book submitted on 05.01.2018. In this note, AO has discussed all the relevant documents which have bearing on the case of appellant for Initiation of proceedings u/s 153C r.w.s 153A of I. T. Act. Thus, at one hand, appellant files the copy of satisfaction note recorded by AO during 8 ITA No. 1201 & 1202/Del/2018 Sai Chandra Construction Vs. DCIT appellate proceedings in its own case, on the other hand, it takes the ground that no satisfaction has been recorded by AO. It seems that the appellant has taken this ground just for the sake of taking it and it is not serious about the Issues raised by it during the appellate proceedings. In view of this, the ground taken by appellant is dismissed. 9. The ground no. 3 taken by appellant relates to the addition of Rs.2,88,000/- made by AO on the basis of incriminating documents found during the search proceedings. As it is clear from the assessment order that on the same page i.e. annexurized as page-80, annexure A-1, Party D-5, the details of cheque payments as well as cash payments made by Sh. Mukul Joshi to the appellant have been mentioned. The appellant failed to explain if the cheque amounts of Rs.33,00,000/- on various dates were given by Sh. Mukul Joshi to appellant as admitted by him, why the doubts have been raised regarding the cash payments made by Sh. Mukul Joshi on various dates to appellant as mentioned on the same page. The contention of appellant cannot be accepted that the cheque payments, which have been recorded in its regular books of account are genuine and authentic but the cash payments, which are undisclosed and out of books of account, are not genuine and correct, though both types of transactions are on the same page. The appellant has also failed to contradict the statements given by Sh. L. K. Yadav who admitted during the recording of statements that the cheque payments of Rs.33,00,000/- as well as cash payments of Rs.36,00,000/- were made by Sh. Mukul Joshi to Mr. Vinod Saini of M/s Sal Chandra Construction Ltd., the appellant and these amounts were given for the purpose of construction of his property at Noida.. Thus, there remains no doubt about the authenticity of document and validity of transactions mentioned on this paper. In this way, the AO has been liberal in estimating the profit @8% of gross receipts of Rs.36,00,000/- as per the provisions of section 44AD of I. T. Act despite of the fact that receipts and payments of Rs.36,00,000/- have been undisclosed and out of books of account. I, therefore, confirm the addition made by him and dismiss the ground taken by appellant. 10. The fourth ground taken by appellant is general in nature, hence, need no adjudication.” 9 ITA No. 1201 & 1202/Del/2018 Sai Chandra Construction Vs. DCIT 8. The Ld. CIT(A) has considered all the Grounds of Appeal of the Assessee and sustained the addition made by the A.O. including the grounds of appeal of the Assessee on the technical and legal issues and sustained the addition made on the Assessee, in the absence of any contrary material available on record or in the absence of any submissions made by the Assessee in submission of the Grounds of Appeal, we find no error or infirmity in the order of the Ld. CIT(A), accordingly, we find no merits in the Grounds of appeal. Accordingly, the Appeal of the Assessee in ITA No. 1201/Del/2018 is dismissed. ITA No. 1202/Del/2018 9. Brief facts of the case in CIT(A) are as under: - The facts, in brief, as discussed by AO, are that a search and seizure operation u/s 132(1) of 1. T. Act was conducted by the Investigation Wing of the Department on 15.02.2014 in the AMQ group of cases. During the course of search operation, certain incriminating documents/hard disk pertaining to the assessee l.e. M/s Sai Chandra Construction Co. were also found and seized. The case was centralized with AO u/s 127 of the Act and he Initiated the assessment proceedings in the case of assessee. During the assessment proceedings, it was 10 ITA No. 1201 & 1202/Del/2018 Sai Chandra Construction Vs. DCIT observed by him that the certain documents pertaining to the farm house maintenance at DLF Chattarpur Farms, Delhi and also for construction of property at Dehradun, were found and seized from the residential premises of Sh. L. K. Yadav, a key employee of the AMQ group. The said documents contained the details of cash amounts of Rs.1,00,32,137/- for the property at DLF Chattarpur, Delhi and Rs.10,00,000/- in cash for the purpose of construction of property at Dehradun. It was further stated by him that these payments were made to M/s Sal Chandra Construction Ltd., the assessee as a contractor hired for construction of aforesaid properties and details of payments were maintained by him only as and when money was received by him from AMQ group and payments made to assessee company. Though the assessee objected during the assessment proceedings by submitting that the payments were not received by it, but the AO did not accept his version and concluded that the payments were made by members of AMQ group to the assessee as the assessee company never denied of receiving the money. In view of this, AO treated the amount of Rs.1,10,32,137/- received by assessee as contract receipts for construction of aforesaid properties and invoked the 11 ITA No. 1201 & 1202/Del/2018 Sai Chandra Construction Vs. DCIT provisions of section 44AD of I. T. Act, applied the rate of 8% on the gross receipts, which comes to Rs.8,82,570/- and added this amount as its additional income and completed the assessment proceedings. 10. Aggrieved by the Assessment Order, the Assessee preferred an Appeal before the Ld. CIT(A). The Ld. CIT(A) vide order dated 16/01/2018, dismissed the Appeal filed by the Assessee. Aggrieved by the order of the Ld. CIT(A), the Assessee preferred the present Appeal on the Grounds mentioned above. 11. The Ld. Departmental Representative vehemently submitted that the order of the A.O. as well as the Ld. CIT(A) does not suffer from any infirmity or error and the Grounds of Appeal of the Assessee are devoid of merit, therefore, sought for dismissal of the Appeal. 12. We have heard the Ld. Departmental Representative and perused the material available on record. The Ld. CIT(A) while deciding the Appeal against the Assessee, the Ld. CIT(A) adjudicated all the grounds of appeal including the Grounds on the procedural aspects. The relevant portion of the order of the Ld. CIT(A) are reproduced as under:- 12 ITA No. 1201 & 1202/Del/2018 Sai Chandra Construction Vs. DCIT 7. The ground no. 1 and 2 taken by appellant relate to the addition of Rs.8,82,570/- made by AO on the basis of Incriminating documents found during the search proceedings. As it is clear from the assessment order that on the basis of Incriminating document i.e. annexurized at page-7, Annexure A-10, Party D-4 and page-24 Annexure A-1, Party D-5, the details of cash payments of Rs.1,00,32,137/- and Rs.10,00,000/- made by AMQ group to the appellant have been worked out by AO. The appellant failed to explain the source of these cash payments made by AMQ group to the appellant. During the appellate proceedings also, it has raised several Issues such as recording of satisfaction etc. which are not relevant at all to this year. It has even mentioned that the payments have been received by appellant from Mr. Mukul Joshi whereas these cash amounts have been received by appellant from the members of the AMQ group as mentioned by AO In the assessment order. Thus, the appellant has made submissions in support of the grounds taken by it only in the casual and sketchy manner. No specific point has been raised by it to claim that the addition made by AO is wrong or unsubstantiated. It appears that the appellant has copied the submissions related to A.Y. 2012-13 and pasted it while making submissions for this year. Since there is no substance in the submission of appellant, it is being rejected. In view of this, conclusion drawn by AO is justified and reasonable. Rather, he has been liberal in estimating the profit @8% of gross receipts of Rs.1,10,32,137/- (Rs.1,00,21,137/- + Rs.10,00,000/-) as per the provisions of section 44AD of I. T. Act despite the facts that receipts and payments of Rs.1,10,32,137/- have been undisclosed and out of books of account. I, therefore, confirm the addition of Rs.8,82,570/- made by him and dismiss the ground taken by appellant. 8. The third grounds taken by the Assessee is general in nature, hence, need no adjudication. 9. In the result, the Appeal of the Assessee dismissed.” 13 ITA No. 1201 & 1202/Del/2018 Sai Chandra Construction Vs. DCIT 13. The Assessee has failed to explain the source of cash payments made to AMQ Group to Assessee before the A.O. or before the Ld. CIT(A). The Ld. CIT(A) also observed that the several issues raised by the Assessee regarding the satisfaction etc. which are not relevant to the year under consideration, the Assessee has not pointed out any specific errors committed by the A.O. either before Ld. CIT(A). In our view, the approach of the Department has been liberal in estimating the profit @ 8% of gross receipts. Thus, we find no error or infirmity in the order of the Lower Authorities and find no merits in the Grounds of Appeal of the Assessee. Accordingly, Grounds of appeal of the Assessee are dismissed. 14. In the result, Appeal of the Assessee in ITA No. 1202/Del/2018 is dismissed. Order pronounced in the open court on 22nd January, 2025 Sd/- Sd/- (M. BALAGANESH) (YOGESH KUMAR U.S.) ACCOUNTANT MEMBER JUDICIAL MEMBER Date:- 22 .01.2025 R.N, Sr.P.S* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI 14 ITA No. 1201 & 1202/Del/2018 Sai Chandra Construction Vs. DCIT "