STAR INTERNATIONAL,DELHI V. DCIT, CENTRAL CIRCLE-II, FARIDABAD

ITA 1294/DEL/2023

AI Insights

Star International appealed against the additions made to their gross profit by the AO for the assessment years 2008-09 to 2012-13. The additions were based on the total turnover accounted by the assessee, which the AO considered as not genuine. The CIT(A) upheld these additions, leading to the current appeals. The Tribunal noted that similar cases had been decided in favor of the assessee, where identical additions were deleted. The Tribunal found that the AO had not pointed out any specific defects in the books of accounts and had made the additions without any incriminating material, relying instead on statements from third parties without providing an opportunity for cross-examination.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 38148 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2009-2010
• Other Referred Cases: Kamal Sharma vs. DCIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAYA CHAUDHARY
• Assessee Lawyers: VED JAIN; AMAN
• Keywords: Set aside; Opportunity of cross examination; Bogus
• Section: 143(3); 153A; 145(3)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “G”, NEW DELHI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER, AND SHRI SUDHIR PAREEK, JUDICIAL MEMBER ITA NO. 1293/Del/2023 (AY 2008-09); ITA NO. 1294/Del/2023 (AY 2009-10); ITA NO. 1295/Del/2023 (AY 2010-11); ITA NO. 1296/Del/2023 (AY 2011-12); AND ITA NO. 1297/Del/2023 (AY 2012-13) STAR INTERNATIONAL, 4119/7, FIRST FLOOR, NAYA BAZAR, DELHI – 110 006 (PAN: AABFS1985K) VS. DCIT, CENTRAL CIRCLE –II, FARIDABAD HARYANA (APPELLANT) (RESPONDENT) Appellant by : Shri Ved Jain, Adv. & Shri Aman Garg, Adv. Respondent by : Ms. Jaya Chaudhary, CIT(DR) Date of hearing : 08.01.2025 Date of pronouncement : 10.01.2025 ORDER PER SHAMIM YAHYA, AM : These are five appeals filed by the assessee against the common order dated 27.02.2023 passed by the ld. CIT(A-3), Gurgaon relating to assessment years 2008-09 to 2012-13 respectively, confirming the action of the AO in 2 | P a g e making the following additions of gross profit over and above the gross profit declared by the assessee:- AY Addition made by the AO (GP rate declared by the assessee * Turnover declared by the assessee) 2008-09 19,67,241 2009-10 54,06,756 2010-11 73,26,768 2011-12 1,21,54,164 2012-13 66,01,526 2. Against the above order, assessee is in appeal before us. Since common grounds have been raised in all the appeals, except the difference in figures of additions. Therefore, for the sake of brevity, we are only reproducing the grounds of appeal pertaining to AY 2008-09 as under:- “1. On the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax (Appeals) [CIT (A)] is bad both in the eye of law and on facts. 2. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the order passed by the learned AO u/s 153A is bad and liable to be quashed as the same has been framed consequent to a search which itself was unlawful and invalid in the eyes of law. 3. On the facts and circumstances of the case, the learned CIT (A) has erred, both on facts and in law, in rejecting the contention of the assessee that the proceedings initiated under section 153A and the assessment framed under section 153A r.w.s. 143(3) are in 3 | P a g e violation of the statutory conditions of the Act and the procedure prescribed under the law and as such the same is bad in the eye of law and liable to be quashed. 4. On the facts and circumstances of the case, the learned CIT (A) has erred, both on facts and in law, in rejecting the contention of the assessee that additions in order passed u/s 153A r.w.s. 143(3) of the Act has been made, without there being any incriminating material having been found during the course of search. 5. On the facts and circumstances of the case, learned CIT (A) has erred, both on facts and in law, in confirming the action of the AO despite the fact that the proceedings initiated under section 153A against the appellant and the assessment framed under section 153A r.w.s 143(3) are in violation of mandatory provisions of Section 153D of the Act and as such the same is bad in eyes of law. 6. (i) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the addition of Rs. 19,67,241/- made by the AO treating the sales/ purchases made by the assessee as not genuine. (ii) That the above addition has been confirmed despite the same has been made on estimated basis by arbitrarily rejecting the explanations and the evidences brought on record by the assessee. (iii) Without prejudice to the above, the CIT(A) has erred in rejecting the contention of the assessee that profit on the sale transaction has already been declared by the asessee, and thus, the addition made by the AO will lead to double taxation of income in the hands of the assessee. 4 | P a g e 7. (i) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in been rejected by the AO without pointing out any defect specified under section 145(3) of the Act. (ii) That the CIT(A) has erred in rejecting the contention of the assessee that the addition has been made by the AO despite the assessee has been maintaining regular books of accounts and financial statement are audited as per law and nothing adverse has been pointed out by the AO. 8. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the addition has been made by AO relying upon the statement recorded of third party without providing the opportunity of cross examination to the assessee to rebut the same. 9. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that assessment order has been passed by AO on the basis of surmises and conjectures, without there being any adverse material on record. 10. That the appellant craves leave to add, amend or alter any of the grounds of appeal.” 3. We have heard both the parties and perused the records. Ld. Counsel for the assessee submitted that AO has made the additions of gross profit over and above the gross profit declared by the assessee without detecting even a single defect in the books of accounts. The AO has made the additions in respective assessment years by declaring the Gross Profit in its books of accounts on the total turnover over and above the gross profit declared by the assessee. He further submitted in identical situation in verbatim order of the AO, similar 5 | P a g e addition has been deleted by this Tribunal vide its order dated 24.10.2024 passed in ITA No. 3400/Del/2023 & ITA No. 3402/Del/2023 in the matter of Kamal Sharma vs. DCIT pertaining to assessment 2008-09 & 2014-15, which has been followed in order dated 10.12.2014 passed in ITA 1219/Del/2023, 1220/Del/2023, 1221/Del/2023 and 3401/Del/2023 in the matter of Kamal Sharma pertaining to assessment years 2010-11 to 2013-14. 4. Per contra, Ld. DR relied upon the orders of the authorities below. However, she did not dispute that the issue is covered by the Coordinate Bench orders in similar cases, as aforesaid. 5. We note that exactly similar issue has been dealt by the Coordinate Bench vide its order dated 24.10.2024 passed in ITA No. 3400/Del/2023 & ITA No. 3402/Del/2023 passed in the matter of Kamal Sharma vs. DCIT pertaining to assessment 2008-09 & 2014-15, wherein, the Tribunal has deleted the similar addition by observing as under:- “9.4 Learned counsel for the assessee reiterated the submissions as made in the synopsis filed on behalf of the assessee and submitted that all relevant details in the form of books of accounts, copy invoices, GR, bilties etc. were filed before the Assessing Officer. The AO without detecting any defect in the books of accounts, rejected the same u/s 145(3) of the Act and made addition of Rs.12,86,416/- by applying the GP rate of 0.24% (declared in its books of accounts) on the total turnover accounted by it in its books of accounts. Learned counsel submitted that the AO has made addition of Gross Profit which has already been considered by the assessee for computing its tax liability. He submitted that the AO by adding gross profit again to the income of the assessee has made double taxation which is unsustainable and unjust in the eyes of law. He submitted that the AO has made the addition by relying on the statements recorded on the back of the assessee without providing an opportunity of cross-examine the same. Relying upon the decision of Hon’ble Supreme Court in the case of Andaman Timber Industries v. CCE 2015 SCC Online SC 1051 he submitted that no adverse inference could be drawn against the assessee on the basis of statement recorded without giving assessee to cross examine the same. In support of his 6 | P a g e contention learned counsel also placed reliance on following judgments: - ITAT Delhi in the case of Mis. Maple Destinations And Dreambuild Pvt. Ltd. Versus DCIT, Circle - 16 (1), New Delhi, 2024 (3) TMI 1071, dated: 21-3-2024 - ITAT Delhi in the case of M/S. Rswn Ltd. Versus DCIT, Central Circle-31, New Delhi, 2024 (2) TMI 278, dated: 31-1-2024 - ITAT Delhi in the case of Divya Exim Pvt. Ltd. C/O. Kapil Goel, Adv., Renu Jain C/O. Kapil Goel, Adv., Nisha Jain C/O.Kapil Goel, Adv. Versus DCIT Central Circle 25 New Delhi 2024 (1) TMI 750, dated:-15-1-2024 9.5 On the other hand, learned DR supported the orders of authorities below. 9.6 We have heard rival submissions and perused the material available on record. The stand of assessee is that all details in the form of books of accounts, copy invoices, GR, bilties etc. were filed before the Assessing Officer and the AO without pointing out any specific defect therein rejected the books of account u/s 145(3) and made the impugned addition of Rs. Rs.12,86,416/- by applying the GP rate of 0.24% on the total turnover accounted by the assessee in its books of accounts. We fail to understand the reasoning of AO as at one hand he stated sale/purchase claimed to have been made by M/s Kamal Trading Company amounting to Rs. 54,14,14,119/- as bogus then he proceeds to make addition on the basis of GP disclosed by the assessee without any justification and explanation. Such order, on merit as well, fails to meet the test of law and deserves to be quashed. The grounds raised by the assessee are allowed. Appeal of the assessee is allowed.” 5.1 We further note that, following the ratio of the aforesaid decision, the Coordinate Bench vide its order dated 10.12.2014 passed in ITA 1219/Del/2023, 1220/Del/2023, 1221/Del/2023 and 3401/Del/2023 in the matter of Kamal Sharma pertaining to assessment years 2010-11 to 2013-14 has held as under:- “6. Considering the fact that the Co-ordinate Bench of the Tribunal deleted the similar addition on the same set of facts for Assessment Year 2008-09 and 2014-15 and in 7 | P a g e the absence of any change of facts or circumstances pointed out by the Department, by respectfully following the order of the Co-ordinate Bench in ITA No. 3400 and 3402/Del/2023 (supra), we set aside the addition made by the A.O. which have been confirmed by the Ld. CIT(A) in so far as Assessment Year 2010-11 to 2013-14. 6. Considering the fact that the Co-ordinate Bench of the Tribunal has deleted the similar additions on the same set of facts for Assessment Years 2008-09 and 2014-15, which has also been followed in assessment years 2010- 11 to 2013-14, as aforesaid and in the absence of any change of facts or circumstances, by respectfully following the orders of the Coordinate Bench, as aforesaid, we set aside the additions made by the AO which have been confirmed by the ld. CIT(A) in the present appeals relating to assessment years 2008-09 to 2012-13 and allow the grounds raised in all the appeals of the assessee. 7. In the result, all the 05 Assessee’s appeals are allowed in the aforesaid manner. Order pronounced on 10/01/2025. SD/- (SUDHIR PAREEK) SD/- (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER SRBHATNAGAR Copy forwarded to:- 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR, ITAT Assistant Registrar "