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ACIT, Circle 29(1), New Delhi. Vs. Sh. Vijay Kumar Goel, Prop. M/s Pyare Lal Vijay Kumar & M/s Pawan Industries,G-40, Laxmi Nagar, Delhi-110092
December, 09th 2014
                        DELHI BENCH : `H : NEW DELHI


                              IT(SS) No.27/Del /2012
                       Block Period 01.01.1996 to 06.03.2003

ACIT, Circle 29(1),                Vs.       Sh. Vijay Kumar Goel,
New Delhi.                                   Prop. M/s Pyare Lal Vijay Kumar &
                                             M/s Pawan Industries,
                                             G-40, Laxmi Nagar, Delhi-110092

                              CO No.240/Del /2012
                          ( In IT(SS) No.27/Del/2012)
                      Block Period 01.01.1996 to 06.03.2003

Sh. Vijay Kumar Goel,
Prop. M/s Pyare Lal Vijay Kumar & Vs.       ACIT, Circle 29(1),
M/s Pawan Industries,                       New Delhi
G-40, Laxmi Nagar, Delhi-110092

(PAN AAPPG 3258 H)

     (Appellant)                                 (Respondent)

             Appellant by :     Shri C.S. Anand, Advocate
             Respondent by:     Shri R.I.S. Gill, CIT. DR.



1.     This appeal at the instance of the Revenue and cross objection filed by the

assessee, arises out of the CIT(A)'s order dated 22.02.2012, pertaining to the Block

Period 01.04.1996 to 06.03.2003.
                                                                IT(SS) No.27/Del /2012   2
                                                                 CO No.240/Del/2012

2.     Grounds raised in Revenue's appeal reads as follows:

       " (i)   On the facts and in the circumstances of the case, the Ld. CIT(A) has
               erred in deleting the addition of Rs.17,64,527/- made by AO on
               account of undisclosed income determined on the basis of
               incriminating documents found in the search.
       (ii)    On the facts and in the circumstances of the case, the Ld. CIT(A) has
               erred in deleting the addition of Rs.17,64,527/- by accepting fresh
               evidence in violation of Rule 46A".

2.1.   Grounds raised in the assessee's cross objection reads as under:

       " (i). That on the facts of the case and under the law, the Ld. CIT(A) has
              erred in not holding that the ld. AO had wrongly assumed jurisdiction
              to initiate proceedings u/s 158BD of the IT Act 1961 in the case of the
       (ii).   That on the facts of the case and under the law, the Ld. CIT(A) has
               erred in not quashing the assessment order dt. 29.05.2009 as passed
               by the ld. AO u/s 158BC/158BD.
       (iii). That on the facts of the case and under the law, the interest u/s
              158BFA(1) of the IT Act 1961 was not chargeable."

3.     Brief facts of the case are as follows.

       The assessee an individual, is proprietor of M/s Pyare Lal Vikay Kumar and

M/s Pawan Industries. A search u/s 132 of the Act, was conducted on 06.03.2003 in

the case of M/s Gian Chand Ramji Dass Group (in short, GCRD). During the course

of search, incriminating documents containing the business transaction of M/s Gian

Chand Ramji Dass and assessee's proprietary concern were seized. Therefore, a

notice u/s 158BD of the Act was issued to the assessee. Since the assessee did not

cooperate with the assessment proceeding, block assessment was completed for the

period 01.04.1996 to 06.03.2003 fixing total undisclosed income at Rs.17,64,527/-.
                                                                           IT(SS) No.27/Del /2012        3
                                                                            CO No.240/Del/2012

  The details of the undisclosed income that was calculated in the hands of two

  proprietary concerns of the assessee are as follows:

 i) Addition made on account of undisclosed income by working out net profit
    at 1% out of the total purchases made from M/s Gian Chand Ramji Dass.

      A.Y.       PYARE LAL VIJAY KUMAR             PAWAN INDUSTRIES                            TOTAL
     1997-98                                NIL                              149667             149667
     1998-99                               70545                              92595             163140
     1999-00                               55770                             145994             201764
     2000-01                                NIL                               91568              91568
     2001-02                                NIL                               74928              74928
     2002-03                                NIL                                NIL                NIL
     2003-04                                NIL                                NIL                NIL

                                          126315                             554752             681067

ii) Addition made on account of peak credit in the Bank Account of Pyare Lal
   Vijay Kumar and Pawan Industrries

       A.Y.            PYARE LAL VIJAY               PAWAN                     TOTAL
                            KUMAR                  INDUSTRIES
       1997-98                           429862 NIL                                        429862
                          [As on 09.11.1996 in
                           Bank of Rajasthan
       1998-99                                                   653598                    653598
                                                    [As on 07.05.1997 in
                                         NIL       Union Bank of India]
       1999-00                                                     NIL                        NIL
       2000-01                           NIL                       NIL                        NIL

       2001-02                           NIL                       NIL                        NIL

       2002-03                           NIL                       NIL                        NIL

       2003-04                           NIL                       NIL                        NIL

                                      429862                    653598                    1083460
                                                               IT(SS) No.27/Del /2012   4
                                                                CO No.240/Del/2012

4.      Aggrieved by the additions made in the block assessment, assessee preferred

an appeal before the First Appellate Authority challenging the initiation of block

assessment u/s158BD of the Act and also on merits of the additions. The CIT(A)

allowed the plea of the assessee on merits holding that no incriminating documents

was found out in the course of search, pertaining to the assessee and therefore two

additions was not warranted. The reasoning of the CIT(A) in deleting the two

additions is identical and same reads as under:-

     "7.4.     I have considered the order of the AO, remand report of the AO
     and the submissions of the assessee I find considerable merit in the
     submission of the assessee that apparently there is no incriminating books
     and documents seized against the assessee on the basis of which the AO has
     made the addition. It is apparent that the AO has made the addition on
     estimate and ad-hoc basis without any material evidence against the
     assessee. After considering all the facts and circumstances of the case I am
     of the view that it is not possible to sustain such estimated and ad-hoc
     addition and accordingly, the same as deleted."

4.1     As against the assessee's ground challenging the assessment framed u/s

158BD of the Act, the CIT(A) decided the issue against the assessee vide paragraph

5.4 of the impugned order.

5.      The Revenue being aggrieved by the deletion of Rs.17,64,527/- is in appeal

before us and the assessee being aggrieved by the CIT'(A)'s order rejecting the

assessee's plea, for quashing assessment u/s 158BD has filed CO No.240/2012

before us.

6.      The Ld. DR relied on the order of the Assessing Officer. The Ld. Authorized

Representative reiterated the submission made before the Income Tax Authority.
                                                                IT(SS) No.27/Del /2012   5
                                                                 CO No.240/Del/2012

7.    We have heard rival submissions and perused the material on record. The

total undisclosed income of Rs.17,64,527/- computed by the AO, comprises of the

following two additions (both proprietary concern of the assessee) :

      i)    N.P. at 1% of the total purchases from M/s Gian Chand Ramji
            Dass Group                                   Rs. 6,81,067/-
      ii)   Addition of peak credit in Bank account      Rs.10,83,460/-
                                             Total       Rs.17,64,527/-

7.1         We shall be deal with the above two additions as under:

            i)     Addition of Rs.6,81,067/-

      In the course of search proceeding in the premises of M/s Gian Chand Ramji

Dass documents pertaining to M/s Pyare Lal Vikay Kumar                 and M/s Pawan

Industries (assessee's proprietary concern) were seized, wherein particulars of

transaction between the searched person and the proprietary concerns of the assessee

were recorded. M/s Gian Chand Ramji Dass Group (the search person) were

recording certain portion of their sales outside the books of account and many of

these sales were made to two proprietary concerns of the assessee. These facts are

evident from the reading of the assessment order and the appraisal report prepared in

the course of the search proceeding. The assessee was asked to explain whether the

purchases from M/s Gian Chand Ramji Dass Group, were duly accounted or not.

There was lack of cooperation on the part of the assessee and did not provide the

necessary material called for by the Assessing Officer. Therefore, the Assessing

Officer was compelled to estimate NP at 1% of the purchase made from M/s Gian
                                                                   IT(SS) No.27/Del /2012    6
                                                                    CO No.240/Del/2012

Chand Ramji Dass Group. The assessee ought to have cooperated and furnished

necessary evidence to show that the purchases from M/s Gian Chand Ramji Dass

Group was duly reflected in the regular books of account. The CIT(A) deleted the

disallowance for the reason that no incriminating documents against the assessee

were found during course of search. In the assessment order it has been mentioned

that M/s Gian Chand Ramji Dass Group has sold goods outside its book of account

to the proprietary concerns of the assessee. The addition of Rs.6,81,067/- would not

have been warranted, had assessee cooperated and produced the details called for in

the course of assessment proceeding. The assessee ought to have furnished

necessary material to show that the purchases from M/s Gian Chand Ramji Dass

Group were duly reflected in the regular book account maintained by the proprietary

concerns. For the aforesaid reasons, we are of the opinion that CIT(A) is not

justified in deleting the addition of Rs.6,81,067/-. Therefore, in the interest of justice

and equity, the issue of addition of Rs.6,81,067/-, is restored to AO for fresh

consideration. The assessee shall be afforded reasonable opportunity of being heard

before assessment is reframed.

ii)   Addition of Rs.10,83,460/-

7.2          The peak credits in two bank accounts were added by the AO as

undisclosed income. The Assessing Officer does not have a case that the Bank

accounts are not disclosed to the Income Tax Department. He has merely added the

peak credit without giving any reasoning for treating the same as undisclosed
                                                                    IT(SS) No.27/Del /2012   7
                                                                     CO No.240/Del/2012

income of the assessee. When the Bank accounts are reflected in the normal course

of assessee's business, we see no reason that the peak credit in the two bank

accounts should be added as undisclosed income. Therefore, the CIT(A)'s order

deleted the addition of Rs.10,83,460/- is correct and in accordance with law and no

interference is called for. It is ordered accordingly.

        CO No.240/2012

8.      Since the issue of addition of Rs.6,81,067/- is remanded to the AO, for de

novo consideration, we deem it appropriate to restore the issues raised in assessee's

cross objection also to the AO         for fresh consideration. Needless to state, the

assessee shall be given adequate opportunity of being heard, before assessment is

reframed. It is ordered accordingly.

9.      In the result:

        i) the appeal of the Revenue is partly allowed for statistical purposes: &
        ii) Cross Objection filed by the assessee is allowed for statistical purposes.

        The decision was pronounced in the open court on 5th December, 2014.

       Sd/-                                                         Sd/-
 (S.V. MEHROTRA)                                         (GEORGE GEORGE K.)
Accountant Member                                          Judicial Member

Dated: 5th December, 2014.

                                IT(SS) No.27/Del /2012   8
                                 CO No.240/Del/2012

Copy forwarded to
1.   Appellant
2.   Respondent
3.   CIT
4.   CIT(A)
5.   DR
                    Asst. Registrar, ITAT, New Delhi
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