IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH : `H : NEW DELHI
BEFORE SHRI S.V. MEHROTRA ACCOUNTANT MEMBER
AND
SHRI GEORGE GEORGE K., JUDICIAL MEMBER
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.
ORDER
PER SHRI GEORGE GEORGE K, JM:
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
assessee.
(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
Ltd.]
1998-99 653598 653598
[As on 07.05.1997 in
NIL Union Bank of India]
1999-00 NIL 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.
Aks/-
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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