Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: TDS :: Central Excise rule to resale the machines to a new company :: cpt :: ACCOUNTING STANDARDS :: VAT Audit :: empanelment :: VAT RATES :: ACCOUNTING STANDARD :: due date for vat payment :: TAX RATES - GOODS TAXABLE @ 4% :: ARTICLES ON INPUT TAX CREDIT IN VAT :: list of goods taxed at 4% :: form 3cd :: articles on VAT and GST in India
 
 
From the Courts »
  Micro Spacematrix Solution P Ltd vs. ITO (ITAT Delhi)
 Micro Spacematrix Solution P Ltd vs. ITO (ITAT Delhi)
 CIT vs. Greenfield Hotels & Estates Pvt. Ltd (Bombay High Court)
 IndiaBulls Financial Services Ltd vs. DCIT (Delhi High Court)
 Maharao Bhim Singh of Kota vs. CIT (Supreme Court)
 Ravneet Takhar Vs. Commissioner Of Income Tax Ix And Ors.
 Jaiprakash Associates Ltd. Vs. Commissioner Of Income Tax
 Formula One World Championship Limited Vs. Commissioner Of Income Tax, International Taxation-3 And Anr.
 Commissioner Of Income Tax International Taxation-3 Delhi Vs. Formula One World Championship Ltd. And Anr.
 Reliance Communications Ltd vs. DDIT (ITAT Mumbai)
  Sushila Devi vs. CIT (Delhi High Court)

M/s D.S. Doors Pvt. Ltd. 11/7, Mathura Road, Faridabad. Vs. Assistant Commissioner of Income Tax, Central Circle-1, Faridabad.
March, 13th 2015
             IN THE INCOME TAX APPELLATE TRIBUNAL
                  DELHI BENCH : `B ' : NEW DELHI

            BEFORE SHRI I.C. SUDHIR, JUDICIAL MEMBER
                               AND
             SHRI T.S. KAPOOR, ACCOUNTANT MEMBER

                  ITA Nos. 1986 to 1991 & 2053/Del /2011
              Assessment Years: 2001-02 to 2006-07 & 2007-08

M/s D.S. Doors Pvt. Ltd.               Vs.          Assistant Commissioner
11/7, Mathura Road,                                 of Income Tax, Central
Faridabad.                                          Circle-1, Faridabad.
(PAN: AAACD5805B)
    (Appellant)                                     (Respondent)

                   ITA Nos. 2273 to 2275& 2052/Del /2011
                   Assessment Years: 2004-05 to 2007-08

M/s D.S. Woodtech Pvt. Ltd.            Vs.          Assistant Commissioner
C/o. M/s. RRA Texindia,                             of Income Tax, Central
D-28, South Extension, Part-I,                      Circle-1, Faridabad.
New Delhi.
(PAN: AAACD2776M)
   (Appellant)                                      (Respondent)

     Appellant by : S/sh. Ashwani Taneja & Tarun Kumar, Advocates
     Respondent by: Smt. A. Misra, CIT, DR

                                    ORDER

PER SHRI I.C. SUDHIR, JM: (A.Ys. 2001-02 to 2006-07):
D.S. Doors Pvt. Ltd. - ITA Nos. 1986 to 1991/Del /2011

1.           In all these appeals, the assessee has questioned the first appellate

orders on the common grounds. In ground nos. 1 & 2, the validity of assessment

framed under Section 153A read with section 143(3) of the Income-tax Act,

1961 (for short "the Act") has been questioned. In ground nos. 3 & 4, the

validity of addition made on account of alleged undisclosed investment in
                                        2

construction under Section 69B of the Act on the basis of valuation report of the

D.V.O. has been questioned. In ground no. 5, the grievance raised is regarding

non-granting of the benefit of the telescoping by the authorities below and in

ground no. 6, charging of interest under Sections 234A, 234B and 234C of the

Act has been questioned.

2.          We have heard and considered the arguments advanced by the

parties in view of the orders of the authorities below, material available on

record and the decisions relied upon.

3.          The facts in brief are that the business premises of the assessee

group and its director were subjected to search and seizure procedure under

Section 132(2) of the Act on 07.02.2007. During the course of search operations,

several documents were seized and cash of Rs. 6,84,000/- and jewellery valued

at Rs. 23,82,493/- were found at the residential premises of the Director of the

D.S. Woodtech Ltd., Sh. Dhan Singh Sharma. Notice under Section 153A of the

Act was issued and in response the assessee filed its return of income. The A.O.

being not satisfied with the explanation of the assessee made the addition on

account of undisclosed investment in construction on the basis of valuation

report of the D.V.O. to whom the A.O. had made reference for the same. Before

the learned CIT(A), the assessee questioned validity of assessment framed under

Section 153A of the Act made in the absence of evidence found during the

course of search and has also questioned the validity of addition made by the

A.O. on the basis of valuation report of the D.V.O. to whom the A.O. had made
                                         3

reference during the assessment proceedings itself.         It was submitted that

reference to D.V.O. cannot be made by the A.O. for the valuation of the property

without rejecting the books of account. It was contended that the building

existed prior to the block period i.e. 01.04.2000, hence no addition could be

made on this account. The learned CIT(A) did not agree with the assessee and

has upheld the addition in question. Hence, the present appeals have been

preferred before the Tribunal against the said first appellate order.

4.           In support of the issue raised in ground nos. 1 and 2 on the validity

of assessment framed under Section 153A read with section 143(3) of the Act,

learned AR submitted that no incriminating material was found during the

course of search, nor any assessment based on the return of income originally

filed was pending on the date of search, hence the A.O. was not justified in

initiating the proceedings under Section 153A of the Act and in framing the

assessment in furtherance to the said notice. He submitted further that the

addition in question has been made by the A.O. not on the basis of seized

documents but on the basis of estimation done by the D.V.O. to whom the

valuation of the building was referred to be determined during the course of

assessment proceedings. In support he referred the following decisions:

  i.   MGF Automobiles Ltd. Vs. ACIT, ITA Nos. 4212 & 4213/Del/2011
       (A.Y. 2004-05 & 2005-06), order dated 28.06.2013;
 ii.   Jaisteel (India) Ltd. Vs. ACIT, (2013) 259 CTR 281 (Raj.HC);
iii.   Gurinder Singh Bawa Vs. DCIT and others, ITA No. 2075/Mum./2010
       and others(A.Y. 2005-06), order dated 16.11.2012;
iv.    Kusum Gupta Vs. DCIT and others, ITA No. 4873/Del/2009 and others
       (A.Y. 2005-06 and others), order dated 28.03.2013;
 v.    CIT Vs. Anil Kumar Bhatia, (2012) 211 Taxmann.com 453 (Del.); and
                                       4

vi.    All Cargo Global Logistics Ltd. Vs. CIT, 137 ITD 287 (Mum.) (SB)

5.           Learned AR submitted further that the action of the A.O. in

referring the estimation of valuation of the construction of the building to the

D.V.O. without rejecting books of account of the assessee was also not valid. In

support, he placed reliance on the decision of Hon'ble Supreme Court in the

case of Sargam Cinema Vs. CIT, (2010) 328 ITR 513 (SC). He also placed

reliance on the following decisions:

  i.   CIT Vs. Chohan Resorts, 359 ITR 394 (P&H);
 ii.   CIT Vs. Raghuraji Agro Industries (P.) Ltd., (2013) 38 taxmann.com 318
       (Allahabad)

6.           Learned AR submitted further that the building under reference i.e.

11/7, Mathura Road with RCC covered area of 29200 sq. fts. and ACC area of

7664 sq. ft. was very much in existence prior to 01.04.2000 hence, no addition

could be made in this regard. In support, he referred contents of para nos. 2 and

5 of the assessment order and page nos. 19 to 93 which are copies of house tax

notice dated 05.11.1998 issued by Municipal Corporation, Faridabad for the

year 1999-2000 showing valuation of plot at 1000 sq.yds. and constructed

covered area in sq. ft. in basement, ground floor, RCC area in Ist floor and ACC

area; extract of assessment register, Municipal Corporation, Faridabad for the

year ending 31.3.2000 showing assessment of total built up RCC area of 29200

sq. ft. (12700 + 16,500) and ACC area of 7664 sq. ft.; notice of house tax

assessment of the business premises of the assessee company for the year 2003-

04 in respect of RCC area of 29200 sq. ft. and ACC area of 4500 sq. ft.; notice
                                         5

of house tax assessment of the business premises of the assessee for the year

2008-09 in respect of RCC area of 29280 sq. ft. and RCC area of 8600 sq. ft. etc.

corresponded with the Municipal Corporation, Faridabad regarding the building

in question as well as the copy of the ledger account of land and building

account for the period 01.01.2000 to 31.3.2007 indicating that substantial

amount of construction/renovation was recorded during the said period etc. With

assistance to the charts drawn at page Nos. 16 to 18 of the written synopsis, the

AR also tried to submit that there is negligible difference in the total area of the

property in question worked out by the DVO and the area constructed by the

assessee prior to 31.3.2000.

7.           The learned DR, on the other hand, tried to justify the orders of the

authorities below. He submitted that for reference to the D.V.O. for

determination of valuation of a building/construction, rejection of books is not

necessary. He submitted that the decisions relied upon by the learned AR in this

regard having distinguishable facts are not helpful to the assessee. The assessee

had not filed any evidence in support before the A.O. that the building in

question were constructed before 01.04.2000. On the issue of validity of

assessment in the absence of incrimination material found during the course of

search, the learned DR submitted that the statements of Sh. Dhan Singh Sharma

recorded during the course of search as well as the documents found and seized

were sufficient to show that there was undisclosed income to initiate

proceedings under Section 153A of the Act. He submitted that on the basis of
                                        6

those documents only, the assessee had made surrender. He submitted that

during the course of search the property in question was visited and it was found

that lavish construction has been made for which the assessee failed to furnish

any explanation. The A.O. has made addition on account of unexplained

investment in the construction and amount in difference found between the

D.V.O. report and the investment declared by the assessee in its books of

account.

8.            In the rejoinder, the learned AR submitted that in the assessment

years 2001-02 to 2006-07, undisputedly only one addition has been made which

is on account of difference in construction cost as shown by the assessee in its

books of account and as estimated by the D.V.O. in his report. It is sufficient to

establish this contention of the assessee that no incriminating material was found

during the course of search to justify the framing of assessment under Section

153A of the Act and undisputedly the return filed for these assessment years

were processed under Section 143(1) and no notice under Section 143(2) of the

Act was issued within the prescribed time limit and thus those returns have

reached its finality.

9.            Considering the above submission, the undisputed fact emerging in

the assessment for the assessment years 2001-02 to 2006-07 are that no addition

other than the addition on account of difference in construction as shown by the

assessee in its books of account and as estimated by the D.V.O. in his report has

been made which impliedly supports the contention of the assessee that no
                                         7

incriminating material was found during the course of search proceedings at the

premises of the assessee. It is also an un-rebutted fact that on the date of search,

assessments based on the return of income originally filed for the assessment

years under consideration were not pending as the returns of income filed for

these assessment years and processed under Section 143(1) of the Act had

reached finality in the absence of issuance of notice under Section 143(2) of the

Act within the prescribed time limit. Thus in view of the above cited decisions

by the Learned AR that is in the cases of All Cargo Global Logistics Ltd. vs.

CIT (supra) and others, we are of the opinion that the assessments framed under

sec. 153A for the assessment years under consideration are not valid. To be

more specific, as per the decision of the coordinate bench in the case of DCIT

vs. Devi Dayal Petro Chemicals Pvt. Ltd. ­ ITA Nos. 5430 to 5436/Del/13, C.O.

Nos. 83 to 88/Del/2014 dated 10.9.2014, proceedings under sec. 153A can be

initiated only for years to which any seized documents, found during the course

of search, belongs and not for the years to which seized documents do not

belong.




10.          Even on the merits, the sole addition made in these assessment

years under consideration is on account of difference in construction as shown

by the assessee in its books of account and as estimated by the D.V.O. in his

report is also not sustainable in view of the above cited decisions including

decision of Hon'ble Supreme Court in the case of Sargam Cinema Vs. CIT

(supra) holding that the Assessing Authority could not have referred the matter
                                        8

to the D.V.O. without the books of account being rejected. It was held that

reliance placed on the report of the D.V.O. is misconceived. Similar are the facts

of the present case before us that the A.O. had referred the matter to the D.V.O.

for the determination of the value of the property in dispute without rejecting the

books of account of the assessee. Respectfully following the ratio laid down by

the Hon'ble Supreme Court in the above cited case of Sargam Cinema Vs. CIT

(supra), we hold that the reference made to the DVO and reliance placed by the

A.O. on the report of the D.V.O. for making the addition in question was

misconceived. The additions made on account of undisclosed investment in the

construction based on the valuation report of the D.V.O. are thus held as not

justified. Besides the documents made available at page Nos. 19 to 45 of the

paper book i.e. correspondences with the Municipal Corporation, Faridabad

which include notices issued time to time by them also suggest the property in

question and area constructed therein was very much in existence well before

01.04.2000. We thus direct the Assessing Officer to delete the addition in

question made during the assessment years under consideration on account of

the amount in difference between the value of consideration shown and

determined by the DVO. The issues raised in ground nos. 1 to 4 are thus

decided and allowed in favour of the assessee.

11.          Ground no. 5 has not been pressed hence the same does not need

adjudication.
                                        9

12.          In ground no. 6, the charging of interest under sections 234A, 234B

and 234C has been questioned, which is consequential in nature, hence does not

need adjudication.

13.          The appeals of the assessee group for the assessment years 2001-02

to 2006-07 are partly allowed.



ITA No. 2053/Del /2011 (A.Y. 2007-08):

1.           In ground nos. 1 and 2, the assessee has questioned validity of the

assessment framed under Section 153A read with section 143(3). In ground no.

3 the validity of addition of Rs. 24,00,000/- as undisclosed income has been

questioned. In ground no. 4, the addition of Rs. 72,00,000/- made on account of

undisclosed stock of the assessee has been questioned. In ground no. 5, the

action of the A.O. in bringing to tax the assessee's share out of the alleged

surrender of Rs. 1.6 crores has been questioned. Ground nos. 6 and 7 are again

general in nature supporting the invalidity of additions questioned in ground nos.

3 to 5 hereinabove. In ground nos. 8 and 9, the validity of addition of Rs.

27,76,029/- on account of undisclosed investment in construction under Section

69B of the Act based on D.V.O. report has been questioned. In ground no. 10,

the action of the authorities below in not granting the benefit of telescoping as

per law has been questioned. In ground no. 11, the total addition of Rs.

1,23,76,029/- on different heads discussed hereinabove has been questioned.
                                         10

The issue raised in ground no. 12 regarding the validity of charging of interest

under Sections 234A, 234B and 234C of the Act is consequential in nature.

2.           Heard and considered the arguments advanced by the parties in

view of the orders of the authorities below, material available on record and the

decisions relied upon.

Ground Nos. 1 to 7

3.           The facts in brief are that during the course of search, some

documents were seized by the search team. On the basis of these documents, it

was alleged that the assessee was doing business outside the books of account

also and thus the assessee had suppressed its sales, purchases and other

expenses. The assessee offered to pay taxes on the undisclosed income

aggregating to Rs. 96 lakhs out of the total offer of Rs. 1.60 crores.

4.           In support of the grounds, learned AR submitted that there was no

incriminating material found during the course of search, nor the assessment

originally framed on the basis of return filed was pending and the surrender was

made as an conditional offer that the amount of Rs. 1.60 crores shall cover all

the alleged unaccounted investment in business of D.S. Woodtech in the alleged

unaccounted accumulated stocks, production, sales, profits earned, expenditure

incurred on account of unaccounted purchase, salary & wages and other

expenses for unaccounted production. It was also made clear that the

surrendered amount shall be considered in the assessment year 2007-08, as if the

entire surrendered/offered amount was earned/invested on account of
                                       11

unaccounted purchase, unaccounted production/sales and unaccounted stock in

the financial year relevant to assessment year 2007-08 i.e. the year of surrender

in the hands of D.S. Doors (P) Ltd. and D.S. Woodtech. It was also made clear

that no interest under Sections 234A, 234B and 234C will be charged and no

penalty under Section 271(1)(c) of the Act will be levied. The A.O., however,

charged the above interest and initiated penalty proceedings. The learned AR

submitted that there is no estoppel against the law even if the assessee agrees or

consents for an addition contrary to law, the A.O. has to discharge his duties of

making fair assessment of income and to compute amount of tax payable as per

law. He submitted that even surrender amount can be retracted, if surrender

represents no income. In this regard he placed reliance on the following

decisions:

  i.   Srikant G. Shah Vs. Income Tax Officer, (2007) 108 ITD 577 (Mum.)
 ii.   Pullangode Rubber Produce Co. Vs. State of Kerala and Another, 91 ITR
       18 (SC)
iii.   S.Arjun Singh Vs. Commissioner of Wealth Tax, 175 ITR 91(Del.)

5.           The learned AR submitted further that the assessee has not earned

any profit from its undisclosed business rather loss has been incurred by the

assessee. This contention was raised before the A.O. as well as before the

learned CIT(A) but the same has been rejected without giving any cogent

reasons. He referred page no. 23 of the paper book i.e. copy of trading account

submitted by the assessee to the A.O. in respect of unaccounted sales,

unaccounted purchases and unaccounted expenditure on account of salary &

wages showing loss of Rs. 7,142/-. He also referred CBDT Circular F. No.
                                       12

286/98/2013- IT (Inv. II) dt. 18.12.2014 directing the Assessing Authority for

gathering evidences during search/survey and to strictly avoid obtaining

admission of undisclosed income under coercion/undue influence for framing

the assessment.

6.           The learned AR submitted that there are many discrepancies in the

stock taking and working out the undisclosed sales and profit by the Assessing

Officer. These discrepancies were pointed out before the A.O. but the same has

been ignored without assigning any reason. In this regard, the learned AR

referred page nos. 4 to 6 and 10 to 29 of the paper book which are copies of

reply and letters filed time to time before the A.O. He also referred page nos. 24

to 44 of the paper book which are the copies of written submission filed time to

time on different dates before the learned CIT(A). He submitted that in the

above stated letters and reply to the A.O., the assessee had made clear that all

purchases, production, sales, expenditure, stock etc. have been duly accounted

for in the return filed. The A.O. was requested for computation indicating how

the value of stock has been arrived at such a huge figure so that proper

reply/reconciliation can be furnished and reply on unaccounted sales was also

submitted. Document and year-wise details of undisclosed investment and

undisclosed expenditures were furnished before the A.O. Objections with regard

to the valuation of stock was submitted to the A.O. with the request that on the

basis of said objections, valuation of stock shall get reduced to Rs. 3.8 crores

approximately. It was also pointed out to the A.O. that the area where stock was
                                       13

lying cannot by any means and ways store such huge piles of stock as alleged.

Further that the stock inventory was prepared by only two people, who were

kept on the job at the time of search to furnish the inventory within such less

time. The assessee also submitted to the A.O. that the profit earned on alleged

unaccounted purchases, sales, production was utilized for purchase of stock

found at the time of search. The assessee had also furnished reply dated

26.12.2008 to the A.O. making offer to pay tax on an amount of Rs. 1.6 crores

both in the case of D.S. Doors and D.P. Woodtech subject to non-charging of tax

under Sections 234A, 234B and 234C and non levy of penalty under Section

271(1)(c) of the Act. He also placed reliance on the decision of Hon'ble High

Court of Delhi in the case of Sonia Magu & Ors. vs. CIT (2011) 336 ITR 227

(Del.). The learned AR referred contents of Page Nos. 27-32 of the assessment

order with this contention that although the Assessing Officer ha reproduced

some replied of the assessee but he has not dealt with all these discrepancies and

has not met all the contentions of the assessee property, instead he has made

ground remarks, without specifying as to what further evidence was required by

him. Besides, queries have been raised at the fag end of the assessment

proceedings i.e. on 26.12.2008 whereas Assessing Officer has been passed on

30.12.2008 (wrongly typed in the assessment order as 30.12.2007). Thus hardly

four days time was given by the Assessing Officer to complete the reply. The

Learned CIT(Appeals) also did not deal with all the above contentions raised by
                                        14

the assessee before the Assessing Officer and reiterated before him and has

simply upheld the additions made by the Assessing Officer.

7.           The learned CIT(DR), on the other hand, submitted that there was

no pressure or coercion on the assessee to make the surrender on the basis of

which the additions questioned in ground nos. 3 to 5 were made. The A.O. has

made reference to several documents/entries not recorded in the books while

making the additions in question. The assesee was not able to furnish any

satisfactory explanation about the contents of seized documents. Retraction from

the surrender was not made within short time after the surrender. She submitted

further that the penalty on surrendered income could be imposed.

8.           Having gone through the orders of the authorities below on the

issue raised in ground nos. 1 to 7, we find that during the course of search in the

premises of the assessee several documents including prima facie incriminating

material were found and seized. Thus, it cannot be said that there was no

incriminating material found during the course of search to concur with the

contention of the assessee that the assessment framed under Section 153A of the

Act was not valid. The ground Nos. 1 and 2 are thus rejected. We, however, find

substance in the contention of the Learned AR that an addition cannot be made

solely on the basis of surrendered amount dehors evidence in corroboration and

ignoring subsequent retraction thereto by the assessee with valid reason. Here

the case before us is that when surrendered income was objected by the assessee

with sufficient reason then the same should have been duly considered by the
                                        15

Assessing Officer and Learned CIT(Appeals) while making and upholding the

additions. The assessee vide several letters including letter dated 17.10.2008,

22.10.2008, 13.11.2008, 05.12.2008, 24.12.2008, 26.12.2008, wrote to the

Assessing Officer and with written submissions dated 28.1.2010, 24.1.2011

before the Learned CIT(Appeals) tried to point out many discrepancies in the

stock taking and working out the undisclosed sales and profit by the Assessing

Officer but the same have been ignored without assigning any reason. Copies of

these letters have been made available at page Nos. 04 & 22, 24 to 44 of the

paper book. In the letter dated 17.10.2008 filed before the Assessing Officer, the

assessee has submitted that all purchases, production, sale, expenditure, stock

etc. have been duly accounted for in the return filed. In the letter dated

13.11.2008 to the Assessing Officer, the assessee had requested for computation

indicating how the value of stock has been arrived at such a huge figure so that

proper reconciliation can be furnished and submitted reply on unaccounted sales

also. In the letter dated 05.12.2008 to the Assessing Officer, the assessee had

submitted documents wise and year-wise details of undisclosed investment and

expenditure. In letter dated 14.12.2008 to the Assessing Officer the assessee had

raised objections with regard to the valuation of stock and requested that on the

basis of the said objections, valuation of stock shall get reduced to Rs.3.8 crores

approximately. In the letter dated 26.12.2008 to the Assessing Officer the

assessee pointed out that the area where the stock was lying, cannot be any

means and ways, store such huge piles of stock as alleged. In this letter, the
                                       16

assessee also submitted that profit earned on alleged unaccounted purchases,

sales, production was utilized for purchase of stock found at the time search. The

Assessing Officer has reproduced the contents of the some of the above stated

letter and has rejected the same mainly on the basis that no evidence was filed in

support without giving adequate opportunity to the assessee to file evidence in

support. For instance, some letters are dated 24.12.2008 and 26.12.2008 and the

assessment order has been passed on 30.12.2008 (wrongly typed as 30.12.2007).

The Learned CIT(Appeals) has also not dealt with the contents of the above

letters. We thus to meet the end of justice set aside the issues raised in ground

Nos. 3 to 7 to the file of the Assessing Officer to decide these afresh after

verifying the contents of these letters after affording adequate opportunity of

being heard to the assessee. The ground Nos. 3 to 7 are thus allowed for

statistical purposes.

Ground nos. 8 and 9:

9.           These grounds are relating to the grievance of the assessee against
the addition of Rs. 27,76,029/- on account of undisclosed investment in
construction under Section 69B of the Act.
10.          Similar arguments has been advanced by the parties as advanced by
them on an identical issued hereinabove in the appeals for the assessment years
2001-02 to 2006-07.
11.          On an identical issue in the appeals for the assessment years 2001-

02 to 2006-07 hereinabove, we after discussing it in detail has come to the

conclusion that the action of the A.O. in making reference to the D.V.O. for

determination of the value of the property without rejecting the books of account
                                        17

is not justified and no addition can be made on the basis of such valuation

reported by the DVO. This view is well supported by the decision of Hon'ble

Supreme Court in the case of Sargam Cinema Vs. CIT, (2010) 328 ITR 513

(SC). Respectfully following the same we decide the ground nos. 8 and 9 in

favour of the assessee with direction to the A.O. to delete the addition of Rs.

27,76,029/- made in this regard.

Ground No. 10

12.          It relates to the grievances of the assessee against the action of the

learned authorities below in not allowing the benefit of telescoping as per law.



13.          In support of this ground, learned AR submitted that the benefit of

telescoping ought to have been allowed by the authorities below in respect of

profits earned during the assessment years 2001-02 to 2007-08 and addition of

Rs. 12,00,000/- (out of Rs. 20,00,000) out of brought forward amount/stocks

available with the assessee company as on 01.04.2000 and also in respect of

assessee's share of Rs. 60,00,000/- towards difference in the alleged

unaccounted accumulated stock as per the books and wrongly calculated at the

time of search.

14.          Learned DR opposed the above submission.

15.          We find that an identical issue raised before the learned CIT(A)

vide ground no. 4(h) has remained to be adjudicated upon by the learned

CIT(A), we thus, in the interest of justice, remand the matter to the file of
                                            18

learned A.O. to address the issue after affording opportunity of being heard to

the assessee.

16.             The other grounds i.e. 11 and 12 are general and consequential in

nature hence does not need independent adjudication.

17.             In the result, the appeal is partly allowed.

18.             In summary, the appeals relating to the assessment years 2001-02 to

2006-07 are allowed and that for the assessment year 2007-08 is partly allowed.



D.S. Woodtech Pvt. Ltd.
ITA Nos. 2273 to 2275& 2052/Del /2011: (A. Yrs: 2004-05 to 2006-07):


19.   In these appeals, in ground No.1, the assessee has questioned first

appellate order on the validity of assessment framed under sec. 153A read with

section 143(3) of the Income-tax Act, 1961 upheld by the Learned

CIT(Appeals). The learned AR, however, has not pressed this ground during the

course of hearing. The same is accordingly rejected.



20.   In ground Nos. 2 to 4 for the assessment year 2004-05, the assessee has

questioned validity of addition of Rs.1,05,000 on account of cash receipt upheld

by the Learned CIT(Appeals) on the basis that incorrect facts have been

recorded and the Assessing Officer has made addition without providing

opportunity of cross-examination and without confronting the entire adverse

material used against the assessee without providing adequate opportunity of
                                       19

hearing. The ground No. 5 is general in nature and in ground No.6, charging f

interest under sec. 234A, 234B and 234C of the Income-tax Act, 1961 has been

questioned.



21.   Similar are the grounds for the remaining assessment years 2005-06 and

2006-07 with the difference in amount of addition. In assessment year 2005-06,

the addition made on account of cash receipt is Rs.1,64,590 and in assessment

year 2006-07, the addition made on this account is Rs. 4 lacs.



22.   The learned AR advanced his arguments in support of the issue raised on

the validity of addition made on account of cash receipts. He submitted that

there was no undisclosed/unaccounted sales/cash receipts in the seized

documents. The addition in question has been made on the basis of entries found

recorded on the documents containing account of Shri Praveen Jain. The

Assessing Officer held that the assessee has not shown the cash receipts in its

books of account and made addition of that amount. Referring the different page

Nos. 1 to 22 of Annexure A08 on the basis of which additions have been made

in these assessment years; the learned AR submitted that page 1 to 7 contains

some phone numbers of parties and rates etc., page Nos. 1 to 10 are blank, page

No. 11 is rough estimate given to parties, the page No.12 is a blank paper; page

No.13 contains transaction with Mr. K. P. Dass; page No. 14 contains

transaction of Mr. K.P. Singhla; page No. 15 contains transaction of Mr.
                                      20

Praveen Jain. There are also some estimates of Shri Raj Kumar Goswami; page

No. 16 contains an advance of Rs. 10, 000 of Mr. T.K. Bansal which was

refunded back on the same day; page No. 17 contains transaction of Mr. Satish

Sharma; page No. 18 contains some rough figures; page No. 19 contains some

dates, page No. 20 contains transaction of Mr. R.K. Rane; page No.21 contains

entries of Mr. Satender Kumar and page No. 22 contains some phone numbers.

The learned AR submitted that so far as page No. 13 is concerned, it contains

transaction with Mr. K.P. Das who is brother of Mr. S.K. Dass and all

transactions with them have been counted for in the name of Mr. S.K. Dass and

duly reflected in the books of account. On page no.12, amount of Rs.9,873.05 is

some estimate as written on the page and amount of Rs.1500, Rs. 2,000,

Rs.2,000 and Rs.2,000 may be some cash received but there is no mention of

date with amount so all the amounts would have been received on the same date.

So it can be assumed that total amount of Rs.7,500 is included in the entries of

cash received of any dues as mentioned in the ledger account. He submitted that

the copy of said ledger account has been made available at page Nos. 1 and 2 of

the paper book. He submitted further that there is one more transaction of

Rs.10,000 on page Nos. 13 relating to Mr. R.P. Jain. All transactions with Mr.

R.P. Jain have duly been accounted for in the books of account, a copy of ledger

account has been made available at page No. 3 of the paper book. Regarding

page No.14, the learned AR submitted that it contains transaction of Mr. R.P.

Singhla as mentioned in the books of account but the Assessing Officer has
                                       21

treated the cash of Rs.10,000 as Rs. 1 lac without any basis, copy of ledger

account in this regard has been made available at page N. 4 of the paper book.

Page No. 15 contains transaction of Mr. Praveen Jain. There is some estimate of

Rs.17,815.70 but total sales to Mr. Praveen Jain is Rs.35,833.86. Against this

sale, total amount of Rs.35,833.86 has been received and has been duly reflected

in the books of account. In support, he referred page No. 5 of the paper book i.e.

copy of ledger account. He submitted further that there are also some estimate of

Raj Kumar Goswami and estimate cannot be accounted for in the books of

account. The learned AR submitted further that page No. 17 contains transaction

of Mr. Satish Sharma which is duly reflected in the books of account and

referred page No. 6 of the paper book wherein the copy of the said ledger

account has been made available. Regarding the contents of page No. 20, the

learned AR submitted that there is transaction of Mr. R.K. Rane and all the

transactions with Mr. R.K. Rane have been duly accounted for in the books of

account and referred copy of ledger account in support made available at page

No. 7 of the paper book. Regarding page No. 21, the learned AR submitted that

it contains cheque entries of Mr. Satender Kumar which has been duly

accounted for in the books of account. In the assessment year 2006-07, the

learned AR submitted that the addition has been made and sustained by the

authorities below on the basis of entries recorded on page No. 7 of Annexure A6

without verifying the correct facts.
                                      22

23.   The Learned DR on the other hand placed reliance on the orders of the

authorities below with this contention that the additions in question have been

made based on the documents found and seized during the course of search

proceedings to which the assessee was having no explanation.



24.   Considering the above submissions, we find that in the assessment year

2004-05, the Assessing Officer has made addition on the basis of entries found

recorded on page No. 15 of Annexure 8 and in the assessment year 2005-06, the

addition has been made on the basis of entries found recorded on page Nos. 11,

14 & 15 of Annexure A-8 and in the assessment year 2006-07, the addition has

been made on the basis of entries recorded on page No. 7 of Annexure A-6.



25.   The relevant facts are that on 07.02.2007, search was also conducted at

the residential premises of Shri Dharam Pal Sharma, director of the assessee

company and various documents as noted in the assessment order were seized

from the premises of the assessee. For the assessment year 2004-05, the

Assessing Officer observed entries on page No. 15 of the Annexure A-8

containing amount of Shri Parveen Jain. He noted that assessee has not shown

the cash receipts of Rs.1,05,000 in its books of account. The Assessing Officer

observed that the cash payments totaling to Rs.25,000 should be read as

Rs.2,50,000, have not been reflected in the books. The assessee opposed the

addition of Rs.1,05,000 by the Assessing Officer on the basis that it has been
                                      23

made on whims and his assumption by the Assessing Officer who had decoded

the alleged coded form used by the assessee without any supporting evidence.

The Learned CIT(Appeals) did not agree and upheld the addition of

Rs.1,05,000.



26.   In the assessment year 2005-06, the Assessing Officer with similar

observations of decoding of figure contain in page Nos. 11, 14 and 15 of

Annexure A-8 regarding entries relating to Shri R..P. Singhla, Shri Ramesh

Bansal and Shri Praveen Jain has made addition of Rs.1,64,590. The Assessing

Officer noted cash payments totaling to Rs.10,000 relating to Shri R.P. Singhla

as Rs.1 lac not reflected in the book. The cash payment of Rs.2,000 relating to

Shri Ramesh Bansal was read as Rs.20,000 not reflected in the books and cash

payments totaling to Rs.25,000 relating to Shri Parveen Jain has been taken as

Rs.2,50,000, not reflected in the books. The Learned CIT(Appeals) did not agree

with the contention of the learned AR that the addition in question has been

made on whims and assumption by the Assessing Officer who has decoded the

earlier code form used by the assessee without any supporting evidence. The

Learned CIT(Appeals) did not agree and has upheld the addition.






27.   In assessment year 2006-07, the Assessing Officer has made addition on

the basis of entries recorded on page No. 7 of Annexure A-6 with these

observations that the entries relating to D.C. Kothari and Demco Solution (P)
                                       24

Ltd. are in coded form. The cash payment of Rs. 10,000 in the case of Shri D.C.

Kothari has been decoded by him as Rs.1 lac not reflected in the books of

account. He noted further that entries of cheques payment of Rs.50,000,

Rs.1,50,000 and Rs.1,11,538 are, however, reflected in the books. In the case of

Demco Solution (P) Ltd., he read the cash amount of Rs.30,000 as Rs.3 lacs not

shown in the books of account by adopting the same decoding method. Learned

CIT(Appeals) upheld the addition of Rs.1 lac made on account of decoding of

receipt from Shri D.C. Kothari by following his earlier decision for the

assessment years 2004-05 and 2005-06 but he upheld the addition of Rs.30,000

out of Rs.3 lacs made on account of receipt from Demco Solution (P) Ltd. with

this observation that Rs.5,000 and Rs.25,000 which were without decimal and

zero thereafter cannot be treated as Rs.50,000 and Rs.2,50,000 totaling to Rs.3

lacs and consequently the addition of Rs.3 lacs cannot be made. Since amount of

Rs.5000 and Rs.25,000 totaling to Rs.30,000 still remained unexplained, hence,

the addition of Rs.30,000 was justified, held the Learned CIT(Appeals).



28.   Considering the above submissions, we find that the authorities below

have justified decoding of those figures by making addition of zero to the figure

where after recording the figure, a zero was mentioned after putting decimal

e.g., if Rs.1,000 was written as Rs.1000.0, the Assessing Officer had decoded

the figure as Rs.10,000. Learned CIT(Appeals) upheld this action of the

Assessing Officer. But he did not agree with the Assessing Officer for adopting
                                         25

similar decoding of figure where Rs.1,000 was written and thereafter no decimal

with zero was put. We, however, find substance in the contentions of the learned

AR that there was no concrete basis for doing so by the authorities below for the

decoding of the figure. The additions in question are thus not sustainable in

absence of any basis particularly in a search proceedings under sec. 153A of the

Act. These additions are accordingly deleted. The ground Nos. 2 to 4 are

accordingly allowed.

29.   Ground No.5 is general in nature and in ground No.6, charging of interest

under sec. 234A, 234B and 234C of the Income-tax Act, 1961 has been

questioned, which is consequential in nature and does not need an independent

adjudication.

30.   In result, the appeals are allowed.



ITA No. 2052/Del/2011 (A.Y. 2007-08):

31.   In ground No.1, the assessee has questioned validity of assessment framed

under sec. 153A read with se. 143(3) of the Income-tax Act, 1961 without

assuming jurisdiction as per law and without serving valid notices, recording

satisfaction and obtaining requisite approval as well as without complying with

the other mandatory conditions envisaged under the Act.



32.   In ground No.2, it has been alleged that the assessment is in violation of

principles of natural justice by recording incorrect facts and findings.
                                       26




33.   In ground No.3, the addition of Rs.16 lacs on account of undisclosed

income upheld by the Learned CIT(Appeals) has been questioned.



34.   In ground No.4, the addition of Rs.48 lacs by treating it as undisclosed

stock of the assessee upheld by the Learned CIT(Appeals) has been questioned.



35.   In ground No. 5, the action of the Learned CIT(Appeals) in upholding the

assessment order in bringing to tax the alleged assessee's shares out of alleged

surrender of Rs.1.6 crores as surrendered has been questioned.



36.   Ground Nos. 6 & 7 are in support of the above ground Nos. 3 to 5 in a

more specific way. In ground No. 8 non-granting of the benefit of telescoping

has been questioned.



37.   In ground No.9, the addition of Rs.64 lacs by treating it as undisclosed

income/investment of the assessee has been questioned. In ground No. 10,

charging of interest under sec. 234A, 234B and 234C of the Act has been

disputed.



38.   So far as issue raised in ground Nos. 1 and 2 on the validity of assessment

framed under sec. 153A read with sec. 143(3) of the Act and violation of
                                        27

principal of natural justice by the Assessing Officer is concerned, the parties

have adopted similar arguments as advanced by them in the case of D.S. Doors

(P) Ltd. hereinabove in ITA No.2053/Del/2011 for the assessment year 2007-08.

Following the view taken therein, we do not find any substance in these grounds

on the issue, the same are accordingly rejected.



39.   Ground Nos. 3 to 7, in support of ground Nos. 3 and 4 questioning the

addition of Rs.16 lacs on account of undisclosed income and Rs.48 lacs made on

account of undisclosed stock, the learned AR submitted that both the additions

have been made by recording incorrect facts and findings. He submitted that

surrender was made by the assessee to gain peace of mind and to get the issue

settled at the assessment stage and had made the disclosure subject to immunity

from the penalty and charging of interest. The Assessing Officer has not

accepted the surrender in its totality. The assessing authority accepted the

disclosure of the assessee because there was nothing on record so quoting the

undisclosed expenditure/income/investment etc. as the department failed to

bring forth any material in support. Nothing is left thereafter to support the

allegations and subsequent additions made to the tune of Rs.64 lacs (Rs.48 lacs

plus Rs.16 lacs). In support of the contentions that the Assessing Officer has

recorded incorrect facts and have not considered the submissions of the assessee

pointing out the correct facts relating to the addition, the learned AR has adopted

the same arguments as advanced by him in the case of D.S. Doors Pvt. Ltd. for
                                         28

the assessment year 2007-08 adjudicated hereinabove. The learned AR pointed

out further that following his action in the case of D.S. Doors Pvt. Ltd. for the

assessment year 2007-08 on identical issues, the Learned CIT(Appeals) has

upheld the action of the Assessing Officer and sustained the above additions.



40.   The Learned DR on the other hand tried to justify the orders of the

authorities below on the issues.



41.   After having gone through the orders of the authorities below, we find

that the Learned CIT(Appeals) has decided the issue raised in the grounds in

question simply following the first appellate order for the assessment year 2007-

08 in the case of D.S. Doors Pvt. Ltd., adjudicated hereinabove. Following the

decision taken therein on an identical issues, we set aside the matter to the file of

the Assessing Officer to decide the issues raised in ground Nos. 3 to 9 relating to

the addition of Rs.64 lacs and the related contentions raised in these grounds

afresh after verifying the submissions of the assessee made time to time before

the authorities below during assessment and first appellate proceedings and

affording adequate opportunity of being heard to the assessee in this regard.

These grounds are accordingly allowed for statistical purposes.

42.   Ground No.10 is relating to charging of interest under sec. 234A, 234B

and 234C of the Income-tax Act, 1961 which is consequential in nature, hence,

does not need independent adjudication.
                                         29

43.   In result, appeal is partly allowed for statistical purposes.

44.   In summary, the appeals relating to assessment years 2001-02 to 2005-06

are allowed and those relating to assessment year 2007-08 are partly allowed.

      The decision is pronounced in the open court on 13 .03.2015.

            Sd/-                                                  Sd/-
          (T.S. Kapoor)                                           (I.C. Sudhir)
       Accountant Member                                      Judicial Member

Dated: 12.03.2015.
*Mohan Lal*

             Copy forwarded to:

             1.      Appellant

             2.      Respondent

             3.      CIT

             4.      CIT(A)

             5.      DR

                                                  Asst. Registrar, ITAT, New Delhi




                                                    Date
Draft dictated on (RK & ML)                   27.01.2015
Draft placed before author                    27.02.2015
Draft proposed & placed before the second
member
Draft discussed/approved by Second Member.    12.03.2015
Approved Draft comes to the Sr.PS/PS          12.03.2015
Kept for pronouncement on                     12.03.2015
File sent to the Bench Clerk                  12.03.2015
Date on which file goes to the AR
Date on which file goes to the Head Clerk.
Date of dispatch of Order.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Sitemap

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions