DCIT, Cen. Circle 12, New Delhi Vs. M/s Bengali Sweets Centre,G-19, South Extension, Part-1,New Delhi.
July, 19th 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
(DELHI BENCH `A' : NEW DELHI)
BEFORE SHRI U.B.S. BEDI, JUDICIAL MEMBER AND
SHRI A.N. PAHUJA, ACCOUNTANT MEMBER
(Assessment Year : 2007-08)
DCIT, Cen. Circle 12, Vs. M/s Bengali Sweets Centre,
New Delhi G-19, South Extension, Part-1,
Assessee by : Sh. P.N. Shastri & Sh. M.P. Rustogi, Adv.
Revenue by : Shri S.K. Upadhyay, Sr.DR
PER U.B.S. BEDI, J.M.
This appeal of the department is directed against the order of the CIT (A)-I, New
Delhi dated 30.03.2011, relevant to assessment year 2007-08, whereby deletion of
addition of Rs.2 crores made on account of unaccounted sales for the year under
consideration after rejecting the books of account has been challenged..
2. The facts indicate that Assessing Officer made addition of Rs.2 crores in the
declared income of the assessee against which assessee preferred appeal raising various
grounds and pleas including that adequate opportunity has not been allowed to the
assessee to furnish relevant material and evidence. As such, order of the Assessing
Officer is not only unjust and improper but is violative of set principles of law.
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Moreover, the basis for arriving at the turn over determined and addition made are also
not supported by relevant material and record. So, it was urged for deletion of the
addition made by the Assessing Officer.
3. It was further submitted by Ld.AR of the assessee that each year is separate unit
for assessment and evidence in one year cannot automatically be presumed to exist in
preceding or subsequent year. Thus, finding same material during the survey operation
cannot be applied on presumption only. So, addition made needs deletion which may be
4. The Ld.CIT(A) noted the reasons given by the Assessing Officer for rejecting the
book result and making addition of Rs.200 lakhs to the income on account of undisclosed
sales, as well as the submissions by the assessee as under:
(1) The assessee was asked to produce complete books of account but
complete set of books were not produced.
That in response to a show cause notice for production of books, Mr.
Ravinder Jain, Partner appeared and stated the complete books were
(2) The assessee was asked to produce the ledger account of `Vehicle
Repairs & Maintenance' of Rs.5,52,590/- along with vouchers.
The Ld.AR submitted that the ledger account was shown but for reasons
best known to the Assessing Officer, he has stated to the contrary.
Further that a copy of the ledger account of the `Vehicle Repairs &
Maintenance' of Rs.5,52,590/- is enclosed in the paper book and the
original ledger is available for inspection.
It was pointed out by him that the narrations in the account even gave the
cash memo Nos. etc. for each payment establishing that they were duly
supported and written in a proper manner.
It was also submitted that the books were subjected to tax audit u/s 44AB
of the I.T. Act, 1961 and so stated in the tax audit report issued before the
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(A.Y. : 2007-08)
submissions of the return. Thus, it cannot be said that the ledger account
was not there earlier also.
(3) The assessee was asked to produce the details of the depreciation
claimed of Rs.7,10,252/- and to produce the original bill of the car
purchased during the year.
The Ld.AR submitted that the details of the depreciation claimed in terms
of sections 43 and 32 of the I.T. Act, 1961 have been shown in the Fixed
Assets Schedule of the Annual Accounts (Balance Sheet and P&L A/c for
the year and also the Tax Audit Report which were submitted along with
the return and which are enclosed in the paper book submitted to your
A photocopy of the Retail Invoice No.002851/06-07 for Rs.15,62,000
issued by Capital Cars Pvt. Ltd., in the name of Bengali Sweets Centre
was produced. A copy of it is enclosed in the paper book. The original
could not be produced as it was given to the HDFC Bank, which gave a
car loan for its purchase for the car. The fact of the car loan is evident
form the balance sheet also. Thus, there is a sufficient and reasonable
cause for the assessee not having the original bill in its possession.
(4) The assessee has debited a sum of Rs.22,26,329/- as wages and
Rs.4,49,344/- to the Profit & Loss account and was asked to produce the
wages register. The assessee was also asked to produce the cash book.
The assessee asked for time to produce them and was given one hour's
time but it could not be produced.
5. And Ld.CIT(A), after reproducing held-portion in ITAT's order in the case of
assessee for 2006-07, concluded to delete the impugned addition by holding as under:
"Submissions of the appellant have been considered. It is apparent that the
Assessing Officer has framed his order for assessment year 2007-08 on the basis
of the assessment order for assessment year 2006-07, a year in which survey was
conducted by the Department. The same was deleted in appeal for assessment
year 2006-07 after calling for a remand report in that year. The deletion has been
upheld by the ITAT. There are no fresh material of findings in this year.
Considering these I have no hesitation in deleting the addition of Rs.200 lakhs."
6. Against such deletion of impugned addition, department has come up in appeal
and it has been contended that CIT(A) has just considered and accepted the submissions
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(A.Y. : 2007-08)
of the assessee even without referring the same to Assessing Officer or seeking his
objections or comments to delete the impugned addition, which action is not only
contrary to facts on record but also against provisions of law. The Assessing Officer
made addition of Rs.2 crores on account of unaccounted sales for the year under
consideration after rejecting the book result in view of facts and circumstances of the case
giving valid reasons and specifically mentioning defects, non-cooperative attitude of the
assessee and not complying with the specific notice despite various opportunities to the
assessee, but Ld.CIT(A) has just accepted the appeal of the assessee to delete the
impugned addition without looking into all these aspects. Since relevant facts on record
have been ignored and provision of law has also not been complied with, therefore, order
of CIT(A) is not sustainable which should be reversed and that of the Assessing Officer
should be restored.
7. Ld.Counsel for the assessee while relying upon the order of CIT(A) has pleaded
to confirm the order of CIT(A) because CIT(A) has relied upon the order of ITAT in
assessee's own case for earlier year when facts are identical and issue is also similar. So,
the similar treatment needs to be given in this year also.
7.1. Ld.AR of the assessee further submitted that time was requested to produce the
wages register etc. and assessee was granted an hour's time and as they were granted an
hour's time since there was long distance of 15 kms. between the tax office at
Jhandewalan Extension and the assessee's place at South Extension, Part I and the travel
time taken for one side itself is about 45 minutes in normal time. So, it was to be kept in
mind that in the year 2009-10, the roads in Delhi were dug up extensively for the
Common Wealth Games, as a result of which the time taken was much longer. In other
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words, the return trip was to take about 3 hours at minimum. Therefore, the assessee
could not comply with the direction, despite the best of its intensions. Ld.AR also
submitted that the assessee is required to pay ESI and PF on the wages, and the details of
which were already on record. which is evident from the ESI challan copies and in the
provident fund return, the names etc. of the employees their annual salaries and the PF
payments for each of them are there. It was observed that the wages paid for the year
reconciled with the wages debited in the P&L A/c. The remaining reasons given for
rejection of book results was that there was a survey on the assessee on 10.11.2005,
relevant to assessment year 2006-07 and that the department had made an addition of
Rs.200 lakhs in assessment year 2006-07 after rejection of book results. Therefore, going
by the findings in assessment year 2006-07, the book results were rejected and an
addition of Rs.200 lakhs was made in assessment year 2007-08 also.
7.2 So, by placing various documents, balance sheet and also copy of ITAT order in
assessee's own case for earlier assessment year it was strongly contended that the
addition has rightly been deleted by CIT(A) whose action deserves to be confirmed
which may be confirmed.
8. We have heard both the sides and considered the material on record as well as
precedent relied upon by the Ld. Counsel for the assessee and find that during the
assessment proceedings despite repeated opportunities having been allowed to the
assessee by the Assessing Officer, assessee failed to produce cash book and wage
register. Various defects were also found in the method of accounting of the assessee
which were pointed out to the assessee, as recorded by the Assessing Officer in the
assessment order, but assessee failed to explain or adduce any material or evidence in this
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regard. Further, assessee has stated before the Assessing Officer that he neither
maintains any stock register nor has been able to provide any details in this regard and
moreover, in the absence of the details of purchases, Assessing Officer rightly observed
that sales could not be verified. Assessee has also itself stated that bills for around 25%
of the sales are kept and rest of the sales are in cash. During the course of assessment
proceedings various defects were found in the books of the assessee, which remained to
be explained. So, it has been rightly observed that assessee is not disclosing its correct
business turnover before the department and Assessing Officer applying survey
calculations in the earlier year as the basis to conclude that the assessee has disclosed
only 34.76% of his total sales before the department. Considering these facts and in
view of various defects, addition of Rs.2 crores was made and in appeal proceedings,
assessee has specifically stated that books and documents demanded could not be
produced because only one hour's time was given to the assessee whereas there is a
considerable distance and it was not practically possible to produce such books and
documents within the given time which was very short. So, it can be inferred that
assessee has not been given adequate opportunity to produce necessary papers and
documents, but Ld. CIT(A) taking note of this fact and relying upon ITAT's order for the
earlier year without considering relevant basis and material on record, has concluded to
delete the impugned addition which action of Ld.CIT(A) cannot be held to be wholly
justified. Moreover, the facts of the earlier year are not similar but are quite different
from facts emerging in the year under consideration inasmuch as in the earlier year
remand report was obtained form the Assessing Officer by CIT(A) and part addition out
of total addition was also upheld by the ITAT, whereas in the year under consideration
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neither any remand report was obtained by remanding the matter to the Assessing Officer
for giving opportunity to the assessee to produce necessary books in order to do proper
verification, but the entire addition has been directed to be deleted by Ld.CIT(A),
wherever, there is no parity in facts and circumstances in this year and in the earlier year.
In order to apply decision of earlier year, facts and circumstances should be similar and
identical, but here we find variation in this regard also. Therefore, keeping in view the
entirety of facts, circumstances and material on record and in the light of observations as
made above, we are of the opinion that neither order of CIT(A) nor of Assessing Officer
could be held to be just and proper. As such in the interest of justice and to have fair play
in the matter, we find it just and appropriate to set aside orders of authorities below and
restore the matter back on the file of the Assessing Officer for reconsideration of the
issue raised in the appeal afresh after giving due and adequate opportunity to the
assessee. We hold and direct accordingly.
9. As a result, the appeal filed by the department gets accepted for statistical
Order pronounced in open court on 17.07.2012.
(A.N. PAHUJA) (U.B.S. BEDI)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated : July 17, 2012
Copy of the order forwarded to:-
4. CIT(A)-XVIII, New Delhi.
5. CIT(ITAT) Deputy Registrar, ITAT
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