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2015 (11) TMI 856 - ITAT DELHI

2015 (11) TMI 856 - ITAT DELHI - TMI - Unexplained purchase u/s 69C - CIT(A) deleted the addition - Held that:- The complete books of accounts were also produced before the AO and the same were examined and the AO has not pointed out any defect in the books of accounts produced by the assessee. Thus, the same stood accepted by the AO. The books of account maintained in the normal course of business are evidence under the 'Evidence Act' and 'Income Tax Act. During the course of assessment proceed .....

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ed view that no interference is called for in CIT(A)'s order - Decided against revenue

Disallowance of 50% of expenditure - CIT(A) deleted the addition - Held that:- Regarding allowance of depreciation the AO was rightly directed to allow the same as per Income Tax Act Rules. Therefore, this ground was therefore allowed in favour of the assessee company.- Decided against revenue

Validity of assessment u/s. 153C - Held that:- As incriminating material belonging to the asses .....

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e Assessee emanate out of the common Order dated 14.5.2012 passed by the Ld. CIT(A-II), New Delhi pertaining to assessment years 2003-04 to 2008-09. Since the issues involved in these appeals as well as cross objections are similar and identical, hence, for the sake of convenience, we are proceeding to dispose of the appeals and cross objections by this consolidated order, by dealing with Revenue s Appeal being ITA No. 4129/Del/12 (AY 2003- 04) and Assessee s Cross Objection No. 338/Del/2012 (AY .....

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tire sales of the assessee represented its income from undisclosed sources . 3. That the Commissioner of Income Tax (Appeals) erred in law and on facts of the case in deleting the addition of RS.2,06,645/- made by the Assessing Officer by way of disallowance of 50% of expenditure and depreciation claimed by the assessee. 4. (a) The order of the CIT (A) is erroneous and not tenable in law and on facts. (b) The appellant craves leave to add, alter or amend any/all of the grounds of appeal before o .....

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n the satisfaction note, do not belong to assessee as the same were part of working papers of the C.A Sh. B.K. Dhingra in whose office the search was conducted. Hence, the notice issued U/s 153C, based on said documents, is illegal, bad in law and without jurisdiction. 3. That admittedly, as recorded in the satisfaction note, no seized document related to the relevant assessment year was found and the seized paper referred in the said satisfaction note were duly reflected in the regular books of .....

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particularly when the assessment had been made without complying with the law and the additions made are illegal, bad in law & without jurisdiction. 6. That on the facts and circumstances of the case and the provisions of the law, the Ld CIT (A) has erred in not considering the fact that the assessment proceeding for the year under appeal was not pending on the date of the recording of satisfaction u/s 153C of the Act and accordingly the same did not abate for the purpose of initiation of p .....

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cases of B.K. Dhingra, Smt. Poonam Dhingra & M/s Madhusudan Buildcon Pvt. Ltd on 20/10/2008 and during the course of search at their residential premises at F-6/5, Vasant Vihar, New Delhi certain documents belonging to the assessee were seized. On the basis of documents so found belonging to the assessee company, proceedings were initiated in the case of the assessee company u/s 153C read with section 153A of the I.T. Act. The case of assessee was initially centralized with ACIT, Central Cir .....

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003-04 to 2008-09 within 15 days of the service of the notices, may be treated as withdrawn as it was inadvertently issued. In response to notice u/s 153C, the assessee filed a return for assessment year 2003-04 on 06/09/2010 declaring nil income. 4.1 The case was subsequently transferred to Central Circle-21 by an order u/s 127 of the LT. Act issued vide F.No. CIT(C)- II/CENT/2010-1111029 dated 19/10/2010. A copy of the panchnama, reasons for issuing notice u/s 1 S3C and jurisdiction order date .....

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31.12.2010 passed u/s. 153C r.w.s. 143(3) of the I.T. Act, 1961 and made the various additions. 5. Aggrieved with the aforesaid assessment order, assessee appealed before the Ld. CIT(A), who vide impugned order dated 14.5.2012 has partly allowed the appeal of the assessee. 6. Now the Revenue is in Appeals and Assessee has filed Cross Objections before the Tribunal. 7. As regards the issues involved in the Revenue appeals is concerned, the Ld. DR relied upon the order passed by the AO and the co .....

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3 is relating to deletion of addition of RS.2,06,645/- by way of disallowance of 50% of expenditure and depreciation claimed by the assessee. We have heard both the parties and perused the relevant records, especially the orders passed by the Ld. First Appellate Authority. 8.1 After hearing both the parties and perusing the records, especially the orders passed by the Ld. CIT(A), on the issue in dispute. For the sake of convenience, we are reproducing the relevant findings of the impugned order .....

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nts and more particularly when the books of accounts have not been rejected by the AO, no question of disallowance of purchases uls 69C arises. The judgement in the case of CIT vs. Mls Radhika Creation ITA No. 692/2009 by Hon'ble Delhi High Court is applicable to the present facts of the case as all the purchases are accounted in the regular books, the source is obviously explained. The provisions of sec 69C are not applicable as there was no unaccounted expenditure. It is also an admitted f .....

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purchases, item-wise detail of purchases and sales giving inventory and rates which purchases and sales were affected. No defect was found by the Assessing officer either in the books of account or in the detail furnished by the appellant. After the books of account regularly maintained in the course of business are furnished before the AO for verification, the AO may accept the same or after pointing out the specific defect may reject the books of account and determine appellant's income as .....

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ted fact that the books of accounts were also produced before the Sales Tax Officer ward 101, New Delhi during the assessment proceeding under the Delhi Sales Tax Act. No adverse remark has been made in the Sales Tax Assessment order. It is pertinent to note that assessment of the appellant co. for the AY. 2005-06, has been completed u/s 143(3) of the I.T. Act, by ITO, Ward no 3(4), New Delhi vide Assessment Order dt 30.03.2007. Working and status of the company stood accepted in the (Page no 27 .....

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43(1) of the I T Act for the AYs. 2003-2004, 2004-2005, 2006-2007, 2007-2008 and 2008-2009. Keeping in mind the views of the Supreme Court in the case of CIT vs Kelvinator Ltd. (2010) 320 ITR 561 and the facts of the case, the additions made as per details hereunder made by the AO in each of the six assessment years i.e for the A.Y. 2003-04 to AT 2008-09, involved in these grounds on account of purchases u/s. 69C are deleted. S.No. A.Y. Amount (Rs.) 1 2003-04 31,32,336/- 2 2004-05 31,32,218/- 3 .....

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the case of Commissioner of Income Tax- V vs. Radhika Creation. The Hon ble Jurisdictional High Court has held that when all the purchases are accounted in the regular books of accounts, the source is explained and the provisions of section 69C are not applicable, as there was no unaccounted expenditure. The provisions of sec 69C are not applicable as there was no unaccounted expenditure. The complete books of accounts were also produced before the AO and the same were examined and the AO has n .....

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rates which purchases and sales were affected. But no defect was found by the Assessing officer either in the books of account or in the detail furnished by the assessee. After going through the reasons mentioned by the Ld. CIT(A) while deleting the addition in dispute, we are of the considered view that no interference is called for in the well reasoned order passed by the Ld. CIT(A) on the deletion of addition of ₹ 31,32,336/- made by the AO on account of unexplained purchases u/s. 69C o .....

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f disallowance of 50% of expenditure and depreciation claimed by the assessee. We are of the view that the Ld. CIT(A) has adjudicate this issue vide para 27 to 31 from pages 53 to 59 of the impugned order. For the sake of convenience, we are reproducing the relevant finding of the Ld. CIT(A) vide para no. 31 at page 58 to 59 on the issue in dispute as under:- 31. I have considered the assessment order, written submissions remand report and rejoinder to the remand report filed by the AR as well a .....

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he appellant company for the A.Y. 2002-03 has already been completed, wherein no disallowance of expenses made. I have also considered the fact that the assessment of the appellant Co. for the AY. 2005- 06, has been completed u/s 143(3) of the LT. Act by the ITO ward 3(4), New Delhi vide Assessing officer's order dated 30.03.2007, wherein working of the appellant company stood accepted and there in no disallowance of the expenses has been made. In the original assessment for the AY 2005-06, .....

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ective assessment years, details as under:- S. No AY Amount (Rs.) 1. 2003-04 2,06,645/- 2. 2004-05 2,14,343/- 3. 2005-06 2,15,407/- 4. 2006-07 2,54,451/- 5. 2007-08 2,71,568/- 6. 2008-09 2,51,061/- Accordingly the AO is directed to delete the addition for the AY. 2003-04 to 2008-09, details hereinabove made on this account. Regarding allowance of depreciation the AO is, directed to allow the same as per Income Tax Act Rules. This ground is therefore allowed in favour of the appellant company. 8. .....

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No deficiency has been pointed out in the books of accounts. It is further submitted that the assessment of the assessee company for the A.Y. 2002-03 has already been completed, wherein no disallowance of expenses made. We have considered the fact that the assessment of the assessee Co. for the AY. 2005-06, has been completed u/s 143(3) of the I.T. Act by the ITO ward 3(4), New Delhi vide Assessing officer's order dated 30.03.2007, wherein working of the assessee company stood accepted and t .....

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are of the considered opinion there is no substance in lump sum disallowance of the expenses in each of the respective assessment years, details as under:- S. No AY Amount (Rs.) 1. 2003-04 2,06,645/- 2. 2004-05 2,14,343/- 3. 2005-06 2,15,407/- 4. 2006-07 2,54,451/- 5. 2007-08 2,71,568/- 6. 2008-09 2,51,061/- 8.5 Accordingly the AO was rightly directed to delete the addition for the AY. 2003-04 to 2008-09, details hereinabove made on this account. Regarding allowance of depreciation the AO was ri .....

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2 (AY 2004-05 - 2008- 09) are concerned, we find that the issues involved in these appeals are similar and identical and also the facts and circumstances of the case are also same to that of ITA No. 4129/Del/2012 (AY 2003-04) as decided by us as aforesaid, wherein we uphold the order of the Ld. CIT(A) on both the issues in dispute. Keeping in view of the above, we uphold the orders of the Ld. CIT(A) in respect of the assessment years 2004-05 to 2008-09 also and decide the issue against the Reven .....

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found during search period. Therefore, he stated that the assessment made in the case of the assessee is without jurisdiction, in view of the Hon ble Jurisdictional High Court decision dated 28.8.2015 in the case of CIT vs. Kabul Chawla passed in ITA No. 707, 709 and 713/2014. He further draw our attention towards the Page No. 1 - 64 especially the pages no. 14 to 15 of the Paper Book especially the Column no. 13 in which the AO has asked the assessee to explain the pages 1 to 64 of Annexure A-2 .....

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/s. 153C is null and void and this issue has already been adjudicated and decided in favor of the assessee by the Hon ble Jurisdictional High Court in the case of CIT vs. Kabul Chawla (Supra), which shall be followed in the present case of the assessee. In this behalf, he draw our attention towards the relevant para no. 38 of the order, which is reproduced hereunder:- 38. The present appeals concern AYs 2002-03, 2005-06 and 2006-07. On the date of the search the said assessments already stood co .....

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iated u/s. 153C is null and void. To support this contention, we follow the Hon ble Jurisdictional High Court decision dated 28.8.2015 in the case of CIT vs. Kabul Chawla passed in ITA No. 707, 709 and 713/2014 wherein vide para no. 38 it has been held as under:- 38. The present appeals concern AYs 2002-03, 2005-06 and 2006-07. On the date of the search the said assessments already stood completed. Since no incriminating material was unearthed during the search, no additions could have been made .....

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avour of the assessee and accordingly, the cross objection is allowed on this ground. 13. Secondly, Ld. Counsel of the assessee stated that AO has not recorded the Satisfaction before issuing the notice u/s. 153C of the I.T. Act to the assessee and in the absence of recording the satisfaction before issuance of the notice u/s. 153C of the I.T. Act, there is non-compliance with legal requirement regarding recording of the satisfaction and this issue. He further stated that similar issue has alrea .....

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decision of the Hon ble Jurisdictional High Court in the case of Pr. Commissioner of Income Tax (Central-II) vs. Aakash Arogya Mandir Pvt. Ltd. & Anr. (Supra), which may be followed in the present case also. 13.1 On the other hand, Ld. DR opposed the request of the assessee s counsel. 14. We have heard both the counsel and perused the records, we find considerable cogency in the contentions raised by the assessee s counsel that AO has not recorded the Satisfaction before issuing the notice u .....

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the similar and identical issue as involved in the present case and has adjudicated and decided the same vide para no. 8 as under:- 8. The Revenue has not placed any material to dispute the factual finding of the ITAT that the requirement of the law explained by this Court in Pepsi Foods regarding the recording of satisfaction by the AO even in respect of the searched person was not fulfilled. Consequently, the fact that it was the same AO both for the searched person and the Assessee makes no d .....

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