TMI Blog2019 (9) TMI 944X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of assessment proceedings. Thus, in light of the decision in case of Surendra Kumar Jain [ 2019 (8) TMI 23 - DELHI HIGH COURT] we are also of the opinion that the objections filed by the assessee should have been disposed off by the Assessing Officer at the initial stage and then should have proceeded with the completion of the Assessment. Therefore, we remand back the issue of disposing off the objections to the file of the Assessing Officer to first deal with the objections of the Assessee, and thereafter passed an appropriate order itself. - Appeal of the assessee is partly allowed for statistical purpose. - ITA No.3176/DEL/2017 - - - Dated:- 17-9-2019 - Shri Suchitra Kamble, Judicial Member, And Shri Prashant Maharishi, Accountant Member For the Assessee : Shri Ved Jain, Adv. And Shri Himanshu Aggarwal, C.A. For the Revenue : Shri Amit Katoch, Sr. DR ORDER PER SUCHITRA KAMBLE, JUDICIAL MEMBER This appeal is filed by the assessee against the order of the Ld. CIT(A)-25, New Delhi, dated 27/02/2017, for Assessment year 2011-12, 2. Grounds of appeal ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fically formed and authorized to deal with the various aspects relating to the organization of the event. The budget of the OC, CWG was estimated at about ₹ 2300 crores. Out of this amount, a sum of ₹ 600 crores was estimated to be spent on the execution of the overlays contracts. These contracts were awarded to 04 different parties, with each party executing the work in respect of one or more of the seven clusters into which the sporting and training venues were dividend. M/s ESAJV DArt Indo India Pvt Ltd was one such party who got the overlays contracts. There were allegations in the public domain that the contracts for overlays work were awarded at high rates resulting into huge margins, which would not be disclosed to the Income Tax Department. A Search under Section 132 of the Income tax Act, 1961 was carried out at the premises of M/s ESAJV DArt Indo Consortium and its associate entities on 19/10/10 at New Delhi. During the course of the Search, various documents were found and seized. During the course of post search inquiries, Survey action u/s 133 A of the Income Tax Act, 1961 was undertaken on 19/10/2010, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16,54,500/- 3 Warehousing Charges 11,58,150/- 4 Supervision Charges 27,57,500/- 5 Furniture on Rent 1,50,55,950/- Total 2,28,32,100/- The Assessing Officer held that the assessee could not explain any direct or indirect expense in relation to sale or services provided to M/s ESAJV D-Art Indo India Pvt. Ltd. The ratio of gross receipt from M/s ESAJV D-Art Indo India Pvt. Ltd. Vs. Total receipts is 12.32% (2,28,32,100/1,85,29,927 * 100). Thereafter, the Assessing Officer made an addition of ₹ 6,34,380/- in total income of the assessee company by disallowing 12.32% of the total administrative expenses and selling overheads on ad-hoc basis. On appeal before the CIT(A), the CIT(A) disregarded the submissions of the assessee regarding non-applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out of the order of assessment. The Ld. AR relied upon the decision of the Tribunal in case of Ramesh Kumar Pabbi vs. ACIT (ITA No. 5594/Del/2014). The Ld. AR also relied upon the decisions of the Hon ble Delhi High Court in case of CIT vs. Sardari Lal and Co. 251 ITR 864 as well as the decision of the Tribunal in case of Bikram Singh vs. DCIT (2016) 48 ITR 689. Thus, in light of the above, the Ld. AR submitted that the enhancement made by the CIT (A) is untenable in law. 7. As regards to Ground Nos. 4 and 5 relating to non-disposal of objection against re-opening of reassessment proceedings raised by the assessee by way of speaking order and non-application of independent mind by the Assessing Officer, the Ld. AR submitted that in the present case, notice u/s 148 of the Act dated 17.03.2014 was issued to the assessee for AY 2011-12 and in response to the same on 20.02.2014 (within specified time) the assessee submitted that the return of income declaring income of ₹ 41,60,505/- filed on 20.09.2011 may be treated as return filed u/s 148 of the Act. Thereafter, on request of the assessee copy of the reasons recorded was supplied to the assessee vide order shee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after completion of the project. While the claimed furniture was supplied on 10.09.2010 and 11.09.2010, a single invoice for the entire contract value was raised on 01.09.2010 i.e. even before the contract had been executed. In respect of the warehousing charges, it was found that the amount charged by M/s Indo Office Solutions Pvt. Ltd. from the assessee company was ten times the amount that it is presently charging from its tenants fro the same premises. Firstly, from the perusal of the reasons recorded by the Assessing Officer it appears that the Assessing Officer has recorded the reasons as the ESAJV D-Art is the assessee company where as in the present case Indo Office Solutions Pvt. Ltd. is the assessee company. Further, reopening has been made despite the fact that the assessee has disclosed all the receipts from M/s ESAJV D-Art and there was no failure on the part of the assessee to disclose fully and truly all the material facts necessary for assessment. Thus, the initiation is bad in law. The Ld. AR relied upon the decision in case of Sabharwal Properties Industries Pvt. Ltd. vs. ITO (2016) 382 ITR 547 wherein the Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1852.99 2.18% 2011-12 1179.62 1.13% The Ld. AR submitted that in the year under consideration the NP rate is highest in three years. Since NP is 2.18%, making addition at 12.32% of the expenses is not tenable in law. The Ld. AR further submitted that there is no allegation by the Assessing Officer that the assessee had not made payments for such expenditure. All the expenses are fully vouched and were verifiable. The assessee has been maintaining regular books of accounts duly audited under Section 44AB of the Act which have not been doubted or rejected by the Assessing Officer. The additions are merely on the suspicions and lacks evidence. The same are bad in law in the light of the judgment of the Hon ble Supreme Court in the case of Umacharan Shaw Bros vs. CIT 37 ITR 271 (SC) wherein it is settled law that suspicion however strong it is cannot take place of the evidence. Further the Ld. AR relied upon the decision of the Hon ble Supreme Court in case of Lalchand Bhagat Ambica Ram vs. CIT (1959) 37 ITR 288. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spite of the clear language used by the Supreme Court as well as this Court, the Assessing Officer did not comply with the requirement of law. 7. This Court has, therefore, no hesitation in setting aside reassessment order dated 29th December, 2018 for the Assessment Year AY 2011-12. Consequently, a direction is issued to the AO to once again take up for consideration, the Petitioner s objections to the reopening of the assessment for the aforementioned AY and dispose of those objections by a reasoned order not later than four weeks from today. The said order shall be communicated to the Petitioner not later one week thereafter. 8. Thereafter, the AO will proceed in accordance with law as far as the reassessment proceedings are concerned. 9. It will be open to the Petitioner to seek appropriate remedies if his objections to the reopening of the assessment are rejected by the AO. In the present case as well, the Assessing Officer has not disposed off the objections of the assessee filed at the initiation of assessment proceedings. Thus, in light of the decision of the Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X
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