ACIT, NEW DELHI vs. SHRI RAVI GOEL, NEW DELHI

आदेश /O R D E R PER MADHUMITA ROY, J.M. 1. The instant appeal filed by the Revenue is directed against the order dated 31.03.2011 passed by the Ld. CIT(A)-XXIII, New Delhi arising out of the order dated 24.12.2009 passed by Ld. ACIT, Circle 23(1), New Delhim u/s 144(1)/254 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for AY 1992-93 with the following grounds:

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September, 1994. Initially the assessments were framed by and under the order dated 13.12.2008. However, the Ld. Tribunal was pleased to restore the matter to the file of the Ld. Assessing Officer upon which the assessment order was passed on 24.12.2009 with certain additions.

During the appellate proceeding the Ld. CIT(A) finally upon issuing remand reports first dated 20.12.2010 and the other dated 23.03.2011 finally deleted certain additions made by the Ld. AO. Hence, the instant appeal before us.

I.T.A.No.2895/Del/2011/A.Y. 199-93 Deletion of addition of Rs. 5,69,500/- being 10% of profit on goods directly lifted by the other parties is the issue before us. In fact these goods were directly lifted by the parties from the Custom Authorities.

The Ld. AO made addition of Rs. 5,69,500/- and 10% profit on it at Rs. 5,69,500/-. The Ld. CIT(A) deleted both the additions. However, it appears from the order passed by the Ld. AO that the concerned parties have made affidavit and no adverse evidence was brought on record to disbelieve the statement made in those affidavits. Further that, upon perusal the copies of agreements between the assessee and the three parties clearly show that no margin or profit was to be charged by the assessee in respect of the goods lifted by these three parties. The agreement with the parties, the affidavits, confirmation and appellant letter filed before the AO the appellant’s letter for personal presence of the parties lifted goods are part of the records lying before us. The Ld. AO observed that these documents were not produced before us though the same was in fact produced during the original assessment. In that view of the matter, the Ld. CIT(A) found no basis to make this addition.

Since the assessee has discharged its onus by producing the entire set of documents/evidence as mentioned hereinabove and in the absence of any adverse evidence relied upon by the Ld. AO. The Ld. CIT(A) finally deleted the addition of Rs. 5,69,500/- which according to us is of no ambiguity so as to warrant interference and hence, this ground of appeal preferred by the Revenue is found to be devoid of any merit and thus,

I.T.A.No.2895/Del/2011/A.Y. 199-93 dismissed. The deletion of addition of Rs. 9,50,000/- on account of unexplained investment has been challenged before us. The fact culled out from the records that the assessee explained the goods lifted from Custom Department to the tune of Rs. 9,50,000/- by filing confirmation of Steelex International detailing the manner in which goods had been lifted by paying the said amount from their bank account being no. 2250 of Synd Bank, Nariman Point, Mumbai. The assessee along with the said confirmation and bank statement is also available being part of the Paper Book filed before us. It is the goods of the Ld. AO that he could not verify the details and thus, made additions the Ld. CIT(A), on the other hand, deleted such addition on the ground that confirmation was already filed and the Ld. AO has also failed to bring any adverse evidence on record to reject such contention of the appellant which, according to us is just and proper and without any ambiguity so as to warrant interference. Hence, this ground of appeal filed by the Revenue found to be devoid of any merit and thus, dismissed. The addition of Rs. 18,11,000/- and Rs. 13,45,750/- as unexplained investment has been challenged before us by the Revenue. Upon verification of the document, it was found that the assessee has made payment of Rs. 1 crore and 61.1 lakh on 15.05.1991 and 31.05.1991 respectively to the Customs Authorities. Upon perusal of the Bank Statement it was seen that the assessee made a bank draft of Rs. 21,02,500/- on 09.05.1991 from his Synd. Bank account no. 323.

Before making it there were various credit entries which the assessee was I.T.A.No.2895/Del/2011/A.Y. 199-93 directed to explain. The explanation rendered by the assessee was not found sufficient and thus, an amount of Rs. 18,11,000/- has been added us 68 of the Act. The Ld. AO further found that before making the draft of Rs. 20,11,00,000/- from Hong Kong Bank there were several credit entries. The assessee’s explanation in this regard was not found sufficient and, therefore, Rs. 13,45,750/- was added to the total income of the assessee. However, there was an arithmetic mistake in calculating Rs. 1800000/- which should have been 1702500/- (2102500 – 400000).

The Ld. CIT(A) during the appellate proceeding went through the cash flow statement prepared on the basis of the copies of seized material taking into account the opening cash balance, bank withdrawals which is also made available before us being part of the Paper Book. Apart from that in the remand report dated 27.10.2010 available at page 10 to 15 of the PB so filed before us. The Ld. AO admitted such facts and the documentary evidences filed in its explanation of the sources of funds by the assessee and hence, the Ld. CIT(A) deleted both the additions.

According to us, there is no ambiguity in making such decision made by the Ld. CIT(A). Hence, the said is hereby confirmed. This ground of appeal preferred by Revenue fails.

The deletion of addition of Rs. 12490000/- on account of cash sale of agricultural equipment has been challenged before us. The assessee’s case is this that the cash flow compiled from the copies of the seized

I.T.A.No.2895/Del/2011/A.Y. 199-93 material and the Department has no seized material in that situation the appellant cannot be panelized without any adverse evidence regarding the availability of cash sales. According to him the cash sale of agricultural equipment shown at Rs. 1302800/- could not be accepted and thus, the difference of Rs. 3050000/- and the explained source of Rs. 2001000/- has been added u/s 68 of the Act. The Ld. CIT(A) while allowing the appeal alongwith this ground of appeal relied on the basis of the documents, facts and the remand report and further observed that the cash flow cannot be suspected in the absence of any adverse evidence relied upon by the Ld. AO which according to us is without any ambiguity so as to warrant interference. This ground of appeal is allowed.

6. The deletion of addition of Rs. 1508644/- made by the AO on account of lifting the goods from the Custom Authorities is the subject matter before us. It appears from the records that the copy of the audited profit and loss account along with the other relevant documents have been filed by the assessee before the Assessing Officer. The Ld. AO vide para 4.B.1 has mentioned that the balance amount of goods lifted from customs has not been accounted for in books of accounts, thus 10% of the goods at Rs. 15086440/- (20776940 – 5690500) is estimated as profit/income of the assessee. The AO has not mentioned anything except that this purchase was not accounted for without any evidence at all. In spite of having all

I.T.A.No.2895/Del/2011/A.Y. 199-93 seized material and the documents of Customs Authorities the AO has not verified the same. Neither has given any adverse comment on the audited profit and loss account. Ld. CIT(A) in his order in para 13 has categorically mentioned that all above grounds are being discussed for the source of funds for lifting the goods from Customs and the appellant has already shown purchase in profit and loss account at Rs. 20260309/- In that view of the matter, the conclusion made by the AO that the said sales had not been reflected in the books of accounts of the assessee is without any basis and application of GP rate on the presumed sales outside the books of account leading to addition of Rs. 1508644/- has been rightly found to be unsustainable in the eye of law by the Ld. CIT(A). Hence, the same is hereby confirmed. This ground of appeal filed by the Revenue is found to be devoid of any merit and hence, dismissed.

7. The addition of Rs. 1852910/- made by the AO on account of specularity profit earned from sale of shares is the issue before us. The said speculation profit on forward transactions which were carried forward in these assessment years and completed in the AY 1993-94 without actual profit/loss was granted for. In fact the Ld. AO rejected the contention of appellant that these were factually forward transactions in shares of Reliance Industries Ltd., during the year under appeal, the same were carried forward and the broker M/s Pradeep Bhall & Co. has calculated

I.T.A.No.2895/Del/2011/A.Y. 199-93 the notional profit on these transactions. The AO only considered the date of bill which was of this year showing notional sale value at Rs. 1960000/- and 3650000/- and notional profit of Rs. 162910/- carried forward on 28.03.1992 and Rs. 1690000/- carried forward on 19.04.1992.

11. The deletion of addition of Rs. 4485420/- on account of closing stock has been challenged before us. The assessee had shown in its Profit & Loss Account sales to the amount of Rs. 44011886/- on which GP of Rs. 4908902/- has been shown. Information was obtained from the Sales Tax Authorities. It was seen that before the UPST, Authorities the sales were shown at Rs. 3913620/- and for CST at Rs. 23319204/- as against the sales of Rs. 44011886/- shown to the Department. The assessee was asked to reconcile and explain the discrepancy. The assessee along with its letter dated 20.02.95 have enclosed the sales shown to the Sales Tax

I.T.A.No.2895/Del/2011/A.Y. 199-93 Department and to the Income Tax Department.

“the assessee had shown an outstanding loan to Plaza Panchsheel properties at Rs. 4405455/- as on 31.03.92 whereas in the previous year it was Rs. 10405455/-. Assessee filed confirmation from Plaza Panchsheel Properties that the sum of Rs. 60 lacs had been returned to the assessee and the Panchsheel Properties in the earlier years but no interest had been shown in the copy of accounts of Plaza Panchsheel Properties for this year. Assessee further stated that the recovery of loan from the above party was doubtful and, therefore, interest has not been charged, it would be pertinent to note that M/s Plaza Panchsheel Properties is owned by the husband and father in law of assessee’s daughter as stated by Sh. S.P. Goyal during the course of search proceedings in his statement. No evidence regarding any disputed in respect of loan or interest has been filed. The interest income was being shown by the assessee in the earlier years.”

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14. The deletion of addition of Rs. 4991098/- made by the AO on account of GP rate at 20% has been challenged before us. The assessee declared sale in the profit and loss account at Rs. 4400886/-, whereas as per intimation from Sales Tax Department, it was sum of Rs. 3913620/- and CST of Rs. 23319204/- it was submitted by the assessee that figures intimated by the Sales Tax Department was the taxable sales, whereas in audited accounts the total sale included exempted one is also included.

Further that the sale declared at Rs. 44011886/- was duly verified and audited neither the AO was having any adverse information or material to reject but on the basis of the information for the Sales Tax Department regarding sales, which was much lessor the sales declared rejected the sales as per audited statements and estimated the sale at 4.50 crore and GP was calculated at 20%; but difference of actual GP to the tune of Rs. 4091098/- was added to the total income of the assessee by the Ld. AO.

While allowing the appeal preferred by the assessee the Ld. CIT(A)

I.T.A.No.2895/Del/2011/A.Y. 199-93 observed as follows: -

“41 I have considered the facts of the case and it is seen that the appellant had clearly explained the discrepancy of turnover shown in the sales tax return vis-à-vis the income tax return. The turnover as recorded in the books of accounts of the assessee at Rs. 44011886/- is much more than the turnover as per the sales tax return. The difference has been explained by the assessee on the ground that turnover in the sales tax return does not include the sales of exempt items of sales like agricultural implements, export sales. The Assessing Officer despite this logical explanation, proceeded to apply a GP rate of 20% on an estimated turnover of Rs. 4,50,00,000/- without bringing on record any sound reasoning for doing the same. There is no reason why the turnover at Rs. 4,40,11,886/- and GP rate as declared by the assessee should be rejected to estimate the turnover at Rs. 4,50,00,000/- and apply any other GP rate say 20%. The addition so made, therefore, deserves to be deleted.”

There was no reason to reject the actual sale of Rs. 44011886/- and GP of 11.15% as of against the Ld. CIT(A) which according to us is without any ambiguity so us to warrant interference and hence, this ground of appeal preferred by the Revenue is found to be devoid of any merit and thus,

I.T.A.No.2895/Del/2011/A.Y. 199-93 dismissed.

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No document was further found during the search to suggest that the assessee had received the interest amount outside the books of account as of the observation made by the Ld. CIT(A) while deleting such addition is according to us just and proper and we hereby confirm the same. The ground of appeal filed by the Revenue fails.

20. The addition of Rs. 1 lakh made on estimate basis is the subject matter before us. This is nothing but on the basis of the voucher containing payment of Visa charges by Vandana Goyal from whose residence the same has been seized. The Ld. CIT(A) while deleting such addition observed as follows: -

22. The deletion of addition of Rs. 6 lacs made on account of creditors has been challenged before us. The facts culled out form the AO’s order that out of Rs. 6984000/- as has been shown as outstanding creditors by the assessee. The assessee filed confirmation from all parties except those of M/s M.B. Enterprises Rs. 150000/- and M/s Anand International Rs. 450000/-. Hence, the same are added to the assessee’s total income Rs. 600000/-.

25. The fact culled out from the AO’s order such addition has been made on the fact of depositing amount of Rs. 3 lacs each to the bank account. The addition was made rejecting the cash flow based upon the documents including sales of agricultural euqipments at Rs. 813000/-. While deleting the addition the Ld. CIT(A) observed as follows: -

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27. The addition of Rs. 295000/- is a subject matter before us. The AO rejected the contention of the assessee that the said amount was deposited out of cash balance available with the assessee out of cash

I.T.A.No.2895/Del/2011/A.Y. 199-93 sales, whereas the appellant has shown total sale of Rs. 11935611/- of agricultural equipment during the year 1991-92 and, therefore, the observation made by the AO found to be erroneous as made by the Ld. CIT(A) is without any ambiguity and thus, the same is hereby confirmed.

The ground of appeal filed by Revenue fails.

28. The deletion of addition of Rs.13003279/- on account of interest at 18% of loans and advances has been challenged before us by the Revenue. The AO disallowed thee said sum of interest on outstanding loans and advances amounting to Rs. 7240435/- which was deleted by the Ld. CIT(A) following the order passed by the Ld. Tribunal in assessee’s own case in for AY 1991-92 the relevant portion where of is as follows: -

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30. The deletion of addition of Rs. 2826860/- has been challenged before us by the Revenue. The fact culled out from the assessment order is this that the assessee had shown debit of Rs. 2157795/- with one Sh. Pradeep

I.T.A.No.2895/Del/2011/A.Y. 199-93 Bhalla & Company and showed the credit balance of Rs. 3280655/-.

These differences of the said amount have been added to the total income of the assessee. Since, the same was not reconciled by the assessee as of the observation made by the Ld. AO. However, fact remains that during assessment the reconciliation was filed to explain the difference of balances. The AO did not consider the same and the facts that in addition of Rs. 1852910/-, the notional speculation profit on forward transactions was carried forward and Rs. 1000000/- was paid by account payee cheque from Bharat Tin Udyog, the concern of wife of Late Shri S.P. Goel. No gain accrued to the appellant. The gain/loss were duly accounted for on the basis of finality of transaction.

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Order pronounced in the open court on 17/08/2021.