ACIT, NEW DELHI vs. SH. AMRIT PAL SINGH, NEW DELHI

Brief facts of the case are that the assessee is engaged in the business of outdoor advertising under the name and style of ‘Adwel Advertising Services’. The assessee had originally filed return declaring an income at Rs. 36,15,560/- for the AY 2003-04. The return was duly accompanied by Tax Audit Report u/s 44AB and audited Balance Sheet and Profit and Loss A/c and was processed u/s 143(1). Search and seizure operations were conducted on 27.08.2003 in respect of assessee’s premises and related persons/concerns. The assessment was completed u/s 143(3)/153A by the Asstt. Commissioner of Income Tax, Central Circle 21, New Delhi, at Rs. 11,08,85,550/-, which was finally reduced to Rs. 64,86,280/- vide order dated 9.22.2009 u/s 254/153A. Similarly, for the AY 2004-05, the assessment was completed on 30.03.2006 at Rs. 1,97,76,120/- against returned income of Rs. 18,07,650/-. It was reduced to Rs. 18,32,875/- u/s 254/153 vide order dated 15.4.2010. However, while proposing reopening of assessment, Assessing Officer issued Notice u/s 148 of the Act on 30.03.2009 and completed the assessment at an income of Rs. 1,84,25,630/- by making an addition of Rs. 1,19,39,350/- for the AY 2003-04 and by making an addition of Rs. 29,82,200/- for the AY 2004-05. Appeals preferred by the assessee were allowed deleting the additions on the ground that the assessee was following the cash system of accounting and receipts from M/s Ogilvy & Mather have been duly accounted for as income in AY 2004-05.

Challenging the impugned orders the Revenue is in appeal before us in these two appeals stating that the Ld. CIT (A) has erred in deleting the addition of Rs. 1,19,39,350/- for the AY 2003- 04 and Rs. 29,82,360/- for the AY 2004-05 added by the AO on account of outstanding bills.

It is the argument of the Ld. DR that the AO made the addition in respect of both the years on the ground that when asked to reconcile the payments with the copy of account of M/s Ogilvy & Mather the assessee failed to do the same, but without looking into this aspect the Ld. CIT (A) book the things for granted and opined that the additions are to be deleted. He further submitted that whatever the material the CIT (A) relied upon had to be furnished to the AO for his defense of the assessment order but without doing so Ld. CIT (A) straightaway reached the conclusion as such they are liable to be reversed and the assessment order has to be restored. Per contra, it is the argument of the Ld. AR that the assessment order passed u/s 147 itself at page no. 2 clearly shows that the alleged amounts were shown as outstanding amounts and since there is no dispute that the assessee has been following the cash system of accounting, there is no basis for the AO to reopen the assessment and to make the additions. He further submitted that no new material was available to the AO and the assessment order u/s 147 itself reads that AO reopened the assessment solely basing on the material already available with him. He prayed to dismiss the appeals.

At the outset, it must be stated that absolutely there is no dispute that the assessee has been following the cash system of accounting, according to which the amount can be charged to tax only on receipt basis. Further it is not the case of the Revenue that during the course of search any material to show that the assessee had actually received any amount relatable to the outstanding bills. AO tabulated the amount to be added at page no. 2 of the order dated 28.12.2010 passed u/s 147 of the Act.

In the result, the appeals are dismissed.