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Income Tax Appellate Tribunal, DELHI BENCH: ‘B’ NEW DELHI
Before: SMT DIVA SINGH & SH.ANADI NATH MISHRA
ORDER PER DIVA SINGH, J.M. : The present appeal has been filed by the assessee assailing the correctness of the order dated 12.12.2013 of the CIT(A) (Central), Gurgaon pertaining to 2007-08 AY wherein the penalty imposed by the AO u/s 271(1)(c) has been upheld.
2. The Ld.AR submitted that the penalty proceedings in the facts of the present case become infructuous. Inviting attention to the consolidated order dated 12.03.2015 in to 1991 & 2053/Del/2011 alongwith ITA Nos.2273 to 2275 & 2052/Del/2011 pertaining to 2001-02 to 2006-07 & 2007-08 alongwith 2004-05 to 2007-08 AYs respectively in the case of M/s. D.S.Doors Pvt.Ltd. vs ACIT & M/s.D.S.Woodtech Pvt.Ltd. vs ACIT, it was submitted that the issues pertaining to the assessee’s appeal in the quantum proceedings before the ITAT were addressed by the Co-ordinate Bench at pages 9-18.
The issues in the quantum proceedings, it was submitted have been brought out by the Co- ordinate Bench in para 1 page 9 of the consolidated order passed in the assessee’s and its group companies as under:-
“In ground nos. I and 2, the assessee has questioned validity of the assessment framed under Section 153A read with section 143(3). In ground no. 5 the validity of addition of Rs.24,00,000/- as undisclosed income has been questioned. In ground no. 4, the addition of Rs. 72,00,000/- made on account of undisclosed stock of the assessee has been questioned. In ground no. 5, the I.T.A .No.-38/Del/2014 D.S.Doors P.Ltd. vs ACIT Page 2 of 4 action of the A.O. in bringing to tax the assessee's share out of the alleged surrender of Rs. 1.6 crores has been questioned. Ground nos. 6 and 7 are again general in nature supporting the invalidity of additions questioned in ground nos. 3 to 5 hereinabove. In ground nos. 8 and 9, the validity of addition of Rs. 27,76,029/- on account of undisclosed investment in construction under Section 69B of the Act based on D.V.O. report has been questioned. In ground no. 10, the action of the authorities below in not granting the benefit of telescoping as per law has been questioned. In ground no.11, the total addition of Rs.1,23,76,029/- on different heads discussed hereinabove has been questioned. The issue raised in ground No12 regarding the validity of charging of interest under Sections 234A, 234B and 234C of the Act is consequential in nature.
Heard and considered the arguments advanced by the parties in view of the orders of the authorities below, material available on record and the decisions relied upon.” 2.1 The ITAT in para 8 it was submitted rejected the plea of the assessee that there was no incriminating material found addressed in Ground No.1 & 2 and the remaining issues addressed vide Ground Nos.3 to 7 it was submitted were restored to the AO with the following observations:-
“Having gone through the orders of the authorities below on the issue raised in ground nos. 1 to 7, we find that during the course of search in the premises of the assessee several documents including prima facie incriminating material were found and seized. Thus, it cannot be said that there was no incriminating material found during the course of search to concur with the contention of the assessee that the assessment framed under Section 153 A of the Act was not valid. The ground Nos. 1 and 2 are thus rejected. We, however, find substance in the contention of the Learned AR that an addition cannot be made solely on the basis of surrendered amount dehors evidence in corroboration and ignoring subsequent retraction thereto by the assessee with valid reason. Here the case before us is that when surrendered income was objected by the assessee with sufficient reason then the same should have been duly considered by the Assessing Officer and learned CIT(Appeals) while making and upholding the additions. The assessee vide several letters including letter dated 17.10.2008, 22.10.2006, 13.11.2008, 05.12.2008, 24.12.2008, 26.12.2008, wrote to the Assessing Officer and with written submissions dated 28.01.2010, 24.01.2011 before the Learned CIT(Appeals) tried to point out many discrepancies in the stock taking arid working out the undisclosed sales and profit by the Assessing Officer but the same have been ignored without assigning any reason. Copies of these letters have been made available at page Nos. 04 to 22, 24 to 44 of the paper book. In the letter dated 17.10.2008 filed before the Assessing Officer, the assessee has submitted that all purchases, production, sale, expenditure, stock etc. have been duly accounted for in the return filed. In the letter dated 13.11.2008 to the Assessing Officer, the assessee had requested for computation indicating how the value of stock has been arrived at such a huge figure so that proper reconciliation can be furnished and submitted reply on unaccounted sales also. In the letter dated 05.12.2008 to the Assessing Officer, the assessee had submitted documents wise and year-wise details of undisclosed investment and expenditure. In letter dated 14.12.2008 to the Assessing Officer the assessee had raised objections with regard to the valuation of stock and requested that on the basis of the said objections, valuation of stock shall get reduced to Rs.3.8 crores approximately. In the letter dated 26.12.2008 to the I.T.A .No.-38/Del/2014 D.S.Doors P.Ltd. vs ACIT
Page 3 of 4 Assessing Officer the assessee pointed out that the area where the stock was lying Cannot be any means and ways, store such huge piles of stock as alleged. In this letter, the assessee also submitted that profit earned on alleged unaccounted purchases , sales, production was utilized for purchase of stock found at the time search. The Assessing Officer has reproduced the contents of the some of the above stated letter and has rejected the same mainly on the basis that no evidence was filed in support. For instance, some letters are dated 24.12.2008 and 26.12.2008 and the assessment order has been passed on 30.12.2008 (wrongly typed as 30.12.2007). The Learned CIT(Appeals) has also not dealt with the contents of the above letters. We thus to meet the end of justice set aside the issues raised in ground Nos. 3 to 7 to the file of the Assessing Officer to decide these afresh after verifying the contents of these letters after affording adequate opportunity of being heard to the assessee. The ground Nos. 3 to 7 are thus allowed for statistical purposes.” 2.2 Qua the issues agitated in Ground Nos.8 & 9, it was submitted that the assessee succeeded before the ITAT which fact is evident from the following extract of the decision relied upon:-
“On an identical issue in the appeals for the assessment years 2001--02 to 2006-07 hereinabove, we after discussing it in detail has come to the conclusion that the action of the A.O. in making reference to the D.V.O. for determination of the value of the property without rejecting the books of account is not justified and no addition can be made on the basis of such valuation reported by the DVO. This view is well supported by the decision of Hon’ble Supreme Court in the case of Sargam Cinema vs CIT, (2010) 328 ITR 513 (SC). Respectfully following the same we decide the ground nos.8 and 9 in favour of the assessee with direction to the A.O to delete the addition of Rs.27,76,029/- made in this regard.”
2.3 The issues addressed by Ground No.10 in the quantum proceedings, it was submitted were also remanded by the ITAT to the AO vide para 15 holding as under :-
“We find that an identical issue rasied before the learned CIT(A) vide ground no.4(h) has remained to be adjudicated upon by the learned CIT(A), we thus, in the interest of justice, remand the matter to the file of learned A.O. to address the issue after affording opportunity of being heard to the assessee.”
2.4 Accordingly, in view of the afore-mentioned peculiar facts and circumstances, it was his submission that the penalty proceedings based on the additions which were sustained by the CIT(A) becomes infructuous as by the aforesaid order of the ITAT either they have been remanded or deleted as on date. The Ld. Sr. DR considering the order of the ITAT and the material available on record relied upon the impugned order.
We have heard the rival submissions and perused the material available on record.
Considering the aforesaid order passed by the Co-ordinate Bench dated 12.03.2015
I.T.A .No.-38/Del/2014 D.S.Doors P.Ltd. vs ACIT
Page 4 of 4 wherein the additions which have been the basis for initiating, levying and upholding the penalty, we find that the prayer of the assessee has to be accepted. Once the additions made in the assessment order are either deleted or are in flux thereby substantially modified as some of the issues are restored to the Assessing Officer. Accordingly, we find that in the circumstances, the penalty order sustained by the CIT(A) has to be set aside holding it as infructuous. The applicability of section 271(1)(c) would be an issue for the Assessing Officer to decide in the fresh round by him since as far as the present proceedings are concerned they cannot be upheld. Accordingly, in view of the above, the penalty proceedings in the present case becomes infructuous.
In the result, the appeal of the assessee is allowed for statistical purposes.. The order is pronounced in the open court on 16th of December, 2016.