Modern Radio,, v. ITO, Ward-31(3),,

ITA 2529/DEL/2003 | 1997-1998
Pronouncement Date: 29-01-2010 | Result: Allowed

Appeal Details

RSA Number 252920114 RSA 2003
Bench Delhi
Appeal Number ITA 2529/DEL/2003
Duration Of Justice 6 year(s) 8 month(s) 15 day(s)
Appellant Modern Radio,,
Respondent ITO, Ward-31(3),,
Appeal Type Income Tax Appeal
Pronouncement Date 29-01-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted E
Tribunal Order Date 29-01-2010
Date Of Final Hearing 25-10-2010
Next Hearing Date 25-10-2010
Assessment Year 1997-1998
Appeal Filed On 14-05-2003
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E: NEW DELHI BEFORE SHRI C.L. SETHI JUDICIAL MEMBER & SHRI B.P. JAIN ACCOUNTANT MEMBER ITA NO. 2529/DEL/2003 ASSESSMENT YEAR : 1997-98 MODERN RADIO HOUSE 24/32 OLD RAJENDER NAGAR NEW DELHI-110060. VS. INCOME TAX OFFICER WARD 11(6) NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R. SANTHAN AM ADV. RESPONDENT BY : SHRI R.K. RAINA SR. D.R. O R D E R PER: C.L. SETHI J.M. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER DATED 10.03.2003 PASSED BY THE LD. CIT(A) IN THE MATTER OF AN ASSESSMENT MADE BY T HE A.O. U/S 143(3)/250 OF THE INCOME TAX ACT 1961 (THE ACT) FOR THE ASSESSMENT YEAR 1997-98. 2. IN THIS APPEAL THE FOLLOWING ISSUES HAVE BEEN R AISED BY THE ASSESSEE:- (I) ADHOC ADDITION OF RS. 50 000/- ON ACCOUNT OF JO B WORK MADE BY THE A.O. AND FURTHER CONFIRMED BY THE LD. CIT(A). (II) THE ADDITION OF RS. 3 90 000/- ON ACCOUNT OF M ONEY CREDITED IN THE PARTNERS ACCOUNT. 3. WE HAVE HEARD BOTH THE PARTIES AND HAVE CAREFULL Y GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. ITA NO. 2529/DEL/2003 2 OF 6 4. IN THIS CASE ORIGINAL ASSESSMENT WAS MADE BY TH E A.O. U/S 143(3) ON 24.03.2000 AGAINST WHICH THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) VIDE HIS ORDER DATED 25.10.2000 REST ORED THE MATTER WITH REGARD TO THE ADDITION OF RS. 3 90 000/- BEING CREDIT IN THE NAME OF SHRI HARESH THAKUR TO THE FILE OF THE A.O. FOR HIS FRESH ADJUDICATION. T HE TOTAL ADDITION MADE BY THE A.O. IN THE ORIGINAL ASSESSMENT WAS RS. 4 40 000/- OUT OF WHICH THE ADDITION OF RS. 50 000/- WAS CONFIRMED BY THE LD. CIT(A) AND TH E BALANCE ADDITION OF RS. 3 90 000/- WAS RESTORED BACK TO THE FILE OF THE A.O . FOR HIS FRESH CONSIDERATION. THE LD. CIT(A)S ORDER IN RESTORING THE ADDITION OF RS. 3 90 000/- TO THE FILE OF THE A.O. FOR HIS FRESH CONSIDERATION HAS SINCE NOW BEEN UPHELD BY US VIDE ORDER OF EVEN DATE IN ITA NO. 4643/DEL/2000. THEREFORE THE A.O. HAD EVERY JURISDICTION TO RECONSIDER THIS ISSUE OF ADDITION OF RS. 3 90 00 0/- AFRESH. 5. IN THE COURSE OF THIS FRESH ASSESSMENT PROCEEDIN GS COMPLETED U/S 143(3)/250 OF THE ACT THE A.O. SUSTAINED THIS ADDI TION OF RS. 3 90 000/- BY SAYING THAT ASSESSEES EXPLANATION FOR THE AMOUNT O F RS. 2 00 000/- AND RS. 1 90 000/- HAS BEEN DEPOSITED IN THE BANK OUT OF TH E MONEY AVAILABLE WITH HIM FROM UNUTILIZED FOREIGN EXCHANGE WAS NOT ESTABLISHE D AND PROVED. 6. ON AN APPEAL THE LD. CIT(A) AGREED WITH THE A.O . BY SAYING THAT THE ASSESSEE HAS NOT BEEN ABLE TO PROVE AND ESTABLISH T HE COGENT AND REAL NEXUS BETWEEN THE MONEY DEPOSITED BY SHRI HARESH THAKUR A ND THE AMOUNT OF FOREIGN EXCHANGE AVAILABLE WITH HIM. ITA NO. 2529/DEL/2003 3 OF 6 7. HENCE THE ASSESSEE IS IN APPEAL BEFORE US. 8. AFTER HEARING BOTH THE PARTIES AND CONSIDERING T HE MATERIAL ON RECORD WE FIND THAT THE ASSESSEES EXPLANATION THAT SHRI HARE SH THAKUR HAS DEPOSITED THE AMOUNT OF RS. 3 90 000/- OUT OF HIS FOREIGN EXCHANG E MONEY AVAILABLE WITH HIM IS TO BE EXAMINED AFRESH AFTER CONSIDERING THE VARI OUS EVIDENCES PRODUCED BY THE ASSESSEE BEFORE THE A.O. AS WELL AS BEFORE THE CIT( A). BOTH THE AUTHORITIES HAVE NOT BEEN ABLE TO POINT OUT AS TO WHY THEY HAVE TAKE N A VIEW THAT ASSESSEE HAS NOT BEEN ABLE TO ESTABLISH A COGENT AND REAL NEXUS BETW EEN THE AMOUNT DEPOSITED BY SHRI HARESH THAKUR AND THE AMOUNT OF FOREIGN EXCHAN GE IF ANY AVAILABLE WITH HIM. WE THEREFORE RESTORE THIS MATTER BACK TO TH E FILE OF THE LD. CIT(A) FOR HIS FRESH ADJUDICATION AFTER ALLOWING THE ASSESSEE TO P RODUCE AND FURNISH ALL SUCH EVIDENCES AND MATERIALS IN SUPPORT OF THE ASSESSEE S CASE OR IN SUPPORT OF SOURCE OF MONEY AMOUNTING TO RS. 3 90 000/- DEPOSITED BY S HRI HARESH THAKUR WITH THE FIRM. THE LD. CIT(A) SHALL PROVIDE ADEQUATE OPPORT UNITY OF BEING HEARD TO THE ASSESSEE AS WELL AS TO THE A.O. THE LD. CIT(A) SHA LL ALSO GIVE AN OPPORTUNITY TO THE A.O. TO EXAMINE AND VERIFY ANY SUCH EVIDENCES O R MATERIALS THAT MAY BE PRODUCED BY THE ASSESSEE BEFORE THE LD. CIT(A) BUT WERE NOT PRODUCED BEFORE THE A.O. SO AS TO ENABLE THE A.O. TO HAVE HIS SAY AFTER EXAMINING AND VERIFYING ALL THE EVIDENCES THAT MAY BE PRODUCED BY THE ASSESSEE BEFORE THE LD. CIT(A). WE ORDER ACCORDINGLY. ITA NO. 2529/DEL/2003 4 OF 6 9. NEXT ISSUE INVOLVED IN THIS APPEAL IS WITH REGAR D TO THE ADHOC ADDITION OF RS. 50 000/- MADE BY THE A.O. ON ACCOUNT OF JOB WOR K. 10. THIS ADDITION HAS BEEN MADE BY THE A.O. IN THE COURSE OF THE FRESH ASSESSMENT PROCEEDINGS IN THE LIGHT OF THE DIRECTIO N GIVEN BY THE LD. CIT(A) IN HIS FIRST ORDER DATED 25.10.2000 DIRECTING THE A.O. TO EXAMINE THE ASPECT ABOUT THE INCOME FROM JOB WORK AND THE TRADING RESULT SHOWN B Y THE ASSESSEE. THE LD. CIT(A)S DIRECTION TO ENQUIRE THIS ASPECT OF THE MA TTER HAS BEEN UPHELD BY US VIDE ORDER OF EVEN DATE IN ITA NO. 4643/DEL/2000. THERE FORE THE A.O. HAD JURISDICTION TO LOOK INTO THIS ISSUE. AFTER CONSIDE RING THE FACTS OF THE CASE THE A.O. MADE A LUMP SUM ADDITION OF RS. 50 000/- BY OB SERVING AS UNDER:- THE LD. CIT(A) HAS SET ASIDE THE INCOME SHOWN BY T HE ASSESSEE FROM JOB WORK AND TRADING OF GOODS IN WHICH THE ASS ESSEE FIRM DEALS. THE A.R. OF THE ASSESSEE FIRM WAS REQUIRED TO EXPLA IN AS TO WHY INCOME SHOULD NOT BE ENHANCED FOR SHOWING IN CORRECT G.P. RATE AND PRODUCE DOCUMENTARY EVIDENCE IN SUPPORT OF YOUR CONTENTION. IN RESPONSE TO THIS THE A.R. OF THE ASSESSEE FIRM HAS SUBMITTED COMPARA TIVE FIGURE OF G.P. RATE FOR THE ASSESSMENT YEAR 1996-97 1997-98 AND 1 998-99 WHICH HAS ALREADY FILED BEFORE THE LD. CIT(A). HE FURTHER ST ATED IN HIS LETTER DATED 28.02.2002 THAT IN THE EXECUTION OF JOBWORK THE AR T OF MATERIALS LIKE WERE CONDUCT PIPES BREAKES ETC ARE BORNE BY THE AS SESSEE FIRM AND ARE INCLUDED IN THE PURCHASES. DURING THE YEAR UNDER ASSESSMENT ASSESSEE HAS SHOWN SALES OF RS. 19 12 399/- AS AGAINST SALE OF RS. 31 24 605/- SHOW N IN THE IMMEDIATELY PROCEEDING YEAR 1996-97. THE A.R. OF THE ASSESSEE W AS ASKED VIDE LETTER DATED 06.02.2002 TO 3 EXPLAIN THE REASONS FOR DECLI NE IN SALES COMPARED TO LAST YEAR AND ALSO DETAILS OF JOB WORK UNDERTAKE N ETC. IN REPLY TO THIS THE A.R. OF THE ASSESSEE HAS STATED IN HIS LETTERS DATED THERE IS INCREASE IN G.P. RATE DUE TO EXECUTION OF MORE JOB WORK. THE M ATERIAL ISSUED IN THE JOB WORK LIKE WERE CONDUIT PIPE BRAKES ETC HAVE A LREADY MERGED WITH THE PURCHASE OF EXACT G.P. ON PURCHASE AND SALES A ND SEPARATE G.P. SHOWN ON JOB WORK AT 5.75% CANNOT BE RELIED UPON. BESIDES ASSESSEE HAS NOT OFFERED SATISFACTORY EXPLANATION REGARDING THE REASON FOR STEEP FALL IN ITA NO. 2529/DEL/2003 5 OF 6 SALES FROM RS. 31 24 605/- TO RS. 19 12 399/-. ON CLOSE EXAMINATION OF THE PURCHASE AND SALES DISCLOSED THAT THE ASSESSEE S G.P. RATE VARIOUS BETWEEN 12% TO 35% IN CERTAIN ITEM LIKE EMPLY SPOOL APPLICATION ETC. THE PURCHASES/ SALES HAVE NOT BEEN FULLY VOUCHES. THE ASSESSEE WAS ASKED TO FILE SEPARATE DETAILS OF AMOUNT OF COST OF MATERIAL PURCHASED AND JOB WORK AS STATE IN THE LETTER DATED 06.02.2002 BU T THE ASSESSEE FAILED TO PRODUCE VERIFICATION. KEEPING ON VIEW THE FACTS STA TED ABOVE AN ADDITION OF RS. 50 000/- IS MADE TO THE TRADING RESULT TO CO VERAGE THE LEAKAGE TO THE TRADING ACCOUNT. 11. ON AN APPEAL THE LD. CIT(A) CONFIRMED THE A.O. S ORDER BY SAYING THAT IN THE LIGHT OF DEFECTS IN THE ASSESSEES TRADING RESU LTS THE ESTIMATED ADDITION OF RS. 50 000/- MADE BY THE A.O. WAS JUSTIFIED. 12. HENCE THE ASSESSEE IS IN APPEAL BEFORE US AGAI NST THIS ADDITION OF RS. 50 000/- MADE BY THE A.O. 13. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY PE RUSED THE ORDERS OF THE AUTHORITIES BELOW. 14. FROM THE A.O.S ORDER IT IS CLEAR THAT THE A.O . HAS MADE A LUMP SUM ADDITION OF RS. 50 000/-. THE A.O. HAS NOT GIVEN AN Y BASIS AS TO WHY HE HAS CHOSEN TO MAKE THE ADDITION OF RS. 50 000/- ONLY TO COVER THE LEAKAGE OF ANY PROFIT IN THE TRADING ACCOUNT. MERE BECAUSE THE SA LES HAVE BEEN REDUCED CANNOT BE A GROUND TO MADE THE ESTIMATED ADDITION. THE A. O. HAS NOT BROUGHT ANY POSITIVE OR ADEQUATE MATERIAL ON RECORD TO SHOW AND ESTABLISH THAT THE ASSESSEE HAS EITHER UNDERSTATED THE SALES OR SUPPRESSED THE PROFIT OR HAS INFLATED THE EXPENSES. THIS SORT OF ADHOC ADDITION PURELY BASED ON A.O.S ESTIMATION AND ITA NO. 2529/DEL/2003 6 OF 6 SURMISES WHICH IN OUR CONSIDERED OPINION IS NOT JUSTIFIED. WE THEREFORE DELETE THE ADDITION. 15. IN THE RESULT THIS APPEAL FILED BY THE ASSESSE E IS ALLOWED IN THE MANNER AS INDICATED ABOVE. 16. THIS DECISION IS PRONOUNCED IN THE OPEN COURT O N 29 TH JANUARY 2010. SD/- SD/- (B.P. JAIN) ACCOUNTANT MEMBER (C.L. SETHI) JUDICIAL MEMBER DATED: 29 TH JANUARY 2010. MAMTA COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT NEW DELHI. BY ORDER DEPUTY REGISTRAR