Commissioner of Income-tax v. Jeet Construction Company
[Citation -2019-LL-1016-79]

Citation 2019-LL-1016-79
Appellant Name Commissioner of Income-tax
Respondent Name Jeet Construction Company
Court HIGH COURT OF ALLAHABAD
Relevant Act Income-tax
Date of Order 16/10/2019
Assessment Year 1997-98, 1998-99, 1999-00, 2000-01, 2001-02, 2002-03, 2003-04
Judgment View Judgment
Keyword Tags suppression of receipts • unexplained expenditure • estimation of income • search and seizure • undisclosed income • levy of surcharge • commission paid • seized material • onus to prove • contract work • penalty
Bot Summary: These two connected appeals, under Section 260-A of the Income Tax Act arise out of judgment and order dated 31.10.2011 passed by Income Tax Appellate Tribunal, Delhi Bench D New Delhi in ITA No. 26/Del/2011 and order dated 19.10.2012 passed in ITA No. 39/Del/2012 for the block assessment year 1997-98 to 2003-04. Whether Ld. Income Tax Tribunal has erred in law in deleting the addition made by the AO of Rs.6,38,500/- u/S 69 C of the IT Act 1961 ignoring that onus to prove legality and date of such expenditure lied upon assessee solely for which opportunities were given by the AO. Whether onus to prove the date of such expenditure was ever lying upon the department. On 11.11.2008, the ITAT dismissed the appeal of the Revenue for block period 1997-98 to 2003-04 in respect of all additions except estimation of income of Rs.51,44,968/-, while the ITAT remanded back the matter to the Assessing Officer for re-examination and re-deciding the matter in the light of observation so made as regards the assessee's appeal. The Tribunal on 31.10.2011 allowed the appeal of the assessee while dismissed the appeal of the Revenue on the ground that where the income had already been assessed or return of income has been filed, that income cannot be taken as undisclosed income. Further, the Tribunal had recorded a finding that merely because ITAT remanded the matter to Assessing Officer, the total of all the entries whether recorded in regular books of accounts or without any date would constitute income of the assessee, that to undisclosed income. The Tribunal had remanded the matter with a direction to complete assessment under Section 158 BD based on seized material, but the Assessing Officer determined the taxable income of Rs.4,82,66,276/- as against addition of Rs.51,44,968/- has put the assessee in more adverse situation which is not permitted in law, and the addition cannot be made under Section 158 BD of the Act merely on presumption that assessee had earned undisclosed income and had incurred expenses outside the books of accounts. The Tribunal had recorded a categorical finding that addition cannot be made merely on presumption that assessee had earned undisclosed income and incurred expenses outside books of account, which need no interference being finding of fact, the appeal lacks merit and is hereby dismissed.


[1] Court No. - 35 Case :- INCOME TAX APPEAL No. - 604 of 2012 Appellant :- Commissioner Of Income Tax Respondent :- M/S Jeet Construction Company Counsel for Appellant :- Manu Ghildyal,S.S.C. I.T. Counsel for Respondent :- R.R. Agrawal,Kartikeya Saran,Suyash Agarwal with Case :- INCOME TAX APPEAL No. - 81 of 2013 Appellant :- Commissioner Of Income Tax Respondent :- M/S Jeet Construction Co. Counsel for Appellant :- S.S.C. I.T.,Manu Ghildyal Counsel for Respondent :- Kartikeya Saran Hon'ble Bharati Sapru,J. Hon'ble Rohit Ranjan Agarwal,J. (Per Hon'ble Rohit Ranjan Agarwal,J.) 1. These two connected appeals, under Section 260-A of Income Tax Act (hereinafter called as 'Act') arise out of judgment and order dated 31.10.2011 passed by Income Tax Appellate Tribunal, Delhi Bench D New Delhi (hereinafter called as 'ITAT') in ITA No. 26/Del/2011 and order dated 19.10.2012 passed in ITA No. 39/Del/2012 for block assessment year 1997-98 to 2003-04. 2. Income Tax Appeal No. 604 of 2012 was admitted on 22.05.2012 on substantial question of law nos. 1 and 2, and on 11.02.2019 additional substantial question of law nos. 4 and 5 were added, which are hereasunder: (1) Whether Ld. Income Tax Appellate Tribunal was correcting in law in deleting Addition of Rs.3,82,66,276/- and Rs.1,00,00,000/- by holding that additions in fresh assessment cannot exceed [2] additions made in set aside assessment ignoring that assessment was completed according to direction of Ld. ITAT itself to frame assessment on basis of seized material and documents u/S 158BB(1) of IT Act, 1961. Whether such findings of ITAT are according to provisions of Income Tax Act, 1961. (2) Whether Ld. Income Tax Tribunal has erred in law in deleting addition made by AO of Rs.6,38,500/- u/S 69 C of IT Act 1961 ignoring that onus to prove legality and date of such expenditure lied upon assessee solely for which opportunities were given by AO. Whether onus to prove date of such expenditure was ever lying upon department. (4) Whether ITAT is legally justified in reversing concurrent finding of fact of authorities below without appreciating material on record? (5) Whether ITAT is legally justified in reversing concurrent findings of fact of authorities below in absence of fresh material placed before it? 3. Income Tax Appeal No. 81 of 2003 was admitted on 15.01.2014 on substantial question of law nos. 1 and 2, which are hereasunder:- (1) Whether on facts and circumstances of case, Ld. ITAT, New Delhi was justified in law in deleting penalty imposed by A.O. for Rs.3,05,58,009/- u/s 158 BFA (2) of Income Tax Act, 1961 ignoring that matter related to relevant additions made during assessment for same block A.Ys. 1997 to 2003-04 was subjudice before Hon'ble High Court, Allahabad which has also been admitted by Hon'ble High Court Allahabad vide order dated 22.05.2012 in Appeal No. 604 of 2012. (2) Whether ITAT has erred in law in deleting penalty imposed under Section 158 BFA (2) when assessee did not fulfill any of conditions prescribed in Section. 4. Both appeals are being heard together and decided by common order. 5. brief facts of case are, that respondent-assessee being partnership firm was engaged in business of civil [3] construction. search and seizure was conducted under Section 132 of Income Tax Act on 23.12.2002, in residential premises of working partner of firm, Baljeet Singh Bakshi, Arvind Puri and Baldev Singh Bakshi. Search was also carried on business premises of firm and another shared business premises situated at 187-A/ Abu Lane, Meerut. During course of search, several incriminating materials, along with some books of accounts pertaining to firm was seized. As seized material needed verification, Assessing Officer issued notice on 16.09.2004 under Section 158 BD of Act on assessee, which was served on 20.09.2004. Assessing Officer found that assessee could not produce books of accounts and vouchers and thus, he reached to conclusion that expenses debited by assessee in trading and profit and loss account for various years of block period could not be verified, thus, books of accounts were rejected. Assessing Officer applied rate of 8% in order to ascertain income for block period and estimated same at Rs.51,44,968/-. This, however, was done by Assessing Officer without giving credit to income already returned by assessee. 6. Against assessment order appeal was filed before CIT (Appeals), who on 13.08.2007 deleted addition of Rs.51,44,968/- on ground that provisions of Section 44 AD were not applicable to facts of case. However, one addition in respect of illegal payments of commission aggregating to Rs.5,88,500/- in addition to levy of surcharge, credit of pre-paid taxes etc. was confirmed. [4] 7. Against aforesaid order, assessee as well as Revenue preferred appeals before ITAT against confirmation of addition of Rs.5,88,500/- as well as on deletion of addition made by AO. 8. On 11.11.2008, ITAT dismissed appeal of Revenue for block period 1997-98 to 2003-04 in respect of all additions except estimation of income of Rs.51,44,968/-, while ITAT remanded back matter to Assessing Officer for re-examination and re-deciding matter in light of observation so made as regards assessee's appeal. ITAT remanded matter to AO with direction to compute income under Section 158 BD (1) and decide issue of unexplained expenditure of Rs.5,88,500/- with specific direction. 9. Assessing Officer in remand proceeding completed assessment on 31.12.2009 by making addition on account of unexplained expenditure Rs.3,82,66,276/- suppression of receipts and inflation of expenses Rs.1,00,00,000/- and illegal payments of Rs.6,38,500/-. Thus, assessing authority added Rs.4,89,476/- on account of undisclosed income while allowing credit for amount declared in block return at Rs.4,00,000/-. 10. Aggrieved by said order appeal was preferred before CIT (Appeals) by assessee, CIT (Appeals) on 16.03.2011 confirmed action of AO in initiating proceedings under Section 158 BD of Act and completed assessment at income of Rs.4,85,04,776/-. Further, CIT(Appeals) deleted addition of Rs.6,38,500/- which was [5] commission paid by assessee. 11. Against said order, two appeals were filed before ITAT, one by assessee, ITA No. 26 (Del) of 2011 and other ITA No. 28 (Del) of 2011 by Department. Tribunal on 31.10.2011 allowed appeal of assessee while dismissed appeal of Revenue on ground that where income had already been assessed or return of income has been filed, that income cannot be taken as undisclosed income. Tribunal also recorded categorical finding that Assessing Officer instead of working out undisclosed income, as per provisions of Section 158 BD had totalled up amount mentioned in various annexures, which according to assessee are part of contract work done by him. No evidence was found to suggest that assessee had been indulging in construction business outside books of account. Further, Tribunal had recorded finding that merely because ITAT remanded matter to Assessing Officer, total of all entries whether recorded in regular books of accounts or without any date would constitute income of assessee, that to undisclosed income. Tribunal had remanded matter with direction to complete assessment under Section 158 BD based on seized material, but Assessing Officer determined taxable income of Rs.4,82,66,276/- as against addition of Rs.51,44,968/- has put assessee in more adverse situation which is not permitted in law, and addition cannot be made under Section 158 BD of Act merely on presumption that assessee had earned undisclosed income and had incurred expenses outside books of accounts. [6] 12. We have heard learned counsel for parties and perused material on record. 13. We find that Tribunal has recorded finding in regard to additions made by Assessing Officer which was confirmed by CIT (Appeals), which was based only on mere assumption and not on any material recovered during search and seizure. Tribunal had recorded categorical finding that addition cannot be made merely on presumption that assessee had earned undisclosed income and incurred expenses outside books of account, which need no interference being finding of fact, appeal lacks merit and is hereby dismissed. 14. question of law is, therefore, answered in favour of assesseee and against Revenue. Order Date :- 16.10.2019 V.S.Singh Commissioner of Income-tax v. Jeet Construction Company
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