HSB Home Solutions Ltd. Vs ACIT (ITAT Delhi)
Summary: The Delhi ITAT partly allowed the assessee’s appeal for AY 2012-13. The Tribunal first upheld the validity of reassessment proceedings initiated after four years, holding that the subsequent survey conducted on 30.11.2018 revealed information regarding allegedly bogus transactions which had not been examined in the original assessment. The original assessment order itself recorded that the assessee had no business activity, despite substantial purchases, sales and disclosed profit. The Tribunal therefore found that the reopening was based on subsequent information and was not merely a change of opinion.
On merits, however, the Tribunal held that the Assessing Officer could not simply treat the entire purchases of Rs.5,81,57,000/- as undisclosed income when the corresponding sales of Rs.5,94,91,966/- had also been treated as bogus. The Tribunal rejected the assessee’s contention that banking-channel transactions alone established genuineness, since physical movement of goods and existence of the parties had not been established. Considering the totality of circumstances, it directed the AO to apply a 5% gross profit rate on the turnover of Rs.5,94,91,966/-, while giving credit for the profit already disclosed by the assessee.
List of Cases Discussed / Relied Upon
- New Delhi Television Limited v. DCIT, 424 ITR 607 (SC)
- Phool Chand Bajrang Lal v. ITO, 203 ITR 456 (SC)
- ITO v. Lakhmani Mewal Das, 103 ITR 437 (SC)
- High Gain Finvest (P) Ltd., 304 ITR 325 (Delhi)
- Raymond Woollen Mills Ltd. v. ITO, 236 ITR 34 (SC)
- Sanand Properties P. Ltd. v. Jt. Commissioner of Income Tax, 488 ITR 337 (SC)
- Prathana Gems, 186 taxmann.com 673 (Guj.); SLP dismissed by the Supreme Court
FULL TEXT OF THE ORDER OF ITAT DELHI
