VSR Enterprises Vs ITO (ITAT Delhi)
Assessing Officer in the instant case has recorded incorrect/wrong and non-existing reasons in the reason for reopening of the assessment and has not applied his mind to the information received from REIC, Ward 43(4)(New Delhi). Therefore, the reopening of the assessment is illegal and bad in law and is liable to be quashed.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal filed by the assessee is directed against the order dated 29.01.2016 of the learned CIT(A)-17, New Delhi, relating to Assessment Year 2007-08.
2. Facts of the case, in brief, are that the assessee is a partnership firm and engaged in the business of import and export of auto parts. It filed its original return of income on 30.10.2007 declaring total income of Rs.7,05,890/-. Subsequently, the Assessing Officer reopened the case u/s 147 of the Act by recording the following reasons:-
“ Information has been received from REIC through ITO Ward 43(4) New Delhi that M/s VST Enterprises Bank A/c No.43750 with Punjab & Sind Bank, Fatehpuri, Delhi, reveals an inflow of Rs. 72 lakhs in cash and Rs. 1.82 crores from Foreign Sources in 2007. According to the information, M/s VSR Enterprises is part of a Syndicate involved in smuggling of Red Sanders Wood run by one Shri She khar. The syndicate involved in trading of banned items across the borders such as exotic herbs, such as Ashwagandha, Peacock feather and a host of items wide name :pyaaz, “Aalu”, “Adrak” and “Seb”.
After considering carefully the contents and nature of the information available before me, I have reason to believe that income chargeable to tax has escaped assessment in the case of M/s VSR Enterprises for Asstt. Year 200 7-08. Hence, proceeding u/s 147 of the I. T. Act, 1961 initiated.
Issue notice u/s 148 for the Asstt. Year 2007-08”
3. The Assessing Officer accordingly issued notice u/s 148 of the Act on 13.04.2011. In response to the same, the assessee vide letter dated 28.10.212 stated that the return filed originally on 30.10.2007 may be treated as return filed in response to notice u/s 148 of the Act.
4. During the course of assessment proceedings, the Assessing Officer asked the assessee to explain the various credit entries appearing in the bank account and also explain the reasons for cash withdrawal from the bank account. Various opportunities were granted by the Assessing Officer to the assessee to which the assessee filed a cash flow summary for the period of 01.04.2006 to 31.03.2007 which are reproduced at page 4 and 5 of the assessment order. Since, the assessee, according to the Assessing Officer, could not explain the source of cash deposits alongwith documentary evidence, of Rs.27,29,000/-, the Assessing Officer, invoking the provisions of section 68 of the Act made addition of the same to the total income of the assessee. Similarly, since, the assessee could not explain to his satisfaction regarding the credit of Rs.74,12,226/- in the bank account of the assessee, the Assessing Officer, invoking the provisions of section 68 of the Act, made addition of Rs.74,12,226/- to the total income of the assessee on account of unexplained credits. Similarly, in absence of production of books of accounts by the assessee, the Assessing Officer rejected the book results and adopted profit rate of 15% of the total turnover of Rs.2,41,87,078/- and determined the net profit of Rs.38,28,061/-. The Assessing Officer accordingly determined the total income of the assessee at Rs.1,37,69,290/-.
5. In appeal, the learned CIT(A), after considering the remand report of the Assessing Officer and the rejoinder of the assessee to such remand report, deleted the addition of Rs.74,12,226/- made by the Assessing Officer u/s 68 on account of unexplained credit. He, however, sustained the addition of Rs.27,29,000/- made by the Assessing Officer u/s 68 of the Act on account of various cash deposits. He also restricted the net profit adopted by the Assessing Officer @15% of the total turnover to 10%.
6. Aggrieved with such part relief granted by the learned CIT(A), the assessee is in appeal before the Tribunal by raising following grounds of appeal:-
Ground No.1
In its impugned order, the CIT (Appeals) has relied on the information available with assessing officer and has passed the order deleting some additions while upholding the addition made under section 68 of the Act.
The Learned AO made an addition of Rs. 27,29,000 section 68 of the Income Tax Act, 1961. The details are as below.
