News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
From the Courts »
 M/s. Gag Construction Pvt. Ltd., M-11, Middle Circular, Connaught Circus, New Delhi-110 001. vs. Assistant Commissioner of Income Tax, Central Circle- 23, Jhandewalan Extension, New Delhi -110 055.
 M/s. Royal Tech. Enterprises, J-127, Pandav Nagar, Meerut. Vs. Income Tax Officer, Ward – 2, Meerut.
 Pankaj Sapra, H-1481, 1st Floor, C. R. Park, New Delhi – 110 019. Vs. Income Tax Officer, Ward – 23(2), New Delhi.
 Umaxe Projects (P) Ltd., D-332, 3rd Floor, Vivek Vihar, New Delhi – 110095. Vs. Deputy Commissioner of Income Tax, Circle-27(1), New Delhi.a
 Pr. Commissioner Of Income Tax-2 Vs. M/s Century Metal Recycling Pvt. Ltd.
 Nokia Solutions and Networks India Pvt Ltd 7th Floor, Building No. 9A DLF Cyber City, Sector 25A Gurgaon - Haryana Vs. The Addl.CIT. Range – 18 New Delhi
 Value First Digital Media Pvt. Ltd. Earlier known as “Value First Messaging Private Limited” Vs. Deputy Commissioner of Income Tax Circle 17(1) New Delhi
 The Pr. Commissioner Of Income Tax-Central-3 Vs. Ankush Saluja
 The Hot Plate Centre Vs. The Commissioner Trade And Taxes, And Ors.
 Avnet Asia Pte. Ltd. C/o. CA K N Gurunath, CGS & Co., Cas, No. 979, 13 Cross, 19 Main, 11 Floor, BSK II Stage Bangalore Vs. DCIT Circle-1(1)(1), International Taxation, Room No. 409, 4th Floor, E-2 Block, Pratyaksh Kar Bhavan,a
 Abodh Borar, H. No.99, Sector-9, Faridabad. Vs. ITO, Ward-1(1), Faridabad.

M/s. Gag Construction Pvt. Ltd., M-11, Middle Circular, Connaught Circus, New Delhi-110 001. vs. Assistant Commissioner of Income Tax, Central Circle- 23, Jhandewalan Extension, New Delhi -110 055.
November, 22nd 2019

Referred Sections:
Section 143(3)/147 dated 24.12.2010 of Income Tax Act,1961
Section 148 of the Act
Section 153C
Section 69C

Referred Cases / Judgments:
M/s.Westland Developers Pvt. Ltd. Vs. ACIT, Central Circle-23, New Delhi in I.T.A.No.1757/Del/2013
ACIT, Cent. Circle 23 vs. M/s IAG Promoters & Developers Pvt. Ltd. ITA No. 1674/Del/
Pooran Mal Vs. CIT [1974] 93 ITR 505 (SC)
Phool Chand Bajranglal Vs. ITO [1993] 203 ITR 456 (SC)
Raymond Woolen Mills Ltd. Vs. ITO [1999] 236 ITR 34 (SC)
ACIT Vs. IAG Promoters and Developers Pvt. Ltd.,
CIT Vs. Lubtec India Ltd., [2009] 311 ITR 175 (Del)
CIT Vs. Ved Prakash Chowdhary 305 ITR 245 (Del)

Gag Construction Pvt. Ltd. v. ACIT-CC-23-New Delhi/ I.T.A.No.1738/Del/2013/A.Y.2006-07             Page 1 of 15



               ,                                                           ` ,                  
                     IN THE INCOME TAX APPELLATE TRIBUNAL
                          DELHI BENCHES `C', NEW DELHI

                BEFORE SHRI KULDIP SINGH, JUDICIAL MEMBER
                 AND SHRI O.P.MEENA, ACCOUNTANT MEMBER

                               .../I.T.A No.1738/Del/2013
                               /Assessment Year: 2006-07
 M/s. Gag Construction Pvt. Ltd.,  Assistant Commissioner of
 M-11, Middle Circular,           Vs. Income Tax, Central Circle-
 Connaught Circus,                    23, Jhandewalan Extension,
 New Delhi-110 001.                   New Delhi -110 055.

 [PAN: AABCG 3001 H]
                  Appellant                                                       /Respondent


    /Assessee by                                           Shri Ajay Bhagwani, CA
    /Revenue by                                            Ms. Nidhi Srivastava, CIT(D.R.)

  / Date of hearing:                                       13.11.2019
   /Pronouncement on:                                      22.11.2019

                                                   /O R D E R

PER O. P. MEENA,AM:

1.        This appeal by the Assessee is directed against the order of learned

Commissioner of Income tax (Appeals)-XXXIII, New Delhi (in short "the

CIT(A)") dated 17.12.2012 pertaining to Assessment Year 2006-07, which in

turn has arisen from the assessment order passed under section

143(3)/147 dated 24.12.2010 of Income Tax Act,1961 (in short `the Act') by

the Deputy Commissioner of Income-Tax, Central Circle ­ 23, New Delhi (in

short "the AO").
Gag Construction Pvt. Ltd. v. ACIT-CC-23-New Delhi/ I.T.A.No.1738/Del/2013/A.Y.2006-07   Page 2 of 15


2.        Ground No.1,4& 5 are not pressed before us by the learned counsel

for the assessee, ex-consequenti, these are treated as dismissed as not

pressed.


3.        Ground No. 2 states that on the facts and in the circumstances of the

case and           law, the          Ld. CIT (A) erred in upholding the assumption of

jurisdiction u/s.147 by the Assessing Officer and in making the assessment

in pursuance thereof, without dealing with appellant`s objection on merit

and giving findings that no seized material obtained from the search of

BPTP Group of cases (no search having been made on the Appellant)

belonged to the appellant, clearly erred in yet upholding the action u/s.147

taken in the hands of the Appellant based on such seized material.


4.        Succinct facts are that the assessee has filed return of income on

02.11.2006 declaring total income of Rs.2,70,090/-. The assessment was

made under section 143(3) on 31.12.2008 by assessing total income at

Rs.15,15,832/-.Subsequently, certain documents seized in the case of

search action of BPTP group on 15.11.2007 and Post search enquiries,

revealed that the group while dealing in land purchase was paying part

payment at the time of execution of sale deed and the balance payment was

being invariably paid by Post Dated Cheques (PDCs) and for intervening

period (i.e. period between the date of sale deed and the date of encashment

of PDCs) interest was being paid in cash @ 1.25% per month, on the

amount of PDCs and this cash payment was not being accounted in the
Gag Construction Pvt. Ltd. v. ACIT-CC-23-New Delhi/ I.T.A.No.1738/Del/2013/A.Y.2006-07   Page 3 of 15


books of accounts. The assessee company has also purchased a large chunk

of land and followed this modus operandi of pertaining interest on PDCs in

cash and not accounting the same in the books of accounts. Therefore,

notice under section 148 of the Act was issued on 29.03.2010 and same

was duly served upon the assessee by speed post.In response to which, the

assessee has filed return of income on 22.04.2010, declaring total income of

Rs.2,70,090/-.              The assessee has also filed objection to issue of notice

under section 148 of the Act which were disposed-off by the AO vide letter

dated 03.12.2010.


5.        Being, aggrieved, the assessee filed an appeal before the Ld.CIT (A).

Wherein relying in the case of SSP Aviation Ltd. v. DCIT WPC NO. 309/2011

dated 29.03.2011 it was submitted that the AO has utilized document

seized at premises of BPTP or its group, therefore, right course for action

was to invoke section 153C instead of proceeding to assess u/s.147 of the

Act.      However, Ld. CIT (A) observed that undoubtedly, the AO utilized

documents seized from premises of BPTP Ltd., but in the assessment order

nowhere it is mentioned that document seized belongs to the assessee. A

perusal of assessment order reveals that the appellant company is one of

the group companiesof BPTP Group and material seized from BPTP Group

and other associates companies has shown some trend of unaccounted

expenditure in the form of interest on PDC is being paid for the acquisition

of land. Therefore, Ld. CIT (A) opined that as a resultof search and seizure
Gag Construction Pvt. Ltd. v. ACIT-CC-23-New Delhi/ I.T.A.No.1738/Del/2013/A.Y.2006-07                Page 4 of 15


operation, there maybe three types of seized documents. One belonging to

the person searched, the income of which will be assessed u/s. 153A, in the

second category, the seized document belonged to other person, such

assessment will be made under section 153C, and third category of

documents establishes a general type of finding which is applicable for

assessing income to a group of cases. In the case of third category, search

assessment under section 153A or under section 153C cannot be invoked.

Therefore, such income is to be assessed under normal provisions of the

Act, either under section 143 (3) or 147 of I. T. Act, 1961, if any evidence is

found, though not belonging to other person, but income has to be assessed

in the hands of other person. Therefore, Ld. CIT (A) placing reliance in the

case of judgment of Pooran Lal v. CIT [1974] 093 ITR 0505 (SC) where the

Hon'ble Supreme Court held that material obtained from search even where

search is made in contravention of the provisions can be used for making

assessment. Accordingly, pronouncement relied by the assessee are of no

consequence. Hence, reopening of assessment was upheld.


6.        Being, aggrieved the assessee filed this appeal before the Tribunal.


7.        The learned counsel for the assessee submitted that the original

assessment            was       made        under         section        143(3),         hence,   reopening          of

assessment can be done as per first proviso to section 147 where there is

failure on the part of the assessee to disclose truly and fully all material

necessary for assessment. The learned counsel for the assessee referred
Gag Construction Pvt. Ltd. v. ACIT-CC-23-New Delhi/ I.T.A.No.1738/Del/2013/A.Y.2006-07   Page 5 of 15







reasons recorded for reopening of assessment, placed at Paper Book, Page

No. 93 and contended that that there is no charge against the assessee that

there was any failure on the part of the assessee to disclose truly and fully

all material facts necessary for the assessment.The learned counsel for the

assessee further submitted that search and seizure operation was carried

out on 15.11.2007 in the BPTP Group. The original assessment in the case

of the assessee was made on 31.12.2008, therefore, the seized material was

available at the time of making original assessment. However, the AO has

not made any addition based on such seized material nor invoked the

provisions of section 153C of the Act. Accordingly, reference to post search

enquiries has no relevance. The learned counsel for the assessee further

referred para 4.3 and 4.4 of the order of CIT (A) wherein the ld. CIT (A)

observed that nowhere the AO has stated that part of seized material

belonged to the assessee.                     It was also mentioned that seized material in

group companies have shown trend of making additional payment for

purchase of land, but there is nothing on record to show that the assessee

had made any payments on account of PDCs interest. The learned counsel

for the assessee referred Paper Book, Page No. 94 to 99 and claimed that

none of the document belongs to the assessee nor any incriminating

material in the documents of other group companies in respect of the

assessee is found. Therefore, it was submitted that the reopening of

assessment was based on incorrect inference that group companies involved

in making interest payment of PDCs is not to be applied. The learned
Gag Construction Pvt. Ltd. v. ACIT-CC-23-New Delhi/ I.T.A.No.1738/Del/2013/A.Y.2006-07   Page 6 of 15


counsel for the assessee further placed reliance in the case of decision of

Co-ordinate Bench of Delhi Tribunal in the case M/s.Westland Developers

Pvt. Ltd. Vs. ACIT, Central Circle-23, New Delhi in I.T.A.No.1757/Del/2013

on identical facts in which reopening of assessment was not found to be

valid.

8.        Per contra, Ld. CIT DR submitted that reasons recorded for reopening

of assessment are not vague as assessment completed u/s 143(3) and not

u/s 143C of the Act. Further, reopening of assessment was done within the

four years, therefore, proviso to section 147 of the Act which says that the

assessment can be reopened where there is a failure on the part of the

assessee is not applicable, where the assessment has been reopened within

four years form the end of the assessment year. In this case, the notice u/s

148 was issued on 29/03/2010 i.e. within four years from the end of the

assessment year 2006-07. As regards para 4.3 & 4.4 of the Ld. CIT(A) the

Ld. CIT DR submitted that the modus operandi adopted by the group

companies are also applicable in the case of the assessee as the assessee

also dealing in lands. Therefore, the Ld. CIT DR supported the order of Ld.

CIT(A). The Ld. CIT DR also placed reliance in the case of ACIT, Cent. Circle

23 vs. M/s IAG Promoters & Developers Pvt. Ltd. ITA No. 1674/Del/2013

for AY 2008-09 of ITAT `C' Bench Delhi dated 31/10/2014, wherein the

additions made on account of interest paid on PDCs one of the group

concern of the assessee was held to be valid.
Gag Construction Pvt. Ltd. v. ACIT-CC-23-New Delhi/ I.T.A.No.1738/Del/2013/A.Y.2006-07         Page 7 of 15


9.        We have heard the rival submissions and perused the relevant

material on record. We find that the assessee has filed Return of Income on

12.11.2006 which was assessed u/s.143(3) on 31.12.2008 by determining

total income at Rs.15,15,832/-, subsequently certain documents seized in

the case of search action in the BPTP group on 15.11.2007. Further, post

search enquiries revealed that the group was dealing in land purchase and

paying part payment at the time of execution of sale and balance was

invariably paid by the post dated cheques and for the intervening period i.e.

period between the date of sale deed and the date of encashment of PDC's

interest was being paid @1.25% per month.                                     The AO has analysed these

papers and grouped them into PDS-1 to PDS-54 which supports the modus-

operandi adopted by the assessee. The reasons recorded for reopening of

assessment placed at PB-93 and with Annexure-A at page 94 to 99 shows

that based on number of seized material, the A.O. found that the assessee

has also purchased large chunk of land and followed the modus-operandi of

making payment of interest on PDC's andhas made payment of interest in

cash out of cash book of account. We, further find that the assessment was

involved is A.Y.2006-07 and the notice for reopening of assessment has

been issued on 29.03.2010, after recording the reasons.                                      Thus, the

assessment has been reopened within four years from the end of relevant

assessment year, hence the assessment can be reopened even where there

is no failure on the part of assessee to disclose fully and all material facts

necessary for the assessment. If, one reads the Explanation-2 to section
Gag Construction Pvt. Ltd. v. ACIT-CC-23-New Delhi/ I.T.A.No.1738/Del/2013/A.Y.2006-07                Page 8 of 15


147 of the Act including the proviso thereto, then it is clear that where the

AO reopens assessment within a period of four years, it can do so on the

ground of income having escaped assessment. Even, if there is no failure

on the part of the assessee to disclose fully and truly all material facts

necessary for the assessment. Further, the information of aforesaid modus-

operandi has been received by the AO after post search enquiries conducted

by the Department in the group cases, hence this information was not

available at the time of assessment order. Moreover, there is no reference of

modus-operandi                or    any       search        in    the      original      assessment      record.

Therefore, the contention of the ld.Counsel that proviso to section 147 is

applicable and there was no failure on the part on the assessee to disclose

all material facts necessary for the assessment is without any basis and not

applicable as the assessment has been reopened within four years from the

end of relevant assessment year.                              We find that in group cases of the

assessee, it has been categorically established the modus-operandi followed

by the group companies and the assessee was also found indulging in land

purchases. The Ld.CIT(A) has placed reliance on the decision of Pooran Mal

Vs. CIT [1974] 93 ITR 505 (SC) wherein the Hon'ble Supreme Court has held

that matter obtained from search even where search is made in

contravention of provision can be used for making assessment. Therefore,

the material obtained during the search in group concern which is duly

corroborated by the modus-operandi of the group, can be used in reopening

of assessment.                The AO has therefore reason to believe that income
Gag Construction Pvt. Ltd. v. ACIT-CC-23-New Delhi/ I.T.A.No.1738/Del/2013/A.Y.2006-07   Page 9 of 15


chargeable to tax has escaped assessment. Similarly, in the case of Phool

Chand Bajranglal Vs. ITO [1993] 203 ITR 456 (SC) the Hon'ble Supreme

Court has held that one of the purposes of section 147 is to ensure that a

party cannot getaway by willfully making a false or untrue statement at the

time of original assessment. Similarly, in the case of Raymond Woolen Mills

Ltd. Vs. ITO [1999] 236 ITR 34 (SC) the Hon'ble Supreme Court held that in

determining whether commencement of the reassessment proceedings was

valid, it has only to be seen whether there was prima-facie some material on

the basis of which the Department could reopen the case. The sufficiency

or correctness of the material is not a thing to be considered at such stage.

Therefore, considering these facts on record,we are of the considered

opinion that AO was justified in reopening assessment. So far as reliance

placed on the decision of Westland Developers (supra)of ITAT is concerned,

we find that the reopening of assessment has been made within four years

from the end of the assessment year, hence, proviso to section 147 was not

applicable, nor this arguments has been discussed.Further, the Tribunal in

that case has carried away by independent evidence in respect of interest of

PDC, hence whereas modus-operandi by recording of statement of Group

concern and their directors was duly established, hence, the said case is

distinguishable. Further, the ld.DR has cited decision of Co-ordinate Bench

decision in the case of ACIT Vs. IAG Promoters and Developers Pvt. Ltd., in

ITA No.1674/Del/2013 for A.Y.2008-09 dated 31.10.2014 in which modus-
Gag Construction Pvt. Ltd. v. ACIT-CC-23-New Delhi/ I.T.A.No.1738/Del/2013/A.Y.2006-07    Page 10 of 15







operandi of group was approved, accordingly this ground of appeal is

dismissed.

10.       Ground No. 3 read as under :-

          "3. That on the facts and circumstances of the case and in law the CIT(A) erred in not
          holding to quote "that seized documents definitely proves that interest is paid on PDC`
          despite ­

          i. that seized record on the basis of which above findings was given ,even according to his
          own finding by the CIT (A) , didn't belong to the appellant and ,
          ii. that no enquiries were made for any alleged recipients of the interest and none was
          confronted with relevant documents
          3.1. That the findings of the CIT (A)is based on mere surmises and conjectures without proof
          and corroboration by independent evidence.
          3.2. That without prejudice the CIT(A) erred in upholding the addition of interest for the
          period for which PDCs were extended.
          3.3 That without prejudice the CIT(A) erred in not quantifying the addition and instead
          giving ambiguous direction to compute the interest after six months from the date of sale.

11.       Succinctly, facts as culled out from the orders of lower authorities are

that the AO noticed that the assessee company is one of the group

companies of BPTP Group in which land has been purchased mainly in the

NCR (National Capital Region). The assessee company has also purchased

large junk of land and has made only part payment of sale consideration to

the seller at the time of executing sale deed and balance payment is made

by way of post dated cheques (PDCs). During the course of assessment, the

AO obtained details of such PDCs from the assessee as given at the time of

registration to the seller and obtained date of encashment and applied rate

of 15% interest per annum paid for the period from sale deed to date of

encashment, on the amount of PDCs on the basis of seized material. The AO

gave a finding in the assessment order that total such interest payable

comes to Rs.24,47,405/- on PDCs which was paid in cash out of books of
Gag Construction Pvt. Ltd. v. ACIT-CC-23-New Delhi/ I.T.A.No.1738/Del/2013/A.Y.2006-07               Page 11 of 15


account. Therefore, such interest was added as unaccounted/unexplained

expenses.


12.       Being, aggrieved, the assessee filed an appeal before the Ld. CIT (A).

However, the Ld. CIT(A) after examining the issue in detailed, has given his

direction for the recalculation of the interest on PDCs which is reproduced

as under: :-

          "5.4 Conclusion :-
          Learned AR has been maintain all along that interest is not paid as all the receipts are only
          memorandum only.Analysis of these above seized document reveals that these seized documents
          definitely proves that interest is paid on PDCs. Various voucher in seized documents conclusively
          proves that the recipient has signed on voucher for receipt of the interest. Ld AR's contention that
          these are only working of interest claimed by seller for putting up before senior management does not
          appear to be convincing. In case of claim, the receiver will not sign the voucher as recipient. Amounts
          are specific and calculation is 15% per annum. Therefore, ld AR without conceding that the interest is
          paid on PDCs has taken the stand that in none of the seized material, i.e., even in receipt seized, the
          interest is from date of issue of PDCs. Now issue arises whether interest on PDCs are paid from date
          of issue or for extension of PDCs. Documents discussed above where there is clear evidences of
          receipt of interest is for extension of period of PDCs. Ld AR's arguments that calculation of interest on
          PDCs has been considered while entering into agreements holds some logic. But when date of PDCs
          are extended, the recipient will definitely ask and settle for some additional compensation in form of
          interest. There is no evidence which proves that interest is paid from the date of sale to date of
          encashment of post dated cheques. However, there is concrete evidence in form of seized material to
          show that interest is paid and received by seller on the extension of PDCs as discussed above while
          analyzing the seized document. Therefore, in my view where ever the date of PDCs are extended
          interest is paid @ 15% per annum in cash out of books of accounts which are evident from seized
          material. Therefore, interest on PDCs to the extent of extension period appears to quite reasonable
          and logical. Accordingly, interest on PDCs either as sale consideration or additional payment may be
          recomputed to the extent of extended period of PDCs by the A.O. and to that extent addition is
          confirmed. The above formulae will apply to all group companies under the management of BPTP i.e.
          (M/s BPTP and Associate companies) including the appellant company as evidence is found in respect
          of various companies of BPTP and some seized paper could not be related to specific company.
          Therefore, it is proper to apply this formula for all companies under the common management of
          BPTP Group, head by Shri Kabul Chawla. All these companies are closely linked. Some companies
          purchase land and transfer the same to M/s BPTP Ltd. or Countrywide Promoters (P) Ltd. for housing
          or commercial projects are ultimately developed and sold by M/s BPTP Ltd. and Countrywide
          Promoters Ltd. or in stray case by some other companies. Assessing Officer has applied the case of
          Eusuf Ali for applying interest on PDCs for all companies of BPTP Group for all assessment year
          under consideration. Ld AR has tried to differentiate the above cited case on facts. In my view, as
          interest payment on extension of period of PDCs are established on numerous seized documents. A
          trend is established for the group as the overall 4 ITA-1674/D/2013 & 1765/D/2013 management is
          controlled by one person Sh. Kabul Chawla and activities of all companies are interrelated.

          If it is not possible to work out the extension of PDCs in each case then A.O. is directed to recompute
          interest on PDCs after six months from date of issue of PDCs i.e. date of sale, as six months is taken as
          reasonable period for giving PDC as per sale deed. This view is formed on the basis the statement of
          Sh. ChhotuRam which says that normally PDCs are given for 8 to 10 months. Further Ld AR has also
Gag Construction Pvt. Ltd. v. ACIT-CC-23-New Delhi/ I.T.A.No.1738/Del/2013/A.Y.2006-07            Page 12 of 15


          submitted few sale deed in respect of some of seized record in the case of RamvatiBeero etc. where the
          interest working is made after 9/15 months. Taking these facts into consideration, it would be proper
          to compute interest after 6 months from date of sale on conservative side. Accordingly this ground is
          partly allowed."

13.       Being, aggrieved the assessee filed this appeal before the Tribunal.

The learned counsel for the assessee submitted that the AO categorized

seized documents and marked as PDC-1 to PDC-54 relating to various

companies of BPTP Group. The AO utilized all these documents in making

present assessment. The assessee on purchase of several tracks of land in

NCR "National Capital Region" and in some cases made part payment on

sale consideration to the seller at the time of execution of sale deeds and

balance payment was made by way of PDC.                                        The AO obtained details of

such PDC's given at the time of registration to the sellers and dates of

encashment. The AO applied rate of interest @ 15% per annum paid for the

period from sale deed to date of encashment on the amount of all the PDC

issued. However, the Ld. CIT(A) has allowed relief in respect of addition on

account of PDC interest for a period up to six months from the date of sale

deed based on the statement of Shri Chhotu Ram which says that normal

PDC's are given for 8 to 10 months. The ld.Counsel submitted that in the

instant case interest is for a period of 7 months, therefore whole of the

addition needs to be deleted.                          However, this finding of Ld. CIT(A) has

resulted in deletion of addition of Rs.24,36,653/- and confirmation of the

balance addition of Rs.10,752/- in respect of four transactions of which

interest was calculated for one month each only. However, this addition is

also not sustainable as the A.O. has failed to summon the vendors of land
Gag Construction Pvt. Ltd. v. ACIT-CC-23-New Delhi/ I.T.A.No.1738/Del/2013/A.Y.2006-07           Page 13 of 15


u/s.131 of the Act, to whom the appellant is alleged to have paid interest on

PDC's. He, further submitted that the A.O. made addition on account of

unexplained expenditure u/s.69C of the Act.                                       However, section 69C is

applicable where the assessee had incurred expenditure.                                     In the instant

case, the assessee has denied to have incurred any expenditure in the form

of interest on PDC being paid.                            However, the A.O. has made addition

without any material or evidence brought on record, simply on the basis of

presumption.              The ld.Counsel placed reliance on the decision on the

decision of Hon'ble Delhi High Court in the case of CIT Vs. Lubtec India

Ltd., [2009] 311 ITR 175 (Del) and CIT Vs. Ved Prakash Chowdhary 305 ITR

245 (Del) in this regard.


14.       Per contra, the ld.CIT-DR submitted that the modus-operandi adopted

by the group in BPTP has been accepted that the interest is being paid that

PDC's only during the period of extension of PDC such finding for

calculation of interest in respect of payment on similar circumstances after

six months from the date of issue of PDC's has been upheld by the Co-

ordinate Bench of the ITAT Delhi Tribunal in the case of ACIT Vs. IAG

Promoters and Developers Pvt. Ltd., in ITA No.1674/Del/2013 for A.Y.2008-

09 dated 31.10.2014.


15.       We have heard the rival submissions and perused the relevant

material on record. We find that the modus operandi adopted by the Group

has been established from the findings as given in the number of group
Gag Construction Pvt. Ltd. v. ACIT-CC-23-New Delhi/ I.T.A.No.1738/Del/2013/A.Y.2006-07               Page 14 of 15


concern. We find that Ld. CIT (A) has found that wherever the date of post

dated cheque was extended, interest was being paid at 15% p.a. in cash out

of books of account as was evident from the seized material, therefore, the

interest on PDC to the extent of extension period was logical. Ld. CIT (A),

therefore, directed the AO to re-compute the interest on PDC either on the

sale consideration or additional payment to the extent of extended period of

PDCs by the AO and in case the working out of the same is not possible, to

re-compute the interest on PDCs after six months from the date of issue of

PDCs i.e. date of sale, as six months is taken as reasonable period for giving

PDC as per sale deed. The Ld. CIT(A) has above relied on the statement of

Shri Chhoturam as mentioned aboe. We find that the Co-ordinate Bench of

Delhi Tribunal ­ C Bench in the case of ACITv. M/s.IAG Promoters &

Developers            (P)      Ltd.       [I.T.A.No.1674/Del/2013/A.Y.                   2008-09          dated

31.10.2014 has upheld the findings of Ld. CIT (A) on similar circumstances

in appeal by the Revenue. Which are reproduced as under:

          "5. We have heard the arguments of both the sides and perused relevant material placed before us. At
          the outset, the ground raised by the Revenue is misconceived because learned CIT(A) has not deleted
          the addition of `5,06,625/- but has only directed to recalculate the interest. We have carefully gone
          through the order of the learned CIT(A) and also the submissions of both the parties and we do not
          find any infirmity in the order of the learned CIT(A). After examining the loose papers seized at the
          time of search at the assessee's premises, it was noticed that interest is paid on the PDCs only during
          the period of extension of PDCs and, therefore, he directed the Assessing Officer to recomputed the
          interest on PDCs at the time of extension of the PDCs. He has further observed that if it is not possible
          to work out the extension of PDCs in each case, then the Assessing Officer is directed to recomputed
          interest on PDCs after six months from the date of issue of the PDCs. Therefore, the ground of appeal
          of the Revenue that the CIT(A) deleted the addition of Rs. 5,06,625/- made by the Assessing Officer on
          account of interest on PDCs is factually incorrect and 5 ITA-1674/D/2013 & 1765/D/2013 contrary to
          the order of the CIT(A). The CIT(A) directed to recalculate the interest on PDCs and there was a
          sound logic for such direction. His direction is based on material found and seized at the time of
          search. In view of the above, we do not find any justification to interfere with the order of learned
          CIT(A) in this regard and accordingly, we reject ground No.1 of the Revenue's appeal."
Gag Construction Pvt. Ltd. v. ACIT-CC-23-New Delhi/ I.T.A.No.1738/Del/2013/A.Y.2006-07          Page 15 of 15


16.       Since the issue is squarely covered by the decision of Tribunal in the

case of group companies of the assessee company. Therefore, respectfully

following the same we upheld findings of Ld. CIT(A) in sustaining the

addition of Rs.10,752/- in the present case. Accordingly, this grounds of

appeal is therefore, dismissed.


17.       In the result, the appeal of the assessee is dismissed.


               Sd/-                                                       Sd/-
          (KULDIP SINGH)                                               (O.P.MEENA)
(  /JUDICIAL MEMBER)                     (   /ACCOUNTANT MEMBER)
   /New Delhi,  Dated: 22 November, 2019/S.Gangadhara Rao, Sr.PS
                                         nd
Copy of order sent to- Assessee/AO/Pr. CIT/ CIT (A)/ ITAT (DR)/Guard file of ITAT.
                                                                                                 By order

          / / TRUE COPY / /
                                                                           Assistant Registrar, New Delhi


 

Home | About Us | Terms and Conditions | Contact Us
Copyright 2019 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Content Management System developers CMS developers Content Management Solutions CMS Solutions CMS India Content Management System India CMS development India Website CMS Website Content Management India Portal CMS India CMS Outsourcing CMS Vendor Complete CMS Custom CMS Services

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions