M/s Laser Communications (P) Ltd. vs Additional Commissioner Of Income Tax

PER SATBEER SINGH GODARA, JM:

These assessee’s twin appeals ITA No. 3217 & 3218/Del/2003 for assessme nt years 1997-18 & 1998-99, ar ise against the Commissioner of Income Tax (for short, “the CIT(A)”), orders both dated 28 .0 3.2003, passed in Orders No. 7/2001-2002 & 5/2001-2002, involving proceedings u/s 148/143(3) of the Income Tax Act, 1961; here inafter referred to as, “the Act” ; respectively.

Heard both the parties. Case files perused.

Learned counsel submits at the outset that he is filing the assessee’s concise grounds which is fairly not objected to at the Revenue’s behest. We thus take the assessee’s concise grounds on record.

We now advert to the assessee’s “lead” appeal ITA No. 3217/Del/2003 in assessment year 1997-98. Learned counsel does not press for its former twin substantive grounds challenging validity of the impugned section 148/147 proceedings. Rejected in very terms.

Next comes the first and foremost issue between the parties wherein both the learned lower authorities have disallowed/added the assessee’s various expenses i.e. consumption store expansion, wall rent, rent materials expansion, video charges, VAN charges, rikshaw charges, administrative and entire expenditure etc.; involving varying sums, thereby holding the same as bogus in nature. That being the case, a very serious issueh as arisen between the parties as to whether we ought to accept the aforesaid impugned expenses or not. The Revenue could hardly dispute in this factual backdrop that the assessee’s principle business activity as well as its total income of Rs. 60,890/- from advertisement business has nowhere been disputed.

Coming to the impugned expenses, learned CIT(DR) vehemently submits in light of Para 3 of the Assessing Officer’s order dated 27.03.2001 that even the assessee’s auditor had made it clear in the concerned note that he had not obtained all the information and explanation as per the relevant books of accounts. We are of the considered view in this factual backdrop that although the assessee’s books claiming the impugned expenses deserve to be rejected, the fact however remains that not all of its gross receipts could be termed as representing the taxable income component in absence of any business expenditure allowed as per the matching concept. We thus deem it appropriate in this factual backdrop that a lumpsump GP estimation @8% of the assessee’s entire receipts derived in the relevant previous year 1996-97 would be just and proper with a rider that the same shall not be treated as a precedent. We further make it clear that once we have rejected its books of accounts, all the corresponding business expenditure disallowance (supra) herein would be deemed to have been deleted as per CIT vs Indwell Constructions(1998) 232 ITR 776 (Andhra Pradesh). Necessary computation shall follow as per law.

The assessee’s next twin substantive grounds inter alia seek to reverse the CIT(A) action partly confirming unsecured loans addition of Rs. 1.70 lakh to the extent of Rs. 25,000/- and upholding share application money of Rs. 14.50 lakhs, respectively. There does not appear to be much a dispute between the parties that all these sums have come from the assessee’s director shri Vipin Gupta etc stated to be assessed in the same jurisdiction. There is no abnormal trend or any serious issue of genuineness and creditworthiness thereof; discussed in both the learned lower authorities’ respective findings. We thus delete the impugned twin additions in the assessee’s favour and against the department.

Learned counsel does not press for the assessee’s last substantive ground of Rs. 15,000/- addition as undisclosed accrued interest on bank FDRs keeping in mind smallness thereof. Rejected accordingly. The assessee’s instant “lead” appeal ITA No. 3217/Del/2003 is partly accepted.

We now proceed to deal with the assessee’s latter appeal ITA No. 3218/Del/2003. Learned counsel presses for the assessee’s substantive grounds on merits only directed against both the learned lower authorities’ respective findings disallowing its various expenses being unsecured loans of Rs. 20,550/- and share application money from Sh. Vipin Gupta respectively. Suffice to say, our preceding detailed discussion has already directed the learned Assessing Officer to estimate GP regarding the assessee’s cross receipts @ 8%. The latter twin additions herein admittedly involve the assessee’s very director Sh. Vipin Gupta etc. We thus estimate its GP @8% and delete the impugned latter twin additions in very terms therefore. The assessee’s instant latter appeal ITA No. 3218/Del/2003 succeeds in part.

No other ground or argument has been pressed.

This assessee’s twin appeals ITA Nos. 3217 & 3218/Del/2003 are partly allowed in above terms. A copy of this common order be placed in the respective case files.