M/s. Baweja Export Pvt. Ltd., New Delhi V. ACIT, New Delhi

CO 180/DEL/2015

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 4734 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 9 month(s) 13 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 14-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 01-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY GOYAL
• Assessee Lawyers: RAGINI HONDA
• Keywords: Bogus purchase; Opportunity of being heard; Block assessment; Audi alteram partem
• Section: 143(3); 142(1); 153A; 143(2); 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: A, NEW DELHI BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SMT. BEENA A PILLAI, JUDICIAL MEMBER ITA NO. 6467 /DEL/ 2014 AY: 2006 - 07 ACIT, CENTRAL CIRCLE - 3 NEW DELHI VS . BAWEJA EXPORT PVT.LTD. D 37, DEFENCE COLONY NEW DELHI 110 024 PAN: AABCB6318G CROSS OBJECTION NO.1 80 /DEL/2015 (IN ITA NO. 6467 /DEL/ 2014) AY: 2006 - 07 BAWEJA EXPORT PVT.LTD. D 37, DEFENCE COLONY NEW DELHI 110 024 VS . ACIT, CENTRAL CIRCLE - 3 NEW DELHI (APPELLANT) (RESPONDENT) DEPARTMENT BY : SHRI SANJAY GO Y AL, CIT, D.R. ASSESSEE BY : S MT. RAGINI HONDA, C.A. DATE OF HEARING : 0 7 /03/2019 DATE OF PRONOUNCEMENT : 14 /03/2019 ORDER PER BEENA A PILLAI, JUDICIAL MEMBER PRESENT C ROSS APPEALS HA VE BEEN FILED BY REVENUE AND ASSESSEE AGAINST ORDER DATED 22/09/14 PASSED BY LD. CIT (A) - 1, NEW DELHI FOR ASSESSMENT YEAR 2006 - 07 ON FOLLOWING GROUNDS OF APPEAL: ITA NO.6467/DEL/2014 AND CO 180/DEL/15 AY 2006 - 07 BAWEJA EXPORT P LTD. 2 ITA NO. 6467/D EL/2014 ( R EVENUES APPEAL) 1. THE ORDER OF LD.CIT(A) IS NOT CORRECT IN LAW AND F ACTS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.2,75,50,000/ - MADE BY A.O. ON ACCOUNT OF BOGUS PURCHASE OF SHARES BY THE ASSESSEE COMPANY. 3. THE APPELLANT CRAVES LEAVE TO ADD, AMEND ANY/ALL THE GR OUNDS OF APPEAL BEFORE OR DURING THE COURSE OF HEARING OF THE APPEAL. CO NO. 180/ D EL/2015 ( A SSESSEES CROSS APPEAL) 1. THAT THE ORDER U/S 153A R.W.S. 143(3) OF THE ACT DATED 27.03.2014 PASSED BY THE ID. AO IS BAD ON FACTS AND IN LAW. 1.1 THAT ON THE FACTS AND IN LAW THE ID. AO HAS ERRED IN NOT GRANTING A PROPER OPPORTUNITY OF BEING HEARD AND HEREBY VIOLATING THE WELL SETTLED PRINCIPLES OF AUDI ALTERAM PARTEM. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ID. AO ERRED IN MAKING HUGE ADDITIONS/DIS ALLOWANCES TO THE TOTAL INCOME WITHOUT ANY INCREMENTING EVIDENCE IN SUPPORT THEREOF. 3. THAT ON FACTS AND IN LAW IN ABSENCE OF ANY INFORMATION LEADING TO ACTION OF SEARCH U/S. 132(1) OF THE INCOME TAX ACT, 1961 THE ID. CIT(A) ERRED IN ASSUMING JURISDICTION T O ASSESS U/S 153A /143(3) OF THE ACT. 3.1 THAT ON FACTS AND IN LAW BLOCK ASSESSMENT U/S 153A IS NOT WARRANTED IF SEARCH WARRANT WAS ISSUED IN JOINT NAMES TOSEARCH PREMISES BELONGING TO ONE ASSESSEE. 4. THAT THE ASSESSEE CRAVES LEAVE TO ADD, ALTER OR AMEND ANY GROUND OF CROSS OBJECTION ON OR AT THE TIME OF HEARING OF THE APPEAL. ITA NO.6467/DEL/2014 AND CO 180/DEL/15 AY 2006 - 07 BAWEJA EXPORT P LTD. 3 2. BRIEF FACTS OF THE CASE ARE AS UNDER : S EARCH AND SEIZURE ACTION UNDER SECTION 132 OF THE INCOME TAX ACT, 1961 (THE ACT) WAS CONDUCTED IN CAS E OF M/S J POLLYC H EM INDIA LTD AND ITS ASSOCIATES ON 14/03/ 20 12. LD. AO OBSERVED THAT THE GROUP IS ENGAGED IN TRADING OF BULK PETROCHEMICALS, CHEMICALS, POLYMERS, ENGINEERING PLASTICS ETC. ASSESSEES CASE WAS ALSO COVERED UNDER SECTION 132 OF THE A CT. LD. AO OBSERVED THAT ASS ESSEE HAD PAID UP CAPITAL OF RS. 14.09 LAKHS. NOTICE UNDER SECTION 153A WAS ISSUED TO ASSESSEE ON 18/01/13 IN RESPONSE TO WHICH RETURN WAS FILED ON 23/12/13 DECLARING INCOME OF RS.3 , 110/ - . S UBSEQUENTLY NOTICE UNDER SECTION 143(2) AND 142(1) ALONG WITH QUESTIONNAIRE WAS ISSUED TO ASSESSEE , IN RESPONSE TO WHICH REPRESENTATIVE OF ASSESSEE APPEARED BEFORE LD.AO AND FILED REQUISITE DETAILS. LD.AO WHILE COMPLETING ASSESSMENT MADE ADDITION OF RS. 2,75,46,890/ - IN THE HANDS OF ASSESSEE. 3. AGGRIEVED BY ORDER OF LD. AO , ASSESSEE PREFERRED APPEAL BEFORE LD.CIT(A) , WHO ALLOWED THE CLAIM OF ASSESSEE ON MERITS. 4. AGGRIEVED BY ORDER OF LD.CIT(A), REVENUE PREFERRED APPEAL BEFORE THIS T RIBUNAL CONTESTING ADDITION BEING DELETED AND ASSESSEE FILED C ROSS O BJECTION ON THE GROUND THAT THE ADDITION HAS BEEN MADE BY LD.AO UNDER SECTION 153A READ WITH 143 (3) OF THE A CT WITHOUT THERE BEING ANY INCRIMINATING MATERIAL S IN SUPPORT THEREOF. AS THE C ROSS O BJECTION RAISED BY ASSESSEE GOES TO THE ROOT OF THE ASSESSMENT, WE ARE INCLINED TO TAKE UP THE CROSS OBJECTION FIRST . ITA NO.6467/DEL/2014 AND CO 180/DEL/15 AY 2006 - 07 BAWEJA EXPORT P LTD. 4 5. IT HAS BEEN SUBMITTED BY LD. AR THAT NO INCRIMINATING DOCUMENTS WERE FOUND AS A RESULT OF SEARCH INDICATING UNDISCLOSED INCOME IN HANDS OF ASSESSEE FOR YEAR UNDER CONSIDERATION. SHE PLACED RELIANCE UPON PARAGRAPH 5.2 OF ASSESSMENT ORDER WHEREIN ADDITION IS BASED ON PROFIT AND LOSS AC COUNT FOR YEAR ENDING 31/03/06. 5.1. LD. AR PLACED HEAVY RELIANCE UPON DECISION OF HONBLE DELHI HIGH COURT IN CASE OF CIT VS KABUL CHAWLA REPORTED IN (2016) 380 ITR 573 . 5.2. ON THE CONTRARY, THOUGH LD.SR.DR SUPPORTED ORDER OF LD.AO IN ASSUMPTION OF JURISDICTION UNDER SECTION 153, BUT COULD NOT CONTROVERT ARGUMENT THAT NO MATERIALS WERE SEIZED DURING SEARCH WHICH WAS BASIS OF ADDITION IN HANDS OF ASSESSEE. 6. W E HAVE PERUSED RECORDS PLACED BEFORE US IN LIGHT OF ARGUMENTS ADVANCED BY BOTH SIDES. 7 . IT IS OBSERVED THAT PRESENT A SSESSMENT Y EAR BEING A SSESSMENT Y EAR 2006 - 7 HAS NOT ABATED AS ON THE DATE OF SEARCH. UNDER SUCH CIRCUMSTANCES WITHOUT THERE BEING INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH NO ADDITION COULD BE MADE IN T HE HANDS OF ASSESSEE. WE REFERRED TO AND RELY UPON THE DECISION OF HONBLE HIGH COURT IN CASE OF CIT VS KABUL CHAWLA (SUPRA) . 7.1. IT IS OBSERV ED THAT IN PRESENT CASE, LD. AO IN PARAGRAPH 5.2 OF HIS ORDER FOR PURPOSES OF MAKING ADDITION RELIED UPON PROFI T AND LOSS ACCOUNT. WE ARE THEREFORE OF CONSIDERED OPINION THAT CROSS OBJECTION DESERVES TO BE ALLOWED. ITA NO.6467/DEL/2014 AND CO 180/DEL/15 AY 2006 - 07 BAWEJA EXPORT P LTD. 5 8. RESPECTFULLY FOLLOWING THE DECISION OF HONBLE DELHI HIGH COURT IN CASE OF CIT VS KABUL CHAWLA (SUPRA), WE ARE INCLINED TO ALLOW C ROSS O BJECTION FILED BY ASSESSEE , THEREBY QUASHING A SSESSMENT ORDER PASSED BY LD.A O UNDER SECTION 153A OF THE ACT. 9. AS WE HAVE ALREADY ALLOWED THE ASSESSEES C ROSS O BJECTION ON LEGAL ISSUE, WE ARE OF THE CONSIDERED OPINION THAT APPEAL FILED BY REVENUE DOES NOT SURVIV E AND THE SAME IS DISMISSED. 10. IN THE RESULT APPEAL FILED BY REVENUE STANDS DISMISSED AND CROSS O BJECTION FILED BY ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 4 /03/2019. S D / - S D / - (N.S. SAINI) (BEENA A PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 1 4 T H MARCH, 2019 GMV ITA NO.6467/DEL/2014 AND CO 180/DEL/15 AY 2006 - 07 BAWEJA EXPORT P LTD. 6 COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT - TRUE COPY - BY ORDER, ASSISTANT REGISTRAR ITAT DELHI BENCHES ITA NO.6467/DEL/2014 AND CO 180/DEL/15 AY 2006 - 07 BAWEJA EXPORT P LTD. 7 DATE DRAFT DICTATED ON 13/03/19 DRAFT PLACED BEFORE AUTHOR 1 4 /03/19 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 1 4 / 0 3 / 1 9 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 1 4 / 0 3 / 1 9 APPROVED DRAFT COMES TO THE SR.PS/PS 1 4 / 0 3 / 1 9 KEPT FOR PRONOUNCEMENT ON & ORDER UPLOADED ON : 1 4 / 0 3 / 1 9 FILE SENT TO THE BENCH CLERK DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.