K.R. Pulp & Papers Ltd, New Delhi V. ACIT, Central Circle-19, New Delhi

CO 207/DEL/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 9996 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 7 month(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 30-06-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2012-2013
• Appeal Filed On: 29-11-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Bogus purchase; Search and seizure
• Section: 69C; 143(3); 153A; 143(2)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI D BEN CH, NEW DELHI [THROUGH VIDEO CONFERENCE] BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER, AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ITA NO. 6170/DEL/2018 [ASSESSMENT YEAR: 2012-13] THE A.C.I.T VS. M/S K.R. PULP & PAPER LTD CENTRAL CIRCLE 19 304, ROOTS TOWER, COMM UNITY CENTRE NEW DELHI DISTRICT CENTRE, LAXMI NAGAR NEW DELHI PAN: AAACK 5861 C CO NO. 207/DEL/2018 A/O ITA NO. 6170/DEL/2018 [ASSESSMENT YEAR: 2012-13] M/S K.R. PULP & PAPER LTD VS. THE A. C.I.T. 304, ROOTS TOWER, COMMUNITY CENTRE CENTRAL CIRCLE - 19 DISTRICT CENTRE, LAXMI NAGAR NEW DELHI NEW DELHI PAN: AAACK 5861 C [APPELLANT] [RESPONDENT] DATE OF HEARING : 29.06.2020 DATE OF PRONOUNCEMENT : 30.06.20 20 ASSESSEE BY : SHRI GAUTAM JAIN, ADV REVENUE BY : SHRI J.K. MISHRA, DR 2 ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER, THIS APPEAL BY THE REVENUE AND CROSS OBJECTION BY T HE ASSESSEE ARE PREFERRED AGAINST THE ORDER OF THE CIT(A) - 27, NEW DELHI DATED 25.07.2018 PERTAINING TO A.Y 2012-13. 2. THE SOLITARY GRIEVANCE OF THE REVENUE IS THAT TH E LD. CIT(A) ERRED IN LAW IN RELYING UPON THE DECISION OF THE HON'BLE HIGH COURT OF DELHI IN THE CASE OF KABUL CHAWLA 380 ITR 573 AND IN HOLDING THAT COMPLETED ASSESSMENT COULD NOT BE INTERFERED BY THE ASSESSING OFFICER WITHOUT INCRIMINATING MATERIAL. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT SEAR CH AND SEIZURE OPERATIONS ALONGWITH SURVEY OPERATION WERE CONDUCTE D ON 08.07.2015. ACCORDINGLY, STATUTORY NOTICES WERE ISSUED AND SERV ED UPON THE ASSESSEE. 4. IN RESPONSE TO THE NOTICE U/S 153A OF THE INCOME TAX ACT, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT' FOR SHORT], T HE ASSESSEE FILED RETURN OF INCOME DECLARING NIL INCOME ON 08.03.017. ASSESSMENT WAS 3 FRAMED U/S 153A R.W.S 143(3) OF THE ACT VIDE ORDER DATED 29.12.2017 AND TOTAL INCOME WAS ASSESSED AT RS. 1,65,75,808/- AFTER MAKING ADDITIONS U/S 69C OF THE ACT. 5. THE ASSESSEE VEHEMENTLY AGITATED THE ASSESSMENT ORDER BEFORE THE LD. CIT(A) AND STRONGLY CONTENDED THAT THE ASSE SSMENT ORDER IS DEVOID OF ANY INCRIMINATING MATERIAL FOUND AT THE T IME OF SEARCH AND, THEREFORE, THE ASSESSMENT IS BAD IN LAW. STRONG RE LIANCE WAS PLACED ON THE JUDGMENT OF THE HON'BLE HIGH COURT OF DELHI IN THE CASE OF KABUL CHAWLA 380 ITR 573 AND MEETA GUTGUTIA 395 ITR 526. 6. AFTER CONSIDERING THE FACTS AND SUBMISSIONS, THE LD. CIT(A) HELD AS UNDER: I HAVE CONSIDERED THE FACTS OF THE CASE, BASIS OF ADDITION MADE BY AO AND SUBMISSIONS OF APPELLANT. AS IT IS R EFLECTED FROM ASSESSMENT ORDER, A SEARCH AND SEIZURE OPERATION WA S CONDUCTED BY THE INVESTIGATION WING OF THE DEPARTMENT IN THE CAS ES OF M/S K. R. PULP AND PAPERS LTD. GROUP AND DURING THE SEARCHES, THE APPELLANT'S CASE WAS ALSO COVERED U/S 132(1) OF I.T. ACT. ACCOR DINGLY, THE NOTICES U/S 153A OF THE ACT WERE ISSUED BY AO AND, IN REPLY, APPELLANT FILED RETURNS OF INCOME. IT IS ALSO CLEAR FROM THE ASSESSMENT ORDER THAT THE ADDITION HAS BEEN MADE ON ACCOUNT OF BOGUS PURCHASES AS INQUIRED DURING THE ASSESSMENT P ROCEEDINGS. HOWEVER, NO ADDITION/DISALLOWANCE HAS BEEN MADE ON THE BASIS OF 4 ANY INCRIMINATING EVIDENCE FOUND DURING THE SEARCH PROCEEDINGS. THE ASSESSMENT ORDER DOES NOT SPEAK ABOUT FINDING O F ANY INCRIMINATING DOCUMENTS/EVIDENCE DURING THE SEARCH PROCEEDINGS IN THE CASE OF APPELLANT. THE ONLY BASIS OF ADDITION M ADE BY AO IS THAT THE APPELLANT HAS MADE BOGUS PURCHASES. 6.1. IN SUCH SITUATION, WHEN NO INCRIMINATING EVIDENCE I S FOUND AND ASSESSMENT IN THIS YEAR IS A COMPLETED ASSESSME NT, CAN ANY ADDITION/DISALLOWANCE BE MADE, THE ISSUE HAS BEEN D EALT WITH AND ANSWERED BY HON'BLE JURISDICTIONAL HIGH COURT IN TH E CASE CIT VS KABUL CHAWLA, AS MENTIONED BY APPELLANT IN ITS SUBM ISSIONS. HON'BLE COURT HAS TAKEN A VIEW IN SUCH CASES THAT ALTHOUGH SECTION 153A DOES NOT SAY THAT ADDITIONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SEARCH, OR OTHE R POST-SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE ASSESSIN G OFFICER WHICH CAN BE RELATED TO THE EVIDENCE FOUND, IT DOES NOT M EAN THAT THE ASSESSMENT CAN BE ARBITRARY OR MADE WITHOUT ANY REL EVANCE OR NEXUS WITH THE SEIZED MATERIAL. AS PER HON'BLE COUR T, SUCH ASSESSMENT HAS TO BE MADE UNDER THE SECTION ONLY ON THE BASIS OF THE SEIZED MATERIAL. IT IS FURTHER OPINED BY HON'BL E COURT THAT COMPLETED ASSESSMENT CAN BE INTERFERED WITH BY THE ASSESSING OFFICER WHILE MAKING THE ASSESSMENT IN THE SECTION 153A ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL FOUND DURI NG THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS OR UNDISCLOSED I NCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH W ERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. IN THE SUBSEQUENT DECISIONS AL SO, HON'BLE COURT HAS SUBSTANTIATED THE AFORESAID VIEW. IN THE CASE PR. CIT VS 5 RAM AVTAR VERMA 395 ITR 252, HON'BLE COURT HAS REIT ERATED THE AFORESAID FINDING THAT IF THE ASSESSMENTS ARE COMPL ETED ON THE DATE OF SEARCH AND NO INCRIMINATING MATERIAL IS FOU ND DURING THE SEARCH, ASSESSMENT U/S 153A OF THE ACT IS INVALID. SIMILAR VIEW HAS BEEN TAKEN BY HON'BLE COURT IN ANOTHER CASE I.E. PR . CIT VS MEETA GUTGUTIA 395 ITR 526 ALSO WHEREIN ASSESSMENTS WERE COMPLETED ON THE DATE OF SEARCH BUT NO INCRIMINATING MATERIAL PE RTAINING TO THOSE COMPLETED ASSESSMENT YEARS WERE FOUND DURING SEARCH, HON'BLE COURT HAS HELD THAT INVOCATION OF SECTION 1 53A FOR THOSE YEARS WAS INVALID. 6.2 NOW THE FACTS OF THE APPELLANT ARE TO BE EXAMINED I N THE LIGHT OF THIS LEGAL POSITION. IT IS CLEAR FROM THE ASSESSMENT ORDER AS WELL AS SUBMISSIONS OF THE APPELLANT THAT SEARCH AN D SEIZURE ACTION 132(1) OF THE ACT WAS UNDERTAKEN BY THE DEPARTMENT IN THE CASE OF APPELLANT AS ON 08.07.2015 AND ON THAT DATE, ASSESS MENT OF A.Y. 2012-13 WAS COMPLETED ASSESSMENT AS THE TIME PERIOD TO ISSUE NOTICES U/S 143(2) FOR AFORESAID YEAR HAD ALREADY E XPIRED. FURTHER, AS MENTIONED ABOVE, NO INCRIMINATING MATERIAL WAS F OUND IN THE CASE OF THE APPELLANT DURING THE SEARCH PROCEEDINGS FOR MAKING ASSESSMENT IN THIS YEAR. THEREFORE, ON BOTH THE COU NTS, NO ADDITION/DISALLOWANCE COULD HAVE BEEN MADE BY AO BY DISTURBING THE INCOME DISCLOSED IN THE RETURN FILED BY APPELLA NT. IN SUCH SITUATION, THE ADDITION/DISALLOWANCE MADE BY AO, AS MENTIONED ABOVE, FOR A.Y. 2012-13, IS NOT SUSTAINABLE AND DES ERVES TO BE DELETED. I, THEREFORE, DELETE THE ADDITION MADE BY HIM AND ALLOW THE GROUNDS TAKEN BY THE APPELLANT. 6 7. BEFORE US, THE LD. DR COULD NOT BRING OUT ANY FA CTUAL ERROR IN THE FINDINGS OF THE LD. CIT(A) NOR COULD POINT OUT ANY INCRIMINATING MATERIAL, WHICH FORMED BASIS OF ADDITION U/S 69C OF THE ACT. 8. PER CONTRA, THE LD. COUNSEL FOR THE ASSESSEE REL IED UPON THE FINDINGS OF THE LD. CIT(A). 9. WE HAVE GIVEN THOUGHTFUL CONSIDERATION TO THE OR DERS OF THE AUTHORITIES BELOW. THE FACTS ON RECORD SHOW THAT AS SESSMENT WAS FRAMED U/S 143(3) OF THE ACT VIDE ORDER DATED 25.03 .2015 AND SEARCH WAS CONDUCTED ON 08.07.2015. IN OUR CONSIDERED OPI NION, COMPLETED ASSESSMENT CAN ONLY BE REOPENED IN A SEARCH CASE WH EN THERE IS SOME INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH. OTHERWISE THE RATIO LAID DOWN BY THE HON'BLE HIGH COURT OF DE LHI IN THE CASE OF KABUL CHAWLA 380 ITR 573 AND MEETA GUTGUTIA 395 ITR 526 SQUARELY APPLY ON THE FACTS OF THE CASE IN HAND WHEREIN THE HON'BLE HIGH COURT HAS HELD THAT COMPLETED ASSESSMENT CAN BE INTERFERE D WITH BY THE ASSESSING OFFICER WHILE MAKING ASSESSMENT U/S 153A OF THE ACT ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH. ACCORDINGLY, GROUND RAISED BY THE REVEN UE IS DISMISSED. 7 10. THE CROSS OBJECTIONS OF THE ASSESSEE HAVE NOT B EEN PRESSED. ACCORDINGLY, THE CROSS OBJECTIONS STAND DISMISSED A S NOT PRESSED. 11. IN THE RESULT, THE APPEAL OF THE REVENUE IN ITA NO. 6170/DEL/2018 AS WELL AS THE CROSS OBJECTIONS IN CO NO. 207/DEL/2018 OF THE ASSESSEE STAND DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 30.06. 2020. SD/- SD/- (BHAVNESH SAINI) (N. K. BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 30 TH JUNE, 2020. VL/ COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT ASST. REGISTRAR 4. CIT(A) ITAT, NEW DELHI 5. DR 8 DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS /PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P S/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOE S TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER