M/s. Dingle Buildcons Pvt. Ltd., New Delhi V. ACIT, New Delhi

CO 353/DEL/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0089 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 9 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 11-12-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 02-12-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: NIDHI SRIVASTAVA
• Assessee Lawyers: SHAR AD AGARWAL
• Keywords: Search and seizure; Opportunity of being heard; Accommodation entries
• Section: 143(3); 142(1); 153A; 68; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: B, NEW DELHI BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. O.P. KANT, ACCOUNTANT MEMBER ITA NO. 4668/DEL/2016 ASSESSMENT YEAR: 2011-12 ACIT, CENTRAL CIRCLE-8, NEW DELHI VS. M/S. DINGLE BUILDCONS PVT. LTD., B-2/5, PLOT NO. 2, ASHOK NAGAR, DB GUPTA ROAD, NEAR FAIZ CHOWK, KAROL BAGH, NEW DELHI PAN : AACCD4382P (APPELLANT) (RESPONDENT) AND C.O. NO. 353/DEL/2016 [IN ITA NO.4668/DEL/2016] ASSESSMENT YEAR: 2011-12 M/S. DINGLE BUILDCONS PVT. LTD., B-2/5, PLOT NO. 2, ASHOK NAGAR, DB GUPTA ROAD, NEAR FAIZ CHOWK, KAROL BAGH, NEW DELHI VS. ACIT, CENTRAL CIRCLE-8, NEW DELHI PAN :AACCD4382P (APPELLANT) (RESPONDENT) DEPARTMENT BY MS. NIDHI SRIVASTAVA, CIT(DR) ASSESSEE BY SH. SHASHWAT BAJPAI, CA & SH. SHARAD AGARWAL, ADV. DATE OF HEARING 04.12.2018 DATE OF PRONOUNCEMENT 11.12.2018 2 ITA NO.4668/DEL/2016 & C.O. NO. 353/DEL/2016 ORDER PER O.P. KANT, AM: THIS APPEAL BY THE REVENUE AND CROSS OBJECTION BY THE ASSESSEE ARE DIRECTED AGAINST ORDER DATED 28/06/2016 PASSED BY THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-24, NEW DELHI [IN SHORT THE LD. CIT(A)] FOR ASSESSMENT YEAR 2011-12. THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE REPRODUCED AS UNDER: 1. THE ORDER OF LD. CIT(A) IS NOT CORRECT IN LAW AND FACTS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN QUASHING THE ORDER U/S 153A OF THE ACT. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN RELYING ON THE ORDER OF HONBLE DELHI HIGH COURT IN CASE OF MR. KABUL CHAWLA AS SEC. 153A DOES NOT RESTRICT THE ASSESSMENT TO INCRIMINATING DOCUMENTS. 4. THE APPELLANT CRAVES LEAVE TO ADD, AMEND ANY/ALL THE GROUND OF APPEAL BEFORE OR DURING THE COURSE OF HEARING OF THE APPEAL. 2. THE GROUNDS RAISED IN CROSS OBJECTION ARE REPRODUCED AS UNDER: THAT GROUND NO. 2 & 3 TAKEN BY THE REVENUE ARE CONTRARY TO THE FACTS AND CIRCUMSTANCES: A) BECAUSE THE ADDITION OF SHARE CAPITAL DOES NOT ARISE FROM ANY INCRIMINATING MATERIA! UNEARTHED DURING THE SEARCH EITHER BY WAY OF UNDISCLOSED ASSETS OR DOCUMENTARY EVIDENCE AGAINST THE ASSESSEE. B) BECAUSE THE ADDITION WAS MADE MERELY ON THE BASIS OF STATEMENT IGNORING THE FACT THAT THE SAID STATEMENTS WAS RECORDED AT THE BACK OF THE ASSESSEE AND THE LD. AO DIE NOT MAKE ANY INDEPENDENT ENQUIRY BEFORE DRAWING ANY INFERENCE EITHER AGAINST OR FOR THE ASSESSEE ON THE BASIS OF THE SEARCHED MATERIAL AND COMPLETED THE ASSESSMENT ONLY ON THE BASIS OF THE STATEMENTS RECORDED U/S 132(4) OF THE ACT. 3 ITA NO.4668/DEL/2016 & C.O. NO. 353/DEL/2016 IT IS, THEREFORE, PRAYED THAT CO BE ALLOWED AND REVENUES APPEAL BE DISMISSED. 2. IN BOTH APPEAL AS WELL AS CROSS OBJECTION, THE MAIN ISSUE IN DISPUTE IS WHETHER IN VIEW OF THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF KABUL CHAWLA IN ITA NOS. 707, 709, & 713 OF 2014, DATED 28.08.2015, PROCEEDINGS UNDER SECTION 153A OF THE ACT HAVE BEEN UNDERTAKEN VALIDLY OR NOT. 3. THE BRIEFLY STATED FACTS OF THE CASE ARE THAT IN THE CASE OF THE ASSESSEE, A SEARCH AND SEIZURE ACTION UNDER SECTION 132 OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT) WAS CARRIED OUT ON 05/04/2012 AND CONSEQUENTLY NOTICE UNDER SECTION 153A OF THE ACT WAS ISSUED ON 09/07/2014, ASKING THE ASSESSEE TO FILE RETURN OF INCOME. IN RESPONSE, THE ASSESSEE FILED RETURN OF INCOME ON 31/12/2014 DECLARING TOTAL INCOME AT RS.4,81,230/-. THE ASSESSING OFFICER COMPLETED ASSESSMENT UNDER SECTION 153A READ WITH SECTION 143(3) OF THE ACT ON 30/03/2015, MAKING ADDITION OF RS.89,50,000/- ON ACCOUNT OF SHARE APPLICATION MONEY RECEIVED DURING THE YEAR FROM FOLLOWING PARTIES HOLDING THE SAME AS BOGUS: M/S. ANKAY ASSOCIATES PVT. LTD. RS.40,00,000/- M/S. SEVEN HEAVENS INFRASTRUCTURE PVT. LTD. RS.33,00,000/- M/S. S.L.B. FINLEASE RS.16,50,000/- TOTAL RS.89,50,000/- 4. AGAINST THE ADDITIONS MADE, THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A) AND CHALLENGED THE JURISDICTION ASSUMED IN MAKING ASSESSMENT UNDER SECTION 153A AS WELL AS MERIT OF THE ADDITION. THE LD. CIT(A) OBSERVED THAT ADDITION WAS MADE MERELY ON THE BASIS OF THE CONFESSION OF SH. ANIL AGRAWAL OBTAINED PRIOR TO THE SEARCH IN THE CASE OF THE ASSESSEE THAT THE ASSESSEE WAS PROVIDED ACCOMMODATION ENTRIES THROUGH HIS COMPANIES. ACCORDING TO THE 4 ITA NO.4668/DEL/2016 & C.O. NO. 353/DEL/2016 LD. CIT(A) NO INCRIMINATING MATERIAL WAS UNEARTHED DURING THE SEARCH ON THE ASSESSEE AND THUS IN VIEW OF THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF SH. KABUL CHAWLA (SUPRA), NO ADDITION COULD BE MADE UNDER SECTION 153A OF THE ACT. THE LD. CIT(A) DID NOT DECIDE MERIT OF THE ADDITION MADE UNDER SECTION 68 OF THE ACT. AGGRIEVED, THE REVENUE IS BEFORE THE TRIBUNAL BY WAY OF THIS APPEAL AND THE ASSESSEE HAS FILED CROSS OBJECTION TO THE APPEAL. 5. BEFORE US, THE LD. COUNSEL OF THE ASSESSEE SUPPORTING THE GROUNDS RAISED SUBMITTED THAT THE ADDITION IN DISPUTE OF SHARE CAPITAL UNDER SECTION 68 OF THE ACT DOES NOT ARISE FROM ANY INCRIMINATING MATERIAL FOUND DURING THE SEARCH EITHER BY WAY OF UNDISCLOSED ASSETS OR DOCUMENTARY EVIDENCE AGAINST THE ASSESSEE AND THE ADITION HAS BEEN MADE ONLY ON THE BASIS OF THE STATEMENT OF SH. ANIL AGRAWAL, WHICH WAS RECORDED AT THE BACK OF THE ASSESSEE . ACCORDING TO HIM, IN VIEW OF THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF KABUL CHAWLA (SUPRA) NO ADDITION COULD HAVE BEEN MADE IN ABSENCE OF ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF THE SEARCH AND THUS THE ASSESSMENT MADE WITHOUT ANY INCRIMINATING MATERIAL IS NOT SUSTAINABLE IN LAW. 5.2 ON THE CONTRARY, THE LD. DR SUBMITTED THAT PRESENT ASSESSMENT YEAR IN THE CASE OF THE ASSESSEE IS NOT COVERED BY THE DECISION OF KABUL CHAWALA(SUPRA) AS THE PERIOD FOR ISSUING NOTICE UNDER SECTION 143(2) OF THE ACT, HAD NOT EXPIRED PRIOR TO THE DATE OF THE SEARCH AND THUS THE LD. CIT(A) HAS COMMITTED AN ERROR IN QUASHING THE ASSESSMENT. SHE SUBMITTED THAT MATTER OF ADDITION UNDER SECTION 68 OF THE ACT NEED TO BE SEND BACK TO THE LD. CIT(A) FOR DECIDING ON MERIT. 5 ITA NO.4668/DEL/2016 & C.O. NO. 353/DEL/2016 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. IN THE INSTANT CASE THE LD. CIT(A) HAS QUASHED THE ASSESSMENT MADE UNDER SECTION 153A OF THE ACT HOLDING THAT THERE IS NO INCRIMINATING MATERIAL FOUND DURING THE COURSE OF THE SEARCH. IN CONCLUDING ABOVE, THE LD. CIT(A) RELIED ON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF SH KABUL CHAWALA (SUPRA). HONBLE HIGH COURT IN THE SAID CASE CONCLUDED THAT NO ADDITION CAN BE MADE IN ASSESSMENT UNDER SECTION 153A OF THE ACT, IF FOLLOWING TWO CONDITIONS ARE FULFILLED: 1. ASSESSMENT IS NOT PENDING ON THE DATE OF THE SEARCH OR SAY THE ASSESSMENT IS COMPLETE. 2. NO INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF THE SEARCH OR UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF THE SEARCH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. 7. THUS, FOR BARRING THE ASSESSING OFFICER FROM MAKING ADDITION UNDER SECTION 153A OF THE ACT BOTH THE ABOVE CONDITIONS SHOULD BE SATISFIED AND FULFILLING OF ONE CONDITION OF INCRIMINATING MATERIAL NOT FOUND , IS NOT SUFFICIENT. 8. IN THE INSTANT CASE, THE LD. DR HAS SUBMITTED THAT THE FIRST CONDITION OF COMPLETED ASSESSMENT HAS NOT BEEN FULFILLED. 9. THUS, THE ISSUE LEFT BEFORE US IS WHETHER ASSESSMENT IN THE YEAR CAN BE SAID TO BE PENDING. WE FIND THAT IN THE CASE OF THE ASSESSEE SEARCH WAS CONDUCTED ON 05/04/2012. THE ASSESSMENT YEAR INVOLVED BEFORE US IS 2011-12 AND THE DUE DATE OF FILING OF THE RETURN OF INCOME FOR COMPANY IS 30 TH NOVEMBER, UNLESS EXTENDED FURTHER BY THE CBDT AND IF RETURN OF INCOME IS FILED EVEN 6 ITA NO.4668/DEL/2016 & C.O. NO. 353/DEL/2016 UP TO 31/03/2012, THE LIMITATION FOR ISSUE NOTICE UNDER SECTION 143(2) OF THE ACT WOULD HAVE BEEN UP TO 30/09/2012. 10.1 IN THE FACTS OF THE CASE BEFORE US, THE THREE SITUATIONS ARISE. FIRST, IF NO RETURN OF INCOME HAS BEEN FILED THEN LIMITATION FOR ISSUE OF NOTICE UNDER SECTION 142(1) FOR CALLING RETURN OF INCOME WAS NOT EXPIRED AND THUS ASSESSMENT REMAINED PENDING FOR THE YEAR UNDER CONSIDERATION. IN THE CASE, THERE IS NOTHING ON THE RECORD, WHETHER THE ASSESSEE FILED RETURN OF INCOME IN REGULAR COURSE. IN THE CIRCUMSTANCE, THE ASSESSMENT WOULD BE PENDING FOR THE YEAR UNDER CONSIDERATION. 10.2 IF IT IS PRESUMED THAT RETURN OF INCOME WAS FILED BY THE ASSESSEE IN THE REGULAR COURSE, THEN 2 ND SITUATION WOULD ARISE AS TO WHETHER THE RETURN WAS PROCESSED UNDER SECTION 143(1) OF THE ACT OR NOT. NOTHING HAS BEEN BROUGHT ON RECORD BY THE ASSESSEE THAT PROCESSING OF THE RETURN WAS COMPLETED FOR THE YEAR UNDER CONSIDERATION. IN THIS SCENARIO ALSO , THE ASSESSMENT REMAINED PENDING . 10.3 IN THIRD SITUATION, IF IT IS PRESUMED THAT THE RETURN OF INCOME WAS FILED AND IT WAS PROCESSED, BUT LIMITATION FOR ISSUE NOTICE UNDER SECTION 143(2) OF THE ACT WAS NOT EXPIRED. IN THIS CASE WE HAVE ALREADY NOTED ABOVE THAT LIMITATION FOR ISSUE NOTICE UNDER SECTION 143(2) OF THE ACT FOR THE YEAR UNDER CONSIDERATION WAS AVAILABLE TILL 30/09/2012 AND THUS, WE CANNOT SAY THAT THE ASSESSMENT ATTAINED FINALITY. THE OPTION WAS STILL AVAILABLE WITH THE ASSESSING OFFICER TO SELECT THE CASE UNDER SCRUTINY AND MAKE ASSESSMENT, HOWEVER, DUE TO SEARCH ACTION AND PROVISIONS OF SECTION 153A, HE WAS BARRED FOR SELECTING THE CASE UNDER SECTION 143(3) OF THE ACT AND IT WAS MANDATORY FOR HIM TO ISSUE NOTICE UNDER SECTION 153A OF THE ACT. 7 ITA NO.4668/DEL/2016 & C.O. NO. 353/DEL/2016 11. THUS IN ALL THE THREE SITUATIONS, THE ASSESSMENT IN THE CASE OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION WOULD FALL IN THE CATEGORY OF PENDING ASSESSMENT. 12. IN VIEW OF THE AFORESAID, THE ASSESSMENT WAS PENDING I.E. ASSESSMENT NOT COMPLETED , BOTH THE CONDITIONS LAID DOWN IN THE DECISION OF THE KABUL CHAWLA(SUPRA) ARE NOT FULFILLED AND THUS RATIO OF THE SAID DECISION CANNOT BE APPLIED OVER THE FACTS OF THE INSTANT CASE. ACCORDINGLY, WE HOLD THAT THE ASSESSMENT FOR THE YEAR UNDER CONSIDERATION CANNOT BE QUASHED. 13. WE FIND THAT THE LD. CIT(A) HAS NOT DECIDED THE ISSUE IN DISPUTE ON MERIT, AND THEREFORE WE FEEL IT APPROPRIATE TO RESTORE THIS MATTER TO THE FILE OF THE LD. CIT(A) FOR DECIDING THE MERIT OF THE ADDITION AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 14. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLOWED PARTLY FOR STATISTICAL PURPOSES, WHEREAS THE CROSS OBJECTION FILED BY THE ASSESSEE IS DISMISSED. THE DECISION IS PRONOUNCED IN THE OPEN COURT ON 11 TH DECEMBER, 2018. S D/- SD/- (H.S. SIDHU) (O.P. KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 11 TH DECEMBER, 2018. RK/-(D.T.D.) COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI 8 ITA NO.4668/DEL/2016 & C.O. NO. 353/DEL/2016 SL. NO. PARTICULARS DATE 1. DATE OF DICTATION (ORDER DRAFTED THROUGH DRAGON SOFTWARE): 07.12.2018 2. DATE ON WHICH THE DRAFT OF ORDER IS PLACED BEFORE THE DICTATING MEMBER: 10.12.2018 3. DATE ON WHICH THE DRAFT OF ORDER IS PLACED BEFORE THE OTHER MEMBER: 4. DATE ON WHICH THE APPROVED DRAFT OF ORDER COMES TO THE SR. PS/PS: 5. DATE OF WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT: 6. DATE ON WHICH THE FINAL ORDER RECEIVED AFTER HAVING BEEN SINGED/PRONOUNCED BY THE MEMBERS: 7. DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT: 8. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 9. DATE ON WHICH FILES GOES TO THE HEAD CLERK: 10. DATE ON WHICH FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 11. DATE OF DISPATCH OF ORDER: