M/s. Arti Chadha & Ms Puja Chadha, New Delhi V. DCIT, New Delhi

CO 373/DEL/2014

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 0379 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 14 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 05-03-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 24-02-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 22-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A MISRA
• Keywords: Unexplained investment; Document seized; Opportunity of being heard; Principle of natural justice; Period of limitation; Additional evidence; Reasonable cause; Assessment record; Time period of passing order; Documents seized
• Section: 142(1); 153A; 132; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A , NEW DELHI BEFORE SH. N. K. SAINI , AM AND SH. C. M. GARG , JM ITA NO. 4795 /DEL/201 4 : ASSTT. YEAR : 2003 - 04 ITA NO. 4796/DEL/2014 : ASSTT. YEAR : 2006 - 07 ITA NO. 4797/DEL/2014 : ASSTT. YEAR : 2007 - 08 ITA NO. 4798/DEL/2014 : ASSTT. YEAR : 2008 - 09 ITA NO. 4799/DEL/2014 : ASSTT. YEAR : 2009 - 10 DCIT, CENTRAL CIRCLE - 21, ROOM NO. 344, E - 2, ARA CENTRE, JHANDEWALAN EXT., NEW DELHI - 55 VS M S . ARTI CHADHA & M S . PUJA CHADHA (IN THEIR CAPACITY AS MEMBERS OF THE HUF KNOWN AS MOHAN LAL CHADHA & SONS, LATE SH. MOHAN LAL CHADHA KARTA), 23/10A, MOTI NAGAR, NEW DELHI - 15 (APPELLANT) (RESPONDENT) CO NO. 370 /DEL/201 4 : ASSTT. YEAR : 200 3 - 04 CO NO. 371/DEL/2014 : ASSTT. YEAR : 2006 - 07 CO NO. 372/DEL/2014 : ASSTT. YEAR : 2007 - 08 CO NO. 373/DEL/2014 : ASSTT. YEAR : 2008 - 09 CO NO. 374/DEL/2014 : ASSTT. YEAR : 2009 - 10 & ITA NO. 4870/DEL/2014 : ASSTT. YEAR : 2004 - 05 M S . ARTI CHADHA & MS . PUJA CHADHA (IN THEIR CAPACITY AS MEMBERS OF THE HUF KNOWN AS MOHAN LAL CHADHA & SONS, LATE SH. MOHAN LAL CHADHA KARTA), 23/10A, MOTI NAGAR, NEW DELHI - 15 VS DCIT, CENTRAL CIRCLE - 21, ROOM NO. 344, E - 2, A RA CENTRE, JHANDEWALAN EXT., NEW DELHI - 55 (APPELLANT) (RESPONDENT) PAN NO. A AAHC1800L A SSESSEE BY : SH. KAPIL GOEL , ADV. REVENUE BY : SMT. A. MISRA , CIT DR DATE OF HEARIN G : 23 .02.2015 DATE O F PRONOUNCEMENT : 05 . 0 3 .20 1 5 ORDER ITA NO S. 4795 TO 4799, 4870 & CO 370 TO 374 /DEL/2014 ARTI CHANDHA & PUJA CHANDHA 2 P ER BENCH : THE APPEALS BY THE DEPARTMENT AND THE CROSS - OBJECTIONS BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER DATED 16.6.2014 FOR THE ASSESSMENT YEAR 2003 - 04, SEPARATE ORDERS EACH DATED 17.6.2014 FOR THE ASSESSMENT YEAR S 2006 - 07 AND 2007 - 08 , SEPARATE ORDERS EACH DATED 18.4.2014 FOR THE ASSESSMENT YEARS 2008 - 09 AND 2009 - 10 AND APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2004 - 05 AGAINST THE ORDER DATED 1.8.2014 OF THE LD. CIT(A) - II, NEW DELHI. 2. SINCE , THE APPEAL S AND THE CROSS OBJECTION S RELAT ING TO THE SAME ASSESSEE WERE HEARD TOGETHER , SO THESE ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE . THE ASSESSEE S IN THEIR APP EAL AND THE CROSS OBJECTIONS HAVE CHALLENGED THE VALIDITY OF THE INITI ATION OF PROCEEDINGS U/S 153C OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 3. FIRST WE WILL DEAL WI TH THE CROSS OBJECTION OF THE ASSESSEE IN CO NO. 370/DEL/2014 . FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: 1. (A). THAT THE LD . AO WAS NOT JUSTIFIED TO ASSUME THE JURISDICTION U/S. 153C OF THE I. T. ACT IN THIS CASE SINCE THE PROCEEDINGS WERE BEYOND THE PERIOD OF SIX YEARS PRIOR TO THE DATE OF RECORDING OF SATISFACTION U/S. 153C OF THE I. T. ACT ON 01/10/2010 AND THE ASSESSMENT I S IN CONTRAVENTION WITH THE PROVISIONS OF SECTION 153C OF THE I. T. ACT. ITA NO S. 4795 TO 4799, 4870 & CO 370 TO 374 /DEL/2014 ARTI CHANDHA & PUJA CHANDHA 3 (B) THE ASSESSMENT U/S. 153C OF THE 1. T. ACT BEING BARRED BY LIMITATION PERIOD AND HAVING BECOME TIME - BARRED MAY KINDLY BE CANCELLED. 2. THAT THE LD. AO WAS NOT JUSTIFIED TO IGNO RE THE FACT THAT THE ASSESSMENT U/S 153C OF THE 1. T. ACT BE RESTRICTED TO ASSESSMENT IN RESPECT OF SEIZED DOCUMENTS AND IN ABSENCE OF ANY SEIZED DOCUMENTS IN THE CASE OF RESPONDENTS FOR THE YEAR UNDER ASSESSMENT, THE ASSESSMENT FRAMED U/S. 153C OF THE I. T. ACT IS TIME BARRED, BAD IN LAW AND DESERVES TO BE QUASHED. 3. THAT THE LD. AO WAS NOT JUSTIFIED TO IGNORE THE FACT THAT THE ASSESSMENT PROCEEDINGS FOR THE YEAR UNDER APPEAL WERE NOT PENDING ON THE DATE OF RECORDING OF SATISFACTION U/S 153C OF THE I. T . ACT AND ACCORDINGLY THESE PROCEEDINGS DID NOT ABATE IN PROCEEDINGS U/S 153C OF THE I. T. ACT AND THE ASSESSMENT BEING TIME BARRED, BAD IN LAW DESERVES TO BE QUASHED. 4. THAT THE LD. AO WAS NOT JUSTIFIED TO MAKE ASSESSMENT IN RESPECT OF INCOME OF M/S. M OHAN LAL & SONS (HUF) IN THE HANDS OF MS. ARTI CHADHA & MS. PUJA CHADHA SINCE HUF HAD CEASED TO EXIST IN THE ABSENCE OF SH. MOHAN LAL CHADHA, THE EARLIER KARTA AND SH. S. P. CHADHA, THE SON OF KARTA AND THE ASSESSMENT FRAMED IN THE HANDS OF INDIVIDUAL MAY KINDLY BE QUASHED. 5. (A) THAT THE LD. AO WAS NOT JUSTIFIED TO MAKE EX - PARTY ASSESSMENT U/S 144 ISSUING ALLEGED NOTICE DATED 13.12.2010 FIXING T HE CASE FOR THE FIRST TIME ON 20.12.2010 BEING THE FAG END OF THE TIME - BARRING PERIOD UPTO 31.12.2010 WITHOUT ANY REASONABLE CAUSE. (B) THAT THE LD. AO WAS NOT JUSTIFIED TO FRAME THE ASSESSMENT WITHOUT ISSUE OF STATUTORY NOTICE U/S 143(2) OF THE I. T. ACT AND THE ASSESSMENT BEING AGAINST PROVISIONS OF LAW MAY KINDLY BE QUASHED. ITA NO S. 4795 TO 4799, 4870 & CO 370 TO 374 /DEL/2014 ARTI CHANDHA & PUJA CHANDHA 4 (C) THAT THE LD. AO WAS NOT J USTIFIED TO IGNORE THE PROCEDURE TO BE FOLLOWED FOR AFFIXTURE OF NOTICE AND THE ASSESSMENT FRAMED B Y WAY OF ILLEGAL AFFIXTURE OF NOTICE U/S 142(1) OF THE I. T. ACT MAY KINDLY BE QUASHED. (D) THAT THE LD. AO WAS NOT JUSTIFIED TO COMMENCE THE ASSESSMENT P ROCEEDINGS BY WAY OF ALLEGED AFFIXTURE OF NOTICE AT THE FIRST INSTANCE WITHOUT MAKING ANY ATTEMPT OF PROPERLY SERVE THE NOTICE, WHICH IS BEING HIGHLY UNUSUAL AND UNNATURAL AND THE ASSESSMENT FRAMED AGAINST PRINCIPLES OF NATURAL JUSTICE MAY KINDLY BE QUASHE D. 6. THAT THE LD. AO WAS NOT JUSTIFIED TO MAKE EX - PARTY ASSESSMENT REJECTING THE AUDITED ACCOUNTS ALONG WITH TAX AUDIT REPORT WITHOUT ANY BASIS OR INCRIMINATING DOCUMENT AGAINST THE BUSINESS RESULTS FOR THE YEAR. 7. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE PROVISIONS OF LAW, THE LD. CIT (A) - II, HAS FAILED TO APPRECIATE THAT THE LD. AO WAS NOT JUSTIFIED TO IGNORE THE SUBMISSIONS OF THE RESPONDENTS THAT ASSESSMENT U/S. 153C OF THE I.T ACT BE RESTRICTED TO ASSESSMENT IN RESPECT OF SEIZED DO CUMENTS OF INCRIMINATING NATURE IN THE CASE OF THE RESPONDENTS FOR THE YEAR UNDER CONSIDERATION AND IN ABSENCE OF ANY INCRIMINATING SEIZED DOCUMENT IN THE CASE OF RESPONDENTS, ASSESSMENT FRAMED U/S. 153C OF THE I.T ACT FOR THE YEAR UNDER CONSIDERATION, IS TIME BARRED, BAD IN LAW AND DESERVE TO BE QUASHED. 8. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE PROVISIONS OF LAW, THE LD. CIT (A) - II, HAS ERRED IN HOLDING THE CONCLUSION THAT THE 'AUDITED BOOKS' NOTWITHSTANDING, THE BOOK RESULTS ARE REQUIR ED TO BE REJECTED, SINCE THE NARRATIONS ARE ARTIFICIAL, SHAM AND NOT REFLECTIVE OF THE ACTUAL BUSINESS/COMMERCIAL TRANSACTIONS. HOWEVER, THE LD. CIT (A) - II, STILL RELYING ON THESE BOOKS/BOOK RESULTS FOR THE PURPOSE OF ITA NO S. 4795 TO 4799, 4870 & CO 370 TO 374 /DEL/2014 ARTI CHANDHA & PUJA CHANDHA 5 CALCULATING THE PEAK FROM THE ENTRIES IN THE CASH BOOK AND FOR BANK BOOK OF THE RESPONDENTS, AMOUNTING RS. 7,97,069/ - FOR THE RELEVANT YEAR UNDER CONSIDERATION. A) THAT ON THE FACTS AND ON THE CIRCUMSTANCES OF THE CASE AND THE PROVISIONS OF LAW, THE LD. CIT (A) - II, HAS ERRED IN SUSTAINING THE ADDITION OF RS. 7,97,069/ - AS UNEXPLAINED INVESTMENT/EXPENDITURE, IGNORING THE FACT THAT THE SAME ARE DULY REFLECTED/ENTERED IN THE BOOKS OF THE ACCOUNTS OF THE RESPONDENTS FOR THE YEAR UNDER CONSIDERATION; B) THAT THE LD. CIT (A) - II, HAS WRONGLY CAL CULATED THE AMOUNT OF RS. 7,97,069/ - FOR THE PURPOSE OF SUSTAINING ADDITION AS UNEXPLAINED INVESTMENT/EXPENDITURE; C) THAT THE LD. CIT (A) - II, HAS IGNORED THE CONCEPT OF 'REAL INCOME' AND WRONGLY CONFIRMED/CALCULATED THE ADDITION OF RS. 7,97,069/ - WITHOU T GRANTING THE CREDIT OF THE PEAK OF FINANCIAL TRANSACTIONS AS PER THE CASH BOOK/BANK BOOK FOR THE PRECEDING YEARS. D) THAT THE LD. CIT (A) - II, DID NOT GIVE SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE RESPONDENTS. 10. THAT THE LD. CIT (A) - II, HAS ERRE D IN IGNORING THE REMAND REPORT, EXPLANATION GIVEN, EVIDENCES, ADDITIONAL EVIDENCES AND MATERIAL PLACED AND AVAILABLE ON RECORD. THE SAME HAS NOT BEEN PROPERLY CONSIDERED AND JUDICIALLY INTERPRETED AND THE SAME DO NOT JUSTIFY THE ADDITIONS MADE. THE ADDITI ONS HAVE BEEN SUSTAINED WITH PRESET MIND OF THE LD. CIT (A) - II AND HER ORDER IS BASED ON SURMISES, CONJECTURES AND SUSPICION. 11. THAT THE CIT (A) - II, HAS ERRED IN IGNORING THE FACT THAT THE LD. AO HAS ERRED BOTH ON FACTS AND IN LAW, IN USING STATEMENT OF VARIOUS PERSONS WITHOUT GIVING A COPY OF THE SAME AND OPPORTUNITY TO CROSS EXAMINE. ITA NO S. 4795 TO 4799, 4870 & CO 370 TO 374 /DEL/2014 ARTI CHANDHA & PUJA CHANDHA 6 12. THAT ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND THE PROVISIONS OF LAW, THE VARIOUS OBSERVATIONS AND FINDINGS OF THE LD. CIT (A) - II, AND LD. AO IN THE IMPUG NED APPELLATE ORDER AND ASSESSMENT ORDER, RESPECTIVELY, IS IRRELEVANT AND VITIATED IN THE LAW. 13. THAT THE RESPONDENTS CRAVE THE RIGHT TO ADD, AMEND, APPEND, DELET E ANY OR ALL GROUNDS OF APPEAL. 4. FROM THE ABOVE GROUNDS IT WOULD BE CLEAR THAT T HE ASS ESSEE MAINLY CHALLENGED VALIDITY OF THE ASSESSMENT ORDER PASSED U/S 153C O F THE I.T. ACT 1961 (HEREINAFTER REFERRED TO AS THE ACT) ON ACCOUNT OF JURISDICTION. THE FACTS RELATED TO THIS ISSUE IN BRIEF ARE THAT A SEARCH OPERATION WAS CONDUCTED ON 20.10.2008 ON SH. B. K. DHINGRA SMT. POONAM DHINGRA, M/S MADHUSUDAN BUILDCON PVT. LTD. AND SH. IN D ER MOHAN THAPAR GROUP TO WHICH THE ASSESSEE IS RELATED. DURING THE COURSE OF SEARCH ON THE ABOVE SAID PERSONS CERTAIN INCRIMINATING DOCUMENTS BELONGING TO THE ASSESSEE W ERE SEIZED AND PROCEEDINGS U/S 153C R.W.S 153A OF THE ACT WERE INITIATED . THE ASSESSEE S IN RESPONSE TO THE NOTICE U/S 153C OF THE ACT STATED THAT THEY ARE GRAND DAUGHTERS OF LATE SH. SH. MOHAN LAL CHADHA WHO HAS EXPIRED, THEIR FATHER SH. S.P. CHADHA AND MO THER SMT. USHA CHADHA HAVE ALSO EXPIRED AND THAT THERE IS NO HUF IN EXISTENCE AS THERE IS NO MAL E MEMBER IN THE FAMILY . HOWEVER, THE ASSESSMENT WAS FRAMED U/S 153C/144 OF THE ACT BY THE AO AT AN INCOME OF RS. 1,0 4,98,770 / - . ITA NO S. 4795 TO 4799, 4870 & CO 370 TO 374 /DEL/2014 ARTI CHANDHA & PUJA CHANDHA 7 5 . BEING AGGRIEVED THE ASSESSE E CARR IED THE MATTER TO THE LD. CIT(A) AND CHALLENGED THE ASSUMPTION OF JURISDICTION U/S 153C OF THE ACT ON THE PLEA THAT IT IS A TIME - BARRED, THE ASSESSMENT PROCEEDINGS FOR THE YEAR UNDER CONSIDERATION WERE NOT PENDING ON THE DATE OF RECORDING OF SATISFAC TION AND HENCE IT DID NOT ABATE FOR THE PURPOSE OF SECTION 153C OF THE ACT . I T WAS STATED THAT THE ASSESS MENT U/S 153C OF THE ACT WA S TO BE RESTRICTED TO THE SEIZED DOCUMENTS AND IN THE ABSENCE OF THOSE THE ASSESSMENT FRAMED U/S 153C OF THE ACT WAS BA D IN LAW AND DESERVED TO BE QUASHED. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE HELD THAT SINCE A NUMBER OF DOCUMENTS BELONGING TO THE ASSESSEE WERE SEIZED DURING SEARCH ON SH. B. K. DHINGRA, THE PROVISIONS OF SECTION 153C OF THE ACT BECA ME APPLICABLE IN THE CASE OF THE ASSESSEE AND THERE IS NO CONDITION OF SATISFACTION ON THE EXISTENCE OF INCRIMINATING DOCUMENTS FOR ASSUMPTION OF JURISDICTION U/S 153C OF THE ACT. HOWEVER, ON QUANTUM ADDITION, THE LD. CIT(A) ALLOWED PART RELIEF TO THE ASSE SSEE. 6 . NOW THE DEPAR T MENT IS IN APPEAL AGAINST THE RELIEF ALLOWED TO THE ASSESSEE AND THE ASSESSEE HAD FILED CROSS OBJECTION AGAINST THE ACTION OF THE LD. CIT(A) IN CONFIRMING THE ADDITION MADE BY THE AO IN PART AND JUSTIFYING THE ACTION OF THE AO IN IN ITIATING THE PROCEEDINGS OF SECTION 153C OF THE ACT. DURING ITA NO S. 4795 TO 4799, 4870 & CO 370 TO 374 /DEL/2014 ARTI CHANDHA & PUJA CHANDHA 8 THE COURSE OF HEARING, IT WAS A COMMON CONTENTION OF BOTH THE PARTIES THAT FACTS OF THIS CASE ARE IDENTICAL TO THE FACTS INVOLVED IN THE CASE OF M/S AQUA GUARD MARKETING PVT. LTD. IN ITA NOS. 4944 TO 4949/DEL/2013 & ITA NOS. 5424 TO 5429/DEL/2013 FOR THE ASSESSMENT YEARS 2003 - 04 TO 2008 - 09 AND EVEN THE RIVAL CONTENTIONS WERE SIMILAR AS WERE IN THE SAID CASE WHICH WE HAVE ALREADY ADJUDICATED AND DISPOSED OFF VIDE ORDER DATED 2 7 .02.2015 AND THE RELEV ANT FINDINGS HA VE BEEN GIVEN IN PARA S 10 & 11 WHICH READ AS UNDER: 10. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IT IS NOTICED THAT AN IDENTICAL ISSUE HAVING SIMILAR FACTS WAS A SUBJECT MATTER OF THE ADJUDICATION BY THE ITAT DELHI BENCH H , NEW DELHI IN THE CASE OF M/S TANVIR COLLECTIONS PVT. LTD., INDIRA PARK, PALAM COLONY, NEW DELHI VS ACIT, CC - 21, NEW DELHI IN ITA NO. 2421/DEL/2014 (SUPRA), IN THE SAID CASE ALSO THE PROCEEDIN GS U/S 153C OF THE ACT WERE INITIATED ON THE BASIS OF INCRIMINATING DOCUMENTS FOUND DURING THE COURSE OF SEARCH CONDUCTED ON 20.10.2008 IN THE CASE OF SH. B. K. DHINGRA, SMT. POONAM DHINGRA ETC. (SUPRA), IN ASSESSEE S CASE ALSO THE PROCEEDINGS U/S 153C R.W .S 153A OF THE ACT WERE INITIATED ON THE BASIS OF CERTAIN INCRIMINATING DOCUMENTS FOUND DURING THE COURSE OF AFORESAID SEARCH CONDUCTED ON 20.10.2008. THEREFORE, THE FACTS ARE SIMILAR IN ASSESSEE S CASE VIS - - VIS THE CASE OF M/S TANVIR COLLECTIONS PVT. LTD . IN THE SAID CASE THE ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE AND THE RELEVANT DISCUSSION AND FINDINGS HAVE BEEN GIVEN IN PARAS 12 TO 27 OF THE ORDER DATED 16.01.2015 WHICH ARE REPRODUCED AS UNDER: 12. LET US EXAMINE THE FACTS OF THE INSTANT CA SE MORE ELABORATELY. IT IS SEEN THAT SOME SATISFACTION WAS RECORDED, A COPY OF WHICH IS AVAILABLE ON PAGE 4 OF THE PAPER BOOK, AS UNDER : - SATISFACTION NOTE FOR ISSUING NOTICE U/S 153C OF THE I.T. ACT, 1961 IN THE CASE OF M/S TANVEER COLLECTION PVT. LTD., RZ - 126, WEST SAGAR PUR, SHANKAR PARK, NEW DELHI, PAN: AACCT6679D FOR A.Y. 2003 - 04 TO 2008 - 09. 08.09.2010 IN THE CASE OF SH. B.K. DHINGRA, SMT. POONAM DHINGRA AND M/S MADHUSUDAN BUILDCON PVT. LTD., SEARCH & SEIZURE TOOK PLACE U/S 132 ON 20.10.2008. THE UND ERSIGNED IS THE ITA NO S. 4795 TO 4799, 4870 & CO 370 TO 374 /DEL/2014 ARTI CHANDHA & PUJA CHANDHA 9 JURISDICTIONAL AO OF THIS CASE. DURING THE COURSE OF SEARCH & SEIZURE DOCUMENTS/PAPERS AT PAGES 101 TO 132 OF ANNEXURE A - 30, PAGE 144 OF ANNEXURE 7 AND PAGES 33 TO 48 OF ANNEXURE 22 SEIZED BY PARTY R - 2, ARE FOUND TO BELONG TO M/S TANVEER CO LLECTION PVT. LTD., RZ - 126, WEST SAGAR PUR, SHANKAR PARK, NEW DELHI. I HAVE EXAMINED THE ABOVE MENTIONED DOCUMENTS/PAPERS AND PROVISION OF SECTION 153C IS INVOKEABLE IN THIS CASE. AS THE UNDERSIGNED IS ALSO THE JURISDICTIONAL AO OF M/S TANVEER COLLECTION P VT. LTD., RZ - 126, WEST SAGAR PUR, SHANKAR PARK, NEW DELHI. THIS SATISFACTION NOTE IS RECORDED AND IS PLACED IN THE FILE BEFORE ISSUING NOTICE U/S 153C. ACIT, CENTRAL CIRCLE 17, NEW DELHI 13. IT CAN BE SEEN FROM THE ASSESSMENT ORDER THAT NOTICE U/S 153C WAS ISSUED TO THE ASSESSEE BY THE ACIT, CENTRAL CIRCLE - 17 ON 08.09.2010, BEING THE SAME DATE ON WHICH THE ABOVE SATISFACTION WAS RECORDED. IT IS APPARENT THAT IT WAS : SATISFACTION NOTE FOR ISSUING NOTICE U/S 153C OF THE I.T. ACT, 1961 IN THE CASE OF M/ S TANVEER COLLECTION PVT. LTD. IT IS FURTHER NOTICEABLE FROM THE ABOVE THAT : THIS SATISFACTION NOTE IS RECORDED AND IS PLACED IN THE FILE BEFORE ISSUING NOTICE U/S 153C. THE CONTENTS OF THE ABOVE SATISFACTION NOTE LEAVE NOTHING TO DOUBT THAT IT WAS REC ORDED BY THE AO OF THE ASSESSEE BEFORE TAKING UP THE ASSESSMENT U/S 153C OF THE ACT PURSUANT TO THE SEARCH CONDUCTED ON SHRI B.K. DHINGRA, SMT. POONAM DHINGRA AND M/S MADHUSUDAN BUILDCON PVT. LTD. PAGES 5 - 7 OF THE PAPER BOOK ARE THE COPIES OF THE REPLY FUR NISHED BY THE DY. COMMISSIONER OF INCOME - TAX, CENTRAL CIRCLE - 17, NEW DELHI TO SHRI B.K. DHINGRA, SMT. POONAM DHINGRA AND M/S MADHUSUDAN BUILDCON PVT. LTD., UNDER THE PROVISIONS OF RTI ACT, 2005. THE RELEVANT PART OF THE REPLY DATED 10.6.2013 GIVEN TO SH. B .K. DHINGRA, IS AS UNDER: - 2. FROM THE ASSESSMENT RECORDS OF SH. BHUPESH KUMAR DHINGRA, WHICH IS COVERED UNDER SECTION 153A, FOR THE ASST. YEARS FROM 2003 - 04 TO 2008 - 09 (BLOCK PERIOD) IT IS NOTICED THAT THERE IS NO SATISFACTION NOTE AVAILABLE/RECORDED IN RESPECT OF OTHER ENTITIES. 14. SIMILAR REPLIES HAVE BEEN GIVEN TO SMT. POONAM DHINGRA AND M/S MADHUSUDAN BUILDCON PVT. LTD. ON A CONSIDERATION OF THE ABOVE REPLIES GIVEN BY THE DEPARTMENT TO THE PERSONS SEARCHED, IT IS MANIFEST THAT THERE IS NO SATIS FACTION NOTE AVAILABLE/RECORDED IN RESPECT OF OTHER ENTITIES . ON A CONJOINT READING OF THE SATISFACTION NOTE AND REPLIES GIVEN BY THE DEPARTMENT TO THE PERSONS SEARCHED UNDER THE RTI ACT, IT CLEARLY EMERGES THAT NO SATISFACTION WAS RECORDED BY THE AO IN T HE ITA NO S. 4795 TO 4799, 4870 & CO 370 TO 374 /DEL/2014 ARTI CHANDHA & PUJA CHANDHA 10 CASES OF THE PERSONS SEARCHED U/S 132(1) OF THE ACT (I.E. SHRI B.K. DHINGRA, SMT. POONAM DHINGRA AND M/S MADHUSUDAN BUILDCON PVT. LTD.) THAT SOME BOOKS OF ACCOUNT OR DOCUMENTS ETC. BELONGING TO THE ASSESSEE WERE FOUND WHICH WERE HANDED OVER TO THE AO OF THE OTHER PERSON (I.E. THE ASSESSEE). THE SATISFACTION NOTE AS REPRODUCED ABOVE HAS BEEN PREPARED BY THE AO OF THE ASSESSEE. 15. THE LD. DR VEHEMENTLY ACCENTUATED ON THE POINT THAT SINCE THE AO OF THE PERSONS SEARCHED AND THE ASSESSEE IS SAME, IT DOES NOT MAKE ANY DIFFERENCE WHETHER THE SATISFACTION IS RECORDED IN THE CASE OF THE PERSONS SEARCHED OR OTHER PERSON. SHE EMPHASIZED ON THE FACTUM OF RECORDING SATISFACTION BY THE AO, WHICH CONDITION IN HER OPINION STOOD SATISFIED, BY VIRTUE OF IT HAVING BEEN RECORDED BY THE COMMON AO. 16. IN OUR CONSIDERED OPINION, THIS CONTENTION ADVANCED ON BEHALF OF THE REVENUE IS DEVOID OF MERIT. WE FAIL TO COMPREHEND AS TO HOW THE REQUIREMENT OF RECORDING SATISFACTION BY THE AO OF THE PERSON SEARCHED PROVIDED BY THE STAT UTE CAN BE SUBSTITUTED WITH ANYTHING ELSE. THERE IS AN UNDERLYING RATIONALE IN PROVIDING FOR RECORDING OF SUCH SATISFACTION BY THE AO OF THE PERSON SEARCHED. AS THE MONEY, BULLION, JEWELLERY, BOOKS OF ACCOUNT OR DOCUMENTS ETC. ALWAYS COME TO THE POSSESSION OF THE AO OF THE PERSON SEARCHED WHO HAS TO FRAME ASSESSMENT, IT IS ONLY HE WHO CAN FIND OUT THAT WHICH OF SUCH DOCUMENTS ETC. DO NOT BELONG TO THE PERSON SEARCHED AND ARE RELEVANT FOR THE ASSESSMENT OF THE OTHER PERSON. IT IS NOT AS IF ALL THE BOOKS OF A CCOUNT AND DOCUMENTS ETC. FOUND DURING THE COURSE OF A SEARCH ARE EVALUATED BY A SEPARATE AUTHORITY TO FIGURE OUT THAT WHICH OF THESE DOCUMENTS BELONG TO THE PERSON SEARCHED AND TO THE OTHERS AND THUS HANDED OVER TO THE CONCERNED AOS OF THE PERSON SEARCHED AND OTHERS FOR MAKING ASSESSMENT. AS IT IS ONLY THE AO OF THE PERSON SEARCHED WHO CAN REACH A CONCLUSION THAT SOME OF THE DOCUMENTS ETC. DO NOT BELONG TO THE PERSON SEARCHED BUT TO SOME OTHER PERSON, THE LEGISLATURE HAS PROVIDED FOR RECORDING OF SUCH SATI SFACTION BY THE AO OF THE PERSON SEARCHED. IT IS NOT PERMISSIBLE UNDER THE LAW TO REQUIRE THE AO OF THE OTHER PERSON TO RECORD SUCH SATISFACTION BY THE AO. 17. AS REGARDS THE OTHER ARGUMENT OF THE LD. DR THAT SINCE THE AO OF BOTH THE PERSONS SEARCHED AND THE ASSESSEE IS THE SAME PERSON, HENCE THE REQUIREMENT OF RECORDING SATISFACTION BY THE AO OF THE PERSONS SEARCHED SHOULD BE DEEMED TO HAVE BEEN FULFILLED WITH THE RECORDING OF SATISFACTION BY THE AO OF THE ASSESSEE. WE ARE AGAIN UNABLE TO APPRECIATE THIS CONTENTION THAT THE COMMONNESS OF THE AO WOULD MAKE NO ITA NO S. 4795 TO 4799, 4870 & CO 370 TO 374 /DEL/2014 ARTI CHANDHA & PUJA CHANDHA 11 DIFFERENCE IN SO FAR AS THE RECORDING OF SATISFACTION IN THE CASE OF THE PERSONS SEARCHED IS CONCERNED. WHAT IS RELEVANT FOR THIS PURPOSE IS NOT THE IDENTITY OF THE PERSON ASSESSING BUT HIS POSITION AN D THE CAPACITY. WHEN THE LAW REQUIRES THE AO OF THE PERSON SEARCHED TO RECORD THE NECESSARY SATISFACTION, IT IS THE AO HAVING JURISDICTION OVER THE PERSON SEARCHED WHO IS OBLIGED TO RECORD SUCH SATISFACTION IN THE CAPACITY OF THAT AO AND THAT TOO IN THE CA SE OF THE PERSON SEARCHED. THE MERE FACT THAT THE AO OF THE PERSON SEARCHED AND THE ASSESSEE IS THE SAME PERSON, DOES NOT, IN ANY MANNER, OBLITERATE THE REQUIREMENT OF LAW NECESSITATING THE RECORDING OF SATISFACTION IN THE CASE OF THE PERSON SEARCHED THAT MONEY, BULLION, JEWELLERY, ETC., FOUND FROM THE PERSON SEARCHED BELONGS TO THE OTHER PERSON. WHAT IS CRUCIAL TO NOTE IS CAPACITY OF THE AO AND NOT HIS IDENTITY. IN VIEW OF THE FACT THAT WHEN THE STATUTORY STIPULATION IS FOR RECORDING THE SATISFACTION BY THE AO OF THE PERSON SEARCHED, THEN, IT CANNOT BE SUBSTITUTED WITH THE SATISFACTION OF THE AO OF THE OTHER PERSON. THIS CONTENTION ALSO FAILS. 18. AT THIS STAGE, IT IS RELEVANT TO NOTE THAT THE LEGISLATURE HAS SUBSTITUTED THE LATTER PART OF SECTION 153C (1) BY THE FINANCE (NO.2) ACT, 2014 W.E.F. 1.10.2014. THE HITHERTO PART OF SUBSECTION (1) : AND THAT ASSESSING OFFICER SHALL PROCEED AGAINST EACH SUCH OTHER PERSON AND ISSUE NOTICE AND ASSESS OR REASSESS THE INCOME OF THE OTHER PERSON REFERRED TO IN SU B - SECTION (1) OF SECTION 153A. HAS BEEN SUBSTITUTED AS UNDER : - AND THAT ASSESSING OFFICER SHALL PROCEED AGAINST EACH SUCH OTHER PERSON AND ISSUE NOTICE AND ASSESS OR REASSESS THE INCOME OF THE OTHER PERSON IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A, IF, THAT ASSESSING OFFICER IS SATISFIED THAT THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED HAVE A BEARING ON THE DETERMINATION OF THE TOTAL INCOME OF SUCH OTHER PERSON FOR THE RELEVANT ASSESSMENT YEAR OR YEARS REFERRED TO IN SUB - SECTION (1) OF SECTION. 19. THE ABOVE SUBSTITUTION HAS THE EFFECT OF NOW MAKING IT MANDATORY FOR THE AO OF THE OTHER PERSON ALSO TO RECORD SATISFACTION THAT THE BOOKS OF ACCOUNT OR DOCUMENTS, ETC., HAVE A BEARING ON THE DETERMINATION OF THE TOTAL INCO ME OF SUCH OTHER PERSON BEFORE EMBARKING UPON THE EXERCISE OF HIS ASSESSMENT OR REASSESSMENT. THEREFORE, NOW UNDER THE LAW, W.E.F. 1.10.2014 IT HAS BECOME OBLIGATORY NOT ONLY FOR THE AO OF THE PERSON SEARCHED TO RECORD SATISFACTION BEFORE HANDING OVER BO OKS OF ACCOUNT OR DOCUMENTS, ETC., TO THE AO OF THE OTHER PERSON , BUT, SUCH AO OF THE OTHER PERSON IS ITA NO S. 4795 TO 4799, 4870 & CO 370 TO 374 /DEL/2014 ARTI CHANDHA & PUJA CHANDHA 12 ALSO REQUIRED TO RECORD SATISFACTION THAT THE BOOKS OF ACCOUNT OR DOCUMENTS, ETC. HAVE A BEARING ON THE DETERMINATION OF THE TOTAL INCOME OF SUCH OTHE R PERSON. IN THE PRE - SUBSTITUTION ERA OF THE RELEVANT PART OF SUB - SECTION (1) OF SECTION 153C COVERING THE PERIOD UNDER CONSIDERATION, THE JURISDICTIONAL CONDITION REMAINS THAT THE SATISFACTION IS REQUIRED TO BE RECORDED BY AND IN THE CASE OF THE PERSON SE ARCHED SO AS TO ENABLE THE AO OF THE OTHER PERSON TO START WITH THE PROCEEDINGS FOR MAKING ASSESSMENT OR REASSESSMENT. 20. THE LD. DR CONTENDED THAT RECORDING OF SATISFACTION BY THE AO OF THE ASSESSEE AT THE MOST CAN BE TREATED AS A TECHNICAL MISTAKE AN D HENCE SHOULD NOT ECLIPSE THE ASSESSMENT. RELYING ON CERTAIN JUDGMENTS, THE LD. DR SUBMITTED THAT THE TECHNICALITIES CANNOT BE ALLOWED TO PREVAIL IN THE COURSE OF INDULGENCE OF JUSTICE. 21. WE AGREE IN PRINCIPLE THAT TECHNICALITIES CANNOT COME IN THE WAY OF DISPENSATION OF JUSTICE. HOWEVER, IT IS IMPORTANT TO NOTE THAT THE LACK OF JURISDICTION BY THE AO CANNOT BE PUT UNDER THE CARPET IN THE GUISE OF A TECHNICAL DEFECT. IT GOES WITHOUT SAYING THAT NO ASSESSMENT OR OTHER PROCEEDINGS CAN BE LAWFULLY TAKEN UP AND COMPLETED UNLESS THE CONCERNED AUTHORITY HAS JURISDICTION TO DO SO. LACK OF JURISDICTION GOES TO THE VERY ROOT OF THE MATTER AND CUTS THE TREE OF ASSESSMENT IF THE FOUNDATION OF JURISDICTION IS MISSING. 22. THE LD. AR HAS BROUGHT TO OUR NOTICE TWO OR DERS PASSED BY THE DELHI BENCHES OF THE TRIBUNAL, NAMELY, ACIT VS. INLAY MARKETING PVT. LTD. (ITA NO.4200/DEL/2012), ETC. AND DCIT VS. AAKASH AROGYA MANDIR PVT. LTD. (ITA NO.5437/DEL/2013), ETC., IN WHICH THE NOTICES AND THE CONSEQUENTIAL ASSESSMENTS U/S 1 53C, UNDER IDENTICAL CIRCUMSTANCES, HAVE BEEN QUASHED. THE LD. DR CONTENDED THAT THE ABOVE REFERRED TWO TRIBUNAL ORDERS ARE PER INCURIUM AND SHOULD NOT BE FOLLOWED. THE MAIN REASON FOR DECLARING THE TRIBUNAL ORDERS AS PER INCURIUM WAS THE NONCONSIDERATION OF THE JUDGMENT OF THE HON BLE JURISDICTIONAL HIGH COURT IN JUDGMENT IN THE CASE OF SSP AVIATION LTD. VS. DCIT (2012) 252 CTR (DEL) 291. 23. LET US EXAMINE THE CASE OF SSP AVIATION LTD. (SUPRA) FOR EVALUATING THE CONTENTION THAT THE INSTANT ASSESSMENT BE DECLARED AS PER LAW. THE HON BLE HIGH COURT IN THAT CASE HAS HELD THAT THE ASSESSING OFFICER HAVING JURISDICTION OVER THE SEARCHED PERSON SHOULD BE SATISFIED THAT THE VALUABLE ARTICLE OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED DURING THE SEARCH BELONG TO A PE RSON OTHER THAN THE SEARCHED PERSON AND THERE IS NO REQUIREMENT IN SECTION 153C(1) THAT THE ASSESSING OFFICER ITA NO S. 4795 TO 4799, 4870 & CO 370 TO 374 /DEL/2014 ARTI CHANDHA & PUJA CHANDHA 13 SHOULD ALSO BE SATISFIED THAT SUCH VALUABLE ARTICLES OR BOOKS OF ACCOUNT OR DOCUMENTS BELONGING TO THE OTHER PERSON MUST CONCLUSIVELY REFLECT OR D ISCLOSE ANY UNDISCLOSED INCOME. WE FIND THAT THERE IS NO SUCH CONTROVERSY BEFORE US AS WAS THERE BEFORE THE HON BLE HIGH COURT. IT IS NOT THE CASE OF THE ASSESSEE BEFORE US IN THIS GROUND THAT THE DOCUMENTS ETC. FOUND FROM THE PERSONS SEARCHED DID NOT POSI TIVELY INDICATE THE EXISTENCE OF SOME INCOME IN THE HANDS OF THE ASSESSEE. THE ARGUMENT IS SIMPLY CONFINED TO NON - RECORDING OF SATISFACTION BY THE AO OF THE PERSONS SEARCHED. INSTEAD OF SUPPORTING THE DEPARTMENT S CASE, WE FIND THAT THIS JUDGMENT STRENGTHE NS THE ASSESASEE S CASE BY MAKING IT CLEAR IN NO UNCERTAIN TERMS THAT THE AO OF THE PERSON SEARCHED IS OBLIGED TO RECORD THE SATISFACTION. THE RELEVANT OBSERVATIONS OF THE HON BLE HIGH COURT CONTAINED IN PARA 15 MERIT REPRODUCTION AS UNDER: - IT NEEDS TO BE APPRECIATED THAT THE SATISFACTION THAT IS REQUIRED TO BE REACHED BY THE ASSESSING OFFICER HAVING JURISDICTION OVER THE SEARCHED PERSON IS THAT THE VALUABLE ARTICLE OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED DURING THE SEARCH BELONG TO A PERSON OTHER THAN THE SEARCHED PERSON. THERE IS NO REQUIREMENT IN SECTION 153C(1) THAT THE ASSESSING OFFICER SHOULD ALSO BE SATISFIED THAT SUCH VALUABLE ARTICLES OR BOOKS OF ACCOUNT OR DOCUMENTS BELONGING TO THE OTHER PERSON MUST BE SHOWN TO SHOW TO CONCLUSIVELY REFLECT OR DISCLOSE ANY UNDISCLOSED INCOME. 24. IT IS PRETTY CLEAR FROM THE ABOVE EXTRACTION THAT THE SATISFACTION AS REFERRED TO IT IN THIS CASE IS THAT OF THE ASSESSING OFFICER HAVING JURISDICTION OVER THE SEARCHED PERSON. AS SUCH, WE ARE OF THE CONSIDERED OPINIO N THAT THIS JUDGMENT DOES NOT SUPPORT THE REVENUE S CASE. RESULTANTLY, THE CHARACTERIZATION OF THE ABOVE TRIBUNAL ORDERS AS PER INCURIUM BY THE LD. DR, IS ABSOLUTELY WITHOUT ANY LEGALLY SUSTAINABLE BASIS. 25. EVEN OTHERWISE, THE JUDICIAL DISCIPLINE REQUIR ES A SUBSEQUENT BENCH TO THE FOLLOW AN EARLIER ORDER OF A COORDINATE BENCH ON THE POINT. IT IS ONLY IF THE SUBSEQUENT BENCH FEELS ITSELF UNABLE TO CONCUR WITH THE VIEW TAKEN EARLIER THAT IT IS REQUIRED TO REFER THE CASE FOR CONSIDERATION BY A SPECIAL BENCH . IN OUR CONSIDERED OPINION, THESE TWO ORDERS OF THE CO - ORDINATE BENCHES ARE PERFECTLY IN ACCORDANCE WITH LAW. 26. COMING BACK TO FACTS OF THE INSTANT CASE, IT IS PALPABLE THAT THE AO OF SHRI B.K. DHINGRA, SMT. POONAM DHINGRA AND M/S MADHUSUDAN BUILDCON P VT. LTD., DID NOT RECORD ANY SATISFACTION THAT SOME MONEY, BULLION, JEWELLERY OR BOOKS OF ACCOUNTS OR OTHER DOCUMENTS FOUND FROM THESE PERSONS BELONGED TO THE ASSESSEE. THE ABSENCE OF ITA NO S. 4795 TO 4799, 4870 & CO 370 TO 374 /DEL/2014 ARTI CHANDHA & PUJA CHANDHA 14 SUCH SATISFACTION, IN OUR CONSIDERED OPINION, FAILED TO CONFER ANY VALID AND LAWFUL JURISDICTION ON THE AO OF THE ASSESSEE TO PROCEED WITH THE MATTER OF THE ASSESSMENT U/S 153C OF THE ACT. WE, ERGO, SET ASIDE THE INITIATION AND THE ENSUING ASSESSMENT ON THE ASSESSEE AS VOID AB INITIO. 27. THE RELIANCE OF THE LD. DR ON SOME DE CISIONS ON OTHER LEGAL ISSUES OR MERITS IS OF NO CONSEQUENCE IN VIEW OF THE LACK OF JURISDICTION OF THE AO TO PROCEED WITH THE ASSESSMENTS U/S 153C OF THE ACT. IN VIEW OF OUR DECISION ON THE FIRST LEGAL ISSUE, THERE IS NO NEED TO ESPOUSE THE OTHER GROUNDS TAKEN BY THE ASSESSEE DEALING WITH OTHER LEGAL ISSUES OR MERITS. 11. SINCE THE FACTS OF THE PRESENT CASE ARE IDENTICAL TO THE FACTS INVOLVED IN THE CASE OF M/S TANVIR COLLECTIONS PVT. LTD. VS ACIT. SO, RESPECTFULLY FOLLOWING THE AFORESAID REFERRED TO ORD ER DATED 16.01.2015 IN ITA NO. 2421/DEL/2014 FOR THE ASSESSMENT YEAR 2003 - 04, THE LEGAL ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE AND ACCORDINGLY, IT IS HELD THAT THE INITIATIONS OF THE PROCEEDINGS U/S 153C OF THE ACT ARE SET ASIDE ON THE ENSUING ASSESSME NT ON THE ASSESSEE IS VOID AB INITIO. THEREFORE, THERE IS NO NEED TO ADJUDICATE THE OTHER ISSUES AGITATED ON MERIT BY THE ASSESSEE IN THIS APPEAL AND THE DEPARTMENT IN ITS APPEAL I.E. ITA NO. 5424/DEL/2013. FOR THE REMAINING ASSESSMENT YEARS I.E. THE ASSES SMENT YEARS 2004 - 05 TO 2008 - 09, THE FACTS ARE SIMILAR AND EVEN THE RIVAL CONTENTION WERE THE SAME, THEREFORE, OUR FINDINGS GIVEN IN THE FORMER PART OF THIS ORDER SHALL APPLY MUTATIS MUTANDIS FOR THESE YEARS. 7 . SO, RESPECTFULLY FOLLOWING THE AFORESAID REF ERRED TO ORDER DATED 25.02.2015 IN THE CASE OF M/S AQUA GUARD MARKETING PVT. LTD. THE CROSS OBJECTIONS OF THE ASSESSEE IS ALLOWED AND THE APPEAL OF THE DEPARTMENT IS DISMISSED. 8. FOR THE REMAINING ASSESSMENT YEA RS 2006 - 07 TO 2009 - 10 WHEREIN THE DEPARTM ENT IS IN APPEAL AND THE ASSESSEE HAS FILED THE CROSS OBJECTIONS, AND IN THE APPEAL OF THE ASSESSEE FOR THE A.Y. 2004 - 05 . THE FACTS ARE SIMILAR, THEREFORE, ITA NO S. 4795 TO 4799, 4870 & CO 370 TO 374 /DEL/2014 ARTI CHANDHA & PUJA CHANDHA 15 OUR FINDINGS GIVEN IN THE FORMER PART OF THIS ORDER SHALL APPLY MUTATIS MUTANDIS FOR ALL THE SE ASS ESSMENT YEARS . 9 . IN THE RESULT, APPEAL S OF THE DEPARTMENT ARE DISMISSED AND THE CROSS OBJECTIONS OF THE ASSESSEE FOR THE ASSESSMENT YEARS 2003 - 04 & 2006 - 07 TO 2009 - 10 AND THE APPEAL FOR THE ASSESSMENT YEAR 2004 - 05 ARE ALLOWED. ( ORDER PRONOU N CED IN T HE OPEN COURT ON 05 /0 3 / 2015 ) . SD/ - SD/ - ( C. M. GARG ) ( N. K. SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 05 / 0 3 / 2015 *SUBODH* /A. K. VERMA COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR