Tanvir Finance & Leasing Ltd., New Delhi V. DCIT, New Delhi

CO 399/DEL/2014

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 0399 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 1 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 27-02-2015
• Appeal Filed By: Assessee
• Bench Allotted: H
• Next Hearing Date: 24-02-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 26-12-2014
• Court: TRIBUNAL
• Assessee Lawyers: P K SIDHU
• Keywords: Search and seizure; Assessment record
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H: NEW DELHI BEFORE SHRI R.S. SYAL, ACCOUNTANT MEMBER AND SHRI I.C. SUDHIR, JUDICIAL MEMBER ITA NOS. 14 TO 17/DEL/2014 ASSESSMENT YEARS: 2003-04, 04-05, 07-08 & 2008-09 DCIT, VS. TANVIR FINANCE & LEASING LTD., CENTRAL CIRCLE 21, 602, D-8, ROSE APARTMENT, NEW DELHI. WARD NO. 3, MEHRAULI, NEW DELHI. AACCT6924B (APPELLANT) (RESPONDENT) CROSS OBJECTION NOS. 268 TO 271/DEL/2014 (IN ITA NOS. 14 TO 17/DEL/2014) ASSESSMENT YEARS: 2003-04, 04-05, 07-08 & 2008-09 TANVIR FINANCE & LEASING LTD., VS. DCIT, 602, D-8, ROSE APARTMENT, CENTRAL CIRCLE-21, WARD NO. 3, MEHRAULI, NEW DELHI. NEW DELHI. AACCT6924B (APPELLANT) (RESPONDENT) ITA NOS. 3317 & 3318/DEL/2014 ASSESSMENT YEARS: 2005-06 & 2006-07 DCIT, VS. TANVIR FINANCE & LEASING LTD., CENTRAL CIRCLE 21, 602, D-8, ROSE APARTMENT, NEW DELHI. WARD NO. 3, MEHRAULI, NEW DELHI. AACCT6924B (APPELLANT) (RESPONDENT) & ITA NOS. 14 TO 17, 3317 & 3318/D/ 2014 & CO NOS. 269 TO 271/D/2014 & 399 TO 400/D/14 2 CROSS OBJECTION NOS. 399 & 400/DEL/2014 (IN ITA NOS. 3317 & 3318/DEL/2014) ASSESSMENT YEARS: 2005-06 & 2006-07 TANVIR FINANCE & LEASING LTD., VS. DCIT, 602, D-8, ROSE APARTMENT, CENTRAL CIRCLE-21, WARD NO. 3, MEHRAULI, NEW DELHI. NEW DELHI. AACCT6924B (APPELLANT) (RESPONDENT) APPELLANT BY: SMT. P.K. SIDHU, CIT DR RESPONDENT BY: SH. KAPIL GOEL, ADV. DATE OF HEARING: 26.02.2015 DATE OF PRONOUNCEMENT: 27.02.2015. ORDER PER BENCH : THESE SIX APPEALS BY THE REVENUE AND EQUAL NUMBER O F CROSS OBJECTIONS BY THE ASSESSEE RELATE TO THE ASSESSMENT YEARS 2003-04 TO 2008-09. SINCE COMMON ISSUES ARE RAISED IN THESE APPEALS, WE ARE, THEREFORE, PROCEEDING TO DISPOSE THEM OFF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. THE FIRST ISSUE RAISED BY THE ASSESSEE IN ITS CR OSS OBJECTIONS FOR ALL THE YEARS UNDER CONSIDERATION IS AGAINST THE PASSING OF ORDER S BY THE ASSESSING OFFICER U/S 153C WITHOUT FIRST ACQUIRING A VALID JURISDICTION. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT A SEARCH AND SEIZURE ACTION U/S 132 OF THE INCOME TAX ACT, 1961 (HEREINAFTER ALSO C ALLED `THE ACT) WAS TAKEN IN THE CASES OF SH.B.K. DHINGRA, SMT. POONAM DHINGRA & M/S MADHUSUDAN BUILDCON PVT. LTD. ON 20.10.2008. DURING THE COURSE OF SUCH SEAR CH, CERTAIN DOCUMENTS BELONGING ITA NOS. 14 TO 17, 3317 & 3318/D/ 2014 & CO NOS. 269 TO 271/D/2014 & 399 TO 400/D/14 3 TO THE ASSESSEE WERE SEIZED. ON THE BASIS OF SUCH DOCUMENTS SO FOUND, THE PROCEEDINGS WERE INITIATED AND THE ASSESSMENTS WERE FINALIZED U/S 153C OF THE ACT. THE ASSESSEE UNSUCCESSFULLY CHALLENGED BEFORE THE L D. CIT(A) THAT A PROPER SATISFACTION WAS NOT RECORDED BY THE CORRECT AO BEF ORE TAKING UP THE PROCEEDINGS U/S 153C. THE LD. CIT(A) DISMISSED THIS GROUND. T HE ASSESSEE, THROUGH ITS CROSS OBJECTIONS, IS AGGRIEVED AGAINST THE FRAMING OF TH E INSTANT ASSESSMENTS BY THE AO U/S 153C WITHOUT ACQUIRING PROPER JURISDICTION. TH E LD. COUNSEL FOR THE ASSESSEE HAS MADE OUT A CASE THAT SINCE PROPER SATISFACTION WAS NOT RECORDED, THE CONSEQUENTIAL ASSESSMENTS SO FRAMED BE DECLARED AS NULL AND VOID. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE RELEVANT MATERIAL ON RECORD. WE HAVE ALSO TAKEN INTO CONSIDERATION THE WRITTEN SUBMISSIONS FILED BY THE LD. DR ON 27.02.2012. IT IS MANIFEST FROM THE ASSE SSMENT ORDERS FOR THE YEARS UNDER CONSIDERATION THAT A SEARCH WAS CARRIED OUT U/S 132 OF THE ACT ON SH. B.K. DHINGRA, SMT. POONAM DHINGRA & M/S MADHUSUDAN BUILDCON PVT. LTD. AND IN SUCH SEARCH PROCEEDINGS, SOME INCRIMINATING DOCUMENTS BELONGI NG TO THE ASSESSEE WERE FOUND WHICH LED TO THE MAKING OF THE INSTANT ASSESSMENTS U/S 153C OF THE ACT. IN ORDER TO PROPERLY APPRECIATE THE CONTENTION MADE BY THE LD. AR ON THIS SCORE, WE CONSIDER IT EXPEDIENT TO CONSIDER THE SO-CALLED SATISFACTION RE CORDED BY THE AO. THERE IS NO DISPUTE THAT THE SATISFACTION HAS BEEN RECORDED FOR ALL THE YEARS UNDER CONSIDERATION IN MUTATIS MUTANDIS SIMILAR MANNER. FOR THE SAKE OF REFERENCE AND ON A ITA NOS. 14 TO 17, 3317 & 3318/D/ 2014 & CO NOS. 269 TO 271/D/2014 & 399 TO 400/D/14 4 REPRESENTATIVE BASIS, WE ARE REPRODUCING THE SATISF ACTION RECORDED FOR THE A.Y. 2003-04, AS UNDER: SATISFACTION NOTE FOR ISSUING NOTICE U/S 153C OF THE I.T. ACT, 1961 IN THE CASE OF M/S TANVEER FINANCE & LEASING LTD., WZ 13, STREET NO. 18, KRISHNA PARK, TILAK NAGAR, NEW DELHI, PAN NO. FOR A .Y. 2003-04 TO 2008-09. 05/07/2010 DOCUMENTS AT PAGES 231 329 OF ANNEXURE OF A-23 AND AT PAGES 61 TO 154 OF ANNEXURE A-32 SEIZED BY THE P ARTY R-2 FROM THE PREMISES AT F 6/5, VASANT VIHAR, NEW D ELHI DURING THE COURSE OF SEARCH CONDUCTED U/S 132 OF TH E I.T. ACT, 1961 ON 20/10/2008 IN THE CASE OF SH. B.K. DHI NGRA, SMT. POONAM DHINGRA, M/S MADHUSUDAN BUILDCON P. LTD . HAVE BEEN FOUND TO BELONG TO M/S TANVEER FINANCE & LEASING LTD., WZ 13, STREET NO. 18, KRISHNA PARK, T ILAK NAGAR, NEW DELHI WHICH HAS NOT BEEN COVERED U/S 132 OF THE I.T. ACT, 1961. ACCORDINGLY, IN TERMS OF PROVI SIONS OF SEC. 153C OF THE ACT, NOTICES U/S 153C ARE HEREBY I SSUED FOR THE A.Y. 2003-04 TO 2008-09 IN THE CASE OF M/S TANVEER FINANCE & LEASING LTD. THE CASE WAS CENTRALIZED IN THE CENTRAL CIRCLE 17, NEW DELHI V IDE ORDERS DATED 03.11.2009 OF CIT-VI, NEW DELHI. SD/- DCIT, CENTRAL CIRCLE-17, NEW DELHI 5. THE VIEW CANVASSED BY THE LD. AR IS THAT NO SAT ISFACTION WAS RECORDED BY THE AO OF THE THREE PERSONS SEARCHED AND THE ABOVE SATISFA CTION WAS RECORDED IN THE FILE OF ITA NOS. 14 TO 17, 3317 & 3318/D/ 2014 & CO NOS. 269 TO 271/D/2014 & 399 TO 400/D/14 5 AND BY THE AO OF THE ASSESSEE ONLY. TO SUBSTANTIAT E THIS CONTENTION, THE LD. AR INVITED OUR ATTENTION TOWARDS PAGES 10A TO 10C OF T HE PAPER BOOK, BEING COPIES OF THE REPLY GIVEN BY THE DEPUTY COMMISSIONER OF INCOM E TAX, CENTRAL CIRCLE-17, NEW DELHI IN RESPONSE TO THE APPLICATIONS FILED BY SH. B.K. DHINGRA, SMT. POONAM DHINGRA AND M/S MADHUSUDAN BUILDCON P. LTD. UNDER T HE PROVISIONS OF RTI ACT, 2005. THE RELEVANT PART OF THE REPLY GIVEN TO SH. B.K. DHINGRA, WHICH IS SIMILAR TO THAT GIVEN TO THE OTHER TWO PERSONS ALSO, IS REPRO DUCED AS UNDER: 2. FROM THE ASSESSMENT RECORDS OF SH. BHUPESH KU MAR DHINGRA, WHICH IS COVERED U/S 153A, FOR THE ASSESSMENT 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. 3. IN CASE YOU INTEND TO FILE THE APPEAL, YOU MAY FILE THE SAME BEFORE THE ADDL. CIT, CENTRAL RANGE-2, 3 RD FLOOR, ARA CENTRE, E-2, JHANDEWALAN, NEW DELHI WITHIN 30 DAYS FROM RECEIPT OF THIS LETTER. 6. FROM THE ABOVE REPRODUCED SATISFACTION RECORDED BY THE AO OF THE ASSESSEE AND THE REPLY GIVEN UNDER THE RTI ACT TO THE THREE PERSONS WHO WERE SEARCHED U/S 132, IT BECOMES APPARENT THAT NO SATISFACTION WAS R ECORDED BY THE AO OF THE PERSONS SEARCHED BEFORE EMBARKING UPON THE ASSESSME NTS OF THE ASSESSEE. 7. AT THIS STAGE, WE WANT TO CLARIFY THAT CERTAIN CASES IN WHICH THE ASSESSMENTS WERE FRAMED U/S 153C OF THE ACT ON SOME ENTITIES PU RSUANT TO SEARCH ON SH. B.K. DHINGRA, SMT. POONAM DHINGRA & M/S MADHUSUDAN BUILD CON PVT. LTD. IN IDENTICAL CIRCUMSTANCES, CAME UP FOR CONSIDERATION BEFORE THE TRIBUNAL. IN ALL THESE CASES SIMILAR OBJECTIONS WERE RAISED BY THE ASSESSEE TO T HE EFFECT THAT NO PROPER ITA NOS. 14 TO 17, 3317 & 3318/D/ 2014 & CO NOS. 269 TO 271/D/2014 & 399 TO 400/D/14 6 SATISFACTION WAS RECORDED BY THE AO OF SUCH ASSESSE ES. THE TRIBUNAL HAS DISPOSED OF SUCH CASES INCLUDING TANVIR COLLECTIONS PVT. LTD. VS. ACIT (ITA NO. 2421/DEL/2014), DCIT VS. INLAY MARKETING PVT. LTD. (ITA NO. 4197/D/2012) AND MORE RECENTLY DCIT VS. G.S. FINDINGS & INVESTMENT PVT. L TD. (ITA NO. 5980/D/2013) BY UNIFORMLY HOLDING, INTER ALIA, AS UNDER : - I. THE RECORDING OF SATISFACTION BY THE AO HAVING J URISDICTION OVER THE PERSONS SEARCHED IS AN ESSENTIAL AND PRE-REQUISITE CONDITION FOR GIVING JURISDICTION TO THE AO OF THE OTHER PERSON. II. SUCH SATISFACTION IS REQUIRED TO BE RECORDED BY THE AO OF THE PERSONS SEARCHED AND NOT THE OTHER PERSON. III. ASSESSMENTS MADE WITHOUT RECORDING PROPER SATI SFACTION ARE NULL AND VOID. IV. EVEN IF THE AO OF THE PERSONS SEARCHED AND THE OTHER PERSON IS SAME, IT IS ONLY THE AO OF THE PERSONS SEARCHED WHO IS OBLIG ED TO RECORD SATISFACTION IN HIS CAPACITY AS THE AO OF THE PERSO N SEARCHED. 8. AFTER CONSIDERING THE ARGUMENTS MADE BY BOTH THE SIDES, ON THE LINES SIMILAR TO THOSE WHICH HAVE BEEN MADE BEFORE US ALSO, THE TRIBUNAL IN THE ABOVE ORDERS HAS QUASHED THE ASSESSMENTS SO MADE BY DECLARING TH EM VOID AB INITIO FOR LACK OF PROPER JURISDICTION. 9. IT IS PERTINENT TO MENTION THAT THE SAME THREE P ERSONS, VIZ., SH. B.K. DHINGRA, SMT. POONAM DHINGRA & M/S MADHUSUDAN BUILDCON PVT. LTD., WERE SEARCHED IN ALL THE ABOVE CASES AND THE AOS OF THOSE ASSESSEES RE CORDED SATISFACTION IN THE SAME MANNER AS HAS BEEN DONE IN THE INSTANT CASE. NO SATISFACTION WAS RECORDED ITA NOS. 14 TO 17, 3317 & 3318/D/ 2014 & CO NOS. 269 TO 271/D/2014 & 399 TO 400/D/14 7 BY THE AOS OF THE PERSONS SEARCHED. ALL THE SUBMIS SIONS MADE BEFORE US ARE SIMILAR TO THOSE MADE IN THE ABOVE CASES. SINCE TH ERE IS NO DIFFERENCE IN THE FACTS AND LEGAL POSITION OF THE CASES UNDER CONSIDERATION VIS-A-VIS THOSE ALREADY CONSIDERED AND DECIDED BY THE TRIBUNAL, RESPECTFULL Y FOLLOWING THE PRECEDENTS, WE SET ASIDE THE ASSESSMENT AND THE CONSEQUENTIAL IMPU GNED ORDERS ON THE GROUND OF LACK OF PROPER JURISDICTION OF THE AO. 10. BEFORE PARTING WITH THESE APPEALS, WE WOULD LIK E TO RECORD SOME FURTHER ARGUMENTS MADE BY THE LD. DR. SHE VEHEMENTLY ARGUE D THAT THE APPRAISAL REPORT CLEARLY MENTIONS THAT THE ASSESSEE WAS TO BE TAXED U/S 153C ALONG WITH OTHER SEVERAL PERSONS AND THE PERSONS SEARCHED WERE LIABL E TO TAX U/S 153A. IN THIS VIEW OF THE MATTER, SHE CONTENDED THAT SUCH APPRAISAL RE PORT SHOULD BE CONSIDERED AS DEPICTING A SATISFACTION. 11. WE ARE UNABLE TO ACCEPT THIS SUBMISSION BECAUSE AN APPRAISAL REPORT DOES NOT CONFER JURISDICTION ON THE AO TO FRAME ASSESSME NT ON THE OTHER PERSONS. IT IS ONLY THE RECORDING OF PROPER SATISFACTION BY THE AO OF THE PERSON SEARCHED THAT THE DOCUMENTS FOUND FROM SUCH PERSON SEARCHED BELONG TO THE OTHER PERSON, THAT THE AO OF THE `OTHER PERSON ACQUIRES JURISDICTION TO F RAME THE ASSESSMENT. APPRAISAL REPORT IS NO SUBSTITUTE OF SATISFACTION OF THE AO O F THE PERSON SEARCHED. 12. THE LD. DR FURTHER SUBMITTED THAT THE TRIBUNAL SHOULD NOT TAKE A HYPER TECHNICAL VIEW ON THE QUESTION OF RECORDING SATISFA CTION AND HENCE THE PROCEEDINGS ITA NOS. 14 TO 17, 3317 & 3318/D/ 2014 & CO NOS. 269 TO 271/D/2014 & 399 TO 400/D/14 8 SHOULD BE ALLOWED TO CONTINUE SINCE HUGE AMOUNTS AR E INVOLVED IN THE RACKET, WHICH WAS UNEARTHED BY THE SEARCH PARTY. 13. WE DULY APPRECIATE THE CONCERN OF THE LD. DR FO R THE EXCHEQUER. BUT WE ARE REMINDED OF THE BASIC PRINCIPLE ENSHRINED IN ARTICL E 265 OF THE CONSTITUTION THAT NO TAX CAN BE COLLECTED WITHOUT AUTHORITY OF LAW. THER E CAN BE NO ASSESSMENT IN THE ABSENCE OF A PROPER JURISDICTION OF THE AUTHORITY. THE QUESTION OF JURISDICTION IS A VERY IMPORTANT ASPECT, WHICH CANNOT BE EQUATED WITH A TE CHNICAL ISSUE. SIMILAR CONTENTION RAISED BY THE LD. DR HAS BEEN ELABORATE LY DEALT WITH BY THE TRIBUNAL IN THE CASE OF TANVIR COLLECTIONS P. LTD. (SUPRA). WE, THEREFORE, DO NOT APPROVE THIS CONTENTION. 14. THE CONTENTION OF THE LD. DR THAT THE HEARING OF THE INSTANT APPEALS BE BLOCKED BECAUSE THE REQUEST FOR THE CONSTITUTION OF SPECIAL BENCH IN KONNAR ENTERPRISES PVT. LTD. (ITA NO. 4141/DEL/2012 ETC.) IS PENDING CONS IDERATION, IS NOT ACCEPTABLE. IT CAN BE NOTICED THAT THE TRIBUNAL HAS UNIFORMALLY DECIDE D THE ISSUE IN THE MANNER AS STATED ABOVE AND THERE IS NO CONFLICTING DECISION ON THE SET OF FACTS WHICH ARE UNDER CONSIDERATION. FURTHER, THE LD. AR HAS SUBMITTED TH AT THE ISSUE IN THE CASE OF KONNAR ENTERPRISES LTD. IS ENTIRELY DIFFERENT AND HAS NO B EARING TO THE FACTS OF THE INSTANT CASE. 15. THE NEXT CONTENTION URGED BY THE LD. DR IS TH AT THE TRIBUNAL IN SOME OTHER CASES HAS HELD THAT WHERE THE AO OF THE PERSONS SEA RCHED AND THE OTHER PERSON IS SAME, THEN THERE IS NO NEED TO RECORD SUCH SATISFAC TION. THIS CONTENTION CANNOT BE COUNTENANCED BECAUSE THE SAME HAS BEEN REJECTED BY THE TRIBUNAL IN ALL THE ABOVE ITA NOS. 14 TO 17, 3317 & 3318/D/ 2014 & CO NOS. 269 TO 271/D/2014 & 399 TO 400/D/14 9 LISTED CASES. AS THE FACTS AND CIRCUMSTANCES OF TH E PRESENT CASE ARE IDENTICAL WITH THOSE OF TANVIR COLLECTIONS AND INLAY ETC., IN WHIC H SUCH CONTENTION HAS NOT FOUND FAVOUR WITH THE TRIBUNAL, WE PREFER TO GO WITH A VI EW TAKEN BY THE TRIBUNAL IN THESE DECISIONS. 16. AS REGARDS THE PROPOSAL OF THE REVENUE TO FIL E MISCELLANEOUS APPLICATION IN THE CASE OF TANVIR COLLECTION, WE FIND THAT NO SUCH MIS CELLANEOUS APPLICATION HAS SO FAR BEEN FILED. FURTHER, THE CONTENTION THAT THE ORDER IN THE CASE OF INLAY MARKETING IS PER INCURIUM, HAS BEEN DEALT WITH BY THE TRIBUNAL IN TH E CASE OF TANVIR COLLECTION, BY HOLDING THAT THERE IS NO FLAW IN SUCH ORDER. 17. THE OTHER OBJECTIONS TAKEN BY THE LD. DR IN HE R WRITTEN SUBMISSIONS ARE NOTHING BUT REITERATION OF THE POINTS ARGUED EARLIER, WHICH HAVE BEEN ELABORATELY DEALT WITH IN THE ABOVE REFERRED TRIBUNAL ORDERS. 18. IN VIEW OF THE FOREGOING DISCUSSION AND RESPECT FULLY FOLLOWING THE ABOVE TRIBUNAL ORDERS, WE SET ASIDE THE ASSESSMENT AND TH E IMPUGNED ORDERS FOR THE REASON THAT THE AO OF THE PERSONS SEARCHED, NAMELY, SH. B.K. DHINGRA, SMT. POONAM DHINGRA & M/S MADHUSUDAN BUILDCON PVT. LTD. DID NOT RECORD ANY SATISFACTION THAT SOME MONEY, BULLION, JEWELLERY OR BOOKS OF ACCOUNT OR OTHER DOCUMENTS FOUND FROM THESE PERSONS BELONGED TO THE ASSESSEE. THE ABSENCE OF SUCH SATISFACTION, IN OUR CONSIDERED OPINION, DID N OT TRANSLATE INTO CONFERRING A VALID AND LAWFUL JURISDICTION TO THE AO OF THE ASSESSEE T O PROCEED WITH THE MATTER OF ASSESSMENT U/S 153C OF THE ACT FOR ALL THE YEARS UN DER CONSIDERATION. ITA NOS. 14 TO 17, 3317 & 3318/D/ 2014 & CO NOS. 269 TO 271/D/2014 & 399 TO 400/D/14 10 19. IN VIEW OF OUR DECISION ON THE ABOVE PRELIM INARY LEGAL ISSUE, THERE IS NO NEED TO EXAMINE THE OTHER LEGAL ISSUES RAISED BY THE ASS ESSEE OR THE MERITS OF THE CASE AS CONTESTED IN THE PRESENT APPEALS. 20. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE ARE ALLOWED AND THOSE OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27.02.2015. SD/- SD/- (I.C. SUDHIR) JUDICIAL MEMBER (R.S. SYAL) ACCOUNTANT MEMBER DATED: 27.02.2015. *KAVITA COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI. TRUE COPY BY ORDER ASSISTANT REGISTRAR