Smt. Geeta Devi Aggarwal, New Delhi V. DCIT, New Delhi

CO 56/DEL/2014

• Counselvise Citation: [2016] 123 COUNSELVISE.COM (IT) 2521 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 7 month(s) 14 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 03-10-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 01-09-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 18-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K SAROHA
• Assessee Lawyers: SSH VED JAI N; ASHISH CHADHA
• Keywords: Capital asset
• Section: 143(3); 2(14); 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER I.T.A. NO.1906/DEL/2013 A.Y. : 2006-07 DCIT, CENTRAL CIRCLE-13, NEW DELHI , ROOM NO. 332, ARA CENTRE, JHANDEWALAN EXTN., NEW DELHI VS. SMT. GEETA DEVI AGGARWAL, SHOP NO. 2, SARBATI BUILDING, JAWALA HERI MARKET, PASCHIM VIHAR, NEW DELHI (PAN: AADPA9048F) (ASSESSEE) (RESPONDENT) AND C.O. NO. 56/DEL/2014 (IN ITA NO. 1906/DEL/2013) A.Y. : 2006-07 SMT. GEETA DEVI AGGARWAL, SHOP NO. 2, SARBATI BUILDING, JAWALA HERI MARKET, PASCHIM VIHAR, NEW DELHI (PAN: AADPA9048F) VS. DCIT, CENTRAL CIRCLE-13, NEW DELHI , ROOM NO. 332, ARA CENTRE,JHANDEWALAN EXTN., NEW DELHI (ASSESSEE) (RESPONDENT) REVENUE BY : SH. A.K. SAROHA, CIT(DR) ASSESSEE BY : S/SH. VED JAIN, ADV. & ASHISH CHADHA, CA DATE OF HEARING : 08-09-2016 DATE OF ORDER : 03-10-2016 ORDER PER H.S. SIDHU : JM THE REVENUE HAS FILED THE APPEAL AND ASSESSEE HAS FILED THE CROSS OBJECTION AGAINST THE ORDER DATED 09.1.2013 OF THE LD. CIT(A)-I, NEW DELHI RELEVANT TO ASSESSMENT YEAR 2006-07. 2 2. THE GROUNDS RAISED IN THE REVENUE S APPEAL RE AD AS UNDER:- 1. THE ORDER OF THE LD. CIT(A) IS NOT CORRECT IN L AW AND FACTS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE L D. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 57,00,000/- M ADE BY AO AS UNEXPLAINED RECEIPTS. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN LAW IN HOLDING THAT THE AGRICULTURE LAND IN QUESTION IS RURAL AGRICULTURE LAND INSTEAD OF URBAN AGRICULTURE LAND AS HELD BY THE AO THAT IT IS A CAPITAL ASSET WITHIN THE MEA NING OF SECTION 2(14) OF THE I.T. ACT, 1961. 4. THE APPELLANT CRAVES LEAVE TO ADD, AMEND ANY / A LL THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF HE ARING OF THE APPEAL. 3. THE GROUNDS RAISED IN THE ASSESSEES CROSS OBJE CTION READ AS UNDER:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A)] HAS E RRED BOTH ON FACTS AND IN LAW IN REJECTING THE CONTENTIO N OF THE ASSESSEE THAT THE PROCEEDINGS INITIATED UNDER SECTI ON 153A AGAINST THE APPELLANT ARE IN VIOLATION OF THE STATU TORY CONDITIONS AND THE PROCEDURE PRESCRIBED UNDER THE L AW AND AS SUCH THE SAME IS BAD IN LAW AND LIKELY TO BE QUASHE D. 3 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN REJECT ING THE CONTENTION OF THE ASSESSEE THAT THE NOTICE ISSUED U NDER SECTION 153A BY THE AO IS IN VIOLATION OF THE PROVI SIONS OF THE ACT AND AS SUCH THE ASSESSMENT FRAMED IN CONSEQUENC E THEREOF IS BAD. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN REJECT ING THE CONTENTION OF THE ASSESSEE THAT THE ASSESSMENT FRAM ED UNDER SECTION 153A/143(3) BEING AGAINST THE STATUTORY PRO VISION OF THE ACT AND THE PROCEDURE PRESCRIBED UNDER THE LAW, IS BAD AND THE SAME IS LIABLE TO BE QUASHED. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN REJECT ING THE CONTENTION OF THE ASSESSEE THAT THE ASSESSMENT FRAM ED IS AGAINST THE SPIRIT OF SECTION 153A OF THE ACT WHERE BY THE REASSESSMENT IS TO BE CONFINED TO THE ADDITIONS AND , DISALLOWANCES CONSEQUENT TO THE MATERIAL FOUND DURI NG THE COURSE OF THE SEARCH AND DOES NOT GIVE POWER TO THE AO TO MAKE ADDITIONS AND DISALLOWANCES WITHOUT ANY INCRIM INATING MATERIAL FOUND DURING THE COURSE OF SEARCH. 5. THAT THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTER ANY OF THE GROUNDS OF CROSS OBJECTION. 4 4. THE BRIEF FACTS OF THE CASE ARE THAT A SEARCH AN D SEIZURE OPERATION U/S. 132 OF THE I.T. ACT, 1961 IN THE SWASTIK PIPE S GROUP OF CASES ON 28.8.2008. THE ASSESSEE WAS COVERED IN THE SEARCH. NOTICE U/S. 153A WAS ISSUED ON 30.12.2009, IN RESPONSE TO WHICH THE ASSESSEE FILED RETURN ON 29.1.2010 DECLARING TOTAL INCOME OF RS. 12,96,25 1/-. NOTICE WAS ISSUED U/S. 143(2) ON 10.2.2010 AND 26.7.2010 AND U/S. 142 (1) ON 11.8.2010. THESE NOTICES WERE DULY COMPLIED WITH AND NECESSARY DETAILS / CLARIFICATIONS WERE FILED. THE CASE WAS ASSESSED A T AN INCOME OF RS. 59,06,457/- AFTER MAKING CERTAIN DISALLOWANCES VIDE HIS ORDER DATED 27.12.2010 U/S. 143(3) R.W.S. 153A OF THE I.T. AC T, 1961. 5. AGAINST THE AFORESAID ASSESSMENT ORDER DATED 27. 12.2010, ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO VIDE IMPUGNED ORDER DATED 09.1.2013 HAS PARTLY ALLOWED THE APPEAL OF TH E ASSESEEE. 6. AGGRIEVED WITH THE ORDER OF THE LD. CIT(A), REVE NUE IS IN APPEAL AND ASSESSEE IS IN CROSS OBJECTION BEFORE THE TRIB UNAL. 7. AT THE THRESHOLD, LD. COUNSEL OF THE ASSESSEE HA S STATED THAT THE CROSS OBJECTION FILED BY THE ASSESSEE HAS INVOLVED THE LEGAL ISSUE AND THEREFORE, THE SAME MAY BE FIRST DECIDED. HENCE, WE FIRST DEAL WITH THE ASSESSEES CROSS OBJECTION AND ADJUDICATE UPON THE LEGAL ISSUE. 8. AT THE THRESHOLD, LD. COUNSEL OF THE ASSESSEE ST ATED THAT THE ISSUES IN DISPUTE RELATING TO UPHOLDING THE VALIDITY OF TH E ORDER OF ASSESSMENT PASSED U/S. 153A ON 27.12.2010, IS SQUARELY COVERED IN FAVOR OF THE ASSESSEE BY THE DECISION DATED 28.8.2015 OF THE HON BLE DELHI HIGH COURT 5 PASSED IN THE CASE COMMISSIONER OF INCOME TAX VS. KABUL CHAWLA REPORTED (2016) 380 ITR 573 (DEL.) WHEREIN THE HON BLE HIGH COURT HAS HELD THAT IF THE ADDITIONS ARE MADE, BUT NOT BASED ON ANY INCRIMINATING MATERIAL FOUND DURING SEARCH OPERATION, THEN THESE ADDITIONS ARE NOT SUSTAINABLE IN THE EYES OF LAW. HE FURTHER STATED IN THE PRESENT CASE THE AO HAS MADE THE ADDITION OF RS. 57,00,000/- IN A PR OCEEDING UNDER SECTION 153A, WITHOUT THERE BEING ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF THE SEARCH IN RESPECT OF SUCH ADDITIO N. HE FURTHER STATED THAT THE ADDITIONS HAVE NO RELATION WITH ANY INCRIMINATI NG MATERIAL FOUND AND UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE CO URSE OF SEARCH AND AS SUCH ARE BAD IN LAW BEING BEYOND THE SCOPE OF JURIS DICTION U/S. 153A OF THE I.T. ACT. IN SUPPORT OF HIS CONTENTION, HE RE LIED UPON THE FOLLOWING ORDERS/JUDGMENTS OF THE HONBLE HIGH COURT AND THE ITAT. I) DELHI HIGH COURT DECISION IN THE CASE OF CIT-7 VS. RRJ SECURITIES LTD. PASSED IN ITA NO. 175-177/DEL/2015 DATED 30.10.2015. II) PRINCIPAL COMMISSIONER OF INCOME TAX-18 VS. MS. LATA JAIN 2016 (5) TMI 1273- DELHI HIGH COURT. III) PRINCIPAL COMMISSIONER OF INCOME TAX-18, VS. M S. LATA JAIN 2016 (5) TMI 292-DELHI HIGH COURT. IV) COMMISSIONER OF INCOME TAX (CENTRAL)-I VS. JAKS ON ENGINEERS LTD. 2015 (12) TMI 1523. 6 V) M/S TEGH INTERNATIONAL VS. ACIT 2016 (6) TMI 450 VI) BABA GLOBAL LTD. VS. DCIT, CENTRAL CIRCLE-29, N EW DELHI (2016) 70 TAXMANN.COM 338 (DELHI TRIBUNAL) VII) PARVNATH DEVELOPERS LTD. VS. DCIT (ITA NO. 518 8/DEL/2013) DATED 31.10.2014. VIII) SANJAY AGGARWAL VS. DCIT (ITA NO. 3184/DEL/20 13 DATED 16.6.2014) IN VIEW OF THE ABOVE, HE REQUESTED THAT THE ASSE SSMENT ORDER PASSED BY THE AO, IS BAD IN LAW AND IS LIABLE TO B E QUASHED. 9. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDER OF THE AUTHORITIES BELOW AND STATED THAT THE PROVISION OF SECTION 153A HAS RIGHTLY BEEN APPLIED IN THE CASE OF THE ASSESSEE ON THE MATERIAL AVAILABLE WITH THEM. HE RELIED UPON THE FOLLOWING JUDGMENTS OF THE HON BLE HIGH COURT AND HENCE, REQUESTED THAT THE APPEAL OF THE ASSESSEE M AY BE DISMISSED. - FILATEX INDIA LTD. VS. CIT (2014) 49 TAXMANN.COM 465 (DELHI) 10. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RELEVANT RECORDS AVAILABLE WITH US, ESPECIALLY THE ORDERS OF THE REV ENUE AUTHORITIES AND THE CASES REFERRED BY THE LD. COUNSEL OF THE ASSESSEE AND THE LD. DR. WE FIND THAT THE ADDITIONS MADE BY THE AO ARE BEYOND T HE SCOPE OF SECTION 153A OF THE INCOME TAX ACT, 1961, BECAUSE NO INCRIM INATING MATERIAL OR EVIDENCE HAD BEEN FOUND DURING THE COURSE OF SEARCH SO AS TO DOUBT THE TRANSACTIONS. IT WAS NOTICED THAT AS ON THE DATE OF SEARCH I.E. 28.8.2008, 7 NO ASSESSMENT PROCEEDINGS WERE PENDING FOR THE YEAR UNDER CONSIDERATION AND THE AO WAS NOT JUSTIFIED IN DISTURBING THE CONC LUDED ASSESSMENT WITHOUT THERE BEING ANY INCRIMINATING MATERIAL BEIN G FOUND IN SEARCH. IN FACT, IN THE ENTIRE ASSESSMENT ORDER, THE AO HAS NO T REFERRED TO ANY SEIZED MATERIAL OR OTHER MATERIAL FOR THE YEAR UND ER CONSIDERATION HAVING BEING FOUND DURING THE COURSE OF SEARCH IN THE CAS E OF ASSESSEE, LEAVE ALONE THE QUESTION OF ANY INCRIMINATING MATERIAL FO R THE YEAR UNDER APPEAL. WE ALSO FIND THAT THE CASE LAW CITED BY TH E LD. CIT(DR) IN THE CASE OF FILATEX INDIA LTD. VS. CIT (SUPRA) IS NOT R ELEVANT TO THE PRESENT CASE. THEREFORE, IN OUR CONSIDERED OPINION, THE ACT ION OF THE AO IS BASED UPON CONJECTURES AND SURMISES AND HENCE, THE ADDIT IONS MADE IS NOT SUSTAINABLE IN THE EYES OF LAW, BECAUSE THIS ISSUE IN DISPUTE IS NOW NO MORE RES-INTEGRA, IN VIEW OF THE DECISION DATED 28 .8.2015 OF THE HONBLE DELHI HIGH COURT IN THE CASE OF COMMISSIONER OF INCOM E TAX VS. KABUL CHAWLA (2016) 380 ITR 573 (DEL.) WHEREIN THE HONBLE HI GH COURT OF DELHI HAS HELD HAS UNDER:- 37. ON A CONSPECTUS OF SECTION 153A(1) OF THE ACT, READ WITH THE PROVISOS THERETO, AND IN THE LIGHT OF THE LAW EXPLA INED IN THE AFOREMENTIONED ITA NOS. 707, 709 AND 713 OF 2014 OF DECISIONS, THE LEGAL POSITION THAT EMERGES IS AS UNDER: I. ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF T HE ACT, NOTICE UNDER SECTION 153 A (1) WILL HAVE TO BE MANDATORILY ISSUED TO THE PERSON SEARCHED REQUIRING HIM TO FILE RETURNS FOR S IX AYS 8 IMMEDIATELY PRECEDING THE PREVIOUS YEAR RELEVANT TO THE AY IN WHICH THE SEARCH TAKES PLACE. II. ASSESSMENTS AND REASSESSMENTS PENDING ON THE DA TE OF THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH AYS W ILL HAVE TO BE COMPUTED BY THE AOS AS A FRESH EXERCISE. III. THE AO WILL EXERCISE NORMAL ASSESSMENT POWERS IN RESPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT AY IN WHICH THE SEARCH TAKES PLACE. THE AO HAS THE POWER TO ASSESS AND REASSESS THE 'TOTAL INCOME' OF THE AFOREMENTIONED SIX YEARS IN SEPARATE ASSESSMENT ORDERS FOR EACH OF THE SIX YEARS. IN OTHER WORDS TH ERE WILL BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX AYS IN WHICH BOTH THE DISCLOSED AND THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX. IV. ALTHOUGH SECTION 153 A DOES NOT SAY THAT A DDITIONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SEARCH, OR OTHER POST-SEARCH MATERIAL OR INFORMATI ON AVAILABLE WITH THE AO WHICH CAN BE RELATED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSESSMENT CAN BE ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOU SLY AN ITA NOS. 707, 709 AND 713 OF 2014 OF ASSESSMENT HAS TO BE MA DE UNDER THIS SECTION ONLY ON THE BASIS OF SEIZED MATERIAL. V. IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPLETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSM ENT OR 9 REASSESSMENT CAN BE MADE. THE WORD 'ASSESS' IN SECT ION 153 A IS RELATABLE TO ABATED PROCEEDINGS (I.E. THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD 'REASSESS' TO COMPLETED ASS ESSMENT PROCEEDINGS. VI. INSOFAR AS PENDING ASSESSMENTS ARE CONCERN ED, THE JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UNDER SECTION 153A MERGES INTO ONE. ONLY ONE ASSES SMENT SHALL BE MADE SEPARATELY FOR EACH AY ON THE BASIS OF THE FIN DINGS OF THE SEARCH AND ANY OTHER MATERIAL EXISTING OR BROUGHT O N THE RECORD OF THE AO. VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WI TH BY THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153 A ONL Y ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS OR UNDISCLOSED INCOME 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. 38. THE PRESENT APPEALS CONCERN AYS, 2002-03, 2005 -06 AND 2006- 07.ON THE DATE OF THE SEARCH THE SAID ASSESSMENTS A LREADY STOOD COMPLETED. SINCE NO INCRIMINATING MATERIAL WAS UNEA RTHED DURING THE SEARCH, NO ADDITIONS COULD HAVE BEEN MADE TO THE INCOME ALREADY ASSESSED. 10 11. RESPECTFULLY FOLLOWING THE PRECEDENT OF THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA, AS AFORESAID, WE QUASH THE ASSESSMENT MADE U/S. 143(3) R.W.S. 153A OF THE I.T. ACT AND DECIDE THE LEGAL ISSUE IN FAVOUR OF THE ASSESSEE AND ACCOR DINGLY, ALLOW THE CROSS OBJECTION FILED BY THE ASSESSEE. 12. AS REGARDS, THE REVENUES APPEAL IS CONCERNED, SINCE WE HAVE ALREADY QUASHED THE ASSESSMENT WHILE DEALING WITH ASSESSEES CROSS OBJECTION, AS AFORESAID, HENCE, THE REVENUES APPEA L HAS BECOME INFRUCTUOUS AND AS SUCH THE SAME IS DISMISSED. 13. IN THE RESULT, THE ASSESSEES CROSS OBJECTIO N STANDS ALLOWED AND REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 03/10/2016. SD/- SD/- [L.P. SAHU] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 03/10/2016 SRBHATNAGAR COPY FORWARDED TO: - 1. ASSESSEE - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES 11