Ranjit Singh Gill, Mohali V. DCIT, Chandigarh

ITA 100/CHANDI/2015

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3798 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 28-07-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 29-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVI SARANGA L
• Keywords: Deemed dividend
• Section: 153A; 132; 139

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.100/CHD/2015 (ASSESSMENT YEAR : 2009-10) RANJIT SINGH GILL, VS. THE D.C.I.T., HOUSE NO.2169, CENTRAL CIRCLE-II, PHASE-VII, MOHALI. CHANDIGARH. PAN: AAQPG1723J (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PARIKSHIT AGGARWAL RESPONDENT BY : SHRI RAVI SARANGAL, DR DATE OF HEARING : 22.12.2016 DATE OF PRONOUNCEMENT : 30.12.2016 O R D E R PER ANNAPURNA GUPTA, A.M . : THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-3 GURGAON, DATED 25.11.2014 RELATING TO ASSESSMENT YEAR 2009-10. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS O F APPEAL; 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE WORTHY CIT (A) IN APPEAL NO. 326/CIT (A)-3/GG N/13-14 DATED 2 02.12.2014 HAS ERRED IN PASSING THE ORDER IN CONTRAVENTION OF THE PROVISIONS OF SECTION 250 (6) OF THE INCOME TAX ACT, 1961. 2. THAT ON FACTS, CIRCUMSTANCES AND LEGAL POSITION OF THE CASE, WORTHY CIT (A) HAS ERRED IN CONFIRMING THE ACTION OF LD. AO WHEREIN HE HAS MADE AN ADDITION OF RS. 37,70,000/-BY WRONGLY INVOKING THE PROVISIONS OF SEC. 2 (22) (E) OF THE ACT AND HOLDING THE ADVANCE FOR SALE OF HOUSE AS DEEMED DIVIDEND IN THE HANDS OF APPELLANT. 3. THAT THE APPELLANT CRAVES LEAVE FOR ANY ADDITION, DELETION OR AMENDMENT IN THE GROUNDS OF APPEAL ORDER BEFORE THE DISPOSAL OF THE SAME. 3. BRIEF FACTS RELATING TO THE CASE ARE THAT A SEA RCH AND SEIZURE OPERATION UNDER SECTION 132 OF THE INCO ME TAX ACT, 1961 WAS CARRIED OUT ON 02.09.2011 IN THE BUSI NESS AND RESIDENTIAL PREMISES OF GILLCO GROUP OF CASES. A SSESSEE FILED ORIGINAL RETURN UNDER SECTION 139 (1) ON 20.06.2010 DECLARING INCOME OF RS.21,59,660/-. THE SAME INCOME WAS DECLARED IN RESPONSE TO NOTICE UNDER SEC TION 153A (1) ISSUED A 13.04.2012. THE ASSESSMENT WAS COMPLETED AT A TOTAL INCOME OF RS.59,29,660/-MAKING ADDITION OF RS.37,70,000/- BY INVOKING THE PROVISIO NS OF SECTION 2(22)(E) OF THE ACT AND HOLDING THE TRANSAC TION TO BE DEEMED DIVIDEND IN THE HANDS OF THE ASSESSEE. 4. LD. CIT (APPEALS) VIDE HER ORDER DATED 25.11.2014 UPHELD THE ORDER OF THE ASSESSING OFFICER 3 CONFIRMING THE ADDITION MADE AND DISMISSED THE APPE AL FILED BY THE ASSESSEE. AGGRIEVED BY THE SAME THE ASSESSEE HAS NOW COME UP IN APPEAL BEFORE US. 5. DURING THE COURSE OF HEARING BEFORE US THE ASSESSEE FILED AN APPLICATION DATED 30.11.2015 RAIS ING AN ADDITIONAL GROUND UNDER RULE 11 OF THE ITAT RULES, 1963. THE GROUND RAISED READS AS FOLLOWS: THE LD. AO HAS ERRED IN MAKING THE IMPUGNED ADDITION OF RS. 37,70,000/- U/S 2(22)(E) OF THE ACT IN ASSESSMENT U/S 153A, WHEN THE ADDITION IS BASED ON QUERIES RAISED AT THE TIME OF ASSESSMENT, NO INCRIMINATING DOCUMENT WAS FOUND AT THE TIME OF SEARCH AND THE ASSESSMENT FOR THE YEAR WAS A COMPLETED ASSESSMENT 6. LD. COUNSEL FOR THE ASSESSEE VIDE HIS AFORESTAT ED APPLICATION AND ALSO DURING THE COURSE OF HEARING B EFORE US, URGED THAT THE ISSUE RAISED VIDE THE ABOVE ADDI TIONAL GROUND, RELATED TO THE LEGAL ASPECT OF THE ADDITION MADE, QUESTIONING THE LEGALITY OF POWER OF LD. ASSESSING OFFICER TO MAKE ADDITION IN ASSESSMENT FRAMED U/S 153A IN RESPECT OF A COMPLETED ASSESSMENT WHEN NO INCRIMINA TING DOCUMENTS WERE FOUND. LD. COUNSEL STATED THAT THE I SSUE COULD BE DECIDED ON THE BASIS OF THE ORDERS OF BOTH THE LOWER AUTHORITIES ITSELF AND NO NEW FACTS WERE REQU IRED TO BE GONE INTO. FURTHER REFERRING TO THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF NATIONAL T HERMAL 4 POWER CO. LIMITED 229 ITR 383 (1998), LD. COUNSEL S TATED THAT BEING A LEGAL GROUND THE SAME OUGHT TO BE ENTERTAINED. 7. WE ARE AN AGREEMENT WITH THE CONTENTION OF THE LD. COUNSEL THAT THE ISSUE RAISED IN THE ADDITIONAL GROUND IS A LEGAL GROUND CHALLENGING THE JURISDICTION OF T HE ASSESSING OFFICER TO MAKE THE IMPUGNED ADDITION U/S 2(22)(E) ON ACCOUNT OF DEEMED DIVIDEND, IN THE ORDE R PASSED U/S 153A, IN THE ABSENCE OF ANY INCRIMINATIN G MATERIAL FOUND DURING SEARCH. MOREOVER WE FIND THA T THE SAME CAN BE ADJUDICATED ON THE BASIS OF FACTS AND MATERIAL. WE THEREFORE ADMIT THE ADDITIONAL GROUND RAISED FOLLOWING THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LIMITED (SUPRA). 8. DURING THE COURSE OF HEARING BEFORE US ON THE ADDITIONAL GROUND RAISED, LD. COUNSEL FOR THE ASSES SEE STATED THAT THE ADDITION ON ACCOUNT OF DEEMED DIVID END WAS BASED MERELY ON QUERIES RAISED AT THE TIME OF ASSESSMENT AND NOT ON ANY INCRIMINATING DOCUMENT FO UND AT THE TIME OF SEARCH. LD. COUNSEL STATED THAT THE SAME WAS EVIDENT FROM A PLAIN READING OF THE ASSESSMENT ORDER AS WELL AS THE CIT (APPEALS) ORDER, WHERE THERE IS NO REFERENCE TO ANY INCRIMINATING MATERIAL FOUND DURIN G THE COURSE OF SEARCH WHICH COULD LEAD TO THE AFORESTAT ED ADDITION MADE. LD. COUNSEL THEREAFTER STATED THAT SEARCH 5 IN THE PRESENT CASE WAS CONDUCTED ON 02.09.2011.THE ORIGINAL RETURN, LD. COUNSEL POINTED OUT, WAS FILED BY THE ASSESSEE ON 20.01.2010 WHICH HAD BEEN INADVERTENTLY MENTIONED AS 20.06.2010 IN THE CIT (APPEALS) ORDER. LD. COUNSEL DREW OUR ATTENTION TO THE CERTIFIED COPY OF THE ACKNOWLEDGEMENT OF RETURN OF INCOME ENCLOSED IN THE PAPER BOOK TO PROVE HIS POINT. THEREAFTER LD. COUNS EL STATED THAT NO NOTICE FOR INITIATING ASSESSMENT PRO CEEDINGS HAD BEEN ISSUED TO THE ASSESSEE TILL THE 30.09.201 0 WHICH WAS THE TIME-LIMIT GRANTED BY THE LEGISLATURE FOR I SSUING SUCH NOTICES. ASSESSMENT IN THE PRESENT CASE WAS THEREFORE COMPLETED UNDER SECTION 143 (1) OF THE AC T, BEFORE THE INITIATION OF SEARCH ON 02.09.2011. LD. COUNSEL FOR THE ASSESSEE THEREAFTER DREW OUR ATTENTION TO T HE DECISION OF THE ITAT, CHANDIGARH BENCH, IN THE CASE OF MALA BUILDERS AND STATED THAT IT HAD BEEN HELD IN THAT CASE THAT IN CASES WHERE ASSESSMENT WAS ORIGINALLY COMPLETED, ADDITION U/S 153A COULD BE MADE ONLY ON THE BASIS OF INCRIMINATING MATERIAL FOUND DURING THE CO URSE OF SEARCH. LD. COUNSEL STATED THAT IN VIEW OF THE SAME THERE WAS NO CASE FOR MAKING ANY ADDITION IN THE PRESENT CASE. 9. LD.DR WAS ASKED AT BAR, TO PRODUCE THE EVIDENCE/MATERIAL FOUND DURING SEARCH, BASED ON WH ICH THE ADDITION ON ACCOUNT OF DEEMED DIVIDEND WAS MADE IN THE PRESENT CASE. SEVERAL OPPORTUNITIES WERE GIVEN TO THE LD. DR. BUT NOTHING WAS PRODUCED BEFORE US. 6 10. WE HAVE HEARD THE SUBMISSIONS OF BOTH THE PARTIES. WE FIND MERIT IN THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE ADDITION MADE IN THE PRES ENT CASE WAS NOT BASED ON ANY INCRIMINATING MATERIAL FO UND DURING THE COURSE OF SEARCH. A PERUSAL OF THE ASSES SMENT ORDER PASSED U/S 153A OF THE INCOME TAX ACT,1961, MAKING THE IMPUGNED ADDITION ,SHOWS THAT THE STARTI NG POINT FOR INVESTIGATING INTO THE ISSUE OF DEEMED D IVIDEND AND MAKING THE ADDITION WAS THE DETAILS FILED BY TH E ASSESSEE DURING ASSESSMENT PROCEEDINGS AND NOT ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH. THE RELEVANT PARA OF THE ASSESSMENT ORDER DEALING W ITH THE ADDITION MADE ON ACCOUNT OF DEEMED DIVIDEND BEGINS WITH THE FOLLOWING WORDS; ADDITION ON ACCOUNT OF DEEMED DIVIDEND UNDER SECTION 2(22)(E) OF THE INCOME TAX ACT, 1961 : A PERUSAL OF THE DETAILS FILED BY THE ASSESSEE REVEALED THAT GILLCO DEVELOPERS AND BUILDERS PVT. LTD. (PAN-AACCG1275G) HAS ADVANCED A SUM OF RS.37,70,000/- ON 19 TH JUNE,2008 TO THE ASSESSEE WHO IS DIRECTOR IN GILLCO DEVELOPERS AND BUILDERS PVT. LTD. (PAN-AACCG1275G) AND ALSO HOLDS 70% EQUITY SHARES OF THE COMPANY. 11. FURTHER DESPITE REPEATED OPPORTUNITIES GIVEN T O THE LD. DR DURING THE COURSE OF HEARING BEFORE US N O INCRIMINATING MATERIAL PROCURED DURING THE COURSE O F 7 SEARCH WAS PRODUCED BEFORE US WHICH FORMED THE BAS IS FOR THE IMPUGNED ADDITION. IN VIEW OF THE SAME WE ARE I N AGREEMENT WITH THE LD. COUNSEL FOR THE ASSESSEE THA T THE ADDITION MADE IN THE IMPUGNED CASE WAS NOT BASED ON ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH. FURTHER WE FIND THAT ON THE DATE OF INITIATION OF T HE SEARCH THE TIME LIMIT FOR ISSUING NOTICE FOR THE PURPOSE O F INITIATING REGULAR ASSESSMENT PROCEEDINGS, UNDER SE CTION 143(2) OF THE ACT, HAD EXPIRED AND NO NOTICE HAD B EEN ISSUED TO THE ASSESSEE TILL THEN. THE LD.DR HAS NOT CONTROVERTED THIS ARGUMENT OF THE ASSESSEE. FOR ALL PURPOSES THEREFORE THE ASSESSMENT OF THE ASSESSEE I S TO BE TREATED AS HAVING BEEN COMPLETED UNDER SECTION 143 (1) OF THE INCOME TAX ACT, 1961. ON IDENTICAL SET OF FACTS , WE FIND THAT THE ITAT, CHANDIGARH BENCH, IN THE CASE O F MALA BUILDERS AND OTHERS, HAS CATEGORICALLY HELD THAT NO ADDITION CAN BE MADE UNDER SECTION 153A OF THE INCO ME TAX ACT 1961 IN THE ABSENCE OF ANY INCRIMINATING MA TERIAL FOUND DURING THE COURSE OF SEARCH. THE DECISION REN DERED IN THE CASE OF MALA BUILDERS (SUPRA) THEREFORE SQUA RELY APPLIES TO THE PRESENT CASE AND IN VIEW OF THE SAME WE HOLD THAT IN THE ABSENCE OF ANY INCRIMINATING MATER IAL FOUND DURING THE COURSE OF SEARCH AND IN VIEW OF TH E FACT THAT THE ASSESSMENT IN THE PRESENT CASE WAS COMPLET ED UNDER SECTION 143 (1), NO ADDITION WHATSOEVER COULD HAVE BEEN MADE. IN VIEW OF THE SAME THE ADDITIONAL GROUN D RAISED BY THE ASSESSEE IS ALLOWED. SINCE WE HAVE SE T ASIDE 8 THE ORDER ON THE LEGAL GROUND RAISED BY THE ASSESSE E WE FIND NO NEED TO GO INTO THE MERITS OF THE CASE. 12. IN VIEW OF THE ABOVE, THE APPEAL OF THE ASSESS EE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (BHAVNESH SAINI) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 30 TH DECEMBER, 2016 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH