DCIT, New Delhi V. Sh. Ram Avtar Verma, New Delhi

ITA 1086/DEL/2010

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7164 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 10 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 01-12-2015
• Assessment Year: 2000-2001
• Appeal Filed On: 11-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B K SINGH
• Keywords: Unexplained investment; Business income; Salary income
• Section: 80HHC; 153A; 132

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H : NEW DELHI BEFORE SHRI I.C.SUDHIR, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI , ACCOUNTANT MEMBER I TA NO S . 1086 &1087 /DEL/ 2010 (ASSESSMENT YEAR: 2000 - 01& 2001 - 02 ) DCIT, CENTRAL CIRCLE - 23, NEW DELHI VS. RAM AVTAR VERMA, A.K. - 77, SHALIMAR BAGH, NEW DELHI (APPELLANT) (RESPONDENT) C.O.115 &116/DEL/2010 I TA NO S . 1086 &1087 /DEL/ 2010 (ASSESSMENT YEAR: 2000 - 01& 2001 - 02 ) RAM AVTAR VERMA, A.K. - 77, SHALIMAR BAGH, NEW DELHI VS. DCIT, CENTRAL CIRCLE - 23, NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. B.K.SINGH, CIT DR RESP ONDENT BY : SH. RAKESH GUPTA , ADV SH. TARUN KUMAR, ADV O R D E R PER PRASHANT MAHARISHI , A. M. 1 . TH ESE APPEAL S PREFERRED BY THE REVENUE AND CROSS OBJECTIONS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT (A) - III , NEW DELHI DATED 17.12.2009 FOR THE ASSESSMENT YEAR 200 0 - 01 AND 2001 - 02 , WHEREIN HE HAS HELD THAT SINCE FOR THE ASSESSMENT YEAR UNDER CONSIDERATION THE ASSESSEE FILED RETURN OF INCOME U/S 143(1) BEFORE THE SEARCH AND FURTHER NO DOCUMENTS OR OTHER MATERIAL FOUND OR SEIZED DURING THE COURSE OF SEARCH , T HERE CANNOT BE ANY ADDITION U/S 80HHC AS WELL AS OTHER ADDITIO NS MADE BY AO. 2 . REVENUE HAS CHALLENGED THE ORDER OF CIT (A) RAISING FOLLOWING GROUNDS OF APPEAL FOR BOTH THE YEARS : - PAGE 2 OF 6 DCIT V RAMAVTAR VERMA A Y 2000 - 01 & 2001 - 02 ITA NO 1086 & 1087 /DEL/2010 & CO NO 115 & 116/DEL/2010 1 . WHETHE R ON THE FACTS AND CIRCUMSTANCE S OF THE CASE , THE CIT A(0 HAS ERRED IN LAW AND ON FACTS IN ANNULLING THE ASSESSMENT BY HOLDING THAT NO DOCUMENT WAS SEIZED DURING THE SEARCH PERTAINING TO THIS ASSESSMENT YEAR? 2 . 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT (A) HAS ERRED IN LAW AND ON FACTS BY RELYING UPON THE IMPUGNED ORDERS OF THE ITAT. 3 . WHET HER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, CIT (A) HAS ERRED IN LAW IN FOLLOWING THE CIRCULAR NO 7 F 2003 DATED 5 - 9 - 2003 ISSUED BY THE CBDT. 4 . WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT (A) HAS ERRED IN LAW BY N OT APPRECIATING THE FACTS THAT THERE IS NOT PRECONDITION THAT DOCUMENTS PERTAINING TO EACH OF THE ASSESSMENT YEAR FALLING UNDER THE PROVISIONS OF SECTION 153C /153A SHOULD BE FOUND. 5 . THE ORDERS OF THE CIT (A) IS EROGENOUS AND NOT TENABLE IN LAW AN D ON FACTS 3 . MAINLY REVENUE HAS CHALLENGED ORDER OF LD CIT (A) ANNULLING THE ASSESSMENT ORDER THAT THERE IS NO REQUIREMENT OF THE DOCUMENTS UNEARTHED DURING THE COURSE OF SEARCH FOR EACH OF THE ASSESSMENT YEAR. 4 . IN THE SAME APPEAL ASSESSEE FILED CROSS OBJECTIONS VIDE C.O. NO.115 & 166/DEL/2010 CHALLENGING AS PER GROUNDS OF CROSS OBJECTION AS UNDER: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) WAS INCORRECT AND UNJUSTIFIED IN HOLDING THAT BUSINESS AND RESIDENTIAL PREMI SE ON THE APPELLANT WERE SEARCHED U/S 132 OF THE ACT ON 20.01.2006. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) WAS INCORRECT AND UNJUSTIFIED IN NOT HOLDING THE ASSESSMENT AS ILLEGAL INVALID AB INITIO VOID SINCE THERE CAN NOT BE ANY 153A ASSESSMENT IN THE ABSENCE OF SEARCH AND CONDUCT OF THE SEARCH. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) WAS INCORRECT AND UNJUSTIFIED IN NOT HOLDING THE ASSESSMENT AS ILLEGAL INVALID AB INITIO VOID PAR TICULARLY WHEN THE AO HIMSELF AGREES THAT IT WAS A CASE OF 153C AND NOTICES U/S 153A WAS ONLY AS A RESULT OF POWER U/S 153C WHICH ITSELF IN THIS CASE WAS INVALID. PAGE 3 OF 6 DCIT V RAMAVTAR VERMA A Y 2000 - 01 & 2001 - 02 ITA NO 1086 & 1087 /DEL/2010 & CO NO 115 & 116/DEL/2010 5 . BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL EARNING SALARY INCOME, INCOM E FROM HOUSE PROPERTY AND OTHER SOURCE BESIDES HAVING BUSINESS INCOME FROM HIS PROPRIETARY CONCERN. A SEARCH WAS CARRIED OUT BY REVENUE AT THE BUSINESS AND RESIDENTIAL PREMISES OF THE ASSESSEE ON 20.01.2006. IT IS THE CONTENTION OF THE ASSESSEE THAT DURIN G THE COURSE OF SEARCH NO INCRIMINATING DOCUMENTS WERE FOUND AND ALL THE ADDITION HAVE BEEN MADE BASED ON THE SCRUTINY OF THE ACCOUNTS OF THE APPELLANT. THEREFORE THE LD CIT(A) HELD THAT NO ADDITION CAN BE MA DE IN THE HANDS OF THE ASSESSEE IN ABSENCE OF D OCUMENTS RELEVANT FOR ADDITION FOUND DURING THE COURSE OF SEARCH. A GAINST THIS THE REVENUE IS IN APPEAL BEFORE US. THE ASSESSEE HAS FILED CROSS OBJECTIONS CONTENDING THAT THERE IS NO SEARCH CARRIED OUT AT THE ADDRESS OF THE ASSESSEE ETC. 6 . BEFORE US THE LD D R SUBMITTED THAT THERE IS NO REQUIREMENT THAT THERE SHOULD BE SOME DOCUMENTS WHICH ARE FOUND DURING THE COURSE OF SEARCH FOR MAKING ADDITION AND AO IS EMPOWERED TO APPRECIATE THE MATERIAL ALREADY ON RECORD. HE RELIED ON THE ORDER OF AO AND SUBMITTE D THAT CIT (A) HAS ERRED IN ANNULLING THE ASSESSMENT ERRONEOUSLY. 7 . LD AR SUBMITTED THAT NOW THIS ISSUE HAS BEEN SETTLED BY THE HONOURABLE DELHI HIGH COURT IN CASE OF CIT V KABUL CHAWLA ( ITA 707/2014) DATED 28.08.2015 THAT A THERE CANNOT BE ADDITION IN THE CASE OF ASSESSEE IN CASE OF COMPLETED ASSESSMENTS IF DURING THE COURSE OF SEARCH NO INCRIMINATING DOCUMENTS WERE FOUND. HE SUBMITTED THAT ALL THESE ASSESSMENT YEARS ARE COMPLETED ASSESSMENT YEARS. PAGE 4 OF 6 DCIT V RAMAVTAR VERMA A Y 2000 - 01 & 2001 - 02 ITA NO 1086 & 1087 /DEL/2010 & CO NO 115 & 116/DEL/2010 8 . WE HAVE CAREFULLY PERUSED THE ORDERS OF THE LOWER AU THORITIES. FROM THE READING OF THE ASSESSMENT ORDER FOR AY 2000 - 01 WE COULD NOTE THAT FOLLOWING ADDITIONS AND DISALLOWANCE HAVE BEEN MADE: A. DEDUCTION U/S 80HHC HAS BEEN DISALLOWED TO THE EXTENT OF RS.43,94,953/ - FROM EXPORT OF JEWELLERY. THIS DISALLOWA NCE HAS BEEN MADE ONLY BECAUSE OF THE REASON THAT NET PROFIT RATE OF 61.27% IS VERY HIGH. THERE IS NO REFERENCE OF ANY INCRIMINATING MATERIAL BASED ON WHICH THE DEDUCTION IS DISALLOWED. B. THERE IS DISALLOWANCE OF STANDARD DEDUCTION CLAIMED BY THE ASSESSE E OF RS.24,000/ - AGAINST THE REMUNERATION RECEIVED BY THE ASSESSEE AS A DIRECTOR OF ONE COMPANY WHERE HE HAS HOLDING ALONG WITH HIS FAMILY MEMBERS ENTIRE SHARE HOLDING OF THE COMPANY. FOR THE DISALLOWANCE OF THIS SUM NO REFERENCE HAS BEEN MADE TO ANY INCRI MINATING MATERIAL C. ADDITION OF RS.2373378/ - HAS BEEN AS UNEXPLAINED INVESTMENT IN THE SHARES OF RANBAXY LTD. THE COMPUTATION OF INCOME AS SHOWN WITH THIS ITEM HAS BEEN DISCUSSED IN THE COMPUTATION FILED WITH THE RETURN OF INCOME AND AO HAS NOT LEAD ANY EVIDENCE THAT THIS ADDITION IS BECAUSE OF SOME INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. D. THE ADDITION OF RS.1,60,000/ - HAS BEEN BASED ON THE INFORMATION CONTAINED IN THE BALANCE SHEET WHERE PAGE 5 OF 6 DCIT V RAMAVTAR VERMA A Y 2000 - 01 & 2001 - 02 ITA NO 1086 & 1087 /DEL/2010 & CO NO 115 & 116/DEL/2010 UNSECURED LOAN FROM RELATIVES IS SHOWN. IN T HAT ADDITION ALSO THERE IS NO REFERENCE TO ANY MATERIAL UNEARTH ED DURING THE COURSE OF SEARCH. E. ADDITION OF RS.239769/ - HAS BEEN MADE IN THE HANDS OF THE ASSESSEE ON ACCOUNT OF LOW HOUSEHOLD WITHDRAWAL ON ESTIMATE BASIS. FOR THIS ADDITION ALSO WE COUL D NOT FIND ANY REFERENCE TO ANY INCRIMINATING MATERIAL. 9 . IDENTICALLY THE ADDITIONS/ DISALLOWANCES WERE ALSO MADE FOR AY 2001 - 02 WITHOUT ANY REFERENCE TO ANY INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH. 10 . AS PER THE PAPER BOOK FILED BY THE LD AR SHOWING THE PANCHNAMA FROM WHERE LD DR COULD NOT POINT OUT ANY MATERIAL FOUND DURING THE COURSE OF SEARCH WHICH COULD GIVE EVEN REMOTE POSSIBILITIES OF ALTERING THE INCOME OF THE ASSESSEE BASED ON ANY INCRIMINATING DOCUMENTS. ADMITTEDLY BOTH THE ASSESSMENT YEARS IN THESE APPEALS ARE COMPLETED ASSESSMENTS IN CASE OF THE ASSESSEE. THE RELIANCE PLACED UPON BY THE LD AR ON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF KABUL CHAWLA VS. CIT ( SUPRA) WHERE ORIGINAL ASS ESSMENT HAVE BEEN MADE U/S 143(1) OF THE ACT IS APT AND SQUARELY COVERS ISSUE IN FAVOUR OF THE ASSESSEE . THE HONBLE HIGH COURT IN PARA NO. 37 OF THAT DECISION HAS HELD THAT NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE IN ABSENCE OF ANY INCRIMINAT ING MATERIAL UNEARTH DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS. ON READING OF THE ORDER OF THE AO WE COULD NOT FOUND THAT THERE IS ANY PAGE 6 OF 6 DCIT V RAMAVTAR VERMA A Y 2000 - 01 & 2001 - 02 ITA NO 1086 & 1087 /DEL/2010 & CO NO 115 & 116/DEL/2010 INCRIMINATING MATERIAL REFERRED BY THE AO WHICH IS FOUND DURING THE COURSE OF SEARCH FOR MAKING THESE ADDIT IONS. THEREFORE RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF KABUL CHAWLA VS. CIT (SUPRA) WE CONFIRM THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) AND DISMISS THE APPEAL OF THE REVENUE. 11 . REGARDING CROSS OBJECTIONS FILED BY THE ASSESSEE NO SPECIFIC AVERMENTS WERE MADE BY LD AR OF THE ASSESSEE. FURTHER A S THE APPEAL OF THE REVENUE IS DISMISSED THEREFORE CROSS OBJECTION FILED BY THE ASSESSEE ARE ALSO DISMISSED. 12 . IN THE RESULT APPEAL OF THE REVENUE AS WELL CROSS OBJECTIONS OF THE ASSESSEE FOR BOTH THE YEARS ARE DISMISSED. O RDER PRONOUNCED IN THE OPEN COURT ON 0 9 . 02 . 2016 . - S D / - - S D / - ( I.C.SUDHIR ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 0 9 / 02 / 2016 A K KEOT COPY FORWARDED TO 1 . APPLICANT 2 . RESPONDENT 3 . CIT 4 . CIT (A) 5 . DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI