DCIT, New Delhi V. M/s. Vikas Chain & Jewellery (P) Ltd., Delhi

ITA 1126/DEL/2010

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6835 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 10 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 01-12-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 12-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B K SINGH
• Keywords: Unexplained cash credit
• Section: 68; 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 . 1126, 1127 &1128 /DEL/ 2010 (ASSESSMENT YEAR: 2003 - 04, 2004 - 05 & 2005 - 06 ) DCIT, CENTRAL CIRCLE - 23, ROOM NO.359, 3 RD FLOOR ARA CENTRE, JHANDEWALAN EXTN. NEW DELHI VS. VIKAS CHAIN & JEWELLERY (P) LTD., 1166/106, KUCHA MAHAJANI, CHANDNI CHOWK, DELHI PAN:AAACV0778M (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 . THESE THREE APPEALS PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT (A) - III, NEW DELHI DATED 16.12.2009 FOR THE ASSESSMENT YEAR 2003 - 04 AND 2005 - 06 , WHEREIN HE HAS HELD THAT SINCE FOR THE ASSESSMENT YEAR UNDER CONSIDERATION PROCESSING OF RETURNS ARE COMPLETE D U/S 143(1 ) AND NO DOCUMENTS OR OTHER MATERIAL FOUND OR SEIZED DURING THE COURSE OF SEARCH , T HERE CANNOT BE ANY ADDITION MADE BY AO. 2 . REVENUE HAS CHALLENGED THE ORDER OF CIT (A) RAISING FOLLOWING GROUNDS OF APPEAL FOR BOTH THE YEARS : - 1. WHETHER ON TH E FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT (A) 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. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE CIT(A) HAS ERRED IN LAW AND ON FACTS BY RELYING UPON THE IMPUGNED ORDERS OF THE ITATS. 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT (A) HAS ERRED IN LAW IN NOT FOLLOWING THE CIRCULAR NO.7 OF 2003 DATED 05.09.2003 ISSUED BY THE CBDT. 4. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN LAW BY NOT APPRECIATING THE FACT THAT THERE IS NO PAGE 2 OF 5 DCIT , CC - 23 NEW DELHI V VIKAS CHAIN & JWELLERY ( P ) LIMITED ITA NO 1126,1127 & 1128/DEL/2010 A Y 2003 - 04 2004 - 05 & 2005 - 06 PRECONDITION THAT THE DOCUMENT PERTAINING TO EACH OF THE ASSESSEMENT YEAR FALLING UNDER THE PROVISION OF S ECTION 153C/153A SHOULD BE FOUND. 5. THE ORDERS OF THE CIT(A) IS ERRONEOUS AND NOT TENABLE IN LAW AND 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 D URING THE COURSE OF SEARCH FOR EACH OF THE ASSESSMENT YEAR. 4 . BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING IN GOLD AND DIAMOND JEWELLERY. A SEARCH WAS CARRIED OUT BY REVENUE U/S 132 AT THE BUSI NESS PREMISES OF THE ASSESSEE ON 20.01.2006. IT IS THE CONTENTION OF THE ASSESSEE THAT DURING 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 MADE IN THE HANDS OF THE ASSESSEE IN ABSENCE OF DOCUMENTS FOUND RELEVANT FOR ADDITION DURING THE COURSE OF SEARCH. AGAINST THIS THE REVENUE IS IN APPEAL BEFORE US. 5 . BEFORE US THE LD DR 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 SUBMITTED THAT CIT (A) HAS ERRED IN ANNULL ING THE ASSESSMENT ERRONEOUSLY. 6 . LD AR SUBMITTED THAT NOW THIS ISSUE HAS BEEN SETTLED BY THE HONBLE DELHI HIGH COURT IN CASE OF CIT V KABUL CHAWLA ( ITA PAGE 3 OF 5 DCIT , CC - 23 NEW DELHI V VIKAS CHAIN & JWELLERY ( P ) LIMITED ITA NO 1126,1127 & 1128/DEL/2010 A Y 2003 - 04 2004 - 05 & 2005 - 06 707/2014) 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 ASSESSMEN T YEARS. 7 . WE HAVE CAREFULLY PERUSED THE ORDERS OF THE LOWER AUTHORITIES. FROM THE READING OF THE ASSESSMENT ORDER FOR AY 2003 - 04 WE COULD NOTE THAT FOLLOWING ADDITIONS AND DISALLOWANCE HAVE BEEN MADE: A. ADDITION U/S 68 HAS BEEN MADE OF RS 49,00,000/ - BY THE AO ON THE OF SHARE CAPITAL BECAUSE THE ASSESSEE FAILED TO PROVE THE CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION OF THE SHAREHOLDERS COMPANIES AND IS ADDED TO THE INCOME OF THE ASSESSEE COMPANY AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. THE ADDITION IS NOT BASED ON ANY INCRIMINATING MATERIAL FOUND WITH RESPECT TO THE ISSUE F SHARE CAPITAL BY THE ASSESSEE. B. THE ASSESSEE CLAIMED EXPENSES OF RS.18,700/ - ON ACCOUNT OF DISALLOWANCE OF CAR EXPENSES. THE AO ASKED THE ASSESSEE TO FURNISH THE L O G BOOK OF THE CARS BUT THE ASSESSEE FAILED TO PRODUCE THE SAME. THE AO WAS OF THE VIEW THAT IN ABSENCE OF LOGBOOK IT CANNOT BE SAID THAT THESE CARS WERE USED WHOLLY AND EXCLUSIVELY FOR BUSINESS OF THE ASSESSEE . IN ABSENCE OF ANY LOGBOOK THE AO A SUM OF EQU AL TO 1/6 TH OF TOTAL PAGE 4 OF 5 DCIT , CC - 23 NEW DELHI V VIKAS CHAIN & JWELLERY ( P ) LIMITED ITA NO 1126,1127 & 1128/DEL/2010 A Y 2003 - 04 2004 - 05 & 2005 - 06 CAR EXPENSE DISALLOWED AND AN ADDITION OF RS.18700/ - WAS ADDED TO THE INCOME OF THE ASSESSEE. IN THIS ISSUE ALSO THE ADDITION IS MADE WITHOUT ANY INCRIMINATING MATERIAL. 8 . IDENTICALLY THE ADDITIONS/ DISALLOWANCES WERE ALSO MADE FOR AY 2003 - 04 AND 2004 - 05 WITHOUT ANY REFERENCE TO ANY INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH. 9 . 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 FOR ALL THE THREE YEARS THE ASSESSMENT YEARS IN THE SE APPEALS ARE COMPLETED ASSESSMENTS IN CASE OF THE ASSESSEE AS PROCESSING OF RETURNS HAVE BEEN COMPLETED U/S 143(1) OF THE ACT. 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 ( S UPRA) WHERE ORIGINAL ASSESSMENT 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 INCRIMINATING MATERIAL UNEARTH DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS. ON READING OF THE ORDER OF THE AO WE COULD NOT F I ND THAT THERE IS ANY INCRIMINATING MATERIAL REFERRED BY THE AO WHICH IS FOUND DURING THE COURSE OF SEARC H FOR MAKING THESE ADDITIONS. THEREFORE RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF KABUL CHAWLA VS. CIT PAGE 5 OF 5 DCIT , CC - 23 NEW DELHI V VIKAS CHAIN & JWELLERY ( P ) LIMITED ITA NO 1126,1127 & 1128/DEL/2010 A Y 2003 - 04 2004 - 05 & 2005 - 06 (SUPRA) WE CONFIRM THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) AND DISMISS THE APPEAL S OF THE REVENUE FOR ALL THE THREE YEARS . 10 . IN THE RESULT APPEAL S OF THE REVENUE FOR AY 2003 - 04 , 2004 - 05 AND 2005 - 06 ARE DISMISSED. O RDER PRONOUNCED IN THE OPEN COURT ON 1 0 . 02 . 2016 . - S D / - - S D / - ( I.C.SUDHIR ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 0 /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