Sh. Ajay Goel, Shimla V. DCIT, Chandigarh

ITA 132/CHANDI/2015

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3812 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 10 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 13-09-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 05-02-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained cash credit
• Section: 40A(3); 153A; 68; 6; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCHES, CHANDIGARH BEFORE SH. N. K. SAINI, AM AND SH. RAVISH SOOD, JM ITA NO. 132 /CHD./2015 : ASSTT. YEAR : 2005-06 ITA NO. 134 /CHD./2015 : ASSTT. YEAR : 2007-08 ITA NO. 135/CHD./2015 : ASSTT. YEAR : 2008-09 SH. AJAY GOEL, GOEL PLAZA, RAM BAZAR, SHIMLA (H.P.)-171001 VS DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-II, CHANDIGARH (UT) (APPELLANT) (RESPONDENT) PAN NO. ABHPG6306K ASSESSEE BY : SH. SUDHIR SEHGAL, ADV. REVENUE BY : SH. SUSH IL KUMAR, CIT DR DATE OF HEARING : 22.12.2016 DATE OF PRONOUNCEMENT : 23.12.2016 ORDER PER N. K. SAINI, AM: THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE SEPARATE ORDERS EACH DATED 09.01.2015 OF THE LD. CI T(A)-3, GURGAON. 2. COMMON ISSUES ARE INVOLVED IN THESE APPEALS WHIC H WERE HEARD TOGETHER SO THESE ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. 3. THE GROUNDS RAISED IN THESE APPEALS ARE AS UNDER : IN ITA NO. 132/CHD./2015 FOR THE ASSESSMENT YEAR 2005-06 1. THE LD. CIT(A) HAS ERRED BY UPHOLDING THE LD. DCITS ORDER WHICH IS CONTRARY TO LAW AND THE FACTS OF THE CASE. 2. THE LD. CIT(A) HAS ERRED BY UPHOLDING THE LD. DCITS ORDER DATED 28.03.2013 WHICH SEEMS TO HAS BEEN PASSED AFTER 31.03.2013 SINCE SAME IS ITA NOS. 132, 134 & 135/CHD./2015 AJAY GOEL 2 DISPATCHED ON 04.04.2013 AND AS SUCH IS TIME BARRED AND NEEDS TO BE QUASHED. 3. THE LD. CIT(A) HAS ERRED BY UPHOLDING THE LD. DCITS ORDER WHEREIN HE ADDED RS.2,18,000/- AS UNEXPLAINED CASH CREDIT. IN ITA NO. 134/CHD./2015 FOR THE ASSESSMENT YEAR 2007-08 1. THE LD. CIT(A) HAS ERRED BY UPHOLDING THE LD. DCITS ORDER WHICH IS CONTRARY TO LAW AND THE FACTS OF THE CASE. 2. THE LD. CIT(A) HAS ERRED BY UPHOLDING THE LD. DCITS ORDER DATED 28.03.2013 WHICH SEEMS TO HAS BEEN PASSED AFTER 31.03.2013 SINCE SAME IS DISPATCHED ON 04.04.2013 AND AS SUCH IS TIME BARRED AND NEEDS TO BE QUASHED. 3. THE LD. CIT(A) HAS ERRED BY UPHOLDING THE LD. DCITS ORDER WHEREIN HE ADDED RS.57,80,000/- AS UNEXPLAINED CASH CREDIT. 4. THE LD. CIT(A) HAS ERRED BY UPHOLDING THE LD. DCITS ORDER WHEREIN HE ADDED RS.6,21,626/- ON ACCOUNT OF CASH PAYMENTS INVOKING PROVISIONS OF SECTION 40A(3). IN ITA NO. 135/CHD./2015 FOR THE ASSESSMENT YEAR 2008-09 1. THE LD. CIT(A) HAS ERRED BY UPHOLDING THE LD. DCITS ORDER WHICH IS CONTRARY TO LAW AND THE FACTS OF THE CASE. 2. THE LD. CIT(A) HAS ERRED BY UPHOLDING THE LD. DCITS ORDER DATED 28.03.2013 WHICH SEEMS TO HAS BEEN PASSED AFTER 31.03.2013 SINCE SAME IS DISPATCHED ON 04.04.2013 AND AS SUCH IS TIME BARRED AND NEEDS TO BE QUASHED. ITA NOS. 132, 134 & 135/CHD./2015 AJAY GOEL 3 3. THE LD. CIT(A) HAS ERRED BY UPHOLDING THE LD. DCITS ORDER WHEREIN HE ADDED RS.82,70,000/- AS UNEXPLAINED CASH CREDIT. THE APPELLANT CRAVES LEAVE TO ADD OR TO AMEND THE AFORESAID GROUNDS BEFORE DISPOSAL OF THE APPEAL. 4. THE ASSESSEE HAS ALSO RAISED ADDITIONAL GROUNDS VIDE SEPARATE APPLICATION EACH DATED 18.12.2015 HAVING T HE COMMON CONTENTION WHICH READ AS UNDER: IT IS VERY HUMBLY SUBMITTED THAT THE ABOVE SAID APPEAL IS PENDING TO BE DECIDED BEFORE THE HON'BLE BENCH. IT IS SUBMITTED THAT WE WISH TO TAKE ADDITIONAL GROUND OF APPEAL, WHICH IS A LEGAL GROUND. THIS LEGAL GROUND OF APPEAL IS BASED UPON THE RECENT JUDGMENTS OF VARIOUS HIGH COURTS AND OF THE HON'BLE BENCH OF THE ITAT, CHANDIGARH BENCH AND THEREFORE, BEING A LEGAL GROUND OF APPEAL, THE ADDITIONAL GROUND OF APPEAL MAY, PLEASE, BE ADMITTED AND BE ADJUDICATED UPON AND PERMISSION FOR THE SAME MAY, PLEASE, BE GRANTED IN VIEW OF THE JUDGMENT OF SUPREME COURT IN THE CASE OF M/S. NATIONAL THERMAL PLANT CO. LTD V/S CIT AS REPORTED IN 229 ITR 383 AND OBLIGE. 5. THE COMMON ADDITIONAL GROUND RAISED IN ITA NOS. 132 & 135/CHD./2015 FOR THE ASSESSMENT YEARS 2005-06 & 2008- 09 READ AS UNDER: 1. THAT LD. CIT(A) ERRED ON FACTS AND LAW IN CONFIRMING THE ADDITION MADE BY THE AO VIDE ORDER PASSED U/S 153A/143(3) OF THE INCOME TAX ACT, 1961 ON ACCOUNT OF UNSECURED LOANS IN THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH AND PENDENCY OF ASSESSMENT PROCEEDINGS FOR THE RELEVANT YEAR ON THE DATE OF SEARCH. 6. IN ITA NO. 134/CHD./2015 FOR THE ASSESSMENT YEAR 2007-08 APART FROM THE AFORESAID ADDITIONAL GROUND, THE ANOTHER ADDITIONAL GROUND HAS ALSO BEEN RAISED WHIC H READ AS UNDER: ITA NOS. 132, 134 & 135/CHD./2015 AJAY GOEL 4 FURTHER THE LD. CIT(A) HAS ALSO ERRED ON FACTS AND LAW IN CONFIRMING THE DISALLOWANCE MADE BY THE AO VIDE ORDER PASSED U/S 153A/143(3) OF THE INCOME TAX ACT, 1961 AS PER THE PROVISIONS OF SECTION 40A(3) O F THE ACT, IN THE ABSENCE OF ANY INCRIMINATING MATERI AL FOUND DURING THE COURSE OF SEARCH AND PENDENCY OF ASSESSMENT PROCEEDINGS FOR THE RELEVANT YEAR ON THE DATE OF SEARCH.' 7. DURING THE COURSE OF HEARING THE LD. LD. COUNSEL FOR THE ASSESSEE REITERATED THE CONTENTION RAISED IN THE AF ORESAID APPLICATION DATED 18.12.2015 AND REQUESTED TO ADMIT THE ADDITION GROUND. 8. IN HIS RIVAL SUBMISSIONS THE LD. DR OPPOSED THE ADMISSION OF THE ADDITIONAL GROUND AND STATED THAT THIS GROUND WAS NOT RAISED BY THE ASSESSEE BEFORE THE LD . CIT(A), THEREFORE, IT SHOULD NOT BE ADMITTED. 9. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE O N THE RECORD. IN THE PRESENT CASE, IT IS AN ADMITTED FACT THAT THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE ARE PUREL Y LEGAL WHICH GO TO THE ROOT OF THE MATTER AND NO INVESTIGA TION OF THE FACTS IS REQUIRED, AS THE SAME ARE ALREADY AVAILABL E ON THE RECORD. THEREFORE, THESE GROUNDS ARE ADMITTED FOR ADJUDICATION BY KEEPING IN VIEW THE RATIO LAID DOWN BY THE HONBLE APEX COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. VS CIT (SUPRA). 10. THE LD. LD. COUNSEL FOR THE ASSESSEE DID NOT PR ESS GROUND NOS. 1 & 2 RAISED IN THESE APPEALS, THEREFOR E, THE SAME ARE DISMISSED AS NOT PRESSED. THE LD. LD. COUN SEL FOR THE ASSESSEE AT THE VERY OUTSET STATED THAT THE ADD ITIONS MADE ITA NOS. 132, 134 & 135/CHD./2015 AJAY GOEL 5 BY THE AO AND SUSTAINED BY THE LD. CIT(A) ARE NOT B ASED ON ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. IT WAS FURTHER STATED THAT THE ADDITIONS HAVE BEEN MADE BY THE AO ON THE BASIS OF CASH CREDITS U/S 68 OF THE I NCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) WHIC H WERE ALREADY RECORDED IN THE BOOKS OF ACCOUNT AND THAT T HE DISALLOWANCE MADE U/S 40A(3) OF THE ACT WAS RELATED TO THE PAYMENTS WHICH WERE ALREADY RECORDED IN THE BOOKS O F ACCOUNTS. IT WAS CONTENDED THAT THE ADDITIONS MADE BY THE AO AND SUSTAINED BY THE LD. CIT(A) WERE NOT BASED O N THE BASIS OF INCRIMINATING MATERIAL FOUND DURING THE CO URSE OF SEARCH. THEREFORE, THE ADDITIONS MADE U/S 153A OF T HE ACT WERE NOT JUSTIFIED. THE RELIANCE WAS PLACED ON THE DECISION DATED 23.08.2016 BY THE ITAT DIVISION BENCH, CHANDI GARH IN THE CASE OF M/S MALA BUILDERS PVT. LTD. & OTHERS VS ACIT, CC-2 & OTHERS, CHANDIGARH (COPY OF THE SAID O RDER WAS FURNISHED WHICH IS PLACED ON RECORD). 11. IN HIS RIVAL SUBMISSIONS THE LD. CIT DR STRONGL Y SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND F URTHER SUBMITTED THAT DURING THE COURSE OF SEARCH, INCRIMI NATING DOCUMENTS WERE FOUND AND SEIZED. THEREFORE, THE ADD ITIONS MADE BY THE AO AND SUSTAINED BY THE LD. CIT(A) WERE FULLY JUSTIFIED. 12. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE O N THE RECORD. IN THE PRESENT CASE, IT IS NOTICED THAT A S EARCH AND SEIZURE OPERATION WAS CONDUCTED ON GOEL GROUP OF CA SES ON 08.10.2010. THE ASSESSEE HAD ALREADY FILED HIS RETU RN OF ITA NOS. 132, 134 & 135/CHD./2015 AJAY GOEL 6 INCOME U/S 139 OF THE ACT ON 28.10.2005, 31.01.2005 AND 30.01.2009 FOR THE ASSESSMENT YEARS 2005-06, 2007-0 8 & 2008-09 RESPECTIVELY. THE INCOMES DECLARED WERE AT RS.4,79,238/-, RS.3,66,050 & RS.1,96,820/- FOR THE ASSESSMENT YEARS 2005-06, 2007-08 & 2008-09 RESPECT IVELY. THE SAME INCOMES WERE DISCLOSED IN THE RETURNS OF I NCOME FILED IN RESPONSE TO THE NOTICES ISSUED U/S 153A OF THE ACT. HOWEVER, THE AO COMPLETED THE ASSESSMENT AT AN INCO ME OF RS.13,43,240/-, 73,91,676/- & RS.91,12,820/- RESPEC TIVELY. THE ADDITIONS MADE BY THE AO WERE ON ACCOUNT OF CAS H CREDITS FOR THE ASSESSMENT YEAR 2005-06 & 2008-09 W HILE FOR THE ASSESSMENT YEAR 2007-08 APART FROM THE ADDITION ON ACCOUNT OF CASH CREDITS, ANOTHER ADDITION U/S 40A(3 ) OF THE ACT WAS MADE OUT OF THE CASH PAYMENTS. IN THE PRESE NT CASE, IT IS NOT IN DISPUTE THAT THE ADDITIONS WHICH WERE MADE BY THE AO WERE RELATING TO THE CASH CREDITS/CASH PAYMENTS ALREADY DISCLOSED AND RECORDED IN THE BOOKS OF ACCOUNTS, TH OSE ADDITIONS WERE NOT BASED ON ANY INCRIMINATING MATER IAL FOUND DURING THE COURSE OF SEARCH. 13. A SIMILAR ISSUE HAS BEEN DECIDED BY THIS BENCH OF THE TRIBUNAL IN THE CASE OF M/S MALA BUILDERS PVT. LTD. & OTHERS VS ACIT, CC-2, CHANDIGARH & OTHERS IN ITA NOS. 433 TO 437/CHD./2014 & OTHERS FOR THE ASSESSMENT YEARS 200 4-05 TO 2008-09, ORDER DATED 23.08.2016 BY FOLLOWING THE JU DGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS KABUL CHAWLA 61 TAXMANN.COM 412 (DEL.). IN THE SAID ORDER DATED 23.08.2016, THE ITAT CHANDIGARH BENCH IN PARA 20 REPRODUCED THE SUMMARIZED LEGAL POSITION HELD BY TH E ITA NOS. 132, 134 & 135/CHD./2015 AJAY GOEL 7 HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS KABU L CHAWLA (SUPRA) WHICH READ AS UNDER: '37. ON A CONSPECTUS OF SECTION 153A(1) OF THE ACT, READ WITH THE PROVISOS THERETO, AND IN THE LIGHT OF THE LAW EXPLAINED IN THE AFOREMENTIONED DECISIONS, THE LEGAL POSITION THAT EMERGES IS AS UNDER: I. ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF THE ACT, NOTICE UNDER SECTION 153 A (I) WILL HAVE T O BE MANDATORILY ISSUED TO THE PERSON SEARCHED REQUIRING HIM TO FILE RETURNS FOR SIX AYS IMMEDIATE LY PRECEDING THE PREVIOUS YEAR RELEVANT TO THE AY IN WHICH THE SEARCH TAKES PLACE. II. ASSESSMENTS AND REASSESSMENTS PENDING ON THE DATE OF THE SEARCH SHALL ABATE. THE TOTAL INCOME FO R SUCH AYS WILL HAVE TO BE COMPUTED BY THE AOS AS AFRESH EXERCISE. III. THE AO WILL EXERCISE NORMAL ASSESSMENT POWERS IN RESPECT OF THE SIX YEARS PREVIOUS TO THE RELEVAN T 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 THERE WILL BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX AYS 'IN WHICH BOTH THE DISCLOSED AN D THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX'. IV. ALTHOUGH SECTION 153 A DOES NOT SAY THAT ADDITIONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SEARCH, OR OTHE R POST-SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE AO WHICH CAN BE RELATED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSESSMENT 'CAN HE ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOUSLY AN ASSESSMENT HAS TO BE MADE WIDER 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 ASSESSMENT OR REASSESSMENT CAN BE MADE. ITA NOS. 132, 134 & 135/CHD./2015 AJAY GOEL 8 THE WORD 'ASSESS' IN SECTION 153 A IS RELATABLE TO ABATED PROCEEDINGS (I.E. THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD 'REASSESS' JO COMPLETED ASSESSMENT PROCEEDINGS. VI. INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, THE JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AN D THE ASSESSMENT UNDER SECTION 153A MERGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY FOR EACH AY ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTHER MATERIAL EXISTING OR BROUGHT ON THE RECORD OF THE AO. VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WITH B Y THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153 A ONLY 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 WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT.' 14. THE ITAT CHANDIGARH BENCH DELETED THE ADDITIONS FOR THE REASON THAT THOSE WERE NOT BASED ON THE INCRIMI NATING MATERIAL FOUND DURING THE COURSE OF SEARCH AND HELD IN PARA 37 OF THE AFORESAID ORDER DATED 23.08.2016 AS UNDER : 37. IN VIEW OF THE ABOVE WE HOLD THAT IN THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH AND THE ASSESSMENT PROCEEDINGS HAVING NOT ABATED AT THE TIME OF SEARCH, THE ASSESSING OFFICER HAS NO JURISDICTION T O MAKE THE ADDITION U/S 153A OF THE ACT. 15. SINCE THE FACTS OF THE PRESENT CASE ARE SIMILAR TO THE FACTS INVOLVED IN THE AFORESAID REFERRED TO CASE OF M/S MALA BUILDERS PVT. LTD. VS ACIT, SO, RESPECTFULLY FOLLOW ING THE SAID ORDER DATED 23.08.2016, THE ADDITIONS MADE BY THE AO AND SUSTAINED BY THE LD. CIT(A) ARE DELETED. ITA NOS. 132, 134 & 135/CHD./2015 AJAY GOEL 9 16. IN THE RESULT, APPEALS OF THE ASSESSEE ARE PART LY ALLOWED. (ORDER PRONOUNCED IN THE COURT ON 23/12/2016) SD/- SD/- (RAVISH SOOD) (N. K. SAINI) JUDICIAL MEMBER ACCOUNTANT M EMBER DATED: 23/12/2016 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR