ACIT Central Circle, Meerut V. Dr. Leena Chaudhary, Meerut

ITA 1350/DEL/2022

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 6447 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-06-2024
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 15-05-2024
• Assessment Year: 2018-2019
• Appeal Filed On: 02-06-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Unexplained expenditure; Search and seizure; Fair market value
• Section: 132; 69C; 142(1); 133A; 153A; 69B; 143(2); 153

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘E’, NEW DELHI BEFORE DR. B.R.R. KUMAR, ACCOUNTANT MEMBER AND SH. SUDHIR KUMAR, JUDICIAL MEMBER ITA No.1350/Del/2022 Assessment Year: 2018-19 ACIT Central Circle Meerut Vs. Dr. Leena Chaudhary A-43/A, Defence Colony, Meerut -250001 PAN No.ACRPP0653M (APPELLANT) (RESPONDENT) Appellant by Sh. Subhra Jyoti Chakraborty, CIT DR Respondent by Sh. P.S. Kashyap, CA Date of hearing: 16/05/2024 Date of Pronouncement: 19/06/2024 ORDER PER SUDHIR KUMAR, JM: This appeal by the revenue is directed against the order of the Commissioner of Income Tax(Appeals),Kanpur-4 [hereinafter referred to as “CIT(A)] vide order dated 14.03.2022 pertaining to A.Y. 2018-19 and arises out of the assessment order dated 16.08.2021 under section 153A of the Act [hereinafter referred as ‘the Act’]. 2 2. The brief fact of the case is that the search and seizure operation under Section 132 of the Act was conducted on 17.01.2019. The notice under Section 153A was issued and served upon the assessee. In compliance of the notice return of income was filed on 19.02.2020 declaring total income of Rs.99,12,490/-. The notice under Section 143(2) of the Act was issued on 31.08.2020 later on notice under Section 142(1) of the Act along with questionnaire were also served to the assessee. The AO completed the assessment by making disallowances of Rs.51,00,000/- as the bogus salary expenses has been shown by the assessee. The AO also made the addition of Rs.37,03,300/- under Section 69B of the Act on account of unexplained investment. 3. Aggrieved by the order passed by the AO the assessee filed an appeal before the CIT(A). The Ld. CIT(A) partly allowed the appeal against which this appeal is filed by Revenue before us by raising the following grounds of appeal :- 1. The CIT(A) has erred in law and on facts in deleting the addition of Rs. 51,00,000/-made by the assessing officer on account of unexplained expenditure u/s 69C of the I.T. Act by observing that disallowance of salary is not based on any incriminating material, without appreciating the fact that and attendance register was found and as per this register only 16 employees were found 3 working whereas the assessee is claiming the salary expenses of 18 other employees which were not found on payroll register. 2. The CIT(A) has erred in law and on facts in deleting the additions of Rs. 37,03,000/- made by the assessing officer on account of unexplained investment u/s 69B of the I.T. Act by observing that the valuation of the property done by the DVO and estimated fair market value cannot be the sole basis of addition u/s 69B of the 1.T. Act without appreciating that the fair market value of the land was computed by DVO based on prevailing circle rate of the land at the time of purchase and as issued by the local administration with specific reference for different floors and also keeping in view the guidelines as well as the adjustment factors. 3. That the appellant craves leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other. 4. Before us at the outset Ld DR has submitted assessee has shown bogus entries regarding the expenses of the salary of the employee and made unexplained investment. The AO therefore, for the reasons noted in the order made the addition. He submitted that the Ld.CIT(A) erred to observed that valuation of the property done by the DVO and the estimated fair market value cannot be the sole basic of the addition under section 69B of the Act. Therefore he submitted that the order of CIT(A) be set aside. 4 5. The counsel for the assessee has submitted that the book of account of the assessee has not been rejected by AO. He has also submitted wholesale medicine sale, retail medicine sale and professional practice cannot be done without employees. He has further submitted that assessee had purchased a constructed property on the first floor of Abhikaram complex for a sum of Rs 1,41,10,000/-and same was recorded in the regular books of accounts. He has also submitted that in the absence of any incriminating material no addition can be made. Ld. Counsel relied on the following cases; “In the case of the PR commissioner of Income Tax, Central-3 vs ARN Infrastructure Ltd. ITA37/2019 the Hon’ble Delhi High court in para 26&27 held that... 26. The statement recorded under Section 133A of the Act has no evidentiary value, since the officer concerned is not authorized to administer oath and record a sworn statement. This is in contradiction with the statement recorded under Section 132 (4) of the Act, which is recorded on oath by an officer who is vested with necessary powers. 27. Given this position and the fact that no corroborative evidences were found to support the addition, we are not 5 inclined to interfere with the impugned order passed by the Tribunal.” 6. In the case of Pr CIT Central 3 vs Abhisar Buidwell Pvt Ltd in civil appeal no 6580 of 2021 Hon’ble Supreme Court held that in the absence of any incriminating material no addition can be made by the AO. 7. On identical set of facts in the case Poonam Promoters and Developers Pvt Ltd vs ACIT in ITA No 4785/Del/2015 the Tribunal had considered an identical issue and based the judgment M/s.USG Buildwell Private Limited In ITA No 2155/Del /2015 the Tribunal held as under; “7. We have heard both the parties and perused the material available on U record. It is pertinent to note that no incriminating material was found during the search and seizure in respect of assessee company, hence the decision of the Delhi High Court in case of Kabul Chawla is squarely applicable in the present case. The Hon'ble Delhi High Court held as under :- “Summary of the legal position 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: 6 i Once a search takes place under Section 132 of the Act, notice under Section 153 A (1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately 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 for such AYs will 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 there 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 additions should be strictly made on the basis of evidence found in the course of the search, or other 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 be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made 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 assessment or 7 reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on proceedings of search) and the word 'reassess to completed assessment vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and 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 by 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. Conclusion 38. The present appeals concern AYs, 2002-03, 2005-06 and 2006- 07.On the date of the search the said assessments already stood completed. Since no incriminating material was unearthed during the search, no additions could have been made to the income already assessed." Since no incriminating material was found in the assessee's case, no addition can be made in the present case. Besides this, the assessee has made investment in prior period and sold the said investment in this particular year which was clearly set out from the submissions and the evidences produced before the Assessing 8 Officer and the CIT(A). Therefore, the appeal of the assessee being ITA No. 2155/Del/2015 for Assessment Year 2005-06 allowed.” 8. Perusal of the order of Ld CIT(A) reveals that no incriminating material was found during the search and seizure operation, so no addition could have been made. As regards ground no.2 i.e. deleting the additions of Rs.37,03,000/-on unexplained investment u/s.69 B of the Act, we find that the assessee has purchased the constructed property. The consideration and registration fee were paid as per circle rate. The purchased property was recorded in the regular books of accounts. Ld.CIT(A) rightly deleted the additions made by the AO. 9. In the case in hand the addition made by AO has been deleted because addition was made without any incriminating material. Hence, appeal has no force and liable to be dismissed. 10. In the result, the appeal of the revenue is dismissed. Order pronounced in the open court on 19.06.2024. Sd/- Sd/- (DR. B R R KUMAR) (SUDHIR KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER *NEHA, Sr. PS* Date:- .06.2024