ACIT, New Delhi V. M/s. Bina Fashion N Food Pvt. Ltd., Delhi

ITA 1420/DEL/2016

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 9657 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2008-2009
• Appeal Filed On: 15-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIDHI SRIVASTAVA
• Keywords: Depreciation; Search and seizure; Document seized; Corroborative evidences; Documents seized; Set aside
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B, NEW DELHI BEFORE SH. R. K. PANDA, ACCOUNTANT MEMBER AND MS. SUCHITRA KAMBLE, JUDICIAL MEMBER ITA NO.1420/DEL/2016 ASSESSMENT YEAR: 2008-09 ACIT CENTRAL CIRCLE -26, ROOM NO. 323, 3 RD FLOOR, ARA CENTRE, JHANDEWALAN EXTENSION, NEW DELHI VS BINA FASHION N FOOD PVT. LTD. 53, COMMUNITY CENTRE NEW FRIENDS COLONY DELHI-110065 PAN NO. AABCB5582A (APPELLANT) (RESPONDENT) APPELLANT BY MS. NIDHI SRIVASTAVA, CIT DR RESPONDENT BY MS. SWEETY KOTHARI, CA DATE OF HEARING: 29/08/2019 DATE OF PRONOUNCEMENT: 23/09/2019 ORDER PER R.K. PANDA, AM: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER DATED 31.12.2015 OF THE CIT(A)-29, NEW DELHI RELATI NG TO A. Y. 2008-09. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSES SEE IS A COMPANY AND HAD FILED ITS RETURN OF INCOME ON 29.11 .2006 DECLARING NIL INCOME AFTER SETTING OFF LOSS AMOUN TING TO RS.1,19,96,117/-. A SEARCH AND SEIZURE OPERATION W AS CARRIED OUT IN THE CASE OF MODI FAMILY GROUP ON 09.11.2011. DURING PAGE | 2 THE COURSE OF SEARCH AT THE RESIDENTIAL PREMISES OF SH. KRISHNA KUMAR MODI AT A-1, MAHARANI BAGH, NEW DELHI A COPY OF SALE DEED EXECUTED ON 18.12.2007 BY SH. SANJEEV LAL IN F AVOUR OF M/S. BEENA FASHIONS N FOODS PRIVATE LIMITED THROUGH ITS DIRECTOR MS. BEENA MODI WAS SEIZED AND ANNEXED AS A -1, PAGE 93 TO 101 BY PAGE NO. D-I. THE ASSESSING OFFICER A FTER RECORDING HIS SATISFACTION VIDE ORDER SHEET ENTRY DATED 29.01 .2014 ISSUED NOTICE U/S. 153C OF THE IT ACT TO THE ASSESSEE ON 0 5.02.2014. IN RESPONSE TO THE NOTICE U/S. 153C, THE ASSESSEE S UBMITTED THAT THE RETURN FILED ORIGINALLY ON 29.11.2006 MAY BE TREATED AS RETURN FILED IN RESPONSE TO NOTICE U/S. 153 C. 3. THE ASSESSING OFFICER, DURING THE COURSE OF ASSE SSMENT PROCEEDINGS, OBSERVED THAT ASSESSEE HAS DEBITED AN AMOUNT OF RS.79,12,080/- ON ACCOUNT OF TRAVELLING AND CONVEYA NCE IN THE PROFIT AND LOSS ACCOUNT. HE ASKED THE ASSESSEE TO FILE DETAILS OF THE SAME. FROM THE DETAILS SO FURNISHED BY THE ASS ESSEE HE OBSERVED THAT A MAJOR PORTION OF THIS EXPENSES WAS ON ACCOUNT OF FOREIGN TRAVEL. HE NOTED FROM THE DETAILS FILED THAT SMT. BEENA MODI WAS TRAVELLING EXTENSIVELY. HE FURTHER NOTED T HAT MS. BEENA MODI IS ALSO FULL TIME EMPLOYEE OF FOLLOWING COMPANIES FROM WHERE SHE HAD RECEIVED SALARY THE DETAILS OF W HICH ARE AS UNDER :- M/S. BEACON TRAVELS PVT. LTD. 12,00,000/ - M/S. BINA FASHIONS N FOOD PVT. LTD. 24,00,000/ - M/S. HMA UDYOG LTD. 41,79,232/ - M/S. INDO EURO INVESTMENT CO. LTD. 60,000/ - PAGE | 3 4. REJECTING THE VARIOUS EXPLANATION GIVEN BY THE A SSESSEE AND OBSERVING THAT THE ASSESSEE COULD NOT SUBSTANTI ATE AND JUSTIFY THE CLAIM OF FOREIGN TRAVEL EXPENSES UNDERT AKEN BY THE DIRECTOR TO THE EXTENT OF RS.65,89,151/-, THE ASSES SING OFFICER MADE ADDITION OF THE SAME TO THE TOTAL INCOME OF TH E ASSESSEE. 5. SIMILARLY THE ASSESSING OFFICER OBSERVED FROM THE P & L ACCOUNT THAT AN AMOUNT OF RS.8.01,683/- HAS BEEN DE BITED TO THE PROFIT AND LOSS ON ACCOUNT OF PURCHASE OF JEWEL LERY UNDER THE HEAD PURCHASES. HOWEVER, THERE IS NEITHER ANY CLOS ING STOCK OF THE JEWELLERY NOR ANY SALE OF JEWELLERY. ON BEING Q UESTIONED BY THE ASSESSING OFFICER IT WAS SUBMITTED THAT THE ASS ESSEE HAS SOLD JEWELLERY TO THE EXTENT OF RS.9,69,307/-. HOW EVER, IN ABSENCE OF ANY SUPPORTING EVIDENCE TO HIS SATISFACT ION THE ASSESSING OFFICER MADE ADDITION OF RS.8,01,683/- TO THE TOTAL INCOME OF THE ASSESSEE ON ACCOUNT OF PURCHASE OF JE WELLERY. 6. THE ASSESSING OFFICER SIMILARLY MADE ADDITION OF RS.1,74,00,000/- ON ACCOUNT OF UNEXPLAINED CASH DEP OSIT IN THE BANK ACCOUNT AND SUBSEQUENTLY CONVERTED INTO INVEST MENT BY INVOKING THE PROVISION OF SECTION 68 OF THE IT ACT. THE ASSESSING OFFICER ALSO MADE ADDITION OF RS.29,24,328/- ON ACC OUNT OF DEPRECIATION CLAIMED ON LAND. ACCORDINGLY THE ASSE SSING OFFICER DETERMINED THE TOTAL INCOME OF THE ASSESSEE AT RS.3 ,97,11,278/- . 7. IN APPEAL THE LD. CIT(A) DELETED THE VARIOUS AD DITIONS MADE. THE RELEVANT FINDINGS OF THE CIT(A) FROM 7.1 .1. READ AS UNDER :- PAGE | 4 7.11 FROM THE VARIOUS ARGUMENTS AS PUT FORTH BY THE APPE LLANT AND AS PER THE DISCUSSIONS MADE IN THE FOREGOING PARAGRAPHS, THE F OLLOWING POSITION EMERGES: A) ON THE DATE OF SEARCH, THE ASSESSMENT STOOD COMPLE TED AND NOT ABATED. B) THE DOCUMENT SEIZED DURING SEARCH CANNOT BE TERMED AS INCRIMINATING IN NATURE AS THE INFORMATION CONTAINED THEREIN DOES NO T LEAD TO ANY UNDISCLOSED INCOME AND NOT SUBSTANTIAL ENOUGH TO IN ITIATE PROCEEDINGS UNDER SECTION 153C/153A OF THE ACT. C) THE DUE PROCEDURE FOR RECORDING OF SATISFACTION AS ENVISAGED BY LAW HAS NOT BEEN FOLLOWED. ONLY ONE SATISFACTION NOTE WAS R ECORDED BY THE AO WITH RESPECT TO THE PRESENT APPELLANT AND NO SUCH SATISF ACTION NOTE WAS RECORDED IN THE CASE OF SH. KK MODI. AO HAS NOT CLEARLY BROUGHT OUT THAT THE SEIZED DOCU MENT IS INCRIMINATING IN NATURE AND HOW THE AO HAS SATISFIED HIMSELF THAT THE SAID DOCUMENT LEADS TO UNDISCLOSED INCOME OF THE APPELLANT. D) THE ASSET, WHOSE SALE DEED SEIZED DURING SEARCH WA S ALREADY DECLARED BY THE APPELLANT IN ITS RETURN OF INCOME AS FIXED ASSE T, WHICH IS ALSO ACKNOWLEDGED BY THE AO. THE SAME WAS ALREADY SUBJEC TED TO SCRUTINY AS MENTIONED ABOVE. E) NO UNDISCLOSED ACCOUNT OR ANY VALUABLES, JEWELLERY , CASH, INVESTMENTS OR ANY MATERIAL FOUND DURING SEARCH TO SHOW THE GENERA TION OF UNDISCLOSED INCOME OF THE APPELLANT. F) THE ADDITIONS MADE ARE NOT EMANATING FROM ANY INCR IMINATING MATERIAL FOUND DURING SEARCH BUT ON THE BASIS OF DETAILS OBT AINED DURING PROCEEDINGS UNDER SECTION 153C/153A. 7.12 IN VIEW OF THE ABOVE DISCUSSIONS AND FINDINGS AND LOOKING TO THE FACTS OF THIS CASE AND POSITION OF LAW AS SUPPORTED BY VARIO US JUDGMENTS INCLUDING THE DECISIONS BY THE JURISDICTIONAL HIGH COURT, THE ADD ITIONS SO MADE BY THE AO IS NOT FOUND SUSTAINABLE, AS FAR AS THIS PROCEEDINGS ARE C ONCERNED, AND THE SAME IS DIRECTED TO BE DELETED. 8. SINCE, THE ISSUE HAS BEEN DECIDED ON THE LEGAL G ROUNDS STATING THAT SUCH ADDITIONS CANNOT BE MADE UNDER SECTION 153C/153A OF THE ACT AND ACCORDINGLY, THE ADDITION HAS NOT BEEN SUSTAINED, THE OTHER GROU NDS RELATING TO THE MERIT OF THIS CASE HAS NOT BEEN CONSIDERED. HOWEVER, IN THE CASE OF DEPRECIATION ON LAND THE PAGE | 5 AO MAY TAKE SUITABLE ACTION, IF PERMITTED UNDER LAW , AS UNDER THIS PROCEEDINGS NO INTERFERENCE CAN BE MADE LOOKING TO THE DECISION OF THE HON'BLE DELHI HIGH COURT IN ITA NO.707/2014 AND 709/2014 VIDE ORDER DATED 28 .08.2015 IN THE CASE OF CIT VS. KABUL CHAWLA. SUBJECT TO THESE REMARKS, APPEAL IS DECIDED IN FAVOUR OF THE APPELLANT. 8. AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE REV ENUE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUNDS OF APPEAL :- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING TH E ADDITIONS OF RS.65,89,151/-, ON ACCOUNT OF FOREIGN TRAVEL EXPENS ES, RS.8,01,686/-, ON ACCOUNT OF PURCHASE OF JEWELLERY, RS.1,74,00,000/-, ON ACCOUNT OF UNACCOUNTED CASH CR EDIT, AND RS.29,24,328/-, ON ACCOUNT OF EXCESS CLAIM OF DEPRE CIATION BY THE AO, WITHOUT DISCUSSING THE MERIT OF THE CASE. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT(A) FAILED TO APPRECIATE THAT THE HONBLE ALLAHA BAD HIGH COURT HAS HELD IN THE CASE OF COMMISSIONER OF INCOME-TAX, CENTRAL, KANPUR V. RAJ KUMAR ARORA [2014] 52 TAXMANN.COM 172 (ALLAH ABAD) , AFTER CONSIDERING THE JUDGEMENT GIVEN BY THE HONBLE DELH I HIGH COURT IN CASE OF CIT V. ANIL KUMAR BHATIA [2012] 211 TAXMAN 453/24 TAXMANN.COM 98, THAT THE AO HAS POWER TO REASSESS R ETURNS OF ASSESSEE NOT ONLY FOR UNDISCLOSED INCOME, WHICH WAS FOUND DURING SEARCH OPERATION BUT ALSO WITH REGARD TO MATERIAL T HAT WAS AVAILABLE AT TIME OF ORIGINAL ASSESSMENT. 3. /THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT(A) ERRED IN HOLDING THAT DUE PROCESS FOR RE CORDINQ OF SATISFACTION U/S 153C HAS NOT BEEN FOLLOWED AS THER E WAS NO PAGE | 6 REQUIREMENT AS PER THE PROVISION OF THE INCOME LAX ACT, TO RECORD SEPARATE SATISFACTION NOTE IN CASE OF SEARCHED PART Y AS THE AO WAS SAME. 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT(A) ERRED IN HOLDING THAT NO INCRIMINATING DOCUM ENT WAS SEIZED AS THE REQUIREMENT OF SEIZED DOCUMENTS BEING INCRIM INATING IN NATURE FOR INITIATION OF PROCEEDING U/S 153C IS NOT GIVEN IN THE ACT. THE ONLY REQUIREMENT IS THAT THE SEIZED DOCUMENT SH OULD HAVE A BEARING ON THE DETERMINATION OF TOTAL INCOME. 5. THAT THE ORDER OF THE CIT(A) IS PERVERSE, ERRONE OUS AND IS NOT TENABLE ON FACTS AND IN LAW. 6. THAT THE GROUNDS OF APPEAL ARE WITHOUT PREJUDICE TO EACH OTHER. 7. THAT THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER OR FORGO ANY GROUND(S) OF APPEAL EITHER BEFORE OR AT THE TIM E OF HEARING OF THE APPEAL. 9. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET S UBMITTED THAT THE ADDITION HAS NOT BEEN MADE ON THE BASIS OF ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH AND ALL THE ADDITIONS MADE BY THE ASSESSING OFFICER ARE ON THE BASIS OF BOOKS OF ACCOUNT REGULARLY MAINTAINED BY THE ASSESS EE. REFERRING TO THE DECISION OF HONBLE DELHI HIGH COU RT IN THE CASE OF CIT VS. KABUL CHAWLA REPORTED IN 380 ITR 573 SHE SUBMITTED THAT NO ADDITION CAN BE MADE IN THE COMPLETED ASSES SMENT UNDER THE PROVISIONS OF SECTION 153 A/ 153C IN ABSE NCE OF ANY PAGE | 7 INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH. REFERRING TO THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. SINGHAD TECHNICAL EDUCATION SOCIETY REPO RTED IN 2017-TIOL-309-SCS HE SUBMITTED THAT THE HONBLE APE X COURT IN THE SAID DECISION HAS HELD THAT SEIZED INCRIMINA TING MATERIAL HAVE TO PERTAIN TO THE ASSESSMENT YEAR IN QUESTION AND HAVE CO- RELATION, DOCUMENT-WISE WITH THE ASSESSMENT YEAR. 10. SHE ACCORDINGLY SUBMITTED THAT SINCE THE ADDITI ONS ARE NOT BASED ON ANY INCRIMINATING MATERIAL FOUND OR UNEART HED DURING THE COURSE OF SEARCH AND ADDITION HAS BEEN MADE ON THE BASIS OF MATERIAL ALREADY AVAILABLE ON RECORD AND NO ASSESSM ENT WAS PENDING, THEREFORE, THE LD. CIT(A) WAS FULLY JUSTIF IED IN DELETING THE VARIOUS ADDITIONS. 11. THE LD. DR ON THE OTHER HAND HEAVILY RELIED ON THE ORDER OF THE ASSESSING OFFICER. SHE SUBMITTED THAT THE ASSE SSING OFFICER OF THE SEARCH PARTY AND THE ASSESSING OFFICER OF TH E ASSESSEE IN THE INSTANT CASE ARE ONE AND SAME, THEREFORE, THE F INDINGS OF THE CIT(A) THAT DUE PROCESS OF RECORDING OF SATISFACTIO NS U/S. 153 C HAS NOT BEEN FOLLOWED IS INCORRECT. 12. REFERRING TO THE PROVISION TO SECTION 153C OF T HE ACT SHE SUBMITTED THAT THERE IS NOTHING IN THE ACT THAT PRO VISIONS OF SECTION 153C CANNOT BE INVOKED, IN ABSENCE OF ANY INCRIMINATING DOCUMENT FOUND OR SEIZED DURING THE C OURSE OF SEARCH. THE ONLY REQUIREMENT IS THAT THE SEIZED DOC UMENT PAGE | 8 SHOULD HAVE A BEARING ON THE DETERMINATION OF THE T OTAL INCOME. SHE ACCORDINGLY SUBMITTED THAT THE ORDER OF THE CIT (A) IS ERRONEOUS AND, THEREFORE, SHOULD BE SET ASIDE. 13. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE ALSO CONSIDERED THE VARIOUS DECISION CITED BEFORE U S. A PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THE VARIOUS ADDI TIONS MADE BY THE ASSESSING OFFICER ARE NOT BASED ON ANY INCRI MINATING MATERIAL FOUND DURING THE COURSE OF SEARCH FROM THE PREMISES OF THE SEARCH PARTY. THE DOCUMENT WHICH WAS FOUND DUR ING THE SEARCH FROM THE PREMISES OF SH. KRISHAN KUMAR MODI BEING THE COPY OF THE SALE DEED EXECUTED ON 18.12.2007 BY SH. SANJEEV LAL IN FAVOUR OF M/S. BEENA FASHIONS N FOODS PRIVATE LI MITED IS ALREADY RECORDED IN THE BOOKS OF THE ASSESSEE AND S AID DOCUMENT PER SE IS NOT INCRIMINATING IN NATURE. SIN CE THE ADDITION IS NOT BASED ON ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH, THEREFORE, WE CONCUR W ITH THE FINDINGS GIVEN BY THE LD. CIT(A) THAT THE ADDITION SO MADE BY THE ASSESSING OFFICER IS NOT SUSTAINABLE. 14. THE HONBLE DELHI HIGH COURT IN THE CASE OF KAB UL CHAWLA (SUPRA) HAS HELD THAT WHEN THE ASSESSMENT WHICH IS COMPLETED ON THE DATE OF SEARCH AND NO INCRIMINATING MATERIAL WERE FOUND DURING THE COURSE OF SEARCH NO ADDITION CAN BE MADE TO THE INCOME ALREADY ASSESSED. THE HONBLE APEX COURT IN THE CASE OF SINGHAD TECHNICAL EDUCATION SOCIETY (SUPRA) HAS HE LD THAT THE SEIZED INCRIMINATING MATERIAL HAVE TO PERTAIN TO TH E ASSESSMENT YEAR IN QUESTION AND HAVE CO-RELATION, DOCUMENT WIS E WITH THE PAGE | 9 ASSESSMENT YEAR. 15. SINCE IN THE INSTANT CASE THE ASSESSMENT WAS CO MPLETED ON THE DATE WHEN THE SATISFACTION NOTE WAS RECORDED BY THE ASSESSING OFFICER AND THE ADDITIONS ARE NOT BASED O N ANY INCRIMINATING MATERIAL FOUND BUT ON THE BASIS OF TH E BOOKS OF ACCOUNT REGULARLY MAINTAINED OR UNEARTHED, DURING T HE COURSE OF SEARCH THEREFORE, THE VARIOUS ADDITIONS MADE BY THE ASSESSING OFFICER ARE NOT SUSTAINABLE. WE, THEREFOR E, UPHOLD THE ORDER OF THE CIT(A) DELETING THE ADDITIONS MADE BY THE ASSESSING OFFICER ON THIS GROUND ITSELF. THE GROUND S RAISED BY THE REVENUE ARE ACCORDINGLY DISMISSED. 16. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23.09.2019. SD/- SD/- (SUCHITRA KAMBLE) (R.K PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER *NEHA* DATE:- 23 .09.2019 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS /PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/ PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT 23.09.2019 PAGE | 10 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH FILE GOES TO THE HEAD CLERK. THE DATE ON WHICH FILE GOES TO THE ASSISTANT REGIST RAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER