Gautam Bhalla, Gurgaon V. ACIT, Central Circle- 8, New Delhi

ITA 1471/DEL/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 1239 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 22-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: C S AGGARWAL; RAVI PRATAP MAL
• Keywords: Unexplained cash credit; Depreciation; Search and seizure; Document seized; Additional evidence; Reason to believe; Reassessment proceedings
• Section: 143(3); 153A; 147; 131; 68; 148; 11; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: C , NEW DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER ITA NOS. 1 471 & 1472 /DEL/ 2019 ASSESSMENT YEAR S : 2010 - 11 & 2011 - 12 SHRI GAUTAM BHALLA, PHB, LCG, 5, LABURNUM, SUSHANT LOK - 1, GURGAON, HARYANA VS. ACIT, CENTRAL CIRCLE - 8, NEW DELHI PAN : AGMPB8807G (APPELLANT) (RESPONDENT) APPELLANT BY SHRI C.S. AGGARWAL, SR. ADV. & SHRI RAVI PRATAP MAL, ADV. RESPONDENT BY SHRI AMIT KATOCH, SR.DR ORDER PER O.P. KANT, A.M.: THESE TWO APPEALS BY THE R EVENUE ARE DIRECTED AGAINST TWO SEPARATE ORDERS , BOTH DATED 14/01/2019 PASSED BY THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) - 24, NEW DELHI [IN SHORT THE LD. CIT(A) ] FOR ASSESSMENT YEAR S 2010 - 11 AND 2011 - 12 RESPECTIVELY. AS IDENTICAL GROUNDS HAVE BEEN RAISED IN SAME SET OF CIRCUMSTANCES IN BOTH THESE APPEALS, THEREFORE , SAME WERE HEARD TOGETHER AND DISPOSED OF F BY WAY OF THIS CONSOLIDATED ORDER FOR SAKE OF CONVENIENCE. DATE OF HEARING 19.08.2019 DATE OF PRONOUNCEMENT 03.09.2019 2 ITA NO. 1471 & 1472/DEL/2019 ITA NO. 1471/DEL/2019 FOR AY : 2010 - 11 2. FIRST WE TAKE UP THE APPEAL HAVING IT A NO. 1471/ DEL /2019 FOR ASSESSMENT YEAR 2010 - 11. THE GROUNDS RAISED IN THE APPEAL ARE REPRODUCED AS UNDER: 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED BOTH IN LAW AND ON FACTS IN UPHOLDING THE ORDER OF ASSESSMENT PASSED U/S 148 R.W.S. 143(3)/153A OF THE ACT. IN SO DOING, HE HAS FAILED TO COMPREHEND THAT EVEN THE ASSUMPTION OF JURISDICTION U/S 147 OF THE INCOME TAX ACT BY THE AO WAS OUTSIDE THE PALE OF THE AFORESAID STATUTORY PROVISIONS. 2. THAT THE LEARNED CIT(A) HAS FURTHER FAILED TO APPRECIATE THAT THE PROCEEDINGS HAD BEEN INITIATED BY THE AO ON THE DIRECTIONS OF THE CIT(A), WHICH WAS BEYOND HIS JURISDICTION AND AS SUCH THE INITIATION OF PROCEEDINGS ITSELF ON THAT GROUND ALONE IS UNTENABLE IN LAW. 3. THAT EVEN OTHERWISE, THE LEARNED CIT(A) HAS FAILED TO APPRECIATE THAT THE ASSESSMEN T HAD BEEN FRAMED U/S 153A OF THE ACT AND AS SUCH, NO VALID PROCEEDINGS COULD HAVE BEEN INITIATED U/S 147 OF THE ACT. 4. THAT THE LEARNED CIT(A) HAS FURTHER FAILED TO COMPREHEND THAT THE THIRD PROVISO BELOW SECTION 147, SPECIFICALLY EXCLUDES THE TAXABILIT Y OF SUCH INCOME WHICH ARE THE SUBJECT MATTER OF APPEAL, AS SUCH THE LEARNED AO COULD NOT HAVE INITIATED THE PROCEEDINGS TO TAX SUCH INCOME BY ISSUE A NOTICE U/S 147 OF THE ACT TO TAX ONLY THAT INCOME WHICH WAS THE SUBJECT MATTER OF APPEAL AND TO TAX SUCH AN INCOME. 5. THAT THE LEARNED CIT(A) HAS FAILED TO APPRECIATE THAT THE SUM SOUGHT TO BE ADDED AND HAS BEEN ALLEGED TO BE AN ESCAPED INCOME, WAS SUCH A SUM WHICH HAD BEEN ASSESSED TO TAX BY THE AO AND ON APPEAL WAS DELETED BY THE LEARNED CIT(A) AGAINST WH ICH REVENUE WAS IN APPEAL, HENCE WAS THE SUBJECT MATTER OF APPEAL BEFORE THE HON'BLE TRIBUNAL. 6. THAT IN ANY CASE AND WITHOUT PREJUDICE TO EACH OF THE AFORESAID GROUND, THE PRE CONDITIONS FOR INVOKING THE PROVISIONS OF SECTION 147 OF THE INCOME TAX ACT, SINCE WERE NOT SATISFIED IN AS MUCH AS THERE HAD BEEN NO ESCAPEMENT OF INCOME, THE INITIATION OF PROCEEDING WAS WITHOUT A REASON TO BELIEVE THAT THERE HAS BEEN AN ESCAPEMENT OF INCOME AND AS SUCH NO PROCEEDINGS U/S 147 OF THE ACT COULD HAVE HELD AS VALIDLY INITIATED PROCEEDINGS. 3 ITA NO. 1471 & 1472/DEL/2019 7. THAT THE LEARNED CIT(A) HAS FAILED TO APPRECIATE THAT THE ASSESSEE HAD DISCHARGED HIS INITIAL ONUS BY ESTABLISHING THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE CREDIT BALANCE EITHER IN THE ACCOUNT OF M/S STANFORD HOSPI TALITY (INDIA) PRIVATE LIMITED OR EVEN IN THE ACCOUNTS OF (A) ANGLICAN INDIAN CONSULTANCY PRIVATE LIMITED AND (B) STANFORD HOTEL MANAGEMENT PRIVATE LIMITED. 8. THAT IN ANY CASE AND WITHOUT PREJUDICE THERE WAS NO JUSTIFICATION EITHER OF FACTS OR IN LAW TO HAVE SUSTAINED THE ADDITION MADE BY THE AO OF RS. 4,95,00,000/ - . IN SO DOING THE LEARNED CIT(A) HAS FAILED TO APPRECIATE THAT THE ASSESSEE HAD RECEIVED A SUM OF RS. 3,15,00,000/ - FROM M/S STANFORD HOSPITALITY (INDIA) PRIVATE LIMITED AND REMAINING SUMS WER E RECEIVED FROM (A) ANGLICAN INDIAN CONSULTANCY PRIVATE LIMITED AND (B) STANFORD HOTEL MANAGEMENT PRIVATE LIMITED., THOUGH THE SAME WERE UNDER SAME MANAGEMENT AND ONE OF THE DIRECTOR WAS A COMMON DIRECTOR OF THE COMPANY. 9. THAT WITHOUT PREJUDICE TO EACH OF THE AFORESAID GROUND OF APPEAL, THE LEARNED CIT(A) OUGHT TO HAVE REMANDED THE MATTER TO THE AO TO HAVE EITHER SUMMONED THE CREDITORS WHOSE IDENTITY WAS WELL ESTABLISHED OR THE MANAGER OF THE BANK WITH WHOM THE SAID CREDITORS HAD THEIR ACCOUNTS AND MONIE S HAD BEEN RECEIVED BY THE ASSESSEE FROM THE SAID BANK ACCOUNTS. IT IS THEREFORE PRAYED THE ADDITION SUSTAINED OF RS. 4,95,00,000/ - BE DIRECTED TO BE DELETED. 3. B RIEFLY STATED FACTS OF THE CASE ARE THAT : ( I ) T HE ASSESSEE, AN INDIVIDUAL FILED ITS ORIGINAL RETURN OF INCOME FOR THE YEAR UN DER CONSIDERATION ON 27/07/2010, DECLARING TOTAL INCOME OF RS.93,09,220/ - . ( II ) SUBSEQUENTLY, A SEARCH AND SEIZURE ACTI ON UNDER SECTION 132(1) OF THE INCOME - TAX A CT, 1961 (IN SHORT THE A CT ) WAS CARRIED OUT ON 16/01/2013 AT THE PREMISES OF THE ASSESSEE ALONG WITH THE SEARCH ACTION AT THE PREMISE OF VATIKA GROUP. ( III ) CONSEQUENT TO SEARCH ACTION, IN RESPO NSE TO NOTICE UNDER SECTION 153A OF THE A CT, THE ASSESSEE AGAIN FILED RETURN OF INCOME AND ASSESSMENT WAS COMPLETED ON 30/03/2015 UNDER SECT ION 15 3A R EAD WITH SECTION 4 ITA NO. 1471 & 1472/DEL/2019 143(3) OF THE ACT AT TOTAL INCOME OF RS.5,18,09, 223/ - AFTER MAKING ADDITION OF RS.4, 9 5,00, 000/ - AS UNEXPLAINED CREDIT UNDER SECTION 68 OF THE A CT. ( IV ) THE ASSESSEE FILED APPEAL BEFORE THE LEARNED FIRST APPELLATE AUTHORITY AG AINST THE ASSESSMENT ORDER AND FILED CONFIRMATION LETTER FROM M/S STANFORD HOSPIT ALITY (INDIA) PRIVATE LIMITED (IN SHORT THE STANFORD HOSPITALITY ) IN RESP ECT OF THE LOAN RECEIVED OF RS.4,95,00, 000/ - AS AN ADDITIONAL EVIDENCE. THE LD. CIT(A) ASKED REMAND REPORT FROM THE ASSESSING OFFICER WITH THE DIRECTION TO CONDUCT ENQUIRY REGARDING THE LOAN RECEIVED. ( V ) DURING REMAND PROCEEDING, THE ASSESSING OFFICER ISSUED SUMMON UNDER SECTION 131 OF THE A CT TO THE ASSES SEE FOR PRODUCING PRINCIPAL OFFICER OF STANFORD H OSPITALITY . THE ASSESSING OFFICER ALSO ISSUED SUMMON DIRECTLY TO THE STANFORD H OSPITALITY BUT NO COMPLIANCE WAS MADE EITHER B Y THE ASSESSEE OR STANFORD H OSPITALITY . I N THE SPOT ENQUIRY MADE BY THE I NCOME - TAX I NSPECTOR OF THE OFFICE OF THE ASSESSING OFFICER, IT WAS FOUND THAT NO ENTITY WAS IN EXISTENCE AT THE ADDRESS PROVIDED IN THE C ONFIRMATION LETTER OF STANFORD H OSPITALITY . THE ASSESSING OFFICER SUBMITTED REMAND REPORT TO THE LEARNED FIRST APPELLATE AUTHORITY . ( VI ) THE LEARNED FIRST APPELLATE AUTHORIT Y V IDE ORDER DATED 07/03/2017 DELETED THE ADDITION OF RS.4,95,00, 000/ - RELYING ON THE RATIO OF THE HON BLE DELHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWALA (2015) TAXMANN.COM 412 OBSERVING THAT THERE WAS NO 5 ITA NO. 1471 & 1472/DEL/2019 REFERENCE TO ANY DOCUMENT SEIZED DURING THE S EARCH OR ANY INCRIMINATING MATERIAL WHICH WAS UTILIZED FOR MAKING THE ADDITION. THE LEARNED FIRST APPELLATE AUTHORITY , HOWEVER, ADVISED THE ASSESSING OFFICER FOR REOPENING THE ASSESSMENT OF THE YEAR UNDER CONSIDERATION USING THE INFORMATION GATHERED DURING REMAND PROCEEDING. ( VII ) AFTER CONSIDERING THE OBSERVATION OF THE LEARNED FIRST APPELLATE AUTHORITY , THE ASSESSING OFFICER RECORDED REASONS FOR REOPENING THE ASSESSMENT AND ISSUED N OTICE UNDER SECTION 148 OF THE A CT ON 29/03/2017. THE ASSESSEE FILED RETURN OF I NCOME IN RESPONSE TO THE NOTICE UNDER SECTION 148 O F THE A CT ON 05/05/2017. THE ASSESSEE WAS SUPPLIED COPY OF REASONS RECORDED FOR REOPENING THE ASSESSMENT ON 28/08/2017. THE OBJECTIONS FILED BY THE ASSESSEE ON 20/11/2017 CHALLENGING THE REASSESSMENT PROCE EDING, WERE DISPOSED O F F BY THE ASSESSING OFFICER ON 18/12/2017 AND THE REASSESSMENT UNDER SECTION 147 WAS COMPLETED ON 28 /12/2017 AT TOTAL INCOME OF RS.5, 88,09,223/ - , INTER ALIA , MAKING ADDITION OF RS. 4, 95,00, 000/ - . ( VIII ) DURING REASSESSMENT PROCEEDING, THE ASS ESSING OFFICER AGAIN ISSUED SUMMON UNDER SECTION 131 TO THE ASSESSEE REQUIRING TO PRODUCE PRINCIPAL OFFICER OF STANFORD H OSPITALITY ALONG WITH RELEVANT DOCUMENT , HOWEVER , THE ASSESSEE FAILED TO DO SO. THE ASSESSING OFFICER FURTHER OBSERVED FROM THE ASSESSMENT ORDER DATED 28/03/2013 IN THE CASE OF STANFORD H OSPITALITY 6 ITA NO. 1471 & 1472/DEL/2019 FOR THE YEAR UNDER CONSIDERATION THAT NAME OF THE ASSESSEE WAS NO T APPEARING IN THE LOANS OF RS.1,04,95, 5 00/ - PROVIDED BY SAID IDENTITY DURING THE YEAR UNDER CONSIDERATION. T HE ASSESSEE FOR THE FIRST TIME CLAIMED THAT A PART O F THE UNEXPLAINED CREDIT OF RS. 4, 95,00, 000/ - WAS RECEIVED FROM SOME OTHER ENTITIES ALSO. IN VIEW OF THE FACTS, THE ASSESSING OFFICER CO NCLUDED THAT THE ASSESSEE FAILED TO SATISFY I NGREDIENT OF SECTION 68 OF THE A CT AND ACCORDINGLY , MADE THE ADDITION OF RS. 4,95,00,000/ - . ( IX ) T HE LD. CIT(A), UPHELD THE LEGALITY OF INITIATING REASSESSMENT PROCEEDING CHALLENGED BY THE ASSESSEE AND ALSO UPHELD ME RIT OF THE ADDITION. ( X ) AGGRIEVED WITH THE IMPUGNED ORDER OF THE LD. CIT(A), TH E ASSESSEE IS IN APPEAL BEFORE THE T RIBUNAL RAISING THE GROUNDS AS REPRODUCED ABOVE CHALLENGING THE LEGALITY OF THE REASSESSMENT PROCEEDING AS WELL AS MERIT OF THE ADDITION. 4. IN THE GROUNDS RAISED, GROUND S NO. 1 TO 6 ARE WITH RESPECT CHALLENGE OF REASSES SMENT PROCEEDING AND GROUND NO. 7 TO 9 ARE RELATED TO MERIT OF THE ADDITION. 4.1 BEFORE US, LD. SENIOR CO UNSEL OF THE ASSESSEE FILED PAPER - BOOK CONTAINING PAGES 1 TO 480 AND F ILED BRIEF SYNOPSIS OF THE CASE. THE LD. S ENIOR C OUNSEL MAINLY ARGUED GROUN D NO. 5 OF THE APPEAL. THE LD. S ENIOR C OUNSEL DRAWN OUR ATTENTION TO THE COPY OF REASONS RECORDED AVAILABLE ON PAGE 120 OF THE PAPER - BOOK AND SUBMITTED THAT REASSESSMENT PROCEEDING S HAVE BEEN INITIATED ON THE ADVICE OF THE LD. CIT(A) . HE FURTHER SUBMITTED THAT ADDITION OF 7 ITA NO. 1471 & 1472/DEL/2019 UNEXPLAINED CASH CREDIT MADE BY THE ASSESSING OFFICER IN THE REASSESSMENT PROCEEDING WAS DELETED BY THE LD. FIRST APPELLATE AUTHORITY IN HIS ORDER DATED 07/03/2017 AND AGAINST WHICH R EVENUE WAS IN APPEAL AND HENCE , WAS SUBJE CT MATTER OF APPEAL BEFORE THE T RIBUNAL. HE SUBMITTED THAT IN VIEW OF THE 3 RD PROVISO TO SECTION 147 OF THE A CT , NO PROCEEDING CAN BE INITIATED TO ASSESS OR REASSESS SUCH INCOME, INVOLVING MATTERS AND SUBJECT MATTER OF AN APPEAL. 4.2 THE LD. DR , ON THE OTHER HAND , RELIED ON ORDER OF THE LOWER AUTHORITIES AND SUBMITTED THAT THE REASSESSMENT PROCEEDINGS HAVE BEEN VALIDLY INITIATED IN THE CASE OF THE ASSESSEE. ACCORDING TO HIM, THE APPEAL HAS BEEN F ILED BY THE REVENUE BEFORE THE TRIBUNAL ON CHALLENGING THE LEGAL GROUND, AND THUS PROVISO - 3 OF SECTION 147 IS NOT APPLICABLE. 4.3 WE HAVE HEARD RIVAL SUBMISSION OF THE PARTIES ON THE ISSUE IN DISPUTE AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE REASO NS RECORDED BY THE ASSESSING OFFICER ARE REPRODUCED AS UNDER: THE CASE OF THE ASSESSEE WAS COMPLETED U/S 15 3A R.W.S 143(3) OF THE INCOME T AX ACT, 1961 VIDE ASSESSMENT ORDER DATED 30.03.2015 AND THE INCOME WAS ASSESSED AT RS. 5,18,09,223/ - AFTER MAKING AN ADDITION OF RS. 4,25,00,000/ - ON ACCOUNT OF UNEXPLAINED CREDIT U/S 68 OF THE INCOME TAX ACT, 1961. 2. THE LD. CIT(A) VIDE ITS ORDER DATED 08.03.2017 HAS DELETED THE ADDITIONS MADE BY THE ASSESSING OFFICER RELYING UPON HON BLE DELHI HIGH COURT ORDER IN TH E CASE OF KABUL CHAWLA. THE ADDITION WAS DELETED ON TECHNICAL GROUND THAT NO INCRIMINATING MATERIAL WAS FOUND DURING THE SEARCH ACTION CONDUCTED UPON THE ASSESSEE FROM WHICH IT CAN BE ESTABLISHED THAT THE LOAN RECEIVED FROM M/S. STANFORD HOSPITALITY (I) P. LTD. ARE NOT GENUINE AND ARE BOGUS. 3. THE ID. CIT(A) HAS NOT GIVEN ANY COMMENT REGARDING THE MERITS OF THE CASE. DURING THE REMAND REPORT PROCEEDING OF THE CASE, 8 ITA NO. 1471 & 1472/DEL/2019 IT WAS NOTICED THAT THE PARTY NAMED M/S. STANDARD HOSPITALITY DOES NOT EXIST. THIS PARTY HA D FILED CONFIRMATION LETTER DATED 23.12.2016 REGARDING THE LOAN TRANSACTION BEFORE THE LD. C1T(A). BUT, WHEN THE ENQUIRIES WERE CONDUCTED BY THE INSPECTOR IN THIS MATTER, IT WAS FOUND THAT THE ADDRESS GIVEN BY IT IN ITS CONFIRMATION LETTER DURING THE APPEL LATE PROCEEDING, I.E. T - 5B, WINDSOR COURT, DLF CITY PHASE - IV, GURGAON. IS A RESIDENTIAL COMPLEX. THE SAID FLAT IS IN THE POSSESSION OF MISS ANUSHKA AND SHE DOES NOT EVEN KNOW M/S. STAN FORT HOSPITALITY (INDIA) PVT. LTD. (INSPECTOR REPORT IS ENCLOSED WITH T HIS PROPOSAL AS PER ANNEXURE 'X .) 4. FURTHER, THE SUMMON U/S 131 OF THE I.T. ACT, 1961 WAS ISSUED TO THE ASSESSEE WITH A DIRECTION TO PRODUCE THE PARTY ;M/S. STANFORD HOSPITALITY (INDIA) PVT. LTD', BEFORE THE UNDERSIGNED ON 13.03.2017. BUT THE ASSESSEE F AILED TO PRODUCE THE PARTY. HENCE, IT IS EVIDENT THAT THE LOAN WHICH HAS BEEN SHOWN BY THE ASSESSEE IN ITS BOOKS AS RECEIVED FROM M/S. STANFORD HOSPITALITY (I) P. LTD. ARE NOT GENUINE AND ARE BOGUS CREDITS IN THE ASSESSEC'S BOOKS. 5. THE FACT OF NON - EXIST ENCE OF ALLEGED LENDER WAS NOT KNOWN DURING ASSESSMENT PROCEEDINGS AND THE ADDITION HAS BEEN DELETED BY THE CIT(A) ON TECHNICAL GROUNDS, WITHOUT CONSIDERING ABOVE FACT NOTED DURING REMAND PROCEEDING. THUS AT THIS STAGE, THE INCOME OF RS. 4,25,00,000/ - STAN DS ESCAPED ASSESSMENT, WHICH SHOULD BE CHARGED IN THE HANDS OF THE ASSESSEE. THEREFORE, THE CASE OF SH. GUATAM BHALLA IS REQUIRED TO B E REOPENED FOR THE A.Y. 2010 - 11 . 6. FROM THE FACTS AND DISCUSSION ABOVE, IT IS CLEAR THAT THE ESCAPEMENT OF TAX IN THE CA SE IS ONLY DUE TO THE INCOMPLETE AND PARTIAL DISCLOSURE OF FACTS BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS AS WELL AS APPELLATE PROCEEDINGS. HENCE, I AM SATISFIED THAT THIS IS THE FIT CASE FOR ISSUANCE OF NOTICE UNDER SECTION 148 OF THE ACT. 4.4 IN BACKGROUND OF THE FACTS OF THE CASE REPRODUCED BY US ABOVE, WE FIN D THAT THAT THE ADDITION OF RS. 4,95,00,000/ - WHICH IS IN DISPUTE BEFORE US HAS BEEN DELETED BY THE LD. FIRST APPELLATE AUTHORITY IN HIS ORDER DATED 07/03/2017 RELYING ON THE DECISION OF THE HON BLE HIGH COURT IN THE CASE OF KABUL CHAWALA (SUPRA) AND THE R EVENUE CHALLENGED THAT ORDER OF THE LD. CIT(A) BEFORE THE T RIBUNAL. THUS , IT IS AN ADMITTED FACT THAT VERY SUM IN RESPECT OF WHIC H THE ASSESSING OFFICER REOPENED THE PROCEEDING, WERE THE SUBJE CT MATTER OF THE APPEAL BEFORE THE T RIBUNAL. WE FIND THAT THE 9 ITA NO. 1471 & 1472/DEL/2019 THIRD PROVISO MANDATES THAT NO PROCEEDING CAN BE INITIATED TO TAX SUCH INCOME, WHICH IS SUBJECT MATTER OF THE APPEAL. FOR THE SAKE OF READY REFERENCE, THE 3 RD PROVISO TO SECTION 147 OF THE A CT IS EXTRACTED BELOW: INCOME ESCAPING ASSESSMENT. 147. IF THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, HE MAY, S UBJECT TO THE PROVISIONS OF SECTIONS 148 TO 153 , ASSESS OR REASSESS SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION, OR RECOMPUTE THE LOSS OR THE DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE, AS THE CASE MAY BE, FOR THE ASSESSMENT YEAR CONCERNED (HEREAFTER IN THIS SECTION AND IN SECTIONS 148 TO 153 REFERRED TO AS THE RELEVANT ASSESSMENT YEAR) : PROVIDED . PROVIDED FURTHER . PROVIDED ALSO THAT THE ASSESSING OFFICER MAY ASSESS OR REASSESS SUCH INCOME, OTHER THAN THE INCOME INVOLVIN G MATTERS WHICH ARE THE SUBJECT MATTERS OF ANY APPEAL, REFERENCE OR REVISION, WHICH IS CHARGEABLE TO TAX AND HAS ESCAPED ASSESSMENT. 4.5 IN VIEW OF THE CLEAR PROVISIONS, WE ARE OF THE CONSIDERED OPINION THAT ASSESSING OFFICER WAS NOT JUSTIFIED IN REOPEN ING THE ASSESSMENT FOR ASSESSING THE INCOME WHICH WAS SUBJECT M ATTER OF THE APPEAL BEFORE THE T RIBUNAL. ACCORDINGLY, WE HOLD THE REASSESSMENT IN THE INSTANT CASE AS VOID - AB - INITIO THUS, THE REASSESSMENT PROCEEDING ARE ACCORDINGLY QUASHED. 4.6 AS WE HAVE ALREADY QUASHED THE REASSESSMENT PROCEEDING, THE OTHER ARGUMENTS OF THE LD. S ENIOR C OUNSEL CHALLENGING THE REASSESSMENT PROCEEDING AND THE MERIT OF THE ADDITION ARE RENDERED MERELY ACADEMIC AND , THEREFORE , WE ARE NOT ADJUDICATING UPON THOSE ARGU MENTS. 4.7 THE APPEAL OF THE ASSESSEE IS ACCORDINGLY ALLOWED. 10 ITA NO. 1471 & 1472/DEL/2019 ITA NO.1472/DEL/2019 FOR AY: 2011 - 12 5. IN ITA NO.1472/12/2019 FOR ASSESSMENT YEAR 2011 - 12 FOLLOWING GROUNDS HAVE BEEN RAISED: 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED BOTH IN LAW AND ON FACTS IN UPHOLDING THE ORDER OF ASSESSMENT PASSED U/S 148 R.W.S. 143(3)/153A OF THE ACT. IN SO DOING, HE HAS FAILED TO COMPREHEND THAT EVEN THE ASSUMPTION OF JURISDICTION U/ S 147 OF THE INCOME TAX ACT BY THE AO WAS OUTSIDE THE PALE OF THE AFORESAID STATUTORY PROVISIONS. 2. THAT THE LEARNED CIT(A) HAS FURTHER FAILED TO APPRECIATE THAT THE PROCEEDINGS HAD BEEN INITIATED BY THE AO ON THE DIRECTIONS OF THE CIT(A), WHICH WAS BEYO ND HIS JURISDICTION AND AS SUCH THE INITIATION OF PROCEEDINGS ITSELF ON THAT GROUND ALONE IS UNTENABLE IN LAW. 3. THAT EVEN OTHERWISE, THE LEARNED CIT(A) HAS FAILED TO APPRECIATE THAT THE ASSESSMENT HAD BEEN FRAMED U/S 153A OF THE ACT AND AS SUCH, NO VALI D PROCEEDINGS COULD HAVE BEEN INITIATED U/S 147 OF THE ACT. 4. THAT THE LEARNED CIT(A) HAS FURTHER FAILED TO COMPREHEND THAT THE THIRD PROVISO BELOW SECTION 147, SPECIFICALLY EXCLUDES THE TAXABILITY OF SUCH INCOME WHICH ARE THE SUBJECT MATTER OF APPEAL, AS SUCH THE LEARNED AO COULD NOT HAVE INITIATED THE PROCEEDINGS TO TAX SUCH INCOME BY ISSUE A NOTICE U/S 147 OF THE ACT TO TAX ONLY THAT INCOME WHICH WAS THE SUBJECT MATTER OF APPEAL AND TO TAX SUCH AN INCOME. 5. THAT THE LEARNED CIT(A) HAS FAILED TO APPR ECIATE THAT THE SUM SOUGHT TO BE ADDED AND HAS BEEN ALLEGED TO BE AN ESCAPED INCOME, WAS SUCH A SUM WHICH HAD BEEN ASSESSED TO TAX BY THE AO AND ON APPEAL WAS DELETED BY THE LEARNED CIT(A) AGAINST WHICH REVENUE WAS IN APPEAL, HENCE WAS THE SUBJECT MATTER O F APPEAL BEFORE THE HON'BLE TRIBUNAL. 6. THAT IN ANY CASE AND WITHOUT PREJUDICE TO EACH OF THE AFORESAID GROUND, THE PRE CONDITIONS FOR INVOKING THE PROVISIONS OF SECTION 147 OF THE INCOME TAX ACT, SINCE WERE NOT SATISFIED IN AS MUCH AS THERE HAD BEEN NO ESCAPEMENT OF INCOME, THE INITIATION OF PROCEEDING WAS WITHOUT A REASON TO BELIEVE THAT THERE HAS BEEN AN ESCAPEMENT OF INCOME AND AS SUCH NO PROCEEDINGS U/S 147 OF THE ACT COULD HAVE HELD AS VALIDLY INITIATED PROCEEDINGS. 7. THAT THE LEARNED CIT(A) HAS F URTHER ERRED IN SUSTAINING AN ADDITION OF RS. 4,62,94,000/ - DESPITE THE FACT THAT THE BALANCE AT THE END OF THE YEAR AGGREGATED TO RS. 6,14,00,000/ - IN THE ACCOUNT OF 11 ITA NO. 1471 & 1472/DEL/2019 M/S STANFORD HOSPITALITY (INDIA) PVT. LTD. OUT OF WHICH ONLY RS. 3,44,00,000/ - HAD BEEN R ECEIVED DURING THE YEAR AND AFTER REPAYMENT OF RS. 45,00,000/ - THE BALANCE REMAINED AT RS. 2,99,00,000/ - . 8. THAT IN ANY CASE AND WITHOUT PREJUDICE THE LEARNED CIT(A) HAS ERRED IN SUSTAINING ADDITION OF RS. 1,63,94,000/ - RECEIVED FROM RAM SHANTI CO - OPERAT IVE GROUP HOUSING SOCIETY LIMITED, WHICH WAS NOT THE SUM HELD AS UNEXPLAINED CREDIT (THOUGH THE SAME WERE UNDER SAME MANAGEMENT AND ONE OF THE DIRECTOR WAS COMMON DIRECTOR OF THE COMPANY) ., 9. THAT WITHOUT PREJUDICE TO EACH OF THE AFORESAID GROUND OF APPE AL, THE LEARNED CIT(A) OUGHT TO HAVE REMANDED THE MATTER TO THE AO TO HAVE EITHER SUMMONED THE CREDITORS WHOSE IDENTITY WAS WELL ESTABLISHED OR THE MANAGER OF THE BANK WITH WHOM THE SAID CREDITORS HAD THEIR ACCOUNTS AND MONIES HAD BEEN RECEIVED BY THE ASSE SSEE FROM THE SAID BANK ACCOUNTS. IT IS THEREFORE PRAYE D THE ADDITION SUSTAINED OF RS. 4,62,94,000/ - BE DIRECTED TO BE DELETED. 6. THE GROUNDS RAISED IN THE INSTANT ASSESSMENT YEAR ARE IDENTICAL TO THE GROUNDS RAISED IN ASSESSMENT YEAR 2010 - 11. THE FACTS AND CIRCUMSTANCES OF THE CASE ARE ALSO IDENTICAL TO THE FACTS AND CIRCUMSTANCES OF ASSESSMENT YEAR 2010 - 11. THE ONLY CHANGE IN RESPECT OF THE AMOUNT OF UNEXPLAINED CASH CREDI T MADE UNDER SECTION 68 OF THE A CT, WHICH IN THE INSTANT YEAR , IS OF RS.4,62, 94,0 00/ - . A COPY OF REASONS RECORDED FOR REOPENING THE ASSESSMENT FOR THE YEAR INTO CONSIDERATION, IS AVAILABLE ON PAGE 124 OF THE PAPER BOOK FILED BY THE ASSESSEE, ARE REPRODUCED AS UNDER: THE CASE OF THE ASSESSEE WAS COMPLETED U/S 153A R.W.S 143(3) OF THE INCOME TAX ACT. 1961 VIDE ASSESSMENT ORDER DATED 30.03.2015 AND THE INCOME WAS ASSESSED AT RS. 5,43,83,644/ - AFTER MAKING AN ADDITION OF RS. 4,62,94,000/ - ON ACCOUNT OF UNEXPLAINED CREDIT U/S 68 OF THE INCOME TAX ACT, 1961. 2. THE LD. CIT(A ) VIDE ITS ORDER DATED 08.03.2017 HAS DELETED THE ADDITIONS MADE BY THE ASSESSING OFFICER RELYING UPON HON BLE 12 ITA NO. 1471 & 1472/DEL/2019 DELHI HIGH COURT ORDER IN THE CASE OF KABUL CHAWLA. THE ADDITION WAS DELETED ON TECHNICAL GROUND THAT NO INCRIMINATING MATERIAL WAS FOUND DURING THE SEARCH ACTION CONDUCTED UPON THE ASSESSEE FROM WHICH IT CAN BE ESTABLISHED THAT THE LOAN RECEIVED FROM M/S. STANFORD HOSPITALITY (I) P. LTD. ARE NOT GENUINE AND ARE BOGUS. 3. THE LD. CIT(A) HAS NOT GIVEN ANY COMMENT REGARDING THE MERITS OF THE CASE. D URING THE REMAND REPORT PROCEEDING OF THE CASE, IT WAS NOTICED THAT THE PARTY NAMED M/S. STANDARD HOSPITALITY DOES NOT EXIST. THIS PARTY HAD FILED CONFIRMATION LETTER DATED 23.12.2016 REGARDING THE LOAN TRANSACTION BEFORE THE LD. CIT(A). BUT, WHEN THE ENQU IRIES WERE CONDUCTED BY THE INSPECTOR IN THIS MATTER, IT WAS FOUND THAT THE ADDRESS GIVEN BY IT IN ITS CONFIRMATION LETTER DURING THE APPELLATE PROCEEDING, I.E. , T - 5B, WINDSOR COURT, DLF CITY PHASE - IV, GURGAON, IS A RESIDENTIAL COMPLEX. THE SAID FLAT IS IN THE POSSESSION OF MISS ANUSHKA AND SHE DOES NOT EVEN KNOW M/S. ' STANFORD HOSPITALITY (INDIA) PVT. LTD. (INSPECTOR REPORT IS ENCLOSED WITH THIS PROPOSAL AS PER ANNEXURE X .) 4. FURTHER, THE SUMMON U/S 131 OF THE I.T. ACT, 1961 WAS ISSUED TO THE ASSESSEE WITH A DIRECTION TO PRODUCE THE PARTY M/S. STANFORD HOSPITALITY (INDIA) PVT. LTD', BEFORE THE UNDERSIGNED ON 13.03.2017. BUT THE ASSESSEE FAILED TO PRODUCE THE PARTY. HENCE, IT IS EVIDENT THAT THE LOAN WHICH HAS BEEN SHOWN BY THE ASSESSEE IN ITS BOOKS A S RECEIVED FROM M/S. STANFORD . HOSPITALITY (1) P. LTD. ARE NOT GENUINE - AND ARE BOGUS CREDITS IN THE ASSESSEE S BOOKS. 5. THE FACT OF NON - EXISTENCE OF ALLEGED LENDER WAS NOT KNOWN DURING ASSESSMENT PROCEEDINGS AND THE ADDITION HAS BEEN DELETED BY THE C1T( A) ON TECHNICAL GROUNDS, WITHOUT CONSIDERING ABOVE FACT NOTED DURING REMAND PROCEEDING. THUS AT THIS STAGE, THE INCOME OF RS. 4,62,94,000/ - STANDS ESCAPED ASSESSMENT, WHICH SHOULD BE CHARGED IN THE HANDS OF THE ASSESSEE. THEREFORE, THE CASE OF SH. GUATAM B HALLA IS REQUIRED TO BE REOPENED FOR THE A.Y. 2011 - 12. 6. FROM THE FACTS AND DISCUSSION ABOVE, IT IS CLEAR THAT THE ESCAPEMENT OF TAX IN THE CASE IS ONLY DUE TO THE INCOMPLETE AND PARTIAL DISCLOSURE OF FACTS BY THE ASSESSEE DURING THE ASSESSMENT PROCEED INGS AS WELL AS APPELLATE PROCEEDINGS. HENCE, I AM SATISFIED THAT THIS IS THE LIT CASE FOR ISSUANCE OF NOTICE UNDER SECTION 148 OF THE ACT. 7. IN VIEW OF ABOVE FACTS, I HAVE REASONS TO BELIEVE THAT INCOME OF RS.4,62,94,000/ - WHICH SHOULD BE CHARGED TO TAX IN THE HANDS OF SH. GAUTAM BHALLA HAS ESCAPED FROM BEING TAXED FOR A.Y. 2011 - 12. HENCE, I AM SATISFIED THAT IT IS A FIT CASE FOR ISSUANCE OF NOTICE U/S 148 OF THE INCOME TAX ACT, 1961. 13 ITA NO. 1471 & 1472/DEL/2019 7. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE INSTANT YEAR IDENTICAL TO FACTS AND CIRCUMSTANCES OF ASSESSMENT YEAR 2010 - 11, THE REASSESSMENT PROCEEDING IN THE INSTANT YEAR IS ALSO QUASHED. 8. T HE APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2011 - 12 IS ACCORD INGLY ALLOWED. 9. IN THE RESULT, BOTH THE APPEAL S OF THE ASSESSEE ARE ALLOWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 3 R D S E P T E M B E R , 2019. S D / - S D / - [ BHA V NESH SAINI ] [O.P. KANT] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 3 R D S E P T E M B E R , 2019. RK/ - [D.T.D.S] COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR ASST. REGISTRAR, ITAT, NEW DELHI