M/s. Splendor Landbase Limited, New Delhi V. ACIT, New Delhi

ITA 1507/DEL/2014

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 0123 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 21-06-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 13-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S RANA
• Keywords: Search and seizure; Opportunity of being heard; Additional evidence
• Section: 271(1)(c); 143(3); 153A; 143(2); 69A; 43; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH: G: NEW DELHI) BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO.1507/DEL/2014 (ASSESSMENT YEAR-2007-08) ITA NO.1508/DEL/2014 (ASSESSMENT YEA R-2008-09) M/S SPLENDOR LANDBASE LIMITED SPLENDOR FORUM, 5 TH FLOOR, JASOLA DISTRICT CENTRE, NEW DELHI- 110025. PAN AAECA 3986E VS . ASST. COMMISSIONER OF INCOME TAX, CIRCLE-9(1), NEW DELHI. (APPELLANT) (RESPONDENT) ITA NO.3532/DEL/2010 (ASSESSMENT YEAR-2007-08) ITA NO.3533/DEL/2010 (ASSESSMENT YEAR-2008-09) M/S SPLENDOR LANDBASE LIMITED F-38/2, SPLENDOR HOUSE OKHLA INDUSTRIES AREA, PHASE-II, NEW DELHI-110020. PAN AAECA 3986E VS . ASST. COMMISSIONER OF INCOME TAX, CIRCLE-9(1), NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY SH. ANIL KUMAR CHOPRA, CA SH. V.K.GARG, ADV. RESPONDENT BY SH. S.S. RANA, CIT-DR DATE OF HEARING 10.12.2019 DATE OF PRONOUNCEMENT 31.12.2019 ITA NOS.1507, 1508/DEL/2014 ITA NOS.3532 & 3533/DEL/2010 (ASST.YEARS:2007-08 & 2008-09) PAGE | 2 ORDER PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER: ALL THESE FOUR APPEALS HAVE BEEN PREFERRED BY THE A SSESSEE. ITA NO.3532/DEL/2010 CHALLENGES THE ORDER OF THE LEARNE D COMMISSIONER OF INCOME TAX (APPEALS)-XII, NEW DELHI AND PERTAINS TO ASSESSMENT YEAR 2007-08. ITA NO.3533/DEL/2010 CH ALLENGES THE ORDER OF THE LEARNED CIT (APPEALS) - XI, NEW DELHI FOR ASSESSMENT YEAR 2008-09. ITA NO.1507/DEL/2014 AND ITA NO.1508/ DEL/2014 ARE THE ASSESSEES APPEALS AGAINST THE PENALTY IMPO SED U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS THE ACT) FOR THE TWO CAPTIONED ASSESSMENT YEARS . FOR THE S AKE OF CONVENIENCE ALL THE FOUR APPEALS WERE HEARD TOGETHE R AND THEY ARE BEING DISPOSED OF THROUGH THIS A COMMON ORDER FOR T HE SAKE OF CONVENIENCE. 2.0 THE BRIEF FACTS OF THE CASE ARE THAT THE ASSES SEE IS A COMPANY ENGAGED IN THE BUSINESS OF REAL ESTATE DEVE LOPMENT. ON 31 ST JANUARY, 2008 ONE SH. VIPIN VERMA, AN EMPLOYEE OF THE ASSESSEE WAS INTERCEPTED BY THE POLICE AT RAJPURA W HILE HE WAS TRAVELLING TO AMRITSAR. RS.1.98 CRORES IN CASH ALON G WITH AN ITA NOS.1507, 1508/DEL/2014 ITA NOS.3532 & 3533/DEL/2010 (ASST.YEARS:2007-08 & 2008-09) PAGE | 3 UNSIGNED PHOTOCOPIED AGREEMENT DATED 30.09.2006, WH ICH WAS ALLEGED TO HAVE BEEN EXECUTED BETWEEN THE ASSESSEE AND ONE M/S V.M. REALITY, WERE SEIZED FROM HIS POSSESSION. AS PER THIS UNSIGNED PHOTOCOPIED AGREEMENT, THE ASSESSEE COMPANY HAD MAD E PAYMENT OF RS.5 CRORES TO M/S V.M. REALITY TOWARDS TRANSACT IONS OF LAND AND A CASH PAYMENT OF RS.70 LACS WAS ALSO ALLEGED TO HA VE BEEN MADE. THIS AGREEMENT WAS SIGNED BY SH. HIRA, THE MANAGING DIRECTOR OF M/S. V.M. REALITY AND NAME OF ONE SH. HEMANT KAPOOR WAS MENTIONED AS BEING THE AUTHORIZED SIGNATORY ON BEHA LF OF THE ASSESSEE COMPANY. HOWEVER, NOBODY HAD SIGNED ON BEH ALF OF THE ASSESSEE COMPANY. IT IS THE ASSESSEE COMPANYS CONT ENTION THAT SH. HEMANT KAPOOR AS NEITHER AN EMPLOYEE OF THE COMPANY NOR HE WAS AUTHORIZED BY THE ASSESSEE COMPANY TO ENTER INTO AN Y SUCH TRANSACTION. SH. HEMANT KAPOOR ALSO IN HIS STATEMEN T RECORDED CATEGORICALLY STATED THAT HE WAS NOT AWARE OF ANY S UCH AGREEMENT AND THE ASSESSEE ALSO VEHEMENTLY DENIED HAVING ENTE RED INTO ANY SUCH AGREEMENT. EVEN IN THE STATEMENT RECORDED OF S H. VIPIN VERMA, SH. VIPIN VERMA NEVER STATED THAT SUCH AGREE MENT BELONGED TO THE ASSESSEE. SUBSEQUENTLY, NOTICE WAS ISSUED U/ S 153C OF THE ITA NOS.1507, 1508/DEL/2014 ITA NOS.3532 & 3533/DEL/2010 (ASST.YEARS:2007-08 & 2008-09) PAGE | 4 ACT AND ASSESSMENT FOR ASSESSMENT YEAR 2007-08 WAS COMPLETED, THEREAFTER, AT AN INCOME OF RS.11,21,82,737/- AFTER MAKING AN ADDITION OF RS.70 LACS WHICH WAS ALLEGED TO HAVE BE EN MADE BY THE ASSESSEE COMPANY IN CASH DURING THE YEAR UNDER CONS IDERATION TO M/S V.M. REALITY PVT. LTD. OUT OF UNEXPLAINED SOURC ES AND IN TERMS OF THE ABOVE SAID AGREEMENT. IN ASSESSMENT YEAR 200 8-09, THE ASSESSMENT WAS COMPLETED AT AN INCOME OF RS.25,14,1 3,359/- AFTER MAKING AN ADDITION OF RS.1.98 CRORES ON ACCOUNT OF UNVERIFIABLE CASH CREDITS APPEARING IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE WHICH AS PER THE ASSESSING OFFICER (AO) REFLECTED U NSUBSTANTIATED CREDITS. 2.1 PENALTY U/S 271(1)(C) AMOUNTING TO RS.23,56,20 0/- WAS IMPOSED FOR ASSESSMENT YEAR 2007-08 AND A SIMILAR P ENALTY OF RS.66,64, 680/- WAS IMPOSED FOR ASSESSMENT YEAR 200 8-09. 2.2 THE ASSESSEES APPEALS AGAINST THE QUANTUM ADD ITIONS AND THE PENALTIES WERE UPHELD BY THE LEARNED CIT (A PPEALS) AND THE APPEALS OF THE ASSESSEE WERE DISMISSED. ITA NOS.1507, 1508/DEL/2014 ITA NOS.3532 & 3533/DEL/2010 (ASST.YEARS:2007-08 & 2008-09) PAGE | 5 2.3 AGGRIEVED, THE ASSESSEE IS NOW BEFORE THE TRIB UNAL CHALLENGING THE QUANTUM ADDITIONS AS WELL AS THE PE NALTIES IMPOSED U/S 271(1)(C) FOR ASSESSMENT YEARS 2007-08 AND 2008 -09. 2.4 THE RESPECTIVE GROUNDS OF APPEAL RAISED IN THE FOUR APPEALS ARE AS UNDER: ITA NO.3532/DEL/2010 FOR ASST. YEAR 2007-08 1. THAT THE ENTIRE ASSESSMENT PROCEEDINGS ARE NULL & VOID AND BEING WITHOUT JURISDICTION SINCE MANDATORY REQU IREMENTS OF SECTION 153C (1) OF I.T. ACT 1961(IN SHORT 'ACT' ) HAD NOT BEEN STRICTLY COMPLIED WITH. THE CIT(A) WAS NOT JUS TIFIED IN REJECTING, SUMMARILY THE LEGAL GROUND CHALLENGING T HE JURISDICTION OF THE AO U/S 153C OF THE ACT, WITHOUT EXAMINING THE RELEVANT FACTS AND MATERIAL ON RECORD AND IN SI MPLY RELYING ON THE ASSESSMENT ORDER. 2. THAT THE IMPUGNED COPY OF AGREEMENT IS NOT SIGNE D ON BEHALF OF THE ASSESSEE AND THEREFORE, IT HAS NO EVI DENTIARY VALUE IN THE EYE OF LAW IN VIEW OF THE JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V KULW ANT RAI 291 ITR 36 (DEL). CONSEQUENTLY, THE ALLEGED AGREEME NT COULD NOT BE TREATED AS A EVIDENCE AGAINST THE ASSESSEE. HENCE, NO ADDITION COULD BE MADE SOLELY ON THE BASIS OF THE A LLEGED AGREEMENT. 3. THAT THE PRESUMPTION RAISED BY THE LOWER AUTHORI TIES AGAINST THE ASSESSEE TO THE EFFECT THAT THE SAID AG REEMENT BELONG TO ASSESSEE IS ILLEGAL SINCE PRESUMPTION, IF ANY, CAN BE RAISED ONLY AGAINST SHRI VIPIN VERMA FROM WHOSE POSSESSION THE SAID AGREEMENT WAS TAKEN IN TO CUSTO DY BY THE POLICE AS PER THE PROVISIONS OF SECTION 292C OF THE ACT WHICH ARE APPLICABLE IN THE PRESENT CASE. NO QUESTI ON WAS EVER ASKED FROM MR VIPIN VERMA IN RESPECT OF SUCH D OCUMENT ITA NOS.1507, 1508/DEL/2014 ITA NOS.3532 & 3533/DEL/2010 (ASST.YEARS:2007-08 & 2008-09) PAGE | 6 AND THEREFORE, IN THE ABSENCE OF ANY CORROBORATING EVIDENCE, QUESTION OF HOLDING THAT THIS DOCUMENT BELONGS TO A SSESSEE DOES NOT ARISE. CONSEQUENTLY, QUESTION OF MAKING AN Y ADDITION SOLELY ON THE BASIS OF SUCH DOCUMENT DOES NOT ARISE. 4. THROUGH THE ONUS WAS ON REVENUE TO PROVE THE GENUINENESS OF THE AGREEMENT, THE ASSESSEE PRODUCED THE BALANCE SHEET OF M/S V.M. REALITY BY WAY OF ADDITIO NAL EVIDENCE UNDER RULE 46A WHICH SHOULD HAVE BEEN ADMI TTED IN THE INTEREST OF JUSTICE. THE CIT(A) WAS NOT JUST IFIED IN REFUSING TO ADMIT THE SAME AS ADDITIONAL EVIDENCE. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE ADDITION OF RS.70 LAKHS IS NOT JUSTIFIED AND DE LETED AFTER THE PROVIDING AN OPPORTUNITY OF BEING HEARD TO THE APPELLANT. IN ITA NO.3533/DEL/2010 FOR ASST. YEAR: 2008-09 1. THE ENTIRE ASSESSMENT PROCEEDINGS ARE NULL & VOI D AND BEING WITHOUT JURISDICTION SINCE MANDATORY REQUIREM ENTS OF SECTION 153C (1) OF I.T. ACT 1961(IN SHORT 'ACT') H AD NOT BEEN STRICTLY COMPLIED WITH. THE CIT(A) WAS NOT JUSTIFIE D IN REJECTING, SUMMARILY THE LEGAL GROUND CHALLENGING T HE JURISDICTION OF THE AO U/S 153C OF THE ACT, WITHOUT EXAMINING THE RELEVANT FACTS AND MATERIAL ON RECORD AND IN SI MPLY RELYING ON THE ASSESSMENT ORDER. 2. WITHOUT PREJUDICE TO ABOVE GROUND, THE ASSESSMEN T MADE IS WITHOUT JURISDICTION SINCE MANDATORY REQUIR EMENT OF SECTION 153C R/W SECTION 153A OF THE ACT REMAINS TO BE COMPLIED WITH. 3. WITHOUT PREJUDICE TO ABOVE GROUNDS, THE ASSESSME NT MADE IS WITHOUT JURISDICTION SINCE ISSUE OF NOTICE U/S 143(2) OF THE ACT WAS ITSELF ILLEGAL AS THE MANDATORY REQU IREMENT OF SECTION 153A ITSELF WAS NOT COMPLIED WITH. ITA NOS.1507, 1508/DEL/2014 ITA NOS.3532 & 3533/DEL/2010 (ASST.YEARS:2007-08 & 2008-09) PAGE | 7 4. THAT THE ADDITION OF RS.1.98 CRORE CANNOT BE MADE/SUSTAINED UNDER THE PROVISIONS OF SECTION 69A OF THE ACT SINCE THE MONEY WAS FOUND TO BE DULY RECORDED I N THE BOOKS OF ACCOUNT. ANY ASSET WHICH IS DULY RECORDED IN THE BOOKS OF ACCOUNT CANNOT BE THE SUBJECT MATTER OF AD DITION U/S 69A OF THE ACT. THE CIT(A) WAS ALSO NOT JUSTIFI ED IN NOT ADJUDICATING THE LEGAL GROUND . 5. ON MERITS, THE ADDITION MADE BY THE ASSESSING OF FICER IS ILLEGAL BECAUSE:- A) THE INFERENCES THAT (I) WHEN CASH WAS FOUND AND SEIZED BY THE POLICE, NEITHER THERE WAS ANY ENTRY IN THE BOOKS NOR ANY VOUCHER WAS EXISTING. IT WAS LATER ON THAT THE CASH CREDITS WERE ARRANGED AND THE ENTRIES WERE PASSED I N THE BOOKS OF ACCOUNT IN THE BACK DATES TO CREATE TH E SUFFICIENT BALANCE IN THE BOOKS OF ACCOUNTS ON 31.01.2008(PARA 4.8, PAGE 4)AND IS PAD IN CASH OUT OFF UNEXPLAINED SOURCES (PARA 8), ARE BASED ON CONJECTU RE AND SURMISES. B) THAT EVERY EMPLOYEE OF AN ASSESSEE IS NOT SUPPOSED TO KNOW THE SOURCE OF MONEY HANDED OVER TO HIM FOR CAR RYING OUT THE REQUIRED JOB AND THEREFORE AO WAS NOT JUSTI FIED IN HOLDING THAT ASSESSEE COULD NOT EXPLAIN THE SOURCE OF CASH PARTICULARLY WHEN NO STATEMENT OF ANY RESPONSIBLE P ERSON WAS RECORDED AND ENTRIES WERE FOUND DULY RECORDED W HEN THE TAX OFFICIALS MADE ENQUIRIES ON 2.2.08. C) IT IS FOR THE BUSINESSMAN TO DECIDE IN WHAT MANNER THE BUSINESS IS TO BE CARRIED ON AND NOT FOR THE TAX AU THORITIES TO DECIDE AS TO HOW THE BUSINESS IS TO BE CARRIED ON. HENCE, AO WAS NOT JUSTIFIED IN OBSERVING THAT THERE WAS NO NE CESSITY FOR SENDING THE CASH TO AMRITSAR FOR PURCHASING THE PRO PERTY. ITA NOS.1507, 1508/DEL/2014 ITA NOS.3532 & 3533/DEL/2010 (ASST.YEARS:2007-08 & 2008-09) PAGE | 8 D) THAT NO ADEQUATE OPPORTUNITY WAS PROVIDED TO ASSESSEE FOR PRODUCING THE CASH CREDITORS SINCE FOR THE FIRST TIME ON 9.12.2009, THE ASSESSEE WAS ASKED TO PRODUC E THEM ONL4.12.2009. DESPITE THE PAUCITY OF TIME, THE ASSE SSEE DID PRODUCE TWO OF THE CREDITORS ON 14.12.09 WHO WERE EXAMINED BY THE AO. BOTH OF THEM ADMITTED THAT CASH PAYMENTS WERE MADE AFTER MAKING WITHDRAWALS FROM BOOKS/BANK. RAJESH BHALLA AS WELL AS HEMANT KAPOOR HAD CLEARLY STATED IN THEIR STATEMENTS THAT CASH WITHDR AWALS WERE DULY RECODED IN THEIR BOOKS OF ACCOUNT BUT THE AO ARBITRARILY REJECTED THEIR EXPLANATIONS WITHOUT ASK ING THEM TO PRODUCE THE RELEVANT BOOKS OR THE BANK STATEMENTS. SUCH ACTION OF AO WAS NOT LEGALLY JUSTIFIED. FURTHER, NO PROPER OPPORTUNITY WAS GIVEN TO PRODUCE THE REMAINING PART IES. THUS, THERE WAS ALSO BREACH OF PRINCIPLES OF NATURA L JUSTICE. 6. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ADDITION OF RSL.98 CRORE IS NOT JUSTIFIED. HENC E, IT IS PRAYED THAT THE IMPUGNED ASSESSMENT BE QUASHED OR I N THE ALTERNATIVE, THE NECESSARY RELIEF BE ALLOWED AFTER PROVIDING AN OPPORTUNITY OF BEING HEARD TO THE APPELLANT. IN ITA NO.1507/DEL/2014 FOR ASST. YEAR: 2007-08 1) THAT THE HONBLE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AS MUCH AS ON THE FACTS OF THE CASE BY UPHOLDING THE FINDINGS OF THE LEARNED ASSES SING OFFICER IN NOT KEEPING IN ABEYANCE THE PENALTY UNDE R PROVISO TO SECTION 275(1A) OF THE INCOME TAX ACT, 1961 TILL THE DISPOSAL OF APPEAL FILED BY THE APPELLANT ON QU ANTUM ADDITIONS BEFORE THE HONBLE INCOME TAX APPELLATE T RIBUNAL, NEW DELHI. 2) HE HAS ALSO FURTHER ERRED IN LAW IN REJECTING TH E REQUEST OF THE APPELLANT TO KEEP THE APPELLATE PROC EEDINGS PENDING AGAINST THE IMPUGNED PENALTY APPEAL FILED B EFORE ITA NOS.1507, 1508/DEL/2014 ITA NOS.3532 & 3533/DEL/2010 (ASST.YEARS:2007-08 & 2008-09) PAGE | 9 HIM TO AVOID MULTIPLICITY OF LEGAL PROCEEDINGS AND UNDUE HARASSMENT TO THE APPELLANT BUT THE SAME WAS ARBITR ARY REJECTED BY HIM WITHOUT GIVING ANY COGENT REASONS W HICH IS BAD IN LAW. 3) THAT THE HONBLE COMMISSIONER OF INCOME TAX (APPEALS) HAS FURTHER ERRED IN LAW AS MUCH AS ON TH E FACTS OF THE CASE BY UPHOLDING THE LEVY OF PENALTY U/SEC. 271(1)(C) OF THE ACT BY THE LEARNED ASSESSING OFFICER BY NOT GIVING ANY OPPORTUNITY OF BEING HEARD TO THE APPELLANT ON RECE IPT OF THE REPLY ON MERITS OF THE CASE FROM THE APPELLANT, THU S THE APPELLANT WAS DEPRIVED OF AN OPPORTUNITY WHICH NOT ONLY BAD IN LAWS BUT AGAINST THE PRINCIPLES OF NATURAL J USTICE. 4) THAT THE HONBLE COMMISSIONER OF INCOME TAX (APPEALS) WHILE UPHOLDING THE PENALTY OF RS.23,56,2 00/- HAS NOT APPRECIATED THAT THE ISSUE RELATING TO THE IMPUGNED ADDITIONS OF RS.70.00 LACS IN THE DECLARED INCOME O F THE APPELLANT IS SUBJUDICE AND PENDING FOR HEARING BEFO RE THE HONBLE INCOME TAX APPELLATE TRIBUNAL, THEN HIS FIN DING THAT THE APPELLANTS EXPLANATION WAS NOT ONLY FOUND FAL SE BUT FULL OF MALAFIDE IS TOTALLY INCORRECT AND IS NOT S USTAINABLE IN LAW. IN VIEW OF THE ABOVE GROUNDS, THE APPELLANT RESPECT FULLY PRAY TO THE HONBLE BENCH TO PLEASE DELETE THE UNWA RRANTED PENALTY OF RS.23,56,200/- LEVIED U/SEC. 271(1) (C) OF THE ACT BY PROVIDING AN OPPORTUNITY OF BEING HEARD TO THE APPELLANT. ITA NOS.1507, 1508/DEL/2014 ITA NOS.3532 & 3533/DEL/2010 (ASST.YEARS:2007-08 & 2008-09) PAGE | 10 IN ITA NO.1508/DEL/2014 FOR ASST. YEAR: 2008-09 1) THAT THE HONBLE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AS MUCH AS ON THE FACTS OF THE CASE BY UPHOLDING THE FINDINGS OF THE LEARNED ASSES SING OFFICER IN NOT KEEPING IN ABEYANCE THE PENALTY UNDE R PROVISO TO SECTION 275(1A) OF THE INCOME TAX ACT, 1961 TILL THE DISPOSAL OF APPEAL FILED BY THE APPELLANT ON QU ANTUM ADDITIONS BEFORE THE HONBLE INCOME TAX APPELLATE T RIBUNAL, NEW DELHI. 2) HE HAS ALSO FURTHER ERRED IN LAW IN REJECTING TH E REQUEST OF THE APPELLANT TO KEEP THE APPELLATE PROC EEDINGS PENDING AGAINST THE IMPUGNED PENALTY APPEAL FILED B EFORE HIM TO AVOID MULTIPLICITY OF LEGAL PROCEEDINGS AND UNDUE HARASSMENT TO THE APPELLANT BUT THE SAME WAS ARBITR ARY REJECTED BY HIM WITHOUT GIVING ANY COGENT REASONS W HICH IS BAD IN LAW. 3) THAT THE HONBLE COMMISSIONER OF INCOME TAX (APPEALS) HAS FURTHER ERRED IN LAW AS MUCH AS ON TH E FACTS OF THE CASE BY UPHOLDING THE LEVY OF PENALTY U/SEC. 271(1)(C) OF THE ACT BY THE LEARNED ASSESSING OFFICER BY NOT GIVING ANY OPPORTUNITY OF BEING HEARD TO THE APPELLANT ON RECE IPT OF THE REPLY ON MERITS OF THE CASE FROM THE APPELLANT, THU S THE APPELLANT WAS DEPRIVED OF AN OPPORTUNITY WHICH NOT ONLY BAD IN LAWS BUT AGAINST THE PRINCIPLES OF NATURAL J USTICE. THAT THE HONBLE COMMISSIONER OF INCOME TAX (APPEAL S) WHILE UPHOLDING THE PENALTY OF RS.66,64,680/- HAS N OT APPRECIATED THAT THE ISSUE RELATING TO THE IMPUGNED ADDITIONS OF RS.1.98 CRORE IN THE DECLARED INCOME O F THE APPELLANT IS SUBJUDICE AND PENDING FOR HEARING BEFO RE THE ITA NOS.1507, 1508/DEL/2014 ITA NOS.3532 & 3533/DEL/2010 (ASST.YEARS:2007-08 & 2008-09) PAGE | 11 HONBLE INCOME TAX APPELLATE TRIBUNAL, THEN HIS FIN DING THAT THE APPELLANTS EXPLANATION WAS NOT ONLY FOUND FAL SE BUT FULL OF MALAFIDE IS TOTALLY INCORRECT AND IS NOT S USTAINABLE IN LAW. IN VIEW OF THE ABOVE GROUNDS, THE APPELLANT RESPECT FULLY PRAY TO THE HONBLE BENCH TO PLEASE DELETE THE UNWA RRANTED PENALTY OF RS.66,64,680/- LEVIED U/SEC. 271(L)(C) O F THE ACT BY PROVIDING AN OPPORTUNITY OF BEING HEARD TO THE A PPELLANT. 3.0 AT THE OUTSET, THE LEARNED AUTHORIZED REPRESEN TATIVE (AR) SUBMITTED THAT AN ESSENTIAL LEGAL GROUND WAS BEING RAISED BY THE ASSESSEE WHEREIN IN GROUND NO. 1 PERTAINING TO ASSE SSMENT YEAR 2007-08 IT IS THE ASSESSEES CONTENTION THAT THE A SSESSMENT FRAMED U/S 153C WAS WITHOUT JURISDICTION AS THE STATUTORY NOTICE U/S 153C WAS ISSUED BY THE ACIT, CIRCLE-9(1) NEW DELHI BASED ON THE SATISFACTION NOTE PREPARED BY THE ITO, WARD-48(4), NEW DELHI I.E., AO OF THE SEARCHED PERSONS BEFORE THE ISSUANCE OF N OTICE U/S 153A TO THE SEARCHED PERSON. THE LEARNED AUTHORISED REPR ESENTATIVE SUBMITTED THAT NO LAWFUL SATISFACTION WAS RECORDED REGARDING THE SEIZED UNSIGNED AGREEMENT ALLEGED TO HAVE BEEN BELO NGING TO THE ASSESSEE. THE LEARNED AUTHORIZED REPRESENTATIVE SUB MITTED THAT THE NOTICE U/S 153C OF THE ACT WAS ISSUED ON 27.11.2008 AFTER RECEIPT ITA NOS.1507, 1508/DEL/2014 ITA NOS.3532 & 3533/DEL/2010 (ASST.YEARS:2007-08 & 2008-09) PAGE | 12 OF SATISFACTION NOTE DATED 27.11.2008 FROM THE ASSE SSING OFFICER OF SH. VIPIN VERMA AND THE ASSESSMENT ORDER U/S 153C W AS PASSED ON 31.12.2009 AFTER MAKING AN ADDITION OF RS.70 LAC S TOWARDS ALLEGED CASH PAYMENTS FOR ASSESSMENT YEAR 2007-08. THE LEARNED AUTHORIZED REPRESENTATIVE (AR) FURTHER SUBMITTED TH AT NOTICE U/S 153A WAS ISSUED TO SH. VIPIN VERMA ON 06.01.2009 AN D THE ASSESSMENT WAS MADE U/S 143(3) R.W. SEC 153A VIDE O RDER DATED 31.12.2009. THE LEARNED AUTHORIZED REPRESENTATIVE ( AR) DREW OUR ATTENTION TO THE COPIES OF THE VARIOUS NOTICES AND THE ASSESSMENT ORDERS TO DEMONSTRATE THE DATES ON WHICH THE ABOVE SAID NOTICES AND ASSESSMENT YEARS WERE PASSED. THE LEARNED AR CO NTENDED THAT IT IS SETTLED LAW THAT NOTICE U/S 153C CANNOT PRECE DE NOTICE U/S 153A AND, THEREFORE, THE NOTICE ISSUED U/S 153C IN THE CASE OF THE ASSESSEE COMPANY WAS UNLAWFUL MAKING THE ASSESSMENT NULL AND VOID. THE LEARNED AR PLACED RELIANCE ON THE JUDGMEN T OF THE HONBLE APEX COURT IN THE CASE OF CIT VS. CALCUTTA KNITWEAR S REPORTED IN [2014] 43 TAXMANN.COM 446 (SC) TO BUTTRESS HIS ARGU MENT THAT SATISFACTION NOTE COULD NOT BE PREPARED PRIOR TO TH E ISSUANCE OF NOTICE AGAINST THE SEARCHED PERSONS. RELIANCE WAS A LSO PLACED ON ITA NOS.1507, 1508/DEL/2014 ITA NOS.3532 & 3533/DEL/2010 (ASST.YEARS:2007-08 & 2008-09) PAGE | 13 CBDT CIRCULAR NO.24/2015 DATED 31.12.2015 WHEREIN T HE CBDT HAD CLARIFIED THAT THE JUDGMENT OF THE HONBLE APEX COURT LAYING DOWN THE GUIDELINES FOR ASSESSMENTS U/S 158 BD (IN THE CASE OF CIT VS. CALCUTTA KNITWEARS (SUPRA)) IS ALSO BE APPLICAB LE TO PROCEEDINGS U/S 153C. RELIANCE WAS ALSO PLACED ON CERTAIN OTHER JUDICIAL PRECEDENTS FROM THE TRIBUNAL ON THE SAME ISSUE. 3.1 WITH RESPECT TO ASSESSEES APPEAL FOR ASSESSME NT YEAR 2008-09, THE LEARNED AR SUBMITTED THAT IN THIS YEAR , THE ASSESSMENT YEAR DESERVED TO BE QUASHED ON THE GROUN D OF NON- ISSUANCE AND NON-SERVICE OF THE MANDATORY NOTICE U/ S 153C OF THE ACT TO THE ASSESSE. THE LD. AR SUBMITTED THAT IN TH IS CASE THE SEARCH WAS INITIATED ON 31.01.2008 (RELEVANT TO ASS ESSMENT YEAR 2008-09) AND THE AO OF THE SEARCHED PERSON RECORDED THE SATISFACTION NOTE AND HANDED OVER THE REQUISITE MAT ERIAL ALLEGED TO BE BELONGING TO THE ASSESSEE TO THE ASSESSING OFFIC ER OF THE ASSESSEE ON 27.11.2008 RELEVANT TO ASSESSMENT YEAR 2009-10 A ND, THEREFORE, IN VIEW OF THE SETTLED LEGAL POSITION, THE SIX YEA RS IN THE CASE OF THE ASSESSEE WILL BE FROM THE ASSESSMENT YEAR 2003-04 T O ASSESSMENT YEAR 2008-09 AND AS SUCH ASSESSMENT YEAR 2008-09 WA S TO BE ITA NOS.1507, 1508/DEL/2014 ITA NOS.3532 & 3533/DEL/2010 (ASST.YEARS:2007-08 & 2008-09) PAGE | 14 COVERED UNDER THE PROVISIONS OF SECTION 153C. FURTH ER, THE LEARNED AR SUBMITTED THAT IT IS BORNE OUT FROM THE ASSESSME NT RECORDS AND THE SATISFACTION NOTE THAT NO NOTICE U/S 153C WAS I SSUED FOR ASSESSMENT YEAR 2008-09 AND NOTICES ONLY WERE ISSUE D U/S 143(2) AND THE THAT THE ASSESSMENT WAS BASED ON THE ORIGIN AL RETURN FILED ON 17.03.2009. THE LEARNED AR PLACED RELIANCE ON TH E NUMEROUS JUDICIAL PRECEDENTS AND SUBMITTED THAT IN ABSENCE O F ISSUANCE AND SERVICE OF NOTICE U/S 153C, THE JURISDICTION FOR FR AMING THE IMPUGNED ASSESSMENT WAS WRONGLY ASSUMED AND, THEREF ORE, WAS UNSUSTAINABLE IN LAW. 3.2 THE LEARNED AR SUBMITTED THAT IF THE LEGAL GRO UNDS WERE TO BE DECIDED IN FAVOUR OF THE ASSESSEE, NO ARGUMEN TS WOULD BE REQUIRED ON THE MERITS OF THE ADDITION AS THE GROUN DS PERTAINING TO THE SAME WOULD BECOME ACADEMIC IN NATURE. 3.3 THE LEARNED AR ALSO SUBMITTED THAT THE PENALTY APPEALS WOULD HAVE A CONSEQUENTIAL EFFECT. 4.0 IN RESPONSE, THE LEARNED CIT-DR PLACED RELIANC E ON THE CONCURRENT FINDINGS OF BOTH THE LOWER AUTHORITIES. THE LEARNED CIT- DR ALSO SUBMITTED THAT THE CASE LAWS BEING RELIED U PON BY THE ITA NOS.1507, 1508/DEL/2014 ITA NOS.3532 & 3533/DEL/2010 (ASST.YEARS:2007-08 & 2008-09) PAGE | 15 ASSESSEE WERE DISTINGUISHABLE ON FACTS AND WOULD NO T SQUARELY COVER THE CASE OF THE ASSESSEE. THE LEARNED CIT-DR ALSO SUBMITTED THAT THERE WERE ALSO JUDICIAL PRECEDENTS WHEREIN IT HAD BEEN HELD THAT ADDITION TO ASSESSEES INCOME RELYING ON STATE MENT RECORDED DURING THE SEARCH OPERATIONS CANNOT BE DELETED WITH OUT PROVING THE STATEMENTS TO BE THE INCORRECT. THE LEARNED CIT-DR ALSO SUBMITTED THAT EVEN A STATEMENT RECORDED DURING THE COURSE OF SURVEY COULD BE RELIED UPON FOR THE PURPOSES OF ASSESSMENT IN ABSEN CE OF ANY CONTRARY EVIDENCE OR EXPLANATION AS TO WHY SUCH STA TEMENT WAS TO BE DISBELIEVED. THE LEARNED CIT-DR SUBMITTED THAT THE ASSESSEE HAD FAILED TO SUBSTANTIATE WITH COGENT EVIDENT THAT NO CASH TRANSACTION HAD TAKEN PLACE AND IN ABSENCE OF ANY E VIDENCE TO THE CONTRARY, IT COULD NOT BE HELD THAT AGREEMENT WAS N OT GENUINE. THE LEARNED CIT-DR VEHEMENTLY ARGUED THAT THE ASSESSEE S APPEALS SHOULD BE HEARD ON MERITS ALSO AND RELIEF SHOULD NO T BE GIVE TO THE ASSESSEE ON MERE TECHNICALITIES. 5.0 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE A LSO PERUSED THE MATERIAL AVAILABLE ON RECORD. AS FAR AS ASSESSMENT YEAR 2007-08 IS CONCERNED, WE HAVE ALSO PERUSED THE NOTI CE ISSUED U/S ITA NOS.1507, 1508/DEL/2014 ITA NOS.3532 & 3533/DEL/2010 (ASST.YEARS:2007-08 & 2008-09) PAGE | 16 153A OF THE ACT IN THE CASE OF SH. VIPIN VERMA I.E. , THE SEARCHED PERSON FROM WHOM THE CASH WAS SEIZED. THIS NOTICE I S UNDISPUTEDLY DATED 6 TH JANUARY, 2009. WE ALSO NOTE THAT IN THE CASE OF TH E ASSESSEE, THE NOTICE U/S 153C WAS ISSUED ON 27.11.2 008 RIGHT AFTER THE RECEIPT OF THE SATISFACTION NOTE DATED 27.11.20 08 FROM THE ASSESSING OFFICER OF THE SEARCHED PERSON I.E., SH. VIPIN VERMA. THE ASSESSMENT ORDER WAS PASSED ON 31.12.2009 IN THE CA SE OF THE ASSESSEE WHEREAS AND IN THE CASE OF THE SH. VIPIN V ERMA I.E., THE SEARCHED PERSON THE NOTICE U/S 153A WAS ISSUED ON 0 6.01.2009 AND THE ASSESSMENT WAS COMPLETED ON 31.12.2009. THU S, ADMITTEDLY AND UNDISPUTEDLY THE NOTICE U/S 153C IN THE CASE OF THE ASSESSEE WAS ISSUED PRIOR TO THE ISSUANCE OF NOTICE U/S 153A IN THE CASE OF THE SEARCHED PERSON. WE AGREE WITH THE CONT ENTION OF THE LD. AR THAT ISSUANCE OF NOTICE U/S 153C CANNOT PRECEDE ISSUANCE OF NOTICE U/S 153A. IN THIS REGARD, THE HONBLE APEX C OURT HAS HELD IN CIT VS. CALCUTTA KNITWEARS (SUPRA), WHILE ADJUDICAT ING ON THE TIMING OF RECORDING OF SATISFACTION NOTE U/S 158BD, THAT S ATISFACTION NOTE CAN BE PREPARED AT EITHER OF THE FOLLOWING STAGES: ITA NOS.1507, 1508/DEL/2014 ITA NOS.3532 & 3533/DEL/2010 (ASST.YEARS:2007-08 & 2008-09) PAGE | 17 (I) AT THE TIME OF OR ALONG WITH INITIATION OF PROCEEDI NGS AGAINST SEARCHED PERSON. (II) DURING THE COURSE OF ASSESSMENT PROCEEDINGS O F SEARCHED PERSON (III) IMMEDIATELY AFTER THE COMPLETION OF ASSESSMEN T PROCEEDINGS OF SEARCHED PERSON. 5.1 HOWEVER, IN THIS CASE, FOR ASSESSMENT YEAR 200 7-08, THE NOTICE U/S 153C HAS BEEN ISSUED PRIOR TO THE ISSUAN CE OF NOTICE U/S 153A TO THE SEARCHED PERSON. THE CBDT CIRCULAR NO.2 4/2015 DATED 31.12.2015 HAS INSTRUCTED THAT GUIDELINES ISSUED BY THE HONBLE APEX COURT IN THE CASE OF CALCUTTA KNITWEARS (SUPRA ) WILL ALSO BE APPLICABLE TO PROCEEDINGS U/S 153C AND, THEREFORE, WE ARE AFRAID THAT THE REVENUE HAS NO CASE IN TERMS OF THE JUDGME NT OF THE HONBLE APEX COURT IN THE CASE OF CIT VS. CALCUTTA KNITWEARS (SUPRA) AND THE CBDT CIRCULAR NO.24/2015 DATED 31.1 2.2015. SINCE, UNDISPUTEDLY, THE SATISFACTION NOTE IN THE C ASE OF THE ASSESSEE WAS PREPARED PRIOR TO THE ISSUANCE OF NOTI CE TO THE SEARCHED PERSON, THE ASSESSMENT FOR ASSESSMENT YEAR 2007-08 BECOMES NULL AND VOID BECAUSE THE ASSUMPTION OF JUR ISDICTION U/S 153C IS DEFECTIVE. ACCORDINGLY, WE HAVE NO OPTION B UT TO HOLD THAT ITA NOS.1507, 1508/DEL/2014 ITA NOS.3532 & 3533/DEL/2010 (ASST.YEARS:2007-08 & 2008-09) PAGE | 18 THE ASSESSMENT FRAMED FOR ASSESSMENT YEAR 2007-08 W AS WITHOUT JURISDICTION AND IS, THEREFORE, UNSUSTAINABLE IN LA W. THE SAME IS HEREBY QUASHED. 5.2 IN THE RESULT, ITA NO.3532/DEL/2010 STANDS AL LOWED. SINCE THE QUANTUM APPEAL OF ASSESSEE STANDS ALLOWED FOR ASSESSMENT YEAR 2007-08, PENALTY IMPOSED U/S 271(1) (C) BEING CONSEQUENTIAL ALSO STANDS DELETED. ACCORDINGLY, ITA NO. 1507/DEL/2014 ALSO STANDS ALLOWED. 5.3 COMING TO ITA NO.3533/DEL/2010 PERTAINING TO ASSESSMENT YEAR 2008-09, WE AGREE WITH THE CONTENTI ON OF THE LEARNED AUTHORISED REPRESENTATIVE THAT SINCE THE SE IZED MATERIAL ALLEGED TO BE BELONGING TO THE ASSESSEE WAS HANDED OVER TO THE ASSESSING OFFICER OF THE ASSESSEE ON 27.11.2008, TH E SIX YEARS FALLING WITHIN THE PURVIEW OF SECTION 153C WOULD BE ASSESSMENT YEARS 2003-04 TO ASSESSMENT YEAR 2008-09. IN VIEW O F THE SETTLED LEGAL POSITION THAT THE DATE OF INITIATION OF SEARC H IN THE CASE OF THE THIRD PARTY SHOULD BE CONSTRUED WITH REFERENCE TO T HE DATE OF RECEIVING THE REQUISITIONED MATERIAL BY THE ASSESSI NG OFFICER HAVING JURISDICTION OVER THE PERSON TO WHOM SUCH MATERIAL RELATES {AS ITA NOS.1507, 1508/DEL/2014 ITA NOS.3532 & 3533/DEL/2010 (ASST.YEARS:2007-08 & 2008-09) PAGE | 19 PROPOUNDED BY THE DELHI HIGH COURT IN THE CASE OF P R COMMISSIONER OF INCOME TAX VS. SARWAR AGENCY PVT. LTD., REPORTED IN [2007] 397 ITR 400 (DELHI)} AND DULY NOTING FROM THE RECORDS T HAT ADMITTEDLY AND UNDISPUTEDLY NO NOTICE U/S 153C WAS ISSUED IN A SSESSEES CASE FOR ASSESSMENT YEAR 2008-09 AND ONLY NOTICE U/S 143 (2) WAS ISSUED, IT IS OUR CONSIDERED OPINION THAT THE IMPUG NED ASSESSMENT HAS NOT BEEN PASSED IN CONFORMITY WITH THE PROVISIO NS OF LAW. WE NOTE THAT THE IMPUGNED ASSESSMENT ORDER HAS BEEN PA SSED U/S 143(3) AND NO NOTICE U/S 153C HAS BEEN ISSUED ALTHO UGH THIS YEAR FALLS WITHIN THE PERIOD OF SIX YEARS WHEN COUNTED F ROM THE DATE OF RECORDING OF SATISFACTION NOTE WHICH IS DEEMED DATE OF SEARCH. THE ASSESSING OFFICER SHOULD HAVE FRAMED THE ASSESSMENT U/S 153C OF THE ACT FOR ASSESSMENT YEAR 2008-09 ALSO AND SHOULD HAVE AT THE TIME OF INITIATING THE PROCEEDINGS AGAINST THE ASSE SSEE ISSUED NOTICE U/S 153C OF THE ACT WHICH HAS NOT SO BE DONE IN THI S CASE. THE ISSUANCE OF NOTICE U/S 153C IS MANDATORY AND IS A P RE-CONDITION IF THE CASE FALLS WITHIN THE BLOCK PERIOD OF SIX YEARS . THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 2008-09 IS, THEREFORE, UN SUSTAINABLE IN ITA NOS.1507, 1508/DEL/2014 ITA NOS.3532 & 3533/DEL/2010 (ASST.YEARS:2007-08 & 2008-09) PAGE | 20 THE EYES OF LAW. ACCORDINGLY, WE ARE LEFT WITH NO O PTION BUT TO QUASH THE ASSESSMENT FOR ASSESSMENT YEAR 2008-09 ALSO. 5.4 IN THE RESULT, ITA NO.3533/DEL/2010 STANDS ALL OWED. 5.5 SINCE, WE HAVE DECIDED THE QUANTUM APPEAL FOR ASSESSMENT YEAR 2008-09 IN FAVOUR OF THE ASSESSEE A ND HAVE QUASHED THE ASSESSMENT, THE CONSEQUENTIAL PENALTY I MPOSED U/S 271(1)(C) ALSO STANDS DELETED AND ITA NO.1508/DEL/2 014 ALSO STANDS ALLOWED. 6.0 IN THE FINAL RESULT, ALL THE FOUR APPEALS OF T HE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31/12/2019. SD/- SD/- (N.K.BILLAIYA) (SUDHANSHU SRIVASTAVA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 31/12/2019 PK/PS COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI