DCIT Central Circle-8, New Delhi V. Rajyog Buildtech Pvt Ltd, New Delhi

ITA 1519/DEL/2020

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 5443 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 10 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-07-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2014-2015
• Appeal Filed On: 27-08-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AMIT GOEL
• Section: 132; 143(3); 153A; 143(2); 264; 139(1); 158BC; 72

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘F’, NEW DELHI Before Sh. Saktijit Dey, Judicial Member Dr. B. R. R. Kumar, Accountant Member ITA No. 1518/Del./2020 : Asstt. Year : 2013-14 ITA No. 1519/Del./2020 : Asstt. Year : 2014-15 DCIT, Central Circle-8, New Delhi-110055 Vs Rajyog Buildtech Pvt. Ltd., 25/33, East Patel Nagar, New Delhi-110008 (APPELLANT) (RESPONDENT) PAN No. AAFCR7424P Assessee by : Sh. Amit Goel, Adv. & Sh. Nipun Mittal, CA Revenue by : Sh. T. Kipgen, CIT DR Date of Hearing: 30.06.2022 Date of Pronouncement: 20.07.2022 ORDER Per Dr. B. R. R. Kumar, Accountant Member: The present appeals have been filed by the Revenue against the orders of ld. CIT(A)-24, New Delhi dated 22.06.2020. 2. Since, the issues involved in both the appeals are identical, they were heard together and being adjudicated by a common order. 3. The pertinent facts relevant to the adjudication of the appeal before us are as under: ITA Nos. 1518 & 1519/Del/2020 Rajyog Buildtech Pvt. Ltd. 2 • A search & seizure action u/s 132 of the Income Tax Act, 1961 has been conducted on 15.11.2017. • The Assessment Years pertain to 2013-14 & 2014-15. • For the A.Y. 2013-14, the assessment u/s 143(3) was completed on 05.09.2014 i.e. prior to the date of search. • The assessee filed return of income for the A.Y. 2014-15 u/s 139(1) on 18.11.2014 and the time limit for issue of notice u/s 143(2) expired on 13.09.2015 i.e. prior to the date of search. • Thus, the Assessment Years 2013-14 and 2014-15 are unabated assessment. • It is an undisputed fact that the assessment u/s 153A has been concluded without reference to any incriminating material or documents found and seized during the search. The ld. DR could not dispute this fact which is on record. 4. With regard to the core issue, whether any addition is called for in the absence of the incriminating material unearthed during the course of search in case of the Assessment Year wherein the assessment of the appellant stands completed on the date of search or the time limit for issue of notice u/s 143(2) has expired, the ld. DR vehemently argued that the settled position of the law and the language of the Act is clear and unambiguous then the literal interpretation has to be followed. The ld. AR relied on the order of the ld. CIT(A). 5. The ld. DR fervently submitted relying the judgments of Hon’ble High Court Kerala, Hon’ble High Court of Allahabad, that the assessment is comprehensive with regard to the material which has been seized and which has been on record ITA Nos. 1518 & 1519/Del/2020 Rajyog Buildtech Pvt. Ltd. 3 hitherto. The ld. DR has tendered his arguments in the form of written submission which are as under: “1. The decision of the CIT(A) that no addition can be made without reference to any seized material in the concluded proceedings, when the proceedings were concluded in not acceptable. It is settled position of law that when the language of the Act is clear and unambiguous then literal interpretation has to be followed . The language of section 153A(1)(b) of the Act is very clear, wherein it has been laid down that the Assessing Officer shall assess or reassess the total income of the assessee. This should be read with the legislative history of the provisions related to search assessments particularly the provisions prevailing before the new scheme of the search assessments which was introduced by the Finance Act, 2003. 2. In the earlier provisions, the search assessments were to be completed u/s 158BC of the Act and there was only one consolidated order for entire block period. There used to be two orders for a particular period in a search case- Block Assessment order u/s 158BC for undisclosed income and Normal Assessment under the regular provisions of the Act. However, this duality has been done away with in the new scheme and there is only one assessment order for every year, wherein disclosed as well as undisclosed income has to be assessed. This position has been very clearly explained in Circular No. 7 of 2003 dated 05.09.2003. It was clearly specified in the earlier provisions that the undisclosed income determined u/s 158BC of the Act has to be based on some incriminating material found during the course of search. However, this fetter has been removed in the new scheme and it has been laid down that the AO has to assess or reassess the total income of the assessee. Had the intention of the Legislature been that only undisclosed income on the basis of any incriminating material can be assessed in the concluded proceedings, then the same would have found place in the provisions of the Act. ITA Nos. 1518 & 1519/Del/2020 Rajyog Buildtech Pvt. Ltd. 4 3. Further, the Assessing Officer in search cases is duly bound to complete the assessment u/s 153A of the Act and the provisions of section 153A of the Act clearly empower the AO to assess or reassess the total income of six assessment years immediately preceding the year in which search is conducted. This is irrespective of the fact that whether the Department has seized any incriminating documents or not. As regards the decision that in absence of any incriminating documents seized, no addition can be made, it is submitted that the decision of Hon’ble Delhi High Court in the case of Kabul Chawla referred to supra has not been accepted by the Department. The Department has taken consistent view that the provisions of section 153A do not restrict the Assessing Officer to make addition only on the basis of incriminating documents. The provisions envisage assessing the “total income” and not undisclosed income” In respect of the plea that the addition was not made on the basis of documents seized during the course of search, reliance is placed on the following decisions- 1. E.N. Gopakumar Vs CIT [(2016) 75 taxmann.com 215 (Kerala))] where Hon’ble Kerala High Court held that assessment proceedings generated by issuance of a notice under section 153A(l)(a) can be concluded against interest of assessee including making additions even without any incriminating material being available against assessee in search under section 132 on basis of which notice was issued under section 153A(l)(a). The judgment in the case of E.N. Gopakumar was delivered after considering the judgments in the case of Kabul Chawla. Finally, the ratio of judgment in that case will be applicable only when two views are possible. In the instant case, the provisions are very clear and unambiguous and there is no scope of having two views on this issue. The above order has been passed after considering cases of ITA Nos. 1518 & 1519/Del/2020 Rajyog Buildtech Pvt. Ltd. 5 (i) CIT v. Kabul Chawla 120161 380 ITR 573/120151 234 Taxman 300/61 taxmann.com 412 (Delhi) (para 4), (ii) CIT v. Continental Warehousing Corpn. (Nhava Sheva) Ltd. [2015] 374 ITR 645/232 Taxman 270/ 58 taxmann.com 78 (Bom.) (para 4) (iii) Principal CIT v. Kurele Paper Mills (P.) Ltd. [2016] 380 ITR 571 (Delhi) (para 4), (iv) CIT v. Lancy Constructions [2016] 383 ITR 168/237 Taxman 728/66 taxmann.com 264 (Kar.) (para 4), (v) CIT v. ST. Francies Clay Decor Tiles [2016] 240 Taxman 168/70 taxmann.com 234 (Ker.) (para 5) and (vi) CIT v. Promy Kuriakose [2016] 386 ITR 597 (Ker.) (para 5). 2. CIT Vs Raj Kumar Arora [2014] 52 taxmann.com 172 (Allahabad)/[2014] 367 ITR 517 (Allahabad) where Hon’ble Allahabad High Court held that Assessing Officer has power to reassess returns of assessee not only for undisclosed income found during search operation but also with regard to material available at time of original assessment 3. CIT Vs Kesarwani Zarda Bhandar Sahson Alld. [ITA No. 270 of 2014] (Allahabad) where Hon’ble Allahabad High Court held that Assessing Officer has power to reassess returns of assessee not only for undisclosed income found during search operation but also with regard to material available at time of original assessment. 4. DR. A. V. Sreekumar Vs CIT Kerala High Court 90 taxmann.com 355 (Kerala) Where pursuant to search and enquiry unaccounted consideration from purchaser had been unearthed, it could not be said that other material already available with Department had been relied upon in proceedings. ITA Nos. 1518 & 1519/Del/2020 Rajyog Buildtech Pvt. Ltd. 6 5. CIT Vs St. Francis Clay Decor Tiles (385 ITR 624) where Hon’ble Delhi Kerala Court held that notice issued under section 153A -return must be filed even if no incriminating documents discovered during search. 6. Vinod Kumar Gupta Vs DCIT ITA No. 1003 of 2017 where Hon’ble Delhi High Court upheld addition made on the basis of statements made by his brother Sh. Suresh Kumar Gupta and the materials seized from his brother's premises, given that the premises were separate, though a common warrant under Section 132 of the Income Tax Act, 1961 was issued in respect of both. 7. Smt . Dayawanti Vs CIT [2016] 75 taxmann.com 308 (Delhi)/[2017] 245 Taxman 293 (Delhi)/[2017] 390 ITR 496 (Delhi)/[2016] 290 CTR 361 (Delhi) where Hon’ble Delhi High Court held that Where inferences drawn in respect of undeclared income of assessee were premised on materials found as well as statements recorded by assessee's son in course of search operations and assessee had not been able to show as to how estimation made by Assessing Officer was arbitrary or unreasonable, additions so made by Assessing Officer by rejecting books of account was justified. 8. CIT Vs Anil Kumar Bhatia (24 taxmann.com 98. 211 Taxman 453, 352 ITR 493 where Hon’ble Delhi High Court held that jurisdiction of AO under 153A is to assess total income for the year and hot restricted to seized material. Post search reassessment in respect of all 6 years can be made even if original returns are already processed u/s 143(1)(a) - Assessing Officer has power u/s 153A to make assessment for all six years and compute total income of assessee, including undisclosed income, notwithstanding that returns for these years have already been processed u/s 143(1)(a). ITA Nos. 1518 & 1519/Del/2020 Rajyog Buildtech Pvt. Ltd. 7 Even if assessment order had already been passed in respect of all or any of those six assessment years, either under section 143(l)(a) or section 143(3) prior to initiation of search/requisition, still Assessing Officer is empowered to reopen those proceedings under section 153A without any fetters and reassess total income taking note of undisclosed income, if any, unearthed during search. 9. Filatex India Ltd Vs CIT (49 taxmann.com 465) where Hon’ble Delhi High Court held that during assessment under section 153A, additions need not be restricted or limited to incriminating material, found during course of search. Thus, in view of the facts prevailing in the assessee’s case and considering the various judicial pronouncements cited above, the additions made by the AO may be sustained.” 6. Heard the arguments of both the parties and perused the material available on record. 7. We have gone through the judgments of Hon’ble Jurisdictional High Court. Reliance is placed on the following case laws: i. CIT v. Kabul Chawla (2016] 380 ITR 573/(2015) 234 Taxman 300/61 taxmann.com 412 (Delhi), ii. All Cargo Global Logistics Limited Vs. DCIT [2012] 18 ITR 106, iii. ACIT, Central Circle-16, New Delhi vs. Vinita Chaurasia, ITA No. 5957/DEL/2015 dated 05.10.2018, iv. ACIT, Central Circle-4, New Delhi vs. M/s. Moolchand Steels Pvt. Ltd., ITA No. 2544/DEL/2015 dated 10.10.2018 etc. 8. The Hon’ble Delhi High Court in the case of CIT Vs Kabul Chawla (supra) held as under: “vii. Completed assessments can be interfered with by the A.O. while making the assessment under section 153A only on the basis of some incriminating material unearthed during the ITA Nos. 1518 & 1519/Del/2020 Rajyog Buildtech Pvt. Ltd. 8 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” 9. The Hon'ble Delhi High Court in its recent decision in the case of Pr. CIT vs. Meeta Gutgutia (2017) 395 ITR 526 in paras 69 to 72 has held as under: “69. What weighed with the Court in the above decision was the “habitual concealing of income and indulging in clandestine operations” and that a person indulging in such activities “can hardly be accepted to maintain meticulous books or records for long.” These factors are absent in the present case. There was no justification at all for the AO to proceed on surmises and estimates without there being any incriminating material qua the AY for which he sought to make additions of franchisee commission. 70. The above distinguishing factors in Dayawanti Gupta (supra), therefore, do not detract from the settled legal position in Kabul Chawla (supra) which has been followed not only by this Court in its subsequent decisions but also by several other High Courts. 71. For all of the aforementioned reasons, the Court is of the view that the ITAT was justified in holding that the invocation of Section 153A by the Revenue for the AYs 2000-01 to 2003- 04 was without any legal basis as there was no incriminating material qua each of those AYs. Conclusion 72. To conclude: (i) Question (i) is answered in the negative i.e., in favour of the Assessee and against the Revenue. It is held that in the ITA Nos. 1518 & 1519/Del/2020 Rajyog Buildtech Pvt. Ltd. 9 facts and circumstances, the Revenue was not justified in invoking Section 153A. of the Act against the Assessee in relation to AYs 2000-01 to AYs 2003-04.” 10. We have gone through the entire plethora of judgments. 11. The decisions of the Hon’ble Jurisdictional High Court are squarely applicable to the facts and circumstances of the case as no assessment was pending on the date of search and the addition has been made merely on the basis of the book entries already disclosed to the department. Further, reliance is also placed on the decision of the Hon’ble Jurisdictional High Court in the case of PCIT Vs. Subhash Khattar in ITA No. 60/2017 dated 25.07.2017. 12. Hence, keeping in view, the entire factum of the case, we hold that the addition made vide the assessment u/s 153A in the absence of any incriminating material is not sustainable. 13. In the result, the appeals of the Revenue are dismissed. Order Pronounced in the Open Court on 20/07/2022. Sd/- Sd/- (Saktijit Dey) (Dr. B. R. R. Kumar) Judicial Member Accountant Member Dated: 20/07/2022 *Subodh Kumar, Sr. PS* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR