ACIT, New Delhi V. Sh. Shantilal Wadhwa, New Delhi

ITA 1541/DEL/2015

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 2701 (ITAT-DELHI)
• Duration Of Justice: 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC 1
• Next Hearing Date: 02-11-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 17-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROBIN RAWAL
• Keywords: Business income; Search and seizure
• Section: 69C; 143(3); 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: SMC - I NEW DELHI BEFORE SMT DIVA SINGH, JUDICIAL MEMBER I.T.A .NO. - 1541/DEL/2015 (ASSESSMENT YEAR - 2005 - 2006 ) ACIT, CENTRAL CIRCLE - 17, ROOM NO.356, ARA CENTRE, E - 2, JHANDEWALAN EXTN., NEW DELHI (APPELLANT) VS SHANTILAL WADHWA, 8194, SECTOR - B, POCKET - XI, VASANT KUNJ, NEW DELHI PAN - AAGPW9693M (RESPONDENT ) C.O.NO.226/DEL/2015 (IN I.T.A .NO. - 1541/DEL /2015) (ASSESSMENT YEAR - 2005 - 2006 ) LATE SHANTILAL WADHWA THROUGH L/H SH. SANDEEP WADHWA, C/O - M/S RRA TAXINDIA, D - 28, SOUTH EXTENSION, PART - I, NEW DELHI - 110049. PAN - AAGPW9693M (APPELLANT) VS ACIT, CENTRAL CIRCLE - 17, ROOM NO.356, ARA CENTRE, E - 2, JHANDEWALAN EXTN., NEW DELHI (RESPONDENT ) APPELLANT BY SH.ROBIN RAWAL, SR. DR RESPONDENT BY SH.TARUN KUMAR, ADV. ORDER THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE ASSAILING THE CORRECTNESS OF THE ORDER DATED 10.12.2014 OF CIT(A) - XXVII, NEW DELHI PERTAINING TO 2005 - 06 ASSESSMENT YEAR ON THE FOLLOWING GROUNDS: - 1. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND ON THE FACTS IN DELETING RS.12,33,847/ - DISALLOWED BY THE AO U/S 69C OF THE I.T.ACT AND ADDED TO THE INCOME OF THE ASSESSEE ON ACCOUNT OF EXPENSES DEBITED TO P&L ACCOUNT. 2. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND ON THE FACTS IN DELETING RS.61500/ - DISALLOWED BY THE AO AND ADDED TO THE INCOME OF THE ASSESSEE ON ACCOUNT OF INCOME FROM HOUSE PROPERTY. 3. (A) THE ORDER OF THE CIT(APPEALS) IS ERRONEOUS AND NOT TENABLE IN LAW AND ON FACTS. DATE OF HEARING 02 . 11 .2015 DATE OF PRONOUNCEMENT 05. 01 .201 6 I.T.A .NO. - 1541/ DEL/201 5 & C.O. - 226/DEL/2015 PAGE 2 OF 5 (B) THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY/ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF THE HEARING OF THE APPEAL. 2. THE GROUNDS RAISED IN THE CROSS OBJECTIONS FILED BY THE ASSESSEE READ AS UNDER: - 1. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT( A HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF LD.AO IN MAKING ADDITIONS/DISALLOWANCES, MORE SO WHEN THERE WAS NO INCRIMINATING MATERIAL FOUND AS A RESULT OF SEARCH AND IN ANY CASE ADDITION MADE BY LD.AO WERE OUTSIDE THE SCOPE OF SECTION 153A. 2. THAT THE CROSS OBJECTOR CRAVES THE LEAVE TO ADD, AMEND, MODIFY, DELETE ANY OF THE GROUND(S) OF CROSS OBJECTION BEFORE OR AT THE TIME OF HEARING. 3. INVITING ATTENTION TO THE CROSS OBJECTION FILED, IT WAS SUBMITTED BY THE LD. AR THAT THE POINT AT ISSUE I S COVERED IN FAVOUR OF THE ASSESSEE BY VIRTUE OF ORDER DATED 19.10.2015 IN CONNECTED CASE OF SMT. RASHMI WADHWA VS DCIT IN ITA NO.501 & 502/DEL/2015 FOR 2008 - 09 & 2009 - 10 ASSESSMENT YEARS ON SIMILAR FACTS AND CIRCUMSTANCES (COPY FILED). INVITING ATTENTION TO THE ORDER SHEET ENTRY DATED 25.08.2015 IT WAS SUBMITTED THAT THIS POSITION WAS CANVASSED B Y THE ASSESSEE CONSIDERING WHICH ON THAT DATE THE APPEAL WAS ADJOURNED TO THE NEXT DATE. IN THE AFORESAID ORDER IT WAS SUBMITTED RELIANCE HAD BEEN PLACED U PON THE DECISION OF THE HON BLE HIGH COURT DATED 28.08.2015 IN THE CASE OF KABUL CHAWLA , CONSIDERING WHICH THE REVENUE S APPEAL ON SIMILAR FACTS AND CIRCUMSTANCES WAS DISMISSED. IT WAS SUBMITTED THAT THE POINT AT ISSUE IS FULLY COV ERED IN FAVOUR OF THE ASSESSEE, CONSEQUENTLY, T HE DEPARTMENTAL APPEAL SHOULD BE DISMISSED AND THE CROSS - OBJECTIONS FOLLOWING THE DECISION IN SMT. RASHMI WADHWA DESERVES TO BE ALLOWED. 4. INVITING ATTENTION TO PAGE 23 OF THE IMPUGNED ORDER IT WAS HIS SUBMISSION THAT THE POSITION THAT THE RE WAS NO INCRIMINATING MATERIAL RELATABLE TO THE ADDITIONS IS A FINDING RECORDED BY THE CIT(A) HIMSELF AND ON THIS GROUND SHOULD HAVE DELETED THE ADDITIONS WHICH HAVE BEEN INSTEAD DELETED BY HIM ON MERITS . IT WAS HIS SUBMISSION THAT CONSIDERING THE GROUN DS RAISED IN THE CROSS - OBJECTIONS THE DEPARTMENTAL APPEAL SHOULD BE DISMISSED ON THIS JURISDICTIONAL FACT ITSELF AS IT DEMOLISHES THE CORRECTNESS OF THE ADDITIONS. FOR READY - REFERENCE, THE RELEVANT EXTRACT IS REPRODUCED HEREUNDER: - I.T.A .NO. - 1541/ DEL/201 5 & C.O. - 226/DEL/2015 PAGE 3 OF 5 16. I HAVE CONSIDERED THE FACTS OF THE CASE WRITTEN SUBMISSIONS AND OTHER MATERIAL ON RECORD. THE ASSESSING OFFICER MADE THE IMPUGNED ADDITION ON THE GROUND THAT THE APPELLANT DID NOT FURNISH NECESSARY DETAILS AND DOCUMENTS PERTAINING TO THE BUSINESS INCOME EARNED. IT MAY BE MENTIONED THAT DURING THE YEAR UNDER CONSIDERATION THE APPELLANT WAS IN THE BUSINESS OF SUPPLYING OF PRINTING STATIONERY TO ATMS AND DECLARED A TOTAL SALE OF RS.25,21,624/ - IN THE PROFIT AND LOSS ACCOUNT. IT IS A FACT THAT NO INCRIMINAT ING MATERIAL OF ANY NATURE WAS FOUND DURING THE COURSE OF SEARCH AND SEIZURE OPERATION AND THE DISALLOWANCE OF EXPENSES MADE BY THE ASSESSING OFFICER NOT TO MAKE ANY ENQUIRIES PERTAINING TO THE ACCOUNTS OF THE APPELLANT U/S 153A. VIDE LETTER DATED 4.2.201 3, THE APPELLANT WAS ASKED TO FURNISH THE DETAILS OF PURCHASE, AND JUSTIFICATION OF THE EXPENSES CLAIMED WITH SUPPORTING DOCUMENTS. (EMPHASIS PROVIDED IN THE PRESENT PROCEEDINGS) 5. CONFRONTED WITH THE ORDER DATED 19.10.2015 IN THE CASE OF SMT. RASH MI W ADHWA, THE LD. SR. DR RELIED UPON THE ASSESSMENT ORDER. NO DECISION CONTROVERTING THE ABOVE DECISION OR THE DECISION OF THE HON BLE HIGH COURT IN THE CASE OF CIT VS KABUL CHAWLA RELIED UPON BY THE CO - ORDINATE BENCH IN THE SAID DECISION WAS REFERRED TO ON BEHALF OF THE REVENUE FOR CONSIDERATION OF THE BENCH. 6. THE RELEVANT FACTS OF THE CASE ARE THAT SEARCH AND SEIZURE OPERATION U/S 132 WAS CONDUCTED ON 19.10.2010 AT THE BUSINESS/RESIDENTIAL PREMISES OF THE ASSESSEE BELONGING TO NUSSLI (SWITZERLAND) LTD. GROUP OF CASES IN RESPONSE TO NOTICE U/S 153A ISSUED ON 19.09.2011. THE ASSESSEE RETURNED AN INCOME OF RS.2,04,680/ - AS AN INDIVIDUAL AS A RETIRED GOVERNMENT OFFICER WORK ING AS A DIRECTOR OF M/S COMFORT NET TRADERS (INDIA) PVT. LTD. UNDER THE HEADS SALA RY/PENSION INCOME , INCOME FROM BUSINESS AND FROM OTHER SOURCES. SUBSEQUENTLY AFTER NOTICE U/S 132(2)/142(1), THE ASSESSMENT WAS CONCLUDED U/S 153A R.W.S 143(3) AT AN INCOME OF RS.14,81,580/ - . IN THE FACTS OF THE PRESENT CASE THE LD. AR HAS RELIED UPON T HE FOLLOWING FINDING ARRIVED AT BY THE CO - ORDINATE BENCH IN PARA 5 WHICH POSITION ON FACT IN THE PRESENT CASE ALSO HAS NOT BEEN DISPUTED BY THE REVENUE. THE FINDING OF THE CO - ORDINATE BENCH RELIED UPON IS REPRODUCED HEREUNDER: - 5. ADMITTEDLY NO INCRIMINA TING MATERIAL WAS FOUND OR SEIZED DURING THE COURSE OF SEARCH AND SEIZURE OPERATION U/S 132 OF THE ACT IN THE CASE OF THE ASSESSEE. IT IS ALSO NOT IN DISPUTE, THAT THE ASSESSMENT FOR BOTH THESE ASSESSMENT YEARS HAVE NOT ABATED. UNDER THE CIRCUMSTANCES, I F IND THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY THE I.T.A .NO. - 1541/ DEL/201 5 & C.O. - 226/DEL/2015 PAGE 4 OF 5 DECISION DATED 28.8.2015 OF THE HON BLE DELHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA PASSED IN ITA NO. 707, 709 AND 713/2014 HELD HAS UNDER: - 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 ITA NOS. 707, 709 AND 713 OF 2014 OF DECISIONS, THE LEGAL POSITION THAT EMERGES IS AS UNDER: 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. I I. 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 ASSESSMEN T 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 AD DITIONS 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 ARBITRAR Y OR MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOUSLY AN ITA NOS. 707, 709 AND 713 OF 2014 OF ASSESSMENT HAS TO BE MADE UNDER THIS SECTION ONLY ON THE BASIS OF SEIZED MATERIAL. V. IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPL ETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESSMENT CAN BE MADE. THE WORD 'ASSESS' IN SECTION 153 A IS RELATABLE TO ABATED PROCEEDINGS (I.E. THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD 'REASSESS' TO COMPLETED ASSESSMENT PROCEE DINGS. 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 S EARCH 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 COU RSE 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. I.T.A .NO. - 1541/ DEL/201 5 & C.O. - 226/DEL/2015 PAGE 5 OF 5 38. THE PRESENT APPEALS CONCERN AYS, 2002 - 0 3, 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. 7. ACCORDINGLY FOLLOWING TH E JUDICIAL PRECEDENT IN THE FACE OF COMMONALITY ON THE CRUCIAL FACT THAT NO INCRIMINATING MATERIAL WAS FOUND IN THE SEARCH, THE APPEAL OF THE ASSESSEE IS ALLOWED . IN VIEW OF THE FACT THAT THE ASSESSMENT ORDER UNDER CONSIDERATION U/S 153A R.W.S 143 WAS NOT BASED ON ANY INCRIMINATING MATERIAL FOUND OR SEIZED DURING THE COURSE OF SEARCH AND BEING BASED ON THE MATERIAL PURELY AVAILABLE ON RECORD, THE GROUNDS RAISED IN THE CROSS OBJECTION ARE ALLOWED AND THE DEPARTMENTAL APPEAL CHALLENGING THE ADDITIONS IS DIS MISSED . 8 . IN THE RESULT, THE DEPARTMENTAL APPEAL IS DISMISSED AND THE C.O. FILED BY THE ASSESSEE IS ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 0 5 T H OF JANUARY , 201 6 . S D / - (DIVA SINGH) JUDICIAL MEMBER DATED: 0 5 /01 /201 6 * AMIT KUMAR * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI