Sh. Abhinav Kumar Mittal, New Delhi V. CIT, New Delhi

ITA 1676/DEL/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1255 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 18-02-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 10-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DK MISHR A
• Assessee Lawyers: V MOHAN CHAURASIA
• Keywords: Unexplained investment; Search and seizure; Opportunity of being heard; Cost of acquisition; Fair market value; Valuation report
• Section: 69; 263; 132; 143(3); 142(1); 80HHC; 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH A AA A : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND SHRI SHRI SHRI SHRI A.D.JAIN A.D.JAIN A.D.JAIN A.D.JAIN, JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER ITA NO. ITA NO. ITA NO. ITA NO.1676/DEL/2012 1676/DEL/2012 1676/DEL/2012 1676/DEL/2012 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : : : : 2006 2006 2006 2006- -- -07 0707 07 SHRI ABHINAV KUMAR MITTAL, SHRI ABHINAV KUMAR MITTAL, SHRI ABHINAV KUMAR MITTAL, SHRI ABHINAV KUMAR MITTAL, V VV V- -- -287, RAJOURI GARDEN, 287, RAJOURI GARDEN, 287, RAJOURI GARDEN, 287, RAJOURI GARDEN, NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. P PP PAN : AOIPK7095P. AN : AOIPK7095P. AN : AOIPK7095P. AN : AOIPK7095P. VS. VS. VS. VS. COMMISSIONER OF INCOME TAX DELHI, COMMISSIONER OF INCOME TAX DELHI, COMMISSIONER OF INCOME TAX DELHI, COMMISSIONER OF INCOME TAX DELHI, CENTRAL CENTRAL CENTRAL CENTRAL- -- -1, 1,1, 1, NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VED JAIN, SMT.RANO JAIN, CAS AND SHRI V.MOHAN CHAURASIA, ADVOCATE. RESPONDENT BY : SHRI D.K.MISHRA, CIT-DR. ORDER ORDER ORDER ORDER PER G. PER G. PER G. PER G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VP VPVP VP : : : : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF LEARNED CIT DELHI, CENTRAL-1, NEW DELHI DATED 12 TH MARCH, 2012 FOR THE AY 2006-07. 2. FOLLOWING GROUNDS ARE RAISED BY THE ASSESSEE :- 1. THE ORDER OF THE LD.CIT DELHI CENTRAL-1 IS NOT CORRECT IN LAW AND FACTS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD.CIT DELHI CENTRAL-1 HAS ERRED IN LAW AND FAC TS IN SET ASIDING THE ORDER OF THE AO UNDER SECTION 263 OF TH E INCOME TAX ACT 1961 ON ACCOUNT OF TAKING THE SALE CONSIDERATION OF FLAT NO.5-E HARBOUR HEIGHT, COLABA , MUMBAI AT RS.1,10,50,000/- ON THE BASIS OF MOU ON 13.7.2005, INSTEAD OF ACTUAL SALE AGREEMENT OF RS.95,00,000/- WITHOUT ANY VALID GROUND. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD.CIT DELHI CENTRAL-1 HAS ERRED IN LAW AND FAC TS IN SET ASIDING THE ORDER OF THE AO ON ACCOUNT OF INCREASIN G THE ITA-1676/DEL/2012 2 SALE VALUE OF THE FLAT NO.5-E HARBOUR HEIGHT, COLAB A, MUMBAI OF BY RS.15,00,000/- AS SHOWN BY THE ASSESSE E WITH HOLDING SUCH REFERENCES AS VOID OR BEYOND JURI SDICTION. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEN D ANY ALL OF GROUNDS OF APPEAL BEFORE OR DURING THE C OURSE OF THE HEARING OF THE APPEAL. 3. AT THE TIME OF HEARING BEFORE US, IT IS STATED B Y THE LEARNED COUNSEL FOR THE ASSESSEE THAT THERE WAS SEARCH AT T HE ASSESSEES BUSINESS PREMISES UNDER SECTION 132 OF THE INCOME-T AX ACT, 1961. THAT DURING THE COURSE OF SEARCH, CERTAIN PAPERS WE RE FOUND AND SEIZED. ONE OF THE PAPERS FOUND WAS RELATING TO PU RCHASE OF FLAT AT HARBOUR HEIGHTS, COLABA, MUMBAI. THAT THE ASSESSIN G OFFICER, VIDE NOTICE UNDER SECTION 142(1) DATED 26.10.2009, ASKED THE ASSESSEE TO EXPLAIN THE SOURCE OF INVESTMENT IN THE PROPERTIES AS FOUND NOTED IN THE SEIZED DOCUMENT. THE REPLY OF THE SAID NOTICE WAS FURNISHED BY THE ASSESSEE ON 7.12.2009. HOWEVER, THE ASSESSING OFFI CER REFERRED THE MATTER FOR THE VALUATION OF THE PROPERTY TO THE DEP ARTMENTAL VALUATION OFFICER WHO, VIDE VALUATION REPORT DATED 10.12.2009 , VALUED THE FAIR MARKET VALUE OF THE SAID FLAT AT ` 95,00,000/-. THAT THE ASSESSEE HAS PURCHASED THE SAID FLAT AT ` 95,00,000/- ONLY. THAT IN THE LOOSE PAPER FOUND AT THE TIME OF SEARCH, THERE WAS MENTION OF C ASH PAYMENT OF ` 15,50,000/-. HOWEVER, IT WAS EXPLAINED DURING THE COURSE OF ASSESSMENT PROCEEDINGS THAT THE ABOVE CASH COMPONEN T WAS TOWARDS THE FURNITURE AND SINCE THE SELLER HIMSELF HAS TAKE N AWAY THE FURNITURE, THEREFORE, NO CASH PAYMENT WAS MADE. THE ASSESSEE PAID ` 95,00,000/- BY CHEQUE WHICH WAS THE SAME AMOUNT AS CERTIFIED BY THE VALUATION OFFICER. IN VIEW OF THESE FACTS, THE ASS ESSING OFFICER DID NOT MAKE ANY ADDITION. THAT THE CIT, BY INVOKING HIS P OWER UNDER SECTION 263, HAS SET ASIDE THE MATTER TO THE FILE OF THE AS SESSING OFFICER HOLDING THAT THE ASSESSING OFFICER HAS NOT CARRIED OUT ADEQUATE ENQUIRIES. IT IS STATED BY THE LEARNED COUNSEL THA T THE ISSUE UNDER CONSIDERATION IS COVERED IN FAVOUR OF THE ASSESSEE BY FOLLOWING DECISIONS OF HON'BLE JURISDICTIONAL HIGH COURT AND OTHER HIGH COURTS:- ITA-1676/DEL/2012 3 (I) CIT VS. SUNBEAM AUTO LTD. (2011) 332 ITR 167 (DEL HI). (II) CIT VS. VIKAS POLYMERS (2012) 341 ITR 537 (DELHI) . (III) CIT VS. DEEPAK MITTAL (2010) 324 ITR 411 (P&H). (IV) CIT VS. ANIL KUMAR SHARMA (2011) 335 ITR 83 (DELH I). 4. LEARNED DR, ON THE OTHER HAND, ARGUED AT LENGTH AND IN ADDITION TO HIS ORAL ARGUMENTS, HE ALSO FURNISHED THE WRITTE N SUBMISSIONS. THE MAIN THRUST OF HIS ARGUMENTS WAS THAT IF ALL THE DO CUMENTS FOUND AT THE TIME OF SEARCH ARE CONSIDERED IN TOTALITY, IT WOULD BE EVIDENT THAT AS PER THE MEMORANDUM OF UNDERSTANDING DATED 12 TH JULY, 2005, THE ASSESSEE HAD AGREED TO PURCHASE THE VACANT FLAT AT ` 1,10,50,000/-. AS PER ONE LOOSE PAPER, COPY OF WHICH IS AT PAGE 8 OF THE PAPER BOOK, IT IS EVIDENT THAT OUT OF ` 1,10,50,000/-, THE SUM OF ` 95,00,000/- WAS TO BE PAID BY CHEQUE AND ` 15,50,000/- WAS TO BE PAID BY CASH. THAT THE EXPLANATION OF THE ASSESSEE BEFORE THE ASSESSING OF FICER THAT THE SUM OF ` 15,50,000/- WAS FOR FURNITURE, WAS THE STORY BUILT UP BY THE ASSESSEE JUST TO EXPLAIN THE SAID LOOSE PAPER. THA T ON THESE FACTS, THE ASSESSING OFFICER OUGHT TO HAVE ENQUIRED FURTHER BE CAUSE HE IS NOT ONLY AN ADJUDICATOR BUT AN INVESTIGATOR ALSO. SINC E HE FAILED TO MAKE ENQUIRY WHICH WAS EXPECTED FROM HIM, HIS ORDER WAS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IN SUPPORT OF THIS CONTENTION, HE RELIED UPON THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF HINDUSTAN MARKETING & ADVERTIS ING CO.LTD. 341 ITR 180 (DELHI). HE ALSO STATED THAT THE ABOVE DEC ISION IN THE CASE OF HINDUSTAN MARKETING & ADVERTISING CO.LTD. IS THE LA TEST DECISION FROM HON'BLE JURISDICTIONAL HIGH COURT AND AS PER THE JU DICIAL PRECEDENT, IF THERE ARE TWO DECISIONS OF THE COORDINATE BENCH, TH E SUBSEQUENT DECISION MUST BE FOLLOWED. HE ALSO STATED THAT WHE N A DOCUMENT IS FOUND DURING THE COURSE OF SEARCH, IT IS THE DUTY O F THE ASSESSING OFFICER TO EXAMINE EVERY ASPECT OF THE DOCUMENT. I N SUPPORT OF HIS CONTENTION, HE ALSO RELIED UPON THE FOLLOWING DECIS IONS:- ITA-1676/DEL/2012 4 (I) INGRAM MICRO INDIA LTD. VS. DCIT AND ANOTHER (201 2) 347 ITR 221 (BOM). (II) CIT VS. DLF POWER LTD. (2012) 345 ITR 446 (DELHI) . (III) CIT VS. HARSH J.PUNJABI (2012) 345 ITR 451 (DELHI ). (IV) CIT VS. (1) NAGESH KNITWEARS P.LTD., (2) ORIENT CRA FTS LTD. & (3) VOGUE SETTERS (2012) 345 ITR 135 (DELHI). (V) CIT VS. D.R.BANSAL (2010) 327 ITR 44 (CHHATTISGAR H). (VI) SURENDRA M.KHANDHAR VS. ACIT AND OTHERS (2010) 32 1 ITR 254 (BOM). 5. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BO TH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. BOTH TH E PARTIES HAVE RELIED UPON A NUMBER OF DECISIONS OF HON'BLE JURISD ICTIONAL HIGH COURT AS WELL AS OTHER HIGH COURTS. SINCE THE DECISION O F HON'BLE JURISDICTIONAL HIGH COURT WOULD BE BINDING ON US, W E DEEM IT PROPER TO CONSIDER AND DEAL HEREIN BELOW THE DECISIONS OF HON 'BLE JURISDICTIONAL HIGH COURT RELIED UPON BY BOTH THE SIDES AND, THAT TOO, RELATING TO THE INTERPRETATION OF SECTION 263. 6. OUT OF THE VARIOUS DECISIONS RELIED UPON BY THE LEARNED DR, FOLLOWING FOUR DECISIONS ARE FROM HON'BLE JURISDICT IONAL HIGH COURT IN WHICH INTERPRETATION OF SECTION 263 WAS INVOLVED. 7. IN THE CASE OF HINDUSTAN MARKETING & ADVERTISING CO.LTD. (SUPRA), HON'BLE JURISDICTIONAL HIGH COURT HELD AS UNDER:- THAT THE VIEW OF THE COMMISSIONER REGARDING AGREEM ENTS ENTERED INTO BETWEEN THE WHOLESALE DEALERS AND THE ASSESSEE WAS BASED ON THE SURMISE THAT THE INCOME-T AX OFFICER DID NOT LOOK INTO THEM AND DID NOT CALL FOR THE NAMES OF THE PARTIES. RECORDS REVEALED THAT THE ASSESSEES BOOKS OF ACCOUNT, INCLUDING THE GENERAL LEDGERS WERE SEIZED AND COMPLETE DETAILS OF PARTIES, THEIR ADDRESSES AND THE AMOUNTS RECEIVED WERE RECORDED IN THIS ITA-1676/DEL/2012 5 GENERAL LEDGER ON THE BASIS OF WHICH THE INCOME-TAX OFFICER HAD MADE FURTHER ENQUIRIES. IT WAS NOT CLEAR WHAT KIND OF FURTHER ENQUIRY THE COMMISSIONER WANTED THE ASSESSI NG OFFICERS TO MAKE, KEEPING IN VIEW THE NATURE OF THE ASSESSEES BUSINESS, ESPECIALLY WHEN NO ERROR WAS P OINTED OUT IN THE ASSESSMENT ORDERS AND IT WAS ALSO NOT PO INTED OUT AS TO HOW THESE ASSESSMENT ORDERS HAD CAUSED PREJUDICE TO THE REVENUE. THE TRIBUNAL WAS RIGHT I N LAW IN CANCELLING THE ORDER PASSED BY THE COMMISSIONER UND ER SECTION 263. 8. IN THE CASE OF DLF POWER LTD. (SUPRA), IT WAS HE LD BY THE HON'BLE JURISDICTIONAL HIGH COURT AS UNDER:- THAT THE TRIBUNAL DISAGREED WITH THE COMMISSIONER AND FELT THAT THE ASSESSING OFFICER HAD EXAMINED THE QU ESTION AND FORMED AN OPINION. THEREAFTER, THE TRIBUNAL WE NT INTO THE BIFURCATION OF INTEREST SUBMITTED BY THE ASSESS EE AND EXAMINED IT ON THE MERITS AND DECIDED WHETHER OR NO T A PARTICULAR INCOME QUALIFIED FOR DEDUCTION UNDER SEC TION 80- IA. THE RIGHT AND PROPER COURSE FOR THE TRIBUNAL W OULD HAVE BEEN TO ASK THE COMMISSIONER TO EXAMINE THE FA CTUAL ASPECTS RATHER THAN GIVE ITS OWN FACTUAL FINDING WI THOUT THERE BEING A FACTUAL EXAMINATION AND VERIFICATION OR FULL OR PROPER REBUTTAL. WITHOUT ANYTHING MORE, THE MERE SUBMISSION OF A LETTER TO THE ASSESSING OFFICER GIV ING BIFURCATION DID NOT NECESSARILY MEAN THAT PROPER VERIFICATION AND INVESTIGATION WAS DONE AND ACCEPTE D. THE AVERMENTS MADE IN THE LETTER HAD TO BE VERIFIED AND THEN ACCEPTED OR REJECTED. IF THE ASSESSING OFFICER KEE PS A LETTER ON RECORD AND DOES NOT CARRY OUT NECESSARY INVESTIGATIONS WHICH ARE PER SE REQUIRED TO VERIFY THE CORRECTNESS OF THE AVERMENTS, THERE IS AN ERROR IN THE SENSE THAT HE HAS FAILED TO CARRY OUT THE REQUISITE ENQUI RY WHICH CAN BE RECTIFIED IN A REVISION. THE COMMISSIONER W AS TO PASS A FRESH ORDER UNDER SECTION 263 OF THE ACT AFT ER HEARING THE ASSESSEE. THE CONTENTIONS AND ISSUES R AISED BY THE ASSESSEE WERE TO BE DEALT WITH BY THE COMMIS SIONER WHO WAS TO EXAMINE WHETHER THE ISSUE IN QUESTION WA S RAISED BEFORE THE ASSESSING OFFICER AND CONSIDERED AND VERIFIED OR THE COURSE ADOPTED WAS PERMISSIBLE. IF THIS WAS CORRECT, THEN HIS JURISDICTION WOULD BE LIMITED TO THE EXTENT OF DECIDING WHETHER THE FINDING WAS ERRONEOUS. ITA-1676/DEL/2012 6 9. IN THE CASE OF HARSH J. PUNJABI (SUPRA), HON'BLE JURISDICTIONAL HIGH COURT HELD AS UNDER:- HELD, ALLOWING THE APPEAL, THAT THE COMMISSIONER D ID NOT DISPUTE OR DENY THAT THE ASSESSEE HAD FILED INVOICE S, COMMISSION VOUCHERS AND DETAILS BUT NOTED THAT THE ASSESSING OFFICER DID NOT CONDUCT ANY ENQUIRY OR VERIFICATION WHETHER THE COMMISSION OF RS.3.33 CRO RES, DEBITED AS COMMISSION IN THE PROFIT AND LOSS ACCOUN T OF THE GURGAON UNIT ALONE AND NOT DEBITED ANY PART OR PORT ION TOWARDS AND FOR EXPORTS MADE BY THE CHENNAI UNIT, W AS ATTRIBUTABLE TO ORDERS PLACED ON AND EXPORTS MADE B Y THE CHENNAI UNIT. ADMITTEDLY, THE PURCHASES FROM BOTH UNITS WERE MADE BY COMMON PARTIES, WHO HAD PLACED ORDERS FOR SUPPLY ON THE ASSESSEE. THEREFORE, THERE WAS FAILU RE ON THE PART OF THE ASSESSING OFFICER TO CONDUCT NECESS ARY AND REQUIRED ENQUIRIES WHICH MADE THE ASSESSMENT ORDER ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE R EVENUE. THE COMMISSIONER RIGHTLY EXERCISED HIS REVISIONARY POWER UNDER SECTION 263 OF THE ACT. 10. IN THE CASE OF NAGESH KNITWEARS P.LTD. (SUPRA), IT WAS HELD BY THE HON'BLE JURISDICTIONAL HIGH COURT AS UNDER:- HELD, ALLOWING THE APPEALS, (I) THAT PREMIUM ON SA LE OF EXPORT QUOTA IS NOT COVERED BY CLAUSES 28(IIIA) TO 28(IIIE) AND, THEREFORE, CANNOT BE TAKEN INTO CONSIDERATION. (II) THAT A READING OF THE ORDER PASSED BY THE COMMISSIONER SHOWED THAT THE ORDER PASSED BY THE ASSESSING OFFICER WAS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE TRIBUNAL WAS WRONG I N HOLDING THAT THE ORDER PASSED BY THE COMMISSIONER U NDER SECTION 263 WAS BAD AND CONTRARY TO THE PROVISIONS OF THE ACT. 11. THE LEARNED COUNSEL FOR THE ASSESSEE RELIED UPO N THE FOLLOWING DECISIONS OF HON'BLE JURISDICTIONAL HIGH COURT. 12. IN THE CASE OF SUNBEAM AUTO LTD. (SUPRA), HON'B LE JURISDICTIONAL HIGH COURT HELD AS UNDER:- ITA-1676/DEL/2012 7 THE ASSESSING OFFICER IN THE ASSESSMENT ORDER IS N OT REQUIRED TO GIVE A DETAILED REASON IN RESPECT OF EA CH AND EVERY ITEM OF DEDUCTION, ETC. WHETHER THERE WAS APPLICATION OF MIND BEFORE ALLOWING THE EXPENDITURE IN QUESTION HAS TO BE SEEN. IF THERE WAS ANY INQUIRY, EVEN INADEQUATE THAT WOULD NOT BY ITSELF GIVE OCCASION T O THE COMMISSIONER TO PASS ORDERS UNDER SECTION 263 OF TH E INCOME-TAX ACT, 1961, MERELY BECAUSE HE HAS A DIFFE RENT OPINION IN THE MATTER. IT IS ONLY IN CASES OF LACK OF INQUIRY THAT SUCH A COURSE OF ACTION WOULD BE OPEN. AN ORDER CANNOT BE TERMED ERRONEOUS UNLESS IT IS NO T IN ACCORDANCE WITH LAW. IF AN INCOME-TAX OFFICER ACTI NG IN ACCORDANCE WITH LAW MAKES A CERTAIN ASSESSMENT, IT CANNOT BE BRANDED AS ERRONEOUS BY THE COMMISSIONER SIMPLY BECAUSE, ACCORDING TO HIM, THE ORDER SHOULD HAVE BE EN WRITTEN MORE ELABORATELY. SECTION 263 DOES NOT VIS UALIZE A CASE OF SUBSTITUTION OF THE JUDGMENT OF THE COMMISS IONER FOR THAT OF THE INCOME-TAX OFFICER WHO PASSED THE O RDER UNLESS THE DECISION IS HELD TO BE ERRONEOUS. WHERE THE INCOME-TAX OFFICER HAS EXERCISED THE QUASI-JUDICIAL POWER VESTED IN HIM IN ACCORDANCE WITH LAW AND ARRIVED AT A CONCLUSION SUCH A CONCLUSION CANNOT BE FOUND TO BE ERRONEOUS SIMPLY BECAUSE THE COMMISSIONER DOES NOT FEEL SATISFIED WITH THE CONCLUSION. THERE MUST BE SOME PRIMA FACIE MATERIAL ON RECORD TO SHOW THAT TAX WHICH WAS LAWFULLY EXIGIBLE HAS NOT BEEN IMPOSED OR THAT BY T HE APPLICATION OF THE RELEVANT STATUTE ON AN INCORRECT OR INCOMPLETE INTERPRETATION A LESSER TAX THAN WHAT WA S JUST HAS BEEN IMPOSED. 13. IN THE CASE OF VIKAS POLYMERS (SUPRA), THEIR LO RDSHIPS OF JURISDICTIONAL HIGH COURT HELD AS UNDER:- THUS, WHILE THE INCOME-TAX OFFICER IS NOT CALLED U PON TO WRITE AN ELABORATE JUDGMENT GIVING DETAILED REASONS IN RESPECT OF EACH AND EVERY DISALLOWANCE, DEDUCTION, ETC., IT IS INCUMBENT UPON THE COMMISSIONER NOT TO EXERCISE HIS SUO MOTU REVISIONAL POWERS UNLESS SUPPORTED BY ADEQ UATE REASONS FOR DOING SO. THE PROVISIONS OF SECTION 26 3 OF THE ACT, WHEN READ AS A COMPOSITE WHOLE, MAKE IT INCUMB ENT UPON THE COMMISSIONER BEFORE EXERCISING REVISIONAL POWERS TO : (I) CALL FOR AND EXAMINE THE RECORD, AN D (II) GIVE THE ASSESSEE AN OPPORTUNITY OF BEING HEARD AND THER EAFTER TO MAKE OR CAUSE TO BE MADE SUCH ENQUIRY AS HE DEEM S NECESSARY. IT IS ONLY AN FULFILLMENT OF THESE TWIN CONDITIONS ITA-1676/DEL/2012 8 THAT THE COMMISSIONER MAY PASS AN ORDER EXERCISING HIS POWER OF REVISION. IF A QUERY IS RAISED DURING THE COURSE OF SCRUTINY BY THE ASSESSING OFFICER, WHICH WAS ANSWER ED TO THE SATISFACTION OF THE ASSESSING OFFICER, BUT NEIT HER THE QUERY NOR THE ANSWER WERE REFLECTED IN THE ASSESSME NT ORDER, THIS WOULD NOT BY ITSELF LEAD TO THE CONCLUS ION THAT THE ORDER OF THE ASSESSING OFFICER CALLED FOR INTER FERENCE AND REVISION. 14. IN THE CASE OF ANIL KUMAR SHARMA (SUPRA), IT WA S HELD BY HON'BLE JURISDICTIONAL HIGH COURT AS UNDER:- HELD, DISMISSING THE APPEAL, THAT THE PRESENT CASE WOULD NOT BE ONE OF LACK OF INQUIRY EVEN IF THE INQUIRY WAS TERMED INADEQUATE. THE TRIBUNAL FOUND THAT COMPLET E DETAILS WERE FILED BEFORE THE ASSESSING OFFICER AND THAT HE APPLIED HIS MIND TO THE RELEVANT MATERIAL AND FACTS , ALTHOUGH SUCH APPLICATION OF MIND WAS NOT DISCERNIB LE FROM THE ASSESSMENT ORDER. THE TRIBUNAL HELD THAT THE COMMISSIONER IN PROCEEDINGS UNDER SECTION 263 ALSO HAD ALL THESE DETAILS AND MATERIAL AVAILABLE BEFORE HIM , BUT HAD NOT BEEN ABLE TO POINT OUT DEFECTS CONCLUSIVELY IN THE MATERIAL, FOR ARRIVING AT A CONCLUSION THAT PARTICU LAR INCOME HAD ESCAPED ASSESSMENT ON ACCOUNT OF NON-APPLICATIO N OF MIND BY THE ASSESSING OFFICER. THE TRIBUNAL WAS RI GHT AND THE ORDER OF REVISION WAS NOT VALID. 15. NOW, WE REVERT TO THE FACTS OF THE PRESENT CASE SO AS TO DECIDE WHICH OF THE ABOVE DECISIONS OF HON'BLE JURISDICTIO NAL HIGH COURT WOULD BE APPLICABLE IN THE CASE OF THE ASSESSEE. SEARCH AND SEIZURE OPERATIONS WERE CONDUCTED UNDER SECTION 132 OF THE INCOME-TAX ACT, 1961 IN THE CASE OF M/S A.K.CAPITAL SERVICES LTD. A ND ITS GROUP COMPANIES AND THE DIRECTORS OF SUCH COMPANIES. AS A CONSEQUENCE THEREOF, NOTICE UNDER SECTION 153C OF THE IT ACT WA S ISSUED IN THE CASE OF THE ASSESSEE, IN RESPONSE TO WHICH, THE ASSESSEE FILED THE RETURN FOR THE YEAR UNDER CONSIDERATION DECLARING TOTAL INCOME OF ` 39,90,410/- ON 18 TH JULY, 2006. THE ASSESSMENT WAS COMPLETED UNDER SE CTION 153A READ WITH SECTION 143(3) OF THE IT ACT ON 30 TH DECEMBER, 2009 AT AN INCOME OF ` 99,69,348/- IN WHICH FOLLOWING ADDITIONS WERE MADE: - ITA-1676/DEL/2012 9 ADDITION : UNEXPLAINED INVESTMENT UNDER SECTION 69 OF INCOME TAX ACT 1961 IN RESPECT OF AHMEDABAD PROPERTY RS.50,21,9 00 ADDITION : UNEXPLAINED INVESTMENT UNDER SECTION 69 OF INCOME TAX ACT 1961 IN RESPECT OF KOLKATA PROPERTY RS.9,57,038 16. THAT DURING THE ASSESSMENT PROCEEDINGS, THE ASS ESSING OFFICER ISSUED NOTICE UNDER SECTION 142(1) DATED 26.10.2009 IN WHICH HE RAISED THE QUERY WITH REGARD TO FLAT AT HARBOUR HEI GHTS, COLABA TWICE. THE FIRST QUERY RAISED WAS QUERY NO.3 WHICH READS A S UNDER:- 3. PLEASE FILE DETAILS AND SOURCES OF INVESTMENT I N THE FOLLOWING PROPERTIES AS FOUND NOTED IN SEIZED DOCUM ENTS THAT BELONG TO SHRI ABHINAV KUMAR MITTAL AS UNDER A ND PLEASE STATE WHETHER THESE PROPERTIES AND INVESTMEN T THEREIN ARE DISCLOSED IN INCOME TAX AND WEALTH TAX RETURNS :- S.NO. PROPERTY ADDRESS ENTITY SEIZED MATERIAL 1. . 2. . 3. FLAT NO.5-E, 5 TH FLOOR, HARBOUR HEIGHTS, COLABA, MUMBAI. ABHINAV KUMAR MITTAL A-7/ANNX. A- 1/PG.113-128 A- 7/ANNX.A-1/PG. 162-168 17. AGAIN, QUERY NO.5 READS AS UNDER:- 5. PLEASE EXPLAIN DETAILS AND SOURCES OF INVESTMEN T IN THE PURCHASE OF PROPERTY AS UNDER:- SUNBEAM AUTO LTD. (SUPRA), VIKAS POLYMERS (SUPRA), ANIL KUMAR SHARMA (SUPRA) AND HINDUSTAN MARKETING & ADVERTISING CO.LT D. (SUPRA) PAGE CONTENTS 162- 168 SALE DEED DATED 25.8.2005 IN RESPECT OF PROPERTY AT HARBOUR HEIGHTS A, NA SAWANT MARG, COLABA, MUMBAI-400005 FOR RS.1,10,50,000/- PAYMENT SCHEDULE OF RS.1,10,50,000/- RS.11,05,000 BY CHEQUE ON 13/07/2005 ITA-1676/DEL/2012 10 128 RS.14,00,000 BY CHEQUE TO BE PAID BEFORE 26.7.2 005. OUT OF BALANCE RS.85,45,000/- RS.69,95,000 BY CHEQUE AND RS.15,50,000/- BY CASH. 26-44 TRANSACTIONS OF PURCHASE AND SALE OF SHARES. INVESTMENTS IN SHARES AND BONDS, PROPERTIES, BANK ACCOUNTS, 18. THE ASSESSEE FILED THE REPLY DATED 7 TH DECEMBER, 2009 AND THE REPLY GIVEN BY HIM READS AS UNDER:- 3 FLAT NO.5-E, 5 TH FLOOR, HARBOUR HEIGHTS, COLABA MUMBAI ABHINAV KUMAR MITTAL A-7/ANNX.A- 1/PG.113-128, A-7/ANNX.A- 1/PG.162-168 THE DETAILS ON PAGE NO.113-128 AND 162-168 OF ANNE X-A-1 PARTY A-7 ONLY RELATE TO FLAT NO.5E, 5 TH FLOOR, HARBOUR HEIGHTS, COLABA, MUMBAI. IT WAS PURCHASED BY ABHINAV KUMAR FROM SELLERS MR. SANTOSH KUMAR GUPTA AND SMT.SEETA LAKSHMI GUPTA ON 06/01/2006 FOR AN PURCHA SE CONSIDERATION OF RS.95,00,000. THE MAJOR AMOUNT OF INVESTMENT IN TH E SAID PROPERTY WAS FINANCED BY HOUSING LOAN OF RS.75,00,000 FROM ICICI BANK. THE BALANCE AMOUNT OF INVESTMENT WAS FINANCED OUT OF OWN RESOUR CES OF ABHINAV KUMAR. THE SAID PROPERTY IS SHOWN IN INCOME TAX AN D IN WEALTH TAX RECORDS OF ABHINAV KUMAR. POINT NO.5 OF YOUR NOTICE : PLEASE EXPLAIN DETAIL S AND SOURCES OF INVESTMENT IN THE PURCHASE OF PROPERTY AS UNDER:- PARTY NO.7 (M/S A.K.CAPITAL SERVICES LIMITED 30-FRE E PRESS ROAD, 215 - NARIMAN POINT, MUMBAI-40 0021-ANNEXURE A-1 PAGE CONTENTS 162-168 128 SALE DEED DATED 25/8/2005 IN RESPECT OF PROPERTY AT HARBOUR HEIGHTS A, N.A. SWANT MARG, COLABA, MUMBAI-400005 FOR RS.1,10, 50,000/- PAYMENT SCHEDULE OF RS.1,10,50,000/- RS.11,05,000 BY CHEQUE ON 13/07/2005 RS.14,00,000 BY CHEQUE TO BE PAID BEFORE 26/7/2005. OUT OF BALANCE RS.85,45,000/- RS.69,95,000 BY CHEQUE AND RS.15,50,000/- BY CASH. THIS IS ROUGH HANDWRITTEN PAGE. THE SAID FLAT WAS EARLIER AGREED TO BE PURCHASED WITH FURNITURE AND FIXTURES AND ALSO THE SELLER HAS TO DO CERTAIN REPAIRS (PLASTERING, LEAKAGES ON WALLS, BATHROOM ET C) BEFORE HANDING OVER THE FLAT TO BUYER. HOWEVER THE SELLER WANTED CASH FOR THE FURNITURE AND FIXTURES AND COST OF REPAIRS WHICH WE DENIED AND HE NCE THE PRICE OF THE FLAT WAS NEGOTIATED TO RS.95,00,000. THE FLAT WAS PURCHASED WITHOUT FURNITURE AND FIXTURES AND AS AND WHERE BASIS. WE DENY OF MAKING ANY CASH PAYMENT TO ANY ONE FOR THE PURCHASE OF SAID FL AT. ITA-1676/DEL/2012 11 19. THE ASSESSING OFFICER ALSO REFERRED THE MATTER TO THE DVO AND THE VALUATION REPORT OF THE DVO DATED 10 TH DECEMBER, 2009 READS AS UNDER:- WHEREAS, THE DETERMINATION OF THE FAIR MARKET VALU E AS ON 06.01.2006 OF THE PROPERTY FLAT NO.5E, 5 TH FLOOR, HARBOUR HEIGHTS, COLABA, MUMBAI 05 WAS REFERRED TO ME BY DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCL E-20, NEW DELHI VIDE HIS OFFICE LETTER DCIT/CC-20/2009- 10/ABHINAV-VALUATION REFERENCE/1131 DATED 28/10/200 9 AND 2. WHEREAS, THE PROPERTY WAS INSPECTED BY ME ON 04/12/2009 ALONG WITH SHRI A.M. REDDY JE OF THIS OF FICE, IN THE PRESENCE OF ASSESSEES REPRESENTATIVE SHRI M. PURUSHOTTAM. 3. HAVING PERUSED THE RECORDS PRODUCED BEFORE ME AN D CONSIDERED THE RELEVANT FACTS OF THE CASE, I AM OF THE OPINION THAT THE FAIR MARKET VALUE OF THE PROPERTY FLAT NO.5E, 5 TH FLOOR, HARBOUR HEIGHTS, COLABA, MUMBAI-05 AT RS.95,00,000/- (RUPEES NINETY FIVE LAKHS ONLY) AS O N 06.01.2006 HAS BEEN CORRECTLY DECLARED IN THE RETUR N MADE BY THE ASSESSEE. SD/- (R.CHANDRASEKARAN) VALUATION OFFICER-I I.T.DEPARTMENT, MUMBAI-12 20. FROM THE ABOVE FACTS, IT IS EVIDENT THAT THE AS SESSING OFFICER MADE PROPER ENQUIRY IN THIS CASE BY ASKING THE ASSE SSEE TO EXPLAIN THE SOURCE OF INVESTMENT IN THE PROPERTY. HE ALSO ASKE D THE ASSESSEE TO EXPLAIN THE NOTING IN THE LOOSE PAPER. HE DID NOT ACCEPT THE ASSESSEES EXPLANATION AT FACE VALUE BUT REFERRED THE MATTER T O THE VALUATION CELL OF THE INCOME TAX DEPARTMENT AND WHEN VALUATION OFF ICER-I OF I.T. DEPARTMENT, MUMBAI ALSO EXPRESSED THE OPINION THAT THE FAIR MARKET VALUE OF FLAT NO.5E, 5 TH FLOOR, HARBOUR HEIGHTS, COLABA AS ON 6.1.2006 IS ` 95,00,000/-, HE DID NOT MAKE ANY ADDITION IN THIS R EGARD. THUS, IN OUR OPINION, IT IS NOT EVEN THE CASE OF INADEQUATE ENQU IRY, MUCH LESS LACK OF ENQUIRY. THE ASSESSING OFFICER MADE THE ENQUIRY NOT ONLY FROM THE ITA-1676/DEL/2012 12 ASSESSEE BUT ALSO GOT THE VALUATION OF THE PROPERTY BY THE DEPARTMENTAL VALUATION OFFICER. MERELY BECAUSE HE DID NOT DISCUSS THESE FACTS IN THE ASSESSMENT ORDER WILL NOT MAKE T HE ASSESSMENT ERRONEOUS OR PREJUDICIAL TO THE INTERESTS OF THE RE VENUE. FROM THE TOTALITY OF ABOVE FACTS, WE ARE OF THE OPINION THAT THE ASSESSING OFFICER HAS APPLIED HIS MIND TO THE PURCHASE OF PROPERTY BY THE ASSESSEE IN THE LIGHT OF LOOSE PAPER FOUND AND SEIZED AND BEING SATISFIED WITH THE ASSESSEES EXPLANATION WHICH WAS FORTIFIED BY THE V ALUATION REPORT OF THE VALUATION OFFICER OF THE INCOME-TAX DEPARTMENT, HE ACCEPTED THE SAME. MERELY BECAUSE THE CIT HAD A DIFFERENT OPINI ON IN THE MATTER, IT WOULD NOT BY ITSELF GIVE RIGHT TO THE CIT TO INVOKE HIS POWERS UNDER SECTION 263. ON THESE FACTS, THE DECISIONS OF HON' BLE JURISDICTIONAL HIGH COURT IN THE CASE OF SUNBEAM AUTO LTD. (SUPRA) , VIKAS POLYMERS (SUPRA), ANIL KUMAR SHARMA (SUPRA) AND HINDUSTAN MA RKETING & ADVERTISING CO.LTD. (SUPRA) WOULD BE SQUARELY APPLI CABLE WHEREIN THE HON'BLE JURISDICTIONAL HIGH COURT HAS HELD THAT THE TRIBUNAL WAS JUSTIFIED IN CANCELLING THE ORDER PASSED BY THE CIT UNDER SECTION 263. 21. LEARNED DR HAS ALSO RELIED UPON VARIOUS DECISIO NS OF HON'BLE JURISDICTIONAL HIGH COURT. HOWEVER, WE FIND THAT F ACTS IN THOSE CASES WERE DIFFERENT THAN THE FACTS IN THE CASE UNDER APP EAL BEFORE US. IN THE CASE OF NAGESH KNITWEARS P.LTD. (SUPRA) RELIED UPON BY THE LEARNED DR, THE ISSUE WAS WITH REGARD TO ALLOWABILITY OF DEDUCT ION UNDER SECTION 80HHC ON THE PREMIUM ON SALE OF EXPORT QUOTA. HON' BLE JURISDICTIONAL HIGH COURT HELD THAT THE ORDER OF THE ASSESSING OFF ICER HOLDING THAT THE ASSESSEE WAS ENTITLED TO DEDUCTION UNDER SECTION 80 HHC IN RESPECT OF SALE OF EXPORT QUOTA IS ERRONEOUS AND PREJUDICIAL T O THE INTERESTS OF THE REVENUE. HOWEVER, THE FACTS IN THE CASE OF THE ASS ESSEE ARE ALTOGETHER DIFFERENT. THEREFORE, THE ABOVE DECISIO N OF HON'BLE JURISDICTIONAL HIGH COURT WOULD NOT BE APPLICABLE T O THE CASE OF THE ASSESSEE. ITA-1676/DEL/2012 13 22. IN THE CASE OF DLF POWER LTD. (SUPRA) RELIED UP ON BY THE LEARNED DR, THE DISPUTE WAS WITH REGARD TO COMPUTATION OF D EDUCTION UNDER SECTION 80-IA. THE ASSESSEE WAS HAVING TWO UNITS ONE ENTITLED TO DEDUCTION UNDER SECTION 80IA AND, THE OTHER, NOT. THE CIT HELD THE ASSESSMENT ORDER TO BE ERRONEOUS ON THE GROUND THAT THERE WAS LACK OF ENQUIRY BY THE ASSESSING OFFICER WITH REGARD TO BIF URCATION OF INTEREST. THE CIT HAD SET ASIDE THE MATTER TO THE FILE OF THE ASSESSING OFFICER. HOWEVER, ON APPEAL, THE TRIBUNAL EXAMINED ON MERITS THE NATURE AND CHARACTER OF THE INTEREST AND BIFURCATION THEREOF A ND HELD THAT THE CIT WAS WRONG IN SETTING ASIDE THE ASSESSMENT ORDER. O N THESE FACTS, HON'BLE JURISDICTIONAL HIGH COURT SET ASIDE THE ORD ER OF THE TRIBUNAL AND RESTORED THE MATTER TO THE FILE OF THE CIT FOR PASS ING A FRESH ORDER AFTER HEARING THE ASSESSEE. THAT THE FACTS IN THE CASE O F THE ASSESSEE ARE ALTOGETHER DIFFERENT BECAUSE IN THE CASE UNDER APPE AL BEFORE US, THE DISPUTE IS WHETHER THERE WAS ANY UNDISCLOSED INVEST MENT MADE BY THE ASSESSEE IN RESPECT OF PURCHASE OF A FLAT AT HARBOU R HEIGHTS, COLABA IN THE LIGHT OF LOOSE PAPER FOUND AND SEIZED. WE HAVE ALREADY STATED EARLIER THAT THE ASSESSING OFFICER MADE ADEQUATE EN QUIRY WITH REGARD TO NOTING ON THE LOOSE PAPER AND ALSO GOT THE PROPE RTY VALUED THROUGH THE VALUATION CELL OF THE INCOME TAX DEPARTMENT. T HE ASSESSING OFFICER MADE THE ADDITION FOR UNEXPLAINED INVESTMEN T ON THE BASIS OF REPORT OF THE VALUATION CELL OF THE I.T. DEPARTMENT IN RESPECT OF OTHER PROPERTY. SINCE IN RESPECT OF THE PROPERTY I.E. FL AT AT HARBOUR HEIGHTS, THE VALUATION OFFICER OF THE I.T. DEPARTMENT VALUED THE PROPERTY AT ` 95,00,000/- WHICH IS THE PURCHASE COST SHOWN BY THE ASSESSEE, THE ASSESSING OFFICER DID NOT MAKE ANY ADDITION. THUS, ADEQUATE ENQUIRY WAS MADE BY THE ASSESSING OFFICER. THEREFORE, ON T HESE FACTS, THE ABOVE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF DLF POWER LTD. WOULD NOT BE APPLICABLE. ITA-1676/DEL/2012 14 23. THE LEARNED DR HAS ALSO RELIED UPON THE DECISIO N OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF HARSH J. P UNJABI (SUPRA). HOWEVER, WE FIND THAT IN THE SAID CASE ALSO, HON'BL E JURISDICTIONAL HIGH COURT WAS OF THE OPINION THAT THERE WAS FAILURE ON THE PART OF THE ASSESSING OFFICER TO CONDUCT NECESSARY AND REQUIRED ENQUIRIES WHICH MADE THE ASSESSMENT ORDER ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IN THE CASE UNDER APPEAL BEFORE US , THE ASSESSING OFFICER HAD MADE ADEQUATE ENQUIRY AND, THEREFORE, I N OUR OPINION, THE ABOVE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT WOULD NOT BE APPLICABLE. IN VIEW OF THE ABOVE, WE, RELYING UPON THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASES OF S UNBEAM AUTO LTD. (SUPRA), VIKAS POLYMERS (SUPRA), ANIL KUMAR SHARMA (SUPRA) AND HINDUSTAN MARKETING & ADVERTISING CO.LTD. (SUPRA), HOLD THAT THE CIT WAS NOT JUSTIFIED IN SETTING ASIDE THE ASSESSMENT O RDER. WE, THEREFORE, QUASH THE ORDER PASSED BY THE LEARNED CIT UNDER SEC TION 263 AND RESTORE THE ASSESSMENT ORDER DATED 30 TH DECEMBER, 2009. 23. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. DECISION PRONOUNCED IN THE OPEN COURT ON 28 TH FEBRUARY, 2013. SD/- SD/- ( (( (A.D.JAI A.D.JAI A.D.JAI A.D.JAIN NN N) )) ) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT DATED : 28.02.2013 VK. COPY FORWARDED TO: - 1. APPELLANT : SHRI ABHINAV KUMAR MITTAL, SHRI ABHINAV KUMAR MITTAL, SHRI ABHINAV KUMAR MITTAL, SHRI ABHINAV KUMAR MITTAL, V VV V- -- -287, RAJOURI GARDEN, NEW DELHI. 287, RAJOURI GARDEN, NEW DELHI. 287, RAJOURI GARDEN, NEW DELHI. 287, RAJOURI GARDEN, NEW DELHI. 2. RESPONDENT : COMMISSIONER OF INCOME TAX DELHI, COMMISSIONER OF INCOME TAX DELHI, COMMISSIONER OF INCOME TAX DELHI, COMMISSIONER OF INCOME TAX DELHI, CENTRAL CENTRAL CENTRAL CENTRAL- -- -1, NEW DELHI. 1, NEW DELHI. 1, NEW DELHI. 1, NEW DELHI. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR