VIKRAM GOYAL, Jaipur V. DCIT, Jaipur

ITA 174/JPR/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2121 (ITAT-JAIPUR)
• Duration Of Justice: 5 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2006-2007
• Appeal Filed On: 01-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROLLY AGARWAL CIT DHK
• Keywords: Unexplained investment; Search and seizure; Loose papers; Reassessment proceedings
• Section: 143(3); 153A; 132; 15

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS [KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YAD AV, AM VK;DJ VIHY LA-@ ITA NO. 174/JP/2017 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2006-07. DR. VIKRAM GOYAL, SAYEED KA GATTA, TONK ROAD, JAIPUR. CUKE VS. THE DCIT, CENTRAL CIRCLE-1, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. ACZPG 5369 B VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI MANISH AGARWAL (C.A) JKTLO DH VKSJ LS@ REVENUE BY : SMT. ROLLY AGARWAL (CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 10.08.2017. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 24/08/2017. VKNS'K@ ORDER PER SHRI KUL BHARAT, JM. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. CIT(APPEALS)- 4, JAIPUR DATED 30.11.2016 PERTAINING TO ASSESSMENT YEAR 2006-07. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. CIT(A) HAS GROSSLY ERRED IN UPHOLDING THE ASSESSMENT COMPLETED U/S 153A OF THE INCOME TAX ACT, 1961 BY THE LD. AO WHEN NO INCRIMIN ATING PAPER WAS FOUND AS A RESULT OF SEARCH PERTAINING TO THE YEAR UNDER APPEAL, THUS THE ADDITIONS SUSTAINED IN THE CONSEQUENT ORDER PAS SED DESERVE TO BE DELETED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) HAS GROSSLY ERRED IN SUSTAINING THE DISALLOWANCE OF RS. 72,000/- ON ACCOUNT OF RENT PAID WITHOUT APPRECIATING THE GUINNESS OF T HE CLAIM AND FACTS BROUGHT ON RECORD BY THE ASSESSEE, THUS THE DISALLO WANCE SUSTAINED DESERVES TO BE DELETED. 2 ITA NO. 174/JP/2017. DR. VIKRAM GOYAL, JAIPUR. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) HAS GROSSLY ERRED IN SUSTAINING AN ADDITION OF RS. 2,60 ,713/- BY CONSIDERING THE SAME AS UNEXPLAINED INVESTMENT IN THE CONSTRUCT ION OF HOUSE ARBITRARILY. 3.1 THAT THE LD. CIT(A) HAS FURTHER ERRED IN IGNORI NG THE FACTS BY NOT ALLOWING THE CREDIT OF RS. 3,33,800/- BEING THE AMO UNT WITHDRAWN BY APPELLANTS WIFE FOR CONSTRUCTION PURPOSE PARTICULA RLY WHEN THE LD. CIT(A) HAS HIMSELF ADMITTED THE SAID FACT WHILE OBS ERVING AT PAGE 22 PAR 3.2.2 OF HIS ORDER AS UNDER:- .. ASSESSEE IS UNABLE TO JUSTIFY THE RENT PAYMEN T OF RS. 72,000/- TO HIS FATHER WHEN HE AND HIS WIFE HAVE IN CURRED ENTIRE EXPENDITURE TOWARDS THE COST OF CONSTRUCTION OF THE HOUSE. THEREFORE, THE COST OF CONSTRUCTION DECLARED BY THE ASSESSEE IS BASED ON ACTUAL EXPENDITURE INCURRED AND DULY ACCOUNTED F OR IN THE BOOKS OF ACCOUNT OF THE ASSESSEE THUS THE ADDITION SUSTAINED DESERVES TO BE DELETED. 4. THAT THE APPELLANT CRAVES THE RIGHT TO ADD, DELE TE, AMEND OR ABANDON ANY OF THE GROUNDS OF APPEAL EITHER BEFORE OR AT TH E TIME OF HEARING OF APPEAL. 2. BRIEFLY STATED THE FACTS ARE THAT THE, A SEARCH & SEIZURE OPERATION WAS CARRIED OUT U/S 132(1) OF THE INCOME TAX ACT 1961 ON 08/06/ 2011 AT THE DIFFERENT PREMISES OF JAIPUR HOSPITAL GROUP. RESIDENTIAL PREMISES OF THE ASSESSEE WERE ALSO COVERED UNDER THE SEARCH AS HE WAS ASSOCIATED WITH JAIPUR H OSPITAL. A NOTICE U/S 153A OF THE ACT WAS ISSUED TO THE ASSESSEE ON 15/06/2012. IN RESPONSE THERETO THE ASSESSEE FURNISHED HIS RETURN OF INCOME ON 24/12/20 12 DECLARING TOTAL INCOME OF RS. 614065/- SAME AS WAS DECLARED AS ORIGINAL RETURN FI LED ON 31/10/2006/-. SUBSEQUENTLY, THE ASSESSMENT WAS FRAMED U/S 143(3) READ WITH SECTION 153A OF THE ACT THEREBY THE ASSESSING OFFICER MADE ADDITION ON ACCOUNT OF DISALLOWANCE ON RENT 3 ITA NO. 174/JP/2017. DR. VIKRAM GOYAL, JAIPUR. EXPENSES OF RS. 72,000/- AND UNDISCLOSED INVESTMEN T IN HOUSE CONSTRUCTION OF RS. 16,37,320/- AND DISALLOWANCE OF OTHER CASH UNVERIFI ABLE EXPENSES OF RS. 1,00,000/-. AGAINST THIS, THE ASSESSEE PREFERRED AN APPEAL BEFO RE LD. CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS PARTLY ALLOWED THE APPE AL. WHILE PARTLY ALLOWING THE APPEAL, LD. CIT(A) DELETED THE ADDITION MADE ON ACC OUNT OF UNVERIFIABLE CASH EXPENSES OF RS. 1,00,000/- AND REDUCED THE ADDITION MADE ON ACCOUNT OF UNDISCLOSED INVESTMENT IN HOUSE CONSTRUCTION TO RS . 2,60,713/-. 3. AGAINST THIS, THE ASSESSEE IS IN PRESENT APPEAL. 4. GROUND NO. 1, IS AGAINST LEGALITY OF THE ASSESSMENT U/S 153A. 4.1 LD. COUNSEL FOR THE ASSESSEE REITERATED THE SU BMISSIONS AS MADE IN THE WRITTEN BRIEF. THE SUBMISSIONS OF THE ASSESSEE ARE REPRODUCED AS UNDER:- THE GROUND OF APPEAL AS TAKEN READS AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE LD. CIT (A) HAS GROSSLY ERRED IN UPHOLDING THE ASSESSMENT COMPLETED U/S 153A OF THE INCOME TAX ACT, 1961 BY THE LD.AO WHEN NO INCRIMINA TING PAPER WAS FOUND AS A RESULT OF SEARCH PERTAINING TO THE YEAR UNDER APPEAL, THUS THE ADDITIONS SUSTAINED IN THE CONSEQUENT ORDER PAS SED DESERVES TO BE DELETED. AT THE OUTSET, YOUR HONOURS KIND ATTENTION IS INVI TED TO THE FACT THAT THE LD. AO HAS COMPLETED THE IMPUGNED ASSESSMENT U/S 153A OF THE I NCOME TAX ACT, 1961 WITHOUT REFERRING TO A SINGLE PIECE OF PAPER WHATSOEVER FOU ND/SEIZED DURING THE COURSE OF SEARCH FROM THE POSSESSION OF THE ASSESSEE OR FROM ELSEWHERE PERTAINING TO THE ASSESSEE AND ASSESSMENT YEAR UNDER APPEAL, AND THE ADDITIONS WERE MADE SOLELY ON THE BASIS OF SO CALLED ADMISSION OF ASSESSEE IN THE STATEMENTS RECORDED DURING THE COURSE OF SEARCH WITHOUT BRINGING ON RECORD ANY COR ROBORATIVE MATERIAL UNEARTHED AS A RESULT OF SEARCH OR COLLECTED DURING THE COURSE O F ASSESSMENT PROCEEDINGS TO SUPPORT THE ALLEGATION OF UNEXPLAINED INVESTMENT IN THE CONSTRUCTION OF HOUSE. IT IS ALSO A MATTER OF FACT THAT LD. CIT(A) WHILE DISMISS ING THIS GROUND OF APPEAL, NOWHERE HAD ALLEGED THAT THE ADDITIONS WERE MADE ON THE BAS IS OF LOOSE PAPERS OR DOCUMENTS 4 ITA NO. 174/JP/2017. DR. VIKRAM GOYAL, JAIPUR. FOUND/ SEIZED AS A RESULT OF SEARCH AND SIMPLY REJE CTED THE PLEA OF THE ASSESSEE FOR THE SOLE REASON THAT THE SLP HAS BEEN ACCEPTED BY T HE HONBLE APEX COURT AGAINST THE DECISION OF HONBLE DELHI HIGH COURT DELIVERED IN THE CASE OF KABUL CHAWLA 281 CTR 45. IT IS HUMBLY SUBMITTED THAT, THE IMPUGNED ASSESSMEN T ORDER OF LD. AO SUFFERS FROM SERIOUS ERROR IN-AS-MUCH-AS, IT IS NOT BASED ON A S INGLE LOOSE PAPER FOUND / SEIZED AS THE RESULT OF SEARCH CONDUCTED IN THE CASE OF ASSES SEE; ON THE OTHER HAND AND CONTRARY TO THE LAW, THIS ORDER IS CLEARLY IN THE N ATURE OF REGULAR ASSESSMENT ORDER AND THEREFORE, COULD NOT HAVE BEEN MADE UNDER THE G ARB OF SECTION 153A PARTICULARLY WHEN THE RETURNED INCOME WAS ACCEPTED BY DEPARTMENT AND THE CASE OF ASSESSEE WAS NOT PICKED UP FOR SCRUTINY AND THUS ASSESSMENT FOR THE YEAR UNDER APPEAL IN THE CASE OF ASSESSEE WAS NOT PENDING BEFORE THE LD. AO, AS ON THE DATE OF SEARCH. THUS, WHEN NO ASSESSMENT PROCEEDINGS PERTAINING TO THE YE AR UNDER APPEAL WERE PENDING BEFORE THE LD. AO, NO PROCEEDINGS COULD HAVE ABATED DUE TO THE SEARCH AND THEREFORE, CANNOT BE CONSIDERED AS MERGED INTO THE ASSESSMENT U/S 153A. IT MAY KINDLY BE NOTED THAT, THE RETURNED INCOME WAS PROCE SSED AND ACCEPTED BY THE DEPARTMENT AND THE CASE WAS NOT PICKED FOR SCRUTINY , AND THUS THE ASSESSMENT IN THE CASE OF ASSESSEE FOR THE YEAR UNDER APPEAL STOOD AL READY FINALIZED. NO PROCEEDINGS RELATING TO THE ASSESSMENT WITH RESPECT TO THE ASSE SSMENT YEAR UNDER APPEAL WERE PENDING BEFORE THE LD. AO AS ON THE DATE OF SEARCH, AND THEREFORE, THE LD. AOS JURISDICTION WAS MERELY LIMITED TO THE MATERIAL FOU ND DURING THE COURSE OF SEARCH AND HE COULD NOT HAVE COMPLETED THE ASSESSMENT U/S 153A WITHOUT REFERRING TO ANY MATERIAL FOUND / SEIZED DURING THE COURSE OF SEARCH . THEREFORE, IT WAS NOT PERMISSIBLE FOR THE LD. AO TO MAKE REGULAR SCRUTINY ASSESSMENT UNDER THE GARB OF ASSESSMENT U/S 153A IN VIEW OF THE FACT THAT THE RETURNED INCO ME WAS ACCEPTED AND THE CASE WAS NOT SELECTED FOR SCRUTINY. LEGALLY VIEWING THE MATTER, IT CAN BE SAID THAT IT IS A SETTLED PROPOSITION OF LAW BASED ON NUMEROUS JUDGMENTS OF HONBLE HIGH COURTS OF THE NATION (INCLUDING JURISDICTIONAL HIGH COURT) AND A CATENA OF ITAT JUDGMENTS THAT, NO ADDITIONS COULD BE MADE IN THE ASSESSMENT U/S 153A FOR A PARTICULAR ASSESSMENT YEA R IF THERE IS NO INCRIMINATING 5 ITA NO. 174/JP/2017. DR. VIKRAM GOYAL, JAIPUR. MATERIAL FOUND AS A RESULT OF SEARCH, AND ASSESSMEN T U/S 153A CANNOT BE EMPLOYED AS A SUBSTITUTE FOR REGULAR ASSESSMENT. THUS, IT IS SUBMITTED THAT THE ADDITIONS MADE VIDE IMPUGNED ASSESSMENT COULD NOT HAVE BEEN MADE A T ALL IN ASSESSMENT MADE U/S 153A ON INCOME WHICH ALREADY STANDS ACCEPTED ESPECI ALLY WHEN NO INCRIMINATING MATERIAL IN THIS REGARD WAS FOUND AS A RESULT OF SE ARCH. THEREFORE, IN THESE FACTS AND CIRCUMSTANCES AND IN VIEW OF THE WELL-ESTABLISHED LAW IN THIS REGARD, THE LD. AO HAS GROSSLY ERRED IN COM PLETING THE ASSESSMENT U/S 153A OF THE INCOME TAX ACT, 1961. THIS POSITION HAS BEEN SETTLED BY A NUMBER OF JUDIC IAL PRONOUNCEMENTS, FEW OF WHICH ARE REPRODUCED HEREWITH: ALL CARGO GLOBAL LOGISTIC LTD. VS. DCIT 137 ITD 287 (MUM)(SB)- UPHELD BY BOMBAY HIGH COURT (APB ) RELEVANT EXTRACTS: PARA 58 OF SB DECISIONS: THUS, QUESTION NO.1 BEFORE US IS ANSWERED AS UNDER : (A) IN ASSESSMENTS THAT ARE ABATED, THE AO RETAINS THE ORIGINAL JURISDICTION AS WELL AS JURISDICTION CONFERRED ON HIM U/S 153A FOR WHICH AS SESSMENTS SHALL BE MADE FOR EACH OF THE SIX ASSESSMENT YEARS SEPARATELY ; (B) IN OTHER CASES , IN ADDITION TO THE INCOME THAT HAS ALREADY BEEN A SSESSED, THE ASSESSMENT U/S 153A WILL BE MADE ON THE BASIS OF INCRIMINATING MATERIAL , WHICH IN THE CONTEXT OF RELEVANT PROVISIONS MEANS - (I) BOOKS OF ACCOUNT, O THER DOCUMENTS, FOUND IN THE COURSE OF SEARCH BUT NOT PRODUCED IN THE COURSE OF ORIGINAL A SSESSMENT, AND (II) UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH. 6 ITA NO. 174/JP/2017. DR. VIKRAM GOYAL, JAIPUR. CIT VS KABUL CHAWLA DELHI HIGH REPORTED IN 234 TAX MAN 300(DELHI) VIDE ITA NOS. 707/2014 AND OTHERS, DATED 28.8.2015, WHEREIN THE HONBLE DE LHI HIGH COURT HAS REITERATED THE ABOVE SETTLED LEGAL PROPOSITION THAT SINCE NO INCRIMINATING MATERIAL WAS UNEARTHED DURIN G THE SEARCH, NO ADDITIONS COULD HAVE BEEN MADE TO THE IN COME ALREADY ASSESSED . . SUMMARY OF LEGAL PROPOSITIONS AND THE CONCLUSION OF JUDGEMENT OF HONBLE HIGH COURT IS AS FOLLOWS: SUMMARY OF THE LEGAL POSITION: 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 AFOREM ENTIONED DECISIONS, THE LEGAL POSITION THAT EMERGES IS AS UNDER: I. ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF T HE ACT, NOTICE UNDER SECTION 153 A (1) WILL HAVE TO BE MANDATORILY ISSUED TO THE PERSO N SEARCHED REQUIRING HIM TO FILE RETURNS FOR SIX AYS IMMEDIATELY PRECEDING THE PREVI OUS YEAR RELEVANT TO THE AY IN WHICH THE SEARCH TAKES PLACE. II. ASSESSMENTS AND REASSESSMENTS PENDING ON THE DA TE 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 AFOREMENTION ED SIX YEARS IN SEPARATE ASSESSMENT ORDERS FOR EACH OF THE 7 ITA NO. 174/JP/2017. DR. VIKRAM GOYAL, JAIPUR. SIX YEARS. IN OTHER WORDS THERE WILL BE ONLY ONE AS SESSMENT ORDER IN RESPECT OF EACH OF THE SIX AYS IN WHICH BOTH THE DISCLOSED AND THE UN DISCLOSED INCOME WOULD BE BROUGHT TO TAX. IV. ALTHOUGH SECTION 153 A DOES NOT SAY THAT ADDITI ONS 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 RELA TED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSESSMENT CAN BE ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOUSLY AN ASSESSMENT HAS TO BE MADE UN DER THIS SECTION ONLY ON THE BASIS OF SEIZED MATERIAL. V. IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE CO MPLETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESSMEN T CAN BE MADE. THE WORD 'ASSESS' IN SECTION 153 A IS RELATABLE TO ABATED PR OCEEDINGS (I.E. THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD 'REASSESS' TO COMPLETE D ASSESSMENT PROCEEDINGS. VI. INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, T HE JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UNDER SECTIO N 153A MERGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY FOR EACH AY ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTHER MATERIAL EXISTING OR BROUG HT ON THE RECORD OF THE AO. VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WITH B Y THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153 A ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITIO N OF DOCUMENTS OR UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN 8 ITA NO. 174/JP/2017. DR. VIKRAM GOYAL, JAIPUR. THE COURSE OF SEARCH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. CONCLUSION 38. THE PRESENT APPEALS CONCERN AYS, 2002-03, 2005- 06 AND 2006-07.ON THE DATE OF THE SEARCH THE SAID ASSESSMENTS ALREADY STOOD COMPL ETED. SINCE NO INCRIMINATING MATERIAL WAS UNEARTHED DURING THE SEARCH, NO ADDITI ONS COULD HAVE BEEN MADE TO THE INCOME ALREADY ASSESSED. 39. THE QUESTION FRAMED BY THE COURT IS ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. RAJASTHAN HIGH COURT IN THE CASE OF JAI STEEL (INDIA) VS ACIT REPORTED IN 259 CTR (RAJ) 281 .THE REQUIREMENT OF ASSESSMENT OR REASSESSMENT UN DER THE SAID SECTION HAS TO BE READ IN THE CONTEXT OF SECTIONS 132 OR 132A, INASMUCH AS, I N CASE NOTHING INCRIMINATING IS FOUND ON ACCOUNT OF SUCH SEARCH OR REQUISITION, THEN THE QUE STION OF REASSESSMENT OF THE CONCLUDED ASSESSMENTS DOES NOT ARISE, WHICH WOULD REQUIRE MOR E REITERATION AND IT IS ONLY IN THE CONTEXT OF THE ABATED ASSESSMENT UNDER SECOND PROVISO WHICH IS REQUIRED TO BE ASSESSED. ....... ....... PARA 26 OF THE JUDGMENT : THE PLEA RAISED ON BEHALF OF THE ASSESSEE THAT AS THE FIRST PROVISO PROVIDES FOR ASSESSMENT OR REASSESSMENT OF THE TOTA L INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN THE SIX ASSESSMENT YEARS, IS ME RELY READING THE SAID PROVISION IN ISOLATION 9 ITA NO. 174/JP/2017. DR. VIKRAM GOYAL, JAIPUR. AND NOT IN THE CONTEXT OF THE ENTIRE SECTION. THE WORDS 'ASSESS' OR 'REASSESS' HAVE BEEN USED AT MORE THAN ONE PLACE IN THE SECTION AND A HARMONI OUS CONSTRUCTION OF THE ENTIRE PROVISION WOULD LEAD TO AN IRRESISTIBLE CONCLUSION THAT THE WORD 'ASSESS' HAS BEEN USED IN THE CONTEXT OF AN ABATED PROCEEDINGS AND REASSESS H AS BEEN USED FOR COMPLETED ASSESSMENT PROCEEDINGS, WHICH WOULD NOT ABATE AS TH EY ARE NOT PENDING ON THE DATE OF INITIATION OF THE SEARCH OR MAKING OF REQUISITION A ND WHICH WOULD ALSO NECESSARILY SUPPORT THE INTERPRETATION THAT FOR THE COMPLETED ASSESSMEN TS, THE SAME CAN BE TINKERED ONLY BASED ON THE INCRIMINATING MATERIAL FOUND DURING TH E COURSE OF SEARCH OR REQUISITION OF DOCUMENTS . AFTER CONSIDERING INTER ALIA ABOVE JUDICIAL PRONOUN CEMENTS, HONBLE ITAT MUMBAI BENCH IN THE CASE OF IDEAL APPLIANCES CO. PVT. LTD VS DCIT HAS DECIDED THE ISSUE IN FAVOUR OF ASSESSEE HOLDING AS UNDER: 9. FROM THE ABOVE SETTLED LEGAL POSITION OF THE ISS UE THAT IN THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND DURING SEARCH, ADDITIONS MADE ON THE ASSESSED INCOME ARE UNSUSTAINABLE IN LAW, WE ARE OF THE CONSIDERED OPINION THAT THE ADDI TIONS MADE IN THE INSTANT CASE ARE NOT SUSTAINABLE AND ACCORDINGLY, WE DELETE THE SAME. CO NSIDERING OUR DECISION ON THE LEGAL ISSUE IN FAVOUR OF THE ASSESSEE, THE OTHER GROUNDS DEMAND NO SPECIFIC ADJUDICATION. THUS, ON THE LEGAL GROUND THE ASSESSEE SUCCEEDS AND REST OF THE GROUNDS ARE DISMISSED AS ACADEMIC. 9.1. FURTHER, REGARDING THE NON-ABATED NATURE OF TH E ASSESSMENTS RELATING TO THE AYS 2007- 2008, 2008-2009 AND 2009-2010, IT IS A DECIDED ISSU ED THAT THE TIME LIMIT FOR THE ISSUE OF NOTICE U/S 143(2) IN THE SAID AYS SINCE EXPIRED ON 30.9.2008 AND THEY CONSTITUTE NON-ABATED ASSESSMENTS AND THEREFORE, THE ASSESSMENTS FOR THOS E AYS HAVE TO BE REASSESSED UNDER THE 10 ITA NO. 174/JP/2017. DR. VIKRAM GOYAL, JAIPUR. SPECIAL PROVISIONS IN THE LIGHT OF THE INCRIMINATIN G MATERIAL SEIZED DURING THE SEARCH. THE ABOVE SAID RATIO WAS ALSO FOLLOWED BY THE TRIBUNAL IN THE CASE OF GURINDER SINGH BAVA VS. CIT (SUPRA) WHEREIN IT WAS HELD THAT .....WHERE THE AS SESSMENT HAD BEEN COMPLETED UNDER SUMMARY SCHEME UNDER SECTION 143(1) AND TIME LIMIT FOR ISSUE OF NOTICE UNDER SECTION 143(2) HAD EXPIRED ON THE DATE OF SEARCH.............THERE WAS NO ASSESSMENT PENDING.............IN SUCH A CASE THERE WAS NO QUESTION OF ABATEMENT. THEREFORE, ADDITION COULD BE MADE ONLY ON THE BASIS OF INCRIMINATING MATERIAL FOUND DURING SEARCH . THIS HONBLE BENCH IN THE CASE OF DAMODAR DAS MODI HAS ALSO EXPRESSED THE SAME VIEW. IN VIEW OF ABOVE, IT IS REQUESTED BEFORE YOUR HONOUR THAT SINCE NO INCRIMINATING DOCUMENTS WERE FOUND AS A RESULT OF SEARCH AND NO A SSESSMENT WAS ABATED, ADDITION MADE BY AO IS NOT JUSTIFIED AND DESERVES TO BE DELE TED. 4.2 ON THE CONTRARY, LD. DEPARTMENTAL REPRESENTATIV ES OPPOSED THE SUBMISSIONS AS MADE IN THE WRITTEN SUBMISSIONS AND THE ORAL ARG UMENTS IN SUPPORT THEREOF AS MADE BY THE LD. COUNSEL FOR THE ASSESSEE. 4.3 WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED TH E MATERIAL AVAILABLE ON RECORD. THERE IS NO DISPUTE WITH REGARD TO THE FAC T THAT NO INCRIMINATING MATERIAL IS FOUND ON BASIS THAT THE ASSESSMENT IS FRAMED U/S 15 3A OF THE ACT. IT IS ALSO NOT IN DISPUTE THAT NO PROCEEDINGS WERE PENDING ON THE DAT E OF SEARCH AND THE TIME LIMIT FOR TAKING THE CASE FOR SCRUTINY ASSESSMENT HAS ALS O EXPIRED. 5. HOWEVER, LD. CIT(A) DECIDED THE ISSUED BY OBSERV ING AS UNDER:- APART FROM ABOVE, THERE ARE SEVERAL DECISIONS OF V ARIOUS JUDICIAL AUTHORITIES WHERE IT HAS BEEN HELD THAT IN THE ABSENE OF ANY IN CRIMINATING MATERIAL FOUND 11 ITA NO. 174/JP/2017. DR. VIKRAM GOYAL, JAIPUR. DURING SEARCH, ADDITIONS MADE ON THE ASSESSED INCOM E AS UNSUSTAINABLE IN LAW. SOME OF THESE DECISIONS ARE DISCUSSED IN THE FOLLOWING PARAGRAPHS: (I) IN THE CASE OF CIT V. KABUL CHAWLA REPORTED IN 281 CTR 45, DELHI, IT HAS BEEN HELD BY THE HON'BLE DELHI HIGH COURT THAT: 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 T HE AFOREMENTIONED 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 ISSUE D TO THE PERSON SEARCHED REQUIRING HIM TO FILE RETURNS FOR SIX AYS IMMEDIATELY PRECEDING THE PREVIOUS YEAR RELEVANT TO THE AY IN W HICH THE SEARCH TAKES PLACE. II. ASSESSMENTS AND REASSESSMENTS PENDING ON THE D ATE OF THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH AYS WILL HAV E 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 SEAR CH TAKES PLACE. THE AO HAS THE POWER TO ASSESS AND REASSESS THE TOTAL INCOME OF THE AFOREMENTIONED SIX YEARS IN SEPARATE ASSESSMENT ORD ERS FOR EACH OF THE SIX YEARS. IN OTHER WORDS THERE WILL BE ONLY ON E ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX AYS IN WHICH BOTH THE D ISCLOSED AND THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX. IV. ALTHOUGH SECTION 153 A DOES NOT SAY THAT ADDITI ONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE O F THE SEARCH, OR OTHER POST-SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE AO WHICH CAN BE RELATED TO THE EVIDENCE FOUND, IT DOES NOT M EAN THAT THE ASSESSMENT CAN BE ARBITRARY OR MADE WITHOUT ANY RE LEVANCE OR NEXUS 12 ITA NO. 174/JP/2017. DR. VIKRAM GOYAL, JAIPUR. WITH THE SEIZED MATERIAL. OBVIOUSLY AN ASSESSMENT H AS TO BE MADE UNDER THIS SECTION ONLY ON THE BASIS OF SEIZED MATE RIAL. V. IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE C OMPLETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REAS SESSMENT CAN BE MADE. THE WORD ASSESS IN SECTION 153 A IS RELATAB LE TO ABATED PROCEEDINGS (I.E. THOSE PENDING ON THE DATE OF SEAR CH) AND THE WORD REASSESS TO COMPLETED ASSESSMENT PROCEEDINGS. VI. INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, THE JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UND ER SECTION 153A MERGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY FOR EACH AY ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTHER MATERIAL EXISTING OR BROUGHT ON THE RECORD OF THE A O. VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153 A ONLY ON T HE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS OR UNDISCLOSED INCOME OR P ROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL A SSESSMENT. (II) IN THE CASE OF ACIT V. PACL INDIA LTD. NEW DELHI, THE HON'BLE ITAT, F. BENCH, DELHI HAS CONSIDERED THE VARIOUS DECISIONS O F DIFFERENT JUDICIAL AUTHORITIES AND IN PARA 10 OF THE ORDER HAS HELD TH AT: ' THEREFORE, THE QUESTION ARISES WHETHER AO CAN MAKE ANY ADDITION IN THE REASSESSMENT PROCEEDINGS U/S 153(A) AFTER MAKING IN QUIRIES WHICH ARE NOT SUGGESTED BY ANY DOCUMENT OR ASSET SEIZED DURING TH E SEARCH. IT DEPENDS ON THE NATURE OF ADDITION. THE FACTS AND CIRCUMSTANCES OF THE ASSESSEE CLEARLY SHOW THAT NO INCRIMINATING DOCUMENT FOUND RELATING TO THE LAND DEVELOPMENT EXPENSES DEBITED IN THE BOOKS OF ACCOUN TS. NO MATERIAL WAS ON 13 ITA NO. 174/JP/2017. DR. VIKRAM GOYAL, JAIPUR. THE RECORD ON THAT BASIS WHICH INCOME OF ASSESSEE C OULD BE FURTHER ASSESSED BY ASSESSING OFFICER. THEREFORE, THE ASSESSING OFFI CER HAS NO JURISDICTION TO MAKE OR TO RESORT TO ROVING AND FISHING INQUIRIES T O FIND OUT WHETHER ANY INCOME HAS ESCAPED ASSESSMENT DURING THESE REASSESS MENT PROCEEDINGS. PARTICULARLY, WHEN THERE IS NO INCRIMINATING MATERI AL FOUND AND SEIZED DURING THE COURSE OF SEARCH U/S 132(1) OF THE ACT AND NOTH ING IS AVAILABLE IN RECORD TO REASSESS THE INCOME OF ASSESSEE. IN VIEW OF THE ABOVE, THIS IS NOT A FIT CASE FOR MAKING THE ADDITION IN THE YEAR UNDER CONSIDERA TION, THE SAME ARE DELETED' (III) IN THE CASE OF M/S IDEAL APPLIANCE COMPANY PVT. L TD. V. DCIT CENTRAL CIRCLE-44, MUMBAI, THE FOLLOWING LEGAL ISSUES WERE RAISED BEFORE THE HON'BLE ITAT, I BENCH, MUMBAI: '1. THE LD. CIT (A) FAILED TO APPRECIATE THE FACT T HAT NO INCRIMINATING DOCUMENTS/EVIDENCES WERE FOUND DURING THE COURSE OF SEARCH OF THIRD PARTY, AND HENCE, RE-COMPUTING THE INCOME U/S 153A IS BAD IN LAW AND LIABLE TO BE QUASHED. 2. THE LD. CIT (A) FAILED TO APPRECIATE THE FACT TH AT ORIGINAL ASSESSMENT WAS MADE U/S 143 (3) VIDE ORDER 31ST AUGUST 2007 AFTER CONSIDERING ALL THE DOCUMENTS AND MATERIALS ON RECORD AND DUE APPLICATI ON FF MIND AND HENCE RE- COMPUTING THE INCOME BY MERELY CHANGING HEAD OF INC OME FOR THE SAID UNDER THE GRAB OF SECTION 153A BASED ON SAME DOCUMENTS AN D MATERIALS, IS BAD IN LAW AND ORDER IS LIABLE TO BE QUASHED, 3. THE LD. CIT (A) ERRED IN CONFIRMING THE ACTION O F THE AO REASSESSING THE INCOME U/S 143 (3) R.W.S 153A, WITHOUT APPRECIATING THE FACT THAT ONLY PENDING ASSESSMENT OBIT AND NOT THE COMPLETED ASSES SMENTS AND HENCE THE ORDER U/S 143 (3) R.W.S 153A IS BAD IN LAW AND LIAB LE TO BE QUASHED. 14 ITA NO. 174/JP/2017. DR. VIKRAM GOYAL, JAIPUR. 4. THE LD. CIT (A) ERRED IN NOT ALLOWING THE DECISI ON OF JURISDICTIONAL HIGH COURT WHEREIN IT WAS HELD THAT NO ADDITION CAN BE MADE U/ S 153A IF NO INCRIMINATING MATERIAL/DOCUMENTS ARE FOUND DURING SEARCH. THEREF ORE, THE ORDER OF THE CIT (A) IS BAD IN LAW.' (IV) ON THESE ISSUED, IT WAS HELD BY THE HONBLE ITAT T HAT: 9. FROM THE ABOVE SETTLED LEGAL POSITION OF THE ISS UE THAT IN THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND DURING SEARCH, ADDITIO NS MADE ON THE ASSESSED INCOME ARE UNSUSTAINABLE IN LAW, WE ARE OF THE CONS IDERED OPINION THAT THE ADDITIONS MADE IN THE INSTANT CASE ARE NOT SUSTAINA BLE AND ACCORDINGLY, WE DELETE THE SAME. CONSIDERING OUR DECISION ON THE L EGAL ISSUE IN FAVOUR OF THE ASSESSEE, THE OTHER GROUNDS DEMAND NO SPECIFIC ADJU DICATION. THUS, ON THE LEGAL GROUND THE ASSESSEE SUCCEEDS AND REST OF THE GROUNDS ARE DISMISSED AS ACADEMIC. 9.1 FURTHER, REGARDING THE NON-ABATED NATURE OF THE ASSESSMENTS RELATING TO THE AYS 2007-08, 2008-09 AND 2009-10, IT IS A DE CIDED ISSUED THAT THE TIME LIMIT FOR THE ISSUE OF THE NOTICE U/S 143 (2) IN TH E SAID AYS SINCE EXPIRED ON 30.09.2008 AND THEY CONSTITUTE NON-ABATED ASSESSMEN TS AND THEREFORE, THE ASSESSMENTS FOR THOSE AYS HAVE TO BE REASSESSED UND ER THE SPECIAL PROVISIONS IN THE LIGHT OF THE INCRIMINATING MATERIAL SEIZED D URING THE SEARCH. THE ABOVE SAID RATIO WAS ALSO FOLLOWED BY THE TRIBUNAL IN THE CASE OF GURINDER SINGH BAWA VS. CIT (SUPRA) WHEREIN IT WAS HELD THAT ..... ..................WHERE THE ASSESSMENT HAD BEEN COMPLETED UNDER SUMMARY SCHEME UNDER SECTION 143 (1) AND TIME LIMIT FOR ISSUE OF NOTICE UNDER SECTIO N 143 (2) HAD EXPIRED ON THE DATE OF SEARCH................THERE WAS NO ASSESSME NT PENDING ............. IN SUCH A CASE THERE WAS NO QUESTION OF ABATEMENT. THEREFORE , ADDITION COULD BE MADE ONLY ON THE BASIS OF INCRIMINATING MATERIAL FOUND D URING SEARCH.' 15 ITA NO. 174/JP/2017. DR. VIKRAM GOYAL, JAIPUR. (V) WHILE GIVING THESE DECISIONS, THE HON''BLE ITAT, MUMBAI AS WELL AS THE HON'BLE ITAT, DELHI BENCH HAS REFERRED TO THE DECIS ION OF THE HON'BLE MUMBAI COURT IN THE CASE OF ALL CARGO GLOBAL LOGIST ICS LTD. VS. DCIT, CENTRAL CIRCLE-44, MUMBAI AND THE DECISION OF THE H ON'BLE DELHI HIGH COURT IN THE CASE OF CIT V. KABUL CHAWLA IN ITA NO. 707/2014 DATED 22.08.2015. HERE IT IS PERTINENT TO MENTION THAT T HE DEPARTMENT HAS NOT ACCEPTED THE DECISIONS OF HON'BLE MUMBAI HIGH C OURT IN THE CASE OF M/S ALL CARGO GLOBAL LOGISTICS AS WELL AS CONTINENT AL WAREHOUSING (NHAVA SHEVA) LTD. AND SLP HAS BEEN FILED BEFORE TH E HON'BLE SEPRME COURT. THE HON'BLE SUPREME COURT HAS GRANTED LEAVE VIDE ORDER DATED 12.10.2015 AS REPORTED IN 64 TAXMANN.COM 34 (SC). SIMILARLY, IN THE CASE OF KABUL CHAWLA SLP HAS ALSO BEEN FILED. IN VIEW OF FACTS & CIRCUMSTANCES MENTIONED ABOVE AN D ALSO TAKING NOTE OF SLP ADMITTED BY HON'BLE APEX COURT IN CASE OF (I) A LL CARGO GLOBAL LOGISTICS (II) CONTINENTAL WAREHOUSING (NHAVA SHEVA) LTD. & ( III) KABUL CHAWLA, ASSESSEE'S APPEAL IN GR. NO. 1 IS HEREBY DISMISSED. 5.1 FROM THE ABOVE, IT IS EVIDENT THAT LD. CIT(A) D ID NOT ACCEPT THE SUBMISSIONS OF THE ASSESSEE, ON THE GROUND THAT THE REVENUE HAD FILED SPECIAL LEAVE PETITION BEFORE THE HONBLE SUPREME COURT. IT IS BROUGHT TO OUR NOTICE THAT SPECIAL LEAVE PETITION FILED BY THE REVENUE IN THE CASE OF CIT VS. KABUL CHAWLA HAS BEEN DISMISSED BY THE HONBLE SUPREME COURT. UNDER THES E FACTS, WE ARE OF THE VIEW THAT LD. CIT(A) WAS NOT JUSTIFIED IN REJECTING THE GROUN D OF THE ASSESSEE. THE HONBLE DELHI HIGH COURT IN THE CASE OF PR. COMMISSIONER OF INCOME TAX VS. MEETA GUTGUTIA DECIDED THIS ISSUE AGAINST THE REVENUE BY THE FOLL OWING THE JUDGMENT RENDERED IN THE CASE OF CIT VS. KABUL CHAWLA (2015) 281 CTR (DEL) 45 . THE HONBLE HIGH COURT HELD THAT SECTION 153A IS TITLED UNDER ASSESSMENT IN CASE OF 16 ITA NO. 174/JP/2017. DR. VIKRAM GOYAL, JAIPUR. SEARCH OR REQUISITION. IT IS CONNECTED TO SECTION 132 WHICH DEALS WITH SEARCH AND SEIZURE. BOTH THESE PROVISIONS, THEREFORE, HAVE T O BE READ TOGETHER. SEC. 153A IS INDEED AN EXTREMELY POTENT POWER WHICH ENABLES THE REVENUE TO REOPEN AT LEAST SIX YEARS OF ASSESSMENTS EARLIER TO THE YEAR OF SEARCH. IT IS NOT TO BE EXERCISED LIGHTLY. IT IS ONLY IF DURING THE COURSE OF SEARCH UNDER SEC TION 132 INCRIMINATING MATERIAL JUSTIFYING THE REOPENING OF THE ASSESSMENTS FOR SIX PREVIOUS IS FOUND THAT THE INVOCATION OF SECTION 153A QUA EACH OF THE ASSESSME NT YEARS WOULD BE JUSTIFIED. IF NO INCRIMINATING MATERIALS WERE FOUND DURING THE CO URSE OF SEARCH IN RESPECT OF AN ISSUE, THEN NO ADDITIONS IN RESPECT OF ANY ISSUE CA N BE MADE TO THE ASSESSMENT U/S 153A AND 153C. IN THE PRESENT CASE, IT IS NOT THE CASE OF REVENUE THAT THE ASSESSMENT HAS BEEN FRAMED ON THE BASIS OF INCRIMIN ATING MATERIAL FOUND DURING THE COURSE OF SEARCH. THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF JAI STEEL (INDIA) VS. ACIT 259 CTR (RAJ) 281 AS RELIED BY THE ASSESSEE AND ALSO HELD THAT FOR THE COMPLETED ASSESSMENT, SAME CAN BE TINKERED ONLY BASED ON THE INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH OR REQUI SITION OF DOCUMENTS. THEREFORE, THE ASSESSMENT IN THE CASE, WHERE THE ASSESSMENT HA S BEEN COMPLETED OR NOT PENDING ON THE DATE OF SEARCH. THE ASSESSING OFFIC ER CAN FRAME ASSESSMENT ONLY ON THE BASIS OF THE INCRIMINATING MATERIAL GATHERED DU RING THE COURSE OF SEARCH. RESPECTFULLY FOLLOWING THE JUDGMENTS OF THE HONBLE DELHI HIGH COURT AND HONBLE RAJASTHAN HIGH COURT RENDERED IN THE CASE OF PR. CI T VS. MEETA GUTGUTIA (SUPRA) AND JAI STEEL (INDIA) VS. ACIT (SUPRA). THE ASSESSMENT AS FRAMED BY THE ASSESSING OFFICER IS QUASHED, AS NO INCRIMINATING MATERIAL WA S FOUND DURING THE SEARCH. THE 17 ITA NO. 174/JP/2017. DR. VIKRAM GOYAL, JAIPUR. REVENUE HAS NOT PLACED ANY MATERIAL ON RECORD SUGGE STING THAT THE IMPUGNED ASSESSMENT WAS FRAMED ON THE BASIS OF INCRIMINATING MATERIAL. 6. GROUND NO. 2 AND 3 ARE ON MERIT, AS WE HAVE QUASHED THE ASSESSMENT FOLLOWING THE JUDGMENT OF THE HONBLE JURISDICTIONA L HIGH COURT. THE GROUNDS RAISED ON MERIT HAVE THEREFORE BECOME INFRUCTUOUS. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS IN ITA NO. 174/JP/2017 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THURSDAY, THE 24 TH DAY OF AUGUST 2017. SD/- SD/- FOE FLAG ;KNO ( DQY HKKJR ) (VIKRAM SINGH YADAV ) ( KUL BHARAT ) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 24/08/2017. POOJA/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- DR. VIKRAM GOYAL, SAYEED KA GATTA , TONK ROAD, JAIPUR. 2. THE RESPONDENT- DCIT, CENTRAL CIRCLE-1, JAIPUR. 3. THE CIT 4. THE CIT (A) 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 174/JP/2017) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR 18 ITA NO. 174/JP/2017. DR. VIKRAM GOYAL, JAIPUR.