Mr. Vipin Mantaktala, New Delhi V. DCIT, New Delhi

ITA 1768/DEL/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7270 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 18-01-2016
• Assessment Year: 2001-2002
• Appeal Filed On: 17-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAM BILAS MEENA
• Assessee Lawyers: REEMA MALIK
• Keywords: Search and seizure; Validity of assessment
• Section: 143(3); 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: H NEW DELHI BEFORE SHRI R.S. SYAL, ACCOUNTANT MEMBER AND SMT. BEENA A. PILLAI, JUDICIAL MEMBER I.T.A .NOS. 1767 TO 1770/DEL/2012 ASSESSMENT YEARS-2000-01 TO 2003-04 VIPIN MANTAKTALA, C-1, STREET, 6-F, SAINIK FARMS, NEW DELHI. AAIPM6900F VS DCIT, CENTRAL CIRCLE 13, NEW DELHI. APPELLANT BY MS. REEMA MALIK, CA RESPONDENT BY SHRI RAM BILAS MEENA, CIT DR ORDER PER BEENA A. PILLAI, JM THE PRESENT APPEALS HAVE BEEN FILED BY THE ASSESSEE AGAINST THE ORDERS PASSED BY THE LD. CIT(A)S-1, NEW DELHI VIDE HIS ORDER DATED 01.02.2012 FOR ASSESSMENT YEARS 2000-01, 2001 -02, 2002- 03 & 2003-04. THE COMMON GROUNDS OF APPEAL RAISED IN ALL THESE ASSESSMENT YEARS ARE AS UNDER: 1. THAT THE ORDER OF THE LD. CIT(A)S IS BAD IN LAW A ND ON FACTS. 2. THAT THE LD. CIT(A) HAS ERRED IN UPHOLDING THE ADDI TION MADE BY THE AO IN ASSESSING THE INCOME UNDER THE HE AD INCOME FROM HOUSE PROPERTY FROM THE LAND SITUATED AT PUNJABI BAGH IN SPITE OF THE FACT THAT NO RENT WAS RECEIVED DURING THE YEAR AND LEVYING THE RENT ON NOTIONAL BA SIS U/S DATE OF HEARING 19.01.2016 DATE OF PRONOUNCEMENT 21.01.2016 I.T.A.NOS. 1767 TO 1770/DEL/2012 2 23 OF THE INCOME TAX ACT, 1961 IS TOTALLY IMPROPER AND UNWARRANTED. 3. THAT THE APPELLANT CRAVES LEAVE TO ALTER, AMEND OR ADD ANY OTHER GROUND OF APPEAL EITHER BEFORE OR DURING THE COURSE OF HEARING. 2. THE BRIEF FACTS OF THE CASE AS RECORDED BY THE A UTHORITIES BELOW ARE AS UNDER: A SEARCH AND SEIZURE OPERATION U/S 132(1) OF THE AC T WAS CARRIED OUT ON 17.01.2006 AT THE OFFICE AND RESIDENTIAL PRE MISES OF M/S GORAMAL HARIRAM LTD. THE PREMISES OF ASSESSEE AT C -1 STREET, 6- F, SAINIK FARMS, NEW DELHI WAS ALSO COVERED. ACCOR DINGLY, NOTICE UNDER 153A OF THE ACT WAS ISSUED ON 16 TH MAY, 2007 WAS ISSUED AND SERVED UPON THE ASSESSEE. IN RESPONSE TO THE N OTICE ISSUED U/S 153A ASSESSEE FILED ITS RETURN OF INCOME ON 6 TH AUGUST, 2007 DECLARING AN INCOME OF RS. 2,70,167/-. NOTICE U/S 143(2) OF THE ACT WAS THEREAFTER ISSUED AND SERVED UPON THE ASSES SEE. THE LD. AO SOUGHT FOR VARIOUS DETAILS WHICH WERE PRODUCED B Y THE ASSESSEE, VIDE LETTER DATED 09.12.2008. FROM THE D ETAILS SOUGHT FROM THE ASSESSEE THE LD. AO OBSERVED THAT ASSESSEE IS THE CO- OWNER OF THE PROPERTY AT 59, ROAD NO. 77, PUNJABI B AGH, NEW DELHI AND HAS OFFERED INCOME FROM HOUSE PROPERTY, A MOUNTING TO RS. 7,500/- PER MONTH. 2.1 THE LD. AO ALSO NOTICED THAT THE ASSESSEE IS A CO-OWNER IN PROPERTY AT KAPASEHRA WHICH HAS BEEN CLAIMED AS SEL F OCCUPIED PROPERTY BY THE ASSESSEE. ON GROUND THROUGH THE VA RIOUS DETAILS FILED BY THE ASSESSEE THE LD. AO COMPLETED THE ASSE SSMENT BY CALCULATING INCOME FROM HOUSE PROPERTY AT 3,25,967/ -. THE LD. AO CALCULATED THE NOTIONAL RENT U/S 23 OF THE ACT A S UNDER: PARTICULARS 2000 - 01 2001 - 02 2002 - 03 2003 - 04 NOTIONAL RENT U/S 23 OF THE ACT 55,800 61,380 60,000 17,325 I.T.A.NOS. 1767 TO 1770/DEL/2012 3 3. AGGRIEVED BY THE ORDER OF THE LD. AO THE ASSESSE E PREFERRED AN APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) DE CIDED AS UNDER: 4.3 I HAVE CONSIDERED THE SUBMISSION GIVEN BY THE APPELLANT AND IT IS SEEN THAT THE ASSESSEE HAS HIMSELF OFFERED INCOME FROM THE SAID PROPERTY FOR FOUR MONTHS IN A.Y. 2002-03 UNDER THE HEAD INCOME FROM HOUSE PROPERTY. AT THE APPELLATE STAGE THE ASSESSEE DID NOT REFUTE THIS OBSERVATION OF THE AO. FURTHER, THE BROTHER OF THE ASSESSEE SH RI VINOD KUMAR WHO IS THE CO-OWNER OF THIS PROPERTY HAS OFFERED INCOME FROM THIS PROPERTY FOR THE PURPOSES OF TAXATION. THUS, THE ASSESSEE AS WELL AS HIS BROTHER HAS ADMITTED OF HAVING A HOUSE PROPERTY AT THIS ADDRESS. IT HAS BEEN HELD IN THE CASE OF NATHOO LAL VS. DURGA PRASAD, AIR 1954 SC 355, 358 THAT WHAT IS ADMITTED BY A PARTY TO BE TRUE MUST BE PRESUMED TO BE TRUE UNLESS THE CONTRARY IS SHOWN. 4.4 SINCE BOTH THE ASSESSEE AS WELL AS HIS BROTHER HAS ADMITTED IN THE RETURN OF INCOME THAT THE SAID PIECE OF PROPERTY HAD GENERATED RENTAL INCOME HE CANNOT LATER ON RELY ON THE SALE DEED TO SHOW THAT IT DID NOT FALL UNDER THE CATEGORY OF HOUSE PROPERTY AND IT WAS JUST A PLOT OF LAND. THE PRESUMPTION ARISING OUT OF THE ADMISSION OF THE ASSESSEE HAS NOT BEEN REBUTTED BY ANY CONCLUSIVE EVIDENCE, NOR HAS THE ASSESSEE OR HIS BROTHER HAVE STATED THAT THE RETURN FILED BY THEM, SHOWING INCOME FROM HOUSE PROPERTY, WAS NOT CORRECT. SINCE THE INCOME FROM HOUSE PROPERTY IS A NOTIONAL CONCEPT THEREFORE , IT HAS TO BE TAXED WHETHER ANY INCOME IS DERIVED FROM IT OR NOT. AS THE ANNUAL VALUE OF THE PROPERT Y IS A NOTIONAL ONE THE ADDITION OF RS. 55,800/- MADE BY THE AO IS UPHELD. THIS GROUND IS DECIDED AGAINST THE APPELLANT. 4. AGGRIEVED BY THE ORDER OF THE LD. CIT(A) THE ASS ESSEE IS IN APPEAL BEFORE US NOW. I.T.A.NOS. 1767 TO 1770/DEL/2012 4 5. AT THE OUTSET, THE LD. AR VIDE APPLICATION DATED 18.11.2015 THE ASSESSEE HAS FURNISHED REQUEST FOR ADMISSION OF ADDITIONAL GROUNDS, IN RESPECT OF ALL THE ASSESSMENT YEARS WHI CH ARE AS UNDER: 1) THE LD. AO HAS PROCEEDED TO MAKE ADDITION IN RESP ECT OF NOTIONAL RENT DESPITE THE FACT THAT THERE WERE N O INCRIMINATING EVIDENCE FOUND DURING THE COURSE OF SEARCH AND THE SAID FACT IS ASCERTAINABLE ON A BARE PERUSAL OF THE ASSESSMENT ORDER. 2) HENCE, THE ENTIRE ASSESSMENT IS BAD IN LAW SINCE U/ S 153A, THE ASSESSMENTS/ADDITIONS ARE CONFINED TO ADDITIONS ONLY ON THE BASIS OF INCRIMINATING DOCUME NTS FOUND DURING SEARCH. 5.1. IT IS OBSERVED THAT THESE ADDITIONAL GROUNDS R AISED BY THE ASSESSEE ARE PURELY LEGAL IN NATURE AND, THEREFORE, WE ARE INCLINED TO ADMIT THESE GROUNDS TO BE ADJUDICATED UPON FIRST . 5.2. THE LD. AR SUBMITS THAT THERE HAS BEEN NO INCR IMINATING MATERIAL THAT WAS SEIZED DURING THE SEARCH. SHE SU BMITS THAT ALL THE DETAILS IN RESPECT OF THE ADDITION MADE BY THE LD. AO ARE ON THE BASIS OF THE SUBMISSIONS MADE BY THE ASSESSEE A T THE TIME OF ASSESSMENT PROCEEDINGS AS WELL AS FROM THE RETURN O F INCOME FILED BY THE ASSESSEE FOR THE RESPECTIVE ASSESSMENT YEARS . SHE ALSO SUBMITS THAT ON THE DATE OF SEARCH NO ASSESSMENT WA S PENDING IN RESPECT OF ANY OF THE ASSESSMENT YEARS. 5.3. THE LD. AR HAS PRODUCED ZEROX COPIES OF THE RE TURNS FILED BY THE ASSESSEE FOR THE RELEVANT ASSESSMENT YEARS UNDE R CONSIDERATION. SHE FURTHER SUBMITS THAT ONLY IN RE SPECT OF THE A.Y. 2001-02 AN INTIMATION U/S 143(1) HAS BEEN RECE IVED BY THE ASSESSEE. THE LD. AR SUBMITS THAT THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA REPO RTED IN 61 TAXMAN.COM 412 SQUARELY COVERS THE ISSUE. I.T.A.NOS. 1767 TO 1770/DEL/2012 5 4. ON THE CONTRARY, THE OTHER HAND SUBMITTED THAT T HERE IS NO NEED OF FINDING OF INCRIMINATING MATERIAL DURING TH E COURSE OF SEARCH TO JUSTIFY THE VALIDITY OF ASSESSMENT FRAMED UNDER SEC. 153A READ WITH SEC. 143(3) OF THE INCOME-TAX ACT, 1 961 AND THE ONLY REQUIREMENT IS THAT SEARCH HAS BEEN CONDUCTED AT THE PREMISES OF THE ASSESSEE UNDER SEC. 132 OF THE ACT. THE LD. DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. THE LD. DR FURTHER SUBMITS THAT AN SLP HAS BEEN PREFERRED AGAINST THE DECISION OF KABUL CHAWLA (SUPRA) BEFORE THE HONBLE SUPREME COU RT. 6. WE HAVE PERUSED THE RECORDS AND DETAILS FILED BE FORE US, THE ORDERS PASSED BY THE AUTHORITIES BELOW AND THE DECI SION RELIED UPON BY THE PARTIES. 6.1. IT IS OBSERVED FROM THE ORDERS PASSED BY THE L D. AO THAT THERE HAS BEEN NO INCRIMINATING MATERIAL, THAT HAS BEEN FOUND AT THE TIME OF SEARCH. IT IS ALSO OBSERVED THAT THERE ARE NO ASSESSMENTS OR REASSESSMENTS I.E. PENDING IN RESPEC T OF THE ASSESSMENT YEARS UNDER CONSIDERATION AS ON THE DATE OF THE SEARCH. THE LD.DR COULD NOT REBUT THE FACT THAT THE RE WAS NO INCRIMINATING MATERIAL THAT WAS FOUND DURING THE CO URSE OF SEARCH AND THAT THE ASSESSMENT U/S, 153 A WAS BASED ON THE RETURN FILED BY THE ASSESSEE U/S.139OF THE ACT. 6.2. THE HONBLE JURISDICTIONAL HIGH COURT WHILE DE CIDING THE CASE OF KABUL CHAWLA (SUPRA) HAS RELIED UPON THE FINDING S BY THE COORDINATE BENCH OF THE HONBLE COURT IN THE CASE O F CIT VS. ANIL KUMAR BHATIA (2012) 211 TAXMANN 453 (DEL.), WHILE D ECIDING THE ISSUE. THE RELEVANT PARA NO. 8 & 9 IN THIS REGARD I S BEING REPRODUCED AS UNDER :- I.T.A.NOS. 1767 TO 1770/DEL/2012 6 8. WE ARE UNABLE TO ACCEPT THE CONTENTION ADVANCED ON BEHALF OF THE REVENUE FOR THE REASON THAT IF BOTH T HE PENDING AND COMPLETED ASSESSMENT WERE TO BE TAKEN O N SAME PEDESTAL, THEN THERE WAS NO NEED TO ENSHRINE SECOND PROVISO TO SEC. 153A(1) PROVIDING THAT THE PENDING ASSESSMENTS WITHIN THE PERIOD OF SIX ASSESSMENT YEARS SHALL ABATE. THE HON'BLE DELHI HIG H COURT IN THE CASE OF ANIL KUMAR BHATIA (SUPRA) DEAL T WITH A SITUATION IN WHICH SOME INCRIMINATING MATERI AL WAS FOUND IN RESPECT OF A NON-PENDING ASSESSMENT. I T WAS IN THAT BACKGROUND THAT THE HON'BLE HIGH COURT HELD THAT SEC. 153A APPLIES IF INCRIMINATING MATERI AL IS FOUND EVEN IF ASSESSMENTS ARE COMPLETED. THE QUESTI ON AS TO WHETHER ANY ADDITION CAN BE MADE IN RESPECT O F COMPLETED ASSESSMENTS WHEN NO INCRIMINATING MATERIA L WAS FOUND, WAS APPARENTLY LEFT OPEN. HOWEVER, WE FI ND THAT THERE ARE SUFFICIENT INDIRECT HINTS GIVEN BY T HE HON 'BLE DELHI HIGH COURT IN THE CASE OF ANIL KUMAR BHA TIA (SUPRA) ABOUT NOT MAKING OF ANY ADDITION IN RESPECT OF AN ASSESSMENT YEAR FOR WHICH THE ASSESSMENT IS ALREADY COMPLETED UNLESS SOME INCRIMINATING MATERIA L IS FOUND DURING THE COURSE OF SEARCH. THIS CAN BE SEEN FROM THE FOLLOWING OBSERVATIONS OF THE HON'BLE HIGH COURT:- '20. A QUESTION MAY ARISE AS TO HOW THIS IS SOUGHT TO BE ACHIEVED WHERE AN ASSESSMENT ORDER HAD ALREADY BEEN PASSED IN RESPECT OF ALL OR ANY OF THOSE SIX ASSESS MENT YEARS, EITHER UNDER SECTION 143(1)(A) OR SECTION 14 3(3) OF THE ACT. IF SUCH AN ORDER IS ALREADY IN EXISTENCE, HAVING OBVIOUSLY BEEN PASSED PRIOR TO THE INITIATION OF TH E SEARCH/REQUISITION, THE ASSESSING OFFICER IS EMPOWE RED TO REOPEN THOSE PROCEEDINGS AND REASSESS THE TOTAL INCOME, TAKING NOTE OF THE UNDISCLOSED INCOME, IF A NY, UNEARTHED DURING THE SEARCH. 9. THE ABOVE EXTRACTED OBSERVATIONS OF THE HON'BLE HIGH COURT, WHICH ARE THOUGH OBITER DICTA, MAKE THE POIN T CLEAR THAT WHERE AN ASSESSMENT ORDER HAS ALREADY BE EN PASSED FOR A YEAR(S) WITHIN THE RELEVANT SIX ASSESS MENT YEARS, THEN ALSO THE A.O IS DUTY BOUND TO REOPEN TH OSE PROCEEDINGS AND REASSESS THE TOTAL INCOME BUT BY 'T AKING NOTE OF THE UNDISCLOSED INCOME IF ANY, UNEARTHED DU RING THE SEARCH'. THE EXPRESSION 'UNEARTHED DURING THE S EARCH' I.T.A.NOS. 1767 TO 1770/DEL/2012 7 IS QUITE SIGNIFICANT TO DENOTE THAT IN RESPECT OF C OMPLETED OR NON-PENDING ASSESSMENTS, THE ASSESSING OFFICER I S ALBEIT DUTY BOUND TO ASSESS OR REASSESS THE TOTAL I NCOME BUT THERE IS A CAP ON THE SCOPE OF ADDITIONS IN SUC H ASSESSMENT, BEING THE ITEMS OF INCOME 'UNEARTHED DU RING THE SEARCH'. IN OTHER WORDS, THE DETERMINATION OF ' TOTAL INCOME' IN RESPECT OF THE ASSESSMENT YEARS FOR WHIC H THE ASSESSMENTS ARE ALREADY COMPLETED ON THE DATE OF SEARCH, SHALL NOT BE INFLUENCED BY THE ITEMS OF INC OME OTHER THAN THOSE BASED ON THE MATERIAL UNEARTHED DU RING THE COURSE OF SEARCH. THERE IS NOT AND CANNOT BE AN Y QUARREL OVER THE PROPOSITION THAT THE ASSESSING OFF ICER HAS NO OPTION BUT TO DETERMINE THE TOTAL INCOME OF THE ASSESSEE IN RESPECT OF THE RELEVANT SIX ASSESSMENT YEARS. HOWEVER, THE SCOPE OF SUCH DETERMINATION OF TOTAL INCOME IS DIFFERENT IN RESPECT OF THE YEARS FOR WHI CH THE ASSESSMENTS ARE PENDING VIS-VIS THE YEARS FOR WHICH ASSESSMENTS ARE NON-PENDING. IN RESPECT TO THE ASSESSMENT YEARS FOR WHICH THE ORIGINAL ASSESSMENTS HAVE ALREADY BEEN COMPLETED ON THE DATE OF SEARCH, THE TOTAL INCOME SHALL BE DETERMINED BY RESTRICTING ADD ITIONS ONLY TO THOSE WHICH FLOW FROM INCRIMINATING MATERIA L FOUND DURING THE COURSE OF SEARCH. IF NO INCRIMINAT ING MATERIAL IS FOUND IN RESPECT OF SUCH COMPLETED ASSESSMENT, THEN THE TOTAL INCOME IN THE PROCEEDING S U/S 153A SHALL BE COMPUTED BY CONSIDERING THE ORIGINALL Y DETERMINED INCOME. IF SOME INCRIMINATING MATERIAL I S FOUND IN RESPECT OF SUCH ASSESSMENT YEARS FOR WHICH THE ASSESSMENT IS NOT PENDING, THEN THE 'TOTAL INCOME' WOULD BE DETERMINED BY CONSIDERING THE ORIGINALLY DETERMI NED INCOME PLUS INCOME EMANATING FROM THE INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. IN THE OTHER SCENARIO OF THE ASSESSMENTS PENDING ON THE DATE OF SEARCH WHICH WOULD ABATE IN TERMS OF SECOND PROVISO TO SEC. 153A( 1), THE TOTAL INCOME SHALL BE COMPUTED A FRESH UNINFLUENCED BY THE FACT WHETHER OR NOT THERE IS AN Y INCRIMINATING MATERIAL. IN FACT, THIS IS THE POSITI ON WHICH FOLLOWS WHEN WE READ THE JUDGMENT OF THE HON'BLE DE LHI HIGH COURT IN ANIL KUMAR BHATIA (SUPRA) IN JUXTAPOS ITION TO THE SPECIAL BENCH ORDER IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. (SUPRA). THE OTHER JUDGMENT RELIED B Y THE LD. DR IN THE CASE OF MADUGULU VENU (SUPRA) ALSO TA LKS I.T.A.NOS. 1767 TO 1770/DEL/2012 8 ABOUT THE NEED FOR MAKING FRESH ASSESSMENT IN RESPE CT OF THE ASSESSMENT YEARS FOR WHICH THE ASSESSMENTS A RE NOT PENDING ON THE DATE OF SEARCH BUT DOES NOT SET OUT THE SCOPE OF SUCH ASSESSMENT, WHICH IS THE ISSUE BE FORE USE. 6.3. WE, THUS, FIND THAT THE DECISION OF THE HONBL E JURISDICTIONAL DELHI HIGH COURT IN THE CASE OF ANIL KUMAR BHATIA ( SUPRA) SUPPORTS THE CASE OF THE ASSESSEE THAT IN ABSENCE O F INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH AN ADDIT ION U/S 153A OF THE ACT CANNOT BE MADE IN THE ASSESSMENT FRAMED THEREUNDER. 7. IN VIEW OF THE ABOVE FINDINGS, WHEREBY THE ASSES SMENT ITSELF HAS BEEN HELD NULL AND VOID, THE OTHER ISSUES RAISE D IN OTHER GROUNDS, QUESTIONING THE VALIDITY OF THE ADDITIONS MADE IN ALL THE ASSESSMENT YEARS UNDER CONSIDERATION, HAVE BECOME I NFRUCTUOUS AND ACADEMIC ONLY. THOSE GROUNDS THUS DO NOT REQUIR E ANY ADJUDICATION, AND THE SAME ARE BEING DISPOSED OFF A S SUCH. IN RESULT, APPEALS ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21.01.2016 SD/- SD/- (R.S. SYAL) (B EENA A. PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 21.01.2016 *KAVITA ARORA COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4.CIT(A) 4. DR BY ORDER ASSTT. REGISTRAR