Sh. Ravinder Singh Lohia, New Delhi V. ITO, New Delhi

ITA 1852/DEL/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 4069 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 29-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T VASANTHAN
• Keywords: Search and seizure; Salary income; Reason to believe; Reassessment proceedings
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI SMC BENCH, NEW DELHI BEFORE SHRI B.P. JAIN, ACCOUNTANT MEMBER ITA NO. 1852 /DEL/201 7 [A.Y. 20 07 - 08 ] SHRI RAVINDER SINGH LOHIA VS. THE I.T. O [DIRECTOR OF LION MANPOWER WARD 1 5 () S OLUTION [P] LTD PLOT NO. 10, NEW DELHI 3 RD FLOOR, LOCAL SHIOPPING COMPLEX B - 1, VASANT KUNJ, NEW DELHI PAN : AAVPL 4403 F [APPELLANT] [RESPONDENT] DATE OF HEARING : 1 0 . 1 0.2017 DATE OF PRONOUNCEMENT : 18 . 1 0.2017 ASSESSEE BY : DR. RAKESH GUPTA SHRI SOMIL AGARWAL, ADVS REVENUE BY : SHRI T. VASANTHAN SR. DR ORDER THIS APPEAL OF THE ASSESSEE ARISES FR OM THE ORDER OF THE LD. CIT(A) - 5 , N EW DELHI VIDE ORDER DATED 27 . 0 2 .201 7 FOR ASSESSMENT YEAR A.Y. 20 07 - 08 . 2. THE ASSESSEE HAS RAISED AS MANY AS 6 GROUNDS OF APPEAL. HOWEVER, ONLY GROUND NOS. 1 AND 2 HAVE BEEN PRESSED WHICH READ AS UNDER: 2 1. T HAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN FRAMING THE IMPUGNED REASSESSMENT ORDER U/S 148/143(3) AND THAT TOO WITHOUT ASSUMING JURISDICTIO N AS PER LAW AND WITHOUT COMPLYING WITH THE MANDATORY CONDITIONS U/S 147 TO 151 AS ENVISAGED UNDER THE INCOME TAX ACT, 1961. 2. THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER, ASSUMPTION OF JURISDICTION U/S 147 PASSING THE IMPUGNED REASSESSMENT ORDER U /S 143(3)/148 IS BAD IN LAW AND AGAINST FACTS AND CIRCUMSTANCES OF THE CASE. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE DECLARED INCOME FROM SALARY AS DIRECTOR OF M/S LION GUARD & SECURE SERVICES [P] LTD COMMISSION, AND INTEREST INCOME FROM BANK IN HIS RETURN ORIGINALLY FILED ON 12.11.2007 DECLARING INCOME OF RS. 13,46,600/ - . SUBSEQUENTLY, INFORMATION WAS RECEIVED FROM THE INVESTIGATION WING, NEW DELHI THAT A SEARCH AND SEIZURE OPERATION WAS CONDUCTED IN AKN GROUP OF CASES ON 11.9.2013 AND C ONSEQUENT SEARCH WAS CONDUCTED AT THE BUSINESS PREMISES AND RESIDENTIAL PREMISES OF SH. NARESH GUPTA ON 17.09.2013. DURING THE COURSE OF SEARCH PROCEEDINGS AN AGREEMENT TO SELL WAS FOUND IN RESPECT OF LAND AT BHIWADI WHERE BY A CONSIDERATION OF RS. 1,50,00 ,000/ - WAS PAID BY THE ASSESSEE OUT OF TOTAL 3 CONSIDERATION OF RS. 8.59 CR. WHICH INCLUDED AN AMOUNT OF RS. 50 LACS IN CASH ALONG WITH CHEQUES AND PAY ORDERS. ON THE BASIS OF THE INFORMATION THE CASE OF THE ASSESSEE WAS REOPENED U/S 147 OF THE IT ACT AFTER OBTAINING NECESSARY APPROVAL FROM THE ADDITIONAL COMMISSIONER OF INCOME TAX, RANGE - 4, NEW DELHI. ACCORDINGLY NOTICE U/S 148 OF THE IT ACT, 1961 WAS ISSUED ON 25/03/2014. IN RESPONSE TO THIS NOTICE THE ASSESSEE COMPANY REPLIED VIDE LETTER DATED 22/4/2014 TH AT THE RETURN OF INCOME FILED ON 12/11/2007 MAY BE TREATED AS COMPLIANCE OF NOTICE U/S 148 OF THE IT ACT, 1961 AND ALSO REQUESTED TO PROVIDE THE REASONS UNDER SECTION 148. REASONS RECORDED WERE SUPPLIED TO THE ASSESSEE VIDE LETTER DATED 19/05/2014. DURING THE COURSE OF HEARING THE ASSESSEE RAISED OBJECTIONS VIDE LETTER DATED 12.06.14 STATING THAT THE REASONS FOR REOPENING OF THE CASE WAS NOT VALID BECAUSE THE AGREEMENT TO SELL WAS UNSIGNED AND, WAS A SOFT COPY. THE OBJECTIONS WERE DULY MET OUT VIDE LETTER D ATED 16/06/ 2014. 4. THE LD. CIT(A), IN FACT, REJECTED THE LEGAL GROUND RAISED BY THE ASSESSEE. HIS FINDINGS AT PARA 4.3.7 ARE REPRODUCED AS UNDER: CONSEQUENTLY, ON THE BASIS OF THE DEFINITE AND CREDIBLE INFORMATION RECEIVED BY THE A.O FROM THE INVES TIGATION WING, THERE BEING NO DETAILS OF THE CASH TRANSACTIONS REFLECTED IN THE RETURN OF INCOME OF THE APPELLANT, IT IS HELD THAT THE A.O HAD 4 REASON TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT. THE REASONS WERE PROPERLY RECORDED, AS THE RECORD SHOWS, ON 21.03.2014. THE COMMUNICATION OF REASONS WAS MADE AND THE APPELLANT AT NO STAGE IN THE REASSESSMENT PROCEEDINGS RAISED ANY OBJECTION TO THE REASONS RECORDED OR TO THE SUFFICIENCY OF MATERIAL, BASED ON WHICH THE REOPENING HAD BEEN DONE. TAKING INTO ACCOUNT ALL THE A BOVE FACTS INTO CONSIDERATION, THE ADDITIONAL GROUND CHALLENGING THE VALIDITY OF THE REOPENING, STANDS DISMISSED. 5 . I HAVE HEARD BOTH THE SIDES AND PERUSED THE RELEVANT MATERIAL ON RECORD . ON THE PERUSAL OF REASONS RECORDED AND ON THE FACTS OF THE CASE, THE JURISDICTION OF THE ASSESSING OFFICER U/S 148 CANNOT BE THERE AND AT THE MOST IT COULD HAVE BEEN U/S 153C OF THE ACT SINCE SEIZED MATERIAL WAS FOUND IN THE CASE OF ONE SHRI NARESH GUPTA AS MENTIONED IN THE REASONS AND ASSESSMENT ORDER ITS ELF. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT T HE CASE OF THE ASSESSEE TAKEN IN THE PROCEEDING UNDER SECTION 147/148 IS WITHOUT JURISDICTION AS THE SAME COULD BE TAKEN ONLY U/S 153C AND NOT U/S 148 AS THE BASIS OF THE PRESENT PROCEEDING IS THE SEIZ ED MATER IAL. T HE REASON RECORDED SHOW S THAT BASIS OF ASSESSMENT WAS SEIZED MATERIAL AND EVEN THE ASSESSMENT ORDER SAYS SO. THEREFORE, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN THE VIEW OF THE FOLLOWING JUDICIAL DECISIONS, SUCH ACTION U/S 147 IS NOT SUSTAINABLE : 5 RAJAT SHUBRA CHATTERJI VS ACIT IN ITA 2430/DEL./2015 R EASSESSMENT WAS INITIATED ON THE BASIS OF INCRIMINATING MATERIAL FOUND IN SEARCH OF THIRD PARTY AND THE VALIDITY OF THE SAME WAS CHALLENGED BY THE ASSESSEE BEFORE THE LEARNED CIT(APP EALS) AND THE LEARNED CIT(APPEALS) VITIATED THE PROCEEDINGS. THE SAME WAS QUESTIONED BY THE REVENUE BEFORE THE ITAT AND THE ITAT AFTER DISCUSSING THE CASES OF THE PARTIES AND THE RELEVANT PROVISIONS IN DETAILS HAS COME TO THE CONCLUSION THAT IN THE ABOVE S ITUATION, PROVISIONS OF SEC. 153C WERE APPLICABLE WHICH EXCLUDES THE APPLICATION OF SECTIONS 147 AND 148 OF THE ACT. THE ITAT HELD THE NOTICE ISSUED UNDER SEC. 148 AND PROCEEDINGS UNDER SEC. 147 AS ILLEGAL AND VOID AB 8 INITIO. IT WAS HELD THAT ASSESSING O FFICER HAVING NOT FOLLOWED PROCEDURE UNDER SEC. 153C, REASSESSMENT ORDER WAS RIGHTLY QUASHED BY THE LEARNED CIT(APPEALS). IN THE PRESENT CASE BEFORE US, IT IS AN ADMITTED FACT, AS ALSO EVIDENT FROM THE REASONS RECORDED AND THE ASSESSMENT ORDER THAT THE INI TIATION OF REOPENING PROCEEDINGS WAS MADE BY THE ASSESSING OFFICER ON THE BASIS OF INFORMATION RECEIVED FROM THE DIRECTORATE OF INCOME - TAX (INV.) ON THE BASIS OF SEARCH & SEIZURE OPERATION CONDUCTED AT THE PREMISES OF ROCK LAND GROUP OF CASES AND THE DOCUM ENTS RELATED TO THE ASSESSEE FOUND DURING THE COURSE OF SEARCH WERE MADE AVAILABLE TO THE ASSESSING OFFICER OF THE PRESENT ASSESSEE. WE THUS RESPECTFULLY FOLLOWING THE DECISION OF CO - ORDINATE BENCH OF THE ITAT IN THE CASE OF ACIT VS. ARUN KAPUR 140 TTJ 2 49 (AMRITSAR) HOLD THAT PROVISIONS OF SEC. 153C OF THE ACT WERE 6 APPLICABLE IN THE PRESENT CASE FOR FRAMING THE ASSESSMENT, IF ANY, WHICH EXCLUDES THE APPLICATION OF SEC. 147 OF THE ACT, HENCE, NOTICE ISSUED UNDER SEC. 148 OF THE ACT AND ASSESSMENT FRAMED I N FURTHERANCE THERETO UNDER SEC. 147 READ WITH SECTION 143(3) OF THE ACT ARE VOID AB INITIO. THE REASSESSMENT IN QUESTION IS ACCORDINGLY QUASHED. THE GROUND NO.1 IS ACCORDINGLY ALLOWED. ACIT VS ARUN KAPUR 140 TTJ 249 (AMRITSAR) CARGO CLEARING AGENCY VS JCIT 307 ITR 1 (GUJ.) M/S CHOPRA MARKETING (P) LTD. VS. DCIT IN ITA NO. 10/DEL/2012 DATED 28.12.2016 SCHLIECHER INDIA LTD. VS. DCIT IN ITA NO. 6253/DEL/2013 DATED 24.03.2017 6. THE CONCLUSION IN THE CASE OF RAJAT SHUBRA [SUPRA] IS THAT REASS ESSMENT WAS INITIATED ON THE BASIS OF INCRIMINATING MATERIAL FOUND IN THE SEARCH OF A THIRD PARTY PROVISIONS OF SECTION 153C WOULD BE APPLICABLE FOR FRAMING ASSESSMENT, IF ANY, WHICH WOULD EXCLUDE APPLICATION U/S 147 AND HENCE NOTICE U/S 148 AND ASSESSMENT FRAMED IN FURTHERANCE THERETO U/S 147 R.W.S. 143(3) OF THE MAKING IN THE IMPUGNED CASE WAS VOID AB INITIO AND REASSESSMENT IN QUESTION WAS JUSTIFIED TO BE QUASHED. 7 7. SIMILARLY, RELIANCE WAS PLACED ON THE CASE OF THE SCHLEICHER INDIA LTD IN ITA NO. 6253/ DEL/2013 FOR ASSESSMENT YEAR 204 - 05 WHEREIN IT HAS BEEN HELD AT PARA 14 PAGE 12 AS UNDER: 14. ADMITTEDLY, IN THE PRESENT CASE ASSESSMENT HAS BEEN REOPENED ON THE BASIS OF SEARCH AND SEIZURE ACTION AT THE PREMISES OF SK GUPTA GROUP COMPANIES. AT THIS JUN CTURE, WE AGREE WITH SUBMISSIONS MADE BY LD. COUNSEL THAT ON RECEIPT OF INFORMATION RECEIVED ON THE BASIS OF SEARCH AND SEIZURE OPERATION, ASSESSING OFFICER SHOULD HAVE FOLLOWED PROCEDURE UNDER SECTION 153C, INSTEAD OF REOPENING THE ASSESSMENT U/S 147. FUR THER IT IS OBSERVED THAT THE REOPENING HAS BEEN DONE ON THE BASIS OF REASONS RECORDED ON INCORRECT FACTS. THAT BEING SO THE REASONS ARE IN FACT NO REASONS AT ALL. THIS VIEW FIN DS SUPPORT FROM THE DECISION OF HON'BLE PUNJAB AND HARYANA HIGH COURT IN THE CA SE OF CIT VERSUS ATLAS CYCLES INDUSTRIES REPORTED IN 180 ITR 319. ON THESE COUNTS ITSELF NOTICE ISSUED UNDER SECTION 147 OF THE ACT INITIATING REASSESSMENT WOULD NOT STAND THE TEST OF LAW. 8. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, REASSESSMENT SO INI TIATED ON THE BASIS OF MATERIAL FOUND IN SEARCH OF THIRD PARTY, NO NOTICE U/S 148 CAN BE ISSUED AND THE ASSESSING OFFICER DOES NOT ACQUIRE JURISDICTION U/S 147/148 OF THE ACT. ACCORDINGLY, ASSESSMENT/RE ASSESSMENT SO MADE IS DIRECTED TO BE QUASHED . 8 9 . S INCE THE ASSESSEE SUCCEEDS ON THE LEGAL GROUND, I DO NOT DECIDE THE OTHER GROUNDS ON MERITS. THUS, THE GROUNDS OF APPEAL RAIS ED BY THE ASSESSEE ARE ALLOWED . 10 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOW ED . THE ORDER IS PRO NOUNCED IN THE OPEN COU RT ON 18 . 1 0.2017. SD/ - [B.P. JAIN] ACCOUNTANT MEMBER DATED: 18 TH OCTOBER , 2017 VL/ COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR ASST. REGISTRAR, ITAT, NEW DELHI