ACIT Central Circle-19, New Delhi V. Chanchal Taneja, New Delhi

ITA 1874/DEL/2019

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 116019 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-02-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 15-02-2023
• Assessment Year: 2010-2011
• Appeal Filed On: 04-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Search and seizure; Reassessment proceedings
• Section: 68; 148; 132; 139; 153A; 69B; 143(2); 139(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘B’, NEW DELHI BEFORE SH. ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SH. YOGESH KUMAR US, JUDICIAL MEMBER ITA No. 1874/Del/2019 (Assessment Year : 2010-11) ACIT Central Circle – 19, New Delhi PAN No. ACSPT 2316 F Vs. Chanchal Taneja F-19/89, Sec-15, Rohini, New Delhi (APPELLANT) (RESPONDENT) Assessee by Shri Ravi Pratap, Adv. Revenue by Shri T. James Singson, CIT-D.R. Date of hearing: 16.02.2023 Date of Pronouncement: 24.02.2023 ORDER PER ANIL CHATURVEDI, AM : This appeal filed by the Revenue is directed against the order dated 27.12.2018 of the Commissioner of Income Tax (Appeals)-24, New Delhi relating to Assessment Year 2010-11. 2. Brief facts of the case as culled out from the material on record are as under :- 3. Assessee is an individual and stated to be deriving income from salary and income from other sources. AO has noted that a search and seizure operation u/s 132 of the Act was carried out on KRBL Group of cases on 30.03.2016 and warrant of ITA No.1874/Del/2019 ACIT Vs. Chanchal Taneja 2 authorization u/s 132 of the Act was issued in the name of the assessee. Accordingly, notice u/s 153A of the Act dated 02.05.2017 and 25.08.2017 was issued to the assessee asking her to file the return of income for A.Y. 2010-11. In response to notice u/s 153A of the Act, assessee submitted that the return of income filed by her u/s 139 of the Act of Rs.3,86,290/- be considered to be return of income in response to notice u/s 153A of the Act. Thereafter, assessment was framed u/s 153A r.w.s 143(3) of the Act vide order dated 30.12.2017 and the total income of the assessee was determined at Rs.4,67,61,580/-. 4. Aggrieved by the order of AO, assessee carried the matter before CIT(A) who vide order dated 27.12.2018 in Appeal No.217/17-18 allowed the appeal of the assessee. Aggrieved by the order of CIT(A), Revenue is now in appeal before the Tribunal and has raised the following grounds: (i). “The order of Ld. CIT(A) is not correct in law and facts. (ii) On the facts and in the circumstances of the case. Ld. CIT(A) has erred in law & facts in deleting the addition of Rs.11,40,750/- on account of addition of unsecured loan u/s 68 of the IT Act, 1961. (iii) On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law and facts in deleting the addition of Rs.4,52,34,540/- on account of undisclosed investment in shares. (iv) On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in quashing the assessment order passed by AO u/s 153A/143(3) by holding that the AO had wrongly assumed jurisdiction u/s 153A of the 1.T.Act. 1961 and made addition to the returned income when no incrementing ITA No.1874/Del/2019 ACIT Vs. Chanchal Taneja 3 material was found during the course of search and seizure action.” 5. Before us, at the outset, Learned DR submitted that though the Revenue has raised various grounds but all the grounds are interconnected. 6. AO in the assessment order has noted that the case of the assessee was reopened u/s 148 of the Act on the basis of information received from DCIT, Central Circle – 9, New Delhi that assessee had received his own fund as unsecured loan from M/s. Vidhya Shankar Investment Pvt. Ltd. and purchased shares of M/s. Index Securities and Research Pvt. Ltd. at very low price resulting into escapement of income. Accordingly, a notice u/s 148 of the Act dated 30.03.2017 was issued to the assessee directing the assessee to file the return of income. AO has noted that since notice u/s 153A of the Act was issued to the assessee on 25.08.2017, therefore the proceedings reopened u/s 148 of the Act was abated as per 2 nd proviso the section 153A of the Act. AO thereafter, in the order dated 30.12.2017 passed u/s 153A r.w.s 143(3) of the Act for the reasons noted in the order made various additions and determined the total income of Rs.4,67,61,580/-. When the matter was carried before the CIT(A), CIT(A) by following the decision of Hon’ble Delhi High Court in the case of Kabul Chawla reported in 380 ITR 573 held that re-assessment proceedings could not have been abated and therefore the assessment u/s 153A/143(3) of the Act was quashed. Aggrieved by the order of CIT(A), Revenue is now before the Tribunal. ITA No.1874/Del/2019 ACIT Vs. Chanchal Taneja 4 7. Before us, Learned DR supported the order of AO. 8. Learned AR on the other hand reiterated the submissions made before the AO and CIT(A) and further submitted that the identical issue arising out of the same search arose in the case of husband of the assessee, Mr. Vinod Kumar Taneja, before the Tribunal. The Tribunal vide order dated 30.09.2022 in ITA No.1874/Del/2019 had upheld the order of CIT(A). He placed on record the copy of the aforesaid order. He submitted that since the facts of the case in the year under consideration are identical to the case of husband of the assessee Mr. Vinod Kumar Taneja (supra) no interference to the order of CIT(A) is called for. 9. We have heard the rival submissions and perused the material available on record. We find that CIT(A) has quashed the assessment u/s 153A/143(3) by observing as under : “5.3 On perusal of material on record it is noticed that the appellant filed the return of income for A.Y .2010-11 on 29.07.2010 u/s 139(1) of the Act. As notice u/s 143(2) of the Act was not issued to the appellant, obviously the return of income filed by the appellant was not selected for scrutiny. Hence, the assessment for A.Y. 2010-11 in the case of the appellant attained finality. Thereafter, search & seizure action u/s 132 of the Act was conducted on the appellant at her premises on 30.03.2016. So it is very clear that on the date of the initiation of search i.e. 30.03.2016, no assessment or reassessment proceedings in the case of appellant was pending and therefore in view of the second proviso to section 153A of the Act, there cannot be any case of assessment or reassessment proceedings for A.Y. 2010-11 getting abated. 5.4 Since the search was conducted at the premises of the appellant, therefore, as per the provisions of section 153A of the ITA No.1874/Del/2019 ACIT Vs. Chanchal Taneja 5 Act, the AO was required to issue notice u/s 153A of the Act for the six assessment years preceding the assessment year in which search was conducted. As evident from the material on record, pending issuance of notice u/s 153A of the Act subsequent to search action, notice u/s 148 of the Act was issued to the appellant on 30.03.2017 on the basis of the information received from the Dy. Commissioner of Income Tax, Central Circle-9, New Delhi regarding transaction of unsecured loan from M/s Vidya Shankar Investments Pvt. Ltd. and purchase of shares of M/s Index Securities & Research Pvt. Ltd. at very low price by the appellant. 5.5 It is further noticed that the AO issued notice u/s 153A of the Act to the appellant on 25.08.2017. As recorded in the assessment order u/s 153A/143(3) of the Act the AO concluded that the proceedings re-opened u/s 148 of the Act has got abated as per second proviso to section 153A of the Act. In course of proceedings u/s 153A of the Act the AO proposed to make addition of the unsecured loan received by the appellant from M/s Vidya Shankar Investments Pvt. Ltd. and also the difference in book value and purchase price of the shares of M/s Index Securities & Research Pvt. purchased by the appellant. It was specifically contended by the appellant that since no incriminating material was found from the premises of the appellant, as such, no addition can be made in respect of the aforesaid sums. However, the AO did not accept the contention of the appellant nor did he dispute that there was no incriminating material found as a result of search. As evident from the assessment order u/s 153A of the Act the AO held that nowhere it was mentioned u/s 153A of the Act that assessment should be based on incriminating material found as a result of search, The AO further held that in view of the fact that the case of the appellant was already re-opened u/s 148 of the Act which got abated on the issuance of notice u/s 153A of the Act therefore the case of the appellant was open for complete scrutiny. 5.6 On thorough consideration of the material on record I find that in the instant case additions made in the assessment order u/s 153A/143(3) of the Act are not based on any incriminating material found as a result of search action at the premises of the appellant. In fact, no incriminating material was brought on record by the AO while making the additions in the assessment order u/s 153A/143(3) of the Act. In such circumstances, I am inclined to hold that the additions made by the AO are not justified and is ITA No.1874/Del/2019 ACIT Vs. Chanchal Taneja 6 contrary to the ratio of judgement of the jurisdictional High Court in the case of CIT (Central-III) vs. Kabul Chawla 380 ITR 573 (Del) wherein it has been held that although Section 153A does not say that additions 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 arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material." 5.7 On due consideration I further hold that the AO is not justified in concluding that the case of the appellant re-opened u/s 148 of the Act got abated on issuance of notice u/s 153A of the Act and therefore the case of the appellant was open for complete scrutiny in proceedings u/s 153A of the Act. The AO has failed to note that under the second proviso to section 153A of the Act, the crucial date for abatement of proceedings is the date of initiation of search and not the date of the issuance of notice u/s 153A of the Act. In fact, in the case of Kabul Chawla, the High Court has specifically held that assessments and reassessments pending on the date of search shall abate. In this case, admittedly, search was conducted on 30.03.2016 and on the date of search, no assessment or reassessment was pending and it was only subsequent to the search action, notice u/s 148 of the Act was issued on 30.03.2017, and therefore, such reassessment proceedings could not have abated. 5.8 On careful consideration of the material on record, I find that the AO has not pointed out any incriminating material found during the search action relating to AY 2010-11 in the assessment order. In the absence of any incriminating material relating to AY 2010-11 and following the ratio of judgement of the jurisdictional High Court in the cases of CIT (Central-III) vs. Kabul Chawla 380 ITR 573 (Del) and PCIT(Central-II), New Delhi vs. Meeta Gutgutia 390 ITR 496 (Del) the action of the AO in assuming jurisdiction u/s 153A and thereafter framing assessment u/s 153A/143(3) of the Act is not justified. 5.9 In view of the facts stated above, in the absence of any incriminating material found during the search action and duly following the judgements in the cases of CIT (Central-III) vs. Kabul Chawla 380 ITR 573 (Del) and PCIT (Central-II), New Delhi vs. ITA No.1874/Del/2019 ACIT Vs. Chanchal Taneja 7 Meeta Gutgutia 390 ITR 496 (Del), I hold that the assessment u/s 153A/143(3) of the Act in the instant case for AY 2010-11 was not justified and therefore is quashed. In such circumstances the additions made by the AO on account of unsecured loan u/s 68 of the Act and unexplained investment u/s 69B of the Act respectively do not survive. Thus, Ground No. 2 of appeal succeeds and is accordingly allowed.” 10. We further find that identical issue arose in the case of the husband of the assessee, Mr. Vinod Kumar Taneja, wherein the Co-ordinate Bench of Tribunal vide order dated 30.09.2022 had dismissed the appeal of the Revenue. Before us, no fallacy in the findings of CIT(A) has been pointed out by Revenue nor has Revenue pointed to any distinguishing feature in the present case and that of husband of assessee, Mr. Vinod Kumar Taneja. In such a situation, we find no reason to interfere with the order of CIT(A). Thus the grounds of Revenue are dismissed. 11. In the result, appeal of Revenue is dismissed. Order pronounced in the open court on 24.02.2023 Sd/- Sd/- (YOGESH KUMAR US) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER Date:- 24.02.2023 PY* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI