ACIT, New Delhi V. Shri Ankush Saluja, New Delhi

ITA 2047/DEL/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 3000 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 13-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Search and seizure; Loose papers; Reassessment proceedings
• Section: 143(3); 153A; 68; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES B: NEW DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA.NO.2047/DEL./2016 ASSESSMENT YEAR 2007-2008 THE DCIT, CENTRAL CIRCLE - 30, ROOM NO.320, E-2, ARA CENTRE, JHANDEWALAN EXTN. NEW DELHI. VS. SHRI ANKUSH SALUJA, 9A, JEEWAN JYOTI FARM, THE GREE RAJOKRI, NEW DELHI. PAN 110036. PANAQDPS8677G (APPELLANT) (RESPONDENT) FOR REVENUE : MS. RACHNA SINGH, CIT-D.R. FOR ASSESSEE : -NONE- DATE OF HEARING : 04.12.2017 DATE OF PRONOUNCEMENT : 07.12.2017 ORDER PER BHAVNESH SAINI, J.M. THIS APPEAL BY THE REVENUE HAS BEEN DIRECTED AGAI NST THE ORDER OF THE LD. CIT(A)-30, NEW DELHI, DATED 25 TH JANUARY, 2016, FOR THE A.Y. 2007-2008, CHALLENGING THE DELETION OF ADD ITION UNDER SECTION 68 OF THE I.T. ACT, 1961, ON ACCOUNT OF UNE XPLAINED CASH CREDIT. 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT A SEARC H AND SEIZURE OPERATION UNDER SECTION 132 OF THE I.T. ACT, WAS IN ITIATED BY THE 2 ITA.NO.2041/DEL./2016 SHRI ANKUSH SALUJA INVESTIGATION WING OF THE DEPARTMENT ON 12 TH JANUARY, 2011 IN SALUJA GROUP OF CASES. CASH AND JEWELLERY BELONGING TO THE ASSESSEE WERE FOUND AND SEIZED FROM THE RESIDENCE OF ASSESSE ES FATHER SHRI VINOD SALUJA IN WHOSE NAME SEARCH WARRANT OF AUTHOR ISATION WAS ISSUED. THE A.O. ACCORDINGLY, ISSUED NOTICE UNDER S ECTION 153C R.W.S. 153A OF THE I.T. ACT. THE ASSESSEE IN RESPONSE TO T HE SAID NOTICE, FILED RETURN OF INCOME DECLARING INCOME OF RS.4,97,60,870 . THE A.O. DURING THE ASSESSMENT PROCEEDINGS, FOUND THAT ASSES SEE HAS TAKEN UNSECURED LOANS FROM DIFFERENT PARTIES. THE A.O. AF TER CONSIDERING THE EXPLANATION OF ASSESSEE TREATED THE UNSECURED LOANS IN A SUM OF RS.11,90,57,300 AS UNEXPLAINED UNDER SECTION 68 OF THE I.T. ACT AND MADE THE ADDITION. THE ASSESSMENT WAS COMPLETED UND ER SECTION 153C R.W.S.153A OF THE I.T. ACT, DATED 14 TH MARCH, 2014. 3. THE ASSESSEE CHALLENGED THE AFORESAID ADDITION BEFORE THE LD. CIT(A) AND IT WAS EXPLAINED BEFORE THE LD. CIT( A) THAT NO ADDITION CAN BE MADE IN THE ABSENCE OF RECOVERY OF ANY INCRI MINATING MATERIAL DURING THE COURSE OF SEARCH AND SEIZURE OPERATION. THE ASSESSEE RELIED UPON THE DECISION OF HONBLE DELHI HIGH COUR T IN THE CASE OF CIT VS. KABUL CHAWLA 380 ITR 573 (DEL.) AND SUBMITT ED THAT IN THIS 3 ITA.NO.2041/DEL./2016 SHRI ANKUSH SALUJA CASE ORIGINAL ASSESSMENT HAD ALREADY FRAMED UNDER S ECTION 143(3) OF THE I.T. ACT. THEREFORE, IN THE ABSENCE OF RECOVERY OF ANY INCRIMINATING MATERIAL OF THE UNEXPLAINED CASH CREDIT, NO ADDITIO N COULD BE MADE BECAUSE NO ASSESSMENT WAS PENDING ON THE DATE OF TH E SEARCH. THE LD. CIT(A) CONSIDERING THE EXPLANATION OF ASSESSEE IN THE LIGHT OF MATERIAL ON RECORD, DELETED THE ADDITION FOLLOWING THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF KABUL CHAWL A (SUPRA). THE FINDINGS OF THE LD. CIT(A) IN PARAS 5.3 AND 5.4 OF THE ORDER ARE REPRODUCED AS UNDER : 5.3 FINDINGS: THE FINDINGS ARE AS UNDER :- 5.4 I HAVE CAREFULLY CONSIDERED ASSESSMENT ORDER, WRITT EN SUBMISSIONS, CASE LAWS RELIED UPON AND ORAL ARGUMEN TS OF LD. AR. THE OBJECTIONS/ARGUMENTS OF THE APPELLANT, ARE DISCUSSED AS UNDER:- (I) IT HAS BEEN SUBMITTED BY THE APPELLANT THAT THE ORI GINAL ASSESSMENT U/S 143(3) WAS COMPLETED ON 18.12.2009, CONSEQUENT OF SEARCH AND SEIZURE ACTION U/S 132 ON 12.01.2012. IN THE ASSESSMENT ORDER, NO ADDITION WA S MADE AND THE ASSESSMENT WAS COMPLETED AT RETURNED INCOME OF RS.4,97,60,866/-. 4 ITA.NO.2041/DEL./2016 SHRI ANKUSH SALUJA HOWEVER, IN THE SUBSEQUENT SEARCH AND SEIZURE ACTION U/S 132 OF THE ACT ON 12.01.2012, NO INCRIMI NATING DOCUMENT WAS FOUND. IT HAS BEEN FURTHER SUBMITTED T HAT THE EARLIER ASSESSMENT U/S 143(3), WAS COMPLETED ON 18.12.2009, BEFORE INITIATION OF ACTION U/S 132 ON 12.01.2012 AND THEREFORE, THE ASSESSMENT WAS NOT ABATED AT THE TIME OF INITIATION OF SECOND SEARCH O N 12.01.2012, CONSEQUENCE OF WHICH, THE ASSESSMENT OR DER PASSED BY THE A.O. ON 14.3.2014, IS CHALLENGED IN T HIS APPEAL. (II) IT HAS BEEN FURTHER SUBMITTED BY THE APPELLANT THAT SUBSEQUENT TO THE SEARCH AND SEIZURE ACTION U/S 132 OF THE ACT, ASSESSMENT U/S 153A/153C WAS COMPLETED ON 14.3.2014, AT TOTAL INCOME OF RS.16,88,18,170/-, AF TER MAKING ADDITION U/S 68 AS UNEXPLAINED CASH CREDIT O N ACCOUNT OF UNSECURED LOAN, BUT WITHOUT REFERRING AN Y INCRIMINATING DOCUMENT FOUND/SEIZED DURING THE SEAR CH AND SEIZURE ACTION U/S 132. THEREFORE, IT IS SUBMIT TED THAT ADDITION MADE BY THE A.O., IS WITHOUT ANY JURISDICT ION FOR MAKING SUCH ILLEGAL AND UNTENABLE ADDITION U/S 68 O F THE ACT. IN VIEW OF THE ABOVE FACTS, IT IS SUBMITTED BY THE APPELLANT THAT DECISION OF THE HONBLE JURISDICTIONA L HIGH COURT OF DELHI, IN THE CASE OF CIT VS. KABUL CHAWLA 61 TAXMANN.COM 412 (DEL.), IS SQUARELY APPLICABLE TO THE FACTS OF THE APPELLANT. 5 ITA.NO.2041/DEL./2016 SHRI ANKUSH SALUJA CONCLUSION: IN VIEW OF THE ABOVE, IT IS CLEAR THAT: (A) THE ORIGINAL ASSESSMENT ORDER DATED 18.12.2009 , PASSED U/S 143(3), WAS COMPLETED BEFORE THE INITIATION OF SEARCH AND SEIZURE ACTION U/S 132, ON 12.01.2012. THEREFOR E, I HOLD THAT NO ASSESSMENT/ REASSESSMENT PROCEEDINGS, WERE ABATED AS ON 12.01.2012 I.E. THE DATE OF INITIATION OF ACTION U/S 132 OF THE ACT.. (B) IT IS ALSO CLEAR FROM THE ASSESSMENT ORDER THAT TH E ADDITION MADE BY THE A.O. U/S 68, IS NOT BASED ON ANY INCRIM INATING DOCUMENT FOUND/SEIZED DURING THE SEARCH ACTION U/S 132 AND THEREFORE, I HOLD THAT THE A.O. HAS NO JURISDIC TION TO MAKE AN ADDITION U/S 68, WHILE PASSING ORDER U/S 153A/153C. THIS VIEW IS ALSO SUPPORTED BY THE RATIO LAID DOWN BY THE HON'BLE JURISDICTIONAL HIGH COURT OF DE LHI, IN THE CASE OF C1T VS. KABUL CHAWLA 61 TAXMANN.COM 412 (DEL), WHICH IS SQUARELY APPLICABLE TO THE FACTS OF THE APPELLANT. IN VIEW OF THE ABOVE, I AGREE WITH THE ARGUMENTS OF THE APPELLANT AND THEREFORE, ADDITION MADE BY THE A.O. U/S 68, IN ABSENCE OF ANY INCRIMINATING DOCUMENT/EVIDENCE, CANNOT BE SUSTAINED. ACCORDINGLY, GROUND NO. 3 AND 8, ARE HEREBY, ALLOWE D. 6 ITA.NO.2041/DEL./2016 SHRI ANKUSH SALUJA 4. THE LD. D.R. RELIED UPON THE ORDER OF THE A.O. AND ALSO FILED WRITTEN SUBMISSIONS IN WHICH IT IS BRIEFLY HI GHLIGHTED THAT THE PROVISIONS OF SECTIONS 153A/153C ARE CLEAR AND DID NOT MANDATE REQUIREMENT OF INCRIMINATING DOCUMENTS FOR THE PURP OSE OF FINALISING THE ASSESSMENT OR RE-ASSESSMENT UNDER THE ABOVE PRO VISIONS. THE LD. D.R. SUBMITTED THAT THE TAX STATUTE SHOULD BE I NTERPRETED STRICTLY. THE LD. D.R. SUBMITTED THAT THE OTHER HIGH COURTS H AVE HELD THAT THERE IS NO NEED FOR RECOVERY OF ANY INCRIMINATING MATERIAL DURING THE COURSE OF SEARCH AND RELIED UPON THE DECISION OF TH E ALLAHABAD HIGH COURT IN THE CASE OF RAJ KUMAR ARORA DATED 11 TH JULY, 2014 IN ITA.NO.56 OF 2011, DECISION OF KERALA HIGH COURT IN THE CASE OF E.N. GOPAKUMAR VS. CIT (2016) 75 TAXMANN.COM 215, DECISI ON OF ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. KESARWA NI ZARDA BHANDAR SAHSON ITA.NO.270 OF 2014, DECISION OF KERA LA HIGH COURT IN THE CASE OF CIT VS. ST. FRANCIS CLAY DCOR TILES 385 ITR 624 AND DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF SMT. DAYAWANTI GUPTA VS. CIT 390 ITR 496. THE LD. D.R. SUBMITTED T HAT THE DEPARTMENT HAS NOT ACCEPTED THE DECISION OF HONBLE DELHI HIGH 7 ITA.NO.2041/DEL./2016 SHRI ANKUSH SALUJA COURT IN THE CASE OF KABUL CHAWLA (SUPRA) AND SLP I S PENDING BEFORE THE HONBLE SUPREME COURT. 5. HOWEVER, NONE APPEARED ON BEHALF OF THE ASSESSE E DESPITE NOTIFYING THE DATE OF HEARING THROUGH REGISTERED PO ST. 6. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LD. D .R. AND PERUSED THE MATERIAL ON RECORD. THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA 380 ITR 573 HELD AS UN DER : COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE A.O. WHILE MAKING THE ASSESSMENT UNDER SECTION 153A ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS OR UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE CO URSE OF SEARCH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCL OSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT 6.1. THE HONBLE DELHI HIGH COURT IN ITS RECENT DE CISION IN THE CASE OF PR. CIT VS. MEETA GUTGUTIA 395 ITR 526 CONS IDERING ITS EARLIER DECISIONS IN THE CASE OF KABUL CHAWLA (SUPRA) AND SMT. DAYAWANTI GUPTA VS. CIT (SUPRA) HELD AS UNDER : 69. WHAT WEIGHED WITH THE COURT IN THE ABOVE DECIS ION WAS THE HABITUAL CONCEALING OF INCOME AND INDULGING IN CLA NDESTINE 8 ITA.NO.2041/DEL./2016 SHRI ANKUSH SALUJA OPERATIONS AND THAT A PERSON INDULGING IN SUCH ACT IVITIES CAN HARDLY BE ACCEPTED TO MAINTAIN METICULOUS BOOKS OR RECORDS FOR LONG. THESE FACTORS ARE ABSENT IN THE PRESENT CASE . THERE WAS NO JUSTIFICATION AT ALL FOR THE AO TO PROCEED ON SURMI SES AND ESTIMATES WITHOUT THERE BEING ANY INCRIMINATING MAT ERIAL QUA THE AY FOR WHICH HE SOUGHT TO MAKE ADDITIONS OF FRANCHI SEE COMMISSION. 70. THE ABOVE DISTINGUISHING FACTORS IN DAYAWANTI G UPTA (SUPRA), THEREFORE, DO NOT DETRACT FROM THE SETTLED LEGAL POSITION IN KABUL CHAWLA (SUPRA) WHICH HAS BEEN FOLLOWED NOT ON LY BY THIS COURT IN ITS SUBSEQUENT DECISIONS BUT ALSO BY SEVER AL OTHER HIGH COURTS. 71. FOR ALL OF THE AFOREMENTIONED REASONS, THE COUR T IS OF THE VIEW THAT THE ITAT WAS JUSTIFIED IN HOLDING THAT TH E INVOCATION OF SECTION 153A BY THE REVENUE FOR THE AYS 2000-01 TO 2003-04 WAS WITHOUT ANY LEGAL BASIS AS THERE WAS NO INCRIMI NATING MATERIAL QUA EACH OF THOSE AYS. CONCLUSION 72. TO CONCLUDE : (I)QUESTION (I) IS ANSWERED IN THE NEGATIVE I.E., I N FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. IT IS HELD THAT I N THE FACTS AND CIRCUMSTANCES, THE REVENUE WAS NOT JUSTIFIED IN INV OKING SECTION 153 A OF THE ACT AGAINST THE ASSESSEE IN RELATION T O AYS 2000-01 TO AYS 2003-04. 9 ITA.NO.2041/DEL./2016 SHRI ANKUSH SALUJA 7. THE ASSESSEE SUBMITTED BEFORE LD. CIT(A) THAT O RIGINAL RETURN OF INCOME WAS FILED UNDER SECTION 139(1) OF THE ACT ON 30 TH MAY, 2008 WHICH WAS ASSESSED UNDER SECTION 143(3) O N RETURNED INCOME OF RS.4,97,60,866. IT IS, THEREFORE, CLEAR T HAT PRIOR TO THE SEARCH THE ASSESSMENT UNDER SECTION 143(3) WAS COMP LETED. IT IS ALSO AN ADMITTED FACT THAT DURING THE COURSE OF SEARCH A ND SEIZURE NO INCRIMINATING EVIDENCE AS REGARDS THE ADDITION UNDE R SECTION 68 OF THE ACT WERE FOUND AND SEIZED DURING THE COURSE OF SEARCH. THEREFORE, NO ASSESSMENT/RE-ASSESSMENT WERE PENDING AS ON THE DATE OF SEARCH. IN THE ABSENCE OF ANY INCRIMINATING MATERIAL DURING THE COURSE OF SEARCH, THE LD. CIT(A) WAS JUSTIFIED IN RELYING UPO N THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF KABUL CHAWL A (SUPRA) FOR THE PURPOSE OF DELETING THE ADDITION. MERELY BECAUSE DE PARTMENTAL SLP IS PENDING BEFORE THE HONBLE HIGH COURT IS NO GROU ND TO TAKE A CONTRARY DECISION AGAINST THE DECISION OF THE JURIS DICTIONAL DELHI HIGH COURT. WE MAY ALSO REFER TO JUDGMENT OF HONBLE GUJ RAT HIGH COURT IN THE CASE OF VIJAY BHAI N. CHANDRANI VS. ACIT 333 ITR 436 IN WHICH IT WAS HELD AS UNDER : 10 ITA.NO.2041/DEL./2016 SHRI ANKUSH SALUJA HELD, ALLOWING THE PETITION, THAT ADMITTEDLY, THRE E LOOSE PAPERS RECOVERED DURING THE COURSE OF SEARCH PROCEE DINGS DID NOT BELONG TO THE PETITIONER. IT WAS NOT THE CA SE OF THE REVENUE THAT THREE DOCUMENTS WERE IN HAND - WRITING OF THE PETITIONER. IN THE CIRCUMSTANCES, WHEN THE CONDITIO N PRECEDENT FOR ISSUANCE OF NOTICE WAS NOT FULFILLED, ACTION TAKEN UNDER SECTION 153C OF THE ACT STOOD VITIATED. 8. IN THE PRESENT CASE, EVEN NO INCRIMINATING DOCU MENT WAS FOUND DURING THE COURSE OF SEARCH SO AS TO MAKE THE ADDITION UNDER SECTION 68 OF THE I.T. ACT ON ACCOUNT OF UNEXPLAINE D CASH CREDIT. THE LD. CIT(A) IN VIEW OF THESE FINDINGS DID NOT DECIDE THE ISSUE ON MERIT. THE ABOVE DISCUSSION CLEARLY SHOW THAT DEPARTMENT H AS NO CASE FOR INTERFERENCE. THE LD. D.R. HAS NOT POINTED OUT ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A). 9. IN THE RESULT, APPEAL OF THE DEPARTMENT STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (L.P. SAHU) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DELHI, DATED 07 TH DECEMBER, 2017 VBP/- 11 ITA.NO.2041/DEL./2016 SHRI ANKUSH SALUJA COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. CIT(A) CONCERNED 4. CIT CONCERNED 5. D.R. ITAT B BENCH, DELHI 6. GUARD FILE. //BY ORDER // ASST. REGISTRAR, ITAT, DELHI BENCHES DELHI.