ACIT, New Delhi V. Sh. Vinod Saluja, New Delhi

ITA 2052/DEL/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7158 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 2 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-07-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 13-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R S AHUJA
• Keywords: Document seized; Documents seized
• Section: 143(3); 153A; 68; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : B : NEW DELHI BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER ITA NO.2051/DEL/2016 ASSESSMENT YEAR : 2007-08 DCIT, CENTRAL CIRCLE-30, NEW DELHI. VS. M/S SALUJA CONSTRUCTION CO. LTD., 30, COMMERCIAL COMMUNITY CENTRE, 1 ST FLOOR, BASANT LOK, VASANT VIHAR, NEW DELHI 110057. PAN: AABCS3788H ITA NOS.2052 & 2053/DEL/2016 ASSESSMENT YEAR : 2006-07 & 2007-08 DCIT, CENTRAL CIRCLE-30, NEW DELHI. VS SHRI VINOD SALUJA, 9A, JEEVAN JYOTI FARM, THE GREEN RAJKORI, NEW DELHI. PAN: BEIPS9920L (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI R.S. AHUJA, CA DEPARTMENT BY : MS RACHNA SINGH, CIT, DR ITA NOS.2051 TO 2053/DEL/2016 2 DATE OF HEARING : 04.07.2018 DATE OF PRONOUNCEMENT : 05.07.2018 ORDER PER R.S. SYAL, VP: THIS BATCH OF THREE APPEALS BY THE REVENUE COMPRIS ES OF ONE APPEAL IN THE CASE OF SALUJA CONSTRUCTION COMPANY LTD. FOR THE ASSESSMENT YEAR 2007-08 AND TWO APPEALS IN THE CASE OF SH. VINOD SA LUJA FOR THE ASSESSMENT YEARS 2006-07 AND 2007-08. THE REVENUE HAS ASSAILE D THE LEGAL TENABILITY OF THE IMPUGNED ORDERS PASSED BY THE LD. CIT(A) ON 25.01.2016. SINCE ALL THESE APPEALS ARE BASED ON SIMILAR FACTS AND IDENTI CAL GROUNDS, WE ARE, THEREFORE, PROCEEDING TO DISPOSE THEM OFF BY THIS C ONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. BRIEFLY STATED, THE FACTS CONCERNING THE APPEAL IN THE CASE OF SALUJA CONSTRUCTION COMPANY LTD. ARE THAT A SEARCH AND SEI ZURE ACTION U/S 132(4) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER ALSO CALLE D THE ACT) WAS TAKEN UP ON 12.02.2012. THE ASSESSEE WAS CALLED UPON TO FIL E RETURN U/S 153A OF THE ACT, WHICH WAS FURNISHED WITH THE ORIGINALLY DECLAR ED INCOME OF RS.47,93,380/- AS AGAINST THE INCOME ASSESSED U/S 1 43(3) AT RS.50,33,380/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSING OFFICER FOUND ITA NOS.2051 TO 2053/DEL/2016 3 THAT THE ASSESSEE HAD SHOWN TO HAVE TAKEN UNSECURED LOANS FROM DIFFERENT PERSONS/PARTIES. IN ORDER TO ASCERTAIN THEIR IDENT ITY AND CAPACITY, THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO PRODUCE SUCH PERSONS. THE ASSESSEE COULD PRODUCE ONLY THREE PARTIES. INVOKIN G THE PROVISIONS OF SECTION 68, THE ASSESSING OFFICER HELD THAT THE ASS ESSEE HAD FAILED TO PROVE THE THREE LIMBS OF SECTION 68, NAMELY, IDENTITY, CA PACITY AND GENUINENESS OF THE TRANSACTIONS. HE, THEREFORE, MADE AN ADDITION O F RS.24,39,70,000/- TO THE ORIGINALLY ASSESSED INCOME AT RS.50,33,380/-. THE ASSESSEE CARRIED THE MATTER TO THE LEARNED FIRST APPELLATE AUTHORITY. A REMAND REPORT WAS CALLED FOR FROM THE ASSESSING OFFICER. AFTER CONSIDERING T HE RELEVANT MATERIAL, THE LD. CIT(A) DELETED THE ADDITION BY OBSERVING THAT N O INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH. THE REVENUE HAS APPROACHED THE TRIBUNAL AGAINST SUCH DELETION OF ADDITION. 3. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE REL EVANT MATERIAL ON RECORD. IT IS SEEN THAT THE SEARCH WAS CONDUCTED U /S 132 OF THE ACT ON 12.02.2012. THE ASSESSMENT YEAR UNDER CONSIDERATIO N IS 2007-08. OBVIOUSLY, NEITHER ANY ASSESSMENT WAS PENDING AT TH E TIME OF SEARCH NOR TIME WAS AVAILABLE FOR MAKING ASSESSMENT. IN FACT, THE ASSESSMENT IN THIS ITA NOS.2051 TO 2053/DEL/2016 4 CASE STOOD COMPLETED EARLIER U/S 143(3) OF THE ACT DETERMINING TOTAL INCOME AT RS.50.33 LAC. IN SUCH CIRCUMSTANCES, THE ASSESS MENT FOR THE YEAR UNDER CONSIDERATION CANNOT BE CONSTRUED AS THAT OF AN `AB ATED ASSESSMENT. 4. THE LD. CIT(A) HAS RELIED ON THE JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF KABUL CHAWLA VS. CIT (2016) 380 ITR 573 (DEL) TO DELETE THE ADDITION. THE FACTUAL MATRIX OF THE C ASE IS THAT A SEARCH WAS CARRIED OUT U/S 132 ON 15.11.2007 ON BPTP LTD., A L EADING REAL ESTATE DEVELOPER OPERATING ALL OVER INDIA AND SOME OF ITS GROUP COMPANIES INCLUDING THE PREMISES OF THE ASSESSEE, WHO OWNED A ND CONTROLLED THE GROUP. NO ASSESSMENT PROCEEDINGS WERE PENDING FOR T HE ASSESSMENT YEARS 2002-03, 2005-06 AND 2006-07 AS ON THE DATE OF THE SEARCH. THE ASSESSMENTS FOR SUCH ASSESSMENTS YEARS HAD ALREADY BEEN MADE U/S 143(1) OF THE ACT. THE ASSESSEE FILED RETURNS FOR THE THR EE ASSESSMENT YEARS DECLARING CERTAIN INCOME. THE ASSESSMENTS WERE COM PLETED U/S 153A FOR THE CONCERNED ASSESSMENT YEARS MAKING ADDITIONS, INTER ALIA , ON ACCOUNT OF LOW HOUSEHOLD WITHDRAWALS AND DEEMED DEDUCTION U/S 2(22)(E) OF THE ACT. IT WAS SUBMITTED BEFORE THE LD. CIT(A) THAT NO EVID ENCE WAS FOUND DURING THE COURSE OF SEARCH SO AS TO WARRANT AN ADDITION U /S 2(22)(E) OF THE ACT. ITA NOS.2051 TO 2053/DEL/2016 5 THE LD. CIT(A) HELD THAT THE ADDITIONS NEED NOT BE RESTRICTED ONLY TO THE SEIZED MATERIAL. THE TRIBUNAL CONCLUDED THAT: IF S OME INCRIMINATING MATERIAL IS FOUND IN RESPECT OF SUCH ASSESSMENT YEA RS FOR WHICH THE ASSESSMENT IS NOT PENDING, THEN, THE TOTAL INCOME W OULD BE DETERMINED BY CONSIDERING THE ORIGINALLY DETERMINED INCOME PLUS I NCOME EMANATING FROM THE INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. THAT IS HOW, THE ADDITIONS MADE U/S 2(22)(E), WHICH WERE NOT BAS ED ON ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH, WERE H ELD TO BE UNSUSTAINABLE IN LAW AND, HENCE, DELETED. THE HON'BLE HIGH COURT APPROVED THE VIEW TAKEN BY THE TRIBUNAL. IT SUMMARIZED THE LEGAL POSI TION IN PARA 37 OF ITS JUDGMENT AS UNDER :- `ON A CONSPECTUS OF SECTION 153A(1) OF THE ACT, RE AD WITH THE PROVISOS THERETO, AND IN THE LIGHT OF THE LAW EXPLAINED IN T HE AFOREMENTIONED DECISIONS, THE LEGAL POSITION THAT EMERGES IS AS UN DER: I. ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF T HE 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 DA TE 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 ITA NOS.2051 TO 2053/DEL/2016 6 AFOREMENTIONED SIX YEARS IN SEPARATE ASSESSMENT ORD ERS FOR EACH OF THE 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 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 MEAN THA T 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 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, T HE 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 A NY OTHER MATERIAL EXISTING OR BROUGHT 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 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. 5. IT IS EVIDENT FROM THE RATIO OF THE ABOVE JUDGMENT THAT ONCE A SEARCH TAKES PLACE U/S 132 OF THE ACT, THE ASSESSEE IS OBL IGED TO FILE RETURNS FOR THE SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE PREV IOUS YEAR RELEVANT TO THE ASSESSMENT YEAR IN WHICH THE SEARCH TOOK PLACE. IN SO FAR AS THE ITA NOS.2051 TO 2053/DEL/2016 7 COMPLETED ASSESSMENTS AS ON THE DATE OF THE SEARCH ARE CONCERNED, THE SAME ARE TO BE REPEATED AS INCREASED BY ADDITIONS, ONLY IF, BASED ON INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. IN OTH ER WORDS, IF NO INCRIMINATING MATERIAL IS FOUND DURING THE COURSE O F SEARCH, THEN, THE AMOUNT OF TOTAL INCOME DETERMINED UNDER THE EARLIER COMPLETED ASSESSMENTS IS TO BE ADOPTED IN A FRESH ASSESSMENTS U/S 153A WI THOUT MAKING ANY FURTHER ADDITION. 6. ADVERTING TO THE FACTS OF THE INSTANT CASE, WE F IND THAT THE ASSESSMENT YEAR 2007-08 UNDER CONSIDERATION FALLS IN THE CATEG ORY OF `COMPLETED ASSESSMENTS. IT IS AN ADMITTED POSITION THAT NO IN CRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH CONCERNING THE AD DITION MADE U/S 68 OF THE ACT. IN THAT VIEW OF THE MATTER, THE ASSESSMENT CANNOT EMBRACE ANY FRESH DISALLOWANCE OTHERWISE THAN THAT SUPPORTED BY ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. IN SUC H A SITUATION, THE ORIGINALLY DETERMINED INCOME HAS TO BE REPEATED IN THE ASSESSMENT U/S 153A OF THE ACT. ITA NOS.2051 TO 2053/DEL/2016 8 7. THE LD. DR CONTROVERTED THE FINDING RETURNED BY THE LD.CIT(A) THAT NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH BY REFERRING TO THE REMAND REPORT DATED 14.12.2015 SUBMITTED BY THE ASSESSING OFFICER WHICH HAS BEEN INCORPORATED ON PAGE 16 OF THE IMPUG NED ORDER. SHE HARPED ON THE OBSERVATIONS CONTAINED IN SUCH REMAND REPORT : IN THIS CONNECTION IT IS SUBMITTED THAT DURING THE SEARCH D ATED 12.01.2012, ON THE BASIS OF SEIZED DOCUMENTS (PAGE 101, ANNEXURE A-22) THE ASSESSEE GROUP MADE DISCLOSURE OF ADDITIONAL INCOME ON ACCOUNT OF UNDISCLOSED LOANS/ADVANCES. IN OUR CONSIDERED OPINION, THIS CO NTENTION DOES NOT TAKE THE CASE OF THE REVENUE ANY FURTHER. WHAT HAS BEEN WRITTEN BY THE ASSESSING OFFICER IN THE REMAND REPORT IS THAT THER E WERE CERTAIN UNDISCLOSED LOANS AND ADVANCES FOR WHICH THE ASSESS EE GROUP MADE DISCLOSURE OF ADDITIONAL INCOME. THIS EXHIBITS THA T THE ASSESSEE GROUP VOLUNTARILY MADE DISCLOSURE OF CERTAIN UNDISCLOSED LOANS/ADVANCES AND OFFERED ADDITIONAL INCOME TO THAT EXTENT. IT IMPLI ES THAT THE CREDITORS WHICH HAVE BEEN INSTANTLY ADDED U/S 68 OF THE ACT DO NOT FORM PART OF THE UNDISCLOSED LOANS/ADVANCES WHICH WERE SURRENDERED B Y THE ASSESSEE GROUP FOR WHICH SOME INCRIMINATING MATERIAL WAS FOUND. B E THAT AS IT MAY, IT IS ITA NOS.2051 TO 2053/DEL/2016 9 APPARENT FROM THE ASSESSMENT ORDER ITSELF, AS HAS B EEN CANDIDLY ADMITTED BY THE LD. DR AS WELL, THAT THERE IS NO REFERENCE TO A NY INCRIMINATING MATERIAL IN THE ASSESSMENT ORDER QUA THESE CREDITORS/ADVANCES IN RESPECT OF WHICH ADDITION OF RS.24.39 CRORE WAS MADE. RESPECTFULLY FOLLOWING THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN KABUL CHAWLA (SUPRA), WE HOLD THAT THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE A DDITION OF RS.24.93 CRORE AND ODD. 8. IN SO FAR AS THE APPEALS OF THE OTHER ASSESS EE, NAMELY, SHRI VINOD SALUJA FOR THE ASSESSMENT YEARS 2006-07 AND 2007-08 ARE CONCERNED, IT IS FOUND THAT THE ADDITIONS WERE MADE ON THE SAME PATT ERN U/S 68 OF THE ACT TO THE TUNE OF RS.12.98 CRORE AND RS.3.75 CRORE FOR TH E ASSESSMENT YEARS 2006- 07 AND 2007-08 RESPECTIVELY. THE LD. CIT(A) DELETE D SUCH ADDITIONS BY RELYING ON THE JUDGMENT DELIVERED IN THE CASE OF KABUL CHAWLA (SUPRA) AFTER NOTING THAT NO INCRIMINATING MATERIAL WAS FOUND DUR ING THE COURSE OF SEARCH QUA THESE CREDITS. 9. BOTH THE SIDES ARE IN AGREEMENT THAT THE FACTS A ND CIRCUMSTANCES OF THESE TWO APPEALS ARE MUTATIS MUTANDIS SIMILAR TO THOSE OF SALUJA ITA NOS.2051 TO 2053/DEL/2016 10 CONSTRUCTION CO. LTD. (ITA NO.2051/DEL/2016), WHICH WE HAVE DISPOSED OF HEREINABOVE. FOLLOWING SUCH VIEW, IT IS HELD THAT THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITIONS. WE, THEREFORE, COUNTENANCE THE IMPUGNED ORDERS. 10. IN THE RESULT, ALL THE APPEALS STAND DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 05.07.201 8. SD/- SD/- [K. NARASIMHA CHARY] [R.S. SYAL] JUDICIAL MEMBER VICE PRESIDENT DATED, 05 TH JULY, 2018. DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.