Smt. Ranjana Garg, New Delhi V. DCIT, New Delhi

ITA 2083/DEL/2012

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6839 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 5 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-10-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 19-07-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 03-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUNIL CHANDER SHARMA
• Keywords: Unexplained cash credit; Sale consideration of property below Jantri Value; Capital asset; Search and seizure; Difference of opinion; Accommodation entries; Change of opinion
• Section: 143(3); 50C; 54F; 2(14); 153A; 133(6); 68; 132

Judgement Text

PAGE 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: B NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT & SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 2083/DEL/2012 ( ASSESSMENT YEAR: 2004-05) RANJANA GARG, 141, SUNDER NAGAR, NEW DELHI. AANPG3625Q VS DCIT CENTRAL CIRCLE 12, JHANDEWALAN EXTN., NEW DELHI. ITA NO. 2833/DEL/2012 ( ASSESSMENT YEAR: 2004-05) RANJANA GARG, 141, SUNDER NAGAR, NEW DELHI. AANPG3625Q VS DCIT CENTRAL CIRCLE 12, JHANDEWALAN EXTN., NEW DELHI. ITA NO. 2759/DEL/2012 ( ASSESSMENT YEAR: 2004-05) ACIT CENTRAL CIRCLE 12, NEW DELHI. VS AMITA GARG, G-15, MAHARANI BAGH, NEW DELHI. AADPG0990L ITA NO. 2345/DEL/2012 ( ASSESSMENT YEAR: 2006-07) ACIT CENTRAL CIRCLE 12, NEW DELHI. VS AMITA GARG, G-15, MAHARANI BAGH, NEW DELHI. AADPG0990L PAGE 2 CO NO. 254/DEL/2012 (IN ITA NO. 2345/DEL/2012) ( ASSESSMENT YEAR: 2006-07) AMITA GARG, G-15, MAHARANI BAGH, NEW DELHI. AADPG0990L VS ACIT CENTRAL CIRCLE 12, NEW DELHI. ITA NO. 2081/DEL/2012 ( ASSESSMENT YEAR: 2006-07) AMITA GARG, G-15, MAHARANI BAGH, NEW DELHI. AADPG0990L VS ACIT CENTRAL CIRCLE 12, NEW DELHI. ITA NO. 2758/DEL/2012 ( ASSESSMENT YEAR: 2003-04) AMITA GARG, G-15, MAHARANI BAGH, NEW DELHI. AADPG0990L VS ACIT CENTRAL CIRCLE 12, NEW DELHI. ITA NO. 2087/DEL/2012 ( ASSESSMENT YEAR: 2003-04) KUSUM LATA GARG G-15, MAHARANI BAGH NEW DELHI AAUPG3747N VS DCIT CENTRAL CIRCLE 12, JHANDEWALAN EXTN., NEW DELHI. ITA NO. 2344/DEL/2012 ( ASSESSMENT YEAR: 2006-07) ACIT CENTRAL CIRCLE 12, JHANDEWALAN EXTN., NEW DELHI. VS KUSUM LATA GARG G-15, MAHARANI BAGH NEW DELHI AAUPG3747N CO NO. 253/DEL/2012 (IN ITA NO. 2344/DEL/2012) PAGE 3 ( ASSESSMENT YEAR: 2006-07) KUSUM LATA GARG G-15, MAHARANI BAGH NEW DELHI AAUPG3747N VS ACIT CENTRAL CIRCLE 12, JHANDEWALAN EXTN., NEW DELHI. ITA NO. 2088/DEL/2012 ( ASSESSMENT YEAR: 2004-05) KUSUM LATA GARG G-15, MAHARANI BAGH NEW DELHI AAUPG3747N VS DCIT CENTRAL CIRCLE12, ROOM NO. 330, JHANDEWALAN EXTN., NEW DELHI. ITA NO. 2755/DEL/2012 ( ASSESSMENT YEAR: 2003-04) ACIT CENTRAL CIRCLE 12 NEW DELHI. VS KUSUM LATA GARG G-15, MAHARANI BAGH NEW DELHI. AAUPG3747N ITA NO. 2079/DEL/2012 ( ASSESSMENT YEAR: 2004-05) RAKESH KUMAR GARG, G-15, MAHARANI BAGH, NEW DELHI. AADPG0991M VS DCIT CENTRAL CIRCLE 12, JHANDEWALAN EXTN., NEW DELHI. ITA NO. 2078/DEL/2012 ( ASSESSMENT YEAR: 2003-04) RAKESH KUMAR GARG, G-15, MAHARANI BAGH, NEW DELHI. AADPG0991M VS DCIT CENTRAL CIRCLE 12, JHANDEWALAN EXTN., NEW DELHI. ITA NO. 2756/DEL/2012 ( ASSESSMENT YEAR: 2003-04) PAGE 4 ACIT CENTRAL CIRCLE 12 NEW DELHI. VS RAKESH KUMAR GARG G-15, MAHARANI BAGH NEW DELHI. AADPG0991M ITA NO. 3185/DEL/2013 ( ASSESSMENT YEAR: 2006-07) RAKESH KUMAR GARG G-15, MAHARANI BAGH NEW DELHI. AADPG0991M VS DCIT CENTRAL CIRCLE 12, JHANDEWALAN EXTN., NEW DELHI. ITA NO. 2085/DEL/2012 ( ASSESSMENT YEAR: 2003-04) DEVI DASS GARG G-15, MAHARANI BAGH NEW DELHI. AACPD7283Q VS DCIT CENTRAL CIRCLE 12, ROOM NO. 330, 3 RD FLOOR, ARA CENTRE, E-2, JHANDEWALAN EXTN., NEW DELHI. ITA NO. 2761/DEL/2012 ( ASSESSMENT YEAR: 2004-05) ACIT CENTRAL CIRCLE 12, NEW DELHI. VS DEVI DASS GARG, G-15, MAHARANI BAGH, NEW DELHI. AACPD7283Q ITA NO. 2086/DEL/2012 ( ASSESSMENT YEAR: 2004-05) DEVI DASS GARG, G-15, MAHARANI BAGH, NEW DELHI. AACPD7283Q VS DCIT CENTRAL CIRCLE 12, ROOM NO. 330, 3 RD FLOOR, ARA CENTRE, E-2, JHANDEWALAN EXTN., NEW DELHI. PAGE 5 ITA NO. 2760/DEL/2012 ( ASSESSMENT YEAR: 2003-04) ACIT CENTRAL CIRCLE 12, NEW DELHI. VS DEVI DASS GARG, G-15, MAHARANI BAGH, NEW DELHI. AACPD7283Q ITA NO. 2341/DEL/2012 ( ASSESSMENT YEAR: 2006-07) ACIT CENTRAL CIRCLE 12, NEW DELHI. VS DEVI DASS GARG, G-15, MAHARANI BAGH, NEW DELHI. AACPD7283Q CO NO. 252/DEL/2012 (IN ITA NO. 2341/D/2012) ( ASSESSMENT YEAR: 2006-07) DEVI DASS GARG, G-15, MAHARANI BAGH, NEW DELHI. AACPD7283Q VS ACIT CENTRAL CIRCLE 12, NEW DELHI. ITA NO. 2762/DEL/2012 ( ASSESSMENT YEAR: 2005-06) ACIT CENTRAL CIRCLE 12, NEW DELHI. VS DEVI DASS GARG, G-15, MAHARANI BAGH, NEW DELHI. AACPD7283Q CO NO. 176/DEL/2013 (IN ITA NO. 2762/D/2012) ( ASSESSMENT YEAR: 2005-06) DEVI DASS GARG, G-15, MAHARANI BAGH, NEW DELHI. AACPD7283Q VS ACIT CENTRAL CIRCLE 12, NEW DELHI. PAGE 6 ITA NO. 2348/DEL/2012 ( ASSESSMENT YEAR: 2006-07) DCIT CENTRAL CIRCLE-5, ROOM NO. 361, 3 RD FLOOR, ARA CENTRE, JHANDEWALAN EXTN., NEW DELHI. VS DEVI DASS SANTOSH KUMAR (HUF), 13-B, 3 RD FLOOR, NETAJI SUBHASH MARG, DARYA GANJ, NEW DELHI. AAAHD4035J CO NO. 179/DEL/2013 (IN ITA NO. 2348/D/2012) ( ASSESSMENT YEAR: 2006-07) DEVI DASS SANTOSH KUMAR (HUF), 13-B, 3 RD FLOOR, NETAJI SUBHASH MARG, DARYA GANJ, NEW DELHI. AAAHD4035J VS DCIT CENTRAL CIRCLE-5, ROOM NO. 361, 3 RD FLOOR, ARA CENTRE, JHANDEWALAN EXTN., NEW DELHI. ASSESSEE BY SH. RAJEEV SAXENA, ADV. SH. SUDESH GARG, CA MS. SUMANGLA SAXSENA, ADV. REVENUE BY SH. SUNIL CHANDER SHARMA, CIT DR DATE OF HEARING 19.07.2016 & 20.07.2016 DATE OF PRONOUNCEMENT 19.10.2016 PAGE 7 ORDER PER BENCH : THESE ARE A BUNCH OF 26 APPEALS AND INVOLVE IDENTIC AL ISSUES. ALL THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF THROUGH THIS COMMON ORDER. WE NOW TAK E UP THESE APPEALS ONE BY ONE. 2. RANJANA GARG - ITA NOS. 2083 AND 2833/DEL/2012 AY 04-05 : ITA NO. 2083/DEL/2012 HAS BEEN PREFERRED BY THE ASS ESSEE AGAINST THE ORDER DATED 20/03/2012 PASSED BY THE LD . CIT (A)-XXXI, NEW DELHI, WHEREAS ITA NO. 2833/DEL/2012 IS THE CROSS APPEAL BY THE DEPARTMENT. THE BRIEF FACTS AR E THAT THE PROCEEDINGS UNDER SECTION 153A OF THE INCOME TAX AC T, 1961, (HEREINAFTER CALLED THE ACT) WERE INITIATED IN PU RSUANCE TO SEARCH CONDUCTED ON 31/07/2008 ON THE RAJ DARBAR GR OUP. THE AO IN HIS ASSESSMENT ORDER HAS DISCUSSED THE BACKGROUND OF THE CASE AND HAS OBSERVED THAT FROM T HE PERUSAL OF THE DETAILS FILED, IT IS SEEN THAT THE A SSESSEE HAS CLAIMED TO HAVE RECEIVED AN AMOUNT OF RS. 99,00,630 /- AS SALES CONSIDERATION OF M/S NAGESHWAR INVESTMENT LTD . AND PAGE 8 HAS DECLARED A CAPITAL GAIN OF RS. 96,81,629/-. AP ART FROM THIS THE ASSESSEE HAS ALSO CLAIMED TO HAVE RECEIVED RS. 31,77,380/- AS SALE PROCEEDS OF SHARES OF M/S QUEST FINANCIAL AND RS. 21,17,350/- AS SALE PROCEEDS OF S HARES OF M/S M.P. INVESTMENTS LTD. THE AO HAS ALSO OBSERVED THAT ENQUIRIES WERE MADE FROM KOLKATA STOCK EXCHANGE WHI CH REVEALED THAT THE PRICE OF SCRIP OF M/S NAGESHWAR I NVESTMENT LTD. WAS AS LOW AS RS. 2/- ON 02/07/2002 AND AS HIG H AS RS. 107/- ON 02/05/2003. THE AO OBSERVED THAT SUCH A M ETEORIC RISE IN PRICE WAS ALSO A SUBJECT MATTER OF ENQUIRY BY THE SEBI. THE AO FURTHER NOTED THAT INFORMATION HAS BEEN RECE IVED FROM CALCUTTA STOCK EXCHANGE THAT DURING THAT PERIOD ONL Y 15 MEMBERS PARTICIPATED IN TRANSACTIONS IN THE SCRIP O F M/S NAGESHWAR INVESTMENTS LTD. AND THAT A LARGE NUMBER OF TRADINGS WERE IN THE NATURE OF SELF TRADING. THE A O FURTHER NOTED THAT SEBI HAS INFORMED THAT ENQUIRIES HAVE AL SO BEEN INITIATED AGAINST THE SHARE BROKERS FOR RIGGING THE PRICES OF SHARES OF THIS SCRIP AND THAT THE TRADING OF THE SC RIP OF M/S NAGESHWAR INVESTMENTS LTD. WAS SUSPENDED W.E.F. 22/11/2005. PAGE 9 2.01 ANOTHER IMPORTANT FACT RELATED TO THIS CASE IS THAT THE ASSESSEE HAD BEEN ASSESSED EARLIER U/S 143(3) AT CE NTRAL CIRCLE, AGRA FOR THE YEAR UNDER CONSIDERATION. IN THE ASSESSMENT ORDER DATED 29/12/2006, THE AO HAD SPECI FICALLY MENTIONED THAT IN ORDER TO VERIFY THE GENUINENESS O F THE TRANSACTION OF SHARES, NOTICES U/S 133(6) WERE ISSU ED TO M/S NAGESHWAR INVESTMENTS LTD. AND M/S BUBNA STOCK BROK ING SERVICES LTD. THROUGH WHICH THE SHARES WERE PURCHAS ED/SOLD BY THE ASSESSEE BUT NO REPLY WAS RECEIVED IN RESPEC T OF TRANSACTIONS OF SHARES OF M/S NAGESHWAR INVESTMENT LTD. ACCORDINGLY, AT THE TIME OF THE ORIGINAL PROCEEDING S, THE AMOUNT CLAIMED TO BE RECEIVED ON ACCOUNT OF SALE OF THESE SHARES WAS HELD AS UNEXPLAINED CASH CREDIT AND ADDI TIONS WERE MADE ACCORDINGLY. SIMILARLY, THE AMOUNTS CLAI MED TO HAVE BEEN RECEIVED AS SALE PROCEEDS OF SHARES OF M/ S QUEST FINANCIAL & M/S MP INVESTMENTS LTD. WERE ALSO HELD TO BE UNEXPLAINED CASH CREDITS. THE AO ALSO NOTED THAT M /S NAGESHWAR INVESTMENT LTD. WAS A GROUP CONCERN OF TH E ASSESSEE. DURING THE COURSE OF PROCEEDINGS U/S 153 A, IT HAS BEEN THE ASSESSEES CONTENTION THAT NO INCRIMINATIN G MATERIAL PAGE 10 WAS FOUND DURING THE COURSE OF THE SEARCH. HOWEVER , THE AO MADE AN ADDITION OF RS. 1,54,99,270/- ON ACCOUNT OF ALLEGED ACCOMMODATION ENTRY. THIS ADDITION INCLUDED 2% EXP ENDITURE INCURRED FOR ACCOMMODATION TRANSACTION. THIS ADDIT ION WAS MADE ON ACCOUNT OF LONG TERM CAPITAL GAIN ON SALE O F SHARES U/S 68 OF THE ACT. BESIDES THIS AN ADDITION OF RS. 3,21,317/- ON ACCOUNT OF NOTIONAL INCOME FROM HOUSE PROPERTY W AS MADE AS ALREADY MADE IN THE ORIGINAL ORDER OF ASSESSMENT DATED 29/12/2006. FURTHER, AN ADDITION OF RS. 1 LAKH WA S MADE ON ACCOUNT OF DISALLOWANCE OF AGRICULTURAL EXPENSES AS OUT OF BOOKS EXPENSES. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT (A) AND CHALLENGED THE ASSUMPTIO N OF JURISDICTION U/S 153A OF THE ACT AS WELL AS CHALLEN GED THE ADDITION ON MERITS. HOWEVER, THE LD. CIT (A) DISMI SSED THE ASSESSEES LEGAL GROUND CHALLENGING THE ASSUMPTION OF JURISDICTION U/S 153A AND CONFIRMED ADDITION OF RS. 54,00,627/- (INCLUDING 2% EXPENSES ON PROVIDING ACCOMMODATION ENTRIES) BEING UNDISCLOSED INCOME FRO M THE SALE OF SHARES OF M/S NAGESHWAR INVESTMENT LTD. TH E OTHER ADDITIONS WERE HOWEVER, DELETED BY THE LD. CIT (A). NOW, BOTH PAGE 11 THE ASSESSEE AS WELL AS THE DEPARTMENT HAS FILED TH E CROSS APPEALS BEFORE THE ITAT AND THE GROUNDS READ AS UND ER: GROUNDS OF ITA 2083/DEL/12 : 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LD. CIT (A) XXXI IS CORRECT IN UPHOLDING THE ASSESSMENT FRAMED OUTSIDE THE SEARCH MATERIAL AND AFTER THE CHANGE OF OPINION? 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LD. CIT (A) XXXI ERRED IN CONFIRMING THE ADDITION OF RS. 54,00,627/- INCLUDING 2% EXPENDITURE ON ACCOUNT OF SALE OF SHARES OF M/S NAGESHWAR INVESTMENTS LTD. 3. THE ASSESSEE CRAVES FOR THE ADDITION, MODIFICATION AND DELETION OF THE GROUNDS OF APPEAL. GROUNDS OF ITA 2833/DEL/12 : 1. THE ORDER OF THE LD. CIT (A) IS NOT CORRECT IN LAW AND FACTS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES, THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 21,59,698 /- MADE BY THE AO U/S 68 OF IT ACT, 1961 AS UNEXPLAINED CASH CREDIT ON ACCOUNT OF SALE OF SHARE S OF M/S M.P. INVESTMENT LIMITED, WITHOUT APPRECIATIN G PAGE 12 THE FACT THAT THE TRANSACTION OF SALE OF SHARES IS NOT GENUINE BUT AN ARRANGED DEAL MANAGED BY THE ASSESSEE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF R S. 32,40,929/- MADE BY THE AO UNDER SECTION 68 OF THE IT ACT, 1961 WAS UNEXPLAINED CASH CREDIT ON ACCOUNT OF SALE OF SHARES OF M/S QUEST FINANCIAL SERVICES LTD., WITHOUT APPRECIATING THE FACT THAT THE TRANSACTION OF SALE OF SHARES IS NOT GENUINE BUT AN ARRANGED DEAL MANAGED BY THE ASSESSEE. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY/ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING T HE COURSE OF THE HEARING OF THE APPEAL. 2.02 THE LD. AR FILED WRITTEN SUBMISSIONS IN SUPPOR T OF THE ASSESSEES CROSS APPEAL AND THE SAME IS BEING REPRO DUCED FOR A READY REFERENCE AS UNDER: 1. THAT THE AFORESAID CROSS APPEAL HAVE BEEN FILED AGAINST THE ORDER OF THE CIT (A) DATED 20.03.2012, WHEREIN LEARNED CIT (A) HAS PARTIALLY ALLOWED THE APPEAL OF THE ASSESSEE. PAGE 13 2. THAT VIDE THE AFORESAID ORDER, LEARNED CIT(A) HAS REJECTED THE GROUND OF THE ASSESSEE WHEREBY ASSESSEE HAS CHALLENGED THE ADDITIONS MADE IN THE ORDER OF ASSESSMENT FRAMED UNDER SECTION 153A OF THE ACT, AS NONE OF THE ADDITIONS MADE BY THE LEARNED AO WERE BASED ON THE INCRIMINATING MATERIAL FOUND AS A RESULT OF SEARCH UNDER SECTION 132(1) OF THE ACT ON THE SEARCHED PERSON I.E. M/S RAJDARBAR GROUP 31.07.2008. 3. IT IS RESPECTFULLY SUBMITTED THAT IN THE INSTANT CASE, FOR THE AFORESAID ASSESSMENT YEAR I.E. AY 2004-05, RETURN OF INCOME FILED BY THE ASSESSEE WAS DULY SCRUTINIZED BY THE LEARNED AO BY FRAMING AN ORDER OF ASSESSMENT UNDER SECTION 143(3) OF THE ACT ON 29.12.2006 MAKING ADDITIONS OF RS. 1,54,99,267/- AS BOGUS ACCOMMODATION ENTRY, DISALLOWANCE OF EXPENSES AND ALSO ADDITION OF RS. 3,21,317/- ON ACCOUNT OF SECTION 23(L)(C). AGAINST THE AFORESAID ORDER OF ASSESSMENT, ASSESSEE PREFERRED AN APPEAL BEFORE THE LEARNED CIT(A) AND LEARNED CIT(A) VIDE HIS ORDER DATED 21.01.2008 DELETED THE ADDITION MADE ON ACCOUNT OF BOGUS ACCOMMODATION ENTRY, DISALLOWANCE OF EXPENSES TO THE EXTENT OF RS. 1,00,000 AND ADDITION OF RS. 3,21,317/- ON ACCOUNT OF SECTION PAGE 14 23(1)(C) OF THE ACT. IT IS MOST HUMBLY SUBMITTED THAT APPEAL FILED BY THE REVENUE AGAINST THE AFORESAID ORDER OF THE LEARNED CIT(A) HAS ALSO BEEN DISMISSED BY THE HONBLE TRIBUNAL VIDE ITS ORDER DATED 31.08.2009 AND AFORESAID ORDER OF THE HONBLE TRIBUNAL HAS ALSO BEEN UPHELD BY THE HONBLE HIGH COURT VIDE ITS ORDER DATED 11.05.2011. 4. IT IS SUBMITTED THAT IN THE INSTANT CASE, PROCEEDINGS UNDER SECTION 153A OF THE ACT HAS BEEN INITIATED IN PURSUANCE TO SEARCH CONDUCTED ON 31.07.2008, WHEREIN NO INCRIMINATING MATERIAL HAS BEEN FOUND, LEARNED AO VIDE HIS ORDER DATED 20.12.2010 HAS AGAIN MADE ADDITION OF RS, 1,54,99,270/- ON ACCOUNT OF ALLEGED ACCOMMODATION ENTRY AND ALSO MADE ADDITION OF RS. 3,21,317 ON ACCOUNT OF NOTIONAL INCOME FROM HOUSE PROPERTY AS WAS MADE IN ORIGINAL ORDER OF ASSESSMENT DATED 29.12.2006. IT IS SUBMITTED THAT WHILE MAKING THE AFORESAID ADDITIONS IN ORDER OF ASSESSMENT PASSED UNDER SECTION 153A OF THE ACT, LEARNED AO HAS NOT REFERRED ANY INCRIMINATING MATERIAL FOUND AS A RESULT OF SEARCH AND HAS MADE THE ADDITION OF RS, 1,54,99,270/- ON ACCOUNT OF ALLEGED ACCOMMODATION ENTRY MERELY ON THE BASIS PAGE 15 OF THE UNSUBSTANTIATED MATERIAL GATHERED FROM THE STOCK EXCHANGES WHICH MATERIAL ALSO DOES NOT ESTABLISH THAT THE ASSESSEE HAS TAKEN ANY ACCOMMODATION ENTRY, AS SUCH, ADDITION MADE IN THE ORDER OF ASSESSMENT IS OUTSIDE THE SCOPE OF SECTION 153A OF THE ACT. 5. IN SUPPORT OF THE AFORESAID SUBMISSION, RELIANCE IS PLACED ON THE RECENT JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA (ITA 707/2014 DATED 28.08.2015) WHEREIN HONBLE HIGH COURT AFTER THREADBARE EXAMINING ALL THE JUDICIAL PRONOUNCEMENTS ON THE SUBJECT I.E. JUDGMENTS OF HIGH COURT OF DELHI IN THE CASE OF CIT V. ANIL KUMAR BHATIA [2013] 352 ITR 493 (DEL), MADUGULA VENU V. DIRECTOR OF INCOME TAX[2013] 29 TAXMANN.COM 200 (DELHI), CIT V. CHETAN DAS LACHMAN DAS (ITA NO.2021/2010), FILATEX INDIA LTD. V. CIT- IV [2014] 49 TAXMANN.COM 465 (DELHI), PR. COMMISSIONER OF INCOME TAX V. KURELE PAPER MILLS P. LTD.( ITA NO. 369 OF 2015), JUDGMENT OF HIGH COURT OF RAJASTHAN IN THE CASE OF JAI STEEL (INDIA), JODHPUR V. ACIT [2013] 36 TAXMANN.COM 523 (RAJ), JUDGMENTS OF HIGH COURT OF BOMBAY IN THE CASE OF CIT V. M/S. MURLI AGRO PRODUCTS LTD. PAGE 16 (ITA NO.36/2009), COMMISSIONER OF INCOME TAX V. CONTINENTAL WAREHOUSING CORPORATION (NHAVA SHEVA) LTD. [2015] 58 TAXMANN.COM 78 (BOM), JUDGMENT OF HIGH COURT OF KARNATAKA IN THE CASE OF M/S. CANARA HOUSING DEVELOPMENT COMPANY V. THE DCIT (ITA NO.38/2014), ORDER OF SPECIAL BENCH IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. V. DEPUTY COMMISSIONER OF INCOME TAX [2012] 23 TAXMANN.COM 103 (MUM.) (SB) HAS SUMMARIZED THE LEGAL POSITION. XXX 6. THAT AFORESAID JUDGMENT OF CIT VS. KABUL CHAWLA (SUPRA) HAS FURTHER BEEN FOLLOWED IN THE CASE OF PCIT V. KUSUM GUPTA IN ITA NO. 634/2015 DATED 01.09.2015, WHEREIN AGAIN IT WAS REITERATED THAT UNLESS SOME INCRIMINATING MATERIAL IS FOUND AS A RESULT OF SEARCH ADDITION MADE IS OUTSIDE THE SCOPE OF SECTION 153A OF THE ACT. 7. RELIANCE IS ALSO PLACED ON THE FOLLOWING JUDIC IAL PRONOUNCEMENTS: I. ACIT VS. PACL INDIA LTD. ITA NO. 2637/DEL/2011 DATED 20.6.2013 II. GURINDER SINGH BAWA VS. DCIT 28 TAXMANN.COM 328 (MUM) PAGE 17 III. ACIT VS. PRATIBHA INDUSTRIES LTD. 23 ITR 766 (TRIB) (MUM) IV. MGF AUTOMOBILES LTD. VS. ACIT ITA NO. 4212 AND 4213/DEL/11 DATED 28.6.2013 V. BHARATI VIDYAPEETH VS. ACIT ITA NO. 917- 922/PN/2010 DATED 28.4.2011 VI. SINHGAD TECHNICAL EDUCATION SOCIETY VS. ACIT 140 TTJ 233 (PUNE) VII. ACIT VS. SHRI MANOJ NARAIN AGGARWAL ITA NO(S). 5518 TO 5524/DEL/12 A.YS. 03-04 TO 09-10 DATED 30.01.2014 VIII. M/S MARIGOLD MERCHANDISE P. LTD. VS. DCIT ITA NOS. 2666 & 2667/DEL/2013 A.YS. 08-09 AND 07-08 DATED 27.12.2013 IX. ACIT VS. PRADEEP KUMAR KUMRA ITA NO. 4016/DEL/2011 A.Y. 02-03 DATED 7.11.2013 X. CIT VS. SMT. SHAILA AGARWAL 346 ITR 130 (ALL) XI. DIVINE INFRACTION P. LTD. VS. DCIT ITA NO. 2393/DEL/2014 AY 08-09 DATED 12.6..2014 XII. ASSTT. COMMISSIONER OF INCOME TAX, VS. INLAY MARKETING P. LTD. (ITA NO. 4200/DEL/2012 TO 4202/DEL/2012 AND 4197/DEL/2012 TO 4199/DEL/2012 DATED 14.11.2014) XIII. ACIT VS. ASHA KATARIA ITA NO. 3105/DEL/2011 ORDER DATED 20.5.2013 XIV. DCIT VS. VRINDAVAN FARMS P. LTD. ITA NOS. PAGE 18 3359, 3360, 3361/DEL/2013 DATED 6.6.2014 XV. JAKSON ENGINEERING LTD. VS. ACIT ITA NO. 349-350/DEL/13 DATED 11.4.2014 XVI. BHARATI VIDYAPEETH MEDICAL FOUNDATION VS. ACIT ITA NO. 36,37, 39/2012 DATED 10.4.2014 (BOM.); XVII. ACIT VS. PRITHVI SOUND PRODUCTS CO. P. LTD. ITA NO. 3422-6/DEL/2011 DATED 17.4.2014 (DELHI TRI.). 8. IN VIEW OF THE AFORESAID JUDICIAL PRONOUNCEMENTS, IT IS MOST HUMBLY SUBMITTED THAT SINCE NONE OF THE ADDITIONS/DISALLOWANCES MADE BY THE LEARNED AO WAS BASED ON ANY INCRIMINATING MATERIAL FOUND AS A RESULT OF SEARCH, AS, SUCH, THE ADDITIONS/DISALLOWANCES MADE IS OUTSIDE THE SCOPE OF SECTION 153A OF THE ACT AND, AS SUCH, IT IS PRAY ED THAT THE APPEAL OF THE ASSESSEE BE ALLOWED AND APPEAL OF THE REVENUE MAY KINDLY BE DISMISSED. 2.03 THE LD. DR SUBMITTED THAT THAT THE ADDITION W AS JUSTIFIED IN VIEW OF THE FACT THAT THE BROKER DID N OT RESPOND TO THE SUMMONS ISSUED BY THE DEPARTMENT. THE LD. DR PAGE 19 SUBMITTED THAT THE DELETION MADE BY THE LD. CIT (A) OF RS. 2,159,698/- ON ACCOUNT OF SALE OF SHARES OF M/S M.P . INVESTMENT LTD. AND OF RS. 3,240,929/- ON ACCOUNT O F SALE OF SHARES OF M/S QUEST FINANCIAL SERVICES LTD. WAS NOT JUSTIFIED BECAUSE THE ONUS ON THE ASSESSEE CANNOT BE SHIFTED TO THE REVENUE. HE EMPHASIZED THAT HERE THE BONA FIDES OF THE BROKER WERE UNDER QUESTION AND THE DEALINGS WITH AL L THE THREE COMPANIES WERE APPARENTLY SUSPICIOUS. THE LD . DR HEAVILY RELIED ON THE FINDINGS OF THE AO AND VEHEME NTLY ARGUED THAT IN VIEW OF THE SPECIFIC INCONSISTENCIES POINTED OUT BY THE AO, THE RELIEF GRANTED TO THE ASSESSEE BY TH E LD. CIT (A) WAS NOT LEGALLY TENABLE. 2.04 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALSO PERUSED THE MATERIAL ON RECORD. SECTION 153A OF TH E ACT PROVIDES THAT WHERE A SEARCH IS INITIATED U/S 132 O F THE ACT, THE AO SHALL ASSESS OR REASSESS THE TOTAL INCOME OF THE SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSME NT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE SEARCH I S CONDUCTED OR REQUISITION IS MADE. THE FIRST PROVISO STATES TH AT THE AO SHALL ASSESS OR REASSESS THE TOTAL INCOME IN RESPEC T OF EACH PAGE 20 ASSESSMENT YEAR FALLING WITHIN SUCH SIX ASSESSMENT YEARS. THE SECOND PROVISO STATES THAT THE ASSESSMENT OR REASSESSMENT RELATING TO THE SAID SIX ASSESSMENT YE ARS PENDING ON THE DATE OF INITIATION OF THE SEARCH U/S 132 SHALL ABATE. IT IS SEEN THAT IN ASSESSEES CASE SEARCH AC TION WAS INITIATED AND ASSESSMENTS U/S 153A WERE FRAMED FOR DIFFERENT ASSESSMENT YEARS MAKING VARIOUS ADDITIONS. IT IS AS SESSEES CLAIM THAT THE ADDITION WAS NOT TENABLE AS THE REGULAR/ORIGINAL RETURN HAD BEEN FILED WHEREIN THE PARTICULARS RELATING TO THE ADDITION HAS BEEN DISCLOSED AND THE SAME HAD BEEN ADDED BY THE AO IN THE ASSESSMENT MADE U/S 143 (3) OF THE ACT. IT IS ALSO SEEN THAT THE ASSESSEE HAD PREF ERRED AN APPEAL BEFORE THE LD. CIT (A) WHO HAD DELETED THESE ADDITIONS AND ON FURTHER APPEAL BY THE DEPARTMENT, ITAT AGRA BENCH HAD ALSO UPHELD THE CIT (A)S ORDER IN ITA NOS. 142 AND 153/AGR/2008. SUBSEQUENTLY, REVENUES APPEAL BEFORE THE HONBLE HIGH COURT WAS ALSO DISMISSED VIDE ORDER DA TED 29.03.2011. IT IS SEEN FROM THE RECORDS THAT NO MAT ERIAL HAS BEEN FOUND DURING THE SEARCH TO JUSTIFY THE ADDITIO N. IN OUR CONSIDERED OPINION SECTION 153A DOES NOT AUTHORISE THE PAGE 21 MAKING OF A DE NOVO ASSESSMENT IN THIS PARTICULAR ASSESSMENT YEAR. WHILE UNDER THE FIRST PROVISO, THE AO IS EMPO WERED TO FRAME ASSESSMENT FOR SIX YEARS, UNDER THE SECOND PR OVISO ONLY ASSESSMENTS WHICH ARE PENDING ON THE DATE OF INITIA TION OF SEARCH ABATE. THE EFFECT IS THAT COMPLETED ASSESSME NTS DO NOT ABATE. THE ASSESSMENTS CAN BE SAID TO BE PENDING ON LY IF THE AO IS STATUTORILY REQUIRED TO DO SOMETHING FURTHER. IF THE SECTION 143(2) NOTICE HAS BEEN ISSUED, THE ASSESSME NT CAN BE SAID TO BE PENDING. HOWEVER AN ASSESSMENT WHICH HAS BEEN CONTESTED UP TO THE HIGH COURT CANNOT BE SAID TO BE PENDING. THE POWER GIVEN BY THE FIRST PROVISO TO ASSESS INCO ME FOR SIX ASSESSMENT YEARS HAS TO BE CONFINED TO THE UNDISCLO SED INCOME UNEARTHED DURING SEARCH AND CANNOT INCLUDE I TEMS WHICH WERE DISCLOSED IN THE ORIGINAL ASSESSMENT PRO CEEDINGS. A PERUSAL OF THE ASSESSMENT ORDER PASSED U/S 153A O F THE ACT REVEALS THAT THE AO HAS NOT MADE ANY REFERENCE WHAT SOEVER TO ANY INCRIMINATING MATERIAL FOUND AS A RESULT OF THE SEARCH AND THE ADDITION OF RS. 15,499,270/- HAS BEEN MADE ENTI RELY ON THE BASIS OF ALLEGATION OF ACCOMMODATION ENTRY WHIC H IN TURN IS BASED ON SOME MATERIAL SAID TO HAVE BEEN GATHERE D FROM PAGE 22 STOCK EXCHANGE BUT WHICH DOES NOT SPECIFICALLY POIN T OUT TOWARDS THE ASSESSEE. THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA IN ITA NO. 707/2014 DA TED 28/08/2015 HAS EXAMINED THREAD BARE THE PROVISIONS OF SECTION 153A AND HAS SUMMARIZED THE LEGAL POSITION BY HOLDING AS UNDER: 37. ON A CONSPECTUS OF SECTION 153A(1) OF THE ACT , READ WITH THE PROVISOS THERETO, AND IN THE LIGHT OF THE LAW EXPLAINED IN THE AFOREMENTIONED DECISIONS, THE LEGAL POSITION THAT EMERGES IS AS UNDER: I. ONCE A SEARCH TAKES PLACE U/S 132 OF THE ACT, NOTICE U/S 153A(1) WILL HAVE TO BE MANDATORILY ISSUED TO THE PERSON SEARCHED REQUIRING HIM TO FILE RETURNS FOR SIX AYS IMMEDIATELY PRECEDING THE PREVIOUS YEAR RELEVANT TO THE AY IN WHICH THE SEARCH TAKES PLACE. II. ASSESSMENTS AND REASSESSMENTS PENDING ON THE DATE OF THE SEARCH ABATE. THE TOTAL INCOME FOR SUCH AYS WILL HAVE TO BE COMPUTED BY THE AOS AS A FRESH EXERCISE. PAGE 23 III. THE AO WILL EXERCISE NORMAL ASSESSMENT POWERS IN RESPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT AY IN WHICH THE SEARCH TAKES PLACE. THE AO HAS THE POWER TO ASSESS AND REASSESS THE TOTAL INCOME OF THE AFOREMENTIONED SIX YEARS IN SEPARATE ASSESSMENT ORDERS FOR EACH OF THE SIX YEARS. IN OTHER WORDS THERE WILL BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX AYS IN WHICH BOTH THE DISCLOSED AND THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX. IV. 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 RELEVANT OR NEXUS WITH THE SEIZED MATERIAL. OBVIOUSLY AN ASSESSMENT HAS TO BE MADE UNDER THIS SECTION ONLY ON THE BASIS OF SEIZED MATERIAL. PAGE 24 V. IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPLETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESSMENT CAN BE MADE. THE WORD ASSESS IN SECTION 153A IS RELATABLE TO ABATED PROCEEDINGS (I.E. THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD REASSESSEE TO COMPLETED ASSESSMENT PROCEEDINGS. VI. INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, THE JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT U/S 153A MERGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY FOR EACH AY ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTHER MATERIAL EXISTING OR BROUGHT ON THE RECORD OF THE AO. VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE AO WHILE MAKING THE ASSESSMENT U/S 153A ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS OR PAGE 25 UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. 2.05 IN THE LIGHT OF THE AFORESAID OBSERVATIONS OF THE HONBLE DELHI HIGH COURT, WE HOLD THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) WAS NOT CORRECT IN UPHOLDING THE ASSESSMENT FRAMED OUTSIDE THE SEARCH MATERIAL AND HENCE, WHILE ALLOWING GROUND NO. 1 OF THE ASSES SEES APPEAL, WE DELETE ALL THE ADDITIONS MADE IN THE ASS ESSMENT PROCEEDINGS U/S 153A OF THE ACT AS THE IMPUGNED ADD ITIONS HAVE BEEN MADE WITHOUT ANY REFERENCE TO ANY SEIZED MATERIAL. GROUND NO. 2 OF THE ASSESSEES APPEAL IS ALSO ALLOW ED. CONSEQUENTLY, ON SIMILAR REASONING, THE DEPARTMENT S APPEAL STANDS DISMISSED. 2.06 THEREFORE, THE ASSESSEES APPEAL STANDS ALLOW ED AND THE DEPARTMENTS APPEAL IS DISMISSED. PAGE 26 2.1 AMITA GARG ITA NOS. 2081 & 2758/DEL/2012 FOR AY 03-04 : IN THIS CASE ALSO NOTICE U/S 153A OF THE ACT WAS IS SUED AS A CONSEQUENCE OF ACTION U/S 132 OF THE ACT ON THE RAJ DARBAR GROUP OF COMPANIES AND ITS ASSOCIATES. PURSUANT TO THE NOTICE, THE ASSESSEE FILED ITS RETURN OF INCOME DEC LARING INCOME OF RS. 23,96,029/- WHICH WAS THE SAME AS THE RETURN FILED ORIGINALLY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO OBSERVED THAT THE ASSESSEE HAD CLAIMED LONG TERM CAPITAL GAIN OF RS. 1,04,72,923/- FROM THE SALE OF SHARES OF M/S NAGESHWAR INVESTMENT LTD., M/S QUEST FINANCIAL LTD. AND M/S M.P. INVESTMENT LTD. IN WHICH A TOTAL CONSI DERATION OF RS. 1,07,85,970/- WAS RECEIVED. THE AO OBSERVED THAT THESE SHARES WERE PURCHASED IN THE MONTH OF NOVEMBE R, 2001 AND SOLD IN FEBRUARY AND MARCH, 2003 ON WHICH LONG TERM CAPITAL GAINS WERE CLAIMED TO HAVE BEEN EARNED. TH E AO REFERRED TO THE ENQUIRIES MADE FROM THE KOLKATA STO CK EXCHANGE WHICH HAD REVEALED THAT THE PRICE OF SCRIP OF M/S NAGESHWAR INVESTMENT WAS AS LOW AS RS. 2/- AND AS H IGH AS RS. 107/- ON 2 ND MAY, 2003 AND ALSO REFERRED TO THE FACT THAT PAGE 27 THE SPURT IN THE PRICE WAS ENQUIRED INTO BY THE SEB I. THE AO ALSO NOTED THAT SEBI HAD CONDUCTED ENQUIRIES AGAINS T THE SHARE BROKERS WHO HAD TRADED IN THE SCRIP OF M/S NA GESHWAR INVESTMENT LTD. THE AO PROCEEDED TO HOLD THAT THE CLAIM OF PROFIT ON THE SHARES OF NAGESHWAR INVESTMENT LTD. W AS A SHAM. THE AO ALSO NOTED THAT SEBI HAD SUSPENDED TH E TRADING IN THE SCRIP OF M/S NAGESHWAR INVESTMENT LT D. W.E.F. 22/11/2005. IN CASE OF THE OTHER TWO COMPANIES I.E . M/S QUEST FINANCIAL LTD. AND M/S M.P. INVESTMENT LTD., THE AO NOTED THAT THE SHARE BROKER M/S BUBNA STOCK BROKING SERVICES LTD. KOLKATA, WHO HAD TRADED THESE SHARES, HAD NOT REPLIED TO THE ENQUIRIES CONDUCTED BY THE DEPARTMEN T AND PROCEEDED TO HOLD THAT BOTH THE PURCHASE AS WELL AS THE SALE TRANSACTIONS WERE ARRANGED. ACCORDINGLY, IN THE C ASE OF THIS ASSSSEE ALSO AN ADDITION OF RS. 1,10,01,690/- (INCL UDING 2% EXPENDITURE INCURRED FOR THE ACCOMMODATION TRANSACT ION) WAS MADE ON ACCOUNT OF LONG TERM CAPITAL GAINS ON SALE OF SHARES U/S 68 OF THE ACT ALTHOUGH IT HAD BEEN THE ASSESSEE S CONTENTION THAT NO INCRIMINATING DOCUMENT WAS FOUND DURING THE COURSE OF SEARCH CONDUCTED IN THE RAJ DARBAR GR OUP. AN PAGE 28 ADDITION OF RS. 70,000/- WAS ALSO MADE ON ACCOUNT O F DISALLOWANCE OF AGRICULTURAL EXPENSES BEING OUT OF BOOKS EXPENSES. ON APPEAL BEFORE THE LD. CIT (A), THE LD . CIT (A) VIDE HIS ORDER DATED 20/03/2012 CONFIRMED ADDITION OF RS. 29,96,250/- (INCLUDING 2% EXPENSES ON PROVIDING ACCOMMODATION ENTRIES) ON ACCOUNT OF UNDISCLOSED IN COME FROM THE SALE OF SHARES OF M/S NAGESHWAR INVESTMENT S LTD. THE BALANCE ADDITIONS WERE DELETED BY THE LD. CIT ( A). NOW, BOTH THE ASSESSEE AS WELL AS THE DEPARTMENT HAVE AP PROACHED THE TRIBUNAL AND HAVE RAISED THE FOLLOWING GROUNDS OF APPEAL: GROUNDS OF APPEAL ITA NO. 2081/DEL/12 : 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LD. CIT (A) XXXI IS CORRECT IN UPHOLDING THE ASSESSMENT FRAMED OUTSIDE THE SEARCH MATERIAL AND AFTER THE CHANGE OF OPINION? 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LD. CIT (A) XXXI ERRED IN CONFIRMING THE ADDITION O F RS. 29,96,250/- INCLUDING 2% EXPENDITURE ON ACCOUNT OF SALE OF SHARES OF M/S NAGESHWAR INVESTMENTS LTD. PAGE 29 3. THE ASSESSEE CRAVES FOR THE ADDITION, MODIFICATION AND DELETION OF THE GROUNDS OF APPEAL. GROUNDS OF APPEAL ITA NO. 2758/D/12 : 1. THE ORDER OF THE LD. CIT (A) IS NOT CORRECT IN LAW AND FACTS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF R S. 32,77,538/- MADE BY THE AO U/S 68 OF I.T. ACT, 1961 AS UNEXPLAINED CASH CREDIT ON ACCOUNT OF SALE OF SHARES OF M/S M.P. INVESTMENTS LTD. WITHOUT APPRECIATING THE FACT THAT THE TRANSACTION OF SALE OF SHARES IS NOT GENUINE BUT AN ARRANGED DEAL MANAGED BY THE ASSESSEE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF R S. 47,27,905/- MADE BY THE AO U/S 68 OF THE I.T. ACT, 1961 AS UNEXPLAINED CASH CREDIT ON ACCOUNT OF SALE OF SHARES OF M/S QUEST FINANCIAL SERVICES LTD. WITHOUT APPRECIATING THE FACT THAT THE TRANSACTION OF SALE OF SHARES IS NOT GENUINE BUT AN ARRANGED DEAL MANAGED BY THE ASSESSEE. PAGE 30 4. THE APPELLANT CRAVES LEAVE TO ADD, AMEND ANY/ALL THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE O F HEARING OF THE APPEAL. 2.1.1 AT THE OUTSET, THE LD. AR FILED WRITTEN SUBM ISSIONS WHICH ARE SUMMARIZED AS UNDER: THE APPELLANT/RESPONDENT WISHES TO SUBMIT THAT SEARCH IN HIS CASE WAS CONDUCTED BY THE DEPARTMENT ON 31.07.2008. STATUS OF RETURN OF INCOME FILED BY THE ASSESSEE ORIGINALLY IS AS BELOW : A.Y. DATE OF FILING WHETHER ASSESSED U/S 143(1) OR 143(3) WHETHER THE ASSESSMENTS WERE ABATED OR NOT WITHIN THE MEANING OF SECOND PROVISO TO SEC. 153A OF THE ACT. 2003-04 27.02.2004 YES, 143(3) DID NOT ABATE FROM THE AFORESAID TABLE, IT CAN BE GATHERED THAT THE ASSESSMENTS IN THE CASE OF THE ASSESSEE DID NOT ABATE CONSEQUENT UPON THE SEARCH WITHIN THE MEANING OF SECOND PROVISO TO SECTION 153A OF THE I.T. ACT. PERUSAL OF THE ASSESSMENT ORDER AS QUOTED ABOVE VERY UNAMBIGUOUSLY EVIDENCES THAT THE ADDITIONS MADE BY THE AO WERE NOT BASED ON ANY INCRIMINATING DOCUMENTS. THE ADDITIONS MADE PAGE 31 THEREFORE, WERE INDISPUTABLY OUTSIDE THE SCOPE OF ASSESSMENTS U/S 153A OF THE I.T. ACT AND DESERVES TO BE DELETED. THE LD. CIT (A) HAS ALSO NOT REFERRED TO ANY INCRIMINATING DOCUMENT WHILE CONFIRMING PART OF THE ADDITIONS. THE ASSESSEE RELIES UPON THE ORDER OF THE HONBLE JURISDICTIONAL DELHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA [2015] 61 TAXMANN.COM 412 (DELHI) FOR THE PROPOSITION THAT ADDITIONS IN THE UNABATED ASSESSMENTS CAN BE MADE ONLY ON THE BASIS OF INCRIMINATING DOCUMENTS FOUND AND SEIZED DURING THE COURSE OF SEARCH. XXX INNUMERABLE CASES HAVE BEEN DECIDED SUBSEQUENT TO THE AFORESAID JUDGMENT OF THE HONBLE DELHI HIGH COURT UPHOLDING/FOLLOWING THE AFORESAID JUDGMENT. XXX HOWEVER, THE APPELLANT WISHES TO REFER TO SOME OF THEM AS PER THE LIST BELOW: S.NO. JUDGMENT CITATION 1. SUNCITY PROJECTS P. LTD. VS. DCIT 2016 - TIOL - 643 - ITAT - DEL DATED 21.03.2016 2. CIT VS. CONTINENTAL WAREHOUSING CORPORATION LTD. [2015] 63 TAXMANN.COM 118 (MUM TRIB.) DATED 12.10.2015 3. CIT VS. CONTINENTAL WAREHOUSING CORPORATION LTD. [2015] 58 TAXMA NN.COM 78 (BOMBAY HC) DATED 21.04.2015 4. JAI STEEL (INDIA) LTD. 219 TAXMANN 233 (RAJASTHAN HC) DATED 24.05.2013 PAGE 32 5. PR CIT VS. KURELE PAPER MILLS P. LTD. ITA NO. 369/2015 (DELHI HC) 6. CIT (C ) - I VS. MGF AUTOMOBILES LTD. ITA NO. 13,14/2014 (DELHI HC) 7. JAIPURIA INFRASTRUCTURE DEVELOPERS P. LTD. VS. ACIT ITA NO. 5522, 5523/DEL/2015 DATED 27.06.2016 8. PR. CIT VS. DINESH TARACHAND KASAT TAX APPEAL NO. 469, 470 OF 2016 (GUJARAT HC) DATED 28.6.2016 9. CIT VS. THAKKAR POPATLAL VELJI SALES LTD. 2016 - TIOL - 709 - HC - MUM - IT DATED 29.03.2016 10. INFOWORLD VS. DCIT 2016 - TIOL - 548 - ITAT - DEL DATED 29.01.2016 11. ACIT VS. MAHAGUN REALTORS P. LTD. 2016 - TIOL - 955 - ITAT - DEL WE ALSO WISH TO MENTION THAT ADDITIONS IN THE IDENTICAL MANNER WERE MADE AND SUSTAINED IN THE CASE OF SH. SANTOSH KUMAR GARG, A FAMILY MEMBER OF THE ASSESSEE WHERE SEARCH WAS CONDUCTED ALONG WITH THE ASSESSEE. HONBLE TRIBUNAL HAS DISPOSED OFF THE AFORESAID MATTER VIDE ORDER DATED 29.10.2015. THE DEPARTMENT FILED APPEAL AGAINST THE AFORESAID ORDER OF THE HONBLE TRIBUNAL BEFORE THE HONBLE DELHI HIGH COURT AND THE APPEAL HAS BEEN DISMISSED. CONSIDERING THE AFORESAID FACTS AND CIRCUMSTANCES OF THE MATTER, THE CASE OF THE ASSESSEE MAY KINDLY BE CONSIDERED TO BE FULLY COVERED AND ITS APPEAL MAY PLEASE BE ALLOWED & DEPARTMENTS APPEAL MAY PLEASE BE DISMISSED. BESIDES THE AFORESAID REASON THE ASSESSEE WISHES TO BRING SOME OTHER RELEVANT FACTS WHICH MAKES THE ADDITIONS UNSUSTAINABLE FOR OTHER PAGE 33 REASONS AS WELL. 1. ASSESSING OFFICERS MENTION OF SEBI ENQUIRIES IS INCORRECT, IRRELEVANT AND MISLEADING. IN THE SEBI REPORT THERE IS NO MENTION THAT THE ASSESSEE WAS IN ANY WAY INVOLVED IN THE ALLEGED RIGGING OF THE M/S NAGESHWAR INVESTMENT LTD. EVEN THE BROKER THROUGH WHOM THE ASSESSEE TRANSACTED IN SHARES DID NOT FIND ANY MENTION IN THE SEBI REPORT. THE SEBI INVESTIGATIONS WERE IN FACT ON ACCOUNT OF CERTAIN PRICE RISE IN THE SHARES OF THE M/S NAGESHWAR INVESTMENT LTD. DURING THE PERIOD APRIL 2005 TO NOVEMBER 2005. TRADING IN THE M/S NAGESHWAR INVESTMENT LTD. SCRIP WAS SUSPENDED FOR A VERY BRIEF PERIOD AND WAS REVOKED ON 31.5.2006 WHEREAS TRANSACTIONS IN THE CASE OF THE ASSESSEE WHICH HAVE BEEN QUESTIONED PERTAIN TO FY 2003-04 & FY 2004- 05 WHICH WAS MUCH BEFORE THE ALLEGED PERIOD OF RIGGING. 2. THE AOS RELIANCE ON THE ADDITIONS IN THE CASE OF SH. DEVI DASS GARG IN THE ORIGINAL ASSESSMENT PROCEEDINGS IN HIS CASE ON THE IDENTICAL ISSUE IS ALSO NOT HELPFUL TO THE DEPARTMENT. THE ADDITIONS MADE WERE DELETED BY THE HONBLE TRIBUNAL VIDE ORDER PAGE 34 DATED 31.08.2009. THE AO SHOULD HAVE BEEN AWARE OF THIS ORDER WHEN HE PASSED THE IMPUGNED ASSESSMENT ORDER YET HE CHOSE TO IGNORE IT AS IT WAS AGAINST THE DEPARTMENT. 2.1.2 THE LD. DR SUBMITTED THAT THAT THE ADDITION WAS JUSTIFIED IN VIEW OF THE FACT THAT THE BROKER DID N OT RESPOND TO THE SUMMONS ISSUED BY THE DEPARTMENT. THE LD. DR SUBMITTED THAT THE DELETION MADE BY THE LD. CIT (A) OF RS. 3,277,535/- ON ACCOUNT OF SALE OF SHARES OF M/S M.P . INVESTMENT LTD. AND OF RS. 4,727,905/- ON ACCOUNT O F SALE OF SHARES OF M/S QUEST FINANCIAL SERVICES LTD. WAS NOT JUSTIFIED BECAUSE THE ONUS ON THE ASSESSEE CANNOT BE SHIFTED TO THE REVENUE. HE EMPHASIZED THAT HERE THE BONA FIDES OF THE BROKER WERE UNDER QUESTION AND THE DEALINGS WITH AL L THE THREE COMPANIES WERE APPARENTLY SUSPICIOUS. THE LD . DR HEAVILY RELIED ON THE FINDINGS OF THE AO AND VEHEME NTLY ARGUED THAT IN VIEW OF THE SPECIFIC INCONSISTENCIES POINTED OUT BY THE AO, THE RELIEF GRANTED TO THE ASSESSEE BY TH E LD. CIT (A) WAS NOT LEGALLY TENABLE. PAGE 35 2.1.3 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALSO PERUSED THE MATERIAL ON RECORD. IT IS SEEN THAT IN ASSESSEES CASE SEARCH ACTION WAS INITIATED AND ASSESSMENTS U/ S 153A WERE FRAMED MAKING VARIOUS ADDITIONS. IT IS ASSESSE ES CLAIM THAT THE ADDITION WAS NOT TENABLE AS THE REGULAR/OR IGINAL RETURN HAD BEEN FILED WHEREIN THE PARTICULARS RELAT ING TO THE ADDITION HAS BEEN DISCLOSED AND THE SAME HAD BEEN A CCEPTED BY THE AO IN THE ASSESSMENT MADE U/S 143 (3) OF THE ACT. ON EXAMINATION OF THE RECORDS, IT IS SEEN THAT THIS CONTENTION OF THE ASSESSEE IS CORRECT IN SO FAR AS CONSEQUENT TO INFORMATION RECEIVED FROM THE INVESTIGATION WING AG RA, THE ERSTWHILE AO HAD MADE DETAILED ENQUIRIES ON THIS IS SUE AND HAD THEN ACCEPTED THE ASSESSEES CLAIM IN THE ORIGI NAL ASSESSMENT ORDER FRAMED U/S 143(3) OF THE ACT. NOW , IT IS SEEN FROM THE RECORDS THAT NO MATERIAL HAS BEEN FOU ND DURING THE SEARCH TO JUSTIFY THE ADDITION AND THE ASSESSME NT ORDER DOES NOT MAKE ANY REFERENCE WHATSOEVER TO ANY SEIZE D MATERIAL ON WHICH THE IMPUGNED ADDITION CAN BE SAID TO BE BASED. IN OUR CONSIDERED OPINION SECTION 153A DOES NOT AUTHORISE THE MAKING OF A DE NOVO ASSESSMENT IN THIS PAGE 36 PARTICULAR ASSESSMENT YEAR. WHILE UNDER THE FIRST P ROVISO, THE AO IS EMPOWERED TO FRAME ASSESSMENT FOR SIX YEARS, UNDER THE SECOND PROVISO ONLY ASSESSMENTS WHICH ARE PENDI NG ON THE DATE OF INITIATION OF SEARCH ABATE. THE EFFECT IS THAT COMPLETED ASSESSMENTS DO NOT ABATE. THE ASSESSMENTS CAN BE SAID TO BE PENDING ONLY IF THE AO IS STATUTORILY RE QUIRED TO DO SOMETHING FURTHER. IF THE SECTION 143(2) NOTICE HAS BEEN ISSUED, THE ASSESSMENT CAN BE SAID TO BE PENDING. T HE POWER GIVEN BY THE FIRST PROVISO TO ASSESS INCOME FOR SIX ASSESSMENT YEARS HAS TO BE CONFINED TO THE UNDISCLOSED INCOME UNEARTHED DURING SEARCH AND CANNOT INCLUDE ITEMS WHICH ARE DI SCLOSED IN THE ORIGINAL ASSESSMENT PROCEEDINGS. A PERUSAL OF THE ASSESSMENT ORDER PASSED U/S 153A OF THE ACT REVEALS THAT THE AO HAS NOT MADE ANY REFERENCE WHATSOEVER TO ANY INCRIMINATING MATERIAL FOUND AS A RESULT OF THE SEA RCH AND THE ADDITION OF RS. 1,101,690/- HAS BEEN MADE ENTIRELY ON THE BASIS OF ALLEGATION OF ACCOMMODATION ENTRY WHICH IN TURN IS BASED ON SOME MATERIAL SAID TO HAVE BEEN GATHERED F ROM STOCK EXCHANGE BUT WHICH DOES NOT SPECIFICALLY POIN T OUT TOWARDS THE ASSESSEE. THE HONBLE DELHI HIGH COURT IN THE PAGE 37 CASE OF CIT VS. KABUL CHAWLA IN ITA NO. 707/2014 DA TED 28/08/2015 HAS EXAMINED THREAD BARE THE PROVISIONS OF SECTION 153A AND HAS SUMMARIZED THE LEGAL POSITION IN PARA 37 OF ITS ORDER (WHICH HAS BEEN REPRODUCED IN EARLI ER PART OF THIS ORDER). IN THE LIGHT OF THE AFORESAID OBSERVA TIONS OF THE HONBLE DELHI HIGH COURT, WE HOLD THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) WAS NOT CORRECT IN UPHOLDING THE ASSESSMENT FRAMED OUTSIDE THE SEARCH MATERIAL AND HENCE, WHILE ALLOWING GROUND NOS. 1 AND 2 OF TH E ASSESSEES APPEAL, WE DELETE ALL THE ADDITIONS MADE IN THE ASSESSMENT PROCEEDINGS U/S 153A OF THE ACT AS THE I MPUGNED ADDITIONS HAVE BEEN MADE WITHOUT ANY REFERENCE TO A NY SEIZED MATERIAL. ON SIMILAR REASONING, THE DEPARTMENTS A PPEAL BECOME ACADEMIC IN NATURE AND THE SAME IS DISMISSED . 2.1.4 THEREFORE, THE ASSESSEES APPEAL STANDS ALLO WED AND THE DEPARTMENTS APPEAL IS DISMISSED. 2.2 AMITA GARG ITA NO. 2759/DEL/2012 FOR AY 04-05 : THIS APPEAL HAS BEEN PREFERRED BY THE DEPARTMENT AG AINST THE ORDER DATED 30/03/2012 PASSED BY THE LD. CIT (A)-XX XI, NEW PAGE 38 DELHI. IN THIS CASE, THERE HAD BEEN AN ACTION U/S 132 OF THE ACT ON RAJ DARBAR GROUP OF COMPANIES AND ITS ASSOCI ATES. THE ASSESSEE WAS ISSUED NOTICE U/S 153A OF THE ACT ALTHOUGH IT HAD BEEN THE ASSESSEES CONTENTION THAT NO INCRI MINATING MATERIAL WAS SEIZED BY THE DEPARTMENT FROM THE ASSE SSEE. PURSUANT TO NOTICE U/S 153A, THE ASSESSEE HAD FILED HER RETURN OF INCOME DECLARING INCOME OF RS. 15,74,769/ -. THE ASSESSEE HAD ALSO SHOWN AGRICULTURAL INCOME OF RS. 26,80,753/-. DURING THE COURSE OF ASSESSMENT, THE A O OBSERVED THAT THERE HAD BEEN A SALE OF AGRICULTURAL LAND AT BANGALORE THAT HAD BEEN EXAMINED BY THE AO IN HIS E ARLIER ASSESSMENT COMPLETED U/S 143(3) OF THE ACT ON 29/12 /2006. IT WAS ALSO STATED THAT FURTHER ENQUIRIES HAD BEEN INITIATED BY THE ERSTWHILE AO IN THIS REGARD TO ASCERTAIN THE ST ATUS OF THE LAND WHICH WAS CLAIMED BY THE ASSESSEE AS AGRICULTU RAL LAND SITUATED IN GRAM DEVARABISANAHALLI, BARTHUR HOBLI, BANGALORE AND THAT THE REPLY TO THE ENQUIRIES WERE YET TO BE RECEIVED AS ON THE DATE OF ASSESSMENT ORDER. THE AO FURTHER OB SERVED THAT TEHSILDAR, BANGALORE VIDE LETTER NO. ADM/CR/142/143/0809 DATED 02/11/2008 HAS INFORMED PAGE 39 THAT THE DISTANCE OF GRAM DEVARABISANAHALLI, BARTHU R HOBLI, BANGALORE FROM THE NEAREST BANGALORE MAHANAGAR PALI KA LIMIT NAMELY KONENA AGRAHARA, HAL, MAIN GATE IS 6 K .M. AND, THEREFORE, THE COMPENSATION OF RS. 2,30,62,500 /- WAS TO BE TREATED AS A SHORT TERM CAPITAL GAIN. THE AO AL SO MADE A DISALLOWANCE OF RS. 2 LAKHS ON ACCOUNT OF ALLEGED N ON- FURNISHING OF BILLS AND VOUCHERS OF AGRICULTURAL EX PENSES. AN AMOUNT OF RS. 2,47,716/- WAS ALSO ADDED TO THE INCO ME OF THE ASSESSEE BEING THE NOTIONAL VALUE OF TWO PROPERTIES HELD BY THE ASSESSEE BY CALCULATING THE ANNUAL LETTABLE VAL UE (ALV) @ 7% OF THE AMOUNT OF INVESTMENT MADE VALUING RS. 50,55,482/-. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT (A) CHALLENGING THE ISSUANCE OF NOTICE U/S 153A AND ALSO CHALLENGING THE IMPUGNED ADDITION ON MERITS. THE LD. CIT (A) DID NOT ACCEPT THE ASSESSEES CONTE NTION THAT THE ISSUANCE OF NOTICE U/S 153A WAS NOT VALID. HE HOWEVER, DELETED ALL THE ADDITIONS ON MERITS. NOW, THE DEPA RTMENT HAS PREFERRED THIS APPEAL BEFORE THE ITAT AND HAS FILED THE FOLLOWING GROUNDS OF APPEAL: PAGE 40 GROUNDS OF APPEAL ITA NO. 2759/DEL/12 : 1. THE ORDER OF THE LD. CIT (A) IS NOT CORRECT IN LAW AND FACTS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF R S. 2,30,62,500/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF SALE OF AGRICULTURAL LAND HOLDING THE SA ME AS SHORT TERM CAPITAL GAIN BY ADMITTING THE ADDITIO NAL EVIDENCE IN CONTRAVENTION OF RULE 46A OF THE INCOME TAX RULES, 1962. 3. THE APPELLANT CRAVES LEAVE TO ADD, AMEND ANY/ALL TH E GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF HEARING OF THE APPEAL. 2.2.1 THE ASSESSEE HAS ALSO FILED AN APPLICATION U NDER RULE 27 OF THE ITAT RULES FOR ADMISSION AND ADJUDIC ATION OF THE FOLLOWING ISSUE: WHETHER THE CIT (A) WAS CORRECT IN UPHOLDING THE ADDITIONS TO BE WITHIN THE SCOPE OF ASSESSMENTS U/S 153A OF THE ACT WHERE ADDITION/DISALLOWANCES MADE B Y THE ASSESSING OFFICER WERE NOT BASED ON ANY MATERIA L FOUND AND SEIZED DURING THE COURSE OF SEARCH. 2.2.2 THE LD. AR FILED WRITTEN SUBMISSIONS WHICH A RE BEING SUMMARIZED AS UNDER: PAGE 41 THE RESPONDENT HAS MOVED AN APPLICATION UNDER RULE 27 OF THE ITAT RULES FOR ADMISSION AND ADJUDICATION OF THE FOLLOWING ISSUES: WHETHER THE CIT (A) WAS CORRECT IN UPHOLDING THE ADDITIONS TO BE WITHIN THE SCOPE OF ASSESSMENTS U/S 153A OF THE ACT WHERE ADDITION/DISALLOWANCES MADE BY THE AO WERE NOT BASED ON ANY MATERIAL FOUND AND SEIZED DURING THE COURSE OF SEARCH. THE APPELLANT/RESPONDENT WISHES TO SUBMIT THAT SEARCH IN HIS CASE WAS CONDUCTED BY THE DEPARTMENT ON 31.07.2008. STATUS OF RETURN OF INCOME FILED BY THE ASSESSEE ORIGINALLY IS AS BELOW: A.Y. DATE OF FILING WHETHER ASSESSED U/S 143(1) OR 143(3) WHETHER THE ASSESSMENTS WERE ABATED OR NOT WITHIN THE MEANING OF SECOND PROVISO TO SEC. 153A OF THE ACT. 2004 - 05 28.03.2005 YES DID NOT ABATE FROM THE AFORESAID TABLE, IT CAN BE GATHERED THAT T HE ASSESSMENTS IN THE CASE OF THE ASSESSEE DID NOT ABATE CONSEQUENT UPON THE SEARCH WITHIN THE MEANING OF SECOND PROVISO TO SECTION 153A OF THE I. T. ACT. PAGE 42 PERUSAL OF THE ASSESSMENT ORDER AS QUOTED ABOVE VERY UNAMBIGUOUSLY EVIDENCES THAT THE ADDITIONS MADE BY THE AO WERE NOT BASED ON ANY INCRIMINATING DOCUMENTS. THE ADDITIONS MADE THEREFORE, WERE INDISPUTABLY OUTSIDE THE SCOPE OF ASSESSMENTS U/S 153A OF THE I.T. ACT AND DESERVES TO BE DELETED. THE LD. CIT (A) HAS ALSO NOT REFERRED TO ANY INCRIMINATING DOCUMENT WHILE CONFIRMING PART OF THE ADDITIONS. THE ASSESSEE RELIES UPON THE ORDER OF T HE HONBLE JURISDICTIONAL DELHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA [2015] 61 TAXMANN.COM 412 (DELHI) FOR THE PROPOSITION THAT ADDITIONS IN THE UNABATED ASSESSMENTS CAN BE MADE ONLY ON THE BASIS OF INCRIMINATING DOCUMENTS FOUND AND SEIZED DURING THE COURSE OF SEARCH. XXX INNUMERABLE CASES HAVE BEEN DECIDED SUBSEQUENT TO THE AFORESAID JUDGMENT OF THE HONBLE DELHI HIGH COURT UPHOLDING/FOLLOWING THE AFORESAID JUDGMENT. HOWEVER, THE APPELLANT WISHES TO REFER TO SOME OF THEM AS PER THE LIST BELOW: S.NO. JUDGMENT CITATION 1. SUNCITY PROJECTS P. LTD. VS. DCIT 2016 - TIOL - 643 - ITAT - DEL DATED 21.03.2016 2. CIT VS. CONTINENTAL WAREHOUSING CORPORATION LTD. [2015] 63 TAXMANN.COM 118 (MUM TRIB.) DATED 12.10.2015 3. CIT VS. CONTINENTAL WAREHOUSING CORPORATION LTD. [2015] 58 TAXMANN.COM 78 (BOMBAY HC) DATED 21.04.2015 4. JAI STEEL (INDIA) LTD. 219 TAXMANN 233 (RAJASTHAN HC) DATED PAGE 43 24.05.2013 5. PR CIT VS. KURELE PAPER MILLS P. LTD. ITA NO. 369/2015 (DELHI HC) 6. CIT (C ) - I VS. MGF AUTOMOBILES LTD. ITA NO. 13,14/2014 (DELHI HC) 7. JAIPURIA INFRASTRUCTURE DEVELOPERS P. LTD. VS. ACIT ITA NO. 5522, 5523/DEL/2015 DATED 27.06.2016 8. PR. CIT VS. DINESH TARACHAND KASAT TAX APPEAL NO. 469, 470 OF 2016 (GUJARAT HC) DATED 28.6.2016 9. CIT VS. THAKKAR POPATLAL VELJI SALES LTD. 2016 - TIOL - 709 - HC - MUM - IT DATED 29.03.2016 10. INFOWORLD VS. DCIT 2016 - TIOL - 548 - ITAT - DEL DATED 29.01.2016 11. ACIT VS. MAHAGUN REALTORS P. LTD. 2016 - TIOL - 955 - ITAT - DEL BESIDES THE AFORESAID REASON THE ASSESSEE WISHES TO BRING SOME OTHER RELEVANT FACTS WHICH MAKES THE ADDITIONS UNSUSTAINABLE FOR OTHER REASONS AS WELL. 1. THE VERY BASIS ON WHICH THE AO HELD AGRICULTURAL LAND TO BE NON AGRICULTURAL LAND WAS HELD TO BE INCORRECT ON THE BASIS OF DOCUMENTARY EVIDENCES. 2. THE LD. CIT (A) HAS HIMSELF MEASURED THE DISTANCE USING THE GOOGLE MAPS TECHNOLOGY AND FOUND THAT THE AGRICULTURAL LAND WAS LOCATED BEYOND 8 KMS. 3. ORIGINAL ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT IN CENTRAL CIRCLE, AGRA AND NO MENTION OF LETTER HAVING BEEN WRITTEN TO THE CONCERNED AUTHORITY WAS MADE AS INCORRECTLY MENTION BY THE AO IN THE IMPUGNED ORDER. PAGE 44 2.2.3 AT THE OUTSET, THE LD. DR OPPOSED THE ASSESS EES APPLICATION UNDER RULE 27 OF THE ITAT RULES. THE L D. DR FURTHER SUBMITTED THAT THE LD. CIT (A) HAD DELETED THE ADDITION OF RS. 23,062,500/- MADE BY THE AO ON ACCO UNT OF SALE OF AGRICULTURAL LAND BY ADMITTING ADDITIONAL E VIDENCE IN CONTRAVENTION TO RULE 46A OF THE ACT AND SUBMITTED THAT THE AOS ORDER SHOULD BE RESTORED. 2.2.4 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALSO PERUSED THE MATERIAL ON RECORD. WE ADMIT THE ASSES SEES APPLICATION FILED UNDER RULE 27 OF THE ITAT RULES A ND PROCEED TO ADJUDICATE UPON IT. A PERUSAL OF THE IMPUGNED O RDER DATED 30/03/2012 REVEALS THAT ALTHOUGH THE LD. CIT (A) HA S UPHELD THE ASSUMPTION OF JURISDICTION U/S 153A OF THE ACT, HE HAS ALSO GIVEN A CATEGORICAL FINDING IN PARA 5.6.7 OF H IS ORDER THAT THE AO HAS NOT BROUGHT ON RECORD ANY INCRIMINATING MATERIAL DISCOVERED DURING THE SEARCH SUGGESTIVE OF AND WHIC H LED TO AN ADVERSE FINDING BY HIM. THIS FINDING OF THE LD. CIT (A) COULD NOT BE NEGATED BY THE DEPARTMENT BEFORE US. HENCE, RESPECTFULLY FOLLOWING THE RATIO OF THE JUDGMENTS L AID DOWN BY THE HONBLE DELHI HIGH COURT IN CIT VS. KABUL CHAWL A (SUPRA), PAGE 45 WE ALLOW THE ISSUE RAISED BY THE ASSESSEE UNDER RUL E 27 OF THE ITAT RULES AND CONFIRM THE DELETION MADE BY THE LD. CIT (A). ACCORDINGLY, THE DEPARTMENTS APPEAL BECOMES ACADEM IC AND THE SAME IS DISMISSED. 2.2.5 IN THE RESULT, THE DEPARTMENTS APPEAL IS DI SMISSED. 2.3 AMITA GARG ITA NO. 2345/DEL/2012 AND CO 254/DEL/2012 - AY 06-07 : IN THIS YEAR ALSO, NOTICE U/S 153A OF THE ACT WAS I SSUED AS A CONSEQUENCE OF ACTION U/S 132 OF THE ACT ON THE RAJ DARBAR GROUP OF COMPANIES. HERE ALSO IT HAS BEEN THE CON TENTION OF THE ASSESSEE THAT NO INCRIMINATING MATERIALS WERE F OUND IN THE CASE OF THE ASSESSEE. PURSUANT TO THE NOTICE U /S 153A, THE ASSESSEE FILED HER RETURN OF INCOME DECLARING I NCOME OF RS. 96,02,851/- AND ALSO SHOWED AGRICULTURAL INCOME OF RS. 24,00,291/-. DURING THE COURSE OF THE ASSESSMENT, THE AO OBSERVED THAT THE ASSESSEE WAS THE HOLDER OF 16.65% SHARES OF M/S TARUPIT EXPORTS LTD. AND THAT THE SHARES HAD BEEN TRANSFERRED TO M/S VIPUL LIMITED ON 19/12/2005. TH E AO FURTHER OBSERVED THAT THE OTHER SHAREHOLDERS HAD AL SO SOLD PAGE 46 THEIR SHARES TO THE SAME COMPANY AND PROCEEDED TO H OLD THAT THE PLOT IN THE COMPANY HELD AS AN ASSET WAS DEEMED TO BE TRANSFERRED TO M/S VIPUL LIMITED AND BY APPLYING PR OVISIONS OF SECTION 50C ON THE SALE OF THE PLOT BY THE ASSES SEE MADE AN ADDITION OF RS. 91,57,450/- ON ACCOUNT OF SHORT TER M CAPITAL GAIN IN PURSUANCE TO SECTION 2(47)(VI) AND SECTION 50C OF THE ACT BY CONSIDERING THE TRANSFER OF SHARES AS TRANSF ER OF OWNERSHIP OF THE LAND. THE AO FURTHER DISALLOWED A N AMOUNT OF RS. 2 LAKH FROM AGRICULTURAL EXPENSES ON THE GRO UND THAT SOME OF THE BILLS AND DETAILS WERE UNVERIFIABLE. T HE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT (A) CHALLENG ING THE ASSUMPTION OF JURISDICTION U/S 153A OF THE ACT AS W ELL AS CHALLENGING THE ADDITION ON MERITS. THE LD. CIT (A ) DID NOT ACCEPT THE ASSESSEES CONTENTION REGARDING ASSUMPTI ON OF JURISDICTION U/S 153A BUT DELETED BOTH THE DISALLOW ANCES ON MERITS. AGGRIEVED, THE DEPARTMENT HAS PREFERRED TH IS APPEAL BEFORE THE TRIBUNAL AND THE ASSESSEE HAS FILED A CO . THE GROUNDS TAKEN BY BOTH THE PARTIES ARE AS UNDER: PAGE 47 GROUNDS OF APPEAL ITA NO. 2345/D/12 : 1. THE ORDER OF LD. CIT (A) IS NOT CORRECT IN LAW AND FACTS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF R S. 91,57,450/- MADE BY THE AO ON ACCOUNT OF SHORT TERM CAPITAL GAIN IN PURSUANT TO SECTION 2(47)(VI) AND SECTION 50C OF THE INCOME TAX ACT, 1961 BY CONSIDERING THE MERE TRANSFER OF SHARES AS TRANSFER OF OWNERSHIP OF LAND HELD AS FIXED ASSETS BY THE COMPANY IN WHICH THE ASSESSEE WAS A SHAREHOLDER. 3. THE ORDER OF THE LD. CIT (A) IS PERVERSE IN LAW AND ON FACTS. 4. THE APPELLANT CRAVES LEAVE TO ADD, AMEND ANY/ALL THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE O F HEARING OF THE APPEAL. GROUNDS OF CO NO. 254/D/12 : 1. BECAUSE THE DEPARTMENTAL APPEAL IS BAD IN LAW AS WELL AS ON FACTS AND IS LIABLE TO BE DISMISSED. 2. WHETHER THE ASSESSMENT FRAMED U/S 153A/143(3) OF THE INCOME TAX ACT, 1961 IS LEGAL, WHEN CONSEQUENT UPON ACTION TAKEN BY THE DEPARTMENT UNDER SECTION PAGE 48 132 OF THE ACT ON 31/07/2008 AGAINST THE ASSESSEE WAS CARRIED OUT AND NOTHING INCRIMINATORY WAS FOUND, AND RE-VISITING THE ISSUES, WHICH HAVE BEEN SETTLED EARLIER, AND RE-ASSESSMENT IN THE GARB OF T HE PROVISION OF SEC. 153A OF THE ACT NOT BASED UPON TH E SEARCH MATERIAL IS PERMISSIBLE? 3. THE RESPONDENT CRAVES LEAVE FOR ADDITION, MODIFICATION, ALTERATION, AMENDMENT OF ANY OF THE CROSS OBJECTION. 2.3.1 THE LD. AR FILED WRITTEN SUBMISSIONS WHICH ARE SUMMARIZED AS UNDER: THE APPELLANT/RESPONDENT WISHES TO SUBMIT THAT SEARCH IN THIS CASE WAS CONDUCTED BY THE DEPARTMENT ON 31.07.2008. STATUS OF RETURN OF INCOME FILED BY THE ASSESSEE ORIGINALLY IS AS BELOW: A.Y. DATE OF FILING WHETHER THE ASSESSMENTS WERE ABATED OR NOT WITHIN THE MEANING OF SECOND PROVISO TO SEC. 153A OF THE ACT. 2006 - 07 30.03.2007 DID NOT ABATE FROM THE AFORESAID TABLE, IT CAN BE GATHERED THAT T HE ASSESSMENTS IN THE CASE OF THE ASSESSEE DID NOT ABATE CONSEQUENT UPON THE SEARCH WITHIN THE MEANING OF SECOND PROVISO TO SECTION 153A OF THE I. T. PAGE 49 ACT. PERUSAL OF THE ASSESSMENT ORDER AS QUOTED ABOVE VERY UNAMBIGUOUSLY EVIDENCES THAT THE ADDITIONS MADE BY THE AO WERE NOT BASED ON ANY INCRIMINATING DOCUMENTS. THE ADDITIONS MADE THEREFORE, WERE INDISPUTABLY OUTSIDE THE SCOPE OF ASSESSMENTS U/S 153A OF THE I.T. ACT AND DESERVES TO BE DELETED. THE LD. CIT (A) HAS ALSO NOT REFERRED TO ANY INCRIMINATING DOCUMENT WHILE CONFIRMING PART OF THE ADDITIONS. THE ASSESSEE RELIES UPON THE ORDER OF T HE HONBLE JURISDICTIONAL DELHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA [2015] 61 TAXMANN.COM 412 (DELHI) FOR THE PROPOSITION THAT ADDITIONS IN THE UNABATED ASSESSMENTS CAN BE MADE ONLY ON THE BASIS OF INCRIMINATING DOCUMENTS FOUND AND SEIZED DURING THE COURSE OF SEARCH. XXX INNUMERABLE CASES HAVE BEEN DECIDED SUBSEQUENT TO THE AFORESAID JUDGMENT OF THE HONBLE DELHI HIGH COURT UPHOLDING/FOLLOWING THE AFORESAID JUDGMENT. HOWEVER, THE APPELLANT WISHES TO REFER TO SOME OF THEM AS PER THE LIST BELOW: S.NO. JUDGMENT CITATION 1. SUNCITY PROJECTS P. LTD. VS. DCIT 2016 - TIOL - 643 - ITAT - DEL DATED 21.03.2016 2. CIT VS. CONTINENTAL WAREHOUSING CORPORATION LTD. [2015] 63 TAXMANN.COM 118 (MUM TRIB.) DATED 12.10.2015 3. CIT VS. CONTINENTAL WAREHOUSING CORPORATION LTD. [2015] 58 TAXMANN.COM 78 (BOMBAY HC) DATED PAGE 50 21.04.2015 4. JAI STEEL (INDIA) LTD. 219 TAXMANN 233 (RAJASTHAN HC) DATED 24.05.2013 5. PR CIT VS. KURELE PAPER MILLS P. LTD. ITA NO. 369/2015 (DELHI HC) 6. CIT (C ) - I VS. MGF AUTOMOBILES LTD. ITA NO. 13,14/2014 (DELHI HC) 7. JAIPURIA INFRASTRUCTURE DEVELOPERS P. LTD. VS. ACIT ITA NO. 5522, 5523/DEL/2015 DATED 27.06.2016 8. PR. CIT VS. DINESH TARACHAND KASAT TAX APPEAL NO. 469, 470 OF 2016 (GUJARAT HC) DATED 28.6.2016 9. CIT VS. THAKKAR POPATLAL VELJI SALES LTD. 2016 - TIOL - 709 - HC - MUM - IT DATED 29.03.2016 10. INFOWORLD VS. DCIT 2016 - TIOL - 548 - ITAT - DEL DATED 29.01.2016 11. ACIT VS. MAHAGUN REALTORS P. LTD. 2016 - TIOL - 955 - ITAT - DEL BESIDES THE AFORESAID REASON THE ASSESSEE WISHES TO BRING SOME OTHER RELEVANT FACTS WHICH MAKES THE ADDITIONS UNSUSTAINABLE FOR OTHER REASONS AS WELL. 1. THE ASSESSEE HAD SOLD SHARES OF THE COMPANY ONLY AND DID NOT TRANSFER THE LAND. THERE WAS NO LEGAL BASIS FOR APPLYING SECTION 50C OF THE IT ACT ON ASSUMED CIRCLE RATE BASIS. 2. LAND WAS SHOWN AS STOCK IN TRADE IN THE BALANCE SHEET OF THE COMPANY WHERE THE ASSESSEE WAS THE SHAREHOLDER. SECTION 50C OF THE ACT DID NOT APPLY ON STOCK IN TRADE EVEN OTHERWISE. 3. THE ASSESSEE CANNOT BE ASSUMED TO BE 16.5% OWNER OF THE LAND FOR THE REASON THAT IT HELD 16.5% OF SHARES OF THE COMPANY WHICH OWNED LAND BECAUSE COMPANY IS A DISTINCT LEGAL PAGE 51 PERSON. 4. THE COMPANY HAD VERY SUBSTANTIAL AMOUNT OF LOANS AS HAS BEEN POINTED OUT BY THE LD. CIT (A) IN HIS APPELLATE ORDER. 5. BOOK VALUE OF LAND/INVENTORY IN THE BOOKS OF COMPANY AS ON 31.3.2006 WAS RS. 7,77,09,789/-. IF FOR ARGUMENT SAKE THE CIRCLE SALE VALUE OF THE LAND TAKEN BY THE AO AT RS. 8,33,00,000/- IS ASSUMED TO BE CORRECT ACTION THEN THE CAPITAL GAINS TAXABLE WILL BE MUCH LESS THAN THE CAPITAL GAINS OFFERED BY THE ASSESSEE. THE AO CANNOT BE ALLOWED TO HAVE SALE VALUE/ASSUMED SALE VALUE OF LAND AND COST OF PURCHASE OF SHARES TO WORK OUT THE CAPITAL GAINS. 2.3.2 THE LD. DR SUBMITTED THAT THE LD. CIT (A) WA S NOT CORRECT IN DELETING THE ADDITION OF RS. 9,157,450/- MADE BY THE AO ON ACCOUNT OF SHORT TERM CAPITAL GAINS. HE SUBMITTED THAT THE AO WAS CORRECT IN APPLYING THE PROVISIONS OF SECTION 2(47)(VI) AND SECTION 50C AND HE VEHEMENTLY DEFENDE D THE SAME. PAGE 52 2.3.3 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALSO PERUSED THE MATERIAL ON RECORD. ALTHOUGH THE LD. C IT (A) HAD GIVEN RELIEF TO THE ASSESSEE ON MERITS, THE ASSESSE E HAS CHALLENGED THE ACTION OF THE LD. CIT (A) IN UPHOLDI NG THE ASSUMPTION OF JURISDICTION U/S 153A OF THE ACT BY M EANS OF A CO. IT IS UNDISPUTED THAT THE ASSESSMENT FOR THE Y EAR UNDER CONSIDERATION DID NOT ABATE CONSEQUENT UPON THE SEA RCH WITHIN THE MEANING OF SECOND PROVISO TO SECTION 153 A OF THE ACT. PERUSAL OF THE ASSESSMENT ORDER ALSO REVEALS THAT THE ADDITIONS MADE BY THE AO WERE NOT BASED ON ANY INCRIMINATING MATERIAL/DOCUMENT. THE LD. CIT (A) H AS ALSO NOT REFERRED TO ANY INCRIMINATING MATERIAL/DOCUMENT . THE ADDITIONS MADE, THEREFORE, ARE INDEED OUTSIDE THE S COPE OF ASSESSMENT AS ENVISAGED U/S 153A OF THE ACT. THE H ONBLE DELHI HIGH COURT HAS LAID DOWN THE PROPOSITION OF L AW IN PARA 37 OF ITS JUDGMENT IN THE CASE OF CIT VS. KABUL CHA WLA (SUPRA) AND RESPECTFULLY FOLLOWING THE SAME, WE HOLD THAT T HE ADDITIONS MADE IN THE ASSESSMENT FRAMED U/S 153A OF THE ACT IN THE INSTANT APPEAL ARE LEGALLY NOT TENABLE AND T HE ENTIRE ASSESSMENT IS BAD IN LAW IN AS MUCH AS THE SAME IS NOT BASED PAGE 53 ON ANY INCRIMINATING MATERIAL FOUND DURING THE COUR SE OF SEARCH AND WE HAVE NO OPTION BUT TO CONFIRM THE DEL ETION OF THE ADDITIONS. THEREFORE, THE CO OF THE ASSESSEE I S ALLOWED AND THE APPEAL PREFERRED BY THE DEPARTMENT BECOMES ACADEMIC AND THE SAME IS DISMISSED. 2.3.4 IN THE RESULT, THE CO OF THE ASSESSEE IS ALL OWED AND THE APPEAL OF THE DEPARTMENT IS DISMISSED. 2.4 SMT. KUSUM LATA GARG ITA NOS. 2087 & 2755/DEL/2012 AY 03-04 : ITA NO. 2087/DEL/2012 HAS BEEN PREFERRED BY THE ASS ESSEE AGAINST THE ORDER DATED 20/03/2012 PASSED BY THE LD . CIT (A)-XXXI, NEW DELHI, WHEREAS ITA NO. 2755/DEL/2012 HAS BEEN PREFERRED BY THE DEPARTMENT. IN THIS CASE ALS O NOTICE WAS ISSUED U/S 153A OF THE ACT SUBSEQUENT TO AN ACT ION U/S 132 OF THE ACT ON THE RAJ DARBAR GROUP OF COMPANIES AND ITS ASSOCIATES. PURSUANT TO THE NOTICE, THE ASSESSEE F ILED HER RETURN OF INCOME DECLARING INCOME OF RS. 13,16,908/ -. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO OBSERV ED THAT THE ASSESSEE HAD CLAIMED LONG TERM CAPITAL GAINS OF RS. PAGE 54 1,11,14,987/- FROM SALE OF SHARES OF M/S NAGESHWAR INVESTMENT LTD., M/S QUEST FINANCIAL LTD. AND M/S M P INVESTMENT LTD. AND THE ASSESSEE HAD CLAIMED TO HAV E RECEIVED A TOTAL CONSIDERATION OF RS. 1,14,27,510/- . IN THIS CASE ALSO THE AO OBSERVED THAT THE SHARES WERE PURC HASED IN THE MONTH OF NOVEMBER, 2001 AND SOLD DURING FEBRUAR Y AND MARCH, 2003. THE AO REFERRED TO THE ENQUIRIES MADE FROM CALCUTTA STOCK EXCHANGE, WHEREIN IT WAS REVEALED TH AT THE PRICE OF SCRIP OF M/S NAGESHWAR INVESTMENT LTD. WAS AS LOW AS RS. 2/- AND AS HIGH AS RS. 107/- ON 02.05.2003. THE AO ALSO REFERRED TO THE ENQUIRY MADE BY THE SEBI AGAIN ST SHARE BROKERS WHO HAD TRADED IN THE SCRIP OF M/S NAGESHWA R INVESTMENT LTD. THE AO ALSO NOTED THAT M/S BUBNA S TOCK BROKING SERVICES LTD. HAD FAILED TO REPLY TO THE EN QUIRIES CONDUCTED BY THE DEPARTMENT. THE AO FURTHER NOTED THAT THE SEBI HAS INFORMED THAT THE TRADING IN THE SCRIP OF M/S NAGESHWAR INVESTMENT LTD. WAS SUSPENDED W.E.F. 22.1 1.2005. THE AO WAS OF THE OPINION THAT BOTH SALES AS WELL A S PURCHASE TRANSACTIONS WERE ARRANGED ONES AS NO DETAILS FROM WHOM THESE SHARES WERE PURCHASED AND TO WHOM THESE SHARE S WERE PAGE 55 SOLD HAVE BEEN FURNISHED BY THE ASSESSEE. THE AO ALSO OBSERVED THAT THE ASSESSEE HAD CLAIMED TO HAVE RECE IVED RS. 31,16,010/- AS SALE CONSIDERATION FOR SHARES OF M/S MP INVESTMENTS AND RS. 47,92,500/- FOR SHARES OF M/S Q UEST FINANCIAL LTD ON 13/03/03 AND 20/03/03 RESPECTIVEL Y WHICH WERE CLAIMED TO HAVE BEEN PURCHASED ON 09/11/2001 A ND 30/11/2001 FOR RS. 96,840/- AND RS. 1,01,000/- RESP ECTIVELY. THE AO ALSO NOTED THAT DEDUCTION U/S 54F OF THE ACT HAS BEEN CLAIMED AGAINST THE LONG TERM CAPITAL GAINS ON THES E SHARES. IT WAS THE CONTENTION OF THE ASSESSEE BEFORE THE AO THAT HER CASE STOOD ASSESSED U/S 143(3), VIDE ASSESSMENT ORD ER DATED 30/03/2006 WITHOUT ANY ADDITION ON THIS GROUND. HO WEVER, THE AO PROCEEDED TO TREAT THE TRANSACTIONS AS SHAM AND MADE AN ADDITION OF RS. 1,11,14,987/- AS UNEXPLAINED CRE DIT ALTHOUGH IT WAS THE ASSESSEES CONTENTION THAT NO INCRIMINATING MATERIAL RELATING TO THE ASSESSEE WAS FOUND DURING THE COURSE OF SEARCH U/S 132 OF THE ACT. TH E AO ALSO MADE AN ADDITION OF RS. 2,52,124/- BEING AMOUNT DEB ITED TO THE PROFIT AND LOSS ACCOUNT UNDER VARIOUS HEADS. T HE AO ALSO PAGE 56 MADE AN ADDITION OF RS. 50,000/- ON ACCOUNT OF ALLE GED NON FURNISHING OF BILLS OF EXPENDITURE ON AGRICULTURE. 2.4.1 AGGRIEVED THE ASSESSEE PREFERRED AN APPEAL B EFORE THE FIRST APPELLATE AUTHORITY CHALLENGING THE ASSUM PTION OF JURISDICTION U/S 153A OF THE ACT AS WELL AS CHALLEN GING THE ADDITIONS ON MERITS. THE LD. CIT (A) DISMISSED TH E LEGAL GROUND CHALLENGING THE ASSUMPTION OF JURISDICTION U /S 153A OF THE ACT BUT DELETED ADDITIONS PERTAINING TO SALE OF SHARES OF M/S M.P. INVESTMENT LTD. AND M/S QUEST FINANCIAL SE RVICES LTD. ON MERITS. NOW, BOTH THE ASSESSEE AS WELL AS THE DEPARTMENT HAS PREFERRED AN APPEAL BEFORE THE ITAT IN WHICH THE FOLLOWING GROUNDS HAVE BEEN RAISED: GROUNDS OF ITA 2087/DEL/12 : 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LD. CIT (A) XXXI IS CORRECT IN UPHOLDING THE ASSESSMENT FRAMED OUTSIDE THE SEARCH MATERIAL AND AFTER THE CHANGE OF OPINION? 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LD. CIT (A) XXXI ERRED IN CONFIRMING THE ADDITION OF PAGE 57 RS. 34,82,351/- INCLUDING 2% EXPENDITURE ON ACCOUNT OF SALE OF SHARES OF M/S NAGESHWAR INVESTMENTS LTD. 3. THE ASSESSEE CRAVES FOR THE ADDITION, MODIFICATION AND DELETION OF THE GROUNDS OF APPEAL. GROUNDS OF ITA 2755/DEL/12 : 1. THE ORDER OF THE LD. CIT (A) IS NOT CORRECT IN LAW AND FACTS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 30,74,684/- MADE BY THE AO U/S 68 OF THE I.T. ACT, 1961 AS UNEXPLAINED CASH CREDIT ON ACCOUNT OF SALE OF SH ARES OF M/S M.P. INVESTMENT LTD. WITHOUT APPRECIATING THE F ACT THAT THE TRANSACTION OF SALE OF SHARES IS NOT GENUI NE BUT AN ARRANGED DEAL MANAGED BY THE ASSESSEE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 47,80,252/- MADE BY THE AO U/S 68 OF THE I.T. ACT, 1961 AS UNEXPLAINED CASH CREDIT ON ACCOUNT OF SALE OF SH ARES OF M/S QUEST FINANCIAL SERVICES LTD. WITHOUT APPRECIAT ING THE FACT THAT THE TRANSACTION OF SALE OF SHARES IS NOT GENUINE BUT AN ARRANGED DEAL MANAGED BY THE ASSESSE E. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAS ERRED IN DELETING THE DISALLOWANCE OF R S. 2,52,124/- MADE BY THE AO ON ACCOUNT OF DISALLOWING THE PAGE 58 EXPENSES CLAIMED AGAINST INTEREST INCOME WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAS NOT CAR RIED OUT ANY BUSINESS ACTIVITIES. 5. THE APPELLANT CRAVES LEAVE TO ADD, AMEND ANY/ALL TH E GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF HE ARING OF THIS APPEAL. 2.4.2 THE LD. AR FILED WRITTEN SUBMISSIONS WHICH A RE BEING SUMMARIZED AND REPRODUCED AS UNDER: THE ASSESSEE WISHES TO SUBMIT THAT SEARCH IN THIS CASE WAS CONDUCTED BY THE DEPARTMENT ON 31.07.2008. STATUS OF RETURN OF INCOME FILED BY TH E ASSESSEE ORIGINALLY IS AS BELOW: A.Y. DATE OF FILING WHETHER THE ASSESSMENTS WERE ABATED OR NOT WITHIN THE MEANING OF SECOND PROVISO TO SEC. 153A OF THE ACT. 2003-04 05.03.2004 DID NOT ABATE FROM THE AFORESAID TABLE, IT CAN BE GATHERED THAT T HE ASSESSMENTS IN THE CASE OF THE ASSESSEE DID NOT ABATE CONSEQUENT UPON THE SEARCH WITHIN THE MEANING OF SECOND PROVISO TO SECTION 153A OF THE I.T. ACT. PERUSAL OF THE ASSESSMENT ORDER AS QUOTED ABOVE VERY UNAMBIGUOUSLY EVIDENCES THAT THE ADDITIONS PAGE 59 MADE BY THE AO WERE NOT BASED ON ANY INCRIMINATING DOCUMENTS. THE ADDITIONS MADE THEREFORE, WERE INDISPUTABLY OUTSIDE THE SCOPE OF ASSESSMENTS U/S 153A OF THE I.T. ACT AND DESERVES TO BE DELETED. THE LD. CIT (A) HAS ALSO NOT REFERRED TO ANY INCRIMINATING DOCUMENT WHILE CONFIRMING PART OF THE ADDITIONS. THE ASSESSEE RELIES UPON THE ORDER OF T HE HONBLE JURISDICTIONAL DELHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA [2015] 61 TAXMANN.COM 412 (DELHI) FOR THE PROPOSITION THAT ADDITIONS IN T HE UNABATED ASSESSMENTS CAN BE MADE ONLY ON THE BASIS OF INCRIMINATING DOCUMENTS FOUND AND SEIZED DURING THE COURSE OF SEARCH. XXX INNUMERABLE CASES HAVE BEEN DECIDED SUBSEQUENT TO THE AFORESAID JUDGMENT OF THE HONBLE DELHI HIGH COURT UPHOLDING/FOLLOWING THE AFORESAID JUDGMENT. HOWEVER, THE APPELLANT WISHES TO REFER TO SOME OF THEM AS PER THE LIST BELOW: S.NO. JUDGMENT CITATION 1. SUNCITY PROJECTS P. LTD. VS. DCIT 2016-TIOL-643- ITAT- DEL DATED 21.03.2016 2. CIT VS. CONTINENTAL WAREHOUSING CORPORATION LTD. [2015] 63 TAXMANN.COM 118 (MUM TRIB.) DATED 12.10.2015 3. CIT VS. CONTINENTAL WAREHOUSING CORPORATION LTD. [2015] 58 TAXMANN.COM 78 (BOMBAY HC) DATED 21.04.2015 PAGE 60 4. JAI STEEL (INDIA) LTD. 219 TAXMANN 233 (RAJASTHAN HC) DATED 24.05.2013 5. PR CIT VS. KURELE PAPER MILLS P. LTD. ITA NO. 36 9/2015 (DELHI HC) 6. CIT (C )-I VS. MGF AUTOMOBILES LTD. ITA NO. 13,1 4/2014 (DELHI HC) 7. JAIPURIA INFRASTRUCTURE DEVELOPERS P. LTD. VS. ACIT ITA NO. 5522, 5523/DEL/2015 DATED 27.06.2016 8. PR. CIT VS. DINESH TARACHAND KASAT TAX APPEAL NO . 469, 470 OF 2016 (GUJARAT HC) DATED 28.6.2016 9. CIT VS. THAKKAR POPATLAL VELJI SALES LTD. 2016-TIOL-709-HC- MUM-IT DATED 29.03.2016 10. INFOWORLD VS. DCIT 2016-TIOL-548-ITAT- DEL DATED 29.01.2016 11. ACIT VS. MAHAGUN REALTORS P. LTD. 2016-TIOL-955 -ITAT- DEL WE ALSO WISH TO MENTION THAT ADDITIONS IN THE IDENTICAL MANNER WERE MADE AND SUSTAINED IN THE CASE OF SH. SANTOSH KUMAR GARG, A FAMILY MEMBER OF THE ASSESSEE WHERE SEARCH WAS CONDUCTED ALONG WITH THE ASSESSEE. HONBLE TRIBUNAL HAS DISPOSED OFF THE AFORESAID MATTER VIDE ORDER DATED 29.10.2015. THE DEPARTMENT FILED APPEAL AGAINST THE AFORESAID ORDER OF THE HONBLE TRIBUNAL BEFORE THE HONBLE DELHI HIGH COURT AND THE APPEAL HAS BEEN DISMISSED. CONSIDERING THE AFORESAID FACTS AND CIRCUMSTANCES OF THE MATTER, THE CASE OF THE ASSESSEE MAY KINDLY BE CONSIDERED TO BE FULLY COVERED AND ITS APPEAL MAY PLEASE BE ALLOWED & PAGE 61 DEPARTMENTS APPEAL MAY PLEASE BE DISMISSED. BESIDES THE AFORESAID REASON THE ASSESSEE WISHES TO BRING SOME OTHER RELEVANT FACTS WHICH MAKES THE ADDITIONS UNSUSTAINABLE FOR OTHER REASONS AS WELL. 1. ASSESSING OFFICERS MENTION OF SEBI ENQUIRIES IS INCORRECT, IRRELEVANT AND MISLEADING. IN THE SEBI REPORT THERE IS NO MENTION THAT THE ASSESSEE WAS IN ANY WAY INVOLVED IN THE ALLEGED RIGGING OF THE M/S NAGESHWAR INVESTMENT LTD. EVEN THE BROKER THROUGH WHOM THE ASSESSEE TRANSACTED IN SHARES DID NOT FIND ANY MENTION IN THE SEBI REPORT. THE SEBI INVESTIGATIONS WERE IN FACT ON ACCOUNT OF CERTAIN PRICE RISE IN THE SHARES OF THE M/S NAGESHWAR INVESTMENT LTD. DURING THE PERIOD APRIL 2005 TO NOVEMBER 2005. TRADING IN THE M/S NAGESHWAR INVESTMENT LTD. SCRIP WAS SUSPENDED FOR A VERY BRIEF PERIOD AND WAS REVOKED ON 31.5.2006 WHEREAS TRANSACTIONS IN THE CASE OF THE ASSESSEE WHICH HAVE BEEN QUESTIONED PERTAIN TO FY 2003-04 & FY 2004- 05 WHICH WAS MUCH BEFORE THE ALLEGED PERIOD OF RIGGING. 2. THE AOS RELIANCE ON THE ADDITIONS IN THE CASE OF SH. DEVI DASS GARG IN THE ORIGINAL PAGE 62 ASSESSMENT PROCEEDINGS IN HIS CASE ON THE IDENTICAL ISSUE IS ALSO NOT HELPFUL TO THE DEPARTMENT. THE ADDITIONS MADE WERE DELETED BY THE HONBLE TRIBUNAL VIDE ORDER DATED 31.08.2009. THE AO SHOULD HAVE BEEN AWARE OF THIS ORDER WHEN HE PASSED THE IMPUGNED ASSESSMENT ORDER YET HE CHOSE TO IGNORE IT AS IT WAS AGAINST THE DEPARTMENT. 2.4.3 THE LD. DR SUBMITTED THAT THAT THE ADDITION WAS JUSTIFIED IN VIEW OF THE FACT THAT THE BROKER DID N OT RESPOND TO THE SUMMONS ISSUED BY THE DEPARTMENT. THE LD. DR SUBMITTED THAT THE DELETION MADE BY THE LD. CIT (A) OF RS. 3,074,687/- ON ACCOUNT OF SALE OF SHARES OF M/S M.P . INVESTMENT LTD. AND OF RS. 4,780,252/- ON ACCOUNT O F SALE OF SHARES OF M/S QUEST FINANCIAL SERVICES LTD. WAS NOT JUSTIFIED BECAUSE THE ONUS ON THE ASSESSEE CANNOT BE SHIFTED TO THE REVENUE. HE EMPHASIZED THAT HERE THE BONA FIDES OF THE BROKER WERE UNDER QUESTION AND THE DEALINGS WITH AL L THE THREE COMPANIES WERE APPARENTLY SUSPICIOUS. THE LD . DR HEAVILY RELIED ON THE FINDINGS OF THE AO AND VEHEME NTLY ARGUED THAT IN VIEW OF THE SPECIFIC INCONSISTENCIES POINTED OUT PAGE 63 BY THE AO, THE RELIEF GRANTED TO THE ASSESSEE BY TH E LD. CIT (A) WAS NOT LEGALLY TENABLE. 2.4.4 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALSO PERUSED THE MATERIAL ON RECORD. IT IS SEEN THAT IN ASSESSEES CASE SEARCH ACTION WAS INITIATED AND ASSESSMENTS U/ S 153A WERE FRAMED MAKING VARIOUS ADDITIONS. IT IS ASSESSE ES CLAIM THAT THE ADDITION WAS NOT TENABLE AS THE REGULAR/OR IGINAL RETURN HAD BEEN FILED WHEREIN THE PARTICULARS RELAT ING TO THE ADDITION HAS BEEN DISCLOSED AND THE SAME HAD BEEN A CCEPTED BY THE AO IN THE ASSESSMENT MADE U/S 143 (3) OF THE ACT. ON EXAMINATION OF THE RECORDS, IT IS SEEN THAT THIS CO NTENTION OF THE ASSESSEE IS CORRECT IN SO FAR AS CONSEQUENT TO INFORMATION RECEIVED FROM THE INVESTIGATION WING AGRA, THE ERST WHILE AO HAD MADE DETAILED ENQUIRIES ON THIS ISSUE AND HAD T HEN ACCEPTED THE ASSESSEES CLAIM IN THE ASSESSMENT ORD ER FRAMED U/S 143(3) OF THE ACT. NOW, IT IS SEEN FROM THE RECORDS THAT NO MATERIAL HAS BEEN FOUND DURING THE SEARCH TO JUS TIFY THE ADDITION AND THE ASSESSMENT ORDER DOES NOT MAKE ANY REFERENCE WHATSOEVER TO ANY SEIZED MATERIAL ON WHIC H THE IMPUGNED ADDITION CAN BE SAID TO BE BASED. IN OUR C ONSIDERED PAGE 64 OPINION SECTION 153A DOES NOT AUTHORISE THE MAKING OF A DE NOVO ASSESSMENT IN THIS PARTICULAR ASSESSMENT YEAR. WHI LE UNDER THE FIRST PROVISO, THE AO IS EMPOWERED TO FRA ME ASSESSMENT FOR SIX YEARS, UNDER THE SECOND PROVISO ONLY ASSESSMENTS WHICH ARE PENDING ON THE DATE OF INITIA TION OF SEARCH ABATE. THE EFFECT IS THAT COMPLETED ASSESSME NTS DO NOT ABATE. THE ASSESSMENTS CAN BE SAID TO BE PENDING ON LY IF THE AO IS STATUTORILY REQUIRED TO DO SOMETHING FURTHER. IF THE SECTION 143(2) NOTICE HAS BEEN ISSUED, THE ASSESSME NT CAN BE SAID TO BE PENDING. THE POWER GIVEN BY THE FIRST PR OVISO TO ASSESS INCOME FOR SIX ASSESSMENT YEARS HAS TO BE CO NFINED TO THE UNDISCLOSED INCOME UNEARTHED DURING SEARCH AND CANNOT INCLUDE ITEMS WHICH ARE DISCLOSED IN THE ORIGINAL A SSESSMENT PROCEEDINGS. A PERUSAL OF THE ASSESSMENT ORDER PAS SED U/S 153A OF THE ACT REVEALS THAT THE AO HAS NOT MADE AN Y REFERENCE WHATSOEVER TO ANY INCRIMINATING MATERIAL FOUND AS A RESULT OF THE SEARCH AND THE ADDITION OF RS. 11,337 ,287/- HAS BEEN MADE ENTIRELY ON THE BASIS OF ALLEGATION OF ACCOMMODATION ENTRY WHICH IN TURN IS BASED ON SOME MATERIAL SAID TO HAVE BEEN GATHERED FROM STOCK EXCH ANGE BUT PAGE 65 WHICH DOES NOT SPECIFICALLY POINT OUT TOWARDS THE A SSESSEE. THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA IN ITA NO. 707/2014 DATED 28/08/2015 HAS EXAMINED THREAD BARE THE PROVISIONS OF SECTION 153A AND HAS SUMMARIZED THE LEGAL POSITION IN PARA 37 OF ITS ORD ER (WHICH HAS BEEN REPRODUCED IN EARLIER PART OF THIS ORDER). IN THE LIGHT OF THE AFORESAID OBSERVATIONS OF THE HONBLE DELHI HIGH COURT, WE HOLD THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) WAS NOT CORRECT IN UPHOLDING THE ASSESS MENT FRAMED OUTSIDE THE SEARCH MATERIAL AND HENCE, WHILE ALLOWING GROUND NOS. 1 AND 2 OF THE ASSESSEES APPEAL, WE DE LETE THE ENTIRE ADDITIONS MADE IN THE ASSESSMENT PROCEEDINGS U/S 153A OF THE ACT AS THE IMPUGNED ADDITIONS HAVE BEEN MADE WITHOUT ANY REFERENCE TO ANY SEIZED MATERIAL. AS A RESULT, ON SIMILAR REASONING, THE DEPARTMENTS APPEAL BECOMES ACADEMIC AND THE SAME STANDS DISMISSED. 2.4.5 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED AND THE APPEAL OF THE DEPARTMENT IS DISMISSED. PAGE 66 2.5 SMT. KUSUM LATA GARG ITA NO. 2088/DEL/2012 AY 04-05 : THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAI NST THE ORDER DATED 20/03/2012 PASSED BY THE LD. CIT (A) XXXI, NEW DELHI. IN THIS CASE ALSO NOTICE WAS ISSUED U/S 153A OF THE ACT SUBSEQUENT TO AN ACTION U/S 132 OF THE ACT ON THE RAJ DARBAR GROUP OF COMPANIES AND ITS ASSOCIATES. PURS UANT TO THE NOTICE, THE ASSESSEE FILED HER RETURN OF INCOME DECLARING INCOME OF RS. 13,78,318/-. DURING THE COURSE OF AS SESSMENT PROCEEDINGS, THE AO OBSERVED THAT THE ASSESSEE HAD CLAIMED LONG TERM CAPITAL GAINS OF RS. 46,88,865/- FROM SAL E OF SHARES OF M/S NAGESHWAR INVESTMENT LTD. AND THAT THE ASSES SEE HAD CLAIMED TO HAVE RECEIVED A TOTAL CONSIDERATION OF R S. 47,97,550/-, IN THIS CASE ALSO THE AO OBSERVED THAT THE SHARES WERE PURCHASED IN THE MONTH OF NOVEMBER, 200 1 AND SOLD DURING FEBRUARY AND MARCH, 2003. THE AO REFER RED TO THE ENQUIRIES MADE FROM CALCUTTA STOCK EXCHANGE, WH EREIN IT WAS REVEALED THAT THE PRICE OF SCRIP OF M/S NAGESHW AR INVESTMENT LTD. WAS AS LOW AS RS. 2/- AND AS HIGH A S RS. 107/- ON 02.05.2003. THE AO ALSO REFERRED TO THE E NQUIRY PAGE 67 MADE BY THE SEBI AGAINST SHARE BROKERS WHO HAD TRAD ED IN THE SCRIP OF M/S NAGESHWAR INVESTMENT LTD. THE AO ALSO NOTED THAT M/S BUBNA STOCK BROKING SERVICES LTD. HA D FAILED TO REPLY TO THE ENQUIRIES CONDUCTED BY THE DEPARTME NT. THE AO FURTHER NOTED THAT THE SEBI HAS INFORMED THAT TH E TRADING IN THE SCRIP OF M/S NAGESHWAR INVESTMENT LTD. WAS SUSPENDED W.E.F. 22.11.2005. THE AO WAS OF THE OPI NION THAT BOTH SALES AS WELL AS PURCHASE TRANSACTIONS WERE AR RANGED ONCE AS NO DETAILS FROM WHOM THESE SHARES WERE PURC HASED AND TO WHOM THESE SHARES WERE SOLD HAVE BEEN FURNIS HED BY THE ASSESSEE. THE AO FURTHER NOTED THAT THESE SHAR ES WERE PURCHASED IN F.Y. 01-02 AT A MEAGER RATE AND SOLD O N 28.04.2003 AT A HIGH PRICE. THE AO OBSERVED THAT T HE ASSESSEE HAD CLAIMED TO HAVE RECEIVED AN AMOUNT OF RS. 47,97,550/- AS SALES CONSIDERATION ON THE SALE OF S HARES OF M/S NAGESHWAR INVESTMENT LTD. AND HAD DECLARED LONG TERM CAPITAL GAINS OF RS. 46,88,865/- ON WHICH DEDUCTION U/S 54F OF THE ACT HAS ALSO BEEN CLAIMED. THE AO PROCEEDED TO MAKE AN ADDITION OF RS. 48,93,501/- U/S 68 OF THE ACT IN RESPECT OF THE SALE OF SHARES. IN ADDITION THE AO ALSO MADE A N ADDITION PAGE 68 OF RS. 1 LAKH ON ACCOUNT OF NON FURNISHING OF BILLS RELATING TO EXPENSES ON AGRICULTURE. 2.5.1 AGGRIEVED THE ASSESSEE APPROACHED THE FIRST APPELLATE AUTHORITY CHALLENGING THE ISSUE OF ASSUMP TION OF JURISDICTION U/S 153A OF THE ACT. THE ASSESSEE ALS O CHALLENGED THE ADDITION ON MERITS. THE LD. CIT (A) DID NOT ACCEPT THE ASSESSEES CHALLENGE ON THE LEGAL GROUND OF ASSUMPTION OF JURISDICTION U/S 153A OF THE ACT AND ALSO CONFIRMED THE ADDITION ON MERITS. NOW, THE ASSESSE E APPROACHED THE TRIBUNAL AND HAS RAISED THE FOLLOWIN G GROUNDS OF APPEAL: GROUNDS OF ITA 2088/DEL/12 : 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LD. CIT (A) XXXI IS CORRECT IN UPHOLDING THE ASSESSMENT FRAMED OUTSIDE THE SEARCH MATERIAL AND AFTER THE CHANGE OF OPINION? 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LD. CIT (A) XXXI ERRED IN CONFIRMING THE ADDITION OF RS. 48,93,501/- INCLUDING 2% EXPENDITURE ON ACCOUNT OF SALE OF SHARES OF M/S NAGESHWAR INVESTMENTS LTD. PAGE 69 3. THE ASSESSEE CRAVES FOR THE ADDITION, MODIFICATION AND DELETION OF THE GROUNDS OF APPEAL. 2.5.2 THE LD. AR FILED WRITTEN SUBMISSIONS WHICH A RE SUMMARIZED AND REPRODUCED AS UNDER: THE ASSESSEE WISHES TO SUBMIT THAT SEARCH IN HIS CASE WAS CONDUCTED BY THE DEPARTMENT ON 31.07.2008. STATUS OF RETURN OF INCOME FILED BY TH E ASSESSEE ORIGINALLY IS AS BELOW: A.Y. DATE OF FILING WHETHER THE ASSESSMENTS WERE ABATED OR NOT WITHIN THE MEANING OF SECOND PROVISO TO SEC. 153A OF THE ACT. 2004 - 05 31.03.2005 DID NOT ABATE FROM THE AFORESAID TABLE, IT CAN BE GATHERED THAT T HE ASSESSMENTS IN THE CASE OF THE ASSESSEE DID NOT ABATE CONSEQUENT UPON THE SEARCH WITHIN THE MEANING OF SECOND PROVISO TO SECTION 153A OF THE I. T. ACT. PERUSAL OF THE ASSESSMENT ORDER AS QUOTED ABOVE VERY UNAMBIGUOUSLY EVIDENCES THAT THE ADDITIONS MADE BY THE AO WERE NOT BASED ON ANY INCRIMINATING DOCUMENTS. THE ADDITIONS MADE THEREFORE, WERE INDISPUTABLY OUTSIDE THE SCOPE OF ASSESSMENTS U/S 153A OF THE I.T. ACT AND DESERVES TO BE DELETED. PAGE 70 THE LD. CIT (A) HAS ALSO NOT REFERRED TO ANY INCRIMINATING DOCUMENT WHILE CONFIRMING PART OF THE ADDITIONS. THE ASSESSEE RELIES UPON THE ORDER OF T HE HONBLE JURISDICTIONAL DELHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA [2015] 61 TAXMANN.COM 412 (DELHI) FOR THE PROPOSITION THAT ADDITIONS IN THE UNABATED ASSESSMENTS CAN BE MADE ONLY ON THE BASIS OF INCRIMINATING DOCUMENTS FOUND AND SEIZED DURING THE COURSE OF SEARCH. THE HONBLE HIGH COUR T HAS LAID DOWN FOLLOWING PROPOSITIONS OF LAW IN THE AFORESAID CASE. XXX INNUMERABLE CASES HAVE BEEN DECIDED SUBSEQUENT TO THE AFORESAID JUDGMENT OF THE HONBLE DELHI HIGH COURT UPHOLDING/FOLLOWING THE AFORESAID JUDGMENT. THE ASSESSEE DOES NOT WANT TO BURDEN THE HONBLE TRIBUNAL WITH ALL OF THESE CASES. HOWEVER, THE APPELLANT WISHES TO REFER TO SOME OF THEM AS PER TH E LIST BELOW: S.NO. JUDGMENT CITATION 1. SUNCITY PROJECTS P. LTD. VS. DCIT 2016 - TIOL - 643 - ITAT - DEL DATED 21.03.2016 2. CIT VS. CONTINENTAL WAREHOUSING CORPORATION LTD. [2015] 63 TAXMANN.COM 118 (MUM TRIB.) DATED 12.10.2015 3. CIT VS. CONTINENTAL WAREHOUSING CORPORATION LTD. [2015] 58 TAXMANN.C OM 78 (BOMBAY HC) DATED 21.04.2015 4. JAI STEEL (INDIA) LTD. 219 TAXMANN 233 (RAJASTHAN HC) DATED 24.05.2013 5. PR CIT VS. KURELE PAPER MILLS P. LTD. ITA NO. 369/2015 (DELHI HC) PAGE 71 6. CIT (C ) - I VS. MGF AUTOMOBILES LTD. ITA NO. 13,14/2014 (DELHI HC) 7. JAIPURIA INFRASTRUCTURE DEVELOPERS P. LTD. VS. ACIT ITA NO. 5522, 5523/DEL/2015 DATED 27.06.2016 8. PR. CIT VS. DINESH TARACHAND KASAT TAX APPEAL NO. 469, 470 OF 2016 (GUJARAT HC) DATED 28.6.2016 9. CIT VS. THAKKAR POPATLAL VELJI SALES LTD. 2016 - TIOL - 709 - HC - MUM - IT DATED 29.03.2016 10. INFOWORLD VS. DCIT 2016 - TIOL - 548 - ITAT - DEL DATED 29.01.2016 11. ACIT VS. MAHAGUN REALTORS P. LTD. 2016 - TIOL - 955 - ITAT - DEL WE ALSO WISH TO MENTION THAT ADDITIONS IN THE IDENTICAL MANNER WERE MADE AND SUSTAINED IN THE CASE OF SH. SANTOSH KUMAR GARG, A FAMILY MEMBER OF THE ASSESSEE WHERE SEARCH WAS CONDUCTED ALONG WITH THE ASSESSEE. HONBLE TRIBUNAL HAS DISPOSED OFF THE AFORESAID MATTER VIDE ORDER DATED 29.10.2015. THE DEPARTMENT FILED APPEAL AGAINST THE AFORESAID ORDER OF THE HONBLE TRIBUNAL BEFORE THE HONBLE DELHI HIGH COURT AND THE APPEAL HAS BEEN DISMISSED. CONSIDERING THE AFORESAID FACTS AND CIRCUMSTANCES OF THE MATTER, THE CASE OF THE ASSESSEE MAY KINDLY BE CONSIDERED TO BE FULLY COVERED AND ITS APPEAL MAY PLEASE BE ALLOWED & DEPARTMENTS APPEAL MAY PLEASE BE DISMISSED. BESIDES THE AFORESAID REASON THE ASSESSEE WISHES TO BRING SOME OTHER RELEVANT FACTS WHICH MAKES THE ADDITIONS UNSUSTAINABLE FOR OTHER REASONS AS WELL. PAGE 72 1. ASSESSING OFFICERS MENTION OF SEBI ENQUIRIES IS INCORRECT, IRRELEVANT AND MISLEADING. IN THE SEBI REPORT THERE IS NO MENTION THAT THE ASSESSEE WAS IN ANY WAY INVOLVED IN THE ALLEGED RIGGING OF THE M/S NAGESHWAR INVESTMENT LTD. EVEN THE BROKER THROUGH WHOM THE ASSESSEE TRANSACTED IN SHARES DID NOT FIND ANY MENTION IN THE SEBI REPORT. THE SEBI INVESTIGATIONS WERE IN FACT ON ACCOUNT OF CERTAIN PRICE RISE IN THE SHARES OF THE M/S NAGESHWAR INVESTMENT LTD. DURING THE PERIOD APRIL 2005 TO NOVEMBER 2005. TRADING IN THE M/S NAGESHWAR INVESTMENT LTD. SCRIP WAS SUSPENDED FOR A VERY BRIEF PERIOD AND WAS REVOKED ON 31.5.2006 WHEREAS TRANSACTIONS IN THE CASE OF THE ASSESSEE WHICH HAVE BEEN QUESTIONED PERTAIN TO FY 2003-04 & FY 2004- 05 WHICH WAS MUCH BEFORE THE ALLEGED PERIOD OF RIGGING. 2. THE AOS RELIANCE ON THE ADDITIONS IN THE CASE OF SH. DEVI DASS GARG IN THE ORIGINAL ASSESSMENT PROCEEDINGS IN HIS CASE ON THE IDENTICAL ISSUE IS ALSO NOT HELPFUL TO THE DEPARTMENT. THE ADDITIONS MADE WERE DELETED BY THE HONBLE TRIBUNAL VIDE ORDER DATED 31.08.2009. THE AO SHOULD HAVE BEEN AWARE PAGE 73 OF THIS ORDER WHEN HE PASSED THE IMPUGNED ASSESSMENT ORDER YET HE CHOSE TO IGNORE IT AS IT WAS AGAINST THE DEPARTMENT. 2.5.3 THE LD. DR VEHEMENTLY SUPPORTED THE ORDERS O F THE AO AS WELL AS THE LD. CIT (A) AND SUBMITTED THAT TH E ADDITIONS WERE FULLY JUSTIFIED AND OUGHT TO BE UPHELD. 2.5.4 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALSO PERUSED THE MATERIAL ON RECORD. IT IS SEEN THAT IN ASSESSEES CASE SEARCH ACTION WAS INITIATED AND ASSESSMENTS U/ S 153A WERE FRAMED MAKING VARIOUS ADDITIONS. IT IS ASSESSE ES CLAIM THAT THE ADDITION WAS NOT TENABLE AS THE REGULAR/OR IGINAL RETURN HAD BEEN FILED WHEREIN THE PARTICULARS RELAT ING TO THE ADDITION HAS BEEN DISCLOSED AND THE SAME HAD BEEN A DDED BY THE AO IN THE ASSESSMENT MADE U/S 143 (3) OF THE AC T. IT IS SEEN THAT THE ASSESSEE HAD PREFERRED AN APPEAL BEFO RE THE LD. CIT (A) WHO HAD DELETED THESE ADDITIONS AND ON FURT HER APPEAL BY THE DEPARTMENT, ITAT AGRA BENCH HAD ALSO UPHELD THE CIT (A)S ORDER. SUBSEQUENTLY, REVENUES APPEAL BEFORE THE HONBLE HIGH COURT WAS ALSO DISMISSED. IT IS SEEN FROM THE RECORDS PAGE 74 THAT NO MATERIAL HAS BEEN FOUND DURING THE SEARCH T O JUSTIFY THE ADDITION. IN OUR CONSIDERED OPINION SECTION 153 A DOES NOT AUTHORISE THE MAKING OF A DE NOVO ASSESSMENT IN THIS PARTICULAR ASSESSMENT YEAR. WHILE UNDER THE FIRST P ROVISO, THE AO IS EMPOWERED TO FRAME ASSESSMENT FOR SIX YEARS, UNDER THE SECOND PROVISO ONLY ASSESSMENTS WHICH ARE PENDI NG ON THE DATE OF INITIATION OF SEARCH ABATE. THE EFFECT IS THAT COMPLETED ASSESSMENTS DO NOT ABATE. THE ASSESSMENTS CAN BE SAID TO BE PENDING ONLY IF THE AO IS STATUTORILY RE QUIRED TO DO SOMETHING FURTHER. IF THE SECTION 143(2) NOTICE HAS BEEN ISSUED, THE ASSESSMENT CAN BE SAID TO BE PENDING. H OWEVER AN ASSESSMENT WHICH HAS BEEN CONTESTED UP TO THE HI GH COURT CANNOT BE SAID TO BE PENDING. THE POWER GIVEN BY THE FIRST PROVISO TO ASSESS INCOME FOR SIX ASSESSMENT Y EARS HAS TO BE CONFINED TO THE UNDISCLOSED INCOME UNEARTHED DUR ING SEARCH AND CANNOT INCLUDE ITEMS WHICH ARE DISCLOSED IN THE ORIGINAL ASSESSMENT PROCEEDINGS. A PERUSAL OF THE ASSESSMENT ORDER PASSED U/S 153A OF THE ACT REVEALS THAT THE A O HAS NOT MADE ANY REFERENCE WHATSOEVER TO ANY INCRIMINATING MATERIAL FOUND AS A RESULT OF THE SEARCH AND THE ADDITION OF RS. PAGE 75 4,893,501/- HAS BEEN MADE ENTIRELY ON THE BASIS OF ALLEGATION OF ACCOMMODATION ENTRY WHICH IN TURN IS BASED ON SO ME MATERIAL SAID TO HAVE BEEN GATHERED FROM STOCK EXCH ANGE BUT WHICH DOES NOT SPECIFICALLY POINT OUT TOWARDS THE A SSESSEE. THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA IN ITA NO. 707/2014 DATED 28/08/2015 HAS EXAMINED THREAD BARE THE PROVISIONS OF SECTION 153A AND RESPECTFULLY FOLLOWING THE SAME, WE DEEM IT APPROPR IATE TO DELETE ALL THE ADDITIONS MADE IN THE ASSESSMENT PRO CEEDINGS U/S 153A OF THE ACT AS BEING NOT LEGALLY TENABLE. THEREFORE, GROUND NOS. 1 AND 2 OF THE ASSESSEES APPEAL ARE AL LOWED . 2.5.5 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. 2.6 SMT. KUSUM LATA GARG ITA NO. 2344/DEL/2012 & CO 253/DEL/2012 AY 06-07 : ITA NO. 2344/DEL/2012 HAS BEEN PREFERRED BY THE DEPARTMENT AGAINST THE ORDER DATED 09/03/2012 PASSE D BY THE LD. CIT (A) XXXI, NEW DELHI, WHEREAS THE CO H AS BEEN PREFERRED BY THE ASSESSEE. IN THIS CASE ALSO, NOT ICE U/S 153A OF THE ACT WAS ISSUED AS A CONSEQUENCE OF ACTION U/ S 132 OF PAGE 76 THE ACT ON THE RAJ DARBAR GROUP OF COMPANIES. HER E ALSO IT HAS BEEN THE CONTENTION OF THE ASSESSEE THAT NO INC RIMINATING MATERIALS WERE FOUND IN THE CASE OF THE ASSESSEE. PURSUANT TO THE NOTICE U/S 153A, THE ASSESSEE FILED HER RETURN OF INCOME DECLARING INCOME OF RS. 76,53,150/-. DURING THE CO URSE OF THE ASSESSMENT, THE AO OBSERVED THAT THE ASSESSEE W AS THE HOLDER OF 16.65% SHARES OF M/S TARUPIT EXPORTS LTD. AND THAT THE SHARES HAD BEEN TRANSFERRED TO M/S VIPUL LIMITE D ON 19/12/2005. THE AO FURTHER OBSERVED THAT THE OTHER SHAREHOLDERS HAD ALSO SOLD THEIR SHARES TO THE SAME COMPANY AND PROCEEDED TO HOLD THAT THE PLOT IN THE COMPANY HELD AS AN ASSET WAS DEEMED TO BE TRANSFERRED TO M/S VIPUL LIM ITED AND BY APPLYING PROVISIONS OF SECTION 50C ON THE SALE O F THE PLOT BY THE ASSESSEE MADE AN ADDITION OF RS. 91,57,450/- ON ACCOUNT OF SHORT TERM CAPITAL GAIN IN PURSUANCE TO SECTION 2(47)(VI) AND SECTION 50C OF THE ACT BY CONSIDERING THE TRANSFER OF SHARES AS TRANSFER OF OWNERSHIP OF THE LAND. THE AO FURTHER DISALLOWED AN AMOUNT OF RS. 1 LAKH FROM AGRICULTURAL EXPENSES ON THE GROUND OF NON FURNISHI NG OF BILLS RELATED TO AGRICULTURAL EXPENSES. THE AO ALSO MADE AN PAGE 77 ADDITION OF RS. 1,54,987/- BEING EXPENSES DEBITED U NDER VARIOUS HEADS IN THE PROFIT AND LOSS ACCOUNT. 2.6.1 THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT (A) CHALLENGING THE ASSUMPTION OF JURISDICTION U/S 153A OF THE ACT AS WELL AS CHALLENGING THE ADDITION ON MERITS. THE LD. CIT (A) DID NOT ACCEPT THE ASSESSEES CONTENTION REGARD ING ASSUMPTION OF JURISDICTION U/S 153A BUT DELETED BOT H THE ADDITIONS/DISALLOWANCES ON MERITS. AGGRIEVED, THE DEPARTMENT HAS PREFERRED THIS APPEAL BEFORE THE TRI BUNAL AND THE ASSESSEE HAS FILED A CO. THE GROUNDS TAKEN BY BOTH THE PARTIES ARE AS UNDER: GROUNDS OF ITA NO. 2344/DEL/2012 : 1. THE ORDER OF THE LD. CIT (A) IS NOT CORRECT IN LAW AND FACTS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF R S. 91,57,450/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF SHORT TERM CAPITAL GAIN IN PURSUANT TO SECTION 2(47)(VI) AND SECTION 50C OF THE INCOME TAX ACT, 1961 BY CONSIDERING THE MERE TRANSFER OF SHARE S PAGE 78 AS TRANSFER OF OWNERSHIP OF LAND HELD AS FIXED ASSE TS BY THE COMPANY IN WHICH THE ASSESSEE WAS A SHAREHOLDER. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAS ERRED IN DELETING THE DISALLOWANCE OF EXPENSES INCURRED AMOUNTING TO RS. 1,54,987/- BY TH E ASSESSEE TOWARDS INTEREST PAID ON LOAN, PRINTING AN D STATIONERY EXPENSES MADE BY THE ASSESSING OFFICER. 4. THE ORDER OF THE LD. CIT (A) IS PERVERSE IN LAW AND ON FACTS. 5. THE APPELLANT CRAVES LEAVE TO ADD, AMEND ANY/ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE O F THE HEARING OF THE APPEAL. GROUNDS OF CO NO. 253/DEL/12 : 1. THAT THE CIT (A) HAS ERRED IN LAW AS WELL AS ON FA CTS IN REJECTING THE CONTENTION THAT IMPUGNED ASSESSMEN T ORDER IS BAD IN LAW AS THE ASSESSMENT AS WELL AS ADDITIONS OR COMPUTATION OF INCOME HAS NOT BEEN FRAMED/MADE ON THE BASIS OF ANY MATERIAL SEIZED PURSUANT TO AN ACTION TAKEN UNDER SECTION 132 OF TH E ACT IN THE CASE OF RAJDARBAR GROUP WHICH ITSELF MAK ES THE ASSESSMENT CONTRARY TO LAW, ILLEGAL LEADING TO BE QUASHED. PAGE 79 2. THE RESPONDENT CRAVES LEAVE FOR ADDITION, MODIFICATION, ALTERATION, AMENDMENT OF ANY OF THE CROSS OBJECTION. 2.6.2 THE LD. AR FILED WRITTEN SUBMISSIONS WHICH A RE SUMMARIZED AND REPRODUCED AS UNDER: THE ASSESSEE WISHES TO SUBMIT THAT SEARCH IN HIS CASE WAS CONDUCTED BY THE DEPARTMENT ON 31.07.2008. STATUS OF RETURN OF INCOME FILED BY TH E ASSESSEE ORIGINALLY IS AS BELOW: A.Y. DATE OF FILING WHETHER THE ASSESSMENTS WERE ABATED OR NOT WITHIN THE MEANING OF SECOND PROVISO TO SEC. 153A OF THE ACT. 2006 - 07 31.03.2007 DID NOT ABATE FROM THE AFORESAID TABLE, IT CAN BE GATHERED THAT T HE ASSESSMENTS IN THE CASE OF THE ASSESSEE DID NOT ABATE CONSEQUENT UPON THE SEARCH WITHIN THE MEANING OF SECOND PROVISO TO SECTION 153A OF THE I. T. ACT. PERUSAL OF THE ASSESSMENT ORDER AS QUOTED ABOVE VERY UNAMBIGUOUSLY EVIDENCES THAT THE ADDITIONS MADE BY THE AO WERE NOT BASED ON ANY INCRIMINATING DOCUMENTS. THE ADDITIONS MADE THEREFORE, WERE INDISPUTABLY OUTSIDE THE SCOPE OF PAGE 80 ASSESSMENTS U/S 153A OF THE I.T. ACT AND DESERVES TO BE DELETED. THE LD. CIT (A) HAS ALSO NOT REFERRED TO ANY INCRIMINATING DOCUMENT WHILE CONFIRMING PART OF THE ADDITIONS. THE ASSESSEE RELIES UPON THE ORDER OF T HE HONBLE JURISDICTIONAL DELHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA [2015] 61 TAXMANN.COM 412 (DELHI) FOR THE PROPOSITION THAT ADDITIONS IN THE UNABATED ASSESSMENTS CAN BE MADE ONLY ON THE BASIS OF INCRIMINATING DOCUMENTS FOUND AND SEIZED DURING THE COURSE OF SEARCH. XXX INNUMERABLE CASES HAVE BEEN DECIDED SUBSEQUENT TO THE AFORESAID JUDGMENT OF THE HONBLE DELHI HIGH COURT UPHOLDING/FOLLOWING THE AFORESAID JUDGMENT. HOWEVER, THE APPELLANT WISHES TO REFER TO SOME OF THEM AS PER THE LIST BELOW: S.NO. JUDGMENT CITATION 1. SUNCITY PROJECTS P. LTD. VS. DCIT 2016 - TIOL - 643 - ITAT - DEL DATED 21.03.2016 2. CIT VS. CONTINENTAL WAREHOUSING CORPORATION LTD. [2015] 63 TAXMANN.COM 118 (MUM TRIB.) DATED 12.10.2015 3. CIT VS. CONTINENTAL WAREHOUSING CORPORATION LTD. [2015] 58 TAXMANN.COM 78 (BOMBAY HC) DATED 21.04.2015 4. JAI STEEL (INDIA) LTD. 219 TAXMANN 233 (RAJASTHAN HC) DATED 24.05.2013 5. PR CIT VS. KURELE PAPER MILLS P. LTD. ITA NO. 369/2015 (DELHI HC) 6. CIT (C ) - I VS. MGF AUTOMOBILES LTD. ITA NO. 13,14/2014 (DELHI HC) 7. JAIPURIA INFRASTRUCTURE DEVELOPERS P. LTD. VS. ACIT ITA NO. 5522, 5523/DEL/2015 DATED 27.06.2016 PAGE 81 8. PR. CIT VS. DINESH TARACHAND KASAT TAX APPEAL NO. 469, 470 OF 2016 (GUJARAT HC) DATED 28.6.2016 9. CIT VS. THAKKAR POPATLAL VELJI SALES LTD. 2016 - TIOL - 709 - HC - MUM - IT DATED 29.03.2016 10. INFOWORLD VS. DCIT 2016 - TIOL - 548 - ITAT - DEL DATED 29.01.2016 11. ACIT VS. MAHAGUN REALTORS P. LTD. 2016 - TIOL - 955 - ITAT - DEL BESIDES THE AFORESAID REASON THE ASSESSEE WISHES TO BRING SOME OTHER RELEVANT FACTS WHICH MAKES THE ADDITIONS UNSUSTAINABLE FOR OTHER REASONS AS WELL. 1. THE ASSESSEE HAD SOLD SHARES OF THE COMPANY ONLY AND DID NOT TRANSFER THE LAND. THERE WAS NO LEGAL BASIS FOR APPLYING SECTION 50C OF THE IT ACT ON ASSUMED CIRCLE RATE BASIS. 2. LAND WAS SHOWN AS STOCK IN TRADE IN THE BALANCE SHEET OF THE COMPANY WHERE THE ASSESSEE WAS THE SHAREHOLDER. SECTION 50C OF THE ACT DID NOT APPLY ON STOCK IN TRADE EVEN OTHERWISE. 3. THE ASSESSEE CANNOT BE ASSUMED TO BE 16.6% OWNER OF THE LAND FOR THE REASON THAT IT HELD 16.6% OF SHARES OF THE COMPANY WHICH OWNED LAND BECAUSE COMPANY IS A DISTINCT LEGAL PERSON. 4. THE COMPANY HAD VERY SUBSTANTIAL AMOUNT OF LOANS AS HAS BEEN POINTED OUT BY THE LD. CIT (A) IN HIS APPELLATE ORDER. 5. BOOK VALUE OF LAND/INVENTORY IN THE BOOKS OF PAGE 82 COMPANY AS ON 31.3.2006 WAS RS. 7,77,09,789/-. IF FOR ARGUMENT SAKE THE CIRCLE SALE VALUE OF THE LAND TAKEN BY THE AO AT RS. 8,33,00,000/- IS ASSUMED TO BE CORRECT ACTION THEN THE CAPITAL GAINS TAXABLE WILL BE MUCH LESS THAN THE CAPITAL GAINS OFFERED BY THE ASSESSEE. THE AO CANNOT BE ALLOWED TO HAVE SALE VALUE/ASSUMED SALE VALUE OF LAND AND COST OF PURCHASE OF SHARES TO WORK OUT THE CAPITAL GAINS. 2.6.3 THE LD. DR SUBMITTED THAT THE ACTION OF THE AO IN MAKING AN ADDITION OF RS. 9,157,450/- ON ACCOUNT OF SHORT TERM CAPITAL GAIN BY VIRTUE OF PROVISIONS OF SECTIO N 2(47)(VI) AND 50C WAS FULLY JUSTIFIED. THE LD. DR VEHEMENTLY ARGUED THAT THE LD. CIT (A) HAD ERRED ON FACTS AS WELL AS IN LAW IN DELETING THE ADDITION IN FACE OF THE DETAILED FINDI NGS AND OBSERVATIONS OF THE AO. 2.6.4 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE PERUSED THE RECORDS. A PERUSAL OF THE ASSESSMENT O RDER REVEALS THAT ADDITION HAS BEEN MADE WITHOUT ANY REF ERENCE TO ANY INCRIMINATING MATERIAL/DOCUMENT FOUND DURING TH E PAGE 83 COURSE OF THE SEARCH AND IS BASED ENTIRELY ON FRESH EVIDENCES GATHERED DURING THE COURSE OF THE ASSESSMENT PROCEE DINGS U/S 153A OF THE ACT. IT IS UNDISPUTED THAT IN THE INSTANT APPEAL THE ASSESSMENT DID NOT ABATE CONSEQUENT UPON THE SEARCH WITHIN THE MEANING OF SECOND PROVISO TO SECT ION 153A OF THE ACT. THE LD. CIT (A) HAS ALSO NOT MADE ANY REFERENCE TO ANY INCRIMINATING MATERIAL/DOCUMENT IN THE IMPUGNED ORDER. THEREFORE, THE ADDITIONS MADE IN THE ASSESSMENT FRA MED U/S 153A CANNOT BE UPHELD AS THERE IS NO REFERENCE TO A NY INCRIMINATING MATERIAL WHATSOEVER. WE HAVE NO OPTI ON BUT TO HOLD THE IMPUGNED ADDITIONS AS BEING BAD IN LAW. W E, ACCORDINGLY, ALLOW THE CO OF THE ASSESSEE AND DISMI SS THE APPEAL FILED BY THE DEPARTMENT AS HAVING BECOME ACA DEMIC IN VIEW OF OUR ALLOWING THE CO OF THE ASSESSEE. 2.6.5 IN THE RESULT, THE CO OF THE ASSESSEE IS ALL OWED AND THE APPEAL OF THE DEPARTMENT IS DISMISSED. PAGE 84 2.7 RAKESH KUMAR GARG ITA NOS. 2078 AND 2756/DEL/2012 AY 03-04 : ITA NO. 2756 HAS BEEN PREFERRED BY THE DEPARTMENT A GAINST THE ORDER DATED 20/03/2012 PASSED BY THE LD. CIT (A )-XXXI, NEW DELHI, WHEREAS ITA NO. 2078 IS THE CROSS APPEAL BY THE ASSESSEE. IN THIS CASE ALSO NOTICE WAS ISSUED U/S 153A OF THE ACT SUBSEQUENT TO AN ACTION U/S 132 OF THE ACT ON T HE RAJ DARBAR GROUP OF COMPANIES AND ITS ASSOCIATES. PURS UANT TO THE NOTICE, THE ASSESSEE FILED HIS RETURN OF INCOME DECLARING INCOME OF RS. 35,77,586/-. DURING THE COURSE OF AS SESSMENT PROCEEDINGS, THE AO OBSERVED THAT THE ASSESSEE HAD CLAIMED LONG TERM CAPITAL GAINS OF RS. 1,03,20,630/- FROM S ALE OF SHARES OF M/S NAGESHWAR INVESTMENT LTD., M/S QUEST FINANCIAL LTD. AND M/S MP INVESTMENT LTD. AND THE A SSESSEE HAD CLAIMED TO HAVE RECEIVED A TOTAL CONSIDERATION OF RS. 1,05,15,970/-. IN THIS CASE ALSO THE AO OBSERVED T HAT THE SHARES WERE PURCHASED IN THE MONTH OF NOVEMBER, 200 1 AND SOLD DURING FEBRUARY AND MARCH, 2003. THE AO REFER RED TO THE ENQUIRIES MADE FROM CALCUTTA STOCK EXCHANGE, WH EREIN IT WAS REVEALED THAT THE PRICE OF SCRIP OF M/S NAGESHW AR PAGE 85 INVESTMENT LTD. WAS AS LOW AS RS. 2/- AND AS HIGH A S RS. 107/- ON 02.05.2003. THE AO ALSO REFERRED TO THE E NQUIRY MADE BY THE SEBI AGAINST SHARE BROKERS WHO HAD TRAD ED IN THE SCRIP OF M/S NAGESHWAR INVESTMENT LTD. THE AO ALSO NOTED THAT M/S BUBNA STOCK BROKING SERVICES LTD. HA D FAILED TO REPLY TO THE ENQUIRIES CONDUCTED BY THE DEPARTME NT. THE AO FURTHER NOTED THAT THE SEBI HAS INFORMED THAT TH E TRADING IN THE SCRIP OF M/S NAGESHWAR INVESTMENT LTD. WAS SUSPENDED W.E.F. 22.11.2005. THE AO WAS OF THE OPI NION THAT BOTH SALES AS WELL AS PURCHASE TRANSACTIONS WERE AR RANGED ONES AS NO DETAILS FROM WHOM THESE SHARES WERE PURC HASED AND TO WHOM THESE SHARES WERE SOLD HAVE BEEN FURNIS HED BY THE ASSESSEE. THE AO ALSO OBSERVED THAT THE ASSES SEE HAD CLAIMED TO HAVE RECEIVED RS. 32,13,270/- AS SALE CONSIDERATION FOR SHARES OF M/S MP INVESTMENTS AND RS. 46,35,200/- FOR SHARES OF M/S QUEST FINANCIAL LTD ON 26/02/2003 AND 18/02/2003 RESPECTIVELY WHICH WERE CLAIMED TO HAVE BEEN PURCHASED ON 06/11/2011 AND 03/11/2001 FOR RS. 96840/- AND RS. 1,01,000/- RESPE CTIVELY. THE AO ALSO NOTED THAT DEDUCTION U/S 54F OF THE ACT HAS BEEN PAGE 86 CLAIMED AGAINST THE LONG TERM CAPITAL GAINS ON THES E SHARES. IT WAS THE ASSESSEES PLEA BEFORE THE AO THAT THESE AMOUNTS SHOULD NOT BE TREATED AS UNEXPLAINED CASH CREDITS B ECAUSE IN THE EARLIER ASSESSMENT ORDER MADE U/S 143(3) OF THE ACT IN THE CASE OF THE WIFE OF THE ASSESSEE CONSEQUENT UPON AN ACTION TAKEN BY THE DEPARTMENT BY THE INVESTIGATION WING A GRA, THE SAME TRANSACTIONS WERE HELD AS GENUINE. HOWEVER, T HE AO PROCEEDED TO MAKE AN ADDITION OF RS. 1,07,26,290/- AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT ON ACCOUN T OF TRANSFER OF SHARES OF M/S NAGESHWAR INVESTMENT LTD. , M/S M.P. INVESTMENTS LTD. AND QUEST FINANCIAL SERVICES LTD. 2.7.1 AGGRIEVED THE ASSESSEE PREFERRED AN APPEAL B EFORE THE LD. CIT (A) CHALLENGING THE ASSUMPTION OF JURIS DICTION U/S 153A OF THE ACT. THE ASSESSEE ALSO CHALLENGED THE ADDITION ON MERITS. THE LD. CIT (A) CONFIRMED THE ADDITION OF RS. 27,20,850/- (INCLUDING 2% EXPENDITURE) AND DELETED THE ADDITIONS OF RS. 32,77,536/- AND RS. 47,27,904/- ON ACCOUNT OF SALE OF SHARES OF M/S M.P. INVESTMENT LTD. AND Q UEST FINANCIAL SERVICES LTD. RESPECTIVELY. PAGE 87 2.7.2 AGGRIEVED, THE DEPARTMENT AS WELL AS THE ASS ESSEE HAS PREFERRED AN APPEAL BEFORE THE ITAT AND HAVE RA ISED THE FOLLOWING GROUNDS OF APPEAL: GROUNDS OF ITA 2756/DEL/12 : 1. THE ORDER OF LD. CIT (A) IS NOT CORRECT IN LAW AND FACTS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF R S. 32,77,535/- MADE BY THE ASSESSING OFFICER U/S 68 OF I.T. ACT, 1961 AS UNEXPLAINED CASH CREDIT ON ACCOUN T OF SALE OF SHARES OF M/S M.P. INVESTMENT LTD. WITHO UT APPRECIATING THE FACT THAT THE TRANSACTION OF SALE OF SHARES IS NOT GENUINE BUT AN ARRANGED DEAL MANAGED BY THE ASSESSEE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF R S. 47,27,904/- MADE BY THE ASSESSING OFFICER U/S 68 OF THE I.T. ACT, 1961 AS UNEXPLAINED CASH CREDIT ON ACCOUNT OF SALE OF SHARES OF M/S QUEST FINANCIAL SERVICES LTD. WITHOUT APPRECIATING THE FACT THAT TH E TRANSACTION OF SALE OF SHARES IS NOT GENUINE BUT AN ARRANGED DEAL MANAGED BY THE ASSESSEE. PAGE 88 4. THE APPELLANT CRAVES LEAVE TO ADD, AMEND ANY/ALL THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE O F HEARING OF THE APPEAL. GROUNDS OF ITA 2078/DEL/12 : 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LD. CIT (A) XXXI IS CORRECT IN UPHOLDING THE ASSESSMENT FRAMED OUTSIDE THE SEARCH MATERIAL AND AFTER THE CHANGE OF OPINION? 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LD. CIT (A) XXXI ERRED IN CONFIRMING THE ADDITION O F RS. 27,20,850/- INCLUDING 2% EXPENDITURE ON ACCOUNT OF SALE OF SHARES OF M/S NAGESHWAR INVESTMENTS LTD. 3. THE ASSESSEE CRAVES FOR THE ADDITION, MODIFICATION AND DELETION OF THE GROUNDS OF APPEAL. 2.7.3 THE LD. AR FILED WRITTEN SUBMISSIONS WHICH A RE REPRODUCED AS UNDER: THE APPELLANT/RESPONDENT WISHES TO SUBMIT THAT SEARCH IN HIS CASE WAS CONDUCTED BY THE DEPARTMENT ON 31.07.2008. STATUS OF RETURN OF INCOME FILED BY THE ASSESSEE ORIGINALLY IS AS BELOW: PAGE 89 A.Y. DATE OF FILING WHETHER ASSESSED U/S 143(1) OR 143(3) WHETHER THE ASSESSMENTS WERE ABATED OR NOT WITHIN THE MEANING OF SECOND PROVISO TO SEC. 153A OF THE ACT. 2003 - 04 08.09.2003 YES 143(3) DID NOT ABATE FROM THE AFORESAID TABLE, IT CAN BE GATHERED THAT T HE ASSESSMENTS IN THE CASE OF THE ASSESSEE DID NOT ABATE CONSEQUENT UPON THE SEARCH WITHIN THE MEANING OF SECOND PROVISO TO SECTION 153A OF THE I. T. ACT. PERUSAL OF THE ASSESSMENT ORDER AS QUOTED ABOVE VERY UNAMBIGUOUSLY EVIDENCES THAT THE ADDITIONS MADE BY THE AO WERE NOT BASED ON ANY INCRIMINATING DOCUMENTS. THE ADDITIONS MADE THEREFORE, WERE INDISPUTABLY OUTSIDE THE SCOPE OF ASSESSMENTS U/S 153A OF THE I.T. ACT AND DESERVES TO BE DELETED. THE LD. CIT (A) HAS ALSO NOT REFERRED TO ANY INCRIMINATING DOCUMENT WHILE CONFIRMING PART OF THE ADDITIONS. THE ASSESSEE RELIES UPON THE ORDER OF T HE HONBLE JURISDICTIONAL DELHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA [2015] 61 TAXMANN.COM 412 (DELHI) FOR THE PROPOSITION THAT ADDITIONS IN THE UNABATED ASSESSMENTS CAN BE MADE ONLY ON THE BASIS OF INCRIMINATING DOCUMENTS FOUND AND SEIZED DURING THE COURSE OF SEARCH. PAGE 90 XXX INNUMERABLE CASES HAVE BEEN DECIDED SUBSEQUENT TO THE AFORESAID JUDGMENT OF THE HONBLE DELHI HIGH COURT UPHOLDING/FOLLOWING THE AFORESAID JUDGMENT. HOWEVER, THE APPELLANT WISHES TO REFER T O SOME OF THEM AS PER THE LIST BELOW: S.NO. JUDGMENT CITATION 1. SUNCITY PROJECTS P. LTD. VS. DCIT 2016 - TIOL - 643 - ITAT - DEL DATED 21.03.2016 2. CIT VS. CONTINENTAL WAREHOUSING CORPORATION LTD. [2015] 63 TAXMANN.COM 118 (MUM TRIB.) DATED 12.10.2015 3. CIT VS. CONTINENTAL WAREHOUSING CORPORATION LTD. [2015] 58 TAXMANN.COM 78 (BOMBAY HC) DATED 21.04.2015 4. JAI STEEL (INDIA) LTD. 219 TAXMANN 233 (RAJASTHAN HC) DATED 24.05.2013 5. PR CIT VS. KURELE PAPER MILLS P. LTD. ITA NO. 369/2015 (DELHI HC) 6. CIT (C ) - I VS. MGF AUTOMOBILES LTD. ITA NO. 13,14/2014 (DELHI HC) 7. JAIPURIA INFRASTRUCTURE DEVELOPERS P. LTD. VS. ACIT ITA NO. 5522, 5523/DEL/2015 DATED 27.06.2016 8. PR. CIT VS. DINESH TARACHAND KASAT TAX APPEAL NO. 469, 470 OF 2016 (GUJARAT HC) DATED 28.6.2016 9. CIT VS. THAKKAR POPATLAL VELJI SALES LTD. 2016 - TIOL - 709 - HC - MUM - IT DATED 29.03.2016 10. INFOWORLD VS. DCIT 2016 - TIOL - 548 - ITAT - DEL DATED 29.01.2016 11. ACIT VS. MAHAGUN REALTORS P. LTD. 2016 - TIOL - 955 - ITAT - DEL WE ALSO WISH TO MENTION THAT ADDITIONS IN THE IDENTICAL MANNER WERE MADE AND SUSTAINED IN THE CASE OF SH. SANTOSH KUMAR GARG, A FAMILY MEMBER OF THE ASSESSEE WHERE SEARCH WAS CONDUCTED ALONG WITH THE ASSESSEE. HONBLE TRIBUNAL HAS DISPOSED O FF THE AFORESAID MATTER VIDE ORDER DATED 29.10.2015. PAGE 91 THE DEPARTMENT FILED APPEAL AGAINST THE AFORESAID ORDER OF THE HONBLE TRIBUNAL BEFORE THE HONBLE DE LHI HIGH COURT AND THE APPEAL HAS BEEN DISMISSED. CONSIDERING THE AFORESAID FACTS AND CIRCUMSTANCES OF THE MATTER, THE CASE OF THE ASSESS EE MAY KINDLY BE CONSIDERED TO BE FULLY COVERED AND IT S APPEAL MAY PLEASE BE ALLOWED & DEPARTMENTS APPEAL MAY PLEASE BE DISMISSED. BESIDES THE AFORESAID REASON THE ASSESSEE WISHES TO BRING SOME OTHER RELEVANT FACTS WHICH MAKES THE ADDITIONS UNSUSTAINABLE FOR OTHER REASONS AS WELL. 1. ASSESSING OFFICERS MENTION OF SEBI ENQUIRIES IS INCORRECT, IRRELEVANT AND MISLEADING. IN THE SEBI REPORT THERE IS NO MENTION THAT THE ASSESSEE WAS IN ANY WAY INVOLVED IN THE ALLEGED RIGGING OF THE M/S NAGESHWAR INVESTMENT LTD. EVEN THE BROKER THROUGH WHOM THE ASSESSEE TRANSACTED IN SHARES DID NOT FIND ANY MENTION IN THE SEBI REPORT. THE SEBI INVESTIGATIONS WERE IN FACT ON ACCOUNT OF CERTAIN PRICE RISE IN THE SHARES OF THE M/S NAGESHWAR INVESTMENT LTD. DURING THE PERIOD APRIL 2005 TO NOVEMBER 2005. TRADING IN THE M/S NAGESHWAR INVESTMENT LTD. SCRIP WAS SUSPENDED FOR A VERY BRIEF PERIOD AND WAS PAGE 92 REVOKED ON 31.5.2006 WHEREAS TRANSACTIONS IN THE CASE OF THE ASSESSEE WHICH HAVE BEEN QUESTIONED PERTAIN TO FY 2003-04 & FY 2004-05 WHICH WAS MUCH BEFORE THE ALLEGED PERIOD OF RIGGING. 2. THE AOS RELIANCE ON THE ADDITIONS IN THE CASE OF SH. DEVI DASS GARG IN THE ORIGINAL ASSESSMENT PROCEEDINGS IN HIS CASE ON THE IDENTICAL ISSUE IS ALSO NOT HELPFUL TO THE DEPARTMENT. THE ADDITIONS MADE WERE DELETED BY THE HONBLE TRIBUNAL VIDE ORDER DATED 31.08.2009. THE AO SHOULD HAVE BEEN AWARE OF THIS ORDER WHEN HE PASSED THE IMPUGNED ASSESSMENT ORDER YET HE CHOSE TO IGNORE IT AS IT WAS AGAINST THE DEPARTMENT. 2.7.4 THE LD. DR SUBMITTED THAT THAT THE ADDITION WAS JUSTIFIED IN VIEW OF THE FACT THAT THE BROKER DID N OT RESPOND TO THE SUMMONS ISSUED BY THE DEPARTMENT. THE LD. DR SUBMITTED THAT THE DELETION MADE BY THE LD. CIT (A) OF RS. 3,277,535/- ON ACCOUNT OF SALE OF SHARES OF M/S M.P . INVESTMENT LTD. AND OF RS. 4,727,904/- ON ACCOUNT O F SALE OF SHARES OF M/S QUEST FINANCIAL SERVICES LTD. WAS NOT JUSTIFIED PAGE 93 BECAUSE THE ONUS ON THE ASSESSEE CANNOT BE SHIFTED TO THE REVENUE. HE EMPHASIZED THAT HERE THE BONA FIDES OF THE BROKER WERE UNDER QUESTION AND THE DEALINGS WITH AL L THE THREE COMPANIES WERE APPARENTLY SUSPICIOUS. THE LD . DR HEAVILY RELIED ON THE FINDINGS OF THE AO AND VEHEME NTLY ARGUED THAT IN VIEW OF THE SPECIFIC INCONSISTENCIES POINTED OUT BY THE AO, THE RELIEF GRANTED TO THE ASSESSEE BY TH E LD. CIT (A) WAS NOT LEGALLY TENABLE. 2.7.5 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALSO PERUSED THE MATERIAL ON RECORD. IT IS SEEN THAT IN ASSESSEES CASE SEARCH ACTION WAS INITIATED AND ASSESSMENTS U/ S 153A WERE FRAMED MAKING VARIOUS ADDITIONS. IT IS SEEN FR OM THE RECORDS THAT NO MATERIAL HAS BEEN FOUND DURING THE SEARCH TO JUSTIFY THE ADDITION. A PERUSAL OF THE ASSESSMENT O RDER SHOWS THAT THE ADDITIONS MADE BY THE AO WERE NOT BASED ON ANY INCRIMINATING DOCUMENTS AND, THEREFORE, THE ADDITIO NS MADE ARE INDISPUTABLY OUTSIDE THE SCOPE OF ASSESSMENT U/ S 153A OF THE ACT. IN OUR CONSIDERED OPINION SECTION 153A DO ES NOT AUTHORISE THE MAKING OF A DE NOVO ASSESSMENT IN THIS PARTICULAR ASSESSMENT YEAR. WHILE UNDER THE FIRST P ROVISO, THE PAGE 94 AO IS EMPOWERED TO FRAME ASSESSMENT FOR SIX YEARS, UNDER THE SECOND PROVISO ONLY ASSESSMENTS WHICH ARE PENDI NG ON THE DATE OF INITIATION OF SEARCH ABATE. THE EFFECT IS THAT COMPLETED ASSESSMENTS DO NOT ABATE. THE ASSESSMENTS CAN BE SAID TO BE PENDING ONLY IF THE AO IS STATUTORILY RE QUIRED TO DO SOMETHING FURTHER. IF THE SECTION 143(2) NOTICE HAS BEEN ISSUED, THE ASSESSMENT CAN BE SAID TO BE PENDING. H OWEVER, IN THE INSTANT APPEAL, THE ASSESSMENT DID NOT ABATE . THE POWER GIVEN BY THE FIRST PROVISO TO ASSESS INCOME F OR SIX ASSESSMENT YEARS HAS TO BE CONFINED TO THE UNDISCLO SED INCOME UNEARTHED DURING SEARCH. A PERUSAL OF THE AS SESSMENT ORDER PASSED U/S 153A OF THE ACT REVEALS THAT THE A O HAS NOT MADE ANY REFERENCE WHATSOEVER TO ANY INCRIMINATING MATERIAL FOUND AS A RESULT OF THE SEARCH AND THE ADDITION OF RS. 10,726,290/- HAS BEEN MADE ENTIRELY ON THE BASIS OF ALLEGATION OF ACCOMMODATION ENTRY WHICH IN TURN IS BASED ON SOME MATERIAL SAID TO HAVE BEEN GATHERED FROM STOCK EXCHANGE BUT WHICH DOES NOT SPECIFICALLY POINT OUT TOWARDS THE ASSESSEE. THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA IN ITA NO. 707/2014 DATED 28/08/20 15 PAGE 95 HAS EXAMINED THREAD BARE THE PROVISIONS OF SECTION 153A IN PARA 37 OF ITS ORDER (WHICH HAS BEEN REPRODUCED IN EARLIER PART OF THIS ORDER). RESPECTFULLY FOLLOWING THE RA TIO OF JUDGMENT LAID DOWN BY THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA (SUPRA), WE ALLOW GROU ND NOS. 1 AND 2 OF THE ASSESSEES APPEAL AND DELETE ALL THE A DDITIONS MADE IN THE ASSESSMENT FRAMED U/S 153A OF THE ACT. CONSEQUENTLY, ON SIMILAR REASONING, THE APPEAL FILE D BY THE DEPARTMENT STANDS DISMISSED. 2.7.6 IN THE RESULT, THE APPEAL FILED BY THE ASSES SEE IS ALLOWED AND APPEAL FILED BY THE DEPARTMENT IS DISMI SSED. 2.8 RAKESH KUMAR GARG ITA NO. 2079/DEL/2012 AY 04-05 : THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAI NST THE ORDER DATED 20/03/2012 PASSED BY THE LD. CIT (A)-XX XI, NEW DELHI. IN THIS CASE ALSO NOTICE WAS ISSUED U/S 153 A OF THE ACT SUBSEQUENT TO AN ACTION U/S 132 OF THE ACT ON THE R AJ DARBAR GROUP OF COMPANIES AND ITS ASSOCIATES. PURSUANT TO THE NOTICE, THE ASSESSEE FILED HIS RETURN OF INCOME DEC LARING PAGE 96 INCOME OF RS. 14,21,716/-. DURING THE COURSE OF AS SESSMENT PROCEEDINGS, THE AO OBSERVED THAT THE ASSESSEE HAD CLAIMED LONG TERM CAPITAL GAINS OF RS. 47,25,145/- FROM SAL E OF SHARES OF M/S NAGESHWAR INVESTMENT LTD. AND THAT THE ASSES SEE HAD CLAIMED TO HAVE RECEIVED A TOTAL CONSIDERATION OF R S. 48,32,200/-. IN THIS CASE ALSO THE AO OBSERVED THA T THE SHARES WERE PURCHASED IN THE MONTH OF NOVEMBER, 200 1 AND SOLD DURING FEBRUARY AND MARCH, 2003. THE AO REFER RED TO THE ENQUIRIES MADE FROM CALCUTTA STOCK EXCHANGE, WH EREIN IT WAS REVEALED THAT THE PRICE OF SCRIP OF M/S NAGESHW AR INVESTMENT LTD. WAS AS LOW AS RS. 2/- ON 02/07/2002 AND AS HIGH AS RS. 107/- ON 02.05.2003. THE AO ALSO REFER RED TO THE ENQUIRY MADE BY THE SEBI AGAINST SHARE BROKERS WHO HAD TRADED IN THE SCRIP OF M/S NAGESHWAR INVESTMENT LTD . THE AO ALSO NOTED THAT M/S BUBNA STOCK BROKING SERVICES LT D. HAD FAILED TO REPLY TO THE ENQUIRIES CONDUCTED BY THE D EPARTMENT. THE AO FURTHER NOTED THAT THE SEBI HAS INFORMED THA T THE TRADING IN THE SCRIP OF M/S NAGESHWAR INVESTMENT LT D. WAS SUSPENDED W.E.F. 22.11.2005. THE AO WAS OF THE OPI NION THAT BOTH SALES AS WELL AS PURCHASE TRANSACTIONS WERE AR RANGED PAGE 97 ONES AS NO DETAILS FROM WHOM THESE SHARES WERE PURC HASED AND TO WHOM THESE SHARES WERE SOLD HAVE BEEN FURNIS HED BY THE ASSESSEE. THE AO FURTHER NOTED THAT THESE SHAR ES WERE PURCHASED IN F.Y. 01-02 AT A MEAGER RATE AND SOLD A T A HIGH PRICE. THE AO PROCEEDED TO MAKE AN ADDITION OF RS. 49,28,844/- U/S 68 OF THE ACT IN RESPECT OF THE SAL E OF SHARES AND INCLUDING 2% EXPENSES. 2.8.1 AGGRIEVED THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT (A) CHALLENGING THE ASSUMPTION OF JURIS DICTION U/S 153A OF THE ACT AS WELL AS ON MERITS. HOWEVER, THE APPEAL OF THE ASSESSEE WAS DISMISSED ON BOTH THE COUNTS AND N OW THE ASSESSEE HAS APPROACHED THE ITAT AND HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: GROUNDS OF ITA 2079/DEL/12 : 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) XXXI IS CORRECT IN UPHOLDING THE ASSESSMENT FRAMED OUTSIDE THE SEARCH MATERIAL AND AFTER THE CHANGE OF OPINION? PAGE 98 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) XXXI ERRED IN CONFIRMING THE ADDITION OF RS. 49,28,844/- INCLUDING 2% EXPENDITURE ON ACCOUNT OF SALE OF SHARES OF M/S NAGESHWAR INVESTMENTS LTD. 3. THE ASSESSEE CRAVES FOR THE ADDITION, MODIFICATION AND DELETION OF THE GROUNDS OF APPEAL. 2.8.2 THE LD. AR SUBMITTED WRITTEN SUBMISSIONS WHIC H ARE REPRODUCED AS UNDER: THE APPELLANT/RESPONDENT WISHES TO SUBMIT THAT SEARCH IN HIS CASE WAS CONDUCTED BY THE DEPARTMENT ON 31.07.2008. STATUS OF RETURN OF INCOME FILED BY THE ASSESSEE ORIGINALLY IS AS BELOW: A.Y. DATE OF FILING WHETHER ASSESSED U/S 143(1) OR 143(3) WHETHER THE ASSESSMENTS WERE ABATED OR NOT WITHIN THE MEANING OF SECOND PROVISO TO SEC. 153A OF THE ACT. 2004 - 05 28.03.2005 YES, 143(3) DID NOT ABATE FROM THE AFORESAID TABLE, IT CAN BE GATHERED THAT T HE ASSESSMENTS IN THE CASE OF THE ASSESSEE DID NOT ABATE CONSEQUENT UPON THE SEARCH WITHIN THE MEANING OF SECOND PROVISO TO SECTION 153A OF THE I. T. ACT. PAGE 99 PERUSAL OF THE ASSESSMENT ORDER AS QUOTED ABOVE VERY UNAMBIGUOUSLY EVIDENCES THAT THE ADDITIONS MADE BY THE AO WERE NOT BASED ON ANY INCRIMINATING DOCUMENTS. THE ADDITIONS MADE THEREFORE, WERE INDISPUTABLY OUTSIDE THE SCOPE OF ASSESSMENTS U/S 153A OF THE I.T. ACT AND DESERVES TO BE DELETED. THE LD. CIT (A) HAS ALSO NOT REFERRED TO ANY INCRIMINATING DOCUMENT WHILE CONFIRMING PART OF THE ADDITIONS. THE ASSESSEE RELIES UPON THE ORDER OF T HE HONBLE JURISDICTIONAL DELHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA [2015] 61 TAXMANN.COM 412 (DELHI) FOR THE PROPOSITION THAT ADDITIONS IN THE UNABATED ASSESSMENTS CAN BE MADE ONLY ON THE BASIS OF INCRIMINATING DOCUMENTS FOUND AND SEIZED DURING THE COURSE OF SEARCH. XXX INNUMERABLE CASES HAVE BEEN DECIDED SUBSEQUENT TO THE AFORESAID JUDGMENT OF THE HONBLE DELHI HIGH COURT UPHOLDING/FOLLOWING THE AFORESAID JUDGMENT. HOWEVER, THE APPELLANT WISHES TO REFER T O SOME OF THEM AS PER THE LIST BELOW: S.NO. JUDGMENT CITATION 1. SUNCITY PROJECTS P. LTD. VS. DCIT 2016 - TIOL - 643 - ITAT - DEL DATED 21.03.2016 2. CIT VS. CONTINENTAL WAREHOUSING CORPORATION LTD. [2015] 63 TAXMANN.COM 118 (MUM TRIB.) DATED 12.10.2015 PAGE 100 3. CIT VS. CONTINENTAL WAREHOUSING CORPORATION LTD. [2015] 58 TAXMANN.COM 78 (BOMBAY HC) DATED 21.04.2015 4. JAI STEEL (INDIA) LTD. 219 TAXMANN 233 (RAJASTHAN HC) DATED 24.05.2013 5. PR CIT VS. KURELE PAPER MILLS P. LTD. ITA NO. 369/2015 (DELHI HC) 6. CIT (C ) - I VS. MGF AUTOMOBILES LTD. ITA NO. 13,14/2014 (DELHI HC) 7. JAIPURIA INFRASTRUCTURE DEVELOPERS P. LTD. VS. ACIT ITA NO. 5522, 5523/DEL/2015 DATED 27.06.2016 8. PR. CIT VS. DINESH TARACHAND KASAT TAX APPEAL NO. 469, 470 OF 2016 (GUJARAT HC) DATED 28.6.2016 9. CIT VS. THAKKAR POPATLAL VELJI SALES LTD. 2016 - TIOL - 709 - HC - MUM - IT DATED 29.03.2016 10. INFOWORLD VS. DCIT 2016 - TIOL - 548 - ITAT - DEL DATED 29.01.2016 11. ACIT VS. MAHAGUN REALTORS P. LTD. 2016 - TIOL - 955 - ITAT - DEL WE ALSO WISH TO MENTION THAT ADDITIONS IN THE IDENTICAL MANNER WERE MADE AND SUSTAINED IN THE CASE OF SH. SANTOSH KUMAR GARG, A FAMILY MEMBER OF THE ASSESSEE WHERE SEARCH WAS CONDUCTED ALONG WITH THE ASSESSEE. HONBLE TRIBUNAL HAS DISPOSED OFF THE AFORESAID MATTER VIDE ORDER DATED 29.10.2015. THE DEPARTMENT FILED APPEAL AGAINST THE AFORESAID ORDER OF THE HONBLE TRIBUNAL BEFORE THE HONBLE DELHI HIGH COURT AND THE APPEAL HAS BEEN DISMISSED. CONSIDERING THE AFORESAID FACTS AND CIRCUMSTANCES OF THE MATTER, THE CASE OF THE ASSESSEE MAY KINDLY BE CONSIDERED TO BE FULLY COVERED AND ITS APPEAL MAY PLEASE BE ALLOWED & DEPARTMENTS APPEAL MAY PLEASE BE DISMISSED. PAGE 101 BESIDES THE AFORESAID REASON THE ASSESSEE WISHES TO BRING SOME OTHER RELEVANT FACTS WHICH MAKES THE ADDITIONS UNSUSTAINABLE FOR OTHER REASONS AS WELL. 1. ASSESSING OFFICERS MENTION OF SEBI ENQUIRIES IS INCORRECT, IRRELEVANT AND MISLEADING. IN THE SEBI REPORT THERE IS NO MENTION THAT THE ASSESSEE WAS IN ANY WAY INVOLVED IN THE ALLEGED RIGGING OF THE M/S NAGESHWAR INVESTMENT LTD. EVEN THE BROKER THROUGH WHOM THE ASSESSEE TRANSACTED IN SHARES DID NOT FIND ANY MENTION IN THE SEBI REPORT. THE SEBI INVESTIGATIONS WERE IN FACT ON ACCOUNT OF CERTAIN PRICE RISE IN THE SHARES OF THE M/S NAGESHWAR INVESTMENT LTD. DURING THE PERIOD APRIL 2005 TO NOVEMBER 2005. TRADING IN THE M/S NAGESHWAR INVESTMENT LTD. SCRIP WAS SUSPENDED FOR A VERY BRIEF PERIOD AND WAS REVOKED ON 31.5.2006 WHEREAS TRANSACTIONS IN THE CASE OF THE ASSESSEE WHICH HAVE BEEN QUESTIONED PERTAIN TO FY 2003-04 & FY 2004- 05 WHICH WAS MUCH BEFORE THE ALLEGED PERIOD OF RIGGING. 2. THE AOS RELIANCE ON THE ADDITIONS IN THE CASE OF SH. DEVI DASS GARG IN THE ORIGINAL ASSESSMENT PROCEEDINGS IN HIS CASE ON THE PAGE 102 IDENTICAL ISSUE IS ALSO NOT HELPFUL TO THE DEPARTMENT. THE ADDITIONS MADE WERE DELETED BY THE HONBLE TRIBUNAL VIDE ORDER DATED 31.08.2009. THE AO SHOULD HAVE BEEN AWARE OF THIS ORDER WHEN HE PASSED THE IMPUGNED ASSESSMENT ORDER YET HE CHOSE TO IGNORE IT AS IT WAS AGAINST THE DEPARTMENT. 2.8.3 THE LD. DR VEHEMENTLY SUPPORTED THE ORDER OF THE AO AS WELL AS THE LD. CIT (A) AND SUBMITTED THAT IN VIEW OF CATEGORICAL FINDINGS OF BOTH THE AUTHORITIES BELOW, THE ADDITION OUGHT TO BE UPHELD. 2.8.4 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE PERUSED THE RECORDS. A PERUSAL OF THE ASSESSMENT O RDER REVEALS THAT ADDITION HAS BEEN MADE WITHOUT ANY REF ERENCE TO ANY INCRIMINATING MATERIAL/DOCUMENT FOUND DURING TH E COURSE OF THE SEARCH AND IS BASED ENTIRELY ON FRESH EVIDENCES GATHERED DURING THE COURSE OF THE ASSESSMENT PROCEE DINGS U/S 153A OF THE ACT. IT IS UNDISPUTED THAT IN THE INSTANT APPEAL THE ASSESSMENT DID NOT ABATE CONSEQUENT UPON THE SEARCH WITHIN THE MEANING OF SECOND PROVISO TO SECT ION 153A PAGE 103 OF THE ACT. THE LD. CIT (A) HAS ALSO NOT MADE ANY REFERENCE TO ANY INCRIMINATING MATERIAL/DOCUMENT WHILE CONFIRMIN G THE ADDITIONS IN THE IMPUGNED ORDER. THEREFORE, THE AD DITIONS MADE IN THE ASSESSMENT FRAMED U/S 153A CANNOT BE UP HELD AS THERE IS NO REFERENCE TO ANY INCRIMINATING MATER IAL WHATSOEVER. WE HAVE NO OPTION BUT TO DELETE ALL TH E ADDITIONS IN THE IMPUGNED ASSESSMENT ORDER AS BEING BAD IN LA W. WE, ACCORDINGLY, ALLOW GROUND NOS. 1 AND 2 OF THE ASSES SEES APPEAL. 2.8.5 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. 2.9 RAKESH KUMAR GARG ITA NO. 3185/DEL/2013 AY 06-07 : THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAI NST THE ORDER DATED 13/03/2013 PASSED BY THE LD. CIT (A) XXXI, NEW DELHI. IN THIS YEAR ALSO THE ASSESSEE WAS ISSU ED NOTICE U/S 153A OF THE ACT PURSUANT TO SEARCH OPERATION U/ S 132 ON THE RAJ DARBAR GROUP OF COMPANIES AND ITS ASSOCIATE S. PURSUANT TO THE NOTICE, THE ASSESSEE FILED HIS RETU RN OF INCOME DECLARING INCOME OF RS. 10,35,937/-. WHILE COMPLET ING THE PAGE 104 ASSESSMENT THE AO OBSERVED THAT THE DOCUMENTS SUBMI TTED BY THE ASSESSEE DID NOT SUGGEST THAT THE ASSESSEE W AS CARRYING ANY BUSINESS OR PROFESSION AND ACCORDINGLY HELD THAT SINCE NO BUSINESS ACTIVITIES WERE CARRIED OUT DURIN G THE YEAR UNDER CONSIDERATION, INTEREST PAYMENT OF RS. 9,51,5 57/- COULD NOT BE ALLOWED AS AN EXPENDITURE AND THE SAME WAS ADDED TO THE INCOME OF THE ASSESSEE. IT WAS THE AS SESSEES CONTENTION BEFORE THE AO THAT NO INCRIMINATING MATE RIAL WAS FOUND DURING THE COURSE OF SEARCH. 2.9.1 AGGRIEVED THE ASSESSEE PREFERRED AN APPEAL BE FORE THE FIRST APPELLATE AUTHORITY RAISING THE LEGAL GRO UND THAT THE ASSUMPTION OF JURISDICTION U/S 153A OF THE ACT WAS ILLEGAL. THE ADDITION WAS ALSO CONTESTED ON MERITS. HOWEVER , THE LD. CIT (A) DISMISSED THE ASSESSEES APPEAL ON BOTH THE COUNTS. NOW, THE ASSESSEE HAS APPROACHED THE ITAT AND HAS R AISED THE FOLLOWING GROUNDS OF APPEAL: PAGE 105 GROUNDS OF ITA 3185/DEL/13 : 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT (A) HAS ERRED IN NOT HOLDING TH AT THE NOTICE ISSUED U/S 153A AND THE ASSESSMENT ORDER PASSED U/S 153A/143(3) ARE ILLEGAL, BAD IN LAW AND WITHOUT JURISDICTION. 2. THE ORDER OF THE CIT (A) IS BAD IN LAW, AS THE CIT (A) HAS NOT CONSIDERED THAT THE ASSESSMENT ORDER IN THI S CASE HAS NOT BEEN PASSED ON THE BASIS OF ANY MATERIAL SEIZED IN A SEARCH ACTION TAKEN U/S 132 OF THE INCOME TAX ACT, 1961. 3. THE ORDER OF THE CIT (A), ON THE FACTS AND CIRCUMSTANCES OF THE CASE, IS PERVERSE AS IT DOES N OT TAKE INTO CONSIDERATION THE RELEVANT DOCUMENTS BROUGHT ON RECORD AND SUBMISSIONS OF THE ASSESSEE. 4. THE CIT (A) HAS ERRED ON THE FACTS AND IN LAW IN CONFIRMING THE ADDITION OF RS. 9,51,557/- MADE BY THE AO WHILE DISALLOWING INTEREST EXPENSES CLAIMED BY THE APPELLANT. 5. THE CIT (A) HAS ERRED ON THE FACTS AND IN LAW IN NO T CONSIDERING THAT THE INTEREST OF RS. 9,51,557/- HAS BEEN UTILIZED IN MAKING PAYMENT OF UNSECURED LOAN AND ARE THEREFORE FULLY ALLOWABLE AS DEDUCTION UNDE R THE PROVISIONS OF INCOME TAX ACT, 1961. PAGE 106 6. THE CIT (A) HAS ERRED ON THE FACTS AND IN LAW IN NO T CONSIDERING THAT THE INTEREST OF RS. 9,51,557/- DOE S NOT FALL UNDER THE HEAD INCOME FROM OTHER SOURCES AND SAID THE INTEREST IS FULLY ALLOWABLE AS DEDUCTI ON TO THE APPELLANT UNDER THE HEAD INCOME FROM PROFIT S OR GAINS OF BUSINESS OR PROFESSION. 7. THE ASSESSEE CRAVES LEAVE TO ADD, ALTER OR MODIFY THE AFORESAID GROUND AND CRAVES LEAVES TO FILE ADDITIONAL GROUNDS. 8. THE AFORESAID GROUNDS ARE TAKEN WITHOUT PREJUDICE TO EACH OTHER. 2.9.2 THE LD. AR FILED WRITTEN SUBMISSIONS WHICH AR E SUMMARIZED AS UNDER: THE APPELLANT/RESPONDENT WISHES TO SUBMIT THAT SEARCH IN HIS CASE WAS CONDUCTED BY THE DEPARTMENT ON 31.07.2008. STATUS OF RETURN OF INCOME FILED BY THE ASSESSEE ORIGINALLY IS AS BELOW: A.Y. DATE OF FILING WHETHER ASSESSED U/S 143(1) OR 143(3) WHETHER THE ASSESSMENTS WERE ABATED OR NOT WITHIN THE MEANING OF SECOND PROVISO TO SEC. 153A OF THE ACT. 2006 - 07 30.03.2007 YES, 143(3) DID NOT ABATE FROM THE AFORESAID TABLE, IT CAN BE GATHERED THAT T HE ASSESSMENTS IN THE CASE OF THE ASSESSEE DID NOT PAGE 107 ABATE CONSEQUENT UPON THE SEARCH WITHIN THE MEANING OF SECOND PROVISO TO SECTION 153A OF THE I. T. ACT. PERUSAL OF THE ASSESSMENT ORDER AS QUOTED ABOVE VERY UNAMBIGUOUSLY EVIDENCES THAT THE ADDITIONS MADE BY THE AO WERE NOT BASED ON ANY INCRIMINATING DOCUMENTS. THE ADDITIONS MADE THEREFORE, WERE INDISPUTABLY OUTSIDE THE SCOPE OF ASSESSMENTS U/S 153A OF THE I.T. ACT AND DESERVES TO BE DELETED. THE LD. CIT (A) HAS ALSO NOT REFERRED TO ANY INCRIMINATING DOCUMENT WHILE CONFIRMING PART OF THE ADDITIONS. THE ASSESSEE RELIES UPON THE ORDER OF T HE HONBLE JURISDICTIONAL DELHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA [2015] 61 TAXMANN.COM 412 (DELHI) FOR THE PROPOSITION THAT ADDITIONS IN THE UNABATED ASSESSMENTS CAN BE MADE ONLY ON THE BASIS OF INCRIMINATING DOCUMENTS FOUND AND SEIZED DURING THE COURSE OF SEARCH. XXX INNUMERABLE CASES HAVE BEEN DECIDED SUBSEQUENT TO THE AFORESAID JUDGMENT OF THE HONBLE DELHI HIGH COURT UPHOLDING/FOLLOWING THE AFORESAID JUDGMENT. HOWEVER, THE APPELLANT WISHES TO REFER T O SOME OF THEM AS PER THE LIST BELOW: PAGE 108 S.NO. JUDGMENT CITATION 1. SUNCITY PROJECTS P. LTD. VS. DCIT 2016 - TIOL - 643 - ITAT - DEL DATED 21.03.2016 2. CIT VS. CONTINENTAL WAREHOUSING CORPORATION LTD. [2015] 63 TAXMANN.COM 118 (MUM TRIB.) DATED 12.10.2015 3. CIT VS. CONTINENTAL WAREHOUSING CORPORATION LTD. [2015] 58 TAXMANN.COM 78 (BOMBAY HC) DATED 21.04.2015 4. JAI STEEL (INDIA) LTD. 219 TAXMANN 233 (RAJASTHAN HC) DATED 24.05.2013 5. PR CIT VS. KURELE PAPER MILLS P. LTD. ITA NO. 369/2015 (DELHI HC) 6. CIT (C ) - I VS. MGF AUTOMOBILES LTD. ITA NO. 13,14/2014 (DELHI HC) 7. JAIPURIA INFRASTRUCTURE DEVELOPERS P. LTD. VS. ACIT ITA NO. 5522, 5523/DEL/2015 DATED 27.06.2016 8. PR. CIT VS. DINESH TARACHAND KASAT TAX APPEAL NO. 469, 470 OF 2016 (GUJARAT HC) DATED 28.6.2016 9. CIT VS. THAKKAR POPATLAL VELJI SALES LTD. 2016 - TIOL - 709 - HC - MUM - IT DATED 29.03.2016 10. IN FOWORLD VS. DCIT 2016 - TIOL - 548 - ITAT - DEL DATED 29.01.2016 11. ACIT VS. MAHAGUN REALTORS P. LTD. 2016 - TIOL - 955 - ITAT - DEL 2.9.3 THE LD. DR VEHEMENTLY SUPPORTED THE ORDER OF THE AO AS WELL AS THE LD. CIT (A) AND SUBMITTED THAT IN VIEW OF CATEGORICAL FINDINGS OF BOTH THE AUTHORITIES BELOW, THE ADDITION OUGHT TO BE UPHELD. 2.9.4 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE PERUSED THE RECORDS. A PERUSAL OF THE ASSESSMENT O RDER REVEALS THAT ADDITION HAS BEEN MADE WITHOUT ANY REF ERENCE TO ANY INCRIMINATING MATERIAL/DOCUMENT FOUND DURING TH E COURSE OF THE SEARCH AND IS BASED ENTIRELY ON FRESH EVIDENCES PAGE 109 GATHERED DURING THE COURSE OF THE ASSESSMENT PROCEE DINGS U/S 153A OF THE ACT. IT IS UNDISPUTED THAT IN THE INSTANT APPEAL THE ASSESSMENT DID NOT ABATE CONSEQUENT UPON THE SEARCH WITHIN THE MEANING OF SECOND PROVISO TO SECT ION 153A OF THE ACT. THE LD. CIT (A) HAS ALSO NOT MADE ANY REFERENCE TO ANY INCRIMINATING MATERIAL/DOCUMENT WHILE CONFIRMIN G THE ADDITIONS IN THE IMPUGNED ORDER. THEREFORE, THE AD DITIONS MADE IN THE ASSESSMENT FRAMED U/S 153A CANNOT BE UP HELD AS THERE IS NO REFERENCE TO ANY INCRIMINATING MATER IAL WHATSOEVER. WE HAVE NO OPTION BUT TO DELETE THE IM PUGNED ADDITIONS AS BEING BAD IN LAW. WE, ACCORDINGLY, AL LOW GROUND NOS. 1 TO 8 OF THE ASSESSEES APPEAL. 2.9.5 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. 2.10 SHRI DEVI DASS GARG ITA NOS. 2085 AND 2760/DEL/2012 AY 03-04 : ITA NO. 2085 HAS BEEN PREFERRED BY THE ASSESSEE AGA INST THE ORDER DATED 20/03/2012 PASSED BY THE LD. CIT (A) XXXI, NEW DELHI, WHEREAS ITA NO. 2760 IS THE CROSS APPEAL FILED BY THE DEPARTMENT. IN THIS CASE ALSO NOTICE WAS ISSUE D U/S 153A PAGE 110 OF THE ACT SUBSEQUENT TO AN ACTION U/S 132 OF THE A CT ON THE RAJ DARBAR GROUP OF COMPANIES AND ITS ASSOCIATES. PURSUANT TO THE NOTICE, THE ASSESSEE FILED HIS RETURN OF INC OME DECLARING INCOME OF RS. 17,35,192/- AND AGRICULTURAL INCOME O F RS. 8,52,989/-. DURING THE COURSE OF ASSESSMENT PROCEE DINGS, THE AO OBSERVED THAT THE ASSESSEE HAD CLAIMED LONG TERM CAPITAL GAINS OF RS. 1,12,89,717/- FROM SALE OF SHA RES OF M/S NAGESHWAR INVESTMENT LTD., M/S QUEST FINANCIAL LTD. AND M/S MP INVESTMENT LTD. AND THE ASSESSEE HAD CLAIMED TO HAVE RECEIVED A TOTAL CONSIDERATION OF RS. 1,16,00, 010/-. IN THIS CASE ALSO THE AO OBSERVED THAT THE SHARES WERE PURCHASED IN THE MONTH OF NOVEMBER, 2001 AND SOLD D URING FEBRUARY AND MARCH, 2003. THE AO REFERRED TO THE E NQUIRIES MADE FROM CALCUTTA STOCK EXCHANGE, WHEREIN IT WAS R EVEALED THAT THE PRICE OF SCRIP OF M/S NAGESHWAR INVESTMENT LTD. WAS AS LOW AS RS. 2/- AND AS HIGH AS RS. 107/- ON 02.05 .2003. THE AO ALSO REFERRED TO THE ENQUIRY MADE BY THE SEB I AGAINST SHARE BROKERS WHO HAD TRADED IN THE SCRIP OF M/S NA GESHWAR INVESTMENT LTD. THE AO ALSO NOTED THAT M/S BUBNA S TOCK BROKING SERVICES LTD. HAD FAILED TO REPLY TO THE EN QUIRIES PAGE 111 CONDUCTED BY THE DEPARTMENT. THE AO FURTHER NOTED THAT THE SEBI HAS INFORMED THAT THE TRADING IN THE SCRIP OF M/S NAGESHWAR INVESTMENT LTD. WAS SUSPENDED W.E.F. 22.1 1.2005. THE AO WAS OF THE OPINION THAT BOTH SALES AS WELL A S PURCHASE TRANSACTIONS WERE ARRANGED ONCE AS NO DETAILS FROM WHOM THESE SHARES WERE PURCHASED AND TO WHOM THESE SHARE S WERE SOLD HAVE BEEN FURNISHED BY THE ASSESSEE. THE AO ALSO OBSERVED THAT THE ASSESSEE HAD CLAIMED TO HAVE RECE IVED RS. 31,16,010/- AS SALE CONSIDERATION FOR SHARES OF M/S MP INVESTMENTS AND RS. 47,80,000/- FOR SHARES OF M/S Q UEST FINANCIAL LTD. ON 10/03/2003 AND 21/02/2003 RESPECT IVELY WHICH WERE CLAIMED TO HAVE BEEN PURCHASED ON 09/11/ 2001 AND 30/11/2001 FOR RS. 96,840/- AND RS. 1,01,000/- RESPECTIVELY. THE AO ALSO NOTICED THAT THE ASSESSE E HAD CLAIMED DEDUCTION U/S 54F OF THE ACT IN RESPECT OF THE LONG TERM CAPITAL GAINS ON THE SALE OF THE AFORESAID SHA RES. THE AO PROCEEDED ADD BACK AN AMOUNT OF RS. 1,18,32,010/- (INCLUDING 2% FOR EXPENSES) TO THE INCOME OF THE AS SESSEE ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S 68 OF THE AC T IN RELATION TO THE ALLEGED SHARE TRANSACTIONS. THE AO ALSO ADDED PAGE 112 BACK A SUM OF RS. 2,35,482/- BEING EXPENSES DEBITED UNDER VARIOUS HEADS IN THE PROFIT AND LOSS ACCOUNT AND AL SO DISALLOWED RS. 70,000/- ON ACCOUNT OF NON FURNISHI NG OF THE BILLS RELATING TO EXPENDITURE ON AGRICULTURE. 2.10.1 AGGRIEVED THE ASSESSEE PREFERRED AN APPEAL B EFORE THE LD. CIT (A) CHALLENGING THE VALIDITY OF ASSUMPT ION OF JURISDICTION U/S 153A OF THE ACT AS WELL AS CHALLEN GING THE ADDITIONS ON MERITS. THE LD. CIT (A) REJECTED THE ASSESSEES GROUND RELATING TO THE VALIDITY OF PROCEEDINGS U/S 153A BUT GIVE RELIEF ON MERITS BY DELETING ADDITIONS OF RS. 31,78,330/- AND RS. 48,55,200/- ON ACCOUNT OF SALE OF SHARES OF M/S MP INVESTMENTS LTD. AND QUEST FINANCIAL SERVICES LTD. RESPECTIVELY. THE LD. CIT (A), HOWEVER, CONFIRMED THE ADDITION OF RS. 37,98,480/- ON ACCOUNT OF SALE OF SHARES OF M/S NAGESHWAR INVESTMENT LTD. NOW, BOTH THE ASSESSEE A ND THE DEPARTMENT HAVE APPROACHED THE ITAT AND HAVE RAISED THE FOLLOWING GROUNDS OF APPEAL: PAGE 113 GROUNDS OF ITA NO. 2085/DEL/12 : 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LD. CIT (A) XXXI IS CORRECT IN UPHOLDING THE ASSESSMENT FRAMED OUTSIDE THE SEARCH MATERIAL AND AFTER THE CHANGE OF OPINION? 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LD. CIT (A) XXXI ERRED IN CONFIRMING THE ADDITION OF RS. 37,98,480/- INCLUDING 2% EXPENDITURE ON ACCOUNT OF SALE OF SHARES OF M/S NAGESHWAR INVESTMENTS LTD. U/S 68 OF THE INCOME TAX ACT, 1961. 3. THE ASSESSEE CRAVES FOR THE ADDITION, MODIFICATION AND DELETION OF THE GROUNDS OF APPEAL. GROUNDS OF ITA NO. 2760/DEL/12 : 1. THE ORDER OF LD. CIT (A) IS NOT CORRECT IN LAW AND FACTS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 31,78,330/- MADE BY THE ASSESSING OFFICER U/S 68 OF THE INCOME TAX ACT, 1961 AS UNEXPLAINED CASH CREDIT ON ACCOUNT OF SALE OF SHARES OF M/S M.P. INVESTMENT LTD. WITHOUT APPRECIATING THE FACT THAT THE TRANSACTION OF SALE OF SHARES IS NOT GENUINE BU T AN ARRANGED DEAL MANAGED BY THE ASSESSEE. PAGE 114 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD.CIT (A) HAS ERRED IN DELETING THE ADDITION O F RS. 48,55,200/- MADE BY THE AO ASSESSING OFFICER U/S 68 OF I.T. ACT, 1961 AS UNEXPLAINED CASH CREDIT ON ACCOUNT OF SALE OF SHARES OF M/S QUEST FINANCIAL SERVICES LTD. WITHOUT APPRECIATING THE FACT THAT TH E TRANSACTION OF SALE OF SHARES IS NOT GENUINE BUT AN ARRANGED DEAL MANAGED BY THE ASSESSEE. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS. 2,35,482/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DISALLOWING THE EXPENSES CLAIMED AGAINST INTEREST INCOME WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAS NOT CARRIED OUT ANY BUSINESS ACTIVITIES. 5. THE APPELLANT CRAVES LEAVE TO ADD, AMEND ANY/ALL THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE O F HEARING OF THE APPEAL. 2.10.2 THE LD. AR FILED WRITTEN SUBMISSIONS WHICH A RE BEING REPRODUCED AS UNDER: THE APPELLANT/RESPONDENT WISHES TO SUBMIT THAT SEARCH IN HIS CASE WAS CONDUCTED BY THE DEPARTMENT ON 31.07.2008. STATUS OF RETURN OF INCOME FILED BY THE ASSESSEE ORIGINALLY IS AS BELOW : PAGE 115 A.Y. DATE OF FILING WHETHER ASSESSED U/S 143(1) OR 143(3) WHETHER THE ASSESSMENTS WERE ABATED OR NOT WITHIN THE MEANING OF SECOND PROVISO TO SEC. 153A OF THE ACT. 2003 - 0 4 31.03.2004 YES, 143(3) DID NOT ABATE FROM THE AFORESAID TABLE, IT CAN BE GATHERED THAT T HE ASSESSMENTS IN THE CASE OF THE ASSESSEE DID NOT ABATE CONSEQUENT UPON THE SEARCH WITHIN THE MEANING OF SECOND PROVISO TO SECTION 153A OF THE I. T. ACT. PERUSAL OF THE ASSESSMENT ORDER AS QUOTED ABOVE VERY UNAMBIGUOUSLY EVIDENCES THAT THE ADDITIONS MADE BY THE AO WERE NOT BASED ON ANY INCRIMINATING DOCUMENTS. THE ADDITIONS MADE THEREFORE, WERE INDISPUTABLY OUTSIDE THE SCOPE OF ASSESSMENTS U/S 153A OF THE I.T. ACT AND DESERVES TO BE DELETED. THE LD. CIT (A) HAS ALSO NOT REFERRED TO ANY INCRIMINATING DOCUMENT WHILE CONFIRMING PART OF THE ADDITIONS. THE ASSESSEE RELIES UPON THE ORDER OF T HE HONBLE JURISDICTIONAL DELHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA [2015] 61 TAXMANN.COM 412 (DELHI) FOR THE PROPOSITION THAT ADDITIONS IN THE UNABATED ASSESSMENTS CAN BE MADE ONLY ON THE BASIS OF INCRIMINATING DOCUMENTS FOUND AND SEIZED DURING THE COURSE OF SEARCH. PAGE 116 XXX INNUMERABLE CASES HAVE BEEN DECIDED SUBSEQUENT TO THE AFORESAID JUDGMENT OF THE HONBLE DELHI HIGH COURT UPHOLDING/FOLLOWING THE AFORESAID JUDGMENT. HOWEVER, THE APPELLANT WISHES TO REFER T O SOME OF THEM AS PER THE LIST BELOW: S.NO. JUDGMENT CITATION 1. SUNCITY PROJECTS P. LTD. VS. DCIT 2016 - TIOL - 643 - ITAT - DEL DATED 21.03.2016 2. CIT VS. CONTINENTAL WAREHOUSING CORPORATION LTD. [2015] 63 TAXMANN.COM 118 (MUM TRIB.) DATED 12.10.2015 3. CIT VS. CONTINENTAL WAREHOUSING CORPORATION LTD. [2015] 58 TAXMANN.COM 78 (BOMBAY HC) DATED 21.04.2015 4. JAI STEEL (INDIA) LTD. 219 TAXMANN 233 (RAJASTHAN HC) DATED 24.05.2013 5. PR CIT VS. KURELE PAPER MILLS P. LTD. ITA NO. 369/2015 (DELHI HC) 6. CIT (C ) - I VS. MGF AUTOMOBILES LTD. ITA NO. 13,14/2014 (DELHI HC) 7. JAIPURIA INFRASTRUCTURE DEVELOPERS P. LTD. VS. ACIT ITA NO. 5522, 5523/DEL/2015 DATED 27.06.2016 8. PR. CIT VS. DINESH TARACHAND KASAT TAX APPEAL NO. 469, 470 OF 2016 (GUJARAT HC) DATED 28.6.2016 9. CIT VS. THAKKAR POPATLAL VELJI SALES LTD. 2016 - TIOL - 709 - HC - MUM - IT DATED 29.03.2016 10. INFOWORLD VS. DCIT 2016 - TIOL - 548 - ITAT - DEL DATED 29.01.2016 11. ACIT VS. MAHAGUN REALTORS P. LTD. 2016 - TIOL - 955 - ITAT - DEL WE ALSO WISH TO MENTION THAT ADDITIONS IN THE IDENTICAL MANNER WERE MADE AND SUSTAINED IN THE CASE OF SH. SANTOSH KUMAR GARG, A FAMILY MEMBER OF THE ASSESSEE WHERE SEARCH WAS CONDUCTED ALONG WITH THE ASSESSEE. HONBLE TRIBUNAL HAS DISPOSED O FF THE AFORESAID MATTER VIDE ORDER DATED 29.10.2015. PAGE 117 THE DEPARTMENT FILED APPEAL AGAINST THE AFORESAID ORDER OF THE HONBLE TRIBUNAL BEFORE THE HONBLE DE LHI HIGH COURT AND THE APPEAL HAS BEEN DISMISSED. CONSIDERING THE AFORESAID FACTS AND CIRCUMSTANCES OF THE MATTER, THE CASE OF THE ASSESS EE MAY KINDLY BE CONSIDERED TO BE FULLY COVERED AND IT S APPEAL MAY PLEASE BE ALLOWED & DEPARTMENTS APPEAL MAY PLEASE BE DISMISSED. BESIDES THE AFORESAID REASON THE ASSESSEE WISHES TO BRING SOME OTHER RELEVANT FACTS WHICH MAKES THE ADDITIONS UNSUSTAINABLE FOR OTHER REASONS AS WELL. 1. ASSESSING OFFICERS MENTION OF SEBI ENQUIRIES IS INCORRECT, IRRELEVANT AND MISLEADING. IN THE SEBI REPORT THERE IS NO MENTION THAT THE ASSESSEE WAS IN ANY WAY INVOLVED IN THE ALLEGED RIGGING OF THE M/S NAGESHWAR INVESTMENT LTD. EVEN THE BROKER THROUGH WHOM THE ASSESSEE TRANSACTED IN SHARES DID NOT FIND ANY MENTION IN THE SEBI REPORT. THE SEBI INVESTIGATIONS WERE IN FACT ON ACCOUNT OF CERTAIN PRICE RISE IN THE SHARES OF THE M/S NAGESHWAR INVESTMENT LTD. DURING THE PERIOD APRIL 2005 TO NOVEMBER 2005. TRADING IN THE M/S NAGESHWAR INVESTMENT LTD. SCRIP WAS SUSPENDED FOR A VERY BRIEF PERIOD AND WAS PAGE 118 REVOKED ON 31.5.2006 WHEREAS TRANSACTIONS IN THE CASE OF THE ASSESSEE WHICH HAVE BEEN QUESTIONED PERTAIN TO FY 2003-04 & FY 2004-05 WHICH WAS MUCH BEFORE THE ALLEGED PERIOD OF RIGGING. 2. THE AOS RELIANCE ON THE ADDITIONS IN THE CASE OF SH. DEVI DASS GARG IN THE ORIGINAL ASSESSMENT PROCEEDINGS IN HIS CASE ON THE IDENTICAL ISSUE IS ALSO NOT HELPFUL TO THE DEPARTMENT. THE ADDITIONS MADE WERE DELETED BY THE HONBLE TRIBUNAL VIDE ORDER DATED 31.08.2009. THE AO SHOULD HAVE BEEN AWARE OF THIS ORDER WHEN HE PASSED THE IMPUGNED ASSESSMENT ORDER YET HE CHOSE TO IGNORE IT AS IT WAS AGAINST THE DEPARTMENT. 2.10.3 THE LD. DR SUBMITTED THAT THAT THE ADDITION WAS JUSTIFIED IN VIEW OF THE FACT THAT THE BROKER DID N OT RESPOND TO THE SUMMONS ISSUED BY THE DEPARTMENT. THE LD. DR SUBMITTED THAT THE DELETION MADE BY THE LD. CIT (A) OF RS. 3,178,330/- ON ACCOUNT OF SALE OF SHARES OF M/S M.P . INVESTMENT LTD. AND OF RS. 4,855,200/- ON ACCOUNT O F SALE OF SHARES OF M/S QUEST FINANCIAL SERVICES LTD. WAS NOT JUSTIFIED PAGE 119 BECAUSE THE ONUS ON THE ASSESSEE CANNOT BE SHIFTED TO THE REVENUE. HE EMPHASIZED THAT HERE THE BONA FIDES OF THE BROKER WERE UNDER QUESTION AND THE DEALINGS WITH AL L THE THREE COMPANIES WERE APPARENTLY SUSPICIOUS. THE LD . DR HEAVILY RELIED ON THE FINDINGS OF THE AO AND VEHEME NTLY ARGUED THAT IN VIEW OF THE SPECIFIC INCONSISTENCIES POINTED OUT BY THE AO, THE RELIEF GRANTED TO THE ASSESSEE BY TH E LD. CIT (A) WAS NOT LEGALLY TENABLE. 2.10.4 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAV E ALSO PERUSED THE MATERIAL ON RECORD. IT IS SEEN TH AT IN ASSESSEES CASE SEARCH ACTION WAS INITIATED AND ASS ESSMENTS U/S 153A WERE FRAMED MAKING VARIOUS ADDITIONS. IT I S ASSESSEES CLAIM THAT THE ADDITION WAS NOT TENABLE AS THE REGULAR/ORIGINAL RETURN HAD BEEN FILED WHEREIN THE PARTICULARS RELATING TO THE ADDITION HAS BEEN DISCLOSED AND THE SAME HAD BEEN ACCEPTED BY THE AO IN THE ASSESSMENT MADE U/S 143 (3) OF THE ACT. IT IS SEEN FROM THE RECORDS THAT NO MAT ERIAL HAS BEEN FOUND DURING THE SEARCH TO JUSTIFY THE ADDITIO N. IN OUR CONSIDERED OPINION SECTION 153A DOES NOT AUTHORISE THE MAKING OF A DE NOVO ASSESSMENT IN THIS PARTICULAR ASSESSMENT PAGE 120 YEAR. WHILE UNDER THE FIRST PROVISO, THE AO IS EMPO WERED TO FRAME ASSESSMENT FOR SIX YEARS, UNDER THE SECOND PR OVISO ONLY ASSESSMENTS WHICH ARE PENDING ON THE DATE OF INITIA TION OF SEARCH ABATE. THE EFFECT IS THAT COMPLETED ASSESSME NTS DO NOT ABATE. THE ASSESSMENTS CAN BE SAID TO BE PENDING ON LY IF THE AO IS STATUTORILY REQUIRED TO DO SOMETHING FURTHER. IF THE SECTION 143(2) NOTICE HAS BEEN ISSUED, THE ASSESSME NT CAN BE SAID TO BE PENDING. HOWEVER AN ASSESSMENT WHICH HAS BEEN FINALIZED U/S 143(3) OF THE ACT CANNOT BE SAID TO B E PENDING. THE POWER GIVEN BY THE FIRST PROVISO TO ASSESS INCO ME FOR SIX ASSESSMENT YEARS HAS TO BE CONFINED TO THE UNDISCLO SED INCOME UNEARTHED DURING SEARCH AND CANNOT INCLUDE I TEMS WHICH ARE DISCLOSED IN THE ORIGINAL ASSESSMENT PROC EEDINGS. A PERUSAL OF THE ASSESSMENT ORDER PASSED U/S 153A OF THE ACT REVEALS THAT THE AO HAS NOT MADE ANY REFERENCE WHAT SOEVER TO ANY INCRIMINATING MATERIAL FOUND AS A RESULT OF THE SEARCH AND THE ADDITION OF RS. 11,832,010/- HAS BEEN MADE ENTI RELY ON THE BASIS OF ALLEGATION OF ACCOMMODATION ENTRY WHIC H IN TURN IS BASED ON SOME MATERIAL SAID TO HAVE BEEN GATHERE D FROM STOCK EXCHANGE BUT WHICH DOES NOT SPECIFICALLY POIN T OUT PAGE 121 TOWARDS THE ASSESSEE. THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA IN ITA NO. 707/2014 DA TED 28/08/2015 HAS EXAMINED THREAD BARE THE PROVISIONS OF SECTION 153A AND HAS SUMMARIZED THE LEGAL POSITION IN PARA 37 OF ITS DECISION (WHICH HAS BEEN REPRODUCED IN AN EARLIER PART OF THIS ORDER). RESPECTFULLY FOLLOWING THE RA TIO OF THE JUDGMENT IN THE CASE OF CIT VS. KABUL CHAWLA (SUPRA ), WE HAVE NO HESITATION IN HOLDING THAT THE ADDITIONS IN THE INSTANT APPEAL WERE MADE BY THE AO WITHOUT BEING BASED ON A NY INCRIMINATING DOCUMENT FOUND DURING THE COURSE OF T HE SEARCH AND, THEREFORE, THE ADDITIONS MADE IN THE AS SESSMENT U/S 153A ARE PATENTLY AND LEGALLY WRONG AND WE DELE TE THE SAME. WE ALLOW GROUND NOS. 1 AND 2 OF THE ASSESSEE S APPEAL . IN VIEW OF OUR ADJUDICATION OF THE ASSESSEES APPEA L, THE APPEAL PREFERRED BY THE DEPARTMENT BECOMES ACADEMI C AND THE SAME IS DISMISSED. 2.10.5 IN THE RESULT, THE APPEAL FILED BY THE ASSES SEE IS ALLOWED, WHEREAS THE APPEAL FILED BY THE DEPARTMENT IS DISMISSED. PAGE 122 2.11 DEVI DASS GARG ITA NOS. 2086 AND 2761/DEL/2012 AY 04-05 : ITA NO. 2086 HAS BEEN PREFERRED BY THE ASSESSEE AGA INST THE ORDER DATED 30/03/2012 PASSED BY THE LD. CIT (A)-XX XI, NEW DELHI, WHEREAS ITA NO. 2761 IS THE CROSS APPEAL FIL ED BY THE DEPARTMENT. IN THIS CASE ALSO NOTICE WAS ISSUED U/ S 153A OF THE ACT SUBSEQUENT TO AN ACTION U/S 132 OF THE ACT ON THE RAJ DARBAR GROUP OF COMPANIES AND ITS ASSOCIATES. PURS UANT TO THE NOTICE, THE ASSESSEE FILED HIS RETURN OF INCOME DECLARING INCOME OF RS. 10,32,827/- AND AGRICULTURAL INCOME O F RS. 13,77,751/-. DURING THE COURSE OF ASSESSMENT PROCE EDINGS, THE AO OBSERVED THAT THE ASSESSEE HAD CLAIMED LONG TERM CAPITAL GAINS OF RS. 46,40,105/- FROM SALE OF SHARE S OF M/S NAGESHWAR INVESTMENT LTD. AND THAT THE ASSESSEE HAD CLAIMED TO HAVE RECEIVED A TOTAL CONSIDERATION OF R S. 47,53,850/-. IN THIS CASE ALSO THE AO OBSERVED THA T THE SHARES WERE PURCHASED IN THE MONTH OF NOVEMBER, 200 1 AND SOLD DURING FEBRUARY AND MARCH, 2003. THE AO REFER RED TO THE ENQUIRIES MADE FROM CALCUTTA STOCK EXCHANGE, WH EREIN IT WAS REVEALED THAT THE PRICE OF SCRIP OF M/S NAGESHW AR PAGE 123 INVESTMENT LTD. WAS AS LOW AS RS. 2/- ON 02/07/2002 AND AS HIGH AS RS. 107/- ON 02.05.2003. THE AO ALSO REFER RED TO THE ENQUIRY MADE BY THE SEBI AGAINST SHARE BROKERS WHO HAD TRADED IN THE SCRIP OF M/S NAGESHWAR INVESTMENT LTD . THE AO ALSO NOTED THAT M/S BUBNA STOCK BROKING SERVICES LT D. HAD FAILED TO REPLY TO THE ENQUIRIES CONDUCTED BY THE D EPARTMENT. THE AO FURTHER NOTED THAT THE SEBI HAS INFORMED THA T THE TRADING IN THE SCRIP OF M/S NAGESHWAR INVESTMENT LT D. WAS SUSPENDED W.E.F. 22.11.2005. THE AO WAS OF THE OPI NION THAT BOTH SALES AS WELL AS PURCHASE TRANSACTIONS WERE AR RANGED ONCE AS NO DETAILS FROM WHOM THESE SHARES WERE PURC HASED AND TO WHOM THESE SHARES WERE SOLD HAVE BEEN FURNIS HED BY THE ASSESSEE. IT WAS THE ASSESSEES CONTENTION BEF ORE THE AO THAT IN THE CASE OF THE ASSESSEE AND OTHER FAMILY M EMBERS FOR A.Y. 04-05, ADDITIONS WERE MADE BY ACIT, CENTRAL CI RCLE, AGRA VIDE HIS ORDER PASSED U/S 143(3) OF THE ACT AGAINST WHICH THE ASSESSEE AND OTHER FAMILY MEMBERS HAD FILED APPEALS BEFORE THE LD. CIT (A) II, AGRA AND GOT RELIEF FOR THE A DDITIONS MADE BY THE AO IN RESPECT OF LONG TERM CAPITAL GAINS. T HE DEPARTMENT HAD PREFERRED AN APPEAL BEFORE THE ITAT, AGRA PAGE 124 BENCH WHICH CONFIRMED THE ORDERS OF THE LD. CIT (A) . ON STILL FURTHER APPEAL BY THE DEPARTMENT, THE HONBLE HIGH COURT HAD DISMISSED THE DEPARTMENTS APPEAL AND, THEREFOR E, THESE ADDITIONS WERE NOT JUSTIFIABLE. HOWEVER, THE AO PR OCEEDED TO ADD BACK RS. 48,48,927/- (INCLUDING 2% EXPENSES) TO THE INCOME OF THE ASSESSEE WITH REGARD TO THE SALE OF S HARES IN NAGESHWAR INVESTMENT LTD. 2.11.1 THE AO HAD FURTHER OBSERVED THAT THERE HAD B EEN A SALE OF AGRICULTURAL LAND AT BANGALORE THAT HAD BEE N EXAMINED BY THE AO IN HIS EARLIER ASSESSMENT COMPLETED U/S 1 43(3) OF THE ACT ON 29/12/2006. IT WAS ALSO STATED THAT FUR THER ENQUIRIES HAD BEEN INITIATED BY THE ERSTWHILE AO IN THIS REGARD TO ASCERTAIN THE STATUS OF THE LAND WHICH WAS CLAIM ED BY THE ASSESSEE AS AGRICULTURAL LAND SITUATED IN GRAM DEVARABISANAHALLI, BARTHUR HOBLI, BANGALORE AND THA T THE SAME WERE PENDING AS ON THE DATE OF ASSESSMENT ORDE R. THE AO FURTHER OBSERVED THAT TEHSILDAR BANGALORE VIDE L ETTER NO. ADM/CR/142/143/08-09 DATED 02/11/2008 HAS INFORMED THAT THE DISTANCE OF GRAM DEVARABISANAHALLI, BARTHU R HOBLI, PAGE 125 BANGALORE FROM THE NEAREST BANGALORE MAHANAGAR PALI KA LIMIT NAMELY KONENA AGRAHARA, HAL, MAIN GATE IS 6 K .M. AND, THEREFORE, THE COMPENSATION OF RS. 5,62,50,000 /- WAS TO BE TREATED AS A SHORT TERM CAPITAL GAIN. 2.11.2 THE AO MADE A FURTHER ADDITION OF RS. 1 LAKH OUT OF AGRICULTURAL INCOME OF RS. 13,77,751/- AS UNDISCLOS ED INCOME FROM OTHER SOURCES. 2.11.3 AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY CHALLENGING THE ASSUM PTION OF JURISDICTION U/S 153A OF THE ACT AS WELL AS CHALLEN GING THE ADDITIONS ON MERITS. LD. CIT (A) DID NOT ACCEPT TH E ASSESSEES GROUND RELATING TO VALIDITY OF THE PROCEEDINGS U/S 153A OF THE ACT. THE LD. CIT (A) ALSO CONFIRMED THE ADDITION O F RS. 48,48,927/- ON ACCOUNT OF SALE OF SHARES OF M/S NAG ESHWAR INVESTMENT LTD. HOWEVER, THE ADDITION OF RS. 5,62, 50,000/- ON ACCOUNT OF SALE OF AGRICULTURAL LAND AND THE ADD ITION ON ACCOUNT OF AGRICULTURAL EXPENSES WERE DELETED. AGG RIEVED BOTH THE ASSESSEE AS WELL AS THE DEPARTMENT HAS PREFERRE D APPEALS BEFORE THE ITAT AND THE FOLLOWING GROUNDS HAVE BEEN RAISED: PAGE 126 GROUNDS OF ITA NO. 2086/DEL/12 : 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) XXXI IS CORRECT IN UPHOLDING THE ASSESSMENT FRAMED OUTSIDE THE SEARCH MATERIAL AND AFTER THE CHANGE OF OPINION? 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LD. CIT (A) XXXI ERRED IN CONFIRMING THE ADDITION OF RS. 48,48,927/- INCLUDING 2% EXPENDITURE ON ACCOUNT OF SALE OF SHARES OF M/S NAGESHWAR INVESTMENTS LTD. U/S 68 OF THE INCOME TAX ACT, 1961. 3. THE ASSESSEE CRAVES FOR THE ADDITION, MODIFICATION AND DELETION OF THE GROUNDS OF APPEAL. GROUNDS OF ITA NO. 2761/DEL/12 : 1. THE ORDER OF LD. CIT (A) IS NOT CORRECT IN LAW AND FACTS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF R S. 5,62,50,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF SALE OF AGRICULTURAL LAND HOLDING THE SA ME AS SHORT TERM CAPITAL GAIN BY ADMITTING THE ADDITIO NAL EVIDENCE IN CONTRAVENTION OF RULE 46A OF INCOME TAX RULES, 1962. PAGE 127 3. THE APPELLANT CRAVES LEAVE TO ADD, AMEND ANY/ALL THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE O F HEARING OF THE APPEAL. 2.11.4 THE LD. AR FILED WRITTEN SUBMISSIONS WHICH A RE BEING REPRODUCED HEREIN UNDER: THE APPELLANT/RESPONDENT WISHES TO SUBMIT THAT SEARCH IN HIS CASE WAS CONDUCTED BY THE DEPARTMENT ON 31.07.2008. STATUS OF RETURN OF INCOME FILED BY THE ASSESSEE ORIGINALLY IS AS BELOW: A.Y. DATE OF FILING WHETHER ASSESSED U/S 143(1) OR 143(3) WHETHER THE ASSESSMENTS WERE ABATED OR NOT WITHIN THE MEANING OF SECOND PROVISO TO SEC. 153A OF THE ACT. 2004 - 05 28.03.2005 YES, 143(3) DID NOT ABATE FROM THE AFORESAID TABLE, IT CAN BE GATHERED THAT T HE ASSESSMENTS IN THE CASE OF THE ASSESSEE DID NOT ABATE CONSEQUENT UPON THE SEARCH WITHIN THE MEANING OF SECOND PROVISO TO SECTION 153A OF THE I. T. ACT. PERUSAL OF THE ASSESSMENT ORDER AS QUOTED ABOVE VERY UNAMBIGUOUSLY EVIDENCES THAT THE ADDITIONS MADE BY THE AO WERE NOT BASED ON ANY INCRIMINATING DOCUMENTS. THE ADDITIONS MADE THEREFORE, WERE INDISPUTABLY OUTSIDE THE SCOPE OF PAGE 128 ASSESSMENTS U/S 153A OF THE I.T. ACT AND DESERVES TO BE DELETED. THE LD. CIT (A) HAS ALSO NOT REFERRED TO ANY INCRIMINATING DOCUMENT WHILE CONFIRMING PART OF THE ADDITIONS. THE ASSESSEE RELIES UPON THE ORDER OF T HE HONBLE JURISDICTIONAL DELHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA [2015] 61 TAXMANN.COM 412 (DELHI) FOR THE PROPOSITION THAT ADDITIONS IN THE UNABATED ASSESSMENTS CAN BE MADE ONLY ON THE BASIS OF INCRIMINATING DOCUMENTS FOUND AND SEIZED DURING THE COURSE OF SEARCH. XXX INNUMERABLE CASES HAVE BEEN DECIDED SUBSEQUENT TO THE AFORESAID JUDGMENT OF THE HONBLE DELHI HIGH COURT UPHOLDING/FOLLOWING THE AFORESAID JUDGMENT. HOWEVER, THE APPELLANT WISHES TO REFER T O SOME OF THEM AS PER THE LIST BELOW: S.NO. JUDGMENT CITATION 1. SUNCITY PROJECTS P. LTD. VS. DCIT 2016 - TIOL - 643 - ITAT - DEL DATED 21.03.2016 2. CIT VS. CONTINENTAL WAREHOUSING CORPORATION LTD. [2015] 63 TAXMANN.COM 118 (MUM TRIB.) DATED 12.10.2015 3. CIT VS. CONTINENTAL WAREHOUSING CORPORATION LTD. [2015] 58 TAXMANN.COM 78 (BOMBAY HC) DATED 21.04.2015 4. JAI STEEL (INDIA) LTD. 219 TAXMANN 233 (RAJASTHAN HC) DATED 24.05.2013 5. PR CIT VS. KURELE PAPER MILLS P. LTD. ITA NO. 369/2015 (DELHI HC) 6. CIT (C ) - I VS. MGF AUTOMOBILES LTD. ITA NO. 13,14/2014 (DELHI HC) 7. JAIPURIA INFRASTRUCTURE DEVELOPERS P. LTD. VS. ACIT ITA NO. 5522, 5523/DEL/2015 DATED 27.06.2016 PAGE 129 8. PR. CIT VS. DINESH TARACHAND KASAT TAX APPEAL NO. 469, 470 OF 2016 (GUJARAT HC) DATED 28.6.2016 9. CIT VS. THAKKAR POPATLAL VELJI SALES LTD. 2016 - TIOL - 709 - HC - MUM - IT DATED 29.03.2016 10. INFOWORLD VS. DCIT 2016 - TIOL - 548 - ITAT - DEL DATED 29.01.2016 11. ACIT VS. MAHAGUN REALTORS P. LTD. 2016 - TIOL - 955 - ITAT - DEL WE ALSO WISH TO MENTION THAT ADDITIONS IN THE IDENTICAL MANNER WERE MADE AND SUSTAINED IN THE CASE OF SH. SANTOSH KUMAR GARG, A FAMILY MEMBER OF THE ASSESSEE WHERE SEARCH WAS CONDUCTED ALONG WITH THE ASSESSEE. HONBLE TRIBUNAL HAS DISPOSED OFF THE AFORESAID MATTER VIDE ORDER DATED 29.10.2015. THE DEPARTMENT FILED APPEAL AGAINST THE AFORESAID ORDER OF THE HONBLE TRIBUNAL BEFORE THE HONBLE DELHI HIGH COURT AND THE APPEAL HAS BEEN DISMISSED. CONSIDERING THE AFORESAID FACTS AND CIRCUMSTANCES OF THE MATTER, THE CASE OF THE ASSESSEE MAY KINDLY BE CONSIDERED TO BE FULLY COVERED AND ITS APPEAL MAY PLEASE BE ALLOWED & DEPARTMENTS APPEAL MAY PLEASE BE DISMISSED. BESIDES THE AFORESAID REASON THE ASSESSEE WISHES TO BRING SOME OTHER RELEVANT FACTS WHICH MAKES THE ADDITIONS UNSUSTAINABLE FOR OTHER REASONS AS WELL. 1. ASSESSING OFFICERS MENTION OF SEBI ENQUIRIES IS INCORRECT, IRRELEVANT AND MISLEADING. IN THE PAGE 130 SEBI REPORT THERE IS NO MENTION THAT THE ASSESSEE WAS IN ANY WAY INVOLVED IN THE ALLEGED RIGGING OF THE M/S NAGESHWAR INVESTMENT LTD. EVEN THE BROKER THROUGH WHOM THE ASSESSEE TRANSACTED IN SHARES DID NOT FIND ANY MENTION IN THE SEBI REPORT. THE SEBI INVESTIGATIONS WERE IN FACT ON ACCOUNT OF CERTAIN PRICE RISE IN THE SHARES OF THE M/S NAGESHWAR INVESTMENT LTD. DURING THE PERIOD APRIL 2005 TO NOVEMBER 2005. TRADING IN THE M/S NAGESHWAR INVESTMENT LTD. SCRIP WAS SUSPENDED FOR A VERY BRIEF PERIOD AND WAS REVOKED ON 31.5.2006 WHEREAS TRANSACTIONS IN THE CASE OF THE ASSESSEE WHICH HAVE BEEN QUESTIONED PERTAIN TO FY 2003-04 & FY 2004- 05 WHICH WAS MUCH BEFORE THE ALLEGED PERIOD OF RIGGING. 2. THE AOS RELIANCE ON THE ADDITIONS IN THE CASE OF SH. DEVI DASS GARG IN THE ORIGINAL ASSESSMENT PROCEEDINGS IN HIS CASE ON THE IDENTICAL ISSUE IS ALSO NOT HELPFUL TO THE DEPARTMENT. THE ADDITIONS MADE WERE DELETED BY THE HONBLE TRIBUNAL VIDE ORDER DATED 31.08.2009. THE AO SHOULD HAVE BEEN AWARE OF THIS ORDER WHEN HE PASSED THE IMPUGNED ASSESSMENT ORDER YET HE CHOSE TO IGNORE IT AS IT PAGE 131 WAS AGAINST THE DEPARTMENT. 2.11.5 THE LD. DR AGITATED THE IMPUGNED ACTION OF T HE LD. CIT (A) IN DELETING THE ADDITION OF RS. 56,250,000/ - ON ACCOUNT OF SALE OF AGRICULTURAL LAND BY ADMITTING A DDITIONAL EVIDENCE IN CONTRAVENTION OF RULE 46A OF THE INCOME TAX RULES, 1962 AND VEHEMENTLY SUPPORTED THE ORDER OF T HE AO. 2.11.6 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE PERUSED THE MATERIAL ON RECORD. AS FAR AS THE ISSU E OF SALE OF SHARES IS CONCERNED, IT IS SEEN THAT THESE TRANSACT IONS WERE ADDED BACK UNDER THE ORIGINAL ASSESSMENT ORDER MADE U/S 143(3) OF THE ACT BUT ON APPEAL WERE DELETED BY THE LD. CIT (A), AGRA AND NO FURTHER APPEAL WAS PREFERRED BY THE DEP ARTMENT ON THIS ISSUE. SIMILARLY, THE ISSUE OF TAXABILITY OF LONG TERM CAPITAL GAINS ON THE SALE OF AGRICULTURAL LAND WAS EXAMINED AND ACCEPTED BY THE AO U/S 143(3) OF THE ACT. A PE RUSAL OF THE ASSESSMENT ORDER U/S 153A OF THE ACT REVEALS THAT N O REFERENCE WHATSOEVER HAS BEEN MADE TO ANY INCRIMINA TING MATERIAL ON WHICH THESE ADDITIONS HAVE BEEN BASED. THE LD. CIT (A) ALSO DOES NOT MAKE ANY REFERENCE TO ANY INC RIMINATING PAGE 132 MATERIAL SEIZED DURING THE COURSE OF THE SEARCH. T HEREFORE, THE ADDITIONS MADE IN THE INSTANT APPEAL ARE UNDISPUTED LY OUTSIDE THE SCOPE OF THE ASSESSMENT U/S 153A OF THE ACT AND WE HAVE NO OPTION BUT TO DELETE THE ENTIRE ADDITIONS MADE I N THE ASSESSMENT AS HAVING BEEN MADE WITHOUT ANY INCRIMIN ATING MATERIAL/DOCUMENT. RELIANCE IS PLACED ON THE DECISI ON OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. KAB UL CHAWLA (SUPRA) FOR THE SAME. WE, ACCORDINGLY, ALLOW GROUND NOS. 1 AND 2 OF THE ASSESSEES APPEAL. IN VIEW OF OUR ADJUDIC ATION IN THE ASSESSEES APPEAL, ON SIMILAR REASONING, WE DISMISS THE DEPARTMENTS APPEAL. 2.11.7 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED, WHEREAS THE DEPARTMENTS APPEAL IS DISMISSED. 2.12 DEVI DASS GARG ITA NO. 2762/DEL/2012 AND CO 176/DEL/2013 AY 05-06 : ITA NO. 2762 HAS BEEN FILED BY THE DEPARTMENT AGAIN ST THE ORDER DATED 30/03/2012 PASSED BY THE LD. CIT (A)-XX XI, NEW DELHI, WHEREAS CO 176 HAS BEEN PREFERRED BY THE ASS ESSEE. IN THIS CASE ALSO NOTICE U/S 153A WAS ISSUED AS A PAGE 133 CONSEQUENCE OF SEARCH AND SEIZURE OPERATION U/S 132 OF THE ACT CARRIED OUT IN THE RAJ DARBAR GROUP OF CASES. IN RESPONSE, RETURN OF INCOME WAS FILED DECLARING AN I NCOME OF RS. 16,06,973/- AND RS. 18,06,900/- AS AGRICULTURE INCOME. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS GATHERED THAT LAND SITUATED AT DEVARABISANAHALLI VILLAGE, BA NGLORE, KARNATAKA WAS ACQUIRED BY THE GOVERNMENT DURING THE YEAR AND A COMPENSATION OF RS. 2,03,71,875/- WAS RECEIVE D BY THE ASSESSEE. THE ASSESSEE CLAIMED THAT THIS LAND WAS AN AGRICULTURAL LAND AND, THEREFORE, NOT A CAPITAL ASS ET WITHIN THE MEANING OF SECTION 2(14) OF THE ACT AND, THEREFORE, NO CAPITAL GAIN WAS DECLARED ON THIS TRANSACTION. THE AO FURT HER OBSERVED THAT TEHSILDAR BANGALORE (EAST TALUK) VIDE LETTER NO. ADM/CR/142/143/08-09 DATED 02/11/2008 HAS INFORMED THAT THE DISTANCE OF GRAM DEVARABISANAHALLI, BARTHU R HOBLI, BANGALORE FROM THE NEAREST BANGALORE MAHANAGAR PALI KA LIMIT NAMELY KONENA AGRAHARA, HAL, MAIN GATE IS 6 K .M. AND, THEREFORE, THE ASSESSEES CLAIM THAT THE ABOVE LAND WAS SITUATED AT A DISTANCE OF 11 K.M. FROM BANGLORE NAG AR MAHAPALIKA DOES NOT SUSTAIN. THE AO OPINED THAT TH E PAGE 134 COMPENSATION OF RS. 2,03,71,875/- WAS TO BE TREATED AS A SHORT TERM CAPITAL GAIN. THE AO FURTHER DISALLOWED A SUM OF RS. 3,79,569/- DEBITED TO THE PROFIT AND LOSS ACCOU NT UNDER VARIOUS HEADS OF EXPENDITURE. THE AO ALSO DISALLOW ED AN AMOUNT OF RS. 1,50,000/- ON ACCOUNT OF NON FURNISHI NG OF COMPLETE BILLS AND VOUCHERS RELATING TO AGRICULTURE EXPENDITURE. 2.12.1 AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY CHALLENGING THE ASSUM PTION OF JURISDICTION U/S 153A OF THE ACT AS WELL AS CHALLEN GING THE ADDITION ON MERITS. THE LD. CIT (A) DISMISSED THE ASSESSEES CHALLENGE ON THE LEGAL GROUND OF ASSUMPTION OF JURI SDICTION U/S 153A OF THE ACT. HE, HOWEVER, DELETED THE ADDI TIONS ON MERITS. NOW, THE DEPARTMENT HAS PREFERRED AN APPEA L AGAINST THE SAID ORDER, WHEREAS THE ASSESSEE HAS PREFERRED A CO. THE GROUNDS TAKEN BY BOTH THE PARTIES ARE AS UNDER: PAGE 135 GROUNDS OF ITA NO. 2762/DEL/12 : 1. THE ORDER OF LD. CIT (A) IS NOT CORRECT IN LAW AND FACTS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF R S. 2,03,71,875/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF SALE OF AGRICULTURAL LAND HOLDING THE SA ME AS SHORT TERM CAPITAL GAIN BY ADMITTING THE ADDITIO NAL EVIDENCE IN CONTRAVENTION OF RULE 46A OF INCOME TAX RULES, 1962. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAS ERRED IN DELETING THE DISALLOWANCE OF EXPENSES INCURRED AMOUNTING TO RS. 3,79,569/- TOWARDS INTEREST PAID ON LOAN, BANK CHARGES AND TELEPHONE EXPENSES WITHOUT APPRECIATING THE FACT TH AT THE ASSESSEE HAS NOT CARRIED OUT ANY BUSINESS ACTIVITIES AND THE ASSESSEE ALSO FAILED TO ESTABLIS H THAT INTEREST EXPENSES WERE INCURRED FOR EARNING INTEREST INCOME. 4. THE APPELLANT CRAVES LEAVE TO ADD, AMEND ANY/ALL THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE O F HEARING OF THE APPEAL. PAGE 136 GROUNDS OF CO NO. 176/DEL/13 : THE GROUNDS STATED HEREIN ARE WITHOUT PREJUDICE TO EACH OTHER: 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE AO HAS ERRED IN PASSING THE ORDER U/S 153A AND THE SAID ORDER ILLEGAL AND BAD IN LAW. 2. THAT IN THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND DURING SEARCH, THE ADDITIONS MADE BY THE AO WHILE COMPLETING ASSESSMENT U/S 153A RWS 143(3) ARE UNJUST, ARBITRARY, AND BAD IN LAW AND WITHOUT JURISDICTION. 3. THAT THE ASSESSMENT FOR RELEVANT ASSESSMENT YEAR WAS NOT PENDING AT THE TIME OF SEARCH HENCE THE SAME WAS NOT ABATED, AS SUCH ASSESSMENT MADE U/S 153A AND ADDITION ARE ILLEGAL, BAD IN LAW AND WITHOUT JURISDICTION. 4. THAT ALL THE ABOVE GROUNDS ARE INDEPENDENT TO EACH OTHER AND MUTUALLY EXCLUSIVE. 5. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER AND/OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL AT OR BEFORE THE TIME OF HEARING. 2.12.2 THE LD. AR FILED WRITTEN SUBMISSIONS WHICH A RE REPRODUCED AS UNDER: PAGE 137 THE APPELLANT/RESPONDENT WISHES TO SUBMIT THAT SEARCH IN HIS CASE WAS CONDUCTED BY THE DEPARTMENT ON 31.07.2008. STATUS OF RETURN OF INCOME FILED BY THE ASSESSEE ORIGINALLY IS AS BELOW: A.Y. DATE OF FILING WHETHER ASSESSED U/S 143(1) OR 143(3) WHETHER THE ASSESSMENTS WERE ABATED OR NOT WITHIN THE MEANING OF SECOND PROVISO TO SEC. 153A OF THE ACT. 2005 - 06 10.01.2006 YES, 143(3) DID NOT ABATE FROM THE AFORESAID TABLE, IT CAN BE GATHERED THAT T HE ASSESSMENTS IN THE CASE OF THE ASSESSEE DID NOT ABATE CONSEQUENT UPON THE SEARCH WITHIN THE MEANING OF SECOND PROVISO TO SECTION 153A OF THE I. T. ACT. PERUSAL OF THE ASSESSMENT ORDER AS QUOTED ABOVE VERY UNAMBIGUOUSLY EVIDENCES THAT THE ADDITIONS MADE BY THE AO WERE NOT BASED ON ANY INCRIMINATING DOCUMENTS. THE ADDITIONS MADE THEREFORE, WERE INDISPUTABLY OUTSIDE THE SCOPE OF ASSESSMENTS U/S 153A OF THE I.T. ACT AND DESERVES TO BE DELETED. THE LD. CIT (A) HAS ALSO NOT REFERRED TO ANY INCRIMINATING DOCUMENT WHILE CONFIRMING PART OF THE ADDITIONS. THE ASSESSEE RELIES UPON THE ORDER OF T HE HONBLE JURISDICTIONAL DELHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA [2015] 61 TAXMANN.COM 412 PAGE 138 (DELHI) FOR THE PROPOSITION THAT ADDITIONS IN THE UNABATED ASSESSMENTS CAN BE MADE ONLY ON THE BASIS OF INCRIMINATING DOCUMENTS FOUND AND SEIZED DURING THE COURSE OF SEARCH. XXX INNUMERABLE CASES HAVE BEEN DECIDED SUBSEQUENT TO THE AFORESAID JUDGMENT OF THE HONBLE DELHI HIGH COURT UPHOLDING/FOLLOWING THE AFORESAID JUDGMENT. HOWEVER, THE APPELLANT WISHES TO REFER T O SOME OF THEM AS PER THE LIST BELOW: S.NO. JUDGMENT CITATION 1. SUNCITY PROJECTS P. LTD. VS. DCIT 2016 - TIOL - 643 - ITAT - DEL DATED 21.03.2016 2. CIT VS. CONTINENTAL WAREHOUSING CORPORATION LTD. [2015] 63 TAXMANN.COM 118 (MUM TRIB.) DATED 12.10.2015 3. CIT VS. CONTINENTAL WAREHOUSING CORPORATION LTD. [2015] 58 TAXMANN.COM 78 (BOMBAY HC) DATED 21.04.2015 4. JAI STEEL (INDIA) LTD. 219 TAXMANN 233 (RAJASTHAN HC) DATED 24.05.2013 5. PR CIT VS. KURELE PAPER MILLS P. LTD. ITA NO. 369/2015 (DEL HI HC) 6. CIT (C ) - I VS. MGF AUTOMOBILES LTD. ITA NO. 13,14/2014 (DELHI HC) 7. JAIPURIA INFRASTRUCTURE DEVELOPERS P. LTD. VS. ACIT ITA NO. 5522, 5523/DEL/2015 DATED 27.06.2016 8. PR. CIT VS. DINESH TARACHAND KASAT TAX APPEAL NO. 469, 470 OF 2016 (GUJARAT HC) DATED 28.6.2016 9. CIT VS. THAKKAR POPATLAL VELJI SALES LTD. 2016 - TIOL - 709 - HC - MUM - IT DATED 29.03.2016 10. INFOWORLD VS. DCIT 2016 - TIOL - 548 - ITAT - DEL DATED 29.01.2016 11. ACIT VS. MAHAGUN REALTORS P. LTD. 2016 - TIOL - 955 - ITAT - DEL BESIDES THE AFORESAID REASON THE ASSESSEE WISHES TO BRING SOME OTHER RELEVANT FACTS WHICH MAKES THE PAGE 139 ADDITIONS UNSUSTAINABLE FOR OTHER REASONS AS WELL. 1. THE VERY BASIS ON WHICH THE AO HELD AGRICULTURAL LAND TO BE NON AGRICULTURAL LAND WAS HELD TO BE INCORRECT ON THE BASIS OF DOCUMENTARY EVIDENCES. 2. THE LD. CIT (A) HAS HIMSELF MEASURED THE DISTANCE USING THE GOOGLE MAPS TECHNOLOGY AND FOUND THAT THE AGRICULTURAL LAND WAS LOCATED BEYOND 8 KMS. 3. ORIGINAL ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT IN CENTRAL CIRCLE, AGRA AND NO MENTION OF LETTER HAVING BEEN WRITTEN TO THE CONCERNED AUTHORITY WAS MADE AS INCORRECTLY MENTION BY THE AO IN THE IMPUGNED ORDER. 2.12.3 THE LD. DR AGITATED THE IMPUGNED ACTION OF T HE LD. CIT (A) IN DELETING THE ADDITION OF RS. 20,371,875/ - ON ACCOUNT OF SALE OF AGRICULTURAL LAND BY ADMITTING A DDITIONAL EVIDENCE IN CONTRAVENTION OF RULE 46A OF THE INCOME TAX RULES, 1962 AND VEHEMENTLY SUPPORTED THE ORDER OF T HE AO. 2.12.4 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE PERUSED THE MATERIAL ON RECORD. IT IS SEEN THAT TH E ISSUE OF TAXABILITY OF LONG TERM CAPITAL GAINS ON THE SALE O F AGRICULTURAL PAGE 140 LAND WAS EARLIER EXAMINED AND ACCEPTED BY THE AO U/ S 143(3) OF THE ACT. A PERUSAL OF THE ASSESSMENT ORDER U/S 153A OF THE ACT REVEALS THAT NO REFERENCE WHATSOEVER HAS BEEN M ADE TO ANY INCRIMINATING MATERIAL ON WHICH THESE ADDITIONS HAV E BEEN BASED. THE LD. CIT (A) ALSO DOES NOT MAKE ANY REFE RENCE TO ANY INCRIMINATING MATERIAL SEIZED DURING THE COURSE OF THE SEARCH. THEREFORE, THE ADDITIONS MADE IN THE INSTA NT APPEAL ARE UNDISPUTEDLY OUTSIDE THE SCOPE OF THE ASSESSMEN T U/S 153A OF THE ACT AND WE HAVE NO OPTION BUT TO HOLD T HE ADDITIONS AS HAVING BEEN MADE WITHOUT ANY INCRIMINA TING MATERIAL/DOCUMENT. RELIANCE IS PLACED ON THE DECISI ON OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. KAB UL CHAWLA (SUPRA) FOR HOLDING THE SAME. WE, ACCORDINGLY, ALLO W THE ASSESSEES CO. ON SIMILAR REASONING AS IN THE CO, WE DISMISS THE DEPARTMENTS APPEAL. 2.12.5 IN THE RESULT, THE CO OF THE ASSESSEE IS ALL OWED, WHEREAS THE DEPARTMENTS APPEAL IS DISMISSED. PAGE 141 2.13 SHRI DEVI DASS GARG ITA NO. 2341/DEL/2012 AND CO 252/DEL/2012 AY 06-07 : ITA NO. 2341 HAS BEEN PREFERRED BY THE DEPARTMENT A GAINST ORDER DATED 09/03/2012 PASSED BY THE LD. CIT (A) XXXI, NEW DELHI, WHEREAS THE CO HAS BEEN PREFERRED BY THE ASSESSEE. IN THIS CASE ALSO, NOTICE U/S 153A OF TH E ACT WAS ISSUED AS A CONSEQUENCE OF ACTION U/S 132 OF THE AC T ON THE RAJ DARBAR GROUP OF COMPANIES. HERE ALSO IT HAS B EEN THE CONTENTION OF THE ASSESSEE THAT NO INCRIMINATING MA TERIALS WERE FOUND IN THE CASE OF THE ASSESSEE. PURSUANT T O THE NOTICE U/S 153A, THE ASSESSEE FILED ITS RETURN OF I NCOME DECLARING INCOME OF RS. 1,79,58,618/- AND AGRICULTU RE INCOME OF RS. 19,71,794/-. DURING THE COURSE OF THE ASSES SMENT, THE AO OBSERVED THAT THE ASSESSEE WAS THE HOLDER OF 16. 65% SHARES OF M/S TARUPIT EXPORTS LTD. AND THAT THE SHA RES HAD BEEN TRANSFERRED TO M/S VIPUL LIMITED ON 19/12/2005 . THE AO FURTHER OBSERVED THAT THE OTHER SHAREHOLDERS HAD ALSO SOLD THEIR SHARES TO THE SAME COMPANY AND PROCEEDED TO H OLD THAT THE PLOT IN THE COMPANY HELD AS AN ASSET WAS DEEMED TO BE TRANSFERRED TO M/S VIPUL LIMITED AND BY APPLYING PR OVISIONS PAGE 142 OF SECTION 50C ON THE SALE OF THE PLOT BY THE ASSES SEE MADE AN ADDITION OF RS. 91,57,450/- ON ACCOUNT OF SHORT TER M CAPITAL GAIN IN PURSUANCE TO SECTION 2(47)(VI) AND SECTION 50C OF THE ACT BY CONSIDERING THE TRANSFER OF SHARES AS TRANSF ER OF OWNERSHIP OF THE LAND. THE AO FURTHER DISALLOWED A N AMOUNT OF RS. 2 LAKHS FROM AGRICULTURAL EXPENSES ON THE GR OUND OF NON FURNISHING OF BILLS RELATED TO AGRICULTURAL EXP ENSES. THE AO ALSO MADE AN ADDITION OF RS. 5,41,917/- BEING EX PENSES DEBITED UNDER VARIOUS HEADS IN THE PROFIT AND LOSS ACCOUNT. 2.13.1 AGGRIEVED THE ASSESSEE PREFERRED AN APPEAL B EFORE THE FIRST APPELLATE AUTHORITY CHALLENGING THE ASSUM PTION OF JURISDICTION U/S 153A OF THE ACT. THE ASSESSEE ALS O CHALLENGED THE ADDITIONS ON MERITS. THE LD. CIT (A ) REJECTED THE ASSESSEES LEGAL GROUND CHALLENGING THE ASSUMPT ION OF JURISDICTION U/S 153A BUT DELETED ALL THE ADDITIONS ON MERITS. NOW, THE DEPARTMENT HAS FILED AN APPEAL BEFORE THE ITAT, WHEREAS THE ASSESSEE HAS PREFERRED TO FILE A CO. T HE GROUNDS RAISED BY BOTH THE PARTIES ARE AS UNDER: PAGE 143 GROUNDS OF ITA NO. 2341/DEL/12 : 1. THE ORDER OF LD. CIT (A) IS NOT CORRECT IN LAW AND FACTS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF R S. 91,57,450/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF SHORT TERM CAPITAL GAIN IN PURSUANT TO SECTION 2(47)(VI) AND SECTION 50C OF THE INCOME TAX ACT,1961 BY CONSIDERING THE MERE TRANSFER OF SHARES AS TRANSFER OF OWNERSHIP OF LAND HELD AS FIXED ASSE TS BY THE COMPANY IN WHICH THE ASSESSEE WAS A SHAREHOLDER. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAS ERRED IN DELETING THE DISALLOWANCE OF EXPENSES INCURRED AMOUNTING TO RS. 5,41,917/- BY THE ASSESSEE TOWARDS INTEREST PAID ON LOAN BANK CHARGES, LEGAL EXPENSES & TELEPHONE EXPENSES MADE BY THE ASSESSING OFFICER. 4. THE ORDER OF THE LD. CIT (A) IS PERVERSE IN LAW AND ON FACTS. 5. THE APPELLANT CRAVES LEAVE TO ADD, AMEND ANY/ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE O F THE HEARING OF THE APPEAL. PAGE 144 GROUNDS OF CO NO. 252/DEL/12 : 1. THAT THE CIT (A) HAS ERRED IN LAW AS WELL AS ON FA CTS IN REJECTING THE CONTENTION RAISED IN GROUND NO. 1 THAT IMPUGNED ASSESSMENT ORDER IS ALSO BAD IN LAW BECAUSE THE ASSESSMENT AS WELL AS ADDITIONS OR COMPUTATION OF INCOME HAS NOT BEEN FRAMED/MADE ON THE BASIS OF ANY MATERIAL SEIZED PURSUANT TO AN ACTION TAKEN UNDER SECTION 132 OF THE ACT IN THE CA SE OF RAJDARBAR GROUP WHICH ITSELF MAKES THE ASSESSMENT CONTRARY TO LAW, ILLEGAL LEADING TO BE QUASHED. 2. THE RESPONDENT CRAVES LEAVE FOR ADDITION, MODIFICATION, ALTERATION, AMENDMENT OF ANY OF THE CROSS OBJECTION. 2.13.2 THE LD. AR SUBMITTED WRITTEN SUBMISSIONS. T HE SAME ARE REPRODUCED AS UNDER: THE APPELLANT/RESPONDENT WISHES TO SUBMIT THAT SEARCH IN HIS CASE WAS CONDUCTED BY THE DEPARTMENT ON 31.07.2008. STATUS OF RETURN OF INCOME FILED BY THE ASSESSEE ORIGINALLY IS AS BELOW : A.Y. DATE OF FILING WHETHER THE ASSESSMENTS WERE ABATED OR NOT WITHIN THE MEANING OF SECOND PROVISO TO SEC. 153A OF THE ACT. 2006 - 07 27.02.2007 DID NOT ABATE PAGE 145 FROM THE AFORESAID TABLE, IT CAN BE GATHERED THAT T HE ASSESSMENTS IN THE CASE OF THE ASSESSEE DID NOT ABATE CONSEQUENT UPON THE SEARCH WITHIN THE MEANING OF SECOND PROVISO TO SECTION 153A OF THE I. T. ACT. PERUSAL OF THE ASSESSMENT ORDER AS QUOTED ABOVE VERY UNAMBIGUOUSLY EVIDENCES THAT THE ADDITIONS MADE BY THE AO WERE NOT BASED ON ANY INCRIMINATING DOCUMENTS. THE ADDITIONS MADE THEREFORE, WERE INDISPUTABLY OUTSIDE THE SCOPE OF ASSESSMENTS U/S 153A OF THE I.T. ACT AND DESERVES TO BE DELETED. THE LD. CIT (A) HAS ALSO NOT REFERRED TO ANY INCRIMINATING DOCUMENT WHILE CONFIRMING PART OF THE ADDITIONS. THE ASSESSEE RELIES UPON THE ORDER OF T HE HONBLE JURISDICTIONAL DELHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA [2015] 61 TAXMANN.COM 412 (DELHI) FOR THE PROPOSITION THAT ADDITIONS IN THE UNABATED ASSESSMENTS CAN BE MADE ONLY ON THE BASIS OF INCRIMINATING DOCUMENTS FOUND AND SEIZED DURING THE COURSE OF SEARCH. XXX INNUMERABLE CASES HAVE BEEN DECIDED SUBSEQUENT TO THE AFORESAID JUDGMENT OF THE HONBLE DELHI HIGH COURT UPHOLDING/FOLLOWING THE AFORESAID PAGE 146 JUDGMENT. HOWEVER, THE APPELLANT WISHES TO REFER T O SOME OF THEM AS PER THE LIST BELOW: S.NO. JUDGMENT CITATION 1. SUNCITY PROJECTS P. LTD. VS. DCIT 2016 - TIOL - 643 - ITAT - DEL DATED 21.03.2016 2. CIT VS. CONTINENTAL WAREHOUSING CORPORATION LTD. [2015] 63 TAXMANN.COM 118 (MUM TRIB.) DATED 12.10.2015 3. CIT VS. CONTINENTAL WAREHOUSING CORPORATION LTD. [2015] 58 TAXMANN.COM 78 (BOMBAY HC) DATED 21.04.2015 4. JAI STEEL (INDIA) LTD. 219 TAXMANN 233 (RAJASTHAN HC) DATED 24.05.2013 5. PR CIT VS. KURELE PAPER MILLS P. LTD. ITA NO. 369/2015 (DELHI HC) 6. CIT (C ) - I VS. MGF AUTOMOBILES LTD. ITA NO. 13,14/2014 (DELHI HC) 7. JAIPURIA INFRASTRUCTURE DEVELOPERS P. LTD. VS. ACIT ITA NO. 5522, 5523/DEL/2015 DATED 27.06.2016 8. PR. CIT VS. DINESH TARACHAND KASAT TAX APPEAL NO. 469, 470 OF 2016 (GUJARAT HC) DATED 28.6.2016 9. CIT VS. THAKKAR POPATLAL VELJI SALES LTD. 2016 - TIOL - 709 - HC - MUM - IT DATED 29.03.2016 10. INFOWORLD VS. DCIT 2016 - TIOL - 548 - ITAT - DEL DATED 29.01.2016 11. ACIT VS. MAHAGUN REALTORS P. LTD. 2016 - TIOL - 955 - ITAT - DEL BESIDES THE AFORESAID REASON THE ASSESSEE WISHES TO BRING SOME OTHER RELEVANT FACTS WHICH MAKES THE ADDITIONS UNSUSTAINABLE FOR OTHER REASONS AS WELL. 1. THE ASSESSEE HAD SOLD SHARES OF THE COMPANY ONLY AND DID NOT TRANSFER THE LAND. THERE WAS NO LEGAL BASIS FOR APPLYING SECTION 50C OF THE IT ACT ON ASSUMED CIRCLE RATE BASIS. 2. LAND WAS SHOWN AS STOCK IN TRADE IN THE BALANCE SHEET OF THE COMPANY WHERE THE PAGE 147 ASSESSEE WAS THE SHAREHOLDER. SECTION 50C OF THE ACT DID NOT APPLY ON STOCK IN TRADE EVEN OTHERWISE. 3. THE ASSESSEE CANNOT BE ASSUMED TO BE 16.5% OWNER OF THE LAND FOR THE REASON THAT IT HELD 16.5% OF SHARES OF THE COMPANY WHICH OWNED LAND BECAUSE COMPANY IS A DISTINCT LEGAL PERSON. 4. THE COMPANY HAD VERY SUBSTANTIAL AMOUNT OF LOANS AS HAS BEEN POINTED OUT BY THE LD. CIT (A) IN HIS APPELLATE ORDER. 5. BOOK VALUE OF LAND/INVENTORY IN THE BOOKS OF COMPANY AS ON 31.3.2006 WAS RS. 7,77,09,789/-. IF FOR ARGUMENT SAKE THE CIRCLE SALE VALUE OF THE LAND TAKEN BY THE AO AT RS. 8,33,00,000/- IS ASSUMED TO BE CORRECT ACTION THEN THE CAPITAL GAINS TAXABLE WILL BE MUCH LESS THAN THE CAPITAL GAINS OFFERED BY THE ASSESSEE. THE AO CANNOT BE ALLOWED TO HAVE SALE VALUE/ASSUMED SALE VALUE OF LAND AND COST OF PURCHASE OF SHARES TO WORK OUT THE CAPITAL GAINS. 2.13.3 THE LD. DR SUBMITTED THAT THE LD. CIT (A) HA D ERRED IN DELETING THE ADDITION OF RS. 9,157,450/- M ADE BY THE PAGE 148 AO ON ACCOUNT OF SHORT TERM CAPITAL GAINS BY APPLYI NG PROVISIONS OF SECTION 2(47)(VI) AND SECTION 50C. T HE LD. DR VEHEMENTLY SUPPORTED THE ORDER OF THE AO AND SUBMIT TED THAT THE ADDITION WAS RIGHTLY MADE AND OUGHT TO BE UPHEL D. 2.13.4 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE PERUSED THE MATERIAL ON RECORD. IT IS SEEN THAT AL THOUGH THE LD. CIT (A) HAS UPHELD THE ASSUMPTION OF JURISDICTI ON U/S 153A OF THE ACT, HE HAS CATEGORICALLY STATED IN PAR A 5.9.3 OF THE IMPUGNED ORDER THAT THE AO HAS NOT BROUGHT ANY EVIDENCE ON RECORD FOUND DURING THE COURSE OF SEARCH WHICH T HROUGH LIGHT ON THE TRANSFER OF LAND. HE HAS FURTHER NOTE D THAT THERE WAS NO DOCUMENT WHICH SUGGESTED THAT ANY AMOUNT WAS PAID/RECEIVED OUT OF BOOKS IN LIEU OF ALLEGED TRANS FER OF THE COMPANY VESTED WITH LAND. THIS FINDING BY THE LD. CIT (A) COULD NOT BE CONTROVERTED BY THE DEPARTMENT BEFORE US ALSO. IT IS UNDISPUTED THAT NO INCRIMINATING DOCUMENT WAS FOUND DURING THE COURSE OF THE SEARCH WHICH COULD WARRANT THIS ADDITION IN THE ASSESSMENT FRAMED U/S 153A OF THE A CT. THE ADDITIONS MADE ARE, THEREFORE, OUTSIDE THE SCOPE OF ASSESSMENT U/S 153A OF THE ACT AND RESPECTFULLY FOL LOWING THE PAGE 149 DECISION OF THE HONBLE DELHI HIGH COURT IN THE CAS E OF CIT VS. KABUL CHAWLA (SUPRA), WE HOLD THAT THE ADDITIONS MA DE IN THE ASSESSMENT U/S 153A HAVE NO LEGAL GROUND TO STAND O N. ACCORDINGLY, THE CO OF THE ASSESSEE IS ALLOWED. CO NSEQUENTLY, THE APPEAL FILED BY THE DEPARTMENT BECOMES ACADEMIC AND IS DISMISSED. 2.13.5 IN THE RESULT, THE CO OF THE ASSESSEE IS ALL OWED AND THE APPEAL OF THE DEPARTMENT IS DISMISSED. 2.14 DEVI DASS SANTOSH KUMAR (HUF) ITA NO. 2348/DEL/2012 AND CO NO. 179/DEL/2013 : ITA NO.2348 HAS BEEN FILED BY THE DEPARTMENT AGAINS T THE ORDER DATED 09/03/2012 PASSED BY THE LD. CIT (A) XXXI, NEW DELHI, WHEREAS THE CO HAS BEEN FILED BY THE ASS ESSEE. IN THIS CASE ALSO, NOTICE U/S 153A OF THE ACT WAS ISSU ED AS A CONSEQUENCE OF ACTION U/S 132 OF THE ACT ON THE RAJ DARBAR GROUP OF COMPANIES. HERE ALSO IT HAS BEEN THE CON TENTION OF THE ASSESSEE THAT NO INCRIMINATING MATERIALS WERE F OUND IN THE CASE OF THE ASSESSEE. PURSUANT TO THE NOTICE U /S 153A, THE ASSESSEE FILED ITS RETURN OF INCOME DECLARING I NCOME OF RS. PAGE 150 1,79,93,174/-. DURING THE COURSE OF THE ASSESSMENT , THE AO OBSERVED THAT THE ASSESSEE WAS THE HOLDER OF 16.73% SHARES OF M/S TARUPIT EXPORTS LTD. AND THAT THE SHARES HAD BEEN TRANSFERRED TO M/S VIPUL LIMITED ON 19/12/2005. TH E AO FURTHER OBSERVED THAT THE OTHER SHAREHOLDERS HAD AL SO SOLD THEIR SHARES TO THE SAME COMPANY AND PROCEEDED TO H OLD THAT THE PLOT IN THE COMPANY HELD AS AN ASSET WAS DEEMED TO BE TRANSFERRED TO M/S VIPUL LIMITED AND BY APPLYING PR OVISIONS OF SECTION 50C ON THE SALE OF THE PLOT BY THE ASSES SEE MADE AN ADDITION OF RS. 92,24,000/- ON ACCOUNT OF SHORT TER M CAPITAL GAIN IN PURSUANCE TO SECTION 2(47)(VI) AND SECTION 50C OF THE ACT BY CONSIDERING THE TRANSFER OF SHARES AS TRANSF ER OF OWNERSHIP OF THE LAND. 2.14.1 AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY CHALLENGING THE ASSUM PTION OF JURISDICTION U/S 153A OF THE ACT AS WELL AS CHALLEN GING THE ADDITION ON MERITS. THE LD. CIT (A) DISMISSED THE ASSESSEES GROUND RELATING TO ASSUMPTION OF JURISDICTION U/S 1 53A OF THE ACT BUT ALLOWED THE ASSESSEES APPEAL ON MERITS BY DELETING THE IMPUGNED ADDITION. NOW, THE DEPARTMENT HAS FIL ED THE PAGE 151 APPEAL BEFORE THE TRIBUNAL AND THE CO HAS BEEN FILE D BY THE ASSESSEE. THE GROUNDS TAKEN BY BOTH THE PARTIES RE AD AS UNDER: GROUNDS OF ITA NO. 2348/DEL/2012 : 1. THE ORDER OF THE LD. CIT (A) IS NOT CORRECT IN LAW AND FACTS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES, THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 92,24,000 /- MADE BY THE AO ON ACCOUNT OF SHORT TERM CAPITAL GAIN IN PURSUANT TO SECTION 2(47)(VI) AND SECTION 5 0C OF THE IT ACT, 1961 BY CONSIDERING THE MERE TRANSFE R OF SHARES AS TRANSFER OF OWNERSHIP OF LAND HELD AS FIX ED ASSETS BY THE COMPANY IN WHICH THE ASSESSEE WAS A SHAREHOLDER. 3. THE ORDER OF THE LD. CIT (A) IS PERVERSE IN LAW AND ON FACTS. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY/ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING T HE COURSE OF THE HEARING OF THE APPEAL. GROUNDS OF CO NO. 179/DEL/2013 : THAT THE LD. CIT (A) ERRED IN LAW AS WELL AS ON FACTS IN IGNORING THE FACT THAT NO ADDITION CAN BE MADE WHEN NO INCRIMINATORY MATERIAL FOUND DURING PAGE 152 THE SEARCH AS DECIDED IN THE RECENT DECISION OF DEL HI ITAT BENCH IN THE MATTER OF MGF AUTOMOBILES LTD. VS. ACIT IN ITA NO. 4212/D/2011 & 4213/D/2011. 2.14.2 THE LD. AR SUBMITTED THAT THE ISSUE INVOLVED IS IDENTICAL TO THE ISSUE BEFORE THE TRIBUNAL IN ITA N O. 2341/DEL/2012 AND CO 252/DEL/2012 IN THE CASE OF DE VI DASS GARG FOR AY 06-07 AND SUBMITTED THAT THE ADJUD ICATION ALSO WOULD BE ON SIMILAR LINES. 2.14.3 THE LD. DR ACCEPTED THE SUBMISSION OF THE LD . AR AND SUBMITTED THAT THE ADJUDICATION MAY BE MADE ON SIMILAR LINES AS IN ITA NO. 2341/DEL/2012 AND CO 252/DEL/20 12 IN THE CASE OF DEVI DASS GARG FOR AY 06-07. 2.14.4 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE PERUSED THE MATERIAL ON RECORD. IT IS SEEN THAT AL THOUGH THE LD. CIT (A) HAS UPHELD THE ASSUMPTION OF JURISDICTI ON U/S 153A OF THE ACT, HE HAS CATEGORICALLY STATED IN PAR A 5.9.3 OF THE IMPUGNED ORDER THAT THE AO HAS NOT BROUGHT ANY EVIDENCE ON RECORD FOUND DURING THE COURSE OF SEARCH WHICH T HROUGH LIGHT ON THE TRANSFER OF LAND. HE HAS FURTHER NOTE D THAT THERE PAGE 153 WAS NO DOCUMENT WHICH SUGGESTED THAT ANY AMOUNT WAS PAID/RECEIVED OUT OF BOOKS IN LIEU OF ALLEGED TRANS FER OF THE COMPANY VESTED WITH LAND. THIS FINDING BY THE LD. CIT (A) COULD NOT BE CONTROVERTED BY THE DEPARTMENT BEFORE US ALSO. IT IS UNDISPUTED THAT NO INCRIMINATING DOCUMENT WAS FOUND DURING THE COURSE OF THE SEARCH WHICH COULD WARRANT THIS ADDITION IN THE ASSESSMENT FRAMED U/S 153A OF THE A CT. THE ADDITIONS MADE ARE, THEREFORE, OUTSIDE THE SCOPE OF ASSESSMENT U/S 153A OF THE ACT AND RESPECTFULLY FOL LOWING THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CAS E OF CIT VS. KABUL CHAWLA (SUPRA), WE HOLD THE ADDITIONS MADE IN ASSESSMENT PROCEEDINGS U/S 153A AS BEING PATENTLY I LLEGAL. ACCORDINGLY, THE CO OF THE ASSESSEE IS ALLOWED. CO NSEQUENTLY, THE APPEAL FILED BY THE DEPARTMENT BECOMES ACADEMIC AND IS DISMISSED. 2.14.5 IN THE RESULT, THE CO OF THE ASSESSEE IS ALL OWED AND THE APPEAL OF THE DEPARTMENT IS DISMISSED. PAGE 154 3. IN THE FINAL RESULT, THE APPEALS ARE DISPOSED OF F AS UNDER: I. ITA NOS. 2083 & 2833/DEL/2012 ASSESSEES APPEAL I S ALLOWED AND DEPARTMENTS APPEAL IS DISMISSED. II. ITA NOS. 2081 & 2758/DEL/2012 ASSESSEES APPEAL I S ALLOWED AND DEPARTMENTS APPEAL IS DISMISSED. III. ITA NO. 2759/DEL/2012 DEPARTMENTS APPEAL IS DISMISSED. IV. ITA NO. 2345/DEL/2012 & CO NO. 254/DEL/2012 CO OF THE ASSESSEE IS ALLOWED AND APPEAL OF THE DEPARTMEN T IS DISMISSED. V. ITA NOS. 2087 & 2755/DEL/2012 ASSESSEES APPEAL I S PARTLY LLOWED AND DEPARTMENTS APPEAL IS DISMISSED. VI. ITA NO. 2088/DEL/2012 APPEAL OF THE ASSESSEE IS ALLOWED. VII. ITA NO. 2344/DEL/2012 & CO NO. 253/DEL/2012 CO OF THE ASSESSEE IS ALLOWED AND APPEAL OF THE DEPARTMEN T IS DISMISSED. VIII. ITA NOS. 2078 & 2756/DEL/2012 ASSESSEES APPEAL I S ALLOWED AND DEPARTMENTS APPEAL IS DISMISSED. IX. ITA NO. 2079/DEL/2012 ASSESSEES APPEAL IS ALLOWE D. PAGE 155 X. ITA NO. 3185/DEL/2013 ASSESSEES APPEAL IS ALLOWE D. XI. ITA NOS. 2085 & 2760/DEL/2012 ASSESSEES APPEAL I S ALLOWED AND DEPARTMENTS APPEAL IS DISMISSED. XII. ITA NOS. 2086 & 2761/DEL/2012 ASSESSEES APPEAL I S ALLOWED AND DEPARTMENTS APPEAL IS DISMISSED. XIII. ITA NO. 2762/DEL/2012 & CO NO. 176/DEL/2013 CO OF THE ASSESSEE IS ALLOWED AND DEPARTMENTS APPEAL IS DISMISSED. XIV. ITA NO. 2341/DEL/2012 & CO NO. 252/DEL/2012 CO OF THE ASSESSEE IS ALLOWED AND APPEAL OF THE DEPARTMEN T IS DISMISSED. XV. ITA NO. 2348/DEL/2012 & CO NO. 179/DEL/2013 CO OF THE ASSESSEE IS ALLOWED AND APPEAL OF THE DEPARTMEN T IS DISMISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 19.10.2016 SD/- SD/- (G.D. AGRAWAL) (SUDHANSHU SRIVASTAVA ) VICE PRESIDENT JUDICIAL MEMBER DATED: 19.10.2016 *KAVITA ARORA PAGE 156 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI