M/s. Saluja Construction Co. Ltd., New Delhi V. ACIT, New Delhi

ITA 219/DEL/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 1987 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-04-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2008-2009
• Appeal Filed On: 12-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R S AHUJA
• Keywords: Principle of natural justice
• Section: 143(3); 153A; 153; 68; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G, NEW DELHI BEFORE MS. SUSHMA CHOWLA, VICE PRESIDENT DR. B. R. R. KUMAR, ACCOUNTANT MEMBER ITA NO. 219/DEL/2017 :ASSTT. YEAR : 200 8-09 SALUJA CONSTRUCTION CO. LTD., MUNIRKA MARG, VASANT VIHAR, NEW DELHI-110057 VS ACIT, CENTRAL CIRCLE-30, NEW DELHI (APPELLANT ) (RESPONDENT) PAN NO. AABCS3788H ASSESSEE BY : SH. R. S. AHUJA, ADV. REVENUE BY : SH. H. K. CHOUDHARY, CIT DR 8 DATE OF HEARING: 28.01.2020 DATE OF PRONOUNCEMENT: 20.04.2020 ORDER PER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A)-31, NEW DELHI DATED 25. 10.2016. 2. FOLLOWING GROUNDS HAVE BEEN RAISED BY THE ASSESS EE: (A) THAT ON THE FACTS & CIRCUMSTANCES OF THE CASE THE LEARNED ITO & THE CIT(A) ERRED IN: I) MAKING ADDITION U/S 68 OF THE ACT OF RS. 3,50,00,000/- BEING THE ADVANCE RECEIVED AGAINST SA LE OF ITS AGRICULTURAL LAND AT JAIPUR ARBITRARILY REJE CTING ALL THE DOCUMENTS AND EVIDENCES FILED BY THE APPELLANT COMPANY TO DISCHARGE ITS ONUS OF PROVING GENUINENES S AND CREDIT WORTHINESS OF THE PERSONS FROM WHOM ADVANCE MONEY HAS BEEN RECEIVED. II) MAKING ADDITION U/S 68 OF THE ACT OF RS. 3,50,00,000/- ALTHOUGH HE HAS HIMSELF INDEPENDENTLY VERIFIED IT BY ISSUING SUMMON FOR WHICH M/S INSTRON ICS ITA NO.219/DEL/2016 SALUJA CONSTRUCTION CO. LTD. 2 LTD. HAS DULY SUBMITTED ITS REPLY DURING THE COURSE OF ASSESSMENT PROCEEDING. III) MAKING ADDITION U/S 68 OF THE ACT OF RS. 3,50,00,000/- ALTHOUGH IT HAS ALREADY BEEN ASSESSED U/S 143(3) OF THE ACT AND NO INCRIMINATING DOCUMENT RELATING TO IT WAS SEIZED DURING THE SEARCH PROCEED ING OR NO EVIDENCE /FACTS COME UP AS A RESULT OF SEARCH . IV) MAKING ADDITION U/S 68 OF THE ACT OF RS. 3,50,00,000/- ALTHOUGH THIS ADVANCE WAS DULY REFUNDED IN THE SUBSEQUENT PERIOD. V) PASSING THE ORDER WHICH IS ERRONEOUS AND UNSUSTAINABLE IN LAW AS WELL AS ON MERITS AND SO TH E ADDITION MADE THEREIN. VI) PASSING THE ORDER WHICH IS BAD IN LAW AND AGAIN ST THE PRINCIPALS OF NATURAL JUSTICE. 3. BRIEF FACTS OF THE CASE ARE THAT A SEARCH & SEIZ URE ACTION U/S 132 OF THE INCOME TAX ACT, 1961 WAS CONDUCTED O N 12.01.2012 AND 11.09.2013 AT HIS /HER / ITS RESIDEN TIAL / BUSINESS /OFFICE PREMISES AT 30, BASANT LOK COMMERC IAL COMMUNITY CENTRE, VASANT VIHAR, NEW DELHI-110057. T HE SEARCH ON THE ASSESSEE WAS MADE ALONG WITH SALUJA GROUP OF CASES WHICH WERE ALSO COVERED IN THE SAID SEARCH. DURING THE COURSE OF SEARCH, THE ASSESSEE HAS DISCLOSED RS.13.95 CROR ES AS ADDITIONAL INCOME FOR THE ASSESSMENT YEAR 2012-13 4. THE RELEVANT HISTORY PERTAINING TO THE CASE OF T HE ASSESSEE FOR THE INSTANT ASSESSMENT YEAR IS AS UNDER: 1. 30.09.2008 DATE OF FILING OF RETURN 2. 23.12.2010 DATE OF COMPLETION OF ASSESSMENT U/S 1 43(3) 3. 12.01.2012 DATE OF SEARCH 4. 11.09.2013 DATE OF ANOTHER SEARCH. ITA NO.219/DEL/2016 SALUJA CONSTRUCTION CO. LTD. 3 5. THE PROVISIONS OF THE INCOME TAX ACT U/S 153A OF THE INCOME TAX ACT, 1961 PROVIDES FOR ASSESSMENT OF THE ASSESSEE FOR A PREVIOUS PERIOD OF 6 ASSESSMENT YEARS FROM TH E DATE OF SEARCH. 6. DURING THE ASSESSMENT U/S 153A, THE ASSESSING OF FICER ISSUED LETTER TO THE ASSESSEE ON 30.12.2015 ENQUIRI NG ABOUT THE UNSECURED LOANS RECEIVED DURING THE ASSESSMENT YEAR 2008-09 AND DISCLOSED IN THE BALANCE SHEET WHICH IS A PART OF BOOKS OF ACCOUNTS PRODUCED BEFORE HIM. AFTER DUE ENQUIRIES, THE AO MADE ADDITION OF UNSECURED LOAN RECEIVED FROM ONE P ARTY NAMELY, AERODYNE ELECTRONICS PVT. LTD. TREATING IT AS BOGUS AND LIABLE TO BE TAXED U/S 68 OF THE ACT. 7. THE MOOT JURISDICTIONAL ISSUE BEFORE US TO BE AD JUDICATED IS WHETHER SUCH ADDITION WHICH IS A PART OF BOOKS OF A CCOUNTS CAN BE ADDED TO THE INCOME OF THE U/S 68 OF THE ACT IN THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND DURING THE SEAR CH ESPECIALLY WHEN THE ASSESSMENT U/S 143(3) OF THE ACT HAS ALREA DY BEEN COMPLETED IN THE REGULAR COURSE OF PROCEEDINGS UNDE R INCOME TAX ACT EVEN BEFORE THE DATE OF SEARCH. 8. THE SUM AND SUBSTANCE OF THE PROVISIONS OF THE S ECTION 153A ARE AS UNDER: I. ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF THE ACT, NOTICE UNDER SECTION 153 A (1) WILL HAVE T O BE MANDATORILY ISSUED TO THE PERSON SEARCHED REQUIRING HIM TO FILE RETURNS FOR SIX AYS IMMEDIATE LY 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 SHALL ABATE. THE TOTAL INCOME FO R ITA NO.219/DEL/2016 SALUJA CONSTRUCTION CO. LTD. 4 SUCH AYS WILL HAVE TO BE COMPUTED BY THE AOS AS A FRESH EXERCISE. III. THE AO WILL EXERCISE NORMAL ASSESSMENT POWERS IN RESPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT A Y 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 AN D THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX. IV. ALTHOUGH SECTION 153 A DOES NOT SAY THAT ADDITIONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SEARCH, OR OTHE R POST-SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE AO WHICH CAN BE RELATED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSESSMENT CAN BE ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOUSLY AN ASSESSMENT HAS TO BE MADE UNDER THIS SECTION ONLY ON THE BASIS OF SEIZED MATERIAL. 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 153 A IS RELATABLE TO ABAT ED PROCEEDINGS (I.E. THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD 'REASSESS' TO COMPLETED ASSESSMENT PROCEEDINGS. VI. INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, THE JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AN D THE ASSESSMENT: UNDER SECTION 153A MERGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY FOR EACH AY ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTHER MATERIAL EXISTING OR BROUGHT ON THE RECOR D OF THE AO. VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WITH B Y THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153 A ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR ITA NO.219/DEL/2016 SALUJA CONSTRUCTION CO. LTD. 5 REQUISITION OF DOCUMENTS OR 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. 9. FROM THE ABOVE, IT CAN BE CONCLUDED THAT, ONCE A SEARCH TAKES PLACE U/S 132 OF THE ACT, THE ASSESSEE IS OBL IGED TO FILE RETURNS FOR THE SIX ASSESSMENT YEARS IMMEDIATELY PR OCEEDING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR I N WHICH THE SEARCH TOOK PLACE. IN SO FAR AS THE COMPLETED ASSES SMENT AS ON THE DATE OF THE SEARCH ARE CONCERNED, THE SAME ARE TO BE REPEATED AS INCREASED BY ADDITIONS, ONLY IF, BASED ON INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH. IN OTHER WORDS, IF NO INCRIMINATING MATERIAL IS FOUND DURING THE COURSE OF SEARCH, THEN, THE AMOUNT OF TOTAL INCOME DETERMINED UNDER THE EARLIER COMPLETED ASSESSMENTS IS TO BE AD OPTED IN A FRESH ASSESSMENTS U/S 153A WITHOUT MAKING ANY FURTH ER ADDITION. 10. JUXTAPOSING THESE PRINCIPLES TO THE FACTS OF TH E INSTANT CASE, WE FIND THAT THE CASE OF THE ASSESSEE DOESNT FALL UNDER THE CATEGORY OF ABATED ASSESSMENT. IT FALLS UNDER T HE CATEGORY OF COMPLETED ASSESSMENTS. IN THE COMPLETED ASSESSME NT, IT IS AN ADMITTED POSITION THAT IF NO INCRIMINATING MATER IAL WAS FOUND DURING THE SEARCH, NO ADDITION IS CALLED FOR. IN TH E INSTANT CASE TOO, NO INCRIMINATING MATERIAL WAS FOUND WITH REGAR D TO THE ADDITION MADE BY THE ASSESSING OFFICER. 11. EVEN, THE LD. CIT (A), THE LD. CIT DR FAILED TO ESTABLISH THAT THE ADDITIONS MADE IN THE CASE OF THE ASSESSEE WERE BASED ON ANY INCRIMINATING MATERIAL FOUND IN THE COURSE O F SEARCH U/S 132 OF THE ACT. ON PERUSAL OF THE ASSESSMENT ORDER AND ON ITA NO.219/DEL/2016 SALUJA CONSTRUCTION CO. LTD. 6 EXAMINATION OF THE ORDER OF THE LD. CIT (A), WE FIN D THAT THE ADDITION MADE IS NOT BASED ON ANY INCRIMINATING MAT ERIAL. 12. SINCE, THE ADDITION WAS NOT BASED ON INCRIMINAT ING MATERIAL AND THE FACT THAT ASSESSMENT HAS NOT BEEN ABATED, T HESE TWIN CONDITIONS GO AGAINST THE ORDER OF THE REVENUE AS D ECLARED BY THE JUDICIAL PRONOUNCEMENT OF THE HONBLE JURISDICT IONAL HIGH COURT IN THE CASE OF CIT VS KABUL CHAWALA 380 ITR 0 57 AND PCIT VS MEETA GUTGUTIA 395 ITR 526 (DEL.). HENCE TH E ADDITION IS LIABLE TO BE DELETED. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20/04/2020. SD/- SD/- (SUSHMA CHOWLA) (DR. B. R. R. KUMAR) VICE PRESIDENT ACCOU NTANT MEMBER DATED: 20/04/2020 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR