M/s. Frontier Commercial Co. Ltd., New Delhi V. DCIT, Faridabad

ITA 2205/DEL/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 5722 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 10 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 12-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAGDISH SINGH
• Keywords: Reopening of assessment; Rule 8D
• Section: 142(1); 153A; 14A; 37(1); 143(2); 153C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B NEW DLEHI BEFORE SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER AND SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER ITA NO. 2205/DEL/2017 ASSESSMENT YEAR: 2009-10 M/S. FRONTIER COMMERCIAL CO. LTD., VS. DCIT, CENTRA L CIRCLE-II, C/O M/S. RRA TAXINDIA, D-28, FARIDABAD. SOUTH EXTENSION PART-1, NEW DELHI. PAN : AABCF 1424D (APPLICANT) (RESPONDENT) APPELLANT BY : SH. SOMIL AGRAWAL, ADV. RESPONDENT BY: SH. JAGDISH SINGH, SR. DR DATE OF HEARING: 16/01/2020 DATE OF ORDER : 14/02/2020 ORDER PER K. NARASIMHA CHARY, J.M. CHALLENGING THE ORDER DATED 06/03/2017 IN APPEAL NO . IT/51/GGN/2015-16 PASSED BY THE LEARNED COMMISSIONE R OF INCOME TAX (APPEALS)- KARNAL (LD. CIT(A)), FOR ASSESSMENT YE AR 2009-10, M/S FRONTIER COMMERCIAL COMPANY LTD. (THE ASSESSEE) P REFERRED THIS APPEAL. 2. BRIEF FACTS OF THE CASE ARE THAT PURSUANT TO SEA RCH AND SEIZURE OPERATION THAT TOOK PLACE IN THE CASE OF SRS GROUP OF CASES ON 09.05.2012, NOTICE U/S. 153C READ WITH SECTION 153A OF THE INCOME TAX ACT, 1961 (THE ACT) WAS ISSUED TO THE ASSESSEE ON 18.09.2014 AND THE ASSESSEE FILED RETURN OF INCOME ON 17.10.2014 DECLA RING INCOME OF 2 RS.2,95,770/-. AFTER ISSUING NOTICE U/S. 143(2) AND 142(1) AND CONSIDERING THE CASE OF THE ASSESSEE, LD. ASSESSING OFFICER DET ERMINED INCOME OF RS.25,64,432/- U/S. 153A(1)(B) READ WITH SECTION 14 3(3) OF THE ACT BY MAKING ADDITION OF RS.9032/- BY INVOKING THE PROVIS IONS OF SECTION 14A READ WITH RULE 8D OF THE RULES AND A SUM OF RS.22,5 9,630/- BY DISALLOWING THE FREIGHT CHARGES. 3. ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A) AND CONTENDED THAT INASMUCH AS NO INCRIMINATING DOCUMENT WAS FOUN D DURING THE COURSE OF SEARCH PROCEEDINGS, NO ADDITION COULD HAVE BEEN MADE BY REOPENING THE CONCLUDED ASSESSMENT IN VIEW OF THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF KABUL CHAWLA, 380 ITR 573 . LD. CIT(A), HOWEVER, DID NOT AGREE WITH THE ASSESSEE AND NOTED THAT UNLE SS THE SEARCH WOULD HAVE CARRIED OUT, THE DETAILS OF EXPENDITURE WHICH WAS DISALLOWED COULD NOT HAVE COME TO LIGHT AND THEREFORE, PLACING RELIA NCE ON THE DECISION IN THE CASE OF KABUL CHAWLA IS NOT JUSTIFIED. LD. CIT( A) FURTHER OBSERVED THAT A DIFFERENT OPINION WAS TAKEN BY HONBLE KERALA HIG H COURT IN ITA NO. 169/2015 DATED 22.03.2016 DIFFERING FROM THE DECISI ON OF KABUL CHAWLA (SUPRA). LD. CIT(A), THEREFORE, CONFIRMED THE ADDIT ION AND DISMISSED THE APPEAL. ASSESSEE IS, THEREFORE, BEFORE US IN THIS A PPEAL. 4. IT IS THE SUBMISSION ON BEHALF OF THE ASSESSEE T HAT IN THIS MATTER THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009-1 0 WAS ORIGINALLY FILED ON 29.09.2009 AND THE TIME AVAILABLE TO ISSUE NOTIC E UNDER PROVISO TO SECTION 143(2) EXPIRED ON 30.09.2010. HE, THEREFORE , SUBMITS THAT EVEN BY THE DATE OF SEARCH ON 09.05.2012, ASSESSMENT FOR THIS YEAR STOOD CONCLUDED AND DOES NOT ABATE, IN VIEW OF WHICH IN A BSENCE OF ANY INCRIMINATING MATERIAL FOUND DURING THE SEARCH, ASS ESSMENT COULD NOT 3 HAVE BEEN REOPENED NOR ANY ADDITION COULD HAVE BEEN MADE. HE FURTHER SUBMITTED THAT THE ASSESSING OFFICER DID NOT DISPUT E THE PURCHASE BUT DOUBTED THE FREIGHT CHARGE WHICH IS NOT TENABLE ONE . 5. THE LD. DR HEAVILY RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT IT IS ONLY DUE TO THE SEARCH AND REOPENING OF ASSESSMENT, THE AUTHORITIES COULD DETECT THE REASON S FOR DISALLOWANCE OF THE AMOUNTS U/S.14A READ WITH RULE 8D AND DISALLOWA NCE U/S. 37(1) OF THE ACT AND THEREFORE, IT IS NOT OPEN FOR THE ASSES SEE TO CONTEND THAT IN VIEW OF THE DECISION OF JURISDICTIONAL HIGH COURT I N THE CASE OF KABUL CHAWLA (SUPRA), THE ADDITION CANNOT BE SUSTAINED. 6. WE HAVE GONE THROUGH THE RECORD IN THE LIGHT OF SUBMISSIONS MADE ON EITHER SIDE. THERE IS NO DISPUTE AS TO THE DATES SUBMITTED ON BEHALF OF THE ASSESSEE. AS COULD BE SEEN FROM PAGE 152 OF THE PAPER BOOK, THE ORIGINAL RETURN OF INCOME FOR THE ASSESSMENT YEAR 2 009-10 WAS FILED BY THE ASSESSEE ON 29.09.2009 AND SIX MONTHS PERIOD F ROM THE END OF THE FINANCIAL YEAR IN WHICH SUCH RETURN WAS FURNISHED, TO ISSUE NOTICE U/S. 143(2) EXPIRED ON 30.09.2010. IT IS, THEREFORE, CLE AR THAT BY 09.05.2012 ITSELF, SUCH AN ASSESSMENT STOOD CONCLUDED. 7. IT IS NOT THE CASE OF REVENUE THAT THE ADDITIONS MADE IN THIS MATTER HAD ANY REFERENCE TO ANY PARTICULAR DOCUMENT OR MAT ERIAL THAT WAS UNEARTHED DURING THE SEARCH SO AS TO JUSTIFY THE RE OPENING OF ASSESSMENT AND THE ADDITIONS. IT IS SETTLED PRINCIPLE OF LAW T HAT IN TERMS OF DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF KA BUL CHAWLA (SUPRA), CHINTELS INDIA LTD VS. DCIT, 397 ITR 416 (DEL), PCI T VS. BEST INFRASTRUCTURE (INDIA) LTD., 397 ITR 82 (DEL), PCIT VS. MEETA GUTG UTIA, 395 ITR 526 (DEL), LD. PCIT VS. MS LATA JAIN, 384 ITR 543 (DEL), THE A SSESSMENTS AND 4 REASSESSMENTS PENDING ON THE DATE OF THE SEARCH SHA LL ABATE AND THE TOTAL INCOME FOR SUCH ASSESSMENT YEARS WILL HAVE TO BE COMPUTED BY THE ASSESSING OFFICERS AS A FRESH EXERCISE; AND THAT AL THOUGH SECTION 153A OF THE ACT DOES NOT SAY THAT ADDITIONS SHOULD BE STRIC TLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SEARCH, OR O THER POST-SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE AO WHICH CAN BE RELATED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSESSMEN T 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. THUS, IN THE CASES OF CON CLUDED ASSESSMENT, NO ADDITION/DISALLOWANCE COULD BE MADE IN THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. 8. IN VIEW OF THE SETTLED PRINCIPLE OF LAW, WE DO N OT FIND ANY JUSTIFICATION EITHER FOR REOPENING OF THE CONCLUDED ASSESSMENT OR MAKING ANY ADDITION WITHOUT ANY REFERENCE OR NEXUS TO THE MATERIAL THAT WAS SEIZED DURING THE SEARCH AND THE SAME CANNOT BE SUS TAINED. THEREFORE, THE IMPUGNED ASSESSMENT ORDER PASSED U/S. 153C IS Q UASHED. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH FEBRUARY, 2020. SD/- SD/- (PRASHANT MAHARISHI) (K. NARASIMHA CHARY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 14/02/2020 AKS