M/s. Precision Dwellers (P) Ltd., New Delhi V. DCIT, New Delhi

ITA 2407/DEL/2014

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 4101 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 10-08-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 21-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KARTAR SINGH
• Keywords: Search and seizure
• Section: 40A(3); 153A; 234B; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : F NEW DELHI BEFORE SH. H.S. SIDHU , JUDICIAL M EMBER AND SH. O.P. KANT , ACCOUNTANT MEMBER ITA NO. 2407 /DEL/ 2014 ASSESSMENT YEAR: 2009 - 10 M/S. PRECISION DWELLERS (P.) LTD. , C/O - RRA TAXINDIA, D - 28 , SOUT H EXTENSION, PART - 1, NEW DELHI VS. DCIT, CENTRAL CIRCLE - 4, NEW DELHI GIR/PAN : AADCP4933D (APPELLANT) (RESPONDENT) APPELLANT BY SH. SOMIL AGARWAL, ADV. RESPONDENT BY SH. KARTAR SINGH, CIT(DR) DATE OF HEARING 10.08.2016 DATE OF PRONOUNCEMENT 16.08.2016 ORDER PER O.P. KANT , A. M. : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORDER DATED 24/12/2013 OF LEARNED COMMISSIONER OF INCOME - TAX ( APPEALS) - XXXIII, NEW DELHI , FOR ASSESSMENT YEAR 2009 - 10 RAISING FOLLOWING GROUNDS: I. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF LD. A.O. IN MAKING DISALLOWANCE OF A SUM OF RS. 14,19,644/ - UNDER PROVISIONS OF THE SECTION 40A(3) OF INCOME TAX ACT, 1961. 2 ITA NO. 2407/DEL/2014 AY: 2009 - 10 II. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF LD. AO IN ASSUMING JURISDICTION TO PASS IMPUGNED ASSESSMENT ORDER UNDER SECTION 153A, MORE SO IN MAKING IMPUGNED DISALLOWANCE WHICH OUGHT NOT TO HAVE BEEN MADE UNDER THE LAW. III. THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER, ACTION OF LD. CIT(A) IN CONFIRMING THE ACTION OF LD. A.O IN MAKING THE IMPUGNED DISALLOWANCE AND FRAMING THE IMPUGNED ASSESSMENT ORDER IS CONTRARY TO LAW AND FACTS, VOID AB INITIO, BEYOND JURISDICTION AND THE SAME IS NOT SUSTAINABLE ON VARIOUS LEGAL AND FACTUAL GROUNDS. IV. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT REVERSING THE ACTION OF LD. AO IN CHARGING IN TEREST U/S 234B OF THE INCOME TAX ACT, 1961. V. THAT THE APPELLANT CRAVES THE LEAVE TO ADD, MODIFY, AMEND OR DELETE ANY OF THE GROUNDS OF APPEAL AT THE TIME OF HEARING AND ALL THE ABOVE GROUNDS ARE WITHOUT PREJUDICE TO EACH OTHER. 2. T HE LEARNED AUTHORIZED R EPRESENTATIVE OF THE ASSESSEE ADDRESSING THE GROUND NO. 2 OF THE APPEAL SUBMITTED THAT IN THE CASE OF THE ASSESSEE ORIGINAL RETURN OF INCOME UNDER SECTION 139(1) OF THE INCOME - TAX ACT , 1961 (FOR SHORT THE ACT ) FOR THE YEAR UNDER CONSIDERATION WAS FILED ON 17/09/2009 AND NO NOTICE UNDER SECTION 143 (2) OF THE ACT WAS ISSUED WITHIN 30/09/2010 AND , THEREFORE , NO ASSESSMENT WAS PENDING IN THE CASE AND , AS SUCH , NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH, NO ADDITION COULD HAVE BEEN MADE IN THE CASE OF THE ASSESSEE. IN SUPPORT OF THE CONTENTION , HE RELIED ON THE DECISION OF THE HON BLE J URISDICTIONAL HIGH COURT IN THE CASE 3 ITA NO. 2407/DEL/2014 AY: 2009 - 10 OF CIT VS. KABUL CHAWLA , (2016) 310 ITR 573 (DEL). THE LEARNED AUTHORISED R EPRESENTATIVE ALSO FILED THE COPY OF ACKNOWLEDGEMENT FOR THE RETURN OF INCOME FILED FOR THE ASSESSMENT YEAR UNDER CONSIDERATION UNDER SECTION 139(1) OF THE ACT. THE LEARNED AUTHORIZED R EPRESENTATIVE ALSO PLACED RELIANCE ON THE DECISION OF THE TRIBUNAL DELHI E BENCH IN THE CASE OF NILAY INFRASTRUCTURE PRIVATE L IMITED VS. DCIT IN ITA NO. 5297/DEL/2013, PRONOUNCED ON 10/06/ 2016. 3. THE LEARNED COMMISSIONER OF INCOME TAX (DEPARTMENTAL R EPRESENTATIVE) RELIED ON THE ORDERS OF THE LOWER AUTHORITIES , HOWEVER , HE COULD NOT CONTROVERT THE FACTS T HAT NO ASSESSMENT PROCEEDINGS WERE PENDING AS ON THE DATE OF SEARCH AND NO INCRIMINATING MATERIAL HAS BEEN FOUND DURING THE COURSE OF SEARCH. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IN THE CASE OF THE ASSESSEE , SEARCH AND SEIZURE OPERATION UNDER SECTION 132 OF THE ACT WAS CARRIED OUT ON 21/01/2011 AND CONSEQUENTLY NOTICE UNDER SECTION 153A OF THE ACT WAS ISSUED ON 09/01/2012 , ASKING THE ASSESSEE TO FILE THE RETURN OF INCOME. IN RESPONSE , THE ASSESSEE FILED A LET TER STATING THAT RETURN FILED ORIGINALLY UNDER SECTION 139(1) OF THE ACT ON 17/09/2009 MIGHT BE TREATED AS RETURN FILED IN THE RESPONSE TO THE NOTICE UNDER SECTION 153A OF THE ACT. IN THE ASSESSMENT PROCEEDINGS UNDER SECTION 153A OF THE ACT, THE ASSESSING OFFICER HAS MAD E DISALLOWANCE UNDER SECTION 40 A(3) OF THE ACT , AMOUNTING TO RS. 14,19, 644/ - . THE LEARNED COUNSEL OF THE ASSESSEE HAS CHALLENGED THE JURISDICTION IN MAKING 4 ITA NO. 2407/DEL/2014 AY: 2009 - 10 ASSESSMENT UNDER SECTION WITH 153A OF THE ACT ON THE GROUND THAT NO NOTICE UNDER SECT ION 143(2) OF THE ACT WAS ISSUED BEFORE THE EXPIRY OF S TATUTORY PERIOD AND , THUS , THE ASSESSMENT WAS DEEMED AS COMPLETE AND NO INCRIMINATING MATERIAL WAS FOUND, RELYING ON THE DECISION OF THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF KABUL CHAWLA (S UPRA). WE FIND THAT IN THE CASE OF KABUL CHAWLA (SUPRA), THE HON BLE JURISDICTIONAL HIGH COURT HAS HELD AS UNDER: SUMMARY OF THE LEGAL POSITION 37. ON A CONSPECTUS OF SECTION 153A(1) OF THE ACT, READ WITH THE PROVISOS THERETO, AND IN THE LIGHT OF THE LA W EXPLAINED IN THE AFOREMENTIONED DECISIONS, THE LEGAL POSITION THAT EMERGES IS AS UNDER: I. ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF THE ACT, NOTICE UNDER SECTION 153 A (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 SHALL ABATE. THE TOTAL INCOME FOR SUCH AYS WILL HAVE TO BE C OMPUTED BY THE AOS AS A FRESH EXERCISE. III. THE AO WILL EXERCISE NORMAL ASSESSMENT POWERS IN RESPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT AY IN WHICH THE SEARCH TAKES PLACE. THE AO HAS THE POWER TO ASSESS AND REASSESS THE 'TOTAL INCOME' OF THE A FOREMENTIONED 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 153 A 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 5 ITA NO. 2407/DEL/2014 AY: 2009 - 10 OR INFORMATION AVAILABLE WITH THE AO WHICH CAN BE RELATED TO THE EVIDENCE FOUND, I T 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 ABATED PROCEEDINGS (I.E. THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD 'REASSESS' TO CO MPLETED ASSESSMENT PROCEEDINGS. VI. INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, THE JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND 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 RECORD OF THE AO. VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY 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 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 TH E COURSE OF ORIGINAL ASSESSMENT. 5. THUS, THE HON BLE HIGH COURT HAS HELD THAT THE COMPLETED ASSESSMENTS CANNOT BE INTERFERED WITHOUT SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS. THE TRIBUNAL IN THE CASE OF NILAY INFRASTRUCTURE PRIVATE L IMITED (SUPRA) HAS ALSO FOLLOWED THE FINDINGS OF THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF KABUL CHAWLA (SUPRA). 6 ITA NO. 2407/DEL/2014 AY: 2009 - 10 6. RESPECTFULLY FOLLOWING THE RATIO LAID DOWN IN ABOVE DECISIONS, WHEN WE E XAMINE THE FACTS OF THE PRESENT CASE, WE FIND THAT ORIGINAL RETURN OF INCOME UNDER SECTION 139(1) OF THE ACT WAS FILED ON 17/09/2009 AND NO NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED WITHIN THE STATUTORY PERIOD AVAILABLE , WHICH EXPIRED ON 30/09/2010 . SINCE IN THE CASE OF THE ASSESSEE SEARCH WAS CONDUCTED ON 21/01/2011, NO ASSESSMENT WAS PENDING AS ON THE DATE OF THE SEARCH. THIS FACT HAS NOT BEEN DISPUTED BY THE LEARNED CIT (DR). FURTHER , WE FIND FROM THE ASSESSMENT ORDER THAT IN THE ADDITION MADE FO R DISALLOWANCE UNDER SECTION 40A(3) OF THE ACT, THERE IS NO REFERENCE OF ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. THUS , ON THE DATE OF SEARCH , UNDISPUTEDLY NO ASSESSMENT WAS PENDING FOR ABETMENT AND IT IS ALSO AN UNDISPUTED FACT OF THE PRESENT CASE THAT NO INCRIMINATING MATERIAL WAS FOUND DU RING THE COURSE OF SEARCH. THUS, WE FIND THAT ON FULFILLMENT OF THESE TWO CONDITIONS I.E. NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH AND NO ASSESSMENT WAS PENDING AS ON THE DATE OF THE SEARCH, NO ADDITION COULD HAVE BEEN MADE IN THE PROCEEDING UNDER SECTION 153A OF THE ACT IN THE CASE OF THE ASSESSEE. WE , THUS , RESPECTFULLY FOLLOWING THE RATIO LAID DOWN IN THE CASE OF DECISION OF THE KABUL CHAWLA (SUPRA) , WE HOLD THAT NO ADDITION COULD HAVE BEEN MADE IN THE CASE OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. THUS , GROUND NO. 2 IS ALLOWED IN FAVOUR OF THE ASSESSEE. 7 ITA NO. 2407/DEL/2014 AY: 2009 - 10 7. IN VIEW OF OUR FINDING S ABOVE , HOLDING THAT NO ADDITION COULD HAVE BEEN MADE IN THE ASSESSMENT UNDER SECTION 153 A OF THE ACT, THE REMAINING GROUND S QUESTIONING THE ACTION OF THE ASSESSING OFFICER IN MAKING THE DISALLOWANCE UNDER SECTION 40A(3) OF THE ACT, DO NOT SURVIVE AND , THUS , THESE GROUNDS ARE DISPOSED OF AS HAVING BECOME INFRUCTUOUS . 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. THE DECISION IS PRONOUNCED IN THE OPEN COURT ON 1 6 T H AUGUST , 2016 . S D / - S D / - ( H.S. SIDHU ) ( O.P. KANT ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 6 T H AUGUST , 2016 . LAPTOP / - COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI