Mr. S.P.S. Ahluwalia, New Delhi V. ACIT, New Delhi

ITA 2430/DEL/2012

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 7365 (ITAT-DELHI)
• Duration Of Justice: 7 year(s) 8 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 08-05-2017
• Assessment Year: 1999-2000
• Appeal Filed On: 21-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Document seized; Assessment record; Documents seized
• Section: 153A; 153; 153C; 68

Judgement Text

1 , , 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 NOS. 2429 TO 2432/DEL/2012 + + + + + + + + / ASSESSMENT YEARS. 1998-99, 1999-2000, 2001-02 & 200 4-05 MR. S.P.S. AHLUWALIA, C/O MANOJ KUMAR MITTAL & CO. CHARTERED ACCOUNTANTS 305, DAKHA CHAMBER, 2068/38, NAI WALA, KAROL BAGH, NEW DELHI PAN-AAGPA5360H .......... ,- /APPELLANT VS ACIT, CENTRAL CIRCLE-12, NEW DELHI . ./,- / RESPONDENT ,-01 / APPELLANT BY : SH. PIYUSH KAUSHIK, ADV. ./,-01 / RESPONDENT BY : SH. H.K.CHOUDHARY, CIT DR 023 / DATE OF HEARING : 28.01.2020 45 023( / DATE OF PRONOUNCEMENT: 30.01.2020 / ORDER PER SUSHMA CHOWLA, VP THIS BUNCH OF FOUR APPEALS FILED BY THE ASSESSEE AR E AGAINST SEPARATE ORDERS OF THE CIT(A), ALL DATED 09.03.2012, RELATIN G TO ASSESSMENT YEARS 1998-99, 1999-2000, 2001-02 & 2004-05 PASSED UNDER SECTION 153A OF THE ACT. ITA NOS.2429 TO 2432/DEL/2012 2 2. THIS BUNCH OF FOUR APPEALS RELATING TO THE SAME ASSESSEE ON SIMILAR ISSUES WERE HEARD TOGETHER AND ARE BEING DISPOSED O F BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 3. THE ASSESSEE IN APPEAL RELATING TO ASSESSMENT YE ARS 1998-99, 1999- 2000 AND 2001-02 HAS RAISED THE PRELIMINARY ISSUE V IDE GROUND OF APPEAL NO. 1, WHICH READS AS UNDER:- LOOKING INTO THE FACTS & CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. AO HAS ERRED IN NOT ISSUING AND SERVING THE NOTICE UNDER SECTION 153(A) ON THE ASSESSEE & HENCE, THE WHOLE A SSESSMENT IS INVALID. HOWEVER, THE CIT(A)-XXXI ERRED IN CONFIRMI NG THE ASSESSMENT ORDER ON UNTENABLE AND ILLEGAL GROUNDS. HENCE THE A SSESSMENT BEING ILLEGAL MAY BE QUASHED. 4. THE LEARNED AR FOR THE ASSESSEE HAS POINTED OUT THAT THE PRELIMINARY ISSUE GOES TO THE ROOT OF JURISDICTION INVOKED BY T HE ASSESSING OFFICER AND NEEDS TO BE ADJUDICATED FIRST. 5. BRIEFLY IN THE FACTS OF THE CASE, SEARCH AND SEI ZURE OPERATION WERE CONDUCTED AT THE PREMISES OF THE ASSESSEE UNDER SEC TION 132(1) OF THE ACT ON 16.12.2003. THE PROCEEDINGS UNDER SECTION 153A O F THE ACT WERE INITIATED AGAINST THE ASSESSEE, AS PER THE ASSESSME NT ORDER, FOR WHICH NOTICE DATED 7.3.2006 WAS ISSUED TO THE ASSESSEE. 6. THE LEARNED AR FOR THE ASSESSEE HAS PRODUCED THE AFORESAID NOTICE ISSUED TO THE ASSESSEE AND POINTED OUT THAT THE SAI D NOTICE WAS NOT ISSUED UNDER SECTION 153A OF THE ACT BUT WAS ISSUED UNDER SECTION 153A READ WITH SECTION 153C OF THE ACT. THE ASSESSEE ULTIMATELY ST RESSED THAT THE INITIATION OF PROCEEDINGS AGAINST THE ASSESSEE SUFFERS FROM IN FIRMITY AS PREMISES OF ITA NOS.2429 TO 2432/DEL/2012 3 THE ASSESSEE WERE SEARCHED AND THE PROCEEDINGS HAVE BEEN INITIATED UNDER SECTION 153C OF THE ACT AND NOT UNDER SECTION 153A OF THE ACT. 7. THE LEARNED DR FOR THE REVENUE REQUESTED FOR FUR THER TIME TO PRODUCE THE ASSESSMENT RECORDS IN THIS REGARD. ON THE PERUS AL OF THE ORDER-SHEET ENTRIES, IT WAS BROUGHT TO THE NOTICE OF LEARNED DR FOR THE REVENUE THAT THE BENCH HAD REQUISITIONED THE LEARNED DR FOR THE REVE NUE TO PRODUCE THE ASSESSMENT RECORDS AS EARLY AS ON 10.4.2013, THEREA FTER REMINDER WAS GIVEN ON 10.7.2014 AND EVEN ON 8.5.2017. HENCE THE REQUEST OF THE LEARNED DR IN THIS REGARD WAS NOT ACCEPTED. 8. THE LEARNED DR FOR THE REVENUE PLACED RELIANCE O N THE ORDERS OF THE AUTHORITIES BELOW AND POINTED OUT THAT THERE WAS A TYPOGRAPHICAL ERROR IN ISSUING NOTICE UNDER SECTION 153 OF THE ACT. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE JURISDICTIONAL ISSUE WHICH IS RAISED BY THE ASSESSE E BY WAY OF GROUND OF APPEAL NO. 1 GOES TO THE ROOT OF THE JURISDICTION I NVOKED BY THE AO IN THE PRESENT SET OF APPEALS. ADMITTEDLY, THE PREMISES OF THE ASSESSEE WERE SEARCHED ON 16.12.2003. CONSEQUENT THERETO, THE REQ UIREMENT OF LAW IS THAT IN CASE THE PREMISES OF THE PERSONS HAVE BEEN SEARCHED, THEN THE PROCEEDINGS TO BE INITIATED ARE BY WAY OF ISSUE OF NOTICE UNDER SECTION 153A OF THE ACT. THE AO IN SUCH FACTS AND CIRCUMSTANCES HAS TO ISSUE, THE AFORESAID NOTICE UNDER SECTION 153A OF THE ACT AND REQUISITION THE ASSESSEE TO FURNISH THE RETURN OF INCOME FOR THE CAPTIONED A SSESSMENT YEARS. IN CASE ANY DOCUMENT RELATING TO PERSON OTHER THAN THE PERS ON SEARCHED WERE ITA NOS.2429 TO 2432/DEL/2012 4 FOUND, THEN THE NOTICE IS TO BE ISSUED TO SUCH OTHE R PERSON UNDER SECTION 153A READ WITH SECTION 153C OF THE ACT. 10. IN THE FACTS OF THE PRESENT CASE, THE AO FOR AS SESSMENT YEARS 1998- 99, 1999-2000 & 2001-02 HAD ISSUED NOTICE DATED 7.3 .2006 UNDER SECTION 153A READ WITH SECTION 153C OF THE ACT. THE INITIAT ION OF THE PROCEEDINGS THUS ARE UNDER SECTION 153C OF THE ACT I.E. IN RESP ECT OF PERSON OTHER THAN THE PERSON SEARCHED, WHICH IS NOT THE CASE. THE ASS ESSEE IS THE PERSON SEARCHED AND REQUIREMENT OF LAW IS TO ISSUE THE NOT ICE UNDER SECTION 153A OF THE ACT. THE COPY OF THE AFORESAID NOTICE HAVE B EEN FILED ON RECORD AND HAVE BEEN PERUSED BY US. THOUGH IN THE ASSESSMENT O RDER, THE AO MENTIONS THAT THE NOTICE HAD BEEN ISSUED UNDER SECT ION 153A OF THE ACT ON 7.3.2006, BUT INFACT THE NOTICE WHICH IS ISSUED ON 7.3.2006 WAS THE NOTICE UNDER SECTION 153A READ WITH SECTION 153C OF THE AC T. THE SAID NOTICES WERE INVALID AND THE CONSEQUENT ASSESSMENT FRAMED U NDER SECTION 153A OF THE ACT SUFFERS FROM INFIRMITY, BECAUSE OF LACK OF JURISDICTION INVOKED BY THE AO UNDER SECTION 153A OF THE ACT. CONSEQUENTLY, THE ASSESSMENT ORDERS FRAMED IN THE CASE ARE BAD IN LAW AND WE HOLD SO. W E THUS CANCEL THE ASSESSMENT ORDERS PASSED IN THE CASE AGAINST THE AS SESSEE BEING BAD AND INVALID IN LAW. THE GROUND OF APPEAL NO. 1 STANDS T HUS ALLOWED IN FAVOUR OF THE ASSESSEE. 11. COMING TO THE APPEAL RELATING TO ASSESSMENT YEA R 2004-05 WHEREIN THE ASSESSEE, AT THE OUTSET HAS NOT PRESSED GROUNDS OF APPEAL NO. 1 TO 4 AND THE SAME ARE DISMISSED AS NOT PRESSED. HOWEVER, THE GROUND OF APPEAL NOS. 5 AND 6 RAISED BY THE ASSESSEE READ AS UNDER:- ITA NOS.2429 TO 2432/DEL/2012 5 5) LOOKING INTO THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD AO ERRED IN MAKING AN ADDITION OF RS. 35,74,537.00 U/S 68 ON UNTENABLE AND ILLEGAL GROUNDS AND HONORABLE CIT(A)- XXXI ERRE D IN SUSTAINING THE SAME. HENCE, THE ADDITION OF RS. 35,74,537.00 MAY BE DELE TED. 6) LOOKING INTO THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD AO ERRED IN MAKING AN ADDITION OF RS. 1,47,82,541.00 O N ACCOUNT OF PROTECTIVE BASIS U/S 160 AND 163(1)0 IN RESPECT OF NRI BROTHER S AND HONORABLE CIT(A)- XXXI ERRED IN SUSTAINING THE SAME. HENCE, THE ADDIT ION OF RS.1, 47,82,541.00 MAY BE DELETED. 12. BOTH THE GROUNDS OF APPEAL NOS. 5 AND 6 ARE INT ERCONNECTED AND WE PROCEED TO DECIDE THE SAME. 13. BRIEFLY IN THE FACTS OF THE CASE, DURING THE CO URSE OF SEARCH ONE DOCUMENT WAS SEIZED WHICH HAD CERTAIN NOTINGS IN RE SPECT OF THE PAYMENT OF SALE PROCEEDS OF HOUSE NO. 1/1 SHANTI NIKETAN, N EW DELHI. THE SAID DOCUMENT WAS ANNEXURE A-7 PAGE-6 AND THE CONTENTS O F THE SAME ARE REPRODUCED ON ONE PAGE EARLIER TO THE LAST PAGE OF THE ASSESSMENT ORDER. THE SEIZED DOCUMENT HAD CERTAIN NOTINGS IN RESPECT OF THE SALE PROCEEDS TO BE RECEIVED BY DIFFERENT FAMILY MEMBERS. THE AO WAS OF THE VIEW THAT THE ENTRIES REFLECT CASH RECEIPT BY THE ASSESSEE WHICH REMAINED UNEXPLAINED AND HENCE IT NEEDS TO BE ADDED TO THE INCOME OF THE ASSESSEE UNDER SECTION 68 OF THE ACT AS UNEXPLAINED CASH CREDIT. 14. THE LEARNED AR FOR THE ASSESSEE POINTED OUT THA T THE YEAR OF ASSESSMENT WAS ASSESSMENT YEAR 2004-05. HE FURTHER POINTED OUT THAT THE PROPERTY IN QUESTION WAS SOLD ON 16 TH JUNE, 2001 I.E. RELATING TO ASSESSMENT YEAR 2002-03. OUR ATTENTION WAS DRAWN TO FOUR SALE DEED EXECUTED IN THIS REGARD WHICH ARE PLACED AT PAGES 2 3 TO 29 OF THE PAPER BOOK. THE LEARNED AR FOR THE ASSESSEE ALSO REFERRE D TO THE PERMISSION ITA NOS.2429 TO 2432/DEL/2012 6 RECEIVED FROM THE INCOME TAX DEPARTMENT AND ITC, FO RM NO. 34A, COPY OF WHICH IS PLACED AT PAGE 62 OF THE PAPER BOOK. THE L EARNED AR FOR THE ASSESSEE SUBMITTED THAT WHERE TRANSACTION OF THE SA LE OF PROPERTY WAS UNDERTAKEN IN ASSESSMENT YEAR 2002-03 THEN CASH IF ANY, WAS TO BE ADDED IN ASSESSMENT YEAR 2002-03. HOWEVER, HE STRESSED TH AT THE SAID DOCUMENTS WERE A DUMB DOCUMENT AS IT TALKED OF ESTIMATED CON SIDERATION AND NO TRANSACTION MATERIALIZED. HE ALSO STRESSED THAT NO CASH WAS FOUND DURING THE COURSE OF SEARCH EXCEPT PETTY AMOUNT OF RS.7000 /-. HE ALSO POINTED OUT THAT IN THE ABSENCE OF ANY BOOKS OF ACCOUNTS, NO AD DITION WAS WARRANTED UNDER SECTION 68 OF THE ACT. REFERRING TO THE GROUN D OF APPEAL NO. 6, THE LEARNED AR FOR THE ASSESSEE BROUGHT TO OUR NOTICE T HAT SAME RELATED TO PROTECTIVE ADDITION MADE IN THE HANDS OF THE ASSESS EE ON ACCOUNT OF CASH COMPONENT BELONGING TO THE BROTHERS / SISTERS OF TH E ASSESSEE. HOWEVER, NO SUBSTANTIVE ADDITION WAS MADE IN THIS CASE IN THE H ANDS OF THE SAID PERSON IN THE CAPTIONED ASSESSMENT YEAR; HENCE NO ADDITION ON PROTECTIVE BASIS COULD BE MADE. HE ALSO POINTED OUT THAT NO NOTICE W AS ISSUED UNDER SECTION 163(2) OF THE ACT BEFORE MAKING ANY ADDITION UNDER SECTION 163(1) OF THE ACT. 15. THE LEARNED DR FOR THE REVENUE PLACED RELIANCE ON THE ORDERS OF THE AUTHORITIES BELOW. 16. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE RAISED IN THE PRESENT APPEAL IS AGAINST THE E NTRIES ON A SEIZED DOCUMENT FOUND DURING THE COURSE OF SEARCH FROM THE PREMISES OF THE ASSESSEE, I.E. IN THE YEAR OF SEARCH AND THE ADDITI ON HAD BEEN MADE ON ITA NOS.2429 TO 2432/DEL/2012 7 ACCOUNT OF CASH COMPONENT RECORDED ON PIECE OF PAPE R IN RESPECT OF SALE OF HOUSE NO. 1/1 SHANTI NIKETAN, NEW DELHI. THE ASSESS EE HAS FILED THE COPIES OF THE SALE DEEDS OF THE AFORESAID PROPERTY WHICH W AS SOLD BY WAY OF FOUR SALE DEEDS. THE FIRST SALE DEED IS PLACED AT PAGE 2 3 ONWARDS, SECOND SALE DEED AT PAGE 36 ONWARDS, THIRD SALE DEED AT PAGE 51 ONWARDS AND FOURTH SALE DEED AT PAGE 59 ONWARDS. ALL THE SALE DEEDS AR E REGISTERED SALE DEEDS DATED 16 TH JUNE, 2001. IN OTHER WORDS, THE TRANSACTION WAS CO MPLETED IN ASSESSMENT YEAR 2002-03. THE ASSESSEE HAD ALSO RECE IVED THE PERMISSION FROM THE INCOME TAX DEPARTMENT FOR THE SALE OF THE SAID PROPERTY AS REQUIRED IN FORM NO. 34A. ONCE THE TRANSACTION HAD BEEN COMPLETED IN ASSESSMENT YEAR 2002-03, IT IS NOT DISCERNIBLE HOW THE CASH COMPONENT IF ANY, WAS TO BE TAXED IN THE HANDS OF THE ASSESSEE I N ASSESSMENT YEAR 2004- 05. WITHOUT GOING INTO THE MERITS OF THE NOTINGS OF THE SEIZED DOCUMENTS, WE FIND NO MERIT IN THE AFORESAID ADDITION MADE IN THE HANDS OF THE ASSESSEE WITH REGARD TO THE CASH COMPONENT OF A SAL E TRANSACTION WHICH WAS COMPLETED IN ASSESSMENT YEAR 2002-03, WHERE CAS H COMPONENT WAS ADDED TO THE INCOME OF THE ASSESSEE IN ASSESSMENT Y EAR 2004-05. FOLLOWING THE SIMILE, WE FIND NO MERIT IN THE PROTECTIVE ADDI TION MADE IN THE HANDS OF THE ASSESSEE ON ACCOUNT OF CASH COMPONENTS RELATING TO THE RESIDENT AND NON-RESIDENT BROTHERS/SISTERS OF ASSESSEE UNDER SEC TION 160 AND 163 OF THE ACT. IN ANY CASE, THE AO HAD FAILED TO GIVE SEPARAT E NOTICE UNDER SECTION 163(2) OF THE ACT AND IN THE ABSENCE ON SAME, NO AD DITION COULD BE MADE IN THE HANDS OF THE ASSESSEE. WE ALSO HOLD THAT WHERE THE ASSESSEE WAS NOT MAINTAINING ANY BOOKS OF ACCOUNTS, NO ADDITION WAS MAINTAINABLE UNDER SECTION 68 OF THE ACT. ACCORDINGLY, WE DIRECT THE A O TO DELETE THE ADDITION ITA NOS.2429 TO 2432/DEL/2012 8 MADE ON ACCOUNT OF CASH COMPONENT OF RS. 35,74,537/ - AND ON ACCOUNT OF CASH COMPONENT RELATING TO THE BROTHERS / SISTERS O F RS. 1,47,82,541/-. IN ANY CASE, SECOND ADDITION OF RS. 147.82.541/- WAS M ADE ON PROTECTIVE BASIS IN THE HANDS OF ASSESSEE AND CORRESPONDING SU BSTANTIVE ADDITION HAS NOT BEEN MADE FOR THE INSTANT ASSESSMENT YEARS IN T HE HANDS OF ANY PERSON. ON THIS GROUND ALSO THERE IS NO MERIT IN TH E AFORESAID ADDITION. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS A LLOWED. 17. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH JANUARY 2020. SD/- SD/- (B.R.R.KUMAR) (SUSH MA CHOWLA) '() '() '() '() /ACCOUNTANT MEMBER ! ! ! ! / VICE PRESIDENT / # DATED : 30 TH JANUARY, 2020 SH '60.278'729 COPY OF THE ORDER IS FORWARDED TO : 1. ,- / THE APPELLANT 2. ./,- / THE RESPONDENT 3. : ; < / THE CIT(A) 4. = : / THE PR. CIT 5. 6. 7>?.2 / DR, ITAT, DELHI ?$+@9 GUARD FILE. '6 '6 '6 '6 / BY ORDER , /72.2 // TRUE COPY // B)C , ASSISTANT REGISTRAR, ITAT, DELHI