ACIT, New Delhi V. Sh. Kamal Kishore Aggarwal, New Delhi

ITA 2511/DEL/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97552 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 23-09-2015
• Assessment Year: 2001-2002
• Appeal Filed On: 13-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NANDITA KANCHAN
• Assessee Lawyers: V K BINDAL CA MS SWETY KOTHARI
• Keywords: Gift; Search and seizure; Accommodation entries
• Section: 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : H NEW DELHI BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA, JUD ICIAL MEMBER ITA NO: 2511/DEL/2011 AY : - 2001-02 ACIT VS. SHRI KAMA L KISHORE AGGARWAL, PROP. CENTRAL CIRCLE-11, M/S. ABHINA V CONSTRUCTION CO., S-2, NEW DELHI. IIND FLOOR , USHA CHAMBERS, 37-38, CENTR AL MARKET, ASHOK VIHAR, NEW DELHI. (PA N AAKPA9967C) (APPELLANT) (RESPONDENT) APPELLANT BY : MS. NANDITA KANCHAN, CIT DR RESPONDENT BY : SHRI V.K. BINDAL, CA, MS. SWETY KOTHARI, CA DATE OF HEARING : 23.9.2015 DATE OF PRONOUNCEMENT : 3 0.9.2015 O R D E R PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER THIS DEPARTMENTS APPEAL IS AGAINST THE OR DER DATED 28.02.2011 PASSED BY THE LD. CIT(A) -I, NEW DELHI. THE ONLY ISSUE INVOLVED I S DELETION OF AN ADDITION OF RS. 21 LACS BY THE LD. CIT(A) ON ACCOUNT OF GIFTS RECEIVED BY THE ASSESSEE. THE BRIEF FACTS OF THE CASE AS BORNE OUT FROM THE RECORDS ARE THAT A SEARCH AND SEIZURE OPERATION U/S 132 OF THE INCOME TAX ACT WAS CARRIED OUT ON 16 .3.2007. IT IS AOS CONTENTION THAT AS PER MATERIAL SEIZED /IMPOUNDED DURING THE C OURSE OF SEARCH AND CONNECTED SURVEY OPERATIONS IT WAS DISCOVERED THAT THE ASSESS SEE HAD RECEIVED GIFTS OF RS. 21 ITA NO.2511/DEL/2011 ACIT VS. SHRI KA MAL KISHORE AGGARWAL 2 LACS FROM ONE SHRI JAGDISH MANGLA ON 11.1.2001. SU MMONS WAS ISSUED TO SHRI JAGDISH MANGLA BUT THEY COULD NOT BE SERVED UPON H IM AS HE HAD ALREADY EXPIRED ON 24.6.2002. IT IS THE DEPARTMENTS CONTENTION THA T SHRI JAGDISH MANGLA WAS AN ENTRY OPERATOR AND THE ENTRIES IN THE BANK STATEMEN T OF THE ASSESSEE (ACCOUNT NO. 988) WERE NOT RELATED TO ANY BUSINESS DEALINGS OF S HRI MANGLA AS CLAIMED BY THE ASSESSEE BUT WERE ACCOMMODATION ENTRIES. IT IS ALSO THE DEPARTMENTS CONTENTION THAT AS SHRI JAGDISH MANGLA WAS NOT RELATED TO THE ASSESSEE OR TO ANY OTHER MEMBER OF THE FAMILY THERE WAS NO JUSTIFICATION FOR THE G IFTS MADE. THE DEPARTMENT ALSO RELIED ON THE ASSESSMENT PROCEEDINGS OF M/S. K.K. A GGARWAL & SONS (HUF) AND M/S. MANISH AGGARWAL & SONS (HUF) FOR FINANCIAL YEAR 200 8-09 WHEREIN IT WAS CONCLUDED BY THE AO THAT SHRI JAGDISH MANGLA DID NOT HAVE TH E CREDITWORTHINESS TO MAKE SUCH GIFTS. THE LD. CIT(A) HOWEVER DELETED THE ENTIRE AD DITION OF RS. 21 LACS ON THE GROUND THAT A SIMILAR ADDITION OF RS. 10 LACS WAS D ELETED BY HIM IN THE CASE OF M/S. K.K. AGGARWAL & SONS (HUF) FOR AY 2001-02 WHEREIN T HE ASSESSEE HAD RECEIVED A GIFT OF RS. 10 LACS FROM SHRI JAGDISH MANGLA. 2. BEFORE US THE LD. AR FOR THE ASSESSEE SUBMI TTED THAT IT IS NOT THE CASE OF THE DEPARTMENT THAT THE ADDITION OF RS. 21 LACS HAS BEE N MADE ON ACCOUNT OF ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH AND SEIZURE PROCEEDINGS. HE DREW OUR ATTENTION TO PAGES 278 , 279 AND 280 OF T HE PAPER BOOK FILED BY HIM WHICH CONTAIN INTIMATION U/S 143(1) OF THE ACT FOR ASSESS MENT YEAR 2001-02 IN THE CASE OF THE ASSESSEE AND THE BALANCE SHEET AND THE CAPITAL ACCOUNT OF THE ASSESSEE FOR AY YEAR 2001-02 RESPECTIVELY. IT IS SEEN AT PAGE 280 O F THE PAPER BOOK THAT THE CAPITAL ACCOUNT OF THE ASSESEE REFLECTS A GIFT OF RS. 21 LA CS UNDER THE CREDITS. IT WAS FURTHER SUBMITTED BY THE LD. AR THAT AS PER THE SECOND PROV ISO OF SECTION 153 A ONLY THE ITA NO.2511/DEL/2011 ACIT VS. SHRI KA MAL KISHORE AGGARWAL 3 ASSESSMENTS WHICH WERE PENDING ON THE DATE OF INITI ATION OF SEARCH U/S 132 OF THE ACT WILL ABATE AND THE ASSESSMENT PROCEEDINGS WHICH HAVE BECOME FINAL AS ON THE DATE WILL NOT STAND ABATED. IT WAS FURTHER SUBMITTE D THAT NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH TO SHOW THAT THE GIFTS WERE NOT GENUINE. LD. AR ALSO DREW OUR ATTENTION TO THE DECISION OF THE H ONBLE HIGH COURT OF DELHI IN CIT CENTRAL-III VS. KABUL CHAWLA IN ITA NOS. 707/2014, 709/2014 AND 713/2014. 3. LD. DR ON THE OTHER HAND SUPPORTED THE ORDE R OF THE AO. 4. WE HAVE CAREFULLY CONSIDERED THE MATERIAL PLA CED BEFORE US AND THE ISSUE INVOLVED. SECTION 153A OF THE ACT PROVIDES THAT WHE RE A SEARCH IS INITIATED U/S 132 OF THE ACT, THE AO SHALL ASSESS OR REASSESS THE T OTAL INCOME OF THE SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR R ELEVANT TO THE PREVIOUS YEAR IN WHICH THE SEARCH IS CONDUCTED OR REQUISITION IS MAD E. THE FIRST PROVISO STATES THAT THE AO SHALL ASSESS OR REASSESS THE TOTAL INCOM E IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SUCH SIX ASSESSMENT YEARS . T HE SECOND PROVISO STATES THAT THE ASSESSMENT OR REASSESSMENT RELATING TO THE SAID SIX ASSESSMENT YEARS PENDING ON THE DATE OF INITIATION OF THE SEARCH U/S 132 SHALL ABATE. IT IS SEEN THAT IN ASSESSEES CASE SEARCH ACTION WAS INITIATED AND ASSESSMENTS U/ S 153A WERE FRAMED FOR SIX ASSESSMENT YEARS MAKING VARIOUS ADDITIONS. IT IS AS SESSEES CLAIM THAT THE ADDITION OF RS. 21 LACS WAS NOT TENABLE AS THE REGULAR RETURN H AD BEEN FILED WHERE THE PARTICULARS RELATING TO THE ADDITION HAS BEEN DISCL OSED AND THE SAME HAD BEEN ACCEPTED U/S 143 (1) OF THE ACT AND THAT NO MATERIA L HAS BEEN FOUND DURING THE SEARCH TO JUSTIFY THE ADDITION. IN OUR CONSIDERED O PINION SECTION 153A DOES NOT AUTHORISE THE MAKING OF A DENOVO ASSESSMENT IN THIS PARTICULAR ASSESSMENT YEAR. ITA NO.2511/DEL/2011 ACIT VS. SHRI KA MAL KISHORE AGGARWAL 4 WHILE UNDER THE FIRST PROVISO, THE AO IS EMPOWERED TO FRAME ASSESSMENT FOR SIX YEARS , UNDER THE SECOND PROVISO ONLY ASSESSMENTS W HICH ARE PENDING ON THE DATE OF INITIATION OF SEARCH ABATE. THE EFFECT IS THAT COMP LETED ASSESSMENTS DO NOT ABATE. THE ASSESSMENTS CAN BE SAID TO BE PENDING ONLY IF T HE AO IS STATUTORILY REQUIRED TO DO SOMETHING FURTHER. IF THE SECTION 143(2) NOTICE HAS BEEN ISSUED, THE ASSESSMENT CAN BE SAID TO BE PENDING. HOWEVER THE ASSESSMENT I N RESPECT OF A RETURN PROCESSED U/S 143(1) IS NOT PENDING BECAUSE THE AO IS NOT RE QUIRED TO DO ANYTHING FURTHER ABOUT SUCH A RETURN. THE POWER GIVEN BY THE FIRST P ROVISO TO ASSESS INCOME FOR SIX ASSESSMENT YEARS HAS TO BE CONFINED TO THE UNDISCLO SED INCOME UNEARTHED DURING SEARCH AND CANNOT INCLUDE ITEMS WHICH ARE DISCLOSED IN THE ORIGINAL ASSESSMENT PROCEEDINGS . 5. IT IS SEEN ON FACTS THAT AS THE RETURN FOR THE YEAR HAD BEEN PROCESSED U/S 143 (1) THE ASSESSMENT WAS NOT PENDING AND AS NO MATERI AL WAS FOUND DURING THE SEARCH, THE ADDITION HAS BEEN RIGHTLY DELETED BY TH E LD. CIT(A). IT WILL ALSO BE WORTHWHILE TO REPRODUCE PARA 37 OF THE JUDGMENT OF THE HONBLE HIGH COURT OF DELHI IN THE CASE OF CIT CENTRAL III VS. KABUL CHAWLA ( SUPRA) WHICH LAYS DOWN THE ENTIRE LAW WITH REGARD TO SECTION 153A 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 AFOREM ENTIONED DECISIONS, THE LEGAL POSITION THAT EMERGES IS UNDER: I. ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF THE ACT, NOTICE UNDER SECTION 153 A (1) WILL HAVE TO BE MANDATORILY ISSUE D 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 P LACE. ITA NO.2511/DEL/2011 ACIT VS. SHRI KA MAL KISHORE AGGARWAL 5 II. ASSESSMENTS AND REASSESSMENTS PENDING ON THE DA TE OF THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH AYS WILL HAVE TO B E 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 AY IN WHICH THE SEARCH TAK ES 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 153 A DOES NOT SAY THAT ADDITI ONS 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 A O WHICH CAN BE RELATED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSES SMENT '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 O N THE BASIS OF SEIZED MATERIAL. V. IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE CO MPLETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESSMEN T 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 'REASSE SS' TO COMPLETED ASSESSMENT PROCEEDINGS. VI. INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, T HE JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UNDER SECTIO N 153A MERGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY FOR E ACH AY ON THE BASIS OF THE FINDING OF THE SEARCH AND ANY OTHER MATERIAL EXISTI NG OR BROUGHT ON THE RECORD 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 R EQUISITION OF DOCUMENTS OR UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE CO URSE OF SEARCH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. 6. THUS ON THE FACTS OF THE CASE AND RESPECTFUL LY FOLLOWING THE HONBLE HIGH COURT OF DELHI IN CIT CENTRAL III VS. KABUL CHAWLA (SUP RA) WE FIND THAT THE ADDITION OF RS. ITA NO.2511/DEL/2011 ACIT VS. SHRI KA MAL KISHORE AGGARWAL 6 21 LACS HAS BEEN RIGHTLY DELETED AND THERE IS NO RE ASON FOR INTERFERENCE WITH THE ORDER OF LD. CIT(A). 7. IN THE RESULT THE APPEAL FILED BY THE DE PARTMENT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH SEPTEMBER, 2015. SD/- SD/- (INTURI RAMA RAO) (SUD HANSHU SRIVASTAVA ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: THE 9. 2015 VEENA COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR 6. GUARD FILE BY ORDER DY. REGISTRAR SL. NO. DESCRIPTION DATE 1. DATE OF DICTATION BY THE AUTHOR 24.9.2015 2. DRAFT PLACED BEFORE THE DICTATING MEMBER 24.9.2 015 3. DRAFT PLACED BEFORE THE SECOND MEMBER 4. DRAFT APPROVED BY THE SECOND MEMBER 5. DATE OF APPROVED ORDER COMES TO THE SR. PS 6. DATE OF PRONOUNCEMENT OF ORDER 7. DATE OF FILE SENT TO THE BENCH CLERK 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER ITA NO.2511/DEL/2011 ACIT VS. SHRI KA MAL KISHORE AGGARWAL 7