Mahalaxmi Buildwell India Pvt. Ltd., Delhi V. DCIT, Central Circle , Dehradun

ITA 2540/DEL/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 4997 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-10-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 25-03-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K CHATTERJEE
• Keywords: Search and seizure; Document seized; Additional evidence; Initiation of penalty proceedings; Documents seized
• Section: 143(3); 153A; 133(6); 201; 143(2); 192; 13; 153; 22; 153C; 131; 68; 132; 10; 15

Judgement Text

IN TH E INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : E : NEW DELHI BEFORE SHRI R. K. PANDA, ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO S . 2540 & 2541 /DEL/201 9 ASSESSMENT YEAR S : 20 09 - 10 & 2010 - 11 MAHALAXMI BUILDWELL INDIA PVT. LTD ., C/O KAPIL GOEL, ADVOCATE, F - 26/124, SECTOR - 7, ROHINI, DELHI. PAN :AAFCM4474J VS DCIT, CENTRAL CIRCLE, DEHRADUN. (APP ELL A NT ) (RESPONDENT) A SSESSEE BY : SHRI KAPIL GOEL, ADVOCATE RE VENUE BY : SHRI S.K. CHATTERJEE, SR. DR DATE OF HEARING : 25 . 0 9 . 20 20 DATE OF PRONOUNCEMENT : 13 . 10 . 20 20 ORDER PER R. K. PANDA, AM : TH E ABOVE TWO APPEAL S FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE SEPARATE ORDER S DATED 2 8 TH JAN UARY, 201 9 OF THE CIT(A) - 4, KANPUR, RELATI NG TO ASSESSMENT YEAR S 20 0 9 - 10 & 2010 - 11, RE SPECTIVELY. SINCE COMMON ISSUES ARE INVOLVED IN BOTH THESE APPEALS, THEREFORE, THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER. ITA NO S . 2540 & 2541 /DEL/201 9 2 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSE E IS A COMPANY ENGAGED IN THE BUSINESS OF REAL ESTATE , DEVELOPERS AND PROMOTERS, ETC. THE COMPANY WAS INCORPORATED ON 4 TH MARCH, 2008. THE RETURN FOR ASSESSMENT YEAR 2009 - 10 WAS FILED ON 30 TH SEPTEMBER, 2009 DECLARING THE TOTAL INCOME AT RS.37 ,130/ - . A SEARCH AND SEIZURE OPERATION WAS CONDUCTED IN THE MAHALAXMI BUILDWELL GROUP OF CASES ON 31 ST OCTOBER, 2014. DURING THE COURSE OF SEARCH, CERTAIN INFORMATION/DOCUMENTS BELONGING TO THE ASSESSEE WERE ALSO FOUND. IN RESPONSE TO NOTICE U/S 153A WHICH WAS IS SUED ON 25 TH MAY, 2015, THE ASSESSEE FILED ITS RETURN OF INCOME ON 20 TH AUGUST, 2016 DECLARING NIL INCOME. 3. THE AO NOTED THAT D URING THE COURSE OF SEARCH PROCEEDINGS CERTAIN DOCUMENTS INCLUDING DOCUMENTS ANN. A - 14, PAGE NO. 1 TO 17 AND A - 22, PAGE NO. 19 TO 24 W ERE FOUND AND SEIZED. AS PER THESE DOCUMENTS THE ASSESSEE PURCHASED THE FOLLOWING LAND WHICH ARE AS FOLLOWS: - S.NO. NAME OF THE SELLER PARTICULAR OF LAND SALE CONSIDERATION DATE OF TRANSACTION 1. RAKESH AGGARWAL 211.8 SQ. MT 8,48,000/ - 30.05.20 08 2. SUNIL JOSHI 178.438 SQ.MT. 6,75,000/ - 17.06.2008 4 . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO ASKED THE ASSESSEE TO FURNISH THE SOURCE OF INVESTMENT IN PURCHASE OF ABOVE LAND/PROPERTIES WITH DOCUMENTARY EVIDENCE. IT WAS SUBMITTED THAT T HE PAYMENTS MADE FOR PURCHASE OF THE LAND IS DULY ACCOUNTED FOR IN THE BOOKS OF ACCOUNT AND INVESTMENTS HAVE BEEN MADE OUT OF RAISING UNSECURED LOANS. THE AO SPECIFICALLY ASKED THE ASSESSEE TO ITA NO S . 2540 & 2541 /DEL/201 9 3 FURNISH COPY OF CONFIRMATION OF LOAN, IDENTITY WITH ASSESSMENT DETAILS/PAN OF THE PARTIES AND CREDIT WORTHINESS OF THE PARTIES IN CASE OF THE FOLLOWING: - S. NO. NAME OF THE PARTY AMOUNT OF UNSECURED LOAN 1. ARCHIT AGGARWAL 202983 2. BANWARI LAL 125000 3. LION AUTO COMPONENTS 400000 4. NIRMALA DEVI 75000 5. PURAN MAL VERMA 75000 6. SARTAJ INFRA DEVELOPERS 800000 TOTAL 16,77,983/ - 5 . HOWEVER, THE AO NOTED THAT THE LD. COUNSEL OF THE ASSESSEE FAILED TO FURNISH THE REQUISITE DOCUMENTS. HE NOTED THAT I N THE CASE OF ARCHIT AGGARWAL , FROM WHOM UNSECURED LOAN OF RS. 1,90,000/ - WAS RAISED, THE ASSESSEE FAILED TO FURNISH THE IDENTITY OF THE PARTY AND CREDIT WORTHINESS OF THE PARTY. IT ONLY FILED PHOTO COPY OF CONFIRMATION OF LOAN. THE ASSESSEE ALSO FAILED TO PRODUCE THE PART Y FOR CONF IRMATION OF THE LOAN. SO FAR AS UNSECURED LOAN RECEIVED FROM BANWARI LAL AND SHRI PURAN MAL VERMA ARE CONCERNED, HE NOTED THAT THE ASSESSEE FAILED TO FURNISH ANY DOCUMENTS. SIMILARLY, IN THE CASE OF LIONS AUTO COMPONENTS AND SARTAJ INFRA DEVELOPER, THE A O OBSERVED THAT THE ASSESSEE FURNISHED ONLY UNSIGNED CONFIRMATION. THE AO FURTHER NOTED FROM THE COPY OF ACKNOWLEDGEMENT OF RETURN OF M/S LION AUTO COMPONENTS AND SARTAJ INFRA DEVELOPERS THAT THEY HAVE SHOWN INCOME OF RS.10,230/ - AND RS.91,800/ - , RESPECTI VELY FOR A.Y. 2009 - 10. THEREFORE, ITA NO S . 2540 & 2541 /DEL/201 9 4 THE CREDIT WORTHINESS OF THESE PARTIES REMAINED UNPROVED. SINCE THE ASSESSEE FAILED TO PRODUCE THE PARTIES FROM WHOM LOAN HAS BEEN TAKEN FOR HIS VERIFICATION, THE AO MADE ADDITION OF RS.16,77,983/ - . SINCE THE ASSESSEE, IN THE ORIGINAL RETURN DECLAR ED INCOME OF RS.37,13 0/ - , BUT, IN THE RETURN FILED IN RESPONSE TO NOTICE U/S 153A NO INCOME HAS BEEN DECLARED AND THE REASON FOR NOT SHOWING INCOME OF RS.37,130/ - WAS NOT FILED, THE AO MADE ADDITION OF RS.37,130/ - TO THE TOTAL INCOME OF THE ASSESSEE. ACCORDINGLY, HE DETERMINED THE TOTAL INCOME OF THE ASSESSEE AT RS.17,15,110/ - AGAINST NIL INCOME SHOWN BY THE ASSESSEE. 6 . SIMILARLY, FOR A.Y. 2010 - 11, THE ORIGINAL RETURN WAS FILED ON 4 TH MARCH, 2008 DECLARING TOTAL INCOME AT RS. 4,09,960/ - . IN RESPONSE TO NOTICE U/S 153A THE ASSESSEE FILED THE RETURN ON 20 TH AUGUST, 2016 DECLARING THE INCOME AT RS.4,09,960/ - . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTED THAT THE ASSESSEE HAS SHOWN RESERVES AND SURPLUS OF RS.3,74 ,85, 000/ - AGAINST RS.1,12,50,000/ - SHOWN IN THE ASSESSMENT YEAR 2009 - 10. HE ASKED THE ASSESSEE TO GIVE COMPLETE LIST OF THE PERSONS TO WHOM SHARES HAVE BEEN ALLOTTED WITH NUMBER OF SHARES . FROM THE VARIOUS DETAILS FURNISHED BY THE ASSESSEE, THE AO NOTED THA T THE ASSESSEE FAILED TO SUBSTANTIATE THE IDENTITY AND CREDIT WORTHINESS OF THE FOLLOWING PERSONS FROM WHOM AN AMOUNT OF RS.30 LAKHS HAS BEEN RECEIVED AS SHARE CAPITAL/SHARE PREMIUM: - ITA NO S . 2540 & 2541 /DEL/201 9 5 S.NO. NAME OF THE PARTY NUMBER OF SHARE AMOUNT @ RS. 10 PER SHARE AND RS .90 PER SHARE PREMIUM (RS. 100) 1. ABU COMMERCE INTERNATIONAL FOODS PVT. LTD. 5000 500000 2. HIGROW PLOYMENRS PVT. LTD. 10000 1000000 3. OPTI VIEW PVT. LTD. 10000 1000000 4. SAR STICHES PVT. LTD. 5000 500000 TOTAL 30000 30,00, 000 7 . HE, THEREFORE, MADE AN ADDITION OF RS.30 LAKHS TO THE TOTAL INCOME OF THE ASSESSEE AND DETERMINED THE INCOME AT RS.34,09,960/ - 8 . BEFORE THE CIT(A), THE ASSESSEE, APART FROM CHALLENGING THE ADDITION ON MERIT, CHALLENGED THE VALIDITY OF THE ASSESS MENT PROCEEDINGS U/S 153A. IT WAS SUBMITTED THAT SINCE NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH , T HEREFORE, IN VIEW OF THE DECISIONS OF THE HON BLE DELHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA, 380 ITR 573 AND PCIT VS. MEETA GUTGUTIA , 82 TAXMANN.COM 287 AND VARIOUS OTHER DECISIONS, THE ORDER PASSED U/S 153A SHOULD BE HELD AS INVALID. 9 . SO FAR AS THE MERIT OF THE CASE IS CONCERNED, THE ASSESSEE FILED CERTAIN ADDITIONAL EVIDENCES IN THE FORM OF CONFIRMATION LETTER, COPIES OF INCOME - TAX ITA NO S . 2540 & 2541 /DEL/201 9 6 RETURNS AND BANK STATEMENT OF SOME OF THE PARTIES. THE LD.CIT(A) ADMITTED THE ADDITIONAL EVIDENCES. HOWEVER, HE DECIDED BOTH THE GROUNDS AGAINST THE ASSESSEE FOR BOTH THE YEARS. SO FAR AS THE ARGUMENT OF THE ASSESSEE THAT IN ABSENCE OF ANY I NCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH THE ASSESSMENT PROCEEDINGS SHOULD BE TREATED AS INVALID IS CONCERNED, THE LD. CIT(A), FOLLOWING THE DECISION OF THE HON BLE KERALA HIGH COURT IN THE CASE OF E.N. GOPAKUMAR VS. CIT , REPORTED IN 75 TAXM ANN .COM 215 , THE DECISION S OF THE HON BLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. RAJ K UMAR ARORA, 367 ITR 517 AND CIT VS. KESARWANI ZARDA BHANDAR SAHSON ALLD., I TA NO. 270 OF 2014 AND VARIOUS OTHER DECISIONS DECIDED THE ISSUE AGAINST THE ASSESSEE. ACC ORDING TO THE CIT(A), AS PER THE DECISION OF HON BLE DELHI HIGH COURT IN THE CASE OF CIT VS. ANIL KUMAR BHATIA, 352 ITR 493, THE JURISDICTION OF AO U/S 153A IS TO ASSESS THE TOTAL INCOME FOR THE YEAR AND NOT RESTRICTED TO SEIZED MATERIAL. POST SEARCH REAS SESSMENT IN RESPECT OF ALL SIX YEARS CAN BE MADE EVEN IF ORIGINAL RETURNS ARE ALREADY PROCESSED U/S 143(1)(A) AND THE AO HAS POWER U/S 153A TO MAKE ASSESSMENT FOR ALL SIX YEARS AND COMPUTE TOTAL INCOME OF THE ASSESSEE INCLUDING THE UNDISCLOSED INCOME NOTW ITHSTANDING THAT RETURNS OF THESE YEARS HAVE ALREADY BEEN PROCESSED U/S 143(1)(A). EVEN IF ASSESSMENT ORDER HAD ALREADY BEEN PASSED IN RESPECT OF ALL OR ANY OF TH O SE SIX ASSESSMENT YEARS EITHER U/S 143(1)(A) OR SECTION 143(3) PRIOR TO INITIATION OF SEARCH /REQUISITION, STILL, THE AO IS EMPOWERED TO REOPEN THOSE PROCEEDINGS U/S 153A WITHOUT ANY F E TTERS AND REASSESS THE TOTAL INCOME TAKING NOTE OF UNDISCLOSED INCOME, IF ANY, UNEARTHED DURING THE SEARCH. ITA NO S . 2540 & 2541 /DEL/201 9 7 10 . SO FAR AS THE MERIT OF THE CASE IS CONCERNED, HE DE CIDED THE ISSUE AGAINST THE ASSESSEE ON THE GROUND THAT THE ASSESSEE FAILED TO SUBSTANTIATE THE CREDIT WORTHINESS OF THE LOAN CREDITORS /SHARE APPLICANTS AND GENUINENESS OF THE TRANSACTION ESPECIALLY WHEN THE LENDERS HAVE DISCLOSED MEAGER INCOME IN THEIR RE TURNS AND EACH CREDIT OF SHARE CAPITAL/UNSECURED LOANS TO THE ASSESSEE COMPANY IS PRECEDED BY THE EQUIVALENT OR MORE AMOUNT OF DEPOSIT ON CREDIT ON THE SAME DATE OR ON THE PRIOR DATE . FURTHER, THE ASSESSEE ALSO FAILED TO PRODUCE THESE CREDITORS FOR EXAMIN ATION BY THE AO DURING ASSESSMENT PROCEEDINGS. 1 1 . AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUNDS: - ITA NO.2540/DEL/2019 (A.Y. 2009 - 10) 1. THAT ON THE FACTS AND IN THE CIRCUMST ANCES OF THE CASE AND IN LAW, ID CIT - A ERRED IN SUSTAINING THE ORDER PASSED BY LD AO U/S 153A/143(3) WITHOUT APPRECIATING THAT ASSUMPTION OF JURISDICTION U/S 153A WAS BY LD AO WAS IN VIOLATION OF MANDATORY JURISDICTIONAL CONDITIONS STIPULATED UNDER THE ACT ; 1.1 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, ID CIT - A ERRED IN SUSTAINING THE ORDER PASSED BY LD AO U/S 153A/143(3) WITHOUT APPRECIATING THAT FOR MAKING VALID ASSESSMENT OF UNABATED YEAR U/S 153A AS ON DATE OF SEARCH THAT IS 31.1 0.2014 (HERE FOR AY 2010 - 2011 RETURN WAS FILED ON 15.10.2010 WHICH U/S 143(2) WAS BARRED ON 30.09.2011 AND ON DATE OF SEARCH THAT IS 31.10.2014 SAID PROCEEDINGS WERE BARRED U/S 143(2)) WITHOUT CORRESPONDING VALID INCRIMINATING MATERIAL BEING BROUGHT ON REC ORDS FOR ADDITION IN QUESTION ASSUMPTION OF JURISDICTION U/S 153A IS PLAINLY INCORRECT AND UNLAWFUL; 1.2 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, ID CIT - A ERRED IN SUSTAINING THE ORDER PASSED BY LD AO U/S 153A/143(3) WITHOUT APPREC IATING THAT ASSESSMENT IS NOT DONE ON BASIS OF VALID APPROVAL U/S 153D AS EVIDENT FROM BARE READING OF LETTER DATED 28/12/2016 WHERE APPROVAL IS NOT GIVEN TO FINAL ORDER AND APPROVAL ITSELF SEEMS TO BE INCOMPLETE WHICH MAKES THE ENTIRE PROCEEDINGS AS VOID AB INITIO. ITA NO S . 2540 & 2541 /DEL/201 9 8 1.3 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, ID CIT - A ERRED IN SUSTAINING THE ORDER PASSED BY LD AO U/S 153A/143(3) AS NONE OF THE ASSESSEE SUBMISSION IS APPRECIATED WHILE ADJUDICATING THE APPEAL; 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, ID CIT - A ERRED IN SUSTAINING THE ORDER PASSED BY LD AO U/S 153A/143(3) WITHOUT APPRECIATING THAT ON BASIS OF PRODIGIOUS EVIDENCES ON RECORDS BURDEN U/S 68 LYING ON ASSESSEE HAS BEEN FULLY DISCHARGED AND MET SO ADDITION MADE BY LD AO (RS 30,00.000 AND CONFIRMED BY CIT - A IN IMPUGNED ORDER DESERVES TO BE DELETED 2.1 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, ID CIT - A ERRED IN SUSTAINING THE ORDER PASSED BY LD AO U/S 153A/143(3) WITHOUT APPRECIATING THAT THERE IS NO BASIS OF ANY OF THE ADDITION OF RS 30,00,000 AS THERE IS NO REMOTE TRAIT OF ANY ACCOMMODATION ENTRY , NO MEANINGFUL ENQUIRY IS DONE AT ANY STAGE BY LD AO/LD CIT - A TO DISLODGE THE CASE OF ASSESSEE, NO ADVERSARIAL STATEMENT OR SMOKE SCREEN IS ESTABLISHED IN EXTANT FACTS, DUE TO WHICH ENTIRE ADDITION MAKES INVALID ; 2.2 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, ID CIT - A ERRED IN SUSTAINING THE ORDER PASSED BY LD AO U/S 153A/143(3) WITHOUT APPRECIATING E VEN NO MEANINGFUL/VALID AND OBJECTIVE ENQUIRY IS MADE FROM SHARE HOLDER'S BANK OR INCOME TAX OFFICER OF SHARE HOLDER ETC WHICH IS SUFFICIENT TO DELETE THE ADDITIONS MADE; EVEN NO SUMMON U/S 131 /ENQUIRY LETTER U/S 133(6) OF THE ACT WAS ISSUED TO SHARE HOLD ER TO ENFORCE THEIR PERSONAL ATTENDANCE WHICH IS IN EXCLUSIVE DOMAIN OF LD AO ; 2.3 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN , LAW, ID CIT - A ERRED IN SUSTAINING THE ORDER PASSED BY LD AO U/S 153A/143(3) WITHOUT APPRECIATING THAT, WHIL E MAKING ADDITION U/S 68 LD AO HAS NOT ISSUED REQUIRED SHOW CAUSE NOTICE NOR LD AO HAS CONSIDERED DETAILED REPLY FILED BY THE ASSESSEE; 2.4 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, ID CIT - A ERRED IN SUSTAINING THE ORDER PASSED BY LD AO U/S 153A/143(3) WITHOUT APPRECIATING THAT WHILE MAKING ADDITION U/S 68 POSITION OF NET WORTH OF COMPANIES IS SUITABLY IGNORED; 2.5 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, ID CIT - A ERRED IN SUSTAINING THE ORDER PASSED BY L D AO U/S 153A/143(3) WITHOUT APPRECIATING THAT NONE OF EVIDENCE FILED BY ASSESSEE IS OVERRULED IN ACCORDANCE WITH LAW 2.6 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD.CIT(A) ERRED IN SUSTAINING THE ORDER PASSED BY THE LD. AO U /S 147/143(3) WITHOUT APPRECIATING THAT SHAREHOLDER COMPANIES WHO ARE GIVING SHARE ITA NO S . 2540 & 2541 /DEL/201 9 9 APPLICATION MONEY /SHARE CAPITAL TO ASSESSEE HEREIN, THEIR EXISTENCE IS NEVER CALLED IN QUESTION AS THE COMPANIES ARE NOWHERE FOUND UNTRACEABLE; 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, ID CIT - A ERRED IN NOT RESTORING THE RETURNED INCOME DECLARED BY ASSESSEE IN ITS RETURN OF INCOME . THAT THE APPELLANT CRAVES LEAVE TO ADD ADD/ALTER ANY/ALL GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING OF TH E APPEAL. ITA NO.254 1 /DEL/2019 (A.Y. 2010 - 11) 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, ID CIT - A ERRED IN SUSTAINING THE ORDER PASSED BY LD AO U/S I53A/143(3) WITHOUT APPRECIATING THAT ASSUMPTION OF JURISDICTION U/S 153A WAS BY LD AO WAS IN VIOLATION OF MANDATORY JURISDICTIONAL CONDITIONS STIPULATED UNDER THE ACT; 1.1 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, ID CIT - A ERRED IN SUSTAINING THE ORDER PASSED BY LD AO U/S 153A/143(3) WITHOUT APPRECIA TING THAT FOR MAKING VALID ASSESSMENT OF UNABATED YEAR U/S 153A AS ON DATE OF SEARCH THAT IS 31.10.2014 (HERE FOR AY 2009 - 2010 RETURN WAS FILED ON 30.09.2009 WHICH U/S 143(2) WAS BARRED ON 30.09.2010 AND ON DATE OF SEARCH THAT IS 31.10.2014 SAID PROCEEDING S WERE BARRED U/S 143(2)) WITHOUT CORRESPONDING VALID INCRIMINATING MATERIAL BEING BROUGHT ON RECORDS FOR ADDITION IN QUESTION ASSUMPTION OF JURISDICTION U/S 153A IS PLAINLY INCORRECT AND UNLAWFUL; 1.2 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, ID CIT - A ERRED IN SUSTAINING THE ORDER PASSED BY LD AO U/S 153A/143(3) WITHOUT APPRECIATING THAT ASSESSMENT IS NOT DONE ON BASIS OF VALID APPROVAL U/S 153D AS EVIDENT FROM BARE READING OF LETTER DATED 28/12/2016 WHERE APPROVAL IS NOT GIVEN TO FINAL ORDER AND APPROVAL ITSELF SEEMS TO BE INCOMPLETE WHICH MAKES THE ENTIRE PROCEEDINGS AS VOID AB INITIO. 1.3 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, ID CIT - A ERRED IN SUSTAINING THE ORDER PASSED BY LD AO U/S 153A/143( 3) AS NONE OF THE ASSESSEE SUBMISSION IS APPRECIATED WHILE ADJUDICATING THE APPEAL; 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, ID CIT - A ERRED IN SUSTAINING THE ORDER PASSED BY LD AO U/S 153A/143(3) WITHOUT APPRECIATING THAT ON B ASIS OF PRODIGIOUS EVIDENCES ON RECORDS BURDEN U/S 68 LYING ON ASSESSEE HAS BEEN FULLY DISCHARGED AND MET SO ADDITION MADE BY LD AO (RS 16,77,983 AND CONFIRMED BY CIT - A IN IMPUGNED ORDER DESERVES TO BE DELETED ITA NO S . 2540 & 2541 /DEL/201 9 10 2.1 THAT ON THE FACTS AND IN THE CIRCUMSTANCE S OF THE CASE AND IN LAW, ID CIT - A ERRED IN SUSTAINING THE ORDER PASSED BY LD AO U/S 153A/143(3) WITHOUT APPRECIATING THAT THERE IS NO BASIS OF ANY OF THE ADDITION OF RS 16,77,983 AS THERE IS NO REMOTE TRAIT OF ANY ACCOMMODATION ENTRY , NO MEANINGFUL ENQUI RY IS DONE AT ANY STAGE BY LD AO/LD CIT - A TO DISLODGE THE CASE OF ASSESSEE, NO ADVERSARIAL STATEMENT OR SMOKE SCREEN IS ESTABLISHED IN EXTANT FACTS, DUE TO WHICH ENTIRE ADDITION MAKES INVALID ; 2.2 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, ID CIT - A ERRED IN SUSTAINING THE ORDER PASSED BY LD AO U/S 153A/143(3) WITHOUT APPRECIATING EVEN NO MEANIN G FUL/VA LID A ND OBJECTIVE ENQUIRY IS MADE FROM LENDER S BANK OR INCOME TAX OFFICER OF LENDER ETC WHICH IS SUFFICIENT TO DELETE THE ADDITIONS MADE; EVEN NO SUMMON U/S 131 /EN QUIRY LETTER U/S 133(6) OF THE ACT WAS ISSUED TO SHARE HOLDER TO ENFORCE THEIR PERSONAL ATTENDANCE WHICH IS IN EXCLUSIVE DOMAIN OF LD AO ; 2.3 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, ID CIT - A ERR ED IN SUSTAINING THE ORDER PASSED BY LD AO U/S 153A/143(3) WITHOUT APPRECIATING THAT WHILE MAKING ADDITION U/S 68 LD AO HAS NOT ISSUED REQUIRED SHOW CAUSE NOTICE NOR LD AO HAS CONSIDERED DETAILED REPLY FILED BY THE ASSESSEE; 2.4 THAT ON THE FACTS AND IN T HE CIRCUMSTANCES OF THE CASE AND IN LAW, ID CIT - A ERRED IN SUSTAINING THE ORDER PASSED BY LD AO U/S 153A/143(3) WITHOUT APPRECIATING THAT WHILE MAKING ADDITION U/S 68 POSITION OF FINANCIAL CAPACITY OF LENDERS IS SUITABLY IGNORED; 2.5 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, ID CIT - A ERRED IN SUSTAINING THE ORDER PASSED BY LD AO U/S 153A/143(3) WITHOUT APPRECIATING THAT NONE OF EVIDENCE FILED BY ASSESSEE IS OVERRULED IN ACCORDANCE WITH LAW ; 2.6 THAT ON THE FACTS AND IN THE CIRCUM STANCES OF THE CASE AND IN LAW, ID CIT - A ERRED IN SUSTAINING THE ORDER PASSED BY LD AO U/S 147/143(3) WITHOUT APPRECIATING THAT LENDER WHO ARE GIVING LOAN TO ASSESSEE HEREIN, THEIR EXISTENCE IS NEVER CALLED IN QUESTION AS THE LENDERS ARE NOWHERE FOUND UNTR ACEABLE; 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, ID CIT - A ERRED IN NOT RESTORING THE RETURNED INCOME DECLARED BY ASSESSEE IN ITS RETURN OF INCOME . THAT THE APPELLANT CRAVES LEAVE TO ADD ADD/ALTER ANY/ALL. GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. ITA NO S . 2540 & 2541 /DEL/201 9 11 1 2 . THE LD. COUNSEL FOR THE ASSESSEE MADE THREE FOLD ARGUMENT THAT IS (A) VALIDITY OF RE ASSESSMENT PROCEEDINGS IN ABSENCE OF ANY INCRIMINATING MATERIAL, (B) APPROVAL GIVEN BY THE JCIT UNDER SECTION 153 D I S NOT IN ACCORDANCE WITH LAW ; AND (C) THE ADDITION ON MERIT. SO FAR AS THE VALIDITY OF THE ASSESSMENT U/S 153 A/143(3) IN ABSENCE OF ANY INCRIMINATING MATERIAL IS CONCERNED THE LD. COUNSEL DREW THE ATTENTION OF THE B ENCH TO THE DECISION OF THE HON BLE DELHI HIGH COURT IN THE CASE OF PCIT VS. M/S SMC P OWER G ENERATION L TD., VIDE ITA 406 / 2019 , ORDER DATED 23 RD JULY 2019 AND SUBMITTED THAT THE H ON BLE HIGH COURT AFTER CONSIDERING THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF CIT V S SINGHAD TECHNICAL E DUCATION SOCIETY (2017) 397 ITR 3 44 , HAS HELD THAT THE REQUIREMENT THAT THE INCRIMINATING MATERIAL TO HAVE TH E CORRELATION TO THE PARTICULAR ADDITION SOUGHT TO BE MADE IS A LOGIC THAT WILL HOLD GOOD NOT ONLY FOR SECTION 153 C OF THE ACT BUT IN RELATION TO S ECTION 153 A OF THE A CT AS WELL. RELYING ON VARIOUS OTHER DECISIONS, HE SUBMITTED THAT SINCE THE ADDITION MADE BY THE AO IS NOT BASED ON ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH , THEREFORE, THE ASSESSMENT MADE UNDER SECTION 153 A/143(3) B Y MAKING THE ADDITION IS NOT IN ACCORDANCE WITH LAW. 13. SO FAR AS THE SECOND PLANK OF HIS ARGUMENT IS CONCERNED THE LD. COUNSEL DREW THE ATTENTION OF THE BENCH TO THE COPY OF APPROVAL GIVEN BY THE JCIT UNDER SECTION 153D IN CASE OF MAHALAXMI GROUP OF CA SES ON 2 8 TH DECEMBER 2016 . THE LD. COUNSEL DREW THE ATTENTION OF THE B ENCH TO PARA 3 OF THE S AID APPROVAL WHICH READS AS UNDER : - ITA NO S . 2540 & 2541 /DEL/201 9 12 3. A APPROVAL IS ACCORDED TO PASS ASSESSMENT ORDERS IN THE DRAFTS ASSESSMENT YEARS IN REFERENCE YEARS. YOU ARE DIRECTED TO E NSURE TAKING INTO ACCOUNT THE SEIZED DOCUMENTS/PAPERS AND COMMENTS IN THE APPRAISAL REPORT PERTAINING TO AYS. THE FACT OF INITIATION OF PENALTY PROCEEDINGS, WHEREVER, APPLICABLE, MUST ALSO BE INCORPORATED IN THE LAS T PARA OF THE ORDER. THE INITIATION OF CO RRECT PENALTY PROVISIONS OF I.T. ACT U/S 271(L)(C)/ 271AAB, AS PER FACTS OF THE CASE , MUST BE ENSURED. 1 4 . REFERRING TO THE DECISION OF THE DELHI B ENCH OF THE TRIBUNAL IN THE CASE OF RISHABH BUILD WELL P. LTD., AND BATCH OF APPEALS VIDE ORDER DATED 4 TH JU LY 2019 , HE SUBMITTED THAT THE TRIBUNAL HAS HELD THAT WHERE THE APPROVING AUTHORITY HAS GIVEN THE APPROVAL IN A TECHNICAL MAN N ER AND HAS DIRECTED THE DCIT TO ENSURE THE SEIZED MATERIALS AND THE FINDINGS OF THE APPRAISAL REPORT TO BE INCORPORATED IN THE FIN AL ASSESSMENT ORDER , APPROVAL GIVEN BY THE J CIT IS NOT A FINAL APPROVAL AS REQUIRED UNDER SECTION 153D OF THE ACT BUT A CONDITIONAL APPROVAL SUBJECT TO MODIFICATION BY THE DCIT AFTER RECEIVING OF THE APPROVAL WHICH MAKES IT AN INVALID , QUALIFIED, UNCERTAI N APPROVAL . ACCORDINGLY, THE ASSESSMENT ORDERS HELD TO BE NULL AND VOID . HE SUBMITTED THAT HERE ALSO THE APPROVAL IS A CONDITIONAL ONE AND, THEREFORE, THE ASSESSMENT ORDERS SHOULD BE TREATED AS NULL AND VOID. 1 5 . SO FAR AS THE MERIT OF THE CASE IS CONCERN ED THE LD. COUNSEL SUBMITTED THAT THE ASSESSEE HAS DISCHARGED THE INITIAL ONUS CAST ON IT BY FILING THE REQUISITE DOCU MENTS . T HE AO HAS NOT ISSUED ANY NOTICE UNDER SECTION 131 TO THE CONCERNED PARTIES OR CALLED FOR INFORMATION FROM THEM UNDER SECTION 133 ( 6 ) AND MERELY ON THE BASIS OF LOW INCOME OF THE CREDITORS , HAS MADE THE ADDITION WHICH HAS BEEN SUSTAINED BY THE CIT(A). HE SUBMITTED THAT ONCE THE ASSESSEE HAS DISCHARGED THE ITA NO S . 2540 & 2541 /DEL/201 9 13 INITIAL ONUS BY FILING THE PRIMARY DETAILS , THE BURDEN SHIFTS TO THE AO WHICH HE HA S FAILED . T HEREFORE, THE ADDITION SO MADE BY THE AO AND SUSTAINED BY THE CIT(A) SHOULD BE DELETED . 1 6 . THE LD. DR ON THE OTHER HAND HEAVILY RELIED ON THE ORDER OF THE AO. HE SUBMITTED THAT THE DECISION OF HON BLE KERALA HIGH COURT IN THE CASE OF E.N. G O PAKUMAR (S UPRA ) IS SQUARELY APPLICABLE TO THE PRESENT CASE AND , THEREFORE , THE ASSESSMENT ORDER CANNOT BE HELD TO BE NULL AND VOID. SO FAR AS THE APPROVAL GIVEN UNDER SECTION 153 D IS CONCERNED , THE LD. DR SUBMITTED THAT THE SAME IS PERFECTLY IN ORDER AND T HE DECISION OF THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF RISHABH B UILDWELL CANNOT BE APPLIED TO THE FACTS OF THE PRESENT CASE. HE SUBMITTED THAT IN THAT CASE IN THE APPROVAL GIVEN UNDER SECTION 153D THE JCIT HAS MENTIONED THAT A TECHNICAL APPROVAL I S ACCORDED TO PASS THE ASSESSMENT ORDER WHEREAS IN THE PRESENT CASE THE JCIT HAS NOT MENTIONED TECHNICAL APPROVAL AND HE HAS GIVEN THE APPROVAL AS PER LAW . HE SUBMITTED THAT THERE IS NOTHING WRONG IN THE APPROVAL GIVEN BY THE JCIT IN THE INSTANT CASE AND I T IS NOT AT ALL A CONDITIONAL APPROVAL AND THEREFORE THE ARGUMENT OF THE LD. COUNSEL IS DEVOID OF ANY MERIT . 1 7 . SO FAR AS THE MERIT OF THE CASE IS CONCERNED THE LD DR SUBMITTED THAT FOR ACCEPTING ANY CASH CREDIT AS GENUINE THE ONUS IS ALWAYS ON THE ASSES SEE TO SUBSTANTIATE WITH EVIDENCE TO THE SATISFACTION OF THE AO REGARDING THE IDENTITY AND CREDIT WORTHINESS OF THE LOAN CREDITORS /SHARE APPLICANTS AND THE GENUINENESS OF THE TRANSACTION. IN THE INSTANT CASE, DESPITE REPEATED REMINDERS THE ASSESSEE DID NOT ITA NO S . 2540 & 2541 /DEL/201 9 14 PRODUCE THE LOAN CREDITORS / SHARE APPLICA NTS A ND HAS NOT DISCHARGED THE ONUS CAST ON IT BY PROVING THE IDENTITY AND CREDITWORTHINESS OF THE LOAN CREDITORS AND GENUINENESS OF THE TRANSACTION. WHEN THE ASSESSEE DID NOT DISCHARGE THE ONUS CAST ON IT , THE COUN SEL CANNOT ARGUE THAT THE AO DID NOT ISSUE SUMMONS UNDER SECTION 131 OR CALLED FOR DETAILS UNDER SECTION 133 ( 6 ) OF THE ACT. RELYING ON VARIOUS DECISIONS AS RELIED ON BY THE CIT(A), HE SUBMITTED THAT THE ADDITION WAS RIGHTLY SUSTAINED BY THE CIT(A). 1 8 . WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES , PERU S ED THE ORDERS OF THE AO AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. WE FIND, THE AO, IN THE INSTANT CAS E , HAS MADE ADDITION OF RS.17,15,113/ - FOR ASSESSMENT YEAR 2009 - 10 AND RS. 30 LACS FOR ASSESSMENT YEAR 2010 - 11 IN THE ORDERS PASSED U/S 153A R.W. SECTION 143(3). A PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THE ADDITION OF RS. 16 , 77 , 983 / - OUT OF THE TOTAL AD DITION OF RS. 17 , 15 , 110 / - FOR A.Y. 2009 - 10 AND RS. 30 LACS IN A.Y. 2010 - 11 IS NOT BASED ON ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH . T HE ADDITION HAS BEEN MADE ON THE BASIS OF POST SEARCH ENQUIRIES . W E FIND THE HON BLE DELHI HIGH COURT I N THE CASE OF PCIT VS. SMC P OWER G ENERATION LIMITED (SUPRA) HAD AN OCCASION TO DECIDE AN IDENTICAL ISSUE WHERE THE ADDITION WAS MADE NOT ON THE BASIS OF INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH , BUT , ADDITION WAS MADE ON THE GROUND THAT THE ASSESSEE HAD NOT ESTABLISHED THE GENUINENESS , IDENTITY AND CREDIT WORTHINESS OF THE ENTITIES ITA NO S . 2540 & 2541 /DEL/201 9 15 FROM W HOM IT HAD RECEIVED SHARE PREMIUM . T HE HON BLE HIGH COURT , FOLLOWING THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF CIT VS. S INGHAD TECHNICAL EDUC ATION SOCIETY , 397 ITR 344 , HELD THAT THE REQUIREMENT THAT THE INCRIMINATING MATERIAL TO HAVE THE CORRELATION TO THE PARTICULAR ADDITION SOUGHT TO BE MADE IS A LOGIC THAT WILL HOLD GOOD NOT ONLY FOR SECTION 153C OF THE A CT , BUT , IN RELATION TO SECTION 153 A OF THE A CT AS WELL . T HE RELEVANT OBSERVATION OF THE H ON BLE H IGH C OURT AT PARA 9 AND 10 OF THE ORDER READS AS UNDER : - 9. THE FACT REMAINS THAT THE REVENUE ITSELF IS NOT DISPUTING THAT IN RESPECT OF THE SHARE CAPITAL NO INCRIMINATING DOCUMENTS WERE FOUND IN THE SEARCH PROCEEDINGS. THE COURT S ATTENTION HAS BEEN DRAWN TO THE DECISION OF THE SUPREME COURT IN CIT V. SINGHAD TECHNICAL EDUCATION SOCIETY (2017) 397 ITR 344 (SC) WHERE IN THE CONTEXT OF SECTION 153C OF THE ACT IT WAS HELD THAT THE INCRIMINATING MA TERIAL WHICH WAS SEIZED HAD TO PERTAIN TO THE AY IN QUESTION. IT IS FURTHER HELD THAT DOCUMENTS SEIZED HAD TO ESTABLISH A CO - RELATION DOCUMENTS WISE WITH THE ASSESSMENT YEARS FOR WHICH THE ADDITION WAS SOUGHT TO BE MADE. 10. THE REQUIREMENT THAT THE INCR IMINATING MATERIAL TO HAVE THE CO - RELATION TO THE PARTICULAR ADDITION SOUGHT TO BE MADE IS A LOGIC THAT WILL HOLD GOOD NOT ONLY FOR SECTION 153 C OF THE ACT BUT IN RELATION TO SECTION 153A OF THE ACT AS WELL. CONSEQUENTLY, THIS COURT DOES NOT FIND ANY ERRO R HAVING BEEN COMMITTED BY THE ITAT IN ACCEPTING THE PLEA OF THE ASSESSEE THAT THERE IS NO INCRIMINATING DOCUMENT WHICH WAS SEIZED IN THE COURSE OF SEARCH RELATING TO THE ADDITION SOUGHT TO BE MADE ON ACCOUNT OF THE SHARE CAPITAL. THEREFORE, THE JURISDICTI ONAL REQUIREMENT OF SECTION 153 A OF THE ACT WAS NOT SATISFIED. 1 9 . SO FAR AS THE DECISION RELIED ON BY THE LD. CIT(A) IN THE CASE OF E.N. GOPAKUMAR IS CONCERNED , NO DOUBT , THE HON BLE KERALA HIGH COURT HAS HELD THAT ASSESSMENT PROCEEDINGS GENERATED BY ISS UANCE OF A NOTICE UNDER SECTION 153 A(1)(A) CAN BE CONCLUDED AGAINST THE INTEREST OF THE ASSESSEE INCLUDING MAKING ADDITION EVEN WITHOUT ANY INCRIMINATING MATERIAL BEING AVAILABLE AGAINST THE ASSESSEE IN ITA NO S . 2540 & 2541 /DEL/201 9 16 S EARCH UNDER SECTION 132 ON THE BASIS OF WHICH NOTICE WAS ISSUED UNDER SECTION 153A (1)(A). H OWEVER , THERE IS NO DECISION AGAINST THE ASSESSEE OF THE JURISDICTIONAL HIGH COURT . I T IS THE SETTLED PROPOSITION OF L A W THAT WHEN THERE ARE DIVERGENT VIEWS ON A PARTICULAR ISSUE THE VIEW WHICH IS FAVORABLE TO THE ASS ESSEE HAS TO BE FOLLOWED AS HELD BY THE HON BLE SUPREME COURT IN THE CASE OF CIT VS V EGETABLE P RODUCTS LTD. 88 ITR 192 . T HEREFORE , RESPECTFULLY FOLLOWING THE DECISION OF THE HON BLE DELHI HIGH COURT IN THE CASE OF SMC POWER GENERATION LTD. CITED ( S UPRA ) , W E HOLD THAT AD DITIONS MADE UNDER SECTION 153 A IN THE ORDERS PASSED UNDER SECTION 1 5 3 /143(3) OF THE A CT ARE NOT IN ACCORDANCE WITH THE LAW AND , THEREFORE , THE ADDITION OF RS. 16 , 77 , 983 / - FOR 2009 - 10 AND RS. 30 LACS FOR ASSESSMENT YEAR 2010 - 11 ARE DIRECTED TO BE DELETED . 20. S O FAR AS THE ORDER FOR ASSESSMENT YEAR 20 0 9 - 1 0 IS CONCERNED,, THE ASSESSEE HAD FILED THE ORIGINAL RETURN DECLARING RS. 31 , 133 / - WHICH IT HAS NOT DISCLOSED IN THE R ETURN I N RESPONSE TO NOTICE UNDER SECTION 153 A. W E DO NOT FIND ANY REASON A S TO WHY THE ASSESSEE HAS NOT DISCLOSED SUCH INCOME IN THE RETURN FILED IN RESPONSE TO NOTICE UNDER SECTION 153 A. THEREFORE, THE ADDITION TO THE TUNE OF RS.3 7 , 133 / - FOR ASSESSMENT YEAR 200 9 - 10 IS UPHELD . 21 . SINCE WE ARE AL LOWING T HE A PPEAL ON LEGAL GROUN D IN ABSENCE OF ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH , THE OTHER ARGUMENTS MADE BY THE ASSESSEE CHALLENGING THE VALIDITY OF THE ORDER IN ABSENCE OF PROPER ITA NO S . 2540 & 2541 /DEL/201 9 17 APPROVAL UNDER SECTION 153 D OR ON MERIT ARE NOT BEING ADJUDI CATED BEING ACADE MIC IN NATURE . 22 . IN THE RESULT THE APPEAL FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 2009 - 10 IS PARTLY ALLOWED AND THE APPEAL FOR ASSESSMENT YEAR 2010 - 11 IS ALLOWED . THE DECISION WAS PRONOUNCED IN THE OPEN COURT ON 13 . 10 .20 20 . SD/ - SD/ - ( SUDHANSHU SRIVASTAVA ) ( R. K. PANDA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 13 TH OCTOBER, 2020. DK COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASSTT. REGISTRAR, ITAT, NEW DELHI