Dilbagh Rai Chawla, New Delhi V. ACIT, New Delhi

ITA 257/DEL/2013

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5103 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 01-08-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 15-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RENU AMITABH
• Keywords: Search and seizure; Question of law
• Section: 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: B NEW DELHI BEFORE SHRI B.P. JAIN, ACCOUNTANT MEMBER & SHRI K.N. CHARY, JUDICIAL MEMBER ITA NO.-257/DEL/2013 ( ASSESSMENT YEAR: 2006-07) DILBAGH RAI CHAWLA C/O RAJ KUMAR & ASSOCIATES, CA, 4435/7, ANSARI ROAD, DARYA GANJ, NEW DELHI. AAWPR6716J VS ACIT CENTRAL CIRCLE 19, JHANDEWALAN, NEW DELHI. ASSESSEE BY SH. RAJ KUMAR GUPTA, CA REVENUE BY MS. RENU AMITABH, CIT DR ORDER PER SHRI K.N. CHARY, J.M. THIS IS AN APPEAL CHALLENGING THE ORDER DATED 30.1 1.2012 IN APPEAL NO. 533/10-11/180 PASSED BY THE LD. COMMISSI ONER OF INCOME TAX (APPEALS)-XXXIII, NEW DELHI. 2. BRIEFLY STATED FACTS ARE THAT AFTER THE ASSESSEE FILED THE RETURN OF INCOME ON 16.03.2007 DECLARING A TOTAL INCOME OF RS. 11,10,510/- FOR THE AY 2006-07, THERE WAS A SEARCH AND SEIZURE OPERATION CARRIED OUT IN R.H. GROUP OF CASES INCLUD ING THE DATE OF HEARING 02.08.2017 DATE OF PRONOUNCEMENT 08.08.2017 2 ITA NO. 257/DEL/2013 ASSESSEE ON 10.02.2009. PURSUANT TO THE STATUTORY NOTICE U/S 153A OF THE INCOME TAX ACT, 1961 THE ASSESSEE FILED THE COPY OF THE ORIGINAL RETURN AND FROM TIME TO TIME FURNISHED THE DETAILS SOUGHT BY THE DEPARTMENT. AO FOUND THAT THE ASSESS EE WAS DERIVING INCOME FROM M/S R.H. AGRO OVERSEAS PVT. LT D. AS SALARY BESIDES INTEREST ON CAPITAL AND REMUNERATION FROM M /S RAGHUNATH AGRO INDUSTRIES AS A PARTNER AND INCOME FROM OTHER SOURCES. THERE WERE LONG TERM CAPITAL GAINS ON THE SALE OF S HARES OF LT OVERSEAS LTD. FOR A CONSIDERATION OF RS. 1,31,92,16 0/- WHICH WAS NOT REFLECTED IN THE COMPUTATION FILED WITH THE ORI GINAL RETURN AND THE LONG TERM CAPITAL GAIN WAS RS. 56,81,323/- WHIC H THE AO ADDED TO THE INCOME OF THE ASSESSEE. APPEAL CARRIE D BY THE ASSESSEE BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS)- XXXIII, NEW DELHI WAS DISMISSED BY WAY OF IMPUGNED ORDER, AS SUCH THE ASSESSEE IS BEFORE US IN THIS APPEAL CHALL ENGING THE SAID ADDITION ON THE GROUND THAT IN THE ABSENCE OF ANY I NCRIMINATING MATERIAL, A CONCLUDED ASSESSMENT CANNOT BE REOPENED TO MAKE ANY ADDITIONS U/S 153A AND FOR THIS PROPOSITION HE PLACED RELIANCE ON THE DECISIONS OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA (2015) 61 TAXMANN.COM 412 (DEL.) 3 ITA NO. 257/DEL/2013 AND PR. CIT VS. MEETA GUTGUTIA PROP. M/S FERNS N PETALS (ITA NO. 306/2017 DATED 25 TH MAY, 2017). PER CONTRA LD. DR WHILE PLACING RELIANCE ON THE DECISIONS REPORTED IN EN GOPA KUMAR VS. CIT 75 TAXMAN.COM 215 AND JUDGMENT OF THE HONBLE DELHI HI GH COURT IN THE CASE OF CIT VS. ANIL KUMAR BHATIA 352 ITR 493 A RGUED THAT WHEN ONCE THE ASSESSMENT IS REOPENED THE JURISDICTI ON OF THE AO EXTENDS TO MAKE ANY ADDITION BASING ON RECORD. 3. SO FAR AS THE FACTS ARE CONCERNED ABSOLUTELY THE RE IS NO DISPUTE. ORIGINAL RETURN OF INCOME FILED ON 16.03. 2007 DECLARING AN INCOME OF RS. 11,10,510/- WAS PROCESSED U/S 143( 1) AND SUBSEQUENT TO THE SEARCH AND SEIZURE ON 10.02.2009, AND PURSUANT TO THE NOTICE ISSUED U/S 153A ON 20.07.200 9, THE ASSESSEE FILED A COPY OF HIS ORIGINAL RETURN ON 20. 09.2010. IT IS NOT THE CASE OF THE REVENUE THAT ANY MATERIAL INCRIMINA TING THE ACCUSED OF ANY CONCEALMENT OF INCOME WAS UNEARTHED DURING THE SEARCH AND SEIZURE OPERATIONS. 4. HON'BLE DELHI HIGH COURT IN CASE OF CIT VS. KABU L CHAWLA (2015) 61 TAXMANN.COM 412 (DEL) CONSIDERING ITS EAR LIER DECISION IN 4 ITA NO. 257/DEL/2013 THE CASE OF CIT VS. ANIL KUMAR BHATIA (SUPRA) CONSI DERED THE FOLLOWING QUESTION OF LAW : 2. THE ISSUE THAT THE COURT PROPOSES TO ADDRESS IN THESE APPEALS IS THE SAME THAT WAS CONSIDERED BY THE ITAT VIZ., WHETHER THE ADDITIONS MADE TO THE INCOME OF THE RESPONDENT-ASSESSEE FOR THE SAID A.YS UNDER SECTION 2(22)(E) OF THE INCOME TAX ACT, 1961 (ACT) WERE N OT SUSTAINABLE BECAUSE NO INCRIMINATING MATERIAL CONCE RNING SUCH ADDITIONS WERE FOUND DURING THE COURSE OF SEAR CH AND FURTHER NO ASSESSMENTS FOR SUCH YEARS WERE PENDING ON THE DATE OF SEARCH ? 5. FURTHER, THE HON'BLE DELHI HIGH COURT IN THE ABO VE CASE AS REGARDS COMPLETED ASSESSMENT HELD AS UNDER : VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE A.O. WHILE MAKING THE ASSESSMENT UNDER SECTION 153A 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 CO URSE OF SEARCH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCL OSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT 6. THE HON'BLE DELHI HIGH COURT IN ITS RECENT DECIS ION IN THE CASE OF PR. CIT VS. MEETA GUTGUTIA (SUPRA) IN PARAS 69 TO 72 HAS HELD AS UNDER : 69. WHAT WEIGHED WITH THE COURT IN THE ABOVE DECIS ION WAS THE HABITUAL CONCEALING OF INCOME AND INDULGING IN CLA NDESTINE OPERATIONS AND THAT A PERSON INDULGING IN SUCH ACT IVITIES CAN HARDLY BE ACCEPTED TO MAINTAIN METICULOUS BOOKS OR RECORDS FOR LONG. THESE FACTORS ARE ABSENT IN THE PRESENT CASE . THERE WAS NO JUSTIFICATION AT ALL FOR THE AO TO PROCEED ON SURMI SES AND ESTIMATES WITHOUT THERE BEING ANY INCRIMINATING MATERIAL QUA THE AY FOR WHICH HE SOUGHT TO MAKE ADDITIONS OF FRANCHISEE COMMISSIO N. 5 ITA NO. 257/DEL/2013 70. THE ABOVE DISTINGUISHING FACTORS IN DAYAWANTI G UPTA (SUPRA), THEREFORE, DO NOT DETRACT FROM THE SETTLED LEGAL POSITION IN KABUL CHAWLA (SUPRA) WHICH HAS BEEN FOLLOWED NOT ON LY BY THIS COURT IN ITS SUBSEQUENT DECISIONS BUT ALSO BY SEVER AL OTHER HIGH COURTS. 71. FOR ALL OF THE AFOREMENTIONED REASONS, THE COUR T IS OF THE VIEW THAT THE ITAT WAS JUSTIFIED IN HOLDING THAT TH E INVOCATION OF SECTION 153A BY THE REVENUE FOR THE AYS 2000-01 TO 2003-04 WAS WITHOUT ANY LEGAL BASIS AS THERE WAS NO INCRIMINATI NG MATERIAL QUA EACH OF THOSE AYS. CONCLUSION 72. TO CONCLUDE : (I)QUESTION (I) IS ANSWERED IN THE NEGATIVE I.E., I N FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. IT IS HELD THAT I N THE FACTS AND CIRCUMSTANCES, THE REVENUE WAS NOT JUSTIFIED IN INV OKING SECTION 153 A OF THE ACT AGAINST THE ASSESSEE IN RELATION T O AYS 2000-01 TO AYS 2003-04. 7. IT IS, THEREFORE, CLEAR THAT IN THE ABSENCE OF A NY INCRIMINATING MATERIAL THAT COULD BE FOUND DURING THE SEARCH AND SEIZURE OPERATIONS THE CONCLUDED ASSESSMENT OF THE ASSESSEE FOR THE AY 2006-07 WAS SOUGHT TO BE REOPENED TO MAKE THE ADDIT IONS. LD. DR ARGUED THAT THE RETURN OF INCOME PROCESSED U/S 1 43(1) OF THE ACT, AS SUCH IN VIEW OF THE JUDGMENT IN ACIT VS. RA JESH JHAVERI STOCK BROKERS PVT. LTD. 291 ITR 500 (SC), THERE WAS NO SCRUTINY OF THE RETURN OF INCOME AND CONSEQUENTLY NO QUESTION O F REOPENING THE SAME ARISES, BUT IN PCIT VS. WORLD WINDOW IMPEX INDIA (P) LTD. (ITA NO. 175/DEL/2016) DECIDED ON 09.03.2016 T HE HONBLE DELHI HIGH COURT HELD AS FOLLOWS: 6 ITA NO. 257/DEL/2013 4. MR. DILEEP SHIVPURI, LD. SENIOR STANDING COUNS EL FOR THE REVENUE, SOUGHT TO DISTINGUISH THE JUDGMENT IN COMMISSIONER OF INCOME TAX (CENTRAL)-III VS. KABUL CHAWLA (SUPRA) ON THE GROUND THAT IT DID NOT CONSIDER A SITUATION WHERE T HE ORIGINAL RETURN WAS MERELY PROCESSED UNDER SECTION 143(1) OF THE ACT. 5. THE COURT NOTES THAT THE DECISION IN COMMISSIONER OF INCOME TAX (CENTRAL)-III VS. KABUL CHAWLA (SUPRA) DOES DEALS WITH THE SAID SITUATION AS IS EVIDENT FROM PARA 3 O F THE SAID JUDGMENT READ WITH THE CONCLUSION IN PARA 37(V). T HE COURT IS, THEREFORE, NOT PERSUADED TO FRAME ANY QUESTION OF L AW IN THIS APPEAL. 8. IN VIEW OF THE CIRCUMSTANCES, WE ARE OF THE CONS IDERED OPINION THAT THERE IS NO MATERIAL MUCH LESS INCRIMI NATING MATERIAL JUSTIFYING THE AO TO REOPEN THE CONCLUDED ASSESSMEN T AND TO MAKE AN ADDITION AS SUCH WE HOLD THAT THE INVOCATION OF SECTION 153A BY THE REVENUE FOR THE AY 2006-07 WAS WITHOUT ANY L EGAL BASIS AND CANNOT BE SUSTAINED. WE, ACCORDINGLY, SET ASID E THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE ADDITION. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 08.08.2017 SD/- SD/- (B.P. JAIN) (K. NARSIM HA CHARY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 08.08.2017 *KAVITA ARORA 7 ITA NO. 257/DEL/2013 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT TRUE COPY ASSISTANT REGISTRAR ITAT NEW DELHI DRAFT DICTATED ON 02.08.2017/03.08.17 DRAFT PLACED BEFORE AUTHOR 03.08.2017 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 08.8.17 APPROVED DRAFT COMES TO THE SR.PS/PS 08.8.17 KEPT FOR PRONOUNCEMENT ON 08.8.17 FILE SENT TO THE BENCH CLERK 10.8.17 DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.