Cedar Infonet Pvt. Ltd., New Delhi V. ACIT, New Delhi

ITA 263/DEL/2016

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 3753 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 10 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2010-2011
• Appeal Filed On: 19-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S RANA
• Keywords: Bogus purchase; Depreciation; Search and seizure; Deemed dividend
• Section: 153A; 2(22)(e); 14A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : G : NEW DELHI BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NOS.263 TO 268/DEL/2016 A.YS: 2010-11, 2009-10, 2007-08, 2006-07, 2005-06 & 2004-05 CEDAR INFONET PVT. LTD., C/O R.S. AHUJA & CO., CA, C-353, DEFENCE COLONY, NEW DELHI. PAN: AABCC9486E VS ACIT, CENTRAL CIRCLE-11, NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SHRI S.S. RANA, CIT, DR DATE OF HEARING : 25.11.2019 DATE OF PRONOUNCEMENT : 28.11.2019 ORDER PER R.K. PANDA, AM: THIS BATCH OF APPEALS FILED BY THE ASSESSEE ARE DIR ECTED AGAINST THE SEPARATE ORDERS OF THE CIT(A)-31, NEW DELHI, FOR THE RESPECT IVE ASSESSMENT YEARS. SINCE IDENTICAL GROUNDS HAVE BEEN RAISED BY THE ASSESSEE IN ALL THESE APPEALS, THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CO MMON ORDER FOR THE SAKE OF CONVENIENCE. ITA NOS.263 TO 268/DEL/2016 2 2. IT WAS SEEN THAT THE NOTICE ISSUED BY THE REGIST RY THROUGH RPAD WAS RETURNED BY THE POSTAL AUTHORITIES WITH THE REMARKS : LEFT WITHOUT ADDRESS. THE ASSESSEE HAS NOT TAKEN ANY STEPS TO INTIMATE THE CH ANGE OF ADDRESS, IF ANY. UNDER THESE CIRCUMSTANCES, ALL THESE APPEALS FILED BY THE ASSESSEE ARE BEING DECIDED ON THE BASIS OF THE MATERIAL AVAILABLE ON RECORD AND A FTER HEARING THE LD. DR. 3. THE GROUNDS RAISED BY THE ASSESSEE IN ALL THE AP PEALS READ AS UNDER:- ITA NO.263/DEL/2016 (A) THAT ON THE FACTS & CIRCUMSTANCES OF THE CASE THE LEARNED ITO & THE CIT(A) ERRED IN : 1. UPHOLDING THE ASSESSMENT & ADDITION OF RS.3,81,96,6 42/- U/S 14A IN SPITE OF THE FACT THAT THE ASSESSMENT FOR THE YE AR HAD ABATED IN TERMS OF SECTION 153A AND NO INCRIMINATING MATERIAL WAS U NEARTHED IN THE COURSE OF SEARCH & SEIZURE OPERATIONS. 2. DISALLOWANCE OF RS.3,81,96,642/- U/S 36(1)(III). (B) THE ASSESSEE CRAVES LEAVE TO ADD, ALTER OR AMEND TH E GROUNDS OF APPEAL AT AND BEFORE THE HEARING. ITA NO.264/DEL/2016 (A) THAT ON THE FACTS & CIRCUMSTANCES OF THE CASE THE LEARNED ITO & THE CIT(A) ERRED IN : 1. UPHOLDING THE ASSESSMENT & ADDITION OF RS.17,20,875 /- U/S 14A AND RS.4,08,45,156/- IN SPITE OF THE FACT THAT THE ASSESSMENT FOR THE YEAR HAD ABATED IN TERMS OF SECTION 153A AND NO INC RIMINATING MATERIAL WAS UNEARTHED IN THE COURSE OF SEARCH & SE IZURE OPERATIONS. 2. DISALLOWANCE OF RS.17,20,875/- U/S 14A PERTAINING T O EXPENSES TOWARDS INVESTMENT ACTIVITY. 3. DISALLOWING U/S 14A WITHOUT THE ASSESSING OFFICER G IVING ANY FINDING IN THE ASSESSMENT ORDER REGARDING THE AMOUN T OF ACTUAL EXPENDITURE INCURRED BY THE ASSESSEE TO EARN TAX-FR EE INCOME. ITA NOS.263 TO 268/DEL/2016 3 4. NOT FOLLOWING THE ORDERS OF THE JURISDICTIONAL HIGH COURT IN THIS MATTER. 5. DISALLOWANCE OF INTEREST PAID RS.4,08,45,156 U/S 36 (1)(III). (B) THE ASSESSEE CRAVES LEAVE TO ADD, ALTER OR AMEND TH E GROUNDS OF APPEAL AT AND BEFORE THE HEARING. ITA NO.265/DEL/2016 (A) THAT ON THE FACTS & CIRCUMSTANCES OF THE CASE THE LEARNED ITO & THE CIT(A) ERRED IN : 1. UPHOLDING THE ASSESSMENT & ADDITION OF RS.8,88,513/ - U/S 14A IN SPITE OF THE FACT THAT THE ASSESSMENT FOR THE YEAR HAD ABATED IN TERMS OF SECTION 153A AND NO INCRIMINATING MATERIAL WAS UNEA RTHED IN THE COURSE OF SEARCH & SEIZURE OPERATIONS. 2.DISALLOWANCE OF RS.8,88,513/- U/S 14A R.W.R 8D OF THE INCOME TAX ACT. 3. DISALLOWING U/S 14A WITHOUT THE ASSESSING OFFICER G IVING ANY FINDING IN THE ASSESSMENT ORDER REGARDING THE AMOUN T OF ACTUAL EXPENDITURE INCURRED BY THE ASSESSEE TO EARN TAX-FR EE INCOME. 4. NOT FOLLOWING THE ORDERS OF THE JURISDICTIONAL HIGH COURT IN THIS MATTER. (B) THE ASSESSEE CRAVES LEAVE TO ADD, ALTER OR AMEND TH E GROUNDS OF APPEAL AT AND BEFORE THE HEARING. ITA NO.266/DEL/2016 (A) THAT ON THE FACTS & CIRCUMSTANCES OF THE CASE THE L EARNED ITO & THE CIT(A) ERRED IN : 1.UPHOLDING THE ADDITION OF RS.25,02,253/- ON ACCOU NT OF BOGUS PURCHASES. 2. DISALLOWANCE OF RS.1,00,000/- U/S 14A OF THE INCOM E TAX ACT EVEN THOUGH THIS WAS NOT PART OF GROUNDS OF APPEAL BEFORE CIT(A) AND NO NOTICE OF ENHANCEMENT HAS BEEN GIVEN. 3. DISALLOWING U/S 14A WITHOUT THE ASSESSING OFFICER G IVING ANY FINDING IN THE ASSESSMENT ORDER REGARDING THE AMOUN T OF ACTUAL EXPENDITURE INCURRED BY THE ASSESSEE TO EARN TAX-FR EE INCOME. ITA NOS.263 TO 268/DEL/2016 4 4. NOT FOLLOWING THE ORDERS OF THE JURISDICTIONAL HIGH COURT IN THIS MATTER. (B) THE ASSESSEE CRAVES LEAVE TO ADD, ALTER OR AMEND TH E GROUNDS OF APPEAL AT AND BEFORE THE HEARING. ITA NO.267/DEL/2016 (A) THAT ON THE FACTS & CIRCUMSTANCES OF THE CASE THE L EARNED ITO & THE CIT(A) ERRED IN : 1. UPHOLDING THE ASSESSMENT & ADDITION OF RS.1,00,000/ - U/S 14A IN SPITE OF THE FACT THAT THE ASSESSMENT FOR THE YEAR HAD ABATED IN TERMS OF SECTION 153A & NO INCRIMINATING MATERIAL WAS UNEART HED IN THE COURSE OF SEARCH & SEIZURE OPERATIONS. 2. ADDITION OF RS.48,50,000/- AS DEEMED DIVIDEND U/S 2 (22)(E) OF THE INCOME TAX ACT. 3. DISALLOWING RS.1,00,000/- U/S 14A R.W.R. 8D OF INCO ME TAX ACT. 4. DISALLOWING U/S 14A WITHOUT THE ASSESSING OFFICER GIVING ANY FINDING IN THE ASSESSMENT ORDER REGARDING THE AMOUN T OF ACTUAL EXPENDITURE INCURRED BY THE ASSESSEE TO EARN TAX FREE INCOME. 5. NOT FOLLOWING THE ORDERS OF THE JURISDICTIONAL HIGH COURT IN THIS MATTER. (B) THE ASSESSEE CRAVES LEAVE TO ADD, ALTER OR AMEND TH E GROUNDS OF APPEAL AT AND BEFORE THE HEARING. ITA NO.268/DEL/2016 (A) THAT ON THE FACTS & CIRCUMSTANCES OF THE CASE T HE LEARNED ITO & THE CIT(A) ERRED IN : 1. UPHOLDING THE ASSESSMENT & ADDITION OF RS.2,00,000/ - U/S 14A IN SPITE OF THE FACT THAT THE ASSESSMENT FOR THE YEAR HAD ABATED IN TERMS OF SECTION 153A & NO INCRIMINATING MATERIAL WAS UNEART HED IN THE COURSE OF SEARCH & SEIZURE OPERATIONS. 2. DISALLOWING RS.2,00,000/- U/S 14A OF INCOME TAX ACT . ITA NOS.263 TO 268/DEL/2016 5 3. DISALLOWING U/S 14A WITHOUT THE ASSESSING OFFICER GIVING ANY FINDING IN THE ASSESSMENT ORDER REGARDING THE AMOUN T OF ACTUAL EXPENDITURE INCURRED BY THE ASSESSEE TO EARN TAX FREE INCOME. 4. NOT FOLLOWING THE ORDERS OF THE JURISDICTIONAL HIGH COURT IN THIS MATTER. (B)THE ASSESSEE CRAVES LEAVE TO ADD, ALTER OR AMEND THE GROUNDS OF APPEAL AT AND BEFORE THE HEARING. 5. FIRST WE TAKE UP ITA NO.268/DEL/2016 FOR ASSESSME NT YEAR 2004-05 AS THE LEAD CASE. FACTS OF THE CASE, IN BRIEF, ARE THAT T HE ASSESSEE IS A PRIVATE LIMITED COMPANY. A SEARCH AND SEIZURE OPERATION U/S 132 OF THE IT ACT WAS INITIATED IN THE CASE OF THE ASSESSEE ON 24 TH SEPTEMBER, 2009. IN RESPONSE TO NOTICE U/S 153A, THE ASSESSEE FILED RETURN OF INCOME DECLARING TOTAL INC OME AT RS.75,642/-. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S 153A /143(3) ON 29 TH DECEMBER, 2011 DETERMINING THE TOTAL INCOME AT RS.2,99,111/- WHEREIN HE DISALLOWED EXCESSIVE CLAIM OF DEPRECIATION OF RS.10,707/- AND DISALLOWED INTEREST OF RS.3,64,046/- U/S 36(1)(III) OF THE IT ACT, 1961. 6. SIMILARLY, FOR ASSESSMENT YEAR 2005-06, THE ASSESSI NG OFFICER COMPLETED THE SAME DETERMINING THE TOTAL INCOME AT RS.56,64,423/- AS AGAINST THE RETURNED INCOME OF RS.6,46,821/-, WHEREIN HE MADE ADDITION OF RS.8, 317/- ON ACCOUNT OF EXCESS CLAIM OF DEPRECIATION, OF RS.48,50,000/- ON ACCOUN T OF DEEMED DIVIDEND U/S 2(22)(E) AND RS.1,59,285/- BEING DISALLOWANCE OF IN TEREST U/S 36(1)(III). FOR ASSESSMENT YEAR 2006-07, THE ASSESSING OFFICER COMP LETED THE ASSESSMENT DETERMINING THE TOTAL INCOME AT RS.38,53,307/- AS A GAINST RETURNED INCOME OF RS.12,32,982/- WHEREIN HE MADE ADDITION OF RS.6,480 /- ON ACCOUNT OF EXCESS CLAIM ITA NOS.263 TO 268/DEL/2016 6 OF DEPRECIATION AND RS.25,02,253 BEING DISALLOWANCE OF INTEREST U/S 36(1)(III). FOR ASSESSMENT YEAR 2007-08, THE ASSESSING OFFICER COMP LETED THE ASSESSMENT DETERMINING THE TOTAL INCOME AT RS.25,95,085/- AS A GAINST THE RETURNED INCOME OF RS.11,97,967/-, WHEREIN HE DISALLOWED PRELIMINARY E XPENSES OF RS.10,935/-, EXCESS CLAIM OF DEPRECIATION OF RS.1,755/- AND DISALLOWANC E U/S 14A OF RS.8,88,513/-. FOR ASSESSMENT YEAR 2009-10, THE ASSESSING OFFICER COMPLETED THE ASSESSMENT AT A TOTAL INCOME OF RS.9,02,23,864/- AS AGAINST NIL RET URNED INCOME WHEREIN HE DISALLOWED PRELIMINARY EXPENSES OF RS.10,935/-, EXC ESS CLAIM OF DEPRECIATION OF RS.1,268/-, DISALLOWANCE OF RS 4,93,66,505/- U/S 14 A AND DISALLOWANCE U/S 36(1)(III) OF RS.4,08,45,156/-. SO FAR AS ASSESSMEN T YEAR 2010-11 IS CONCERNED, THE ASSESSING OFFICER COMPLETED THE ASSESSMENT BY DETER MINING THE TOTAL INCOME AT RS.3,42,92,153/- AS AGAINST DECLARED LOSS OF RS.2,6 4,51,835/- WHEREIN HE DISALLOWED PRELIMINARY EXPENSES OF RS.10,935/-, EXC ESS CLAIM OF DEPRECIATION OF RS.12,68/-, DISALLOWANCE U/S 14A OF RS.1,76,41,196/ - AND DISALLOWANCE OF INTEREST U/S 36(1)(III) OF RS.4,30,90,589/-. 7. BEFORE THE CIT(A), APART FROM CHALLENGING THE ADDIT ION ON MERIT, WE FIND THE ASSESSEE HAD TAKEN A LEGAL GROUND WHICH READS AS UN DER:- THAT THE ASSESSING OFFICER EXCEEDED HIS JURISDICTI ON IN MAKING VARIOUS ADDITIONS/DISALLOWANCES IN THE IMPUGNED ASSESSMENT COMPLETED UNDER SECTIONS 143(3)/153A OF THE ACT, DE-HORS ANY INCRIMINATING M ATERIAL/DOCUMENT FOUND DURING THE COURSE OF SEARCH. 8. IDENTICAL GROUNDS HAVE BEEN RAISED BY THE ASSESSEE FOR ALL THE YEARS BEFORE THE CIT(A). ITA NOS.263 TO 268/DEL/2016 7 9. HOWEVER, WE FIND THE LD.CIT(A) HAS NOT ADJUDICATED THIS GROUND. A PERUSAL OF THE ORDER OF THE ASSESSING OFFICER ALSO SHOWS TH AT IT IS NOT CLEARLY COMING OUT FROM THE ASSESSMENT ORDER AS TO WHETHER THE ADDITIO N HAS BEEN MADE ON THE BASIS OF ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. UNDER THESE CIRCUMSTANCES, WE DEEM IT PROPER TO RESTORE THE ISS UE TO THE FILE OF THE CIT(A) WITH A DIRECTION TO ADJUDICATE THE LEGAL GROUND RAISED B EFORE HIM CHALLENGING THE VARIOUS ADDITIONS MADE BY THE ASSESSING OFFICER IN ABSENCE OF ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. SINCE WE ARE RE STORING THE ISSUE TO THE FILE OF THE CIT(A) ON THIS LEGAL GROUND WHICH WAS RAISED BE FORE HIM, BUT, NOT ADJUDICATED BY HIM, WE REFRAIN OURSELVES FROM ADJUDICATING THE VARIOUS OTHER GROUNDS RAISED BY THE ASSESSEE CHALLENGING THE VARIOUS ADDITIONS ON M ERIT. THE APPEALS FILED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED FOR STATISTICAL PU RPOSES. 10. IN THE RESULT, THE APPEALS FILED BY THE A SSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. THE DECISION WAS PRONOUNCED IN THE OPEN COURT ON 2 8.11.2019. SD/- SD/- (KULDIP SINGH) (R.K. PANDA) JUDICIAL MEMBER ACCO UNTANT MEMBER DATED: 28 TH NOVEMBER, 2019 DK ITA NOS.263 TO 268/DEL/2016 8 COPY FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASSTT. REGISTRAR, ITAT, NEW DELHI