M/s B.L. Mehta, Chandigarh V. DCIT, Chandigarh

ITA 275/CHANDI/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6927 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 5 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 18-07-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 16-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVI SARANGA L
• Keywords: Gift; Search and seizure; Audit objection; Period of limitation; Time period of passing order; Reason to believe; Documents seized
• Section: 143(3); 153A; 139(5); 147; 69; 148; 132; 139

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER & DR. B.R.R. KUMAR, ACCOUNTANT MEMBER ITA NOS. 275 TO 277/CHD/2015 ASSESSMENT YEARS: 2006-07, 2007-08 & 2009-10 SH. B.L. MEHTA, VS. THE DCIT, CENTRAL CIRCLE-1, CHANDIGARH CHANDIGARH PAN NO. AAMPL3260F (APPELLANT) (RESPONDENT) APPELLANT BY : SH. T.N. SINGLA RESPONDENT BY : SH. RAVI SARANGAL DATE OF HEARING : 22.06.2017 DATE OF PRONOUNCEMENT : 28.08.2017 ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE ABOVE CAPTIONED APPEALS HAVE BEEN PREFERRED BY THE SAME ASSESSEE AGAINST THE SEPARATE ORDERS DATED 10.02.20 15 OF THE PRINCIPAL COMMISSIONER OF INCOME TAX (OSD), [HEREINAFTER REFE RRED TO AS PCIT], GURGAON RELATING TO ASSESSMENT YEARS 2006-07, 2007- 08 AND 2009-10 RESPECTIVELY. 2. SINCE IDENTICAL FACTS AND ISSUES HAVE BEEN INVOL VED IN ALL THE APPEALS, THE SAME HAVE BEEN HEARD TOGETHER AND ARE BEING DIS POSED OF BY THIS 2 COMMON ORDER. FOR THE SAKE OF CONVENIENCES, THE FAC TS HAVE BEEN TAKEN FROM ITA NO. 275/CHD//2015 (ASSESSMENT YEAR 2006-07 ). 3. THE ASSESSEE IN THIS APPEAL IS AGGRIEVED BY THE ACTION OF THE CIT(A) IN CONFIRMING THE ADDITIONS MADE BY THE ASSESSING O FFICER IN THE ASSESSMENT PROCEEDINGS CARRIED OUT U/S 143(3) READ WITH SECTION 153A OF THE OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT' ) IN RELATION TO THE GIFTS RECEIVED BY THE ASSESSEE AMOUNTING TO RS. 55 LACS D URING THE YEAR UNDER CONSIDERATION. APART FROM CONTESTING THE ADDITION O N MERITS, THE ASSESSEE IN THIS APPEAL HAS TAKEN AN ADDITIONAL LEGAL GROUND, W HICH READS AS UNDER:- THAT THE LD. PRINCIPAL CIT (OSD) HAS WRONGLY UPHELD THE ADDITION OF RS. 55 LACS RECEIVED DURING THE YEAR U/S 153A WITHOUT ANY INCRIMINATING MATERIAL RELATING TO THESE RECEIPTS FOUND DURING THE SEARCH SINCE THE LEGAL PLEA RAISED BY THE ASSESSEE BY WAY OF ADDITIONAL GROUND GOES TO THE ROOT OF THE CASE AND THE FINDINGS ARRIV ING ON THAT ISSUE WILL BE DETERMINATIVE OF THE VALIDITY OF THE ASSESSMENT DON E BY THE ASSESSING OFFICER U/S 153 OF THE ACT, HENCE, WE DEEM IT FIT T O ADMIT THE LEGAL ISSUE FOR ADJUDICATION. 4. THE BRIEF FACTS OF THE CASE RELATING TO THE ISSU E UNDER CONSIDERATION ARE THAT A SEARCH AND SEIZURE OPERATION WAS CONDUCT ED AT THE RESIDENTIAL AND BUSINESS PREMISES OF THE MEHTA AND ZANDAR GROUP ON 18.2.2011, THE ASSESSEE BEING PART OF THAT GROUP WAS ALSO COVERED. THE ASSESSMENT WAS COMPLETED U/S 143(3) READ WITH SECTION 153A OF THE ACT MAKING THE IMPUGNED ADDITIONS OF RS. 55 LAKHS INTO THE INCOME OF THE ASSESSEE ON 3 ACCOUNT OF CERTAIN GIFTS ALLEGEDLY RECEIVED BY THE ASSESSEE FROM HIS RELATIVES DURING THE YEAR UNDER CONSIDERATION. 5. IT HAS BEEN PLEADED BY THE LD. AUTHORISED REPRES ENTATIVE (AR) THAT THE ORIGINAL ASSESSMENT PROCEEDINGS FOR THE ASSESSM ENT YEAR UNDER CONSIDERATION HAD ALREADY ATTAINED FINALITY AS ON T HE DATE OF SEARCH. THAT EVEN THE LIMITATION PERIOD FOR ISSUANCE OF NOTICE U /S 143(2) OF THE ACT FOR INITIATION OF SCRUTINY ASSESSMENT PROCEEDINGS HAD E XPIRED AND FURTHER THAT SINCE NO INCRIMINATING MATERIAL WAS FOUND DURING TH E SEARCH ACTION, HENCE, NO ADDITIONS WERE WARRANTED U/S 153A OF THE ACT. HE IN THIS RESPECT HAS RELIED UPON THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. 120 DTR 89 AND OF THE DELHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA 234 TAXMAN 30 0 ( DELHI) AND IN PRINCIPAL CIT VS. MEETA GUTGUTIA PROP M/S FERNS N PETALS, ITA 306/2017 AND OTHERS DECIDED VIDE ORDER DATED 25.5.2 017. 6. THE LD. D.R., IN REBUTTAL TO THIS LEGAL PLEA RAI SED BY THE ASSESSEE HAS STRONGLY CONTENDED THAT EVEN IN THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND DURING THE SEARCH ACTION, THE AO IS EMPOWERED TO LOOK INTO, CONSIDER AND MAKE ADDITIONS IN RELATION TO THE ISSUES REGARD ING WHICH NO INCRIMINATING MATERIAL WAS FOUND DURING THE SEARCH ACTION AS IT WAS OPEN TO THE AO TO PASS FRESH ASSESSMENT ORDERS UNDER SECTIO N 153A OF THE ACT LOOKING INTO ALL THE ASPECTS OF THE MATTER IRRESPEC TIVE OF THE FACT WHETHER OR NOT THE ORIGINAL ASSESSMENTS HAVE BEEN COMPLETED AN D NOT PENDING OR ABATED ON THE DATE OF SEARCH ACTION. HE HAS FURTHE R CONTENDED THAT EVEN OTHERWISE THE ORIGINAL ASSESSMENT PROCEEDINGS WERE NOT COMPLETED UNDER SECTION 143(3) OF THE ACT RATHER THE RETURNS FILED BY THE ASSESSEE WERE PROCESSED UNDER SECTION 143(1) OF THE ACT AND UNDER THE CIRCUMSTANCES THE 4 AO WAS EMPOWERED TO EXAMINE AND LOOK INTO THE ISSUE S AS THE SAME WERE NOT LOOKED INTO WHILE PROCESSING THE RETURN UNDER S ECTION 143(1) OF THE ACT. 7. WE HAVE CONSIDERED THE RIVAL CONTENTIONS. THE LD . AR HAS SUBMITTED THAT THE ISSUE RELATING TO THE VALIDITY OF ASSESSME NT MADE UNDER SECTION 153A WITHOUT HAVING ANY INCRIMINATING MATERIAL FOUN D DURING THE SEARCH ACTION U/S 132 OF THE ACT IN CASE OF COMPLETED ASSE SSMENTS, EVEN WHERE THE ORIGINAL RETURN WAS PROCESSED UNDER SECTION 143(1) OF THE ACT, HAS COME INTO CONSIDERATION BEFORE THE CO-ORDINATE MUMBAI BE NCH OF THE TRIBUNAL IN THE CASE OF THE ACIT CENT. CIR. 33, MUMBAI VS. SHR I JAYENDRA P. JHAVERI ITA NOS.2141, 2142, 2143 & 2144/M/2012 & CO NOS.248 , 249, 250 & 251/M/2013 DECIDED ON 20.02.2014 (ONE OF US BEING P ARTY TO THAT ORDER). THE TRIBUNAL HAS DISCUSSED THE ISSUE IN DETAIL AND HAS MADE THE FOLLOWING OBSERVATIONS: 8. THE LEARNED DR HAS ALSO FILED WRITTEN SUBMISSIO NS. TO STRESS HIS POINT THAT THE RETURN PROCESSED U/S. 143(1) CAN NOT BE SAID TO BE AN ASSESSMENT BUT A MERE INTIMATION, HE HAS RELI ED UPON THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF R AJESH JHAVERI STOCK BROKERS P. LTD. (2007) 291 ITR 500 ( SC). HIS CONTENTION HAS BEEN THAT IN THE CASE IN HAND THE AS SESSMENT WAS NOT DONE ORIGINALLY U/S. 143(3) HENCE THE ESTIMATIO N IN QUESTION HAS BEEN RIGHTLY MADE U/S. 153A OF THE ACT BY THE A O. HE HAS FURTHER CONTENDED THAT THE PRINCIPAL LAID DOWN BY T HE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF ALL CARGO GLO BAL LOGISTICS LTD. 137 ITD 287 CAN BE APPLIED TO THE C ASE WHERE THE ORIGINAL ASSESSMENT WAS COMPLETED U/S. 143(3) O F THE ACT AND NOT TO THE CASE WHERE THE RETURN WAS PROCESSED U/S. 143(1) OF THE ACT. 9. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LEARNE D DR. SO FAR SO THE RELIANCE PLACED BY HIM IN THE CASE OF RAJES H JHAVERI STOCK BROKERS P. LTD. (SUPRA) IS CONCERNED, WE MAY OBSERVE THAT THE ISSUE BEFORE THE HONBLE SUPREME COURT IN THAT CASE WAS REGARDING THE REOPENING OF THE ASSESSMENT U/S. 147 OF THE ACT. THE HONBLE SUPREME COURT HELD THAT THE PROPOS ITION OF 5 LAW LAID DOWN BY THE HONBLE GUJARAT HIGH COURT IN THE CASE OF ADANI EXPORTS V. DEPUTY CIT, (1999) 240 ITR 224 ( GUJ) WAS NOT APPLICABLE IN THAT CASE. IN THE CASE OF ADANI EXPORTS (SUPRA), WHERE THE ASSESSMENT WAS MADE U/S. 143(3) OF THE ACT, AND THE AO DID NOT HOLD ANY BELIEF THAT INCOME HAD ESCAPED ASSESSMENT ON ACCOUNT OF ERRONEOUS COMPUTATION, THE RE- OPENING U/S. 147 MADE MERELY ON THE BASIS OF AUDIT OBJECTIONS WAS HELD TO BE BAD IN LAW BY THE HONBLE HIGH COURT . IN THE CASE OF RAJESH JHAVERI STOCK BROKERS P. LTD. (SUP RA), THE HONBLE SUPREME COURT WHILE INTERPRETING THE PROVIS IONS OF SECTION 143(1) AND SECTION 143(3) (AS WERE IN FORCE DURING THE RELEVANT TIME PERIOD) HAS HELD THAT IN CASE OF ASSE SSMENT MADE U/S. 143(3), THE ASSESSMENT IS MADE BY THE AO BY AP PLYING HIS MIND WHEREAS IN CASE OF PROCESSING OF RETURN U/S. 1 43(1) OF THE ACT, THERE IS NO APPLICATION OF MIND BY THE AO AND AS SUCH, IF A NEW MATERIAL COMES INTO THE KNOWLEDGE OF THE AO AND THE REQUIREMENTS OF SECTION 147 OF THE ACT ARE FULFILLE D, THE AO IS FREE TO INITIATE PROCEEDINGS U/S. 147 AND THE FAILU RE TO TAKE STEPS U/S. 143(3) WILL NOT RENDER THE AO POWERLESS TO INI TIATE RE- ASSESSMENT PROCEEDINGS EVEN WHEN INTIMATION U/S. 14 3(1) HAD BEEN ISSUED. SO THE PROPOSITION OF LAW LAID DOWN IN THE CASE OF RAJESH JHAVERI STOCK BROKERS P. LTD. (SUPRA) RELA TES TO THE POWERS OF THE AO FOR RE-OPENING OF ASSESSMENT U/S. 147IN RELATION TO THE ASSESSMENT PROCEEDINGS CONDUCTED UN DER SECTION 143(1) VIZ-A-VIZ U/S 143(3) OF THE ACT. (AS WERE IN FORCE DURING THE RELEVANT PERIOD, SINCE SECTION 143 HAS BEEN FUR THER AMENDED VIDE FINANCE ACT 2008 W.E.F 01.04.2008.) IT IS TO B E NOTED THAT POWERS OF THE AO TO RE-OPEN AN ASSESSMENT U/S. 147 IS SUBJECT TO LIMITATION OF TIME PERIOD AS PRESCRIBED U/S. 149 OF THE ACT. SO THE REASONABLE CONCLUSION WILL BE THAT WHETHER THE RETURN WAS PROCESSED U/S. 143(1) OR U/S. 143(3), IF THE AO HAS A REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAP ED ASSESSMENT, HE CAN RE-OPEN THE ASSESSMENT U/S. 147 BY ISSUING NOTICE U/S. 148 BUT WITHIN THE TIME LIMIT AS PRESCR IBED U/S. 149 OF THE ACT. 10. SO FAR SO, THE QUESTION AS TO THE PROCESSING OF RETURN U/S. 143(1) VIZ-A-VIZ ASSESSMENT MADE U/S. 143(3) IS CON CERNED, IT MAY FURTHER BE OBSERVED THAT AFTER PROCESSING OF RE TURN U/S. 143(1) THE SAME CAN BE ASSESSED U/S. 143(3) BY ISSU E OF NOTICE U/S. 143(2) SUBJECT TO ITS ISSUANCE WITHIN THE LIMI TATION PERIOD OF 12 MONTHS FROM THE END OF THE MONTH IN WHICH RETURN IS FURNISHED AS PER THE PROVISO TO CLAUSE (II) OF SECT ION 143(2) [AS WAS EXISTING AT THE TIME OF RELEVANT ASSESSMENT YEA R]. ONCE THE LIMITATION PERIOD AS PRESCRIBED VIDE PROVISO TO CLA USE (II) OF SUB SECTION (2) OF SECTION 143 IS EXPIRED, IT IS NOT OP EN TO THE AO TO 6 ASSESS THE INCOME U/S. 143(3) OF THE ACT AND THE RE TURN FILED BY THE ASSESSEE U/S. 139 IS DEEMED TO BE ACCEPTED, WHI CH HOWEVER, CAN BE RE-OPENED U/S. 147 OF THE ACT SUBJECT TO THE FULFILLMENT OF INGREDIENTS OF SECTION 147 AND WITHIN THE TIME PERI OD AS PRESCRIBED U/S. 149 OF THE ACT, AS DISCUSSED IN THE PRECEDING PARA. SO UNDER SUCH CIRCUMSTANCES IF THE RETURN IS PROCESSED U/S. 143(1) AND NOT U/S. 143(3) AND AFTER THE PRESC RIBED PERIOD OF LIMITATION, THE SAME CANNOT BE ASSESSED U/S. 143 (3) THOUGH IT MAY BE INTERPRETED AS MERE INTIMATION ASSESSMENT OR OTHERWISE, BUT THE SAME SHALL BE DEEMED TO BE ACCEPTED BY THE AO AND IT WILL NOT HAVE ANY DIFFERENT COLOUR OTHER THAN THE R ETURN WHICH IS PROCESSED U/S. 143(3) OF THE ACT. THE ONLY DISTINGU ISHING FEATURE AS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF RAJESH JHAVERI STOCK BROKERS P. LTD. (SUPRA), WOULD BE TH AT IF TO A SET OF FACTS AND CIRCUMSTANCES, THE AO HAS APPLIED HIS MIND AND HE WAS OF THE BELIEF THAT THERE WAS NO ESCAPEMENT OF I NCOME THEN FOR INVOKING THE PROVISIONS OF SECTION 147 OF THE A CT, HE IS PRECLUDED, ON THE BASIS OF SAME FACTS AND CIRCUMSTA NCES, TO SAY THAT HE HAS REASON TO BELIEVE THAT INCOME OF THE AS SESSEE HAS ESCAPED ASSESSMENT. WHEREAS IN CASE OF RETURNS PROC ESSED U/S. 143(1), SINCE THE AO DOES NOT APPLY HIS MIND, SUCH A DEFENSE IS NOT AVAILABLE TO THE ASSESSEE. HOWEVER, THAT PROPOS ITION OF LAW DOES NOT HELP THE REVENUE IN THE PRESENT CASE WHICH IS A CASE OF ASSESSMENT/RE-ASSESSMENT U/S. 153A OF THE ACT. 11. ADMITTEDLY, IN THE CASE IN HAND, THE RETURN WAS PROCESSED U/S. 143(1) OF THE ACT BUT THE SAME HAS ATTAINED FI NALITY DUE TO THE EXPIRY OF LIMITATION PERIOD OF TWELVE MONTHS FR OM THE END OF THE MONTH IN WHICH THE RETURN WAS FILED. HENCE, TH E ASSESSMENT IS DEEMED TO BE COMPLETED AND NOT PENDING ON THE DA TE OF SEARCH ON 14.08.2008. ADMITTEDLY, NO INCRIMINATING MATERIA L WAS FOUND FROM THE PREMISES OF THE ASSESSEE DURING THE SEARCH U/S. 132 OF THE ACT. THE SPECIAL BENCH OF THE TRIBUNAL IN THE C ASE OF ALL CARGO GLOBAL LOGISTICS LTD.(SUPRA), HAS HELD THAT ASSESSMENT U/S. 153A CAN BE MADE ON THE BASIS OF INCRIMINATING MATERIAL FOUND DURING THE SEARCH. THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF JAI STEEL (INDIA) V. ACIT (2013) 259 CTR 281 HAS HELD THAT IN CASE NOTHING INCRIMINATING IS FOUND ON ACCOUNT OF SEARCH OR REQUISITION, THE QUESTION OF REASSESSMENT OF THE CONCLUDED ASSESSMENT DOES NOT ARISE. UNDER SUCH CIR CUMSTANCES, IT IS NOT OPEN TO THE ASSESSEE TO SEEK DEDUCTION OR CLAIM EXPENDITURE WHICH HAS NOT BEEN CLAIMED IN THE ORIGI NAL AND ALREADY CONCLUDED ASSESSMENT, IN THE CASE OF ASSESS MENT U/S. 153A IN PURSUANCE OF SEARCH ACTION. HONBLE HIGH CO URT REJECTED THE ARGUMENT OF THE LEARNED COUNSEL FOR AS SESSEE TO THE EFFECT THAT ONCE THE NOTICE U/S. 153A IS ISSUED, TH E ASSESSMENTS 7 FOR SIX YEARS ARE AT LARGE BOTH FOR THE AO AND THE ASSESSEE. IT HAS BEEN FURTHER HELD BY THE HONBLE HIGH COURT THA T THE PROVISIONS OF SECTION 153A TO 153C CANNOT BE INTERP RETED TO BE FURTHER INNINGS TO THE AO AND/OR ASSESSEE BEYOND TH E PROVISIONS OF SECTION 139(RETURN OF INCOME), 139(5) (REVISED R ETURN OF INCOME), 147 (INCOME ESCAPING ASSESSMENT) AND 263(R EVISION OF ORDERS) OF THE ACT. THE HONBLE HIGH COURT HAS FURT HER OBSERVED THAT THE WORDS ASSESS OR RE-ASSESS HAVE BEEN US ED AT MORE THAN ONE PLACE IN THE SECTION AND A HARMONIOUS CONS TRUCTION OF THE ENTIRE PROVISION WOULD LEAD TO AN IRRESISTIBLE CONCLUSION THAT THE WORD ASSESS HAS BEEN USED IN THE CONTEXT OF ABATED PROCEEDINGS AND REASSESS HAS BEEN USED FOR COMPLE TED ASSESSMENT PROCEEDINGS, WHICH WOULD NOT ABATE AS TH EY ARE NOT PENDING ON THE DATE OF INITIATION OF THE SEARCH OR MAKING OF REQUISITION AND WHICH WOULD ALSO NECESSARILY SUPPOR T THE INTERPRETATION THAT FOR THE COMPLETED ASSESSMENTS, THE SAME CAN BE TINKERED ONLY ON THE BASIS OF THE INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS. THE HONBLE HIGH COURT WHILE REPRODUCING THE PROPOS ITION OF LAW LAID DOWN BY THE HONBLE SUPREME COURT IN THE C ASE OF K P VARGHESE V. ITO (1981) 24 CTR 358 THAT IT IS RE COGNIZED RULE OF CONSTRUCTION THAT A STATUTORY PROVISO MUST BE SO CONSTRUED, IF POSSIBLE, THAT ABSURDITY AND MISCHIEF MAY BE AVOIDED HAS OBSERVED THAT IF THE ARGUMENT OF THE C OUNSEL FOR THE ASSESSEE WAS TO BE ACCEPTED, IT WOULD MEAN THAT EVEN IN CASE WHERE THE APPEAL ARISES OUT OF THE COMPLETED ASSESS MENT HAS BEEN DECIDED BY THE CIT(A) OR TRIBUNAL AND THE HIGH COURT, ON A NOTICE ISSUES U/S. 153A OF THE ACT, THE AO WOULD HAVE POWER TO UNDO WHAT HAS BEEN CONCLUDED BY THE HIGH COURT. ANY INTERPRETATION WHICH LEADS TO SUCH CONCLUSION HAS T O BE REPELLED AND/OR AVOIDED AS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF K P VARGHESE (SUPRA). ALMOST SIMILAR PROPOSITION OF LAW HAS BEEN LAID DOW N BY THE CO-ORDINATE BENCH OF THE TRIBUNAL BENCH OF THE TRIBUNAL IN THE CASE OF M/S DEEPA RESTAURANT & BAR P. LTD. IN ITA NO.1336/M/2012 DECIDED ON 05.02.2014 (ONE OF US BEI NG THE PARTY OF THE SAID ORDER) WHEREIN, IT HAS BEEN OBSER VED THAT WHERE THE SCRUTINY ASSESSMENT ORDER U/S. 143(3) OF THE ACT WAS SET ASIDE BY THE HIGHER AUTHORITIES THAT, ITSELF, C ANNOT BE A GROUND FOR RE-OPENING THE ASSESSMENT U/S. 147 OF TH E ACT ON THE PLEA THAT SINCE SCRUTINY ASSESSMENT HAS BEEN ANNULL ED ON THE LEGALITY OF NOTICE U/S. 143(2) OF THE ACT AND THE C ASE HAS NOT BEEN HEARD AT ANY OF THE STAGE HENCE, THERE WAS A R EASON TO BELIEVE THAT THE INCOME ASSESSED IN THIS CASE HAS E SCAPED ASSESSMENT. THE CO-ORDINATE BENCH IN THE ABOVE SAID CASE HAS 8 FURTHER HELD THAT SUCH AN ACTION CANNOT BE ALLOWED UNDER THE LAW AS IT MAY AMOUNT TO DEFEATING ONE OF THE STATUT ORY PROVISIONS IN THE GRAB OF ACTING UNDER OTHER PROVIS IONS OF THE STATUTE. ONCE ASSESSMENT U/S. 143(3) HAD BEEN ANNUL LED BY HIGHER AUTHORITIES ON THE GROUND OF LEGALITY OF NOT ICE U/S. 143(2) OF THE ACT, RE-OPENING U/S. 147 ON THAT VERY GROUND WOULD MEAN NOTHING ELSE BUT THE ABUSE OF PROCESS OF LAW. HENCE , THE CONTENTION OF THE LEARNED DR THAT AS THE RETURN WAS PROCESSED U/S. 143(1) AND IT WAS A MERE INTIMATION HENCE, THE AO HAD REASON TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMEN T AND IT WAS OPEN TO THE AO TO REASSESS THE INCOME U/S. 153A , EVEN WITHOUT ANY INCRIMINATING MATERIAL FOUND DURING THE SEARCH ACTION, IS NOT TENABLE. 12. THE LEARNED DR HAS FURTHER RELIED ON THE JUDGME NT OF THE HONBLE ANDHRA PRADESH HIGH COURT IN THE CASE OF G OPAL LAL BADRUKA VS. DCIT, 346 ITR 106 (AP) TO STRESS THE P OINT THAT THE AO CAN USE EVIDENCE OTHER THAN THAT FOUND DURIN G THE COURSE OF SEARCH WHILE FRAMING THE ASSESSMENT U/S. 153A OF THE ACT. THE SAID JUDGMENT OF HONBLE ANDHRA PRADESH HIGH COURT HAS BEEN DULY DISCUSSED BY THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. (SUPRA), HOLDI NG THAT THE SAME WAS DISTINGUISHABLE ON THE FACTS. IN THE CASE OF GOPAL LAL BADRUKA VS. DCIT (SUPRA), INCRIMINATING EVIDENCE W AS FOUND IN RELATION TO EIGHT PLOTS OF LAND BUT NO EVIDENCE WAS FOUND IN RESPECT OF 24 PLOTS. SINCE INCRIMINATING MATERIAL W AS FOUND IN RESPECT OF EIGHT PLOTS, HONBLE COURT HELD THAT THE AO CAN ESTIMATE THE INCOME IN RESPECT OF ALL 32 PLOTS. THE FACT WAS THAT INCRIMINATING MATERIAL WAS FOUND IN THAT CASE. THE OTHER JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. CHETAN DASS LACHMAN DASS [201 2] 211 TAXMANN 61, STRONGLY RELIED UPON BY THE LEARNED DR, IS ALSO OF NO HELP TO THE REVENUE BUT TO THE ASSESSEE ONLY. IN THE SAID CASE THE HONBLE DELHI HIGH COURT, IN PARA 11 OF THE ORD ER, THOUGH HAS HELD THAT THERE IS NO CONDITION IN SECTION153A THAT ADDITIONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FO UND DURING THE COURSE OF SEARCH OR OTHER POST SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE AO WHICH CAN BE RELA TED TO THE EVIDENCE FOUND AND THAT THE SEIZED MATERIAL CAN BE RELIED UPON TO ALSO DRAW INFERENCE THAT THERE CAN BE SIMILAR TR ANSACTIONS THROUGHOUT THE RELEVANT PERIOD, YET, AT THE SAME TI ME IT HAS BEEN FURTHER OBSERVED THAT THIS HOWEVER, DOES NOT MEAN T HAT ASSESSMENT U/S 153 A CAN BE ARBITRARILY MADE WITHOU T ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL. 9 THE PROPOSITION OF LAW WHICH EMERGES OUT IN THE LIG HT OF THE LAW LAID DOWN BY THE RAJASTHAN HIGH COURT IN TH E CASE OF JAI STEEL (INDIA) (SUPRA), HONBLE GUJARAT HIGH C OURT IN THE CASE OF GOPAL LAL BADRUKA (SUPRA) AND ALSO BY THE HONBLE DELHI HIGH COURT IN THE CASE OF CHETAN DASS LACHMA N DASS IS THAT WHERE INCRIMINATING MATERIAL IS FOUND DURING T HE SEARCH ACTION, THE AO WHILE MAKING ASSESSMENT U/S. 153A CA N TAKE NOTE OF OTHER MATERIALS ON RECORD, WHICH ARE RELEVANT AN D CONNECTED TO THE MATERIAL FOUND DURING THE SEARCH AND INFEREN CE CAN BE DRAWN RELATING TO OTHER TRANSACTIONS OF SIMILAR NAT URE. HOWEVER, WHEN NO INCRIMINATING EVIDENCE IS FOUND DU RING SEARCH, IT IS NOT OPEN TO THE AO TO MAKE RE-ASSESSM ENT OF CONCLUDED ASSESSMENT IN THE GARB OF INVOKING THE PR OVISIONS OF SECTION 153A. AS OBSERVED ABOVE, SUCH AN ACTION WIL L DEFEAT THE OTHER RELEVANT PROVISIONS OF THE ACT AND ALSO THE R IGHTS OF THE ASSESSEE ACCRUED THEREIN. 8. THE ABOVE DECISION HAS ALSO BEEN FOLLOWED BY ANOTHER CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF ATUL BAROT ( HUF) VS. DCIT IN ITA NO.2889/M/2011 & ORS. DECIDED ON 26.02.2014. WE AGR EE WITH THE VIEW TAKEN BY THE CO-ORDINATE BENCH OF THE TRIBUNAL IN T HE CASE OF SHRI JAYENDRA P JHAVERI (SUPRA). FURTHER, THE SPECIAL BENCH DECISION IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. (SUPRA) HAS NOW BEEN APPROVED BY TH E HONBLE BOMBAY HIGH COURT IN THE CASES OF ALL CARGO LOGISTICS I TA NO.1969 OF 2013 AND CONTINENTAL WAREHOUSING CORPORATION ITA NO. 523 O F 2013 REPORTED IN (2015) 279 CTR 0389 (BOMBAY) DECIDED BY COMMON ORDE R, WHEREIN, IT HAS BEEN HELD THAT IN RELATION TO THE ASSESSMENTS WHICH HAVE ALREADY BEEN CONCLUDED, THE AO WAS PRECLUDED FROM MAKING ADDITI ONS ON ANY OTHER ISSUE EXCEPT RELATING OR CONCERNING TO THE INCRIMIN ATING MATERIAL FOUND DURING THE SEARCH ACTION. THE AO CANNOT DISTURB TH E ASSESSMENT ORDER OR REASSESSMENT ORDER WHICH HAS ATTAINED FINALITY, UNL ESS THE MATERIAL GATHERED IN THE COURSE OF PROCEEDINGS U/S 153A OF THE ACT ES TABLISHES THAT RELIEF 10 GRANTED UNDER THE FINAL ASSESSMENT/REASSESSMENT WAS CONTRARY TO THE FACT UNEARTHED DURING THE COURSE OF 153A PROCEEDINGS. ID ENTICAL VIEW HAS BEEN TAKEN BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. MURLI AGRO PRODUCTS LTD. ITA NO.36 OF 2009 DECIDED VIDE O RDER DATED 29-10- 2010 AND BY THE HON'BLE DELHI HIGH COURT IN THE REC ENT DECISION IN THE CASE OF PRINCIPAL CIT VS. MEETA GUTGUTIA PROP M/S FERNS N PETALS (SUPRA) . WE MAY MENTION HERE THAT THE HON'BLE DELHI HIGH COU RT HAS ALSO DISCUSSED AND DISTINGUISHED THE CASE OF SMT. DAYAW ANTI VS. CIT IN ITA 357/2015 & OTHERS DATED 27.10.2016, WHICH AUTHORITY HAS BEEN RELIED UPON BY THE LD. DR. IT HAS BEEN HELD THAT IN THE C ASE OF SMT. DAYAWANTI VS. CIT, INCRIMINATING MATERIAL WAS FOUND DURING T HE SEARCH ACTION, HOWEVER, IN THE CASE OF PRINCIPAL CIT VS. MEETA G UTGUTIA PROP M/S FERNS N PETALS (SUPRA), NO INCRIMINATING MATERIAL WAS FOUND DURING THE SEARCH ACTION, HENCE, THE ADDITIONS MADE BY THE ASSESSING OFFICER WERE NOT JUSTIFIED. 9. IN VIEW OF THE ABOVE DISCUSSION, THIS ISSUE IS D ECIDED IN FAVOUR OF THE ASSESSEE. CONSEQUENTLY, THE ASSESSMENT PROCEEDINGS CARRIED BY THE ASSESSING OFFICER U/S 143(3) READ WITH SECTION 153A OF THE ACT ARE SET ASIDE. 10. SINCE WE HAVE ALREADY SET ASIDE THE ASSESSMENT PROCEEDINGS DONE BY THE ASSESSING OFFICER, HENCE, THE CONSEQUENT ADDITI ON MADE IN THE SAID ASSESSMENT PROCEEDINGS STAND DELETED. THE GROUND TA KEN BY THE ASSESSEE ON MERITS OF THE ADDITION THUS BECOME INFRUCTUOUS AND THE SAME DO NOT REQUIRE ANY ADJUDICATION AT THIS STAGE. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS HE REBY ALLOWED. 11 ITA NO. 276/CHD/2015 (ASSESSMENT YEAR 2007-08) 12. SINCE THE FACTS AND ISSUE INVOLVED IN THIS APPE AL ARE IDENTICAL, HENCE, IN THE LIGHT OF DISCUSSION MADE ABOVE AND FOLLOWING THE SAME LINES, THIS APPEAL OF THE ASSESSEE IS ALSO ALLOWED. ITA NO. 277/CHD/2015 (ASSESSMENT YEAR 2009-10) 13. SINCE THE ASSESSMENT FOR ASSESSMENT YEAR 2009-10 WAS NOT COMPLETED RATHER STOOD ABATED ON THE DATE OF SEARCH, HENCE, T HE ASSESSING OFFICER WAS JUSTIFIED IN EXAMINING ALL THE MATERIAL FACTS COMIN G TO HIS KNOWLEDGE DURING THE FRAMING OF THE ASSESSMENT PROCEEDINGS U/ S 153A READ WITH 143(3) OF THE ACT FOR THE YEAR UNDER CONSIDERATION. 14. DURING THE SEARCH CONDUCTED ON 18.2.2011, A COP Y OF THE STATEMENT OF SHRI BRIJ LAL MEHTA RECORDED ON OATH ON 17.09.20 11 BY THE DDIT (INV) BHATINDA WAS FOUND AND SEIZED FROM THE RESIDENCE OF THE ASSESSEE SHRI PYARE LAL MEHTA S/O SH. BRIJ LAL MEHTA. ON PERUSAL OF THIS STATEMENT, IT WAS REVEALED THAT DURING THE COURSE OF AN EARLIER S EARCH ACTION CARRIED OUT U/S 132 OF THE ACT ON M/S SARASWATI BUILDERS, M/S S .B. TOWNSHIP LTD AND SH. RADHEY SHYAM GROUP OF MANSA ON 03.9.2009, CERTA IN DOCUMENTS WERE FOUND AND SEIZED, WHICH MENTION THAT SHRI BRIJ LAL MEHTA HAD TRANSACTIONS RUNNING INTO CRORES WITH THIS GROUP. THE ASSESSING OFFICER SHOW CAUSED THE ASSESSEE TO EXPLAIN THE SOURCE OF SUCH PAYMENTS / I NVESTMENT / EXPENDITURE AND TO RECONCILE THE SAME WITH THE BOOKS OF ACCOUNT . THE ASSESSEE FURNISHED THE REQUIRED DETAILS. AFTER PERUSAL OF T HE REPLY OF THE ASSESSEE, THE ASSESSING OFFICER RECORDED HIS SATISFACTION THA T THE ENTRIES REGARDING THE WITHDRAWALS AND PAYMENTS MADE FROM THE BANK ACC OUNT OF THE ASSESSEE 12 STOOD EXPLAINED AND VERIFIED. HE, HOWEVER, OBSERVED THAT THE ASSESSEE COULD NOT EXPLAIN THE SOURCE OF RS. 47 LAKHS SATISF ACTORILY. HE REJECTED THE ASSESSEES PLEA THAT THE SAME WAS FROM THE CASH BOO K OF M/S BRIJ LAL MEHTA CONSTRUCTION PVT LTD ON THE GROUND THAT NO BO OKS OF ACCOUNT OF THE SAID COMPANY WERE FOUND AT THE TIME OF SEARCH OR DU RING THE POST SEARCH ENQUIRES. EVEN THE BOOKS OF ACCOUNT OF THE SAID COM PANY HAD BEEN REJECTED AND NET PROFITS HAD BEEN ESTIMATED U/S 153A (1)(B) FOR THE GIVEN YEAR. HE ACCORDINGLY, HELD THAT ANY CREDIT AGAINST SUCH CASH BOOK COULD NOT BE GIVEN TO THE ASSESSEE. HE OBSERVED THAT SOURCE OF RS. 47 LACS PAID BY THE ASSESSEE TO SHRI RADHEY SHYAM REMAINED UNEXPLAINED AND HE AC CORDINGLY ADDED BACK THE SAME TO THE TAXABLE INCOME OF THE ASSESSEE U/S 69 OF THE ACT. 15. THE ASSESSEE UNSUCCESSFULLY CONTESTED THE MATTE R BEFORE THE CIT(A). 16. BEFORE US, THE LD. AR OF THE ASSESSEE HAS SUBM ITTED THAT ASSESSING OFFICER IN PARA 5 OF THE ASSESSMENT ORDER HAS MENTI ONED THAT DURING THE COURSE OF SEARCH ON 18.2.2011, A COPY OF THE STATEM ENT OF SHRI BRIJ LAL MEHTA RECORDED ON OATH ON 17.9.2009 BY DDIT (INV.), BHATINDA WAS FOUND AND SEIZED. THAT THE SAID STATEMENT WAS RECORDED BY DDIT (INV.), BHATINDA ON 17.9.2009 IN RELATION TO SEARCH CONDUCTED ON M/S SARASWATI BUILDERS, M/S S.B TOWNSHIP LTD. AND SHRI RADHEY SHYAM GROUP O N 3.9.2009. THAT THE DOCUMENTS SEIZED IN THE CASE OF SHRI RADHEY SHY AM WERE CONFRONTED TO THE ASSESSEE FOR COMMENTS AND TO SHOW CAUSE RELATIN G TO THE TRANSACTIONS MADE BY THE ASSESSEE WITH RADHEY GROUP OF MANSA THA T NO PAPERS RELATING TO THE AFORESAID TRANSACTIONS WERE FOUND FROM THE PREMISES OF THE ASSESSEE EXCEPT THE COPY OF THE STATEMENT OF THE ASSESSEE RE CORDED ON 17.9.2009. THAT THE ASSESSEE HAD ALREADY EXPLAINED TO THE SATI SFACTION OF THE CONCERNED DDIT (INV.) THROUGH HIS STATEMENT ON 17.9.2009 RELA TING TO THE SAID 13 TRANSACTIONS, OTHERWISE THE AMOUNT UNDER CONSIDERAT ION WOULD HAVE BEEN ADDED IN THE HANDS OF THE ASSESSEE U/S 153C OF THE ACT IN THE COURSE / PURSUANT TO ASSESSMENT PROCEEDINGS CARRIED OUT U/S 153A OF THE ACT IN CASE OF RADEHY SHYAM GROUP OF CASES. THAT THOUGH THE ASS ESSING OFFICER HAD SHOW CAUSED THE ASSESSEE FOR MAKING AN ADDITION OF RS. 4,19,00,000/- HOWEVER, THE ASSESSEE HAS SATISFACTORILY EXPLAINED ABOUT EACH AND EVERY TRANSACTION AND THE ASSESSING OFFICER HAS REPORTED THAT ALL THE TRANSACTIONS STOOD EXPLAINED AND VERIFIED, EXCEPT ABOUT THE STAT ED TRANSACTION OF RS. 47 LACS PAID IN CASH ON 23.10.2008 FOR THE PURCHASE OF SCO NO. 273 IN SECTOR 32 RELATING TO BRIJ LAL MEHTA CONSTRUCTIONS PVT LT D. THE LD. AR HAS SUBMITTED THAT THE PROPERTY NO. 273 IN SECTOR 32 IS OWNED BY B.L. MEHTA CONSTRUCTION PVT LTD. AND AS SUCH THERE WAS NO JUS TIFICATION ON THE PART OF THE ASSESSING OFFICER TO MAKE THE ADDITIONS IN T HE HAND OF ASSESSEE SH. BRIJ LAL MEHTA. THE ASSESSMENT OF M/S BRIJ LAL ME HTA CONSTRUCTION PVT LTD. WAS ALSO DEALT BY THE SAME ASSESSING OFFICER AND IF HE WAS NOT SATISFIED WITH THE SOURCE AND INVESTMENTS IN THE HA NDS OF THE COMPANY, THEN AT THE BEST, THE AMOUNT COULD HAVE BEEN ADDED IN TH E HANDS OF THE COMPANY BUT IT COULD NOT HAVE BEEN ADDED IN THE HANDS OF TH E ASSESSEE SHRI BRIJ LAL MEHTA. THE LD. AR HAS ALSO INVITED OUR ATTENTION T O PAGE 32 OF THE PAPER BOOK WHICH IS A COPY OF THE RECEIPT ISSUED BY ESTA TE OFFICERS, CHANDIGARH ADMINISTRATION, CHANDIGARH REGARDING PAYMENTS MADE IN RESPECT OF SCO 273, SECTOR 32-D, SHOWING THAT THE AMOUNT OF RS. 47 LACS IN CASH WAS DEPOSITED BY M/S BRIJ LAL MEHTA CONSTRUCTION PVT L TD IN RESPECT OF PLOT NO. SCO 273, SECTOR 32, CHANDIGARH. 14 17. ON THE OTHER HAND, LD. DR HAS RELIED UPON THE F INDINGS OF THE LOWER AUTHORITIES. 18. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PER USAL OF THE ASSESSMENT ORDER REVEALS THAT NO NEW MATERIAL WAS F OUND DURING SEARCH ACTION EXCEPT THE STATEMENT RECORDED OF THE ASSESSE E DATED 17.9.2009 BY THE DDIT (INV.), BHATINDA IN RELATION TO THE SEARCH ACT ION CARRIED OUT U/S 132 OF THE ACT IN THE CASE OF RADHEY SHYAM GROUP OF CAS ES OF MANSA ON 3.9.2009. THE ASSESSING OFFICER CONFRONTED THE ASSE SSEE IN RELATION TO THE SAID STATEMENT AND THE DOCUMENTS MENTIONED IN THE S AID STATEMENT. THE ASSESSING OFFICER REPRODUCED THE STATEMENT OF THE A SSESSEE DATED 17.9.2009 AND ASKED THE ASSESSEE TO EXPLAIN EACH AND EVERY TR ANSACTION. IT IS ALSO A FACT ON THE FILE THAT THE SAID STATEMENT HAS ALREAD Y BEEN CONSIDERED BY THE DEPARTMENT IN THE COURSE OF ASSESSMENT PROCEEDINGS CARRIED OUT IN THE CASE OF RADHEY SHYAM GROUP OF MANSA. NO ADDITIONS WERE C ONTEMPLATED IN THE HANDS OF THE ASSESSEE U/S 153C OF THE ACT IN RELATI ON TO THE DOCUMENTS OR TRANSACTIONS AS MENTIONED IN THE STATEMENT OF THE A SSESSEE DATED 17.9.2009. HOWEVER, ON THE VERY BASIS OF THE SAME STATEMENT, A GAIN THE ASSESSING OFFICER SHOW CAUSED THE ASSESSEE TO EXPLAIN THE TRA NSACTIONS. THE ASSESSEE EXPLAINED EACH AND EVERY TRANSACTION. EVEN THE ASSE SSING OFFICER ALSO GOT SATISFIED ABOUT THE GENUINENESS OF THE TRANSACTIONS EXCEPT OF THE PAYMENT OF RS. 47 LAKHS PAID IN CASH BY M/S BRIJ LAL MEHTA CONSTRUCTION PVT LTD. FOR THE PURCHASE OF SCO 273, SECTOR 32, CHANDIGARH. THE ASSESSING OFFICER HAS MADE THE ADDITION IN THE HANDS OF THE ASSESSEE ON THE GROUND THAT THE BOOKS OF ACCOUNT OF THE SAID COMPANY HAD BEEN REJEC TED. THE ASSESSEE HAS PRODUCED ON THE FILE THE RECEIPT DATED 23.10.2008 O F THE ESTATE OFFICER, CHANDIGARH SHOWING THAT THE CASH PAYMENT OF RS. 47 LAKHS WAS MADE BY THE 15 COMPANY FOR PURCHASE OF PLOT I.E. SCO 273, SECTOR 3 2-D, CHANDIGARH. UNDER THE CIRCUMSTANCES, THE ASSESSEE HAS EXPLAINED THAT SAID PAYMENTS WERE NOT MADE IN HIS INDIVIDUAL CAPACITY BUT ON BEH ALF OF THE COMPANY, THE SOURCE OF THE PAYMENTS THUS WAS TO BE EXPLAINED BY THE COMPANY AND NOT BY THE ASSESSEE. EVEN OTHERWISE AFTER CONSIDERING T HE EXPLANATION GIVEN BY THE ASSESSEE DURING HIS STATEMENT BEFORE DDIT (INV. ) ON 17.09.2009, NO ACTION U/S 153C OF THE ACT WAS CONTEMPLATED IN THE CASE OF ASSESSEE. UNDER THE CIRCUMSTANCES, THE ADDITION IN THE HANDS OF THE ASSESSEE OF THE SAID AMOUNT OF RS. 47 LAKHS CANNOT BE HELD TO BE JU STIFIED AND THE SAME IS ACCORDINGLY SET ASIDE. 19. IN THE RESULT, THE APPEAL PREFERRED BY THE ASSE SSEE IS HEREBY ALLOWED. 20. IN VIEW OF OUR FINDINGS GIVEN ABOVE, ALL THE AP PEALS PREFERRED BY THE ASSESSEE ARE HEREBY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28.08.2017 SD/- SD/- (DR. B.R.R. KUMAR) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 28 TH AUGUST, 2017 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR