Rajesh Mangla, Faridabad V. DCIT, Central circle-II, Faridabad

ITA 2810/DEL/2018

AI Insights

The case involves appeals by the assessee, Rajesh Mangla, against the orders of the CIT (Appeals) concerning additions made to his income for the assessment years 2007-08 and 2009-10. The additions were based on cash deposits totaling Rs.6,20,000 found in the assessee's bank account, which the Assessing Officer (AO) considered undisclosed income. The assessee contested the jurisdiction and the merits of the additions, arguing that no incriminating material was found during the search that justified the additions. The Tribunal, referencing decisions from the Hon'ble Apex Court and the Delhi High Court, concluded that the additions were not based on any incriminating material unearthed during the search, thus invalidating the jurisdiction under section 153A.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 113912 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-06-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 18-06-2023
• Assessment Year: 2007-2008
• Appeal Filed On: 19-04-2018
• Other Referred Cases: Pr. CIT-3 vs. Abhisar Buildwell P. Ltd., CIT (Central)-III vs. Kabul Chawla
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RAKESH GUPTA
• Keywords: Income from undisclosed sources
• Section: 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH ‘F’ : NEW DELHI) SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER and SHRI YOGESH KUMAR US, JUDICIAL MEMBER ITA No.2810/Del./2018 (ASSESSMENT YEAR : 2007-08) ITA No.2812/Del./2018 (ASSESSMENT YEAR : 2009-10) Rajesh Mangla, vs. DCIT, Central Circle II, C/o RRA Tax India, Faridabad. D – 28, South Extension, New Delhi – 110 049. (PAN : AKBPM6493Q) (APPELLANT) (RESPONDENT) ASSESSEE BY : Dr. Rakesh Gupta, Advocate Shri Somil Agarwal, Advocate REVENUE BY : Ms. Banita Devi Neorem, CIT DR Date of Hearing : 19.06.2023 Date of Order : 21.06.2023 ORDER PER SHAMIM YAHYA, ACCOUNTANT MEMBER : These appeals are preferred by the assessee against the orders of ld. CIT (Appeals) for the respective assessment years. 2. Since the issues are common & connected and the appeals were heard together, they are disposed off by this common order. ITA Nos.2810 & 2812/Del./2018 2 3. For the sake of reference, we are referring grounds of appeal for AY 2007-08 which read as under :- “1. That having regard to the fact and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in assuming jurisdiction and issuing of notice u/s 153A of the Act. 2. That in any case and in any view of the matter, the assessment framed under section 153A(1)(a) of the Act, is bad in law and against the facts and circumstances of the case. 3. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of the Ld. A.O. in making addition of Rs.6,20,000/- on account of cash deposited in the bank account as alleged income from undisclosed sources and that too in the proceedings u/s 153A of the Act. 4. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in making addition of Rs.6,20,000/- is bad in law and against the facts and circumstances of the case. 5. That having regard to the facts and circumstances of the case, Ld. CIT (A) has erred in law and on facts in confirming the action of Ld. AO in passing the impugned order without giving adequate opportunity of being heard.” 4. Brief facts of the case are that there was a search and seizure operation conducted on 09.05.2012 in the case of assessee. Assessment was framed under section 153A read with section 143 (3) of the Income- tax Act, 1961 (for short 'the Act'). In the assessment order, AO did not mention regarding any incriminating material seized. Rather he mentioned that on perusal of the bank account statement of the assessee, it was noticed that cash deposits were appearing and the total of which was Rs.6,20,000/-. When the assessee was asked to explain the source of the said cash deposits, assessee submitted that cash was deposited out of ITA Nos.2810 & 2812/Del./2018 3 earlier withdrawals. However, the AO was not convinced. He held that assessee had not disclosed this income suo moto and this income would not have been unearthed had there been no search on the premises of the assessee. Hence, he made the impugned addition. 5. Assessee challenged the same both on jurisdiction as well as merits before the ld. CIT (A) who rejected the assessee’s appeal. 6. Against this order, assessee is in appeal before us. We have heard both the parties and perused the records. 7. Ld. Counsel of the assessee submitted that the issue is squarely covered by the decision of Hon’ble Apex Court in the case of Pr. CIT-3 vs. Abhisar Buildwell P. Ltd. in Civil Appeal No.6580 of 2021 vide order dated 24.04.2023 and the decision of Hon’ble jurisdictional High Court in the case of CIT (Central)-III vs. Kabul Chawla (2016) 380 ITR 573 (Delhi). He submitted that since no incriminating material was found on the basis of which addition has been done, the same is without jurisdiction on the touchstone of the aforesaid precedents. 8. Per contra, ld. DR for the Revenue relied upon the orders of the authorities below. 9. Upon careful consideration, we note that it is undisputed that addition of cash deposit in the bank account has been found from the banks statement of the assessee and no incriminating material was found during the search which is mentioned in the assessment order. In this ITA Nos.2810 & 2812/Del./2018 4 view of the matter, the aforesaid Hon’ble Apex Court decision which upheld the decision of Hon’ble Delhi High Court in the case of Kabul Chawla (supra) applies fully. In this case, it was held that completed assessments can be interfered with by AO while making assessment u/s 153A only on the basis of some incriminating material unearthed during the course of search which was not produced or not already disclosed or made known in course of original assessment. 10. In the present case, the issue emanating from the aforesaid case laws is fully applicable. The addition is not made on the basis of any incriminating material found. Hence, the jurisdiction to make the addition u/s 153A of the Act is not valid. Since we have held the jurisdiction of the assessment is not valid, the issue on merits is academic and we are not engaging into the same. 11. Our above order applies mutatis mutandis in case of ITA No.2812/Del/2018 for AY 2009-10. 12. In the result, both the appeals filed by the assessee are allowed. Order pronounced in the open court on this 21 st day of June, 2023. Sd/- sd/- (YOGESH KUMAR US) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated the 21 st day of June, 2023 TS ITA Nos.2810 & 2812/Del./2018 5 Copy forwarded to: 1.Appellant 2.Respondent 3.CIT 4.CIT (A) 5.CIT(ITAT), New Delhi. AR, ITAT NEW DELHI.