ACIT, New Delhi V. M/s. SBP 87 Hotels Pvt. Ltd., New Delhi

ITA 2884/DEL/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97727 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-11-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC 2
• Next Hearing Date: 10-11-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 11-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJNA
• Assessee Lawyers: ROHIT ARTICLED CLERK
• Keywords: Search and seizure
• Section: 143(3)

Judgement Text

1 I.T.A.NOS.2884,2887,2890&2891/DEL/2015 IN THE INCOME TAX APELALTE TRIBUNAL (DELHI BENCH SMC-2, NEW DELHI) BEFORE SHRI P. K. BANSAL, ACCOUNTANT MEMBER ITA NO.2884/DEL/2015 ASSESSMENT YEAR: 2010-11 ACIT, CC-07, VS. SBP 87, HOTELS PVT. LTD., NEW DELHI R/O16/21, PADAM SINGH ROAD, KAROL BAGH, NEW DELHI GIR/PAN:AALCS7171E ITA NO.2887/DEL/2015 (ASSESSMENT YEAR 1010-11) ACIT. CC-07, VS. M/S. KARAT 87 HOTELS PVT . LTD. , NEW DELHI R/O 16/21, PADAM SINGH ROAD, KAROL BAGH, NEW DELHI GIR/PAN: AADCK2600A ITA NO.2890 & 2891/DEL/2015 (ASSESSMENT YEAR 2008-09 & 2009-10) ACIT, CC-07, VS. M/S. SATYA REALTORS PVT. LTD., NEW DELHI A-1, CC COLONY, OPP. RANA PRATAP BAGH, NEW DELHI GIR/PAN:AAJCS1332F (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI P. DAM KANUNJNA, SR. DR RESPONDENT BY: SHRI ROHIT ARTICLED CLERK DATE OF HEARING : 10.11.2015 DATE OF PRONOUNCEMENT : 10.11.2015 ORDER ALL THESE APPEALS FILED BY THE REVENUE AGAINST THE RESPECTIVE ORDERS OF LD. CIT(A). SINCE COMMON ISSUE IS INVOLVED, ALL TH ESE APPEALS ARE BEING 2 I.T.A.NOS.2884,2887,2890&2891/DEL/2015 DISPOSED OF BY THIS COMMON ORDER. THE ONLY EFFECTI VE GROUND TAKEN BY THE REVENUE IN ALL THESE APPEALS READ AS UNDER: ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD . CIT(A) HAS ERRED IN LAW IN QUASHING THE ORDER PASSED BY THE ASSESSIN G OFFICER BY TREATING THE ASSUMPTION OF JURISDICTION U/S 153C BA D IN LAW BY RELYING ON THE RATIO OF JUDGEMENT OF THE HONBLE HIGH COURT IN THE CASE OF M/S. PEPSI FOODS (P) LTD. (SUPRA) AND M/S. PEPSICO INDIA HOLDINGS PVT. LTD. (SUPRA). 2. THE BRIEF FACTS OF THESE CASES ARE THAT IN THESE APPEALS, THE A.O. ISSUED NOTICE U/S 153C TO THE RESPONDENT ASSESSEES AND THE ASSESSEES RAISED OBJECTIONS ABOUT THE VALIDITY OF NOTICE ISSUED U/S 153C OF THE ACT ON THE GROUND THAT THE ASSESSEE HAS NOT BEEN INFORMED ABOU T THE SEIZURE OF REQUISITION OF ANY MONEY, BULLION, JEWELLERY OR OTH ER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNTS OR DOCUMENTS BELONGING TO THE ASSESSEE FOUND FROM THE PREMISES OF ANY OTHER PERSON AND SUBSEQUENTLY, IN T HE ABSENCE OF SUCH VITAL INFORMATION REGARDING SEIZURE OR REQUISITION OF NAY INCRIMINATING MATERIAL OR DOCUMENTS OR ASSETS, PROVISIONS CONTAINED IN SECTIO N153C OF THE ACT CANNOT BE INVOKED. ON ASKING THE A.O. TO PROVIDE THE REAS ONS ALONG WITH COPIES OF MATERIAL RELIED UPON FOR THE ISSUANCE OF NOTICE U/S 153C AND INVOKING PROCEEDINGS INITIATED U/S 153C, IT WAS ALSO SUBMITT ED THAT MORE INCRIMINATING DOCUMENTS, MATERIAL OR EVIDENCE BELONGING TO THE AS SESSEES WAS FOUND AND SEIZED DURING THE COURSE OF SEARCH OR FROM ANY OTHE R PERSON. NOTICE HAS BEEN ISSUED BY THE A.O. SHOWING THE STATUS OF THE ASSESS EE AS A FIRM BUT THE EVENTUAL ASSESSMENT ORDER PASSED U/S 153C READ WITH SECTION 143(3) ISSUANCE TO THE SAID NOTICE IN ONE ANOTHER STATUS COMPANY. APPROPRIATE STATUS HAS TO BE CLEARLY SPECIFIED IN THE JURISDICTION NOTICE. F AILURE TO DO SO VITIATES THE PROCEEDINGS. THE A.O. DID NOT AGREE WITH THE OBJEC TIONS OF THE ASSESSEE AND ULTIMATELY COMPLETED THE ASSESSMENT U/S 153C READ W ITH SECTION143(3) IN EACH OF THE CASES MAKING ADDITIONS. THE ASSESSEES WENT IN APPEAL BEFORE LD. 3 I.T.A.NOS.2884,2887,2890&2891/DEL/2015 CIT(A). LD. CIT(A) NOTED THAT THE CASE OF THE ASS ESSEES IS DULY COVERED BY THE ORDER OF HONBLE DELHI HIGH COURT IN THE CASE O F PEPSI FOODS PVT. LTD. VS CIT 52 TAXMAN.COM 220 (DEL.) AND ACCORDINGLY, AL LOWED THE APPEAL OF EACH OF THE ASSESSEES. 3. I HAVE HARD RIVAL SUBMISSIONS AND CAREFULLY CONS IDERED THE SAME ALONG WITH THE ORDERS OF TAX AUTHORITIES BELOW. I NOTED THAT THE ONLY ISSUE INVOLVED IN THESE APPEALS IS THAT HT LD. CIT(A) ERRED IN LAW IN QUASHING THE ORDER PASSED BY THE A.O. BY TREATING THE JURISDICTION U/S 153C ILLEGAL FOLLOWING THE LAW LAID DOWN BY HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF PEPSI FOODS PVT. LTD. AND M/S. PEPSICO INDIA HOLDINGS PV T. LTD. (SUPRA). I NOTED THAT THE ASSESSEE OBJECTED THE INITIATION OF PROCEE DINGS U/S 153C IN EACH OF THE CASE AND HAS ASKED THE A.O. FOR A COPY OF THE S ATISFACTION NOTE BUT THE A.O. DID NOT PROVIDE THE COPY OF THE SATISFACTION N OTE TO THE ASSESSEE AND DISMISSED THE OBJECTIONS OF THE ASSESSEE. THEN THE ASSESSEE WENT BEFORE LD. CIT(A), THE ASSESSEE RECEIVED THE COPY OF SATISFACT ION NOTE DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE LD. CIT(A) AND THE SAID SATISFACTION NOTE READS AS UNDER:- A SEARCH AND SEIZURE OPERATION U/S 132(1) OF THE I . T. ACT WAS CARRIED OUT AT THE VARIOUS PREMISES OF M/S. SATYA PRAKASH & BROTHERS PVT. LTD. GROUP ON 28.10.2010. M/S. SATYA PRAKASH & BROTHERS PVT. LTD. IS ENGAGED IN THE BUSINESS OF EXECUTING GOVT. CONTRACT S WORKING FOR PWD, CPWD AND MCD AND NDMC ETC. DURING THE COURSE OF COMMON WEALTH GAMES 2010, THE COMPANY EXECUTED WORK OF STREET ESCAPING AND BEAUTIFICATION OF ROADS WORTH RS.159.0 5 CRORES. DURING THE SEARCH OPERATION A LARGE NUMBER OF DOCUMENTS WE RE SEIZED WHICH CLEARLY INDICATED THAT THE GROUP INCLUDING THE ASSE SSEE IS EARNING HUGE PROFITS WHICH ARE REDUCED BY INTRODUCING BOGUS EXPE NSES. THE CASE OF ASSESSEE NAMELY M/S.SPB 87 HOTELS PVT. LTD. IS CLOS ELY RELATED/ ASSOCIATED ENTITY TO THE MAIN ASSESSEE I.E. M/S. SA TAYA PRAKASH & BROTHERS PVT. LTD. IN VIEW OF FACTS NARRATED ABOVE , I AM SATISFIED THAT THE CASE OF M/S. SPB 87 HOTELS PVT. LTD. IS A FIT C ASE FOR ISSUE OF NOTICE U/S 153C OF THE I. T. ACT, 1961. NOTICE U/S 153C D ATED 08.05.2012 IS 4 I.T.A.NOS.2884,2887,2890&2891/DEL/2015 ISSUED REQUIRING THE ASSESSEE TO FILE RETURN OF INC OME FOR THE A.Y. 2005-06 TO 2010-11. 4. A PERUSAL OF THE SATISFACTION NOTE REPRODUCED AB OVE, CLEARLY SHOWS THAT THE A.O. HAS NOT SPECIFIED THE PARTICULAR DOCUMENTS WHICH WERE SEIZED AND RELATED TO THE ASSESSEE. HE HAS MERELY MADE GENERA L OBSERVATION THAT A LARGE NUMBER OF DOCUMENTS ARE SEIZED DURING THE COURSE OF SEARCH AT THE PREMISES OF M/S. SATYA PRAKASH & BROTHERS PVT. LTD. AND THOS E DOCUMENTS CLEARLY INDICATE THAT THE GROUP INCLUDING THE ASSESSEE HAS EARNED HUGE PROFITS WHICH ARE REDUCED BY INTRODUCING BOGUS EXPENSES. THE AS SESSEE IS CLOSELY RELATED ASSOCIATE TO THE ASSESSEE IN WHOSE CASE SEARCH HAS TAKEN PLACE. THE A.O. HAS NOT GIVEN ANY BASIS OR REASONS HOW HE IS SATISFIED THAT THE CASE OF THE ASSESSEE IS A FIT CASE FOR THE ISSUANCE OF NOTICE U/S 153C. I NOTED THAT UNDER THE SIMILAR FACTS AND CIRCUMSTANCES, HONBLE DELHI HIGH COURT I N THE CASE OF PEPSI FOODS PVT. LTD. VS ACIT 52 TAXMAN.COM 220 HELD A UN DER:- 11. IT IS EVIDENT FROM THE ABOVE SATISFACTION NOTE THAT APART FROM SAYING THAT THE DOCUMENTS BELONGED TO THE PETITIONE R AND THAT THE A.O. IS SATISFIED THAT IT IS A FIT CASE FOR ISSUANCE OF A NOTICE UNDER SECTION1543C, THERE IS NOTHING WHICH WOULD INDICATE AS TO HOW THE PRESUMPTIONS WHICH ARE TO BE NORMALLY RAISED AS IND ICATED ABOVE, HAVE BEEN REBUTTED BY THE A.O. MERE USE OR MENTION OF THE WORD SATISFACTION OR THE WORDS I AM SATISFIED IN THE ORDER OR THE NOTE WOULD NOT MEET THE REQUIREMENT OF THE CONCEPT OF SA TISFACTION AS USED IN SECTION 153C OF THE SAID ACT. THE SATISFACTION NOTE ITSELF MUST DISPLAY THE REASONS OR BASIS FOR THE CONCLUSION THA T THE A.O. OF THE SEARCHED PERSON IS SATISFIED THAT THE SEIZED DOCUME NTS BELONG TO A PERSON OTHER THAN THE SEARCHED PERSON. WE ARE AFRA ID, THAT GOING THROUGH THE CONTENTS OF THE SATISFACTION NOTED, WE ARE UNABLE TO DISCERN ANY SATISFACTION OF KIND REQUIRED UNDER SECTION 1 53C OF THE SAID ACT. 12. THIS BEING THE POSITION THE VERY FIRST STEP PRI OR TO THE ISSUANCE OF A NOTICE UNDER SECTION 153C OF THE SAID ACTS HAS NO T BEEN FULFILLED. INASMUCH AS THIS CONDITION PRECEDENT HAS NOT BEEN M ET, THE NOTICED UNDER SECTION 153C ARE LABEL TO BE QUASHED. IT IS ORDERED 5 I.T.A.NOS.2884,2887,2890&2891/DEL/2015 ACCORDINGLY. THE WRIT PETITIONS ARE ALLOWED AS ABO VE. THERE SHALL BE NO ORDER AS TO COSTS. 5. FROM THE SAID DECISION, IT IS APPARENT THAT HE S ATISFACTION NOTE SHOULD SPECIFY THE DOCUMENTS BELONGING TO THE ASSESSEE AND ALSO THE SAID NOTE MUST DISPLAY THE REASONS OR THE BASIS FOR THE CONCLUSION OF THE A.O. OF THE SEARCHED PERSON THAT THE A.O. IS SATISFIED THAT THE SEIZED D OCUMENTS BELONG TO A PERSON OTHER THAN THE SEARCHED PERSON. IN THIS CASE, I NO TED THAT THE SATISFACTION NOTE DOES NOT MEET OUT THE CRITERIA AS MENTIONED BY THE HONBLE JURISDICTIONAL HIGH COURT, THEREFORE, LD. CIT(A) HAS QUASHED THE A SSESSMENT ORDER. NO CONTRARY DECISION OR THE COGENT MATERIAL WAS BROUGH T BEFORE ME, WHICH MAY WARRANT MY INTERFERENCE IN THE ORDER OF LD. CIT(A). 6. I NOTED IN ALL THE OTHER THREE CASES ALSO, SIMIL AR TYPE OF SATISFACTION HAS BEEN RECORDED. I, THEREFORE, CONFIRM THE ORDER OF LD. CIT(A) QUASHING THE ASSESSMENT ORDER PASSED BY THE A.O. IN ALL THE FOUR CASES. 7. IN THE RESULT, ALL THESE APPEALS FILED BY THE RE VENUE ARE DISMISSED. 8. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH NOV., 2015. SD./- (P.K. BANSAL) ACCOUNTANT MEMBER DATE: 10.11. 2015 SP. COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A), NEW DELHI 5. THE DR, ITAT, NEW DELHI TRUE COPY BY ORDER (ITAT, NEW DELHI)