Pawan Kumar Jain, New Delhi V. DCIT, New Delhi

ITA 3081/DEL/2012

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 2890 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 6 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 10-12-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 18-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAMESH CHAND
• Assessee Lawyers: S AGARWAL; PRAKASH GUPTA F
• Keywords: Unexplained investment
• Section: 153A; 68; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F , NEW DELHI BEFORE SH. N. K. SAINI, AM AND SMT . BEENA PILLAI , JM ITA NO. 3078/DEL/2012 : ASSTT. YEAR : 2004 - 05 ITA NO. 3079/DEL/2012 : ASSTT. YEAR : 2005 - 06 ITA NO. 3080 /DEL/201 2 : ASSTT. YEAR : 2006 - 07 ITA NO. 3081/DEL/2012 : ASSTT. YEAR : 2008 - 09 MR. PAWAN KUMAR JAIN, C/O PRAKASH KUMAR PRAKASH, B - 1, SAGAR APARTMENTS, 6, TILAK MARG NEW DELHI - 110001 VS DEPUTY COMMISSIO NER OF INCOME TAX, CENTRAL CIRCLE - 3 , NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. AA DPJ4041P ITA NO. 3653/DEL/2012 : ASSTT. YEAR : 2005 - 06 ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 3, NEW DELHI VS MR. PAWAN KUMAR JAIN, C/O PRAKA SH KUMAR PRAKASH, B - 1, SAGAR APARTMENTS, 6, TILAK MARG NEW DELHI - 110001 (APPELLANT) (RESPONDENT) PAN NO. AADPJ4041P ASSESSEE BY : SH. S . AGARWAL, ADV. & PRAKASH GUPTA , F CA REVENUE BY : SH. RAMESH CHAND , CIT DR DATE OF HEARING : 10.12 .2015 DATE OF PRONOUNCEMENT : 01.01 .201 6 ORDER PER BENCH : THE SE APPEALS BY THE ASSESSEE FOR THE ASSESSMENT YEARS 2004 - 05, 2006 - 07 AND 2008 - 09 AND THE CROSS APPEAL BY THE ASSESSEE AND DEPARTMENT FOR THE ASSE SSMENT YEAR 2005 - 06 ARE ITA NO S. 3078 TO 308 1 & 3653 /DEL /201 5 PAWAN KUMAR JAIN 2 DIRECTED AGAINST THE SEPARATE ORDERS EACH DATED 30.04.2012 OF LD. CIT(A). 2. SINCE T HE ISSUE S INVOLVED ARE COMMON AND THE APPEALS WERE HEARD TOGETHER SO THESE ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVEN IENCE AND BREVITY. 3. FIRST WE WILL DEAL WITH THE APPEAL IN ITA NO. 3078/DEL/2012 FOR THE ASSESSMENT YEAR 2004 - 05 . FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: 1. THAT THE ORDER PASSED BY THE LD. ASSESSING OFFICER AND CONFIRMED BY LD. CIT(A) IS NO T ONLY BAD IN LAW BUT ALSO AGAINST THE FACTS OF THE CASE. 2. THE LD. CIT(A) IS ERRED UNDER THE LAW WHILE HOLDING THAT AO HAS A VALID JURISDICTION U/S 153C OF THE ACT PARTICULARLY IN VIEW OF FOLLOWING REASONS: - I) AS THE SAME HAS BEEN ISSUED BEYOND THE TI ME LIMIT PRESCRIBED UNDER THE ACT. II) THE LD. AO HAS RECORDED ANY SATISFACTION BEFORE ISSUANCE OF THE NOTICE. III) THE RE - ASSESSMENT PROCEEDINGS U/S 153A R.W.S. 153C OF THE ACT CAN BE WITH REFERENCE TO PENDING ASSESSMENTS AS PER SUB SECTION 2 OF 153A OF THE ACT AND QUA SEIZED MATERIAL FOUND DURING THE SEARCH. ITA NO S. 3078 TO 308 1 & 3653 /DEL /201 5 PAWAN KUMAR JAIN 3 3. THAT THE CIT(A) HAS ERRED UNDER THE LAW AND FACTS WHILE CONFIRMING THE ORDER OF LD. AO WITH REGARD TO ADDITION OF RS.4,00,000/ - ON ACCOUNT OF ALLEGED UNEXPLAINED INVESTMENT IN UNSECURED LOAN U/S 68 OF THE ACT. 4. THAT ANY OTHER GROUNDS OF APPEAL MAY BE ADDED/DELETED OR AMENDED AT THE TIME OF HEARING. 4 . GROUND NOS. 1 & 4 ARE GENERAL IN NATURE SO THESE GROUNDS DO NOT REQUIRE ANY COMMENT OF OUR PART. 5 . VIDE G ROUND NO. 2 , THE ASSESSEE HAS CHALL ENGED VALIDITY OF THE JURISDICTION U/S 153C OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 6 . FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE FILED THE ORIGINAL RETURN OF INCOME ON 04.08.2004 DECLARING NET TAXABLE OF INCOME OF RS. 2,47 ,000/ - WHICH WAS PROCESSED U/S 143(1) OF THE ACT. THE ASSESSEE IS THE FATHER OF SH. AMIT JAIN AND SH. DHIRAJ JAIN, WHO ARE DIRECTORS OF M/S MAHAGUN (INDIA) PVT. LTD., IN WHICH CASE A SEARCH WAS CONDUCTED ON 26.08.2008 AT THE BUSINESS PREMISES. DURING THE C OURSE OF SEARCH CERTAIN DOCUMENTS PERTAINING TO THE ASSESSEE WERE FOUND AND SEIZED. THE AO ISSUED THE NOTICE U/S 153C OF THE ACT , THE ASSESSEE SUBMITTED THAT THE RETURN FILED ON 26.07.2010 IN RESPONSE TO NOTICE U/S 153A OF THE ACT MAY BE TREATED AS HAVING BEEN FILED IN RESPONSE TO THIS NOTICE. THE AO NOTICED THAT THE RETURN DECLARING NET TAXABLE INCOME OF RS.2,47,000/ - WAS ITA NO S. 3078 TO 308 1 & 3653 /DEL /201 5 PAWAN KUMAR JAIN 4 FILED ON 26.07.2010 AND THAT THE ASSESSEE HAD RAISED UNSECURED LOAN OF RS.4,00,000/ - FROM SH. SANJEEV KUMAR GUPTA WHO FILED AN UNDATED C ONFIRMATION BUT NO EVIDENCE HAD BEEN FILED WITH REGARD TO THE INCOME TAX RETURN FILED BY THE SAID PERSON, THE SOURCE OF THE INCOME OF THE LOANEE AND THE SOURCE OF GIVING THE SAID LOAN. THE AO TREATED THE UNSECURED LOAN AMOUNTING TO RS.4,00,000/ - IN THE NAM E OF SH. SANJEEV KUMAR GUPTA AS UNEXPLAINED INVESTMENT OF THE ASSESSEE AND ADDED THE SAME TO HIS INCOME. 7. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) WHO CONFIRMED THE ADDITION MADE BY THE AO. THE LD. CIT(A) ALSO DID NOT ACCEPT THI S CONTENTION OF THE ASSESSEE THAT DURING THE COURSE OF SEARCH NO DOCUMENT MUCH LESS INCRIMINATING MATERIAL BELONGING TO THE ASSESSEE HAD BEEN FOUND WHICH MAY SUGGEST CONCEALMENT OF ANY INCOME OR ANY ESCAPED INCOME FOR THE YEAR UNDER C ONSIDERATION, T HEREFOR E, THE AO COULD NOT HAVE ASSUMED JURISDICTION U/S 153C/153A OF THE ACT. THE RELIANCE WAS PLACED ON THE DECISION OF THE ITAT MUMBAI BENCH IN THE CASE OF ANIL P. KHIMANI VS DCIT (2010) TIOL 177 ITAT MUMABI B BENCH. THE LD. CIT(A) ALSO HELD THAT THE SEIZURE OF INCRIMINATING MATERIAL WAS NOT THE CONDITION FOR INVOKING THE PROVISIONS U/S 153C R.W.S. 153A, T HEREFORE, THE AO RIGHTLY INITIATED THE PROCEEDINGS U/S 153C OF THE ACT AGAINST THE ASSESSEE. ITA NO S. 3078 TO 308 1 & 3653 /DEL /201 5 PAWAN KUMAR JAIN 5 8. NOW THE ASSESSEE IS IN APPEAL. THE LD. COUNSEL FOR THE ASS ESSEE AT THE VERY OUTSET STATED THAT THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE VIDE ORDER DATED 28.08.2015 OF THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT, CENTRAL - III VS KABUL CHAWLA IN ITA NOS. 707, 709 & 713/2014 (COPY OF THE SAID ORDER WAS FURNISHED WHICH IS PLACED ON RECORD). 9. IN HIS RIVAL SUBMISSIONS THE LD. CIT DR REITERATED THE OBSERVATIONS MADE BY THE LD. CIT(A) AND STRONGLY SUPPORTED THE IMPUGNED ORDER. 10 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND G ONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE, IT IS AN ADMITTED FACT THAT NO INCRIMINATING MATERIAL PERTAINING TO THE ASSESSEE WAS UNEARTHED DURING THE COURSE OF SEARCH. THE AO HAD MADE THE ADDITIONS O N ACCOUNT OF UNSECURED LOANS, T HE DETAILS OF WHICH WERE ALREADY AVAILABLE . I T IS ALSO NOT BROUGHT ON RECORD TO SUBSTANTIATE THAT ANY DOCUMENT PERTAINING TO THE LOAN FROM SH. SANJEEV KUMAR GUPTA WAS FOUND DURING THE COURSE OF SEARCH OR THE ASSESSEE CONCEALED ANY INCOME OR FURNISHED INAC CURATE PARTICULARS OF INCOME WHICH LATER ON WERE FOUND DURING THE COURSE OF SEARCH. ON A SIMILAR ISSUE THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS KABUL CHAWLA (SUPRA) HAS HELD AS UNDER: 37. ON A CONSPECTUS OF SECTION 153A(1) OF THE ACT, READ WITH THE PROVISOS THERETO, AND IN THE LIGHT OF THE LAW EXPLAINED IN ITA NO S. 3078 TO 308 1 & 3653 /DEL /201 5 PAWAN KUMAR JAIN 6 THE AFOREMENTIONED DECISIONS, THE LEGAL POSITION THAT EMERGES IS AS UNDER: I. ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF THE ACT, NOTICE UNDER SECTION 153 A (1) WILL HAVE TO BE MAN DATORILY ISSUED TO THE PERSON SEARCHED REQUIRING HIM TO FILE RETURNS FOR SIX AYS IMMEDIATELY PRECEDING THE PREVIOUS YEAR RELEVANT TO THE AY IN WHICH THE SEARCH TAKES PLACE. II. ASSESSMENTS AND REASSESSMENTS PENDING ON THE DATE OF THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH AYS WILL HAVE TO BE COMPUTED BY TH E AOS AS A FRESH EXERCISE. III. THE AO WILL EXERCISE NORMAL ASSESSMENT POWERS IN RESPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT AY IN WHICH THE SEARCH TAKES PLACE. THE AO HAS THE POWER TO ASSESS AND R EASSESS THE 'TOTAL INCOME' OF THE AFOREMENTIONED SIX YEARS IN SEPARATE ASSESSMENT ORDERS FOR EACH OF THE SIX YEARS. IN OTHER WORDS THERE WILL BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX AYS IN WHICH BOTH THE DISCLOSED AND THE UNDISCLOSED IN COM E WOULD BE BROUGHT TO TAX . IV. ALTHOUGH SECTION 153 A DOES NOT SAY THAT ADDITIONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SEARCH, OR OTHER POST - SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE AO WHICH CAN BE RELATED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSESSMENT CAN BE ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOUSLY AN ASSESSMENT HAS TO BE MADE UNDER THIS SECTION ONLY ON TH E BASIS OF SEIZED MATERIAL. ITA NO S. 3078 TO 308 1 & 3653 /DEL /201 5 PAWAN KUMAR JAIN 7 V. IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPLETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESSMENT CAN BE MADE. THE WORD 'ASSESS' IN SECTION 153 A IS RELATABLE TO ABATED PROCEEDINGS (I.E. THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD 'REA SSESS' TO COMPLE TED ASSESSMENT PROCEEDINGS. VI. INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, THE JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UNDER SECTION 153A MERGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY FOR EACH AY ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTHER MATERIAL EXISTING OR BROUGHT ON THE RECORD O F THE AO. VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153 A ONLY ON THE BASIS OF SOME INCRIMINATING MAT ERIAL UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS OR UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. 11 . IN THE P RESENT CASE ALSO NO INCRIMINATING MATERIAL WAS UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENT OR UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURS E OF ORIGINAL ASSESSMENT. WE, THEREFORE, BY KEEPING IN VIEW THE RATIO LAID DOWN BY THE HON BLE JURISDICTIONAL HIGH COURT IN THE AFORESAID REFERRED TO CASE OF CIT VS KABUL CHAWLA (SUPRA) DECIDE THE CASE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE AND HOLD THAT SINCE NO INCRIMINATING ITA NO S. 3078 TO 308 1 & 3653 /DEL /201 5 PAWAN KUMAR JAIN 8 MATERIAL WAS UNEARTHED DURING THE COURSE OF SEARCH, NO ADDITION COULD HAVE BEEN MADE TO THE INCOME ALREADY ASSESSED. ACCORDINGLY, THE IMPUGNED ORDER IS SET ASIDE AND THE ADDITION MADE BY THE AO IS DELETED. 12 . THE FACTS RE LATED TO THE OTHER YEARS ARE SIMILAR AS WERE INVOLVED IN THE ASSESSMENT YEAR 2004 - 05, THE ONLY DIFFERENCE IS IN THE AMOUNT OF ADDITION MADE BY THE AO. THEREFORE, OUR FINDINGS GIVEN IN THE FORMER PART OF THIS ORDER IN ITA NO. 3078/DEL/2012 WILL BE APPLICABL E WITH THE SAME FORCE FOR ANOTHER APPEAL S OF THE ASSESSEE AND ALSO THE DEPARTMENTAL APPEAL IN ITA NO. 3653/DEL/2012. IN VIEW OF THE ABOVE, WE DO NOT SEE ANY MERIT IN THE APPEAL OF THE DEPARTMENT AND ALLOW THE APPEALS OF THE ASSESSEE. 1 3 . IN THE RESULT, TH E APPEAL S OF THE ASSESSEE ARE ALLOWED AND THAT OF THE DEPARTMENT IS DISMISSED . ( ORDER PRON OUNCED IN THE COURT ON 01/01/2016 ) SD/ - SD/ - ( BEENA PILLAI ) (N. K. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 01/01/2016 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR