M/s. Global Heritage Venture Ltd., Delhi V. DCIT, New Delhi

ITA 3197/DEL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 7210 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 06-04-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 21-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K SAROHA
• Keywords: Search and seizure; Question of law; Commercial expediency; Revised return
• Section: 143(3); 142(1); 260A; 139(5); 132; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C' NEW DELHI BEFORE SHRI J.S. REDDY, ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER I.T.A. NO. 3197/DEL/2013 AY: 200 9-10 GLOBAL HERITAGE VENTURE LTD., VS DCIT, (FORMERLY KNOWN AS M/S KRISHNA CENTRAL CIRCLE-1 2, BUILDWELL & DEVELOPERS PVT. LTD.), ARA CENTRE, 12, RING ROAD, LAJPAT NAGAR-IV, JHANDEWALAN EXT ENSION, DELHI. NEW DELHI. (PAN: AACCK9842K) (APPELLANT) (RESPONDENT) APPELLANT BY: MR. SUDESH GARG, ADV. RESPONDENT BY: SHRI A.K. SAROHA, CIT DR DATE OF HEARING: 06.04.2016 DATE OF PRONOUNCEMENT: 21.06.2016 ORDER PER SUDHANSHU SRIVASTAVA, J.M. THE PRESENT APPEAL IS PREFERRED BY THE ASSESSEE AG AINST THE IMPUGNED ORDER DATED 12.03.2013 PASSED BY THE LD. C IT(A)-XXXI, NEW DELHI FOR ASSESSMENT YEAR 2009-10. 2. THE FACTS, IN BRIEF, ARE AS UNDER:- 2.1 SEARCH AND SEIZURE OPERATION U/S 132 OF THE INC OME TAX ACT WAS CARRIED OUT IN RAJDARBAR GROUP OF CASES ON 31.0 7.2008. DURING SEARCH OPERATION, CERTAIN DOCUMENTS WERE SEI ZED WHICH ALLEGEDLY BELONGED TO THE ASSESSEE COMPANY. THE CAS E OF THE I.T.A. NO. 3197/DEL/2013 ASSESSMENT YEAR: 2009-10 2 ASSESSEE COMPANY WAS TRANSFERRED TO CENTRAL CIRCLE - 12 FROM CENTRAL CIRCLE-5, NEW DELHI UNDER SECTION 127 OF TH E INCOME TAX ACT, 1961 BY THE ORDERS OF LD. COMMISSIONER OF INCO ME TAX (CENTRAL)-I, DELHI VIDE F. NO. CIT(C)- 1/DEL/CENTRALISATION/1/2009-10/2888 DATED 25.03.201 0. 3. NOTICE U/S 142(1) OF INCOME TAX ACT, 1961 DATE D 02.08.2010 WAS ISSUED TO THE ASSESSEE COMPANY, REQUIRING IT TO FILE THE RETURN FOR THE ASSESSMENT YEAR 2009-10. RETURN OF I NCOME FOR THE ASSESSMENT YEAR 2009-10 WAS FILED BY THE ASSESS EE ON 10.09.2010 DECLARING INCOME OF RS. 19,09,200/-. THE RETURN FILED BY THE ASSESSEE COMPANY WAS THE SAME AS THAT WHICH WAS E-FILED UNDER SECTION 139 OF THE ACT ON 20/04/2010. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE REVISED ITS RETURN OF INCOME U/S 139(5) ON 26-10-2010 DECLARING AN INCOME OF RS. 3,12,72,630/- . 4. DURING THE POST SEARCH INVESTIGATION, THE ASSES SEE COMPANY OFFERED ADDITIONAL INCOME OF RS. 10 CRORE FOR THE A Y 2009-10 ON ACCOUNT OF WORK IN PROGRESS IN THE HOTEL PROJECT AT GURGAON. OUT OF THE ABOVE AMOUNT, RS. 9 CRORE HAS BEEN SHOWN IN THE HANDS OF SH. RAKESH KUMAR GARG TOWARDS THE CONSTRUCTION OF T HE HOTEL OF THE ASSESSEE COMPANY. IN THE REVISED RETURN FILED O N I.T.A. NO. 3197/DEL/2013 ASSESSMENT YEAR: 2009-10 3 26/10/2010, THE ASSESSEE HAS SHOWN SURRENDERED INCO ME OF RS. 2,93,87,834/- WHICH INCLUDES THE BALANCE ADDITIONAL INCOME OF RS. 1 CRORE, WHICH WAS OFFERED DURING SEARCH. IN OT HER WORDS, THE ASSESSEE AND SHRI RAKESH KUMAR GARG (MAIN PROMOTER OF THE ASSESSEE COMPANY) HAVE SHOWN ADDITIONAL INCOME OF R S. 10,00,00,000/- AS SURRENDERED DURING THE SEARCH PRO CEEDINGS. 5. DURING THE ASSESSMENT YEAR 2008-09, THE ASSESS EE COMPANY RECEIVED A SUM OF RS. 100 CRORE FROM M/S PRAMERICA ASPF II CYPRUS HOLDING LIMITED, 11, FLORINIS STREET CITY FO RUM, 7 TH FLOOR, 1065, NICOSIA, CYPRUS ON ACCOUNT OF 4% FULLY & MAND ATORY CONVERTIBLE DEBENTURES. DURING THE YEAR, THE ASSESS EE COMPANY HAS PAID INTEREST ON DEBENTURES TO THE TUNE OF RS. 4,18,63,014/- AND CAPITALIZED THE SAME IN THE COST OF THE HOTEL P ROJECT. THE ABOVE AMOUNT OF RS. 100 CRORE WAS DEPOSITED IN UNIO N BANK OF INDIA A/C NO. 307801010917171 ON 05/02/2008 AND SAM E DAY THE AMOUNT WAS TRANSFERRED TO SISTER CONCERN M/S GL OBAL REALTY VENTURE LTD. (GRVL) AND THIS COMPANY TRANSFERRED T HE SAME AMOUNT ON THE VERY SAME DAY TO ANOTHER SISTER CONCE RN M/S NARENDRA IMPEX LTD., WHICH USED THE AMOUNT AGAINST PAYMENT MADE TO NBCC LTD. AS ADVANCE AGAINST PROPERTY AT NB CC PLAZA, NEW DELHI. NO INTEREST WAS CHARGED FROM M/S GRVL BY THE I.T.A. NO. 3197/DEL/2013 ASSESSMENT YEAR: 2009-10 4 ASSESSEE AND AO WAS OF THE OPINION THAT THE ASSESSE E HAD DIVERTED THE DEBENTURE AMOUNT OF RS. 100 CRORE RECE IVED FROM THE FOREIGN COMPANY TO M/S GRVL WITHOUT INTEREST BUT HA D, HOWEVER, PAID INTEREST OF RS. 4,18,63,014/- TO THE FOREIGN C OMPANY. THE ASSESSEE HAD CLAIMED THE ABOVE PAYMENT AS ADVANCES TO CONTRACTOR & SUPPLIERS. THE AO HELD THAT THE INTERE ST OF RS. 4,18,63,014/- PAID TO THE FOREIGN COMPANY WAS NOT TO BE ALLOWED TO BE CAPITALISED IN THE COST OF THE HOTEL. 6. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFO RE THE LD. FIRST APPELLATE AUTHORITY WHICH WAS ALSO DISMISSED. NOW, THE ASSESSEE HAS FILED THIS APPEAL BEFORE THE TRIBUNAL AND HAS SUBSEQUENTLY REVISED THE GROUNDS OF APPEAL. THE FOL LOWING GROUNDS OF APPEAL HAVE BEEN RAISED IN THE REVISED G ROUNDS OF APPEAL:- 1. THE LD. CIT (A) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE ASSESSMENT OF THE APPELLANT PASSED WITHOUT SATISFYING THE SUBSTANTIVE AND PROCEDURAL REQUIREMENTS UNDER SECTION 153C OF THE INCOME TAX ACT. 2. WITHOUT PREJUDICE TO THE OTHER GROUNDS OF APPE AL, THE LD. CIT (A) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE ASSESSMENT ORDER UNDER SECTION 143(3 ) OF THE INCOME TAX ACT, 1961 PASSED WITH THE APPROVA L OF THE ADDITIONAL CIT, RANGE-ILL, NEW DELHI VIDE HI S LETTER F. NO. ADDL. CIT (CR)-111/2010-11/814 DATED 27.12.2010 WHEN LAW DOES NOT STIPULATE ANY SUCH I.T.A. NO. 3197/DEL/2013 ASSESSMENT YEAR: 2009-10 5 APPROVAL. 3. WITHOUT PREJUDICE TO THE OTHER GROUNDS OF APPE AL, THE LD. CIT (A) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE ADDITIONS WHICH WERE NOT BASED ON TH E INCRIMINATING MATERIAL FOUND AND SEIZED DURING THE COURSE OF SEARCH. 4. WITHOUT PREJUDICE TO THE OTHER GROUNDS OF APPEA L, THE LD. CIT (A) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE DISALLOWANCE OF CAPITALIZATION OF INTEREST OF RS. 4,18,63,014/- INCURRED ON PAYMENT O F DEBENTURES INTEREST TO OVERSEAS INVESTORS IGNORING THE FACT THAT THE SUMS ON WHICH INTEREST EXPENDITURE WA S INCURRED WERE USED FOR COMMERCIAL EXPEDIENCY AND WERE RAISED AT A VERY LOW RATE OF INTEREST. 5. WITHOUT PREJUDICE TO THE OTHER GROUNDS OF APPEA L, THE LD. CIT (A) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE DISALLOWANCE OF CAPITALIZATION OF INTEREST OF RS. 4,18,63,0147- EVEN IF ASSUMING THE FUNDS RECEIVED FROM THE OVERSEAS INVESTORS WERE NOT DIRECTLY APPLIED TO THE HOTEL PROJECT AS THE APPELL ANT HAD MADE SUBSTANTIAL INVESTMENT OF INTEREST FREE FU ND IN THE HOTEL PROJECT BEFORE THE FOREIGN FUNDING WAS RECEIVED. 7. THE LD. AR SUBMITTED THAT THIS TRIBUNAL WAS PLEA SED TO QUASH THE ASSESSMENT ORDER PASSED U/S 143 (3)/153C FOR AY 2008-09. COPY OF THIS ORDER IS PLACED IN THE PAPER BOOK FROM PAGE NUMBER 74 TO 88. THIS ORDER WAS THE SUBJECT MA TTER OF APPEAL U/S 260A OF THE ACT BEFORE THE HON'BLE DELHI HIGH COURT AND THE HON'BLE HIGH COURT WAS PLEASED NOT TO ADMIT THE SAME. I.T.A. NO. 3197/DEL/2013 ASSESSMENT YEAR: 2009-10 6 COPY OF THE ORDER OF THE HON'BLE COURT IS PLACED AT PAGE NUMBER 73 OF THE PAPER BOOK. 8. IT WAS SUBMITTED THAT THE ORDER OF THE AO OSTENS IBLY PASSED U/S 143(3) SHOULD BE CONSIDERED TO HAVE BEEN PASSED U/S 153C R.W.S. 143(3). FOR THIS ARGUMENT THE LD. AR DREW OU R ATTENTION TO THE ORDER PASSED BY THE CO-ORDINATE BENCH OF THE TR IBUNAL IN THE CASE OF THE GROUP CONCERN M/S NATURAL PRODUCT BIO T ECH LTD. (PLACED IN THE PAPER BOOK AT PAGE NUMBER 7 TO 22) W HEREIN THE CO-ORDINATE BENCH OF THE TRIBUNAL TREATED THE ORDER FOR THE YEAR OF SEARCH AS ORDER PASSED U/S 153C. 9. THE LD. AR FURTHER SUBMITTED THAT THE DEPARTMENT RAISED THIS SPECIFIC ISSUE IN THE APPEAL BEFORE HON'BLE DE LHI HIGH COURT THAT THAT THE ORDER FOR AY 2009-10 WAS NOT EVEN PAS SED U/S 153C SO THE ORDER OF THE TRIBUNAL WAS ERRONEOUS THE REFORE, NEEDED TO BE SET ASIDE. IT WAS FURTHER SUBMITTED TH AT CONSIDERING THIS DIRECT PRECEDENT IN THE ASSESSEE GROUP ITSELF, THE ASSESSMENT ORDER UNDER APPEAL THOUGH OSTENSIBLY SIMILARLY STAT ED TO HAVE BEEN PASSED U/S 143(3) SHOULD BE CONSIDERED TO HAVE BEEN PASSED U/S 153C AND QUASHED. 10. LEARNED DEPARTMENTAL REPRESENTATIVE, HOWEVER, S TRONGLY CONTENDED THAT AS LONG AS THERE WAS NO AMBIGUITY IN THE I.T.A. NO. 3197/DEL/2013 ASSESSMENT YEAR: 2009-10 7 STATUTORY LANGUAGE, RESORT TO ANY INTERPRETATIVE PR OCESS TO UNFOLD THE LEGISLATIVE INTENT WOULD BE IMPERMISSIBLE. HE RELIED ON THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF K ESHAVJI RAVIJI & CO. VS CIT 1883 ITR 1 (SC) FOR THIS PROPOSITION. THE LEARNED DEPARTMENTAL REPRESENTATIVE ALSO ARGUED THAT THERE WAS NO SCOPE FOR IMPORTING INTO THE STATUTE WORDS WHICH WERE NOT THERE. HE RELIED ON THE CASE OF SMT. TARALATA SHYAM & ORS VS C.I.T. 108 ITR 345 (SC) FOR THE SAME. THE LEARNED DEPARTMENTAL RE PRESENTATIVE ALSO RELIED ON THE CASE OF CIT VS ANIL KUMAR BHATIA 24 TAXMANN.COM 98 (DELHI) FOR THE PROPOSITION THAT THE PROVISIONS OF SECTION 153C ARE NOT AUTOMATIC AND THEY CAN BE INVO KED ONLY IF CERTAIN CONDITIONS WERE FULFILLED. 11. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFU LLY PERUSED THE RECORDS. WE ARE INCLINED TO CONCUR WITH THE S UBMISSIONS OF THE LD. AR THAT THE IMPUGNED ORDER OF THE ASSESSING OFFICER OSTENSIBLY PASSED U/S 143(3) OF THE ACT SHOULD BE C ONSIDERED TO HAVE BEEN PASSED U/S 153C READ WITH SECTION 143(3) IN VIEW OF THE DECISION RENDERED BY THE HON'BLE DELHI HIGH COU RT IN THE CASE OF PR. COMMISSIONER OF INCOME TAX-2 VS NATURAL PROD UCTS BIO- TECH LTD. IN I.T.A. NO. 568/2015 WHEREIN THE FACTS WERE IDENTICAL. THE RELEVANT PORTION IS REPRODUCED AS UNDER:- I.T.A. NO. 3197/DEL/2013 ASSESSMENT YEAR: 2009-10 8 THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 28 LH NOVEMBER 2014 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL (ITAT) IN ITA NO. 3086/DEL/2013 FOR THE ASSESSMENT YEAR ('AY') 2009-1 0. THE QUESTION SOUGHT TO BE URGED IS WHETHER THE ITAT WAS CORRECT IN UPHOLDING THE ORDER OF THE CIT (A) THAT SINCE THE REQUISITES OF SECTION 153-C OF THE ACT WERE NOT SAT ISFIED AND THE ASSESSMENT PROCEEDINGS STOOD VITIATED. 2. ON 14TH AUGUST 2015, THIS COURT PASSED AN ORDER IN THE PRESENT APPEAL, THE RELEVANT PORTION OF WH ICH READS AS UNDER: 3. THE POINT URGED BY THE REVENUE IN THIS APPEAL AGAINST THE ORDER DATED 28TH NOVEMBER, 2014 OF THE ITAT IN ITA NO. 20861 DEL/2013 PERTAINING TO THE ASSESSMENT YEAR (AY) 2009-10 IS THAT THE ASSESSME NT ITSELF WAS FRAMED ONLY UNDER SECTION 143 (3) OF THE IT ACT AND THEREFORE THE ITAT WAS IN ERROR IN PROCEEDI NG ON THE BASIS THAT IT WAS UNDER SECTION 153C OF THE ACT . 4. LEARNED COUNSEL FOR THE RESPONDENT/ASSESSEE ON THE OTHER HAND DREW THE ATTENTION OF THIS COURT TO PARA 9 OF THE ASSESSMENT ORDER WHICH STATES THAT IT HAS BEEN PASSED WITH THE PRIOR APPROVAL OF THE ADDL. CI T CENTRAL RANGE-ILL, NEW DELHI VIDE HIS LETTER DATED 28TH DECEMBER, 2010. HE SUBMITS THAT THIS WAS THE PRIOR APPROVAL THAT WAS REQUIRED, IN TERMS OF SECTION 153 D OF THE ACT, TO INITIATE PROCEEDINGS UNDER SECTION 153 C OF THE ACT. 5. THE LEARNED COUNSEL FOR THE REVENUE STATES THAT HE NEEDS SOME TIME TO EXAMINE THIS ASPECT. AT HIS REQUEST LIST ON 29TH SEPTEMBER, 2015. 3. THE COURT IS TODAY INFORMED THAT THE SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSESSEE MADE ON THE PREVIOUS OCCASION IS CORRECT. 4. THE POINT INVOLVED IN THE RESENT APPEAL STANDS COVERED AGAINST THE REVENUE BY THE ORDER PASSED BY THIS COURT ON 14 TH AUGUST 2015 IN ITA NOS. 569, 570, 571 OF I.T.A. NO. 3197/DEL/2013 ASSESSMENT YEAR: 2009-10 9 2015 ( PR. COMMISSIONER OF INCOME TAX V. NATURAL PRODUCTS BIO TECH LTD.). 5. NO SUBSTANTIAL QUESTION OF LAW ARISES FOR DETERMINATION BY THIS COURT. 6. THE APPEAL IS DISMISSED. 12. RESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY T HE HON'BLE DELHI HIGH COURT IN THE CASE OF NATURAL PRODUCTS BI O-TECH LTD. AS AFORESAID, WE HOLD THE IMPUGNED ASSESSMENT ORDER A NULLITY AND QUASH THE SAME. THE OTHER GROUNDS ARE NOT ADJUDICA TED HAVING BECOME ACADEMIC. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21ST JUNE, 2016. SD/- SD/- (J.S. REDDY) (SUDHANSHU SRI VASTAVA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: THE 21ST OF JUNE 2016 GS I.T.A. NO. 3197/DEL/2013 ASSESSMENT YEAR: 2009-10 10 COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR 6. GUARD FILE BY ORDER ASSTT. REGISTRAR