C.L. Sharma, New Delhi V. DCIT, New Delhi

ITA 3201/DEL/2012

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 9726 (ITAT-DELHI)
• Duration Of Justice: 7 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 10-07-2017
• Assessment Year: 2001-2002
• Appeal Filed On: 21-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VINAY KUMAR KARAN
• Keywords: Unexplained expenditure; Search and seizure
• Section: 143(3); 153A; 43; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B: NEW DELHI BEFORE SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER AND SHRI K.NARASIMHA CHARY, JUDICIAL MEMBER I.T.A. NO. 3201/DEL/2012 ASSESSMENT YEAR: 2001-02 C.L. SHARMA, 8, LOCAL SHOPPING CENTRE, VS. DCIT, CE NTRAL CIRCLE-22, 2 ND /3 RD FLOOR, VARDHMAN SIDDHARTH NEW DELHI PLAZA, SAVITA VIHAR, NEW DELHI. PAN: AATPS 2067C (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE DEPARTMENT BY: SH. VINAY KUMAR KARAN, CIT-DR DATE OF HEARING: 18.12.2019 DATE OF PRONOUNCEMENT: 06.01.2020 ORDER PER K. NARASIMHA CHARY, JM AGGRIEVED BY THE ORDER DATED 11/4/2012 IN APPEAL NO . 233/08-09, PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS)-III, DELHI (LD. CIT(A)), FOR THE ASSESSMENT YEAR 2001-02, SH. CL S HARMA (THE ASSESSEE) FILED THIS APPEAL ON THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND CIRCUMSTANCES OF CASE AND IN L AW, THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIR MING THE ACTION OF THE ASSESSING OFFICER OF MAKING ADDITION OF RS.1 0,0,000/- ON ACCOUNT OF ALLEGED MARRIAGE EXPENSES. ON THE FACTS A ND CIRCUMSTANCES OF THE CASE AND IN LAW, THE COMMISSION ER OF INCOME TAX SHOULD HAVE DELETED THE ADDITION OF RS.10,00,00 0/- MADE BY THE ASSESSING OFFICER. 2. ON THE FACTS AND CIRCUMSTANCES OF CASE AND IN LA W, THE AMOUNT OF RS.10,00,000/- WAS NOT THE INCOME FOR THE YE AR AND 2 THEREFORE THE CIT(A) SHOULD HAVE DELETED THE ADDITION MADE BY THE A.O. 3. THE ADDITION OF RS.10,00,000/- MADE BY THE ASSESS ING OFFICER AND CONFIRMED BY CIT(A) IS BEYOND THE JURISDICTION O F PROVISIONS OF SECTION 153A OF INCOME TAX ACT, 1961. 2. BRIEF FACTS OF THE CASE ARE THAT THERE WAS SEARC H AND SEIZURE ACTION UNDER SECTION 132 OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT) IN THE ACCURATE GROUP OF CASES ON 26/7/2006, PURSUANT TO W HICH A NOTICE UNDER SECTION 153A OF THE ACT WAS ISSUED AND SERVED ON TH E ASSESSEE. ASSESSEE FILED THEIR RETURN OF INCOME ON 3/6/2008 DECLARING AN INCOME OF RS.3,46,508/-. 3. IN THE STATEMENT RECORDED UNDER SECTION 132(4) O F THE ACT ON 26/7/2006, THE ASSESSEE STATED THAT THE MARRIAGE OF HIS ELDER DAUGHTER, NAMELY, MEERA SHARMA TOOK PLACE ON 10/4/2000 FOR WH ICH A SUM OF RS. 10 LACS WAS INCURRED. ASSESSEE FURTHER STATED THAT SUC H AMOUNT WAS UTILISED OUT OF THE SURRENDERED AMOUNT. ASSESSEE WAS PUT ON NOTICE BY THE LEARNED ASSESSING OFFICER TO SPECIFICALLY POINT OUT THE PER IOD OF SURRENDER WHICH IS ATTRIBUTABLE FOR THE UTILISATION OF THE MARRIAGE EX PENSES AND LEARNED ASSESSING OFFICER OBSERVED THAT THE RECORD DOES NOT REVEAL ANY SUCH SURRENDER WHATSOEVER BY THE ASSESSEE FOR THE YEAR I N WHICH THE MARRIAGE TOOK PLACE. ASSESSEE DOES NOT SEEM TO HAVE RESPONDE D TO SUCH A QUERY AND THE FINDING OF THE LEARNED ASSESSING OFFICER IS A C ATEGORICAL TO THE EFFECT THAT THERE WAS NO SURRENDER DURING THE YEAR UNDER C ONSIDERATION IN RESPECT OF ANY OF THE GROUP OF CASES AND, THEREFORE, THE AD MITTED EXPENDITURE OF RS. 10 LACS ON MARRIAGE CANNOT BE CORRELATED TO ANY SURRENDER. 4. LEARNED ASSESSING OFFICER FURTHER OBSERVED THAT EVEN IF IT IS CONSIDERED THAT THE SOURCES OF MARRIAGE EXPENSES WE RE MET OUT OF 3 SURRENDERED INCOME OF THE COMPANIES, NAMELY, M/S AM L AND M/S ATL IN WHICH THE ASSESSEE IS THE MANAGING DIRECTOR, THE BE NEFIT DERIVED FROM THE COMPANIES IS ASSESSABLE IN THE HAND OF THE ASSESSEE AS SALARY IN VIEW OF SECTION 17(1)(IV) OF THE ACT AND 17(2)(III) OF THE ACT AND EXPLANATION 3 TO SEC. 17(2) OF THE ACT, AND THEREFORE, THE BENEFIT D ERIVED BY THE ASSESSEE FROM THE COMPANY IN WHICH HE IS A DIRECTOR/MANAGING DIRECTOR AND GETTING SALARY IN THE FORM OF MARRIAGE EXPENSES BEING MET O UT OF THE SOURCES OF THE COMPANY IS TAXABLE IN THE HAND OF THE ASSESSEE AS S ALARY. 5. LEARNED ASSESSING OFFICER FURTHER OBSERVED THAT THE ASSESSEE HAS FURNISHED THE CASH UTILISATION STATEMENT OF SURREND ERED AMOUNT IN THE HAND OF THE GROUP CASES AND THE ASSESSEE HAS NOT SU RRENDERED ANY AMOUNT IN HIS CASE; THAT SPECIFIC DETAILS OF CASH GENERATI ON AND ITS UTILISATION UNDER DIFFERENT HEADS HAVE BEEN GIVEN; THAT THE CASH UTIL ISATION STATEMENT SUBMITTED BY THE ASSESSEE IS AT VARIANCE WITH THE I NCOME ASSESSED BY THE ASSESSING OFFICER IN THE GROUP CASES; AND THAT IT I S A CLEAR ATTEMPT TO COVER UP THE UNEXPLAINED EXPENDITURE AND SUCH TYPE OF TEL ESCOPING OF ADDITIONS BETWEEN DIFFERENT ASSESSEES AND DIFFERENT ASSESSMEN T YEARS ARE NOT PERMISSIBLE AS PER THE ACT. FOR THESE REASONS, THE LEARNED ASSESSING OFFICER BROUGHT THE AMOUNT OF RS. 10 LACS TO TAX BY WAY OF ADDITION, INTER ALIA SO MANY OTHER ADDITIONS BY ORDER DATED 19/12/2008 PASS ED UNDER SECTION 153A/143(3) OF THE ACT. 6. AGGRIEVED BY SUCH ADDITIONS, ASSESSEE PREFERRED APPEAL ON SEVERAL GROUNDS, OUT OF WHICH THE ASSESSEE DID NOT PRESS MA NY GROUNDS TOUCHING CERTAIN ADDITIONS. INSOFAR AS THE IMPUGNED ADDITION OF RS. 10 LACS IS CONCERNED, PLEA TAKEN BY THE ASSESSEE IS THAT THE P REPARATIONS OF THE MARRIAGE WERE DONE MONTHS IN ADVANCE AND ACCORDINGL Y THE EXPENSES WERE 4 INCURRED MUCH EARLIER TO THE ACTUAL DATE OF MARRIAG E, NAMELY, PRIOR TO 31/3/2000 AND, THEREFORE, SUCH AN EXPENDITURE DOES NOT FALL DURING THE YEAR UNDER CONSIDERATION. ACCORDING TO THE ASSESSEE , THERE IS NO EVIDENCE THAT SUCH AN EXPENDITURE OF 10 LACS WAS INCURRED DU RING THE PERIOD BETWEEN 1/4/2010 AND 10/4/2010 NOR THE ASSESSEE COU LD BE EXPECTED TO EARN RS. 10 LACS DURING THE SHORT PERIOD OF 10 DAYS . ASSESSEE HAD TAKEN THE POSITIVE PLEA THAT SUCH AN AMOUNT WAS SPENT OUT OF SCRAP SALES HAPPENED PRIOR TO 31/3/2000. 7. LD. CIT(A) CONSIDERED ALL THESE CONTENTIONS. ACC ORDING TO HIM AS A MATTER OF RECORD, DURING THE COURSE OF SEARCH, WHEN THE STATEMENT OF THE ASSESSEE WAS RECORDED IN SECTION 132 (4) OF THE ACT , THE ASSESSEE CLEARLY ADMITTED THAT HE HAD INCURRED RS. 10 LACS FOR THE M ARRIAGE OF HIS DAUGHTER AND CONFIRMED IN SUCH STATEMENT THAT THE MARRIAGE O F HIS ELDER DAUGHTER TOOK PLACE ON 10/4/2000 WHICH FALLS IN THE ASSESSME NT YEAR 2001-02. CIT(A) FURTHER OBSERVED THAT THOUGH THE ASSESSEE CLAIMED T O HAVE INCURRED SUCH AN EXPENDITURE OUT OF THE ADDITIONAL INCOME SURREND ERED FOR MORE THAN 10 CRORES BY THE ACCURATE GROUP, IT IS FOUND THAT THE MARRIAGE EXPENSES OF RS. 10 LACS WAS NOT COVERED IN THE UTILISATION CHART OF ADDITIONAL INCOME SO SURRENDERED, AND, THEREFORE, THE QUESTION OF GRANTI NG BENEFIT OF SET OFF/TELESCOPING DOES NOT ARISE. ACCORDING TO THE LD . CIT(A) THE STAND TAKEN BY THE ASSESSEE THAT THE BENEFIT OF SET OFF/TELESCO PING SHOULD BE GIVEN AGAINST THE FUNDS AVAILABLE AGAINST INCOME PERTAINI NG TO THE PERIOD PRIOR TO 31 ST OF MARCH 2000 IS AN UNSUBSTANTIATED AFTERTHOUGHT A ND CANNOT BE ACCEPTED. LD. CIT(A), THEREFORE, CONFIRMED THE ADDI TION MADE BY THE LEARNED ASSESSING OFFICER UNDER THIS HEAD. ASSESSEE , THEREFORE, AGGRIEVED BY SUCH AN ORDER PREFERRED THIS APPEAL. 5 8. WHEN THE MATTER IS CALLED, NEITHER THE ASSESSEE NOR ANY AUTHORISED REPRESENTATIVE ENTERED APPEARANCE. IT COULD BE SEEN FROM THE RECORD THAT THE NOTICE ISSUED ON 18/11/2019 NOTING THE DATE OF HEARING AS 18/12/2019 WAS SENT TO THE ADDRESS GIVEN IN FORM NO. 36. IF TH E ASSESSEE IS AVAILABLE IN SUCH ADDRESS, SUCH NOTICE SHOULD HAVE BEEN SERVED O N THE ASSESSEE. IF FOR ANY REASON, THE ASSESSEE IS NOT AVAILABLE THERE, IT IS FOR THE ASSESSEE TO MAKE ARRANGEMENTS FOR SERVICE OF SUCH NOTICE BY FUR NISHING THE ADDRESS WHERE THE ASSESSEE WOULD BE AVAILABLE, OR TO DELIVE R IT TO SOME AUTHORISED PERSON, OR BY MAKING REQUEST TO THE POSTAL DEPARTME NT TO DETAIN THE MAIL TILL THE ASSESSEE CLAIMS THE SAME. SINCE THE ASSESS EE DOES NOT SEEM TO HAVE ADOPTED ANY OF THESE METHODS, WE ARE OF THE CONSIDE RED OPINION THAT NO TIME COULD BE GRANTED. BASING ON THE RECORD WE PROC EED TO HEAR THE COUNSEL FOR REVENUE AND DECIDE THE MATTER ON MERITS . 9. IT IS THE SUBMISSION OF THE LD. DR THAT THE ASSE SSMENT UNDER SECTION 153A/153C OF THE ACT NEED NOT NECESSARILY BE BASED ON INCRIMINATING MATERIAL AND FOR SUCH PURPOSE HE PLACED RELIANCE ON DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF ANIL KUMAR BHATIA 24 TAXMANN.COM 98. ACCORDING TO HIM THE ASSESSING OFFICER IS BOUND TO ISSUE NOTICES TO THE ASSESSEE TO FURNISH RETURNS FOR 6 ASSESSMENT YEARS AND HE IS EMPOWERED TO ASSESS OR REASSESS THE TOTAL INCOME INCLUDING THE U NDISCLOSED INCOME OF THE ASSESSEE. HE FURTHER SUBMITTED THAT LEARNED ASSESSI NG OFFICER IS EMPOWERED TO REOPEN THE PROCEEDINGS UNDER SECTION 1 43 (1) (A) OR UNDER SECTION 143(3) OF THE ACT TO REASSESS THE TOTAL INC OME, TAKING NOTE OF THE UNDISCLOSED INCOME, IF ANY AND THE LEARNED ASSESSIN G OFFICER IS ENTRUSTED WITH THE DUTY OF BRINGING TO TAX THE TOTAL INCOME O F THE ASSESSEE WHOSE CASES ARE COVERED BY SECTION 153A OF THE ACT BY EVE N MAKING REASSESSMENT. 6 10. WE HAVE GONE THROUGH THE RECORD IN THE LIGHT OF THE SUBMISSIONS MADE BY THE REVENUE. DESPITE THE RELEVANT DOCUMENTS MADE BY THE LD. DR, THE FACT REMAINS THAT INSOFAR AS THIS ADDITION OF 10 LACS IS CONCERNED NO INCRIMINATING MATERIAL WAS FOUND DURING THE SEARCH AND SEIZURE OPERATIONS THAT TOOK PLACE ON 26/7/2006. IT IS ONLY BASING ON THE ANSWERS GIVEN BY THE ASSESSEE TO THE QUESTIONS PUT BY THE LEARNED ASSESS ING OFFICER AT THE TIME OF RECORDING OF THE STATEMENT OF THE ASSESSEE UNDER SECTION 132 (4) OF THE ACT, THE ADDITION IS MADE. IT IS THE DECISION OF TH E HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA, 380 ITR 573THAT IN THE ABSENCE OF ANY INCRIMINATING MATERIAL THAT IS FOUND DURING THE SEARCH, IS NOT OPEN FOR THE ASSESSING OFFICER TO REOPEN THE CONCLU DED ASSESSMENT TO MAKE ANY ADDITIONS. IN OUR CONSIDERED OPINION, THIS CASE IS COVERED BY THE DECISION IN KABUL CHAWLA (SUPRA) AND IN VIEW OF THE SAME THE ADDITIONS MADE BY THE LEARNED ASSESSING OFFICER CANNOT BE SUS TAINED. WE, THEREFORE, FIND STRENGTH IN THE GROUNDS OF APPEAL PLEADED BY T HE ASSESSEE AND ALLOW THEM. 11. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 6 TH JANUARY, 2020. SD/- SD/- (PRASHANT MAHARISHI) (K.NARASIMHA CHARY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 06/01/2020 *AKS*