DCIT, CENTRAL CIRCLE- 19, NEW DELHI V. FORUM SALES PVT. LTD., NEW DELHI

ITA 3247/DEL/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 3219 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 04-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Gift; Search and seizure; Deemed dividend
• Section: 153A; 2(22)(e); 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: B, NEW DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND DR. B.R.R. KUMAR, ACCOUNTANT MEMBER ITA NO.3246/DEL/2018 ASSESSMENT YEAR: 2011-12 & ITA NO.3247/DEL/2018 ASSESSMENT YEAR: 2012-13 DCIT CENTRAL CIRCLE-19, NEW DELHI. VS. FORUM SALES PVT. LTD. C-134, DEFENCE COLONY, NEW DELHI. PAN :AAACF0285H (APPELLANT) (RESPONDENT) ORDER PER B.R.R. KUMAR, A.M: THE PRESENT APPEALS FILED BY THE REVENUE ARE DIRE CTED AGAINST THE COMMON ORDER DATED 28.02.2018 PASSED BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-27, NEW DELHI, PERTAINING TO THE AYS 2011-12 & 2012-13 RAISING THE SIMILAR GR OUNDS OF APPEAL. (AY 2012-13 REPRODUCED) 1. THE LD. CIT(A) HAS ERRED IN HOLDING THAT COMPLETED ASSESSMENT COULD NOT BE INTERFERED WITH BY THE APPELLANT BY MS. NIDHI SRIVASTAVA, DR RESPONDENT BY SH. HIREN MEHTA, ADV. DATE OF HEARING 04.12.2019 DATE OF PRONOUNCEMENT 04.12.2019 2 ITA NOS.3246 & 3247/DEL/2018 ASSESSING OFFICER WITHOUT INCRIMINATING MATERIAL, WHEREAS THE PROVISIONS OF SECTION 153A OF THE IT ACT, 1961 DO NOT STIPULATE ANY SUCH RESTRICTIONS ON THE POWERS OF THE ASSESSING OFFICER. 2. THE LD. CIT(APPEALS) HAS ERRED IN LAW AND ON THE FA CTS IN DELETING THE ADDITION OF RS. 74,74,803/- ON ACCOUNT OF ESTIMATION OF UNACCOUNTED PROFIT. 3. THE LD. CIT(A) HAS ERRED IN LAW AND ON THE FACTS IN DELETING THE ADDITION OF RS. 29,07,267/- ON ACCOUNT OF DISALLOWANCE OF EXPENSES. 4. THE LD. CIT(A) HAS ERRED IN LAW AND ON THE FACTS IN DELETING THE ADDITION OF RS. 14,61,443/- ON ACCOUNT OF UNACCOUNTED PROFIT WITH DIFFERENT PARTIES. 5. THE LD. CIT(A) HAS ERRED IN LAW AND ON THE FACTS IN DELETING THE ADDITION OF RS. 10,00,000/- ON ACCOUNT OF DEEMED DIVIDEND U/S 2(22)(E). 6. THE LD. CIT(A) HAS ERRED IN LAW AND ON THE FACTS IN DELETING THE ADDITION OF RS. 4,92,24,373/- ON ACCOU NT OF INFLATED PURCHASES. 7. THE LD. CIT(A) HAS ERRED IN LAW AND ON THE FACTS IN DELETING THE ADDITION OF RS. 50,000/- ON ACCOUNT OF DISALLOWANCE U/S 40A(3). 8. (A) THE ORDER OF THE CIT(A) IS ERRONEOUS AND NOT T ENABLE IN LAW AND ON FACTS. (B) THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AM END ANY/ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING T HE COURSE OF THE HEARING OF THE APPEAL. 3 ITA NOS.3246 & 3247/DEL/2018 2. THE FACTS OF THE CASE, IN BRIEF ARE THAT THE ASS ESSEE M/S. FORUM SALES (P) LTD. IS ENGAGED IN PROVIDING CORPOR ATE GIFTING SOLUTIONS TO VARIOUS COMPANIES. SEARCH & SEIZURE AN D SURVEY OPERATIONS UNDER SECTION 132/133A OF THE INCOME TAX ACT, 1961 WERE CONDUCTED ON 15.02.2014 AND SUBSEQUENT DATES I N THE CASE OF THE ASSESSEE ALONGWITH OTHER CASES OF THE AMQ GR OUP AT VARIOUS RESIDENTIAL & BUSINESS PREMISES. IN RESPONS E TO NOTICE U/S 153 A OF THE ACT, THE ASSESSEE FILED THE RETURN OF INCOME OF RS. 62,93,632/- FOR THE AY 2011-12 AND RS.77,31,688 /- ON 24.07.2015 FOR A. Y. 2012-13. 3. THE ASSESSING OFFICER MADE ADDITIONS ON THE ABOV E GROUNDS BASED ON THE RECORD AVAILABLE WITH THEM. BEFORE TH E LD. CIT(A), THE ASSESSEE HAS TAKEN ARGUMENTS THAT ASSESSMENT YE ARS 2011- 12 & 2012-13 ARE COMPLETED ASSESSMENTS AND ISSUE FO R NOTICE U/S 143(2) HAS ELAPSED AT THE TIME OF SEARCH PROCEE DINGS UNDERTAKEN AND SECONDLY, ASSESSMENTS U/S 153A HAS T O BE ESSENTIALLY BASED ON DOCUMENTS UNEARTHED DURING THE COURSE OF SEARCH AND SEIZURE OPERATION. THE ASSESSEE HAS CHA LLENGED THE ADDITIONS/DISALLOWANCES ON THE GROUND THAT SINCE TH E ASSESSMENTS FOR THE YEARS IN QUESTION WERE COMPLETE D ASSESSMENTS AND IN ABSENCE OF ANY INCRIMINATING MAT ERIAL HAVING BEEN FOUND DURING SEARCH, ADDITIONS IN ITS CASE COU LD NOT HAVE BEEN MADE BY ASSESSING OFFICER. 4. THE LD. CIT(A) ACCEPTING THE CONTENTION OF THE A SSESSEE DELETED THE ADDITION HOLDING AS UNDER: 4 ITA NOS.3246 & 3247/DEL/2018 12. AS IT IS REFLECTED FROM ASSESSMENT ORDERS, A SE ARCH AND SEIZURE OPERATION WAS CONDUCTED BY THE INVESTIG ATION WING OF THE DEPARTMENT IN THE CASES OF M/S AMQ GROUP AND DURING THE SEARCHES, THE BUSINESS PREMISES OF ASSESSEE AT C-134, GROUND FLOOR,, DEFENCE COLONY, N EW DELHI-110024 WAS ALSO COVERED U/S 132(1) OF I.T. ACT . ACCORDINGLY, THE NOTICES U/S 153A OF THE ACT WERE ISS UED BY AO AND, IN REPLY, APPELLANT FILED RETURNS OF INCO ME. IT IS ALSO CLEAR FROM THE ASSESSMENT ORDERS THAT IN ALL T HE SEVEN YEARS I.E. A.Y. 2008-09 TO A.Y. 2014-15, ADDIT IONS HAVE BEEN MADE ON THE GROUNDS OF INFLATED/BOGUS PURCHASES, DISALLOWANCE OF EXPENSES, ESTIMATION OF PROFIT, DEEMED DIVIDEND U/S 2(22)(E) ETC. HOWEVER, NO ADDITION/DISALLOWANCE HAS BEEN MADE ON THE BASIS OF ANY INCRIMINATING EVIDENCE FOUND DURING THE SEARCH PROCEEDINGS. THE ASSESSMENT ORDERS DO NOT SPEAK ABO UT FINDING OF ANY INCRIMINATING DOCUMENTS/EVIDENCE DUR ING THE SEARCH PROCEEDINGS IN THE CASE OF APPELLANT. TH E ADDITION MADE ON ACCOUNT OF UNDISCLOSED PROFIT @7.8 % DERIVED FROM TRANSACTIONS WITH M/S JAGATJIT INDUSTR IES LTD. AND M/S HARI MOHAN ENTERPRISES IS ALSO BASED O N INCRIMINATING DOCUMENT/EVIDENCE FOUND IN THE CASE O F APPELLANT FOR A.Y. 2013-14 AND A.Y. 2014-15 WHICH CANNOT BE APPLIED IN EARLIER YEARS. 12.1 IN SUCH SITUATION, WHEN NO INCRIMINATING EVIDEN CE IS FOUND AND ASSESSMENTS IN THESE YEARS ARE COMPLET ED ASSESSMENTS, CAN ANY ADDITION/DISALLOWANCE BE MADE, THE ISSUE HAS BEEN DEALT WITH AND ANSWERED BY HON'B LE 5 ITA NOS.3246 & 3247/DEL/2018 JURISDICTION HIGH COURT IN THE CASE CIT VS KABUL CH AWLA, AS MENTIONED BY APPELLANT IN ITS SUBMISSIONS. HON'B LE COURT HAS TAKEN A VIEW IN SUCH CAST THAT ALTHOUGH SECTION 153A 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 ASSESSING OFFICER WHI CH CAN BE RELATED TO THE EVIDENCE FOUND, IT DOES NOT M EAN THAT THE ASSESSMENT CAN BE ARBITRARY OR MADE WITHOU T ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL. AS PER HON'BLE COURT, SUCH ASSESSMENT HAS TO BE MADE UNDER THE SECTION ONLY ON THE BASIS OF THE SEIZED MATERIA L. IT IS FURTHER OPINED BY HON'BLE COURT THAT COMPLETED ASSESSMENT CAN BE INTERFERED WITH BY THE ASSESSING OFFICER WHILE MAKING THE ASSESSMENT IN THE SECTION 153A ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL FO UND DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUM ENTS OR UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE CO URSE OF SEARCH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. IN THE SUBSEQUENT DECISIONS ALSO, HON'B LE COURT HAS SUBSTANTIATED THE AFORESAID VIEW. IN THE CASE PR. CIT VS RAM AVTAR VERMA 395 ITR 252, HON'BLE COUR T HAS REITERATED THE AFORESAID FINDING THAT IF THE ASSESSMENTS ARE COMPLETED ON THE DATE OF SEARCH AND NO INCRIMINATING MATERIAL IS FOUND DURING THE SEARCH ASSESSMENT U/S 153A OF THE ACT IS INVALID. SIMILAR V IEW HAS BEEN TAKEN BY HON'BLE COURT IN THE RECENT CASE I.E. 6 ITA NOS.3246 & 3247/DEL/2018 PR. CIT VS MEETA GUTGUTIA 395 ITR 526 ALSO WHEREIN ASSESSMENTS WERE COMPLETED ON THE DATE OF SEARCH BU T NO INCRIMINATING MATERIAL PERTAINING TO THOSE COMPL ETED ASSESSMENT YEARS WERE FOUND DURING SEARCH, HON'BLE COURT HAS HELD THAT INVOCATION OF SECTION 153A FOR T HOSE YEARS WAS INVALID. 12.2 NOW THE FACTS OF THE APPELLANT ARE TO BE E XAMINED IN THE LIGHT OF THIS LEGAL POSITION. IT IS CLEAR FR OM THE ASSESSMENT ORDERS AS WELL AS SUBMISSION APPELLANT T HAT SEARCH AND SEIZURE ACTION 132(1) OF THE ACT WAS UNDERTAKEN BY THE DEPARTMENT IN THE CASE OF APPELLA NT AS ON 15.02.2014 AND ON T ASSESSMENTS OF A.Y. 2008-09 TO A.Y. 2012-13 WERE COMPLETED ASSES THE TIME PERIOD TO ISSUE NOTICES U/S 143(2) FOR AFORESAID YEARS B EXPIRED. FURTHER, AS MENTIONED ABOVE, NO INCRIMINATING MATER IAL WAS FOUND IN THE CASE OF THE APPELLANT DURING THE S EARCH PROCEEDINGS FOR MAKING IN THESE YEARS. THEREFORE, O N BOTH THE COUNTS, NO ADDITION/DISALLOWANCE COULD HAVE BEE N MADE BY AO BY DISTURBING THE INCOME DISCLOSED IN TH E RETURNS FILED BY APPELLANT. IN SUCH SITUATION, THE ADDITIONS/DISALLOWANCES MADE BY ASSESSING OFFICER, AS MENTIONED ABOVE, FOR AYS 2008-09 TO 2012-13, ARE NO T SUSTAINABLE AND LIABLE TO BE DELETED. I, THEREFORE , DELETE THE ADDITIONS MADE BY THE A FOR THE AFORESAID FIVE ASSESSMENT YEARS AND ALLOW THE GROUNDS TAKEN BY THE APPELLANT. 7 ITA NOS.3246 & 3247/DEL/2018 5. DURING THE ARGUMENTS BEFORE US, THE LD. AR, MS. NIDHI SRIVASTAVA, VEHEMENTLY ARGUED THAT PROVISIONS OF SE C. 153A OF THE ACT DO NOT STIPULATE ANY RESTRICTIONS ON THE POWERS OF THE ASSESSING OFFICER TO COMPLETE THE ASSESSMENT BASED ON ALL THE MATERIALS AVAILABLE BEFORE THEM. AGAINST THE ARGUME NTS OF THE LD. DR, SHRI HIREN MEHTA ARGUED THAT IN VIEW OF THE JUD GMENTS OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CI T VS. MEETA GUTGUTIA 82 TAXMAN 287, CIT VS. KABUL CHAWLA 380 IT R 573, NO ASSESSMENT CAN BE MADE IN THE ABSENCE OF ANY INCRIM INATING MATERIAL LEADING TO UNDISCLOSED INCOME. 6. AFTER CONSIDERING THE DOCUMENTS OF BOTH THE PART IES, WE FIND IT IS AN ADMITTED FACT THAT THE TIME LIMIT FOR ISSU E OF NOTICE U/S 143(2) AND COMPLETION OF THE ASSESSMENT HAS ALREADY BEEN LAPSED AS ON THE DATE OF THE SEARCH. WE ALSO FIND THAT TH E ADDITIONS MADE BY THE ASSESSING OFFICER IS NOT BASED ON INCRI MINATING MATERIAL FOUND DURING THE COURSE OF SEARCH ALBEIT I S BASED ON THE OTHER RECORD NOT RELATED TO MATERIAL FOUND DURING T HE SEARCH. IN SUCH A SITUATION, THE ADDITIONS MADE ARE BEYOND THE SCOPE OF PROCEEDINGS U/S 153A. THIS PREPOSITION OF THE LAW HAS BEEN WELL SETTLED BY THE JURISDICTIONAL HIGH COURT IN THE CAS E OF CIT VS. MEETA GUTGUTIA 82 TAXMAN 287, CIT VS. KABUL CHAWLA 380 ITR 573. IN THE CASE OF KABUL CHAWLA THE HONBLE HIGH COURT CLEARLY SPELT THAT 153A ADDITIONS HAVE TO BE MADE ONLY ON T HE BASIS OF THE SEIZED MATERIAL. IT WAS ALSO HELD THAT COMPLET ED ASSESSMENTS CAN BE INTERFERED WITH BY THE ASSESSING OFFICER WHI LE MAKING ASSESSMENT ORDER U/S 153A ONLY ON THE BASIS OF SOME 8 ITA NOS.3246 & 3247/DEL/2018 INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH OR REQUISITION OF DOCUMENTS OR UNDISCLOSED INCOME OR P ROPERTY DISCOVERED IN COURSE OF SEARCH WHICH WERE NOT PRODU CED OR NOT ALREADY DISCLOSED TO THE REVENUE. HENCE, KEEPING I N VIEW THE FACTS THAT ASSESSMENT HAS BEEN MADE FOR THE YEARS I N QUESTION IS NOT BASED ON ANY INCRIMINATING MATERIAL FOUND DURIN G THE SEARCH, WE HEREBY DECLINE TO INTERFERE WITH THE ORDER OF TH E LD. CIT(A). 7. IN THE RESULT, THE APPEALS OF THE REVENUE ARE HE REBY DISMISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 4 TH DECEMBER, 2019. SD/- SD/- (BHAVNESH SAINI) (B.R.R KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 4 TH DECEMBER, 2019. *KAVITA COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI 9 ITA NOS.3246 & 3247/DEL/2018