ACIT, New Delhi V. Sh. Gurnam Arora, New Delhi

ITA 3284/DEL/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7004 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 8 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 27-11-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 23-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K SAROHA
• Assessee Lawyers: SALIL KAPOOR SHUBHAM RASTOGI; SUMIT LAL S
• Keywords: Additional evidence; Question of law; Cost of acquisition; Assessment record
• Section: 142(1); 153A; 132; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH C : NEW DELHI) BEFORE SHRI A.T. VARKEY, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER ITA NO.3284/DEL./2013 (ASSESSMENT YEAR : 2004-05) ACIT, CENTRAL CIRCLE 22, VS. SHRI GURNAM ARORA, NEW DELHI. 201, VIPPS CENTRE, 2, COMMUNITY CENTRE, MASJID MOTH, GREATER KAILASH-II, NEW DELHI 110 048. (PAN : AAJPA1064F) CO NO.213/DEL/2013 (IN ITA NO.3284/DEL./2010) (ASSESSMENT YEAR : 2004-05) SHRI GURNAM ARORA, VS. ACIT, CENTRAL CIRCLE 22, 201, VIPPS CENTRE, NEW DELHI. 2, COMMUNITY CENTRE, MASJID MOTH, GREATER KAILASH-II, NEW DELHI 110 048. (PAN : AAJPA1064F) (APPELLANT) (RESPONDENT) ASSESSEE BY : S/SHRI SALIL KAPOOR, SHUBHAM RASTOGI AND SUMIT LAL, ADVOCATES REVENUE BY : SHRI A.K. SAROHA, CIT DR O R D E R PER A.T. VARKEY, JUDICIAL MEMBER : 2 ITA NO.3284/DEL/2013 CO NO.213/DEL/2013 THE APPEAL FILED BY THE REVENUE AND THE CROSS OBJE CTION FILED BY THE ASSESSEE ARE AGAINST THE ORDER OF THE CIT (APPEALS) -III, NEW DELHI DATED 15.03.2013 FOR THE ASSESSMENT YEAR 2004-05. 2. THE GROUNDS OF APPEAL TAKEN BY THE REVENUE ARE A S UNDER :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF LONG TERM CAPITAL L OSS OF RS.1,05,76,383/- SHOWN TO HAVE BEEN INCURRED ON SALE OF PROPERTY LOC ATED AT MASJID MOTH, GREATER KAILASH-II, NEW DELHI. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY THE A.O. ON ACCOUN T OF DISALLOWANCE OF LONG TERM CAPITAL LOSS BY ADMITTING ADDITIONAL EVIDENCE EVEN THOUGH THE A.O HAD OBJECTED TO ITS ADMISSION ON BOTH ON PRINCIPLE AND ON MERITS. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE CIT(A) HAS ERRED, IN VIOLATION OF RULE 46A OF THE INCOME TAX R ULES 1962, BY NOT FOLLOWING THE DECISION OF HON'BLE HIGH COURT IN THE CASE OF MANISH BUILDWELL PVT. LTD. 204 TAXMAN 106, WHEREIN IT WAS HELD BY TH E HON'BLE JURISDICTIONAL HIGH COURT TO GIVE TWO STAGE OPPORTUNITY UNDER RULE 46A I.E. FIRST BEFORE ADMISSION OF ADDITIONAL EVIDENCE AND SECOND AFTER A DMISSION OF ADDITIONAL EVIDENCE. 4. THE ORDER OF THE LD. CIT (A) IS ERRONEOUS AND I S NOT TENABLE ON FACTS AND IN LAW. 5. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AME ND ANY/ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF TH E HEARING OF THE APPEAL. THE GROUNDS TAKEN IN THE CROSS OBJECTION BY THE ASS ESSEE ARE AS UNDER:- 1. THAT THE ORDER PASSED UNDER SECTION 153A / 143( 3) AND THE ADDITIONS MADE ARE ILLEGAL, BAD IN LAW AND WITHOUT JURISDICTI ON. 2. THAT NO INCRIMINATING MATERIAL WAS SEIZED DURING THE SEARCH THAT SUGGESTED IN ANY MANNER ANY UNDISCLOSED INVESTMENT IN THE PROPERTY AT MASJID MOTH, HENCE THE ADDITION MADE IS ILLEGAL BAD IN LAW . 3. THAT THE AO PASSED THE ORDER ON HIS WHIMS AND FA NCIES WITHOUT APPRECIATING THE FACTS AND EVIDENCE PROPERLY AND WI THOUT VERIFYING AND EXAMINING THE RECORD. 3 ITA NO.3284/DEL/2013 CO NO.213/DEL/2013 3. BASICALLY, THE GROUNDS OF THE REVENUE ARE AGAINS T DELETING THE DISALLOWANCE OF LONG TERM CAPITAL LOSS OF RS.1,05, 76,383/- SHOWN TO HAVE INCURRED ON SALE OF PROPERTY BY ADMITTING ADDITION AL EVIDENCES AND ALSO NOT GIVING OPPORTUNITY UNDER RULE 46A I.E. FIRST BEFORE ADMISSION OF ADDITIONAL EVIDENCE AND SECOND AFTER ADMISSION OF ADDITIONAL E VIDENCE; AND CROSS OBJECTION OF THE ASSESSEE IS THAT NO ADDICTION CAN BE MADE WI THOUT ANY INCRIMINATING MATERIAL SEIZED DURING SEARCH U/S 153A PROCEEDINGS. 4. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FI LED ORIGINAL RETURN ON 11.04.2005 DECLARING INCOME OF RS.67,00,137/-. A S EARCH AND SEIZURE ACTION U/S 132 OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE A CT) WAS CARRIED OUT IN KOHINOOR FOODS LTD. GROUP OF CASES ON 05.12.2007 AN D A SEARCH WARRANTED WAS ISSUED ON THE ASSESSEE ALSO. A NOTICE U/S 153A WAS ISSUED AND IN RESPONSE TO THE SAID NOTICE, THE ASSESSEE FILED RETURN DECLARIN G INCOME OF RS.67,00,136/- ON 06.02.2009. THEREAFTER, THE NOTICES U/S 143(2) AND 142(1) WERE ISSUED AND SERVED ON THE ASSESSEE. 4.1 THE AO NOTICED DURING THE ASSESSMENT PROCEEDING S THAT THE ASSESSEE CLAIMED THAT HE HAD PURCHASED A PROPERTY IN THE YEA R 1993 FOR RS.84,26,500/- AND THE SAID PROPERTY WAS SOLD DURING THE YEAR UNDE R CONSIDERATION FOR A SUM OF RS.85,00,000/-. IT WAS NOTICED THAT AFTER REDUCING THE EXPENDITURE OF BROKERAGE/COMMISSION, THE NET SALE CONSIDERATION RE CEIVED WAS OF RS.82,84,000/-. THE AO FURTHER NOTICED THAT BY WOR KING OUT THE BENEFIT OF COST 4 ITA NO.3284/DEL/2013 CO NO.213/DEL/2013 OF INDEXATION ON THE ACQUISITION OF THE SAID PROPER TY AND IMPROVEMENT THEREON, THE VALUE OF THE SAID ASSET CAME TO RS.1,88,60,383/ - AND THE ASSESSEE THUS CLAIMED IN HIS RETURN OF INCOME LONG TERM CAPITAL L OSS OF RS.1,05,76,383/- (RS.1,88,60,383/- MINUS RS.82,84,000/-). THE AO HE LD THAT SINCE THE SAID PROPERTY AT MASJID MOTH WAS NOT SHOWN IN THE STATE OF AFFAIRS/BALANCE SHEET FILED BY THE ASSESSEE OF EARLIER YEARS, THE SAID PROPERTY HAD BEEN ACQUIRED FROM THE SOURCES OUTSIDE THE BOOKS OF ACCOUNTS. ACCORDINGLY, HE DISALLOWED THE LONG TERM CAPITAL LOSS AS CLAIMED BY THE ASSESSEE IN HIS RETU RN OF INCOME AND COMPLETED THE ASSESSMENT U/S 153A/143(3) OF THE ACT. 5. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE T HE FIRST APPELLATE AUTHORITY AND THE LD. CIT (A), AFTER OBSERVING THE SUBMISSION S OF THE ASSESSEE, DELETED THE ADDITION AS UNDER :- 6. I HAVE GONE THROUGH THE ABOVE SUBMISSIONS OF T HE APPELLANT AND HAVE PERUSED THE AO'S ORDER AND CONSIDERED THE FACTS AND EVIDENCES ON RECORD. 6.1 FROM THE PERUSAL OF THE ASSESSMENT ORDER IT IS SEEN THAT AOS OBJECTION IS THAT THE SAID PROPERTY AT MASJID MOTH HAS NOT BE EN SHOWN IN THE BALANCE SHEET FOR THE ASSESSMENT YEARS 2002-03 AND 2003-04 AND SINCE NO DOCUMENTS VIZ. PURCHASE DEED AND SALE DEED FOR THE SAID PROPE RTY WERE FILED, THE AO ACCORDINGLY DISALLOWED THE CAPITAL LOSS CLAIMED BY THE APPELLANT IN ITS RETURN OF INCOME. 6.2 IT IS FURTHER SEEN FROM THE BALANCE SHEET FILED BY THE APPELLANT DURING THE APPELLATE PROCEEDINGS FROM ASSESSMENT YEARS 199 4-95 TO 2003-04 THAT THE SAID PROPERTY HAS DULY BEEN REFLECTED IN THE APPELL ANT'S BOOKS OF ACCOUNTS. THE PERUSAL OF PURCHASE DEED AND SALES DEED OF THE PROP ERTY IN QUESTION SHOWS THAT: (A) VIPPS INDIA LTD ACQUIRED LAND FROM POA BY OBTAI NING PERPETUAL LEASE HOLD RIGHTS OF LAND VIDE LEASE DEED DATED 06.02.198 1. 5 ITA NO.3284/DEL/2013 CO NO.213/DEL/2013 (B) BY AGREEMENT DATED 5.9.85 AND SUPPLEMENTARY AGR EEMENT DATED 07.12.1988 VIPPS INDIA LTD ENTERED INTO AGREEMENT W ITH.1.K. SYNTHETICS FOR CONSTRUCTING MULTI STORIED COMMERCIA L BLDG. (C) J.K. SYNTHETICS PURCHASED THE FLAT FROM VIPPS I NDIA LTD. (D) DDA GRANTED TO VIPPS INDIA LTD THE OCCUPANCY CE RTIFICATE ON 24.2.92. (E) J.K. SYNTHETICS AGREED TO SELL THE PROPERTY TO APPELLANT, APARTMENT NO.501 FOR RS.76.50 LAKHS ON 28.07.1983. (F) APPELLANT SOLD THE FLAT TO MR. SHRI SHYAM LAL S ETHI ON 12.1.2001. FROM THE SEQUENCE OF ABOVE EVENTS AND FROM THE DETA ILS OF BALANCE SHEET FILED DURING THE APPELLATE PROCEEDINGS FROM ASSESSMENT YE ARS 1994-95 TILL 2003-04, IT IS SEEN THAT THE PROPERTY AT MASJID MOTH' NEW DE LHI HAVE REGULARLY BEEN DECLARED IN THE APPELLANT'S BOOKS OF ACCOUNTS, THER EFORE THERE IS NO FORCE IN THE AO'S VIEW THAT THE PROPERTY IN QUESTION IS AN UNACC OUNTED ONE AND THUS THE LONG TERM LOSS INCURRED ON THE SALE OF SUCH PROPERT Y IS NOT ALLOWABLE. 6.3 WHEN THE AO WAS GIVEN THE OPPORTUNITY TO GIVE H IS COMMENTS ON THE DOCUMENTS, THE APPELLANT FILED DURING THE APPELLATE PROCEEDINGS, THE AO VIDE HIS LETTER DATED 24.12.1012HAD OBJECTED TO THE ABOV E DOCUMENTS AS ADDITIONAL EVIDENCE. IN THIS REGARD, I AM OF THE VIEW THAT TH E BALANCE SHEET WHICH WERE FILED FROM ASSESSMENT YEAR 1994-95 TILL ASSESSMENT YEAR 2003-04 IS PART OF THE AOS ASSESSMENT RECORD, THEREFORE THERE IS NO Q UESTION OF FILING ANY NEW/ADDITIONAL EVIDENCES, THEREFORE THE OBJECTIONS RAISED UNDER RULE 46A BY THE AO IN THIS REGARD DOES NOT HOLD GOOD AT ALL. BU T HAVING SAID THAT, THE NEW DOCUMENTS VIZ. PURCHASE DEED AND SALE DEED OF THE S AID PROPERTY WHICH WERE FILED DURING THE APPELLATE PROCEEDINGS FOR THE FIRS T TIME, I ADMIT THEM UNDER RULE 46A IN VIEW OF THE APPELLANT'S CONTENTION THAT SAID PROPERTY WAS SOLD 5 YEARS BACK AND THEY WERE GIVEN JUST 40 DAYS TO COLL ECT ALL THE DETAILS. THUS TAKING IN TOTALITY ALL THE FACTS AND EVIDENCES ON RECORD, THE SALE DEED AND PURCHASE DEED ARE TAKEN AS ADDITIONAL EVID ENCE AS APPELLANT'S CASE FALLS UNDER RULE 46A(1)(B) AND (D). 6.4 THUS FROM THE ABOVE DISCUSSION AND FROM THE PER USAL OF THE APPELLANT BALANCE SHEET FOR ASSESSMENT YEAR 1994-95 TILL 2003 -04 WHERE THE PROPERTY IN QUESTION IS REGULARLY DULY BEEN REFLECTED, I HOLD T HAT THE AO'S VIEW THAT LOSS ON SALE OF PROPERTY IS NOT ALLOWABLE BEING AN UNACCOUN TED ASSETS IS NOT CORRECT. HENCE, THE ADDITION OF RS.1,05,76,383/- MADE BY THE AO DESERVES TO BE DELETED. 6. LD. DR RELIED ON THE ORDER OF THE AO AND SUBMITT ED THAT THE SAID PROPERTY WAS NOT SHOWN IN THE STATE OF AFFAIRS/BALANCE SHEET FILED BY THE ASSESSEE OF 6 ITA NO.3284/DEL/2013 CO NO.213/DEL/2013 EARLIER YEARS. HE FURTHER SUBMITTED THAT THE LD. C IT (A) WAS NOT RIGHT IN ACCEPTING THE ADDITIONAL EVIDENCES LIKE SALE DEED A ND PURCHASE DEED PRODUCED FOR THE FIRST TIME BY THE ASSESSEE BEFORE HIM AND A LSO NOT GIVING THE OPPORTUNITY TO THE AO UNDER RULE 46A BEFORE AND AFTER THE ADMIS SION OF THE SAME. HE, THEREFORE, PLEADED THAT THE ORDER OF THE CIT (A) BE SET ASIDE AND THAT OF THE AO BE RESTORED. 7. ON THE OTHER HAND, THE LD. AR FOR THE ASSESSEE R ELIED ON THE ORDER OF THE LD. CIT (A) AND REITERATED THE SUBMISSIONS MADE BEF ORE HIM. HE SUBMITTED THAT THE ASSESSEE SOLD EQUITY SHARE OF M/S. SATNAM OVERS EAS LTD., M/S. UNION OVERSEAS BANK, M/S. ORIENTAL BANK OF COMMERCE AND M /S. GLOBAL TRUST BANK AND UNITS OF UTI AND AFTER CLAIMING THE INDEXATION ON THE COST OF ACQUISITION OF THE EQUITY SHARES/UNITS SHOWED LONG TERM CAPITAL GA IN ON SHARES AT RS.92,77,748 FOR THE YEAR. AGAINST THIS INCOME, THE ASSESSEE AD JUSTED THE LONG TERM LOSS OF RS.79,724/- CARRIED FORWARD FROM LAST YEAR AND THUS , THE ASSESSEE HAD DECLARED LONG TERM CAPITAL GAIN OF RS.91,98,024/- FROM THE S ALE OF SHARES AND ALSO DECLARED LONG TERM CAPITAL GAIN FROM SALE OF HAMIDP UR PROPERTY AT RS.21,45,214/-. THEREFORE, TOTAL LONG TERM CAPITAL GAIN SO DECLARED WAS RS.1,13,43,238/- (RS.91,98,024/- + RS.21,45,214). HE SUBMITTED THAT IN THE SAME YEAR, THE ASSESSEE SOLD A PROPERTY LOCATED AT MASJID MOTH, NEW DELHI WHICH WAS PURCHASED IN THE YEAR 1993-94 FOR RS.84,2 6,500/- AND THE SALE CONSIDERATION OF THE PROPERTY WAS SHOWN AT RS.85,00 ,000/- AND RS.2,16,000/- 7 ITA NO.3284/DEL/2013 CO NO.213/DEL/2013 WAS CLAIMED TOWARDS BROKERAGE AND COMMISSION ON SAL E OF THIS PROPERTY, THEREFORE, THE NET SALE CONSIDERATION WAS DECLARED AT RS.82,84,000/-. HE SUBMITTED THAT AFTER INDEXATION ON THE COST OF ACQU ISITION AND IMPROVEMENTS THERETO, THE INDEXED COST OF PROPERTY WAS WORKED OU T AT RS.1,88,60,383/- RESULTING INTO LONG TERM CAPITAL LOSS OF RS.1,05,76 ,383/-. 7.1 AS REGARDS THE OBJECTION OF THE AO THAT THE ASS ESSEE BECAME THE OWNER OF THE PROPERTY ONLY ON 14.02.2003, LD. AR SUBMITTED T HAT THE PROPERTY WAS PURCHASED IN 1993 AS PER AGREEMENT TO SELL DATED 28 .07.1993 FROM M/S. J.K. SYNTHETICS LTD. AND THE ASSESSEE WAS REFLECTING THE SAME IN THE BALANCE SHEETS FILED FROM AYS 1994-95 SHOWING A VALUE OF RS.84,26, 500/- AND IT CONTINUED TO SHOW TILL AY 2003-04 SHOWING A VALUE OF RS.1,09,17, 797/- (INCLUDING COST OF IMPROVEMENT) AS ON 31.03.2003. AS REGARDS AOS OBJ ECTION THAT THE ASSESSEE BECAME OWNER OF THE PROPERTY ONLY ON 14.02.2003 BY VIRTUE OF AN IRREVOCABLE POWER OF ATTORNEY EXECUTED BY M/S. VIPPS INDIA, HE CLARIFIED THAT AS THE ASSESSEE SOLD THE PROPERTY TO SHRI SETHI VIDE SALE DEED DATE D 12.06.2004 AND SINCE THE BUYER, SHRI SETHI INSISTED FOR AN IRREVOCABLE POWER OF ATTORNEY SIGNED BY THE ORIGINAL SELLER TO MS. J.K. SYNTHETICS LTD., THE PO WER OF ATTORNEY WAS EXECUTED TO FACILITATE THE SALE. HE FURTHER SUBMITTED THAT THE RE WAS NO FINANCIAL TRANSACTION BETWEEN M/S. VIPPS INDIA AND THE ASSESSEE AND ALSO THERE WAS NO RELATIONSHIP OF BUYER AND SELLER I.E. BETWEEN M/S. VIPPS INDIA AND THE ASSESSEE. HE ALSO SUBMITTED THAT AS FAR AS, THE ASSESSEE WAS CONCERNE D THE PURCHASE WAS MADE 8 ITA NO.3284/DEL/2013 CO NO.213/DEL/2013 FROM M/S. J.K. SYNTHETICS LTD. AND IN THIS REGARD, HE REFERRED TO PARA A OF AGREEMENT TO SELL ON PAGE 1 IN WHICH PERPETUAL LEAS E DEED WAS MADE IN THE NAME OF M/S. VIPPS INDIA WHICH SOLD IT TO M/S. J.K. SYNTHETICS LTD. AND FROM WHOM THE ASSESSEE HAD PURCHASED THE PROPERTY. THER EFORE, HE SUBMITTED THAT THE CONTENTION OF THE AO THAT THE ASSESSEE HAD BECOME T HE OWNER OF THE PROPERTY ONLY ON 14.02.2003 WAS ERRONEOUS AS THE PROPERTY IN QUESTION WAS PURCHASED BY THE ASSESSEE IN THE YEAR 1993. 7.1 LD. AR FURTHER SUBMITTED THAT THE ASSESSEE PURC HASED THE PROPERTY AGAINST AGREEMENT TO SELL DATED 28.07.1993 AND THE SAID PR OPERTY WAS DULY REFLECTED IN THE BALANCE SHEET AS ON 31.03.1994 I.E. AY 1994-95 BEING THE BOOK VALUE AT RS.84,26,500/-. HE ALSO SUBMITTED THAT THE SAME WA S REGULARLY SHOWN IN THE BALANCE SHEET FOR AYS 1994-95 TO 20003-04 AND THE L D. CIT (A) RIGHTLY APPRECIATED THE SAME ON THE BASIS OF THE EVIDENCES FILED BEFORE HIM. 7.2 AS REGARDS THE OBJECTION OF REVENUE UNDER RULE 46A, LD. AR SUBMITTED THAT THE AO WAS GIVEN THE OPPORTUNITY BY THE LD. CI T(A) TO COMMENT ON THE DOCUMENTS FILED BY THE ASSESSEE AND THE AO OBJECTED TO THE DOCUMENTS FILED AS ADDITIONAL EVIDENCE. HE SUBMITTED THAT THE LD. CIT (A) RIGHTLY APPRECIATED THAT THE BALANCE SHEETS FOR AYS 1994-95 TO 2003-04 FILED BEFORE THE LD. CIT (A) WERE PART OF THE AOS ASSESSMENT RECORD AND AS REGA RDS THE NEW DOCUMENTS I.E. PURCHASE DEED AND SALE DEED OF THE PROPERTY WHICH W ERE FILED DURING THE APPELLATE PROCEEDINGS FOR THE FIRST TIME, AGAIN THE LD. CIT (A) RIGHTLY HELD THAT 9 ITA NO.3284/DEL/2013 CO NO.213/DEL/2013 THE SAID PROPERTY WAS SOLD FIVE YEARS BACK AND THAT THEY WERE GIVEN JUST 40 DAYS TO COLLECT ALL THE DOCUMENTS. THEREFORE, HE SUBMITT ED THAT THE LD. CIT (A) WAS RIGHT IN ACCEPTING THE ADDITIONAL EVIDENCES. 7.3 LD. AR ALSO SUBMITTED THAT THE AO MADE THE ADDI TION WITHOUT LOOKING INTO THE FACTS OF THE CASE AND UNSUPPORTED BY ANY S EIZED MATERIAL IN POSSESSION AND MADE THE ADDITION IN RESPECT OF THE REGULAR ITE MS WHICH WERE ALREADY DISCLOSED IN THE ORIGINAL RETURN OF INCOME FILED BE FORE THE SEARCH OPERATION. IN THIS REGARD, HE RELIED ON VARIOUS JUDICIAL PRONOUNC EMENTS WHEREIN IT WAS HELD THAT, THE ITEMS OF REGULAR ASSESSMENT CANNOT BE ADDED BAC K IN THE PROCEEDINGS U/S 153A WHEN NO INCRIMINATING DOCUMENTS WERE FOUND IN RESPECT OF DISALLOWED AMOUNTS IN THE SEARCH PROCEEDINGS. 7.4 IN VIEW OF HIS SUBMISSIONS MADE ABOVE, LD. AR W ANTS US NOT TO INTERFERE WITH THE ORDER OF THE LD. CIT (A) AND PLEADED TO UP HOLD THE SAME. 8. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MAT ERIAL ON RECORD. FIRST OF ALL, WE ARE INCLINED TO DECIDE THE CROSS OBJECTION RAISED BY THE ASSESSEE IN WHICH THE ASSESSEE RAISES THE GROUND THAT WITHOUT ANY INC RIMINATING MATERIALS, BEING UNEARTHED DURING THE SEARCH, NO ADDITION CAN BE MAD E U/S 153A OF THE ACT. THE DRS OBJECTION THAT THIS GROUND WAS NEVER RAISED BY THE ASSESSEE BEFORE THE CIT (A), SO WE SHALL NOT ENTERTAIN THE SAME CANNOT BE C OUNTENANCED IN THE LIGHT OF THE LAW LAID BY THE HONBLE SUPREME COURT IN NATION AL THERMAL POWER CO. LTD. VS. CIT (1998) 229 ITR 383 (SC). IN THAT CASE, T HE ASSESSEE HAD DEPOSITED ITS 10 ITA NO.3284/DEL/2013 CO NO.213/DEL/2013 FUNDS NOT IMMEDIATELY REQUIRED BY IT ON SHORT TERM DEPOSITS WITH BANKS. THE INTEREST RECEIVED ON SUCH DEPOSITS WAS OFFERED BY T HE ASSESSEE ITSELF FOR TAX AND THE ASSESSMENT WAS COMPLETED ON THAT BASIS. EVEN BE FORE THE COMMISSIONER OF INCOME-TAX (APPEALS), THE INCLUSION OF THIS AMOUNT WAS NEITHER CHALLENGED BY THE ASSESSEE NOR CONSIDERED BY THE COMMISSIONER OF INCOME-TAX (APPEALS). THE ASSESSEE FILED AN APPEAL BEFORE THE TRIBUNAL. THE I NCLUSION OF THE AMOUNT WAS NOT OBJECTED TO EVEN IN THE GROUNDS OF APPEAL AS OR IGINALLY FILED BEFORE THE TRIBUNAL. 9. SUBSEQUENTLY, THE ASSESSEE BY A LETTER RAISED AD DITIONAL GROUNDS TO THE EFFECT THAT THE SAID SUM COULD NOT BE INCLUDED IN T HE TOTAL INCOME. THE ASSESSEE CONTENDED THAT ON AN ERRONEOUS ADMISSION, NO INCOME CAN BE INCLUDED IN THE TOTAL INCOME. IT WAS FURTHER CONTENDED THAT THE ITO AND THE COMMISSIONER OF INCOME-TAX (APPEALS) HAD ERRED AND FAILED IN THEIR DUTY IN ADJUDICATING THE MATTER CORRECTLY AND BY MECHANICALLY INCLUDING THE AMOUNT IN THE TOTAL INCOME. IT IS PERTINENT TO NOTE THAT THE ASSESSEE CONTENDED THAT IT WAS ENTITLED TO THE DEDUCTION IN VIEW OF TWO ORDERS OF THE SPECIAL BENC HES OF THE TRIBUNAL AND THE ASSESSEE FURTHER STATED THAT IT, HAD RAISED THESE A DDITIONAL GROUNDS ON LEARNING ABOUT THE LEGAL POSITION SUBSEQUENTLY. 10. THE TRIBUNAL DECLINED TO ENTERTAIN THESE ADDITI ONAL GROUNDS. THE SUPREME COURT DID NOT ANSWER THE QUESTION ON MERITS, BUT FR AMED THE FOLLOWING QUESTION AND HELD AS UNDER:- 11 ITA NO.3284/DEL/2013 CO NO.213/DEL/2013 '4. THE TRIBUNAL HAS FRAMED AS MANY AS FIVE QUESTIO NS WHILE MAKING A REFERENCE TO US. SINCE THE TRIBUNAL HAS NOT EXAMINE D THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE ON MERIT, WE DO NOT PROPOSE TO ANSWER THE QUESTIONS RELATING TO THE MERIT OF THOSE CONTENTIONS. WE REFR AME THE QUESTION WHICH ARISES FOR OUR CONSIDERATION IN ORDER TO BRING OUT THE POINT WHICH REQUIRES DETERMINATION MORE CLEARLY. IT IS AS FOLLOWS: WHERE ON THE FACTS FOUND BY THE AUTHORITIES BELOW A QUESTION OF LAW ARISES (THOUGH NOT RAISED BEFORE THE AUTHORITIES) WHICH BE ARS ON THE TAX LIABILITY OF THE ASSESSEE, WHETHER THE TRIBUNAL HAS JURISDICTION TO EXAMINE THE SAME.' UNDER SECTION 254 OF THE INCOME TAX ACT THE APPELLA TE TRIBUNAL MAY, AFTER GIVING BOTH THE PARTIES TO THE APPEAL AN OPPORTUNIT Y OF BEING HEARD, PASS SUCH ORDERS THEREON AS IT THINKS FIT. THE POWER OF THE T RIBUNAL IN DEALING WITH THE APPEALS IS THUS EXPRESSED IN THE WIDEST POSSIBLE TE RMS. THE PURPOSE OF THE ASSESSMENT PROCEEDINGS BEFORE THE TAXING AUTHORITIE S IS TO ASSESS CORRECTLY THE TAX LIABILITY OF AN ASSESSEE IN ACCORDANCE WITH LAW . I~ FOR EXAMPLE, AS A RESULT OF A JUDICIAL DECISION GIVEN WHILE THE APPEAL IS PE NDING BEFORE THE TRIBUNAL, IT IS FOUND THAT A NON-TAXABLE ITEM IS TAXED OR A PERM ISSIBLE DEDUCTION IS DENIED, WE DO NOT SEE ANY REASON WHY THE ASSESSEE SHOULD BE PREVENTED FROM RAISING THAT QUESTION BEFORE THE TRIBUNAL FOR THE FIRST TIM E, SO LONG AS THE RELEVANT FACTS ARE ON RECORD IN RESPECT OF THAT ITEM WE DO N OT SEE ANY REASON TO RESTRICT THE POWER OF THE TRIBUNAL UNDER SECTION 254 ONLY .T O DECIDE THE GROUNDS WHICH ARISE FROM THE ORDER OF THE COMMISSIONER OF I NCOME TAX (APPEALS). BOTH THE ASSESSEE AS WELL AS THE DEPARTMENT HAS A R IGHT TO FILE AN APPEAL/CROSS-OBJECTIONS BEFORE THE TRIBUNAL. WE FAI L TO SEE WHY THE TRIBUNAL SHOULD BE PREVENTED FROM CONSIDERING QUESTIONS OF L AW ARISING IN ASSESSMENT PROCEEDINGS ALTHOUGH NOT RAISED EARLIER.' 11. THEREFORE, THE OBJECTION OF THE LD. DR REGARDIN G ADJUDICATION OF THIS GROUND IS REJECTED AND WE PROCEED TO DEAL WITH IT. FROM A PERUSAL OF THE ASSESSMENT ORDER, WE DO NOT FIND A WHISPER OF ANY I NCRIMINATING MATERIALS FOUND DURING SEARCH TO MAKE THE IMPUGNED ADDITION. THE A O MAKES THE ADDITION AFTER ISSUING QUESTIONNAIRE AND FINALLY ASSESS U/S 144 OF THE ACT. THE LD. DR COULD NOT POINT OUT FROM THE ASSESSMENT ORDER, WHETHER TH E AO TAKES NOTE OF ANY INCRIMINATING MATERIALS FOUND DURING SEARCH WHICH W AS THE BASIS FOR MAKING THIS IMPUGNED ADDITION. THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA IN ITA 707 / 2014 HAS LAID THE LAW ON THIS ISSUE AS UNDER :- 12 ITA NO.3284/DEL/2013 CO NO.213/DEL/2013 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 T HE 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 MANDATORILY ISSUE D TO THE PERSON SEARCHED REQUIRING HIM TO FILE RETURNS FOR SIX AYS IMMEDIATE LY PRECEDING THE PREVIOUS YEAR RELEVANT TO THE AY IN WHICH THE SEARCH TAKES P LACE. II. ASSESSMENTS AND REASSESSMENTS PENDING ON THE DATE O F THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH AYS WILL HAV E TO BE COMPUTED BY THE AOS AS A FRESH EXERCISE. III. THE AO WILL EXERCISE NORMAL ASSESSMENT POWERS IN RE SPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT AY IN WHICH THE SEAR CH TAKES PLACE. THE AO HAS THE POWER TO ASSESS AND REASSESS THE 'TOTAL INC OME' 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 RE SPECT OF EACH OF THE SIX AYS IN WHICH BOTH THE DISCLOSED AND THE UNDISCLOSE D INCOME 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 O F THE SEARCH, OR OTHER POST- SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE A O WHICH CAN BE RELATED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSES SMENT 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 O N THE BASIS OF SEIZED MATERIAL. V. IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPL ETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REAS SESSMENT CAN BE MADE. THE WORD 'ASSESS' IN SECTION 153 A IS RELATABLE TO ABAT ED PROCEEDINGS (I.E. THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD 'REASSE SS' TO COMPLETED ASSESSMENT PROCEEDINGS. VI. INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, THE J URISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UND ER SECTION 153A MERGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARAT ELY FOR EACH AY ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTHER M ATERIAL EXISTING OR BROUGHT ON THE RECORD OF THE AO. VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153 A ONLY ON T HE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS OR UNDISCLOSED INCOME OR PROPERTY DISCOVE RED IN THE COURSE OF SEARCH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCL OSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. 13 ITA NO.3284/DEL/2013 CO NO.213/DEL/2013 12. AFTER CAREFUL PERUSAL OF THE ASSESSMENT ORDER, WE FIND THAT ADDITION MADE BY THE AO BY DISALLOWING RS.1,05,76,583/- WAS NOT B ASED ON ANY INCRIMINATING MATERIAL FOUND DURING SEARCH OPERATION. ACCORDINGL Y, THE ADDITION IS HELD TO BE NOT SUSTAINABLE IN LAW AND SO DIRECTED TO BE DELETE D. 13. ON MERITS ALSO, WE CONCUR WITH THE LD. CIT (A) S ORDER TO DELETE THE ADDITION AND SINCE WE FULLY AGREE WITH THE VIEW EXP RESSED BY THE LD. CIT (A), WE DO NOT WISH TO RECORD OUR OWN REASONS FOR THAT A ND FOR SUCH A PROPOSITION, WE RELY ON THE HONBLE APEX COURT DECISION IN CIT V S. K.Y. PILLIAH & SONS (1967) 62 ITR 411. 14. IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS DISMISSED AND THE CROSS OBJECTION OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS DAY OF 2 2 ND FEBRUARY, 2016. SD/- SD/- (O.P. KANT) (A.T. VARKEY) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 22 ND DAY OF FEBRUARY, 2016 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-III, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.