ACIT, Central Circle-6, New Delhi V. KAD Housing Pvt. Ltd., Delhi

ITA 3305/DEL/2019

AI Insights

The case involves an appeal by the Revenue against the order of the CIT(A) which had reversed the additions made by the Assessing Officer following a search and seizure operation under Section 132 of the Income Tax Act, 1961. The additions pertained to unexplained credits in the form of share application money and unsecured loans received by KAD Housing Pvt. Ltd. for the Assessment Year 2010-11. The CIT(A) found that the additions were made without any incriminating material discovered during the search, relying on judicial precedents that restrict such additions in the absence of incriminating evidence. The Tribunal upheld the CIT(A)'s decision, emphasizing that the additions were beyond the scope of Section 153A of the Act as no incriminating material was linked to the additions.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 121731 (ITAT-DELHI)
• Duration Of Justice: 10 year(s) 6 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 04-12-2022
• Assessment Year: misc
• Appeal Filed On: 15-05-2012
• Other Referred Cases: CIT vs. Kabul Chawla, CIT vs. Meeta Gutgutia
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 68; 132; 143(3); 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “H” DELHI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER I.T.A. No.3305/DEL/2019 Assessment Year 2010-11 ACIT, Central Circle-6, New Delhi. Vs. KAD Housing Pvt. Ltd., 151, Savita Vihar, Delhi. TAN/PAN: AACCK4705B (Appellant) (Respondent) Appellant by: Shri C.S. Anand, Adv. Respondent by: Shri M. Baranwal, CIT-DR Date of hearing: 05 12 2022 Date of pronouncement: 15 12 2022 O R D E R PER PRADIP KUMAR KEDIA, A.M.: The captioned appeal has been filed by the Revenue against the order of the Commissioner of Income Tax (Appeals)-XXIV, New Delhi [‘CIT(A) ’ in short] dated 24.01.2019 arising fro m the assessment order dated 31.03.2016 passed by the Assessing Officer ( AO) under Section 153A r.w. Section 143(3) of the Inco me Tax Act, 1961 (the Act) concerning AY 2010-11. 2. The grounds of appeal raised by the Revenue read as under: “ 1 . T h e o r d e r o f L d . C I T ( A ) i s n o t c o r r e c t i n l a w an d f a c t s . 2 . Wh e t h e r o n t h e f a c t s a n d c i r c u m s t a n c e s o f c a s e , L d . C I T ( A ) h a s e r r e d i n d e l e t i n g t h e a d d i t i o n o f R s . 2 , 2 6 , 6 2 , 1 0 0 / - m a d e b y a s s e s s i n g o f f i c e r o n a c c o u n t s o f u n e x p l a i n e d c r e d i ts t h e I n c o m e T a x A c t , 1 9 6 1 . 3 . Wh e t h e r o n t h e f a c t s a n d c i r c u m s t a n c e s o f t h e c as e , t h e L d . I.T.A. No.954/Del/2022 2 C I T ( A ) h a s e r r e d a s t h e p r o v i s i o n s o f s e c t i o n 1 5 3 A c l e a r l y e m p o w e r s t h e a s s e s s m e n t y e a r r e l e v a n t t o t h e p r e v i ou s y e a r i n w h i c h s u c h s e a r c h i s c o n d u c t e d / r e q u i s i t i o n i s m a d e a n d i t d o n o t r e s t r i c t t h e A s s e s s i n g O f f i c e r t o f r a m e a s s e s s m e n t o r r e a s s e s s m e n t o n l y t o t h e d o c u m e n t s / a s s e t s s e i z e d d u r i n g t h e c o u rs e o f s e a r c h o r r e q u i s i t i o n . 4 . Wh e t h e r o n t h e f a c t s a n d c i r c u m s t a n c e s o f t h e c as e , t h e L d . C I T ( A ) h a s e r r e d i n , n o t u p h o l d i n g t h e a s s e s s m e n t or d e r p a s s e d u n d e r S e c t i o n 1 5 3 A r . w . S e c t i o n 1 4 3 ( 3 ) o f t h e A c t on t h e g r o u n d t h a t n o i n c r i m i n a t i n g m a t e r i a l w a s f o u n d d u r i n g t h e s e a r c h o n t h e b a s i s o f w h i c h a d d i t i o n s h a v e b e e n m a d e b y t h e A s s es s i n g O f f i c e r a s h e l d i n t h e c a s e o f K a b u l C h a w l a , e v e n w h e n , t h e p r i n c i p a l l a i d d o w n i n t h e j u d g m e n t o f H o n ’ b l e H i g h C o u r t i n t h e ca s e o f K a b u l C h a w l a h a s n o t b e e n a c c e p t e d b y t h e R e v e n u e a n d S . L. P . t h e r e a g a i n s t h a s b e e n f i l e d w h i c h i s p e n d i n g f o r a d j u d i ca t i o n b e f o r e t h e H o n ’ b l e A p e x C o u r t . 5 . Wh e t h e r o n t h e f a c t s o f t h e c a s e , L d . C I T ( A ) i s j u s t i f i e d i n r e l y i n g o n t h e d e c i s i o n s i n c a s e o f K a b u l C h a w l a a nd M e e t a G u t g u t i a i n t h e c u r r e n t c a s e w h e n t h e s e d e c i s i o n s ar e d i s t i n g u i s h a b l e o n f a c t s . 3. Briefl y stated, a search and seizure operation under Section 132 of the Act was car ried out on Santosh/KM/VMI Group including the assessee by the Inco me Tax Depart ment on 27.06.2013. Consequently, a notice under Section 153A was served upon the assessee and the assess ment was co mpleted under Section 153A r .w. S ection 143(3) of the Act. In pursuance of search action under Section 132 of the Act, the Assessing Officer made an addition of Rs.2,26,62,100/- under Section 68 of the Act by questioning the bona fides of share application mone y on unsecured loan received by the assessee during the year . 4. Aggrieved, the assessee preferred appeal before the CIT( A). In the course of first appellate proceedings, the assessee contended that (i) as on date of search and seizure action u/s.132, the assessment for Assessment Yea r 2010-11 was not pending as the scrutiny assess me nt order was already passed I.T.A. No.954/Del/2022 3 on 30.12.2011 and (ii) despite absence of incriminating material attributable to Assessment Year 2010-11 unearthed during the search and seizure action as ma y be under Section 132, the Assessing Officer has made an addition of Rs.2,66,62,100/- by invoking Section 68 of the Act. The assessee placed reliance upon the judgmen ts rendered by Hon’ble Hon’ble Hig h Court in CIT vs. Kabul Chawla, 380 ITR 573 (Delhi) and CIT vs. Meeta Gutgutia, 395 ITR 526 (Del) , and contended that the action of the Assessing Officer in making such additions is be yond the legal mandate, in the absence of any re fere nce to the incri minating material unearthed during the search. 5. The CIT( A) found merit in the contentions of the assessee and reversed the additions made b y the Assessing Officer under Section 68 of the Act. The relevant operative paragraph of the order of the CI T( A) is r eproduced hereunder: “ 5 . 1 I h a v e c o n s i d e r e d t h e m a t e r i a l o n r e c o r d i n c l ud i n g w r i t t e n s u b m i s s i o n s o f t h e A R o f t h e a p p e l l a n t f i l e d i n c o ur s e o f a p p e l l a t e p r o c e e d i n g s . I h a v e p e r u s e d t h e a s s e s s m e n t o r d e r u /s 1 5 3 A r . w . s . 1 4 3 ( 3 ) o f t h e A c t p a s s e d b y t h e A O . I h a v e a l s o c o ns i d e r e d t h e r e m a n d r e p o r t s o f t h e A O a n d t h e r e j o i n d e r s o f t h e A R o f t h e a p p e l l a n t t h e r e o n . 5 . 2 G r o u n d N o s . 3 & 7 o f r e v i s e d g r o u n d s o f a p p e a l a r e b u n c h e d t o g e t h e r f o r p r o p e r a d j u d i c a t i o n . O n c a r e f u l c o n s i de r a t i o n , I f i n d t h a t t h e A O h a s n o t d i s p u t e d t h a t n o i n c r i m i n a t i n g m a t e r i a l w a s f o u n d o r s e i z e d i n c o u r s e o f s e a r c h a c t i o n o n t h e ap p e l l a n t . T h e A O h a s n o t p o i n t e d o u t a n y s p e c i f i c i n c r i m i n a t i n g se i z e d m a t e r i a l r e l a t i n g t o t r a n s a c t i o n s o f t h e a p p e l l a n t l e a d i n g to a d d i t i o n o f R s . 2 , 2 6 , 6 2 , 1 0 0 / - m a d e i n t h e a s s e s s m e n t o r d e r u / s . 1 5 3 A r . w . s . 1 4 3 ( 3 ) o f t h e A c t . I d o h o l d t h a t b y v i r t u e o f p r o vi s i o n s o f s e c t i o n 1 5 3 A t h e A s s e s s i n g O f f i c e r g e t s t h e j u r i s d i c t i o n o f a s s e s s m e n t / r e a s s e s s m e n t o v e r t h e a p p e l l a n t . H o w e v e r , t h e s e p r ov i s i o n s d o n o t p r o v i d e t h e A O w i t h p o w e r t o m a k e a d d i t i o n o n a n y is s u e i n r e s p e c t o f t h e y e a r f o r w h i c h n o a s s e s s m e n t i s p e n di n g a s o n d a t e o f s e a r c h a n d i n r e s p e c t o f w h i c h n o i n c r i m i n a t i n g m a t e r i a l h a s b e e n f o u n d d u r i n g t h e c o u r s e o f s e a r c h . I n t h e i n s ta n t c a s e t h e a s s e s s m e n t u / s 1 4 3 ( 3 ) o f t h e A c t w a s c o m p l e t e d o n 30 . 1 2 . 2 0 1 1 . I.T.A. No.954/Del/2022 4 F u r t h e r , n o a s s e s s m e n t p r o c e e d i n g s w e r e p e n d i n g f o r A Y 2 0 1 0 - 1 1 o n d a t e o f s e a r c h ( 2 7 . 0 6 . 2 0 1 3 ) . I t i s f u l l y e s t a b l is h e d t h a t n o i n c r i m i n a t i n g m a t e r i a l w a s f o u n d d u r i n g t h e c o u r s e o f s e a r c h a c t i o n . A t t h i s s t a g e i t i s r e l e v a n t t o c o n s i d e r t he j u d g m e n t o f t h e H o n ' b l e D e l h i H i g h C o u r t i n t h e c a s e o f C I T ( C e n t r al - I l l ) v s . K a b u l C h a w l a 1 3 8 0 I T R 5 7 3 ( D e l ) I w h i c h h a s h e l d a s u n d e r : " 3 7 . O n a c o n s p e c t u s o f S e c t i o n 1 5 3 A ( 1 ) o f t h e A c t , r e a d w i t h t h e p r o v i s o t h e r e t o , a n d i n t h e l i g h t o f t h e l a w , e x p l ai n e d i n t h e a f o r e m e n t i o n e d d e c i s i o n s , t h e l e g a l p o s i t i o n t h a t em e r g e s i s a s u n d e r : i . O n c e a s e a r c h t a k e s p l a c e u n d e r S e c t i o n 1 3 2 o f t h e A c t , n o t i c e u n d e r S e c t i o n 1 5 3 A ( 1 ) w i l l h a v e t o b e m a n d a to r i l y i s s u e d t o t h e p e r s o n s e a r c h e d r e q u i r i n g h i m t o f i l e r e t u r n s f o r s i x A Y s i m m e d i a t e l y p r e c e d i n g t h e p r e v i o u s y e a r r e l e v a n t t o t h e A Y i n w h i c h t h e s e a r c h t a k e s p l a c e . i i . A s s e s s m e n t s a n d r e a s s e s s m e n t s p e n d i n g o n t h e d a t e of t h e s e a r c h s h a l l a b a t e . T h e t o t a l i n c o m e f o r s u c h A Y s wi l l h a v e t o b e c o m p u t e d b y t h e A O s a s a f r e s h e x e r c i s e . i i i . T h e A O w i l l e x e r c i s e n o r m a l a s s e s s m e n t p o w e r s i n r e s p e c t o f t h e s i x y e a r s p r e v i o u s t o t h e r e l e v a n t A Y i n w h i c h t h e s e a r c h t a k e s p l a c e . T h e A 0 h a s t h e p o w e r t o a s s e s s a n d r e as s e s s t h e ' t o t a l i n c o m e ' o f t h e a f o r e m e n t i o n e d s i x y e a r s i n se p a r a t e a s s e s s m e n t o r d e r s f o r e a c h o f t h e s i x y e a r s . I n o t he r w o r d s t h e r e w i l l b e o n l y o n e a s s e s s m e n t o r d e r i n r e s p e c t o f e a c h o f t h e s i x A Y s " i n w h i c h b o t h t h e d i s c l o s e d a n d t h e u nd i s c l o s e d i n c o m e w o u l d b e b r o u g h t t o t a x " . i v . A l t h o u g h S e c t i o n 1 5 3 A d o e s n o t s a y t h a t a d d i t i on s s h o u l d b e s t r i c t l y m a d e o n t h e b a s i s o f e v i d e n c e f o u n d i n t h e c o u r s e o f t h e s e a r c h , o r o t h e r p o s t - s e a r c h m a t e r i a l o r i n f o r ma t i o n a v a i l a b l e w i t h t h e A O w h i c h c a n b e r e l a t e d t o t h e ev i d e n c e f o u n d , i t d o e s n o t m e a n t h a t t h e a s s e s s m e n t " c a n b e a r b i t r a r y o r m a d e w i t h o u t a n y r e l e v a n c e o r n e x u s w it h t h e s e i z e d m a t e r i a l . O b v i o u s l y a n a s s e s s m e n t h a s t o b e m a d e u n d e r t h i s S e c t i o n o n l y o n t h e b a s i s o f s e i z e d m a t e r i a l . " ( e m p h a s i s s u p p l i e d ) v . I n a b s e n c e o f a n y i n c r i m i n a t i n g m a t e r i a l , t h e c om p l e t e d a s s e s s m e n t c a n b e r e i t e r a t e d a n d t h e a b a t e d a s s e s s me n t o r r e a s s e s s m e n t c a n b e m a d e . T h e w o r d ' a s s e s s ' i n S e c ti o n 1 5 3 A i s r e l a t a b l e t o a b a t e d p r o c e e d i n g s (i . e . t h o s e p en d i n g o n t h e d a t e o f s e a r c h ) a n d t h e w o r d ' r e a s s e s s ' t o c o m pl e t e d a s s e s s m e n t p r o c e e d i n g s . v i . I n s o f a r a s p e n d i n g a s s e s s m e n t s a r e c o n c e r n e d , th e j u r i s d i c t i o n t o m a k e t h e o r i g i n a l a s s e s s m e n t a n d t he a s s e s s m e n t u n d e r S e c t i o n 1 5 3 A m e r g e s i n t o o n e . O n l y o n e a s s e s s m e n t s h a l l b e m a d e s e p a r a t e l y f o r e a c h A Y o n t h e b a s i s o f t h e f i n d i n g s o f t h e s e a r c h a n d a n y o t h e r ma t e r i a l I.T.A. No.954/Del/2022 5 e x i s t i n g o r b r o u g h t o n t h e r e c o r d o f t h e A O . v i i . C o m p l e t e d a s s e s s m e n t s c a n h e i n t e r f e r e d w i t h by t h e A O w h i l e m a k i n g t h e a s s e s s m e n t u n d e r S e c t i o n 1 5 3 A o n ly o n t h e b a s i s o f s o m e i n c r i m i n a t i n g m a t e r i a l u n e a r t h e d d u r in g t h e c o u r s e o f s e a r c h o r r e q u i s i t i o n o f d o c u m e n t s o r u n di s c l o s e d i n c o m e o r p r o p e r t y d i s c o v e r e d i n t h e c o u r s e o f s e a rc h w h i c h w e r e n o t p r o d u c e d o r n o t a l r e a d y d i s c l o s e d o r m a d e k n o w n i n t h e c o u r s e o f o r i g i n a l a s s e s s m e n t . 3 8 . T h e p r e s e n t a p p e a l s c o n c e r n A Y s , 2 0 0 2 - 0 3 , 2 0 0 5 -0 6 a n d 2 0 0 6 - 0 7 . 0 n t h e d a t e o f t h e s e a r c h t h e s a i d a s s e s s m e n t s al r e a d y s t o o d c o m p l e t e d . S i n c e n o i n c r i m i n a t i n g m a t e r i a l w a s u n e ar t h e d d u r i n g t h e s e a r c h , n o a d d i t i o n s c o u l d h a v e b e e n m a d e t o t he i n c o m e a l r e a d y a s s e s s e d . 5 . 3 I n t h e c a s e o f P C 1 T (C e n t r a l - I I ) , N e w D e l h i v s . M e e t a G u t g u t i a 3 9 0 I T R 4 9 6 ( D e l ) , h a s h e l d t h a t i n v o c a t i on o f s e c t i o n 1 5 3 A t o r e - o p e n c o n c l u d e d a s s e s s m e n t s o f a s s e s s m e n t y e a r s e a r l i e r t o y e a r o f s e a r c h i s n o t j u s t i f i e d i n a b s e n c e o f i nc r i m i n a t i n g m a t e r i a l f o u n d d u r i n g s e a r c h q u a e a c h s u c h e a r l i e r a s s e s s m e n t y e a r . I t i s i m p o r t a n t t o n o t e t h a t t h e H o n ' b l e S u p re m e C o u r t o f I n d i a d i s m i s s e d v i d e i t s o r d e r d a t e d 0 2 . 0 7 . 2 0 1 8 S p ec i a l L e a v e P e t i t i o n ( S L P ) f i l e d b y t h e R e v e n u e a g a i n s t t h e o r d er d a t e d 2 5 . 0 5 . 2 0 1 7 o f t h e H o n ' b l e H i g h C o u r t o f D e l h i i n t he c a s e o f M e e t a G u t g u t i a . 5 . 4 I n v i e w o f t h e f a c t s s t a t e d a b o v e , f o l l o w i n g t he r a t i o o f t h e j u d g e m e n t s o f t h e H o n ' b l e H i g h C o u r t o f D e l h i i n t he c a s e s o f C I T ( C e n t r a l - I I I ) v s . K a b u l C h a w l a 3 8 0 I T R 5 7 3 ( D e l ) a nd P C I T ( C e n t r a l - I I ) , N e w D e l h i v s . M e e t a G u t g u t i a 3 9 0 I T R 4 9 6 ( D e l ) a n d f u r t h e r c o n s i d e r i n g t h e f a c t t h a t o n t h e d a t e o f t he s e a r c h t h e a s s e s s m e n t f o r A Y 2 0 1 0 - 1 1 a l r e a d y s t o o d c o m p l e t e d , n o a d d i t i o n c o u l d h a v e b e e n m a d e t o t h e i n c o m e a l r e a d y a s s e s s e d s i n c e n o i n c r i m i n a t i n g m a t e r i a l w a s u n e a r t h e d d u r i n g t h e s e ar c h . T h u s , I h o l d t h a t a l t h o u g h t h e i s s u e o f n o t i c e u / s 1 5 3 A o f t h e A c t b y t h e A O w a s f u l l y j u s t i f i e d b u t t h e a d d i t i o n o f R s . 2 , 2 6 ,6 2 , 1 0 0 / - m a d e b y t h e A O w a s b e y o n d t h e s c o p e o f t h e p r o v 4 i o n s o f s e ct i o n 1 5 3 A o f t h e A c t a n d t h e r e f o r e , d e l e t e d . C o n s i d e r i n g t h e f a ct s a n d c i r c u m s t a n c e s o f t h e i n s t a n t c a s e a n d l e g a l p o s i t i on s t a t e d a b o v e , G r o u n d N o . 3 i s d i s m i s s e d b u t G r o u n d N o . 7 i s a l l o we d . ” 6. Aggrieved by the relief granted by the CIT( A) , the Revenue has preferred appeal before the Tribunal. 7. We have considered the rival submissions and perused the orders of the authorities below. We note that the CIT( A) has exa mined the meri ts of the legal contentions raised on behalf of I.T.A. No.954/Del/2022 6 the assessee and deleted the additions made b y the Assessing Officer . On bare perusal of the order of the Assessing Officer and CIT(A), we find total absence of referenc e to any incri minating material which ma y have an y bearing to the i mpugned additions made under Section 68 of the Act. As a corollary, it is ma nifest that impugned additions were made b y the Assessing Off icer without reference to any specif ic material found as a result of search and seizure action under Section 132 of the Act which can be said to be incriminating material. The action of the Assessing Officer is merel y bas ed on re- appreciation of facts unconnected to search. 8. We si multaneously note that the Inc o me Tax R eturn f or the relevant Assessment Year 2010-11 was duly asse ssed under Section 143(3) of the Act prior to search and thus no assessment was eventually pending at the ti me of initiation of search which ma y abate in consequence of search. No refe renc e to any incri minating material, if an y, is fo und in the assessment order for the purposes of making i mpugned additions under Section 68 of the Act. Acc ordingly, in the light of the judicial dicta referred to and re lied upon by the CIT( A), we ar e of the view that the impugned additions made by the Assessing Officer are clearl y be yond the scope of authority vested under Section 153A of the Act owing to absence of any incri minating material or evidence deduced as a result of sear ch. 8.2 The legal issue emanating on such facts that in the absence of an y incri mina ting mate rial/evidence, no addition can be sustained under Section 153A where the earlier assessment stood included prior to search, is no longer res integra in view I.T.A. No.954/Del/2022 7 of the judg ment of the Hon’ble Jurisdictional High Court in Kabul Chawla (supra) and Meeta Gutgutia (supra) and host of other judicial pronouncements. 8.3 In view of long line of judicial precedents governing the field, we see no infir mit y in the conclusion drawn by the CIT( A). We are o f the opinion that in the factual backdrop, the CIT( A) has rightly concluded that in the Section 153A proceedings the additions made without showing any nexus to incri minating found, if any, as a result of search operation are not sustainable in the eye of law. Th e order of the CIT(A) being in sync with the judicial view echoed, we decline to interfere therewith. 7. In the result, the captioned appeal of the Revenue is dismissed. Order pronounced in the open Court on 15/12/2022. Sd/- Sd/- [SAKTIJIT DEY] [PRADIP KUMAR KEDIA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: /12/2022 Prabhat