DCIT, New Delhi V. Shri M.K.R. Construction Pvt. Ltd., Delhi

ITA 3349/DEL/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 3639 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 29-06-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 30-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHEFALI SWROOP
• Assessee Lawyers: S K GUPTA
• Keywords: Unexplained cash credit; Income from undisclosed sources; Accommodation entries
• Section: 153A; 68; 132; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E : NEW DELHI) BEFORE HONBLE PRESIDENT, SHRI G.D. AGRAWAL AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.3348/DEL./2014 (ASSESSMENT YEAR : 2005-06) ITA NO.3349/DEL./2014 (ASSESSMENT YEAR : 2006-07) DCIT, CENTRAL CIRCLE 3, VS. M/S. M.K.R. CONSTRUCTIO N PVT. LTD., NEW DELHI. 2042, KATRA TOBACCO, KHARI BAOLI, DELHI. (PAN : AADCM6195J) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S.K. GUPTA, ADVOCATE REVENUE BY : MS. SHEFALI SWROOP, CIT DR DATE OF HEARING : 08.11.2017 DATE OF ORDER : 16.11.2017 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : SINCE COMMON QUESTIONS OF FACTS AND LAW HAVE BEEN R AISED IN BOTH THE AFORESAID APPEALS, THE SAME ARE BEING D ISPOSED OFF BY WAY OF CONSOLIDATED ORDER TO AVOID REPETITION OF DI SCUSSION. 2. THE APPELLANT, DEPUTY COMMISSIONER OF INCOME-TAX , CENTRAL CIRCLE 3, NEW DELHI (HEREINAFTER REFERRED T O AS THE REVENUE) BY FILING THE PRESENT APPEAL SOUGHT TO SE T ASIDE THE ITA NO.3348 & 3349/DEL./2014 2 IMPUGNED ORDER DATED 03.03.2014 PASSED BY THE COMMI SSIONER OF INCOME-TAX (APPEALS)-I, NEW DELHI QUA THE ASSESSMEN T YEARS 2005- 06 & 2006-07 ON THE GROUNDS INTER ALIA THAT :- ITA NO.3348/DEL/2014 (AY 2005-06) 1. THAT THE COMMISSIONER OF INCOME TAX(APPEALS) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN DELETI NG THE ADDITION OF RS.1,55,00,000/ - MADE BY AO ON ACCOUNT OF UNEXPLAINED CASH CREDIT. 2. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING T HE ADDITION OF RS.75,500/ - MADE BY AO ON ACCOUNT OF COMMISSION PAID ON PROCUREMENT OF ACCOMMODATION ENTRIES OF RS.1,55,00,000/- . 3. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING T HE ADDITION OF RS.43,00,000/ - MADE BY AO ON ACCOUNT O F INCOME FROM UNDISCLOSED SOURCES U/S 68 OF I.T. ACT, 1961. 4. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING T HE ADDITION OF RS. 52,965/ - MADE BY AO ON ACCOUNT OF INTEREST PAID ON TDS PAYABLE ON UNSECURED LOANS. ITA NO.3349/DEL/2014 (AY 2006-07) 1. THAT THE COMMISSIONER OF INCOME TAX(APPEALS) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN DELETI NG THE ADDITION OF RS.2,10,00,000/ - MADE BY AO ON ACCOUNT OF UNEXPLAINED CASH CREDIT. 2. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING T HE ADDITION OF RS.1,05,500/ - MADE BY AO ON ACCOUNT OF COMMISSION PAID ON PROCUREMENT OF ACCOMMODATION ENTRIES OF RS.2,10,00,000/- . ITA NO.3348 & 3349/DEL./2014 3 3. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING T HE ADDITION OF RS.70,00,000/ - MADE BY AO ON ACCOUNT O F INCOME FROM UNDISCLOSED SOURCES U/S 68 OF I.T. ACT, 1961. 4. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING T HE ADDITION OF RS.3,78,021/ - MADE BY AO ON ACCOUNT OF INTEREST PAID ON TDS PAYABLE ON UNSECURED LOANS. 3. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICATION OF THE CONTROVERSY AT HAND ARE : ASSESSMENT IN THESE CASES WERE COMPLETED UNDER SECTION 153A READ WITH 143 (3) OF THE INCOME- TAX ACT, 1961 (FOR SHORT THE ACT) ON THE BASIS OF SEARCH AND SE IZURE OPERATION CONDUCTED IN MAHESH MEHTA GROUP OF CASES ON 30.06.2 009. 4. AO MADE ADDITION OF RS.1,55,00,000/-, RS.77,500/ -, RS.43,00,000/- AND RS.52,965/- ON ACCOUNT OF UNEXPL AINED CASH CREDIT, COMMISSION PAYMENT PAID @ 0.5%, UNEXPLAINED CASH CREDIT AND DISALLOWANCE OF INTEREST PAID ON UNSECURED LOAN S & TDS PAYABLE RESPECTIVELY IN AY 2005-06. 5. IN AY 2006-07, AO MADE ADDITION OF RS.2,10,00,00 0/-, RS.1,05,000/-, RS.70,00,000/- AND RS.3,78,021/- ON ACCOUNT OF UNEXPLAINED CASH CREDIT, COMMISSION PAYMENT PAID @ 0.5%, UNEXPLAINED CASH CREDIT AND DISALLOWANCE OF INTERES T PAID ON UNSECURED LOANS & TDS PAYABLE RESPECTIVELY. ITA NO.3348 & 3349/DEL./2014 4 6. ASSESSEE CARRIED THE MATTER BY WAY OF FILING APP EALS BEFORE THE LD. CIT (A) WHO HAS DELETED THE ADDITIONS BY AL LOWING THE APPEALS. FEELING AGGRIEVED, THE REVENUE HAS COME U P BEFORE THE TRIBUNAL BY WAY OF CHALLENGING THE IMPUGNED ORDER P ASSED BY LD. CIT (A) . 7. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 8. ASSESSEE WHILE MOVING AN APPLICATION UNDER RULE 27 OF INCOME TAX (APPELLATE TRIBUNAL) RULES, 1963 (FOR SH ORT THE RULES) SOUGHT TO RAISE THE FOLLOWING GROUND :- THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED BOTH IN LAW AND ON FACTS IN CONFIRMING THE PROCEEDINGS INITIATED UNDER SECTION 153A OF I.T. ACT, WHICH IS BAD IN LAW IN THE ABSENCE MY INCRIMINATING MATERIAL BELONG ING TO THE ASSESSEE BEING FOUND DURING THE COURSE OF SEARCH. 9. FROM THE GROUNDS RAISED BEFORE CIT (A) AND THE I MPUGNED ORDER, IT IS CLEAR THAT CIT (A) BY FOLLOWING HIS OW N ORDER FOR AY 2005-06 DECIDED THE LEGAL ISSUE AS TO INITIATION OF PROCEEDINGS U/S 153A OF THE ACT AGAINST THE ASSESSEE. THE LD. DR FOR THE REVENUE OPPOSED THE APPLICATION U/S 27 OF THE RULES. SINCE THIS ISSUE WAS ITA NO.3348 & 3349/DEL./2014 5 RAISED BEFORE THE LD. CIT (A) BUT WAS REJECTED, WE ARE OF THE CONSIDERED VIEW THAT LEGAL GROUND CAN BE TAKEN BY T HE ASSESSEE EVEN BY SUPPORTING THE IMPUGNED ORDER CHALLENGED BE FORE THE TRIBUNAL. CONSEQUENTLY, FOR COMPLETE ADJUDICATION OF THE CONTROVERSY AT HAND, THE ASSESSEE IS ALLOWED TO RAI SE THE AFORESAID GROUND IN BOTH THE APPEALS FOR AYS 2005-06 AND 2006 -07. 10. LD. AR FOR THE ASSESSEE CONTENDED THAT BOTH THE APPEALS ARE COVERED IN ASSESSEES OWN CASE VIDE ORDER DATED 10.07.2017 PASSED BY THE COORDINATE BENCH OF THE TRIBUNAL IN I TA NO.5444/DEL/2013 FOR AY 2004-05 , WHICH FACT IS NOT CONTROVERTED BY THE LD. DR FOR THE REVENUE. 11. UNDISPUTEDLY, THE ASSESSEE HAD FILLED ORIGINAL RETURN U/S 139 (1). IT IS ALSO NOT IN DISPUTE THAT NO INCRIMINATI NG MATERIAL HAS COME ON RECORD QUA THE ASSESSMENT YEARS UNDER CONSI DERATION TO MAKE ADDITION IN QUESTION NOR THERE IS ANY BLEAK RE FERENCE CONCERNING SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE IN THE STATEMENT OF MAHESH MEHTA RECORDED ON 01.07.2009. 12. KEEPING IN VIEW THE AFOREMENTIONED FACTS, THE C OORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2004-05 (SUPRA) DELETED THE ADDITION BY RETURNING THE FOLLO WING FINDINGS :- 11. THUS, FOLLOWING THE ABOVE AFORESAID PROPOSITIO N OF LAW AND ADMITTED FACT OF THE CASE ARE THAT THERE IS NO INCRIMINATING MATERIAL QUA THE ASSESSMENT YEAR FOR. ITA NO.3348 & 3349/DEL./2014 6 WHICH IMPUGNED ADDITION HAS BEEN MADE, WE HOLD THAT SUCH AN ADDITION CANNOT BE ROPED IN THE ASSESSMENT ORDER PASSED U/S 153A. ACCORDINGLY SAME IS DIRECTE D TO BE DELETED. SO FAR AS THE RELIANCE PLACED BY THE L EARNED CIT DR ON THE JUDGMENT OF ANIL KUMAR BHATIA, WE FIN D THAT THE HONBLE HIGH COURT ITSELF HAD CLARIFIED TH AT THERE IS NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH AND THEREFORE, NO EXPRESS OPINION AS TO WHETHER THE ADDITION CAN BE MADE U/S 153A WAS MADE BY THEIR LORDSHIPS. THE RELEVANT OBSERVATION IN PAR A 23 OF THE JUDGMENT IS REPRODUCED HERE UNDER :- WE ARE NOT CONCERNED WITH A CASE WHERE NO INCRIMINATING MATERIAL WAS FOUND DURING THE SEARCH CONDUCTED U/S 132 OF THE ACT. WE, THEREFORE, EXPRESS NO OPINION AS TO WHETHER SECTION 153A BE INVOKED EVEN IN SUCH A SITUATION. THAT QUESTION IS THEREFORE LEFT OPEN.' HENCE, THE RELIANCE PLACED BY THE LEARNED CIT DR ON THIS JUDGMENT IS WHOLLY MISPLACED. 13. IN THE IMPUGNED ORDERS CHALLENGED BEFORE THIS B ENCH FOR AYS 2005-06 AND 2006-07, THE LD. CIT (A) ALSO RELIE D UPON CASE CITED AS CIT VS. ANIL KUMAR BHATIA REPORTED IN 352 ITR 493 WHICH HAS BEEN DISTINGUISHED BY THE COORDINATE BENC H OF THE TRIBUNAL IN PRECEDING REPRODUCED PARA 12 (11). 14. IN VIEW OF THE PRINCIPLE LAID DOWN BY HONBLE D ELHI HIGH COURT IN CIT VS. KABUL CHAWLA (2016) 380 ITR 570 , WE ARE OF THE CONSIDERED VIEW THAT SINCE THE AO COULD NOT LAY HAND ON ANY INCRIMINATING MATERIAL QUA THE IMPUGNED ADDITION, T HE ASSESSMENT ORDER U/S 153A IS NOT SUSTAINABLE, WHICH IS BEYOND THE PURVIEW OF ITA NO.3348 & 3349/DEL./2014 7 ASSESSMENT MADE U/S 153A. SO, BY FOLLOWING THE DEC ISION RENDERED BY COORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES O WN CASE FOR AY 2004-05 (SUPRA), WE ARE OF THE CONSIDERED VIEW THAT LD. CIT (A) HAS ERRED IN CONFIRMING THE PROCEEDINGS INITIATED U/S 1 53A OF THE ACT BY THE AO, HENCE LEGAL GROUND RAISED BY THE ASSESSE E UNDER RULE 27 IS ALLOWED. SINCE ASSESSMENT ORDER PASSED U/S 1 53A HAS FAILED TO WITHSTAND THE LEGAL SCRUTINY, ASSESSMENTS MADE T HEREUNDER STAND QUASHED, WE DO NOT FEEL IT NECESSARY TO GO INTO THE GROUNDS RAISED BY THE REVENUE WHICH HAS SINCE BECOME INFRUCTUOUS. CONSEQUENTLY, THE APPEALS FILED BY THE REVENUE ARE HEREBY DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 16 TH DAY OF NOVEMBER, 2017. SD/- SD/- (G.D. AGRAWAL) (KULDIP SINGH) PRESIDENT JUDICIAL MEMBER DATED THE 16 TH DAY OF NOVEMBER, 2017 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-I, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.