Arsh Home Private Ltd., Delhi V. DCIT, New Delhi

ITA 3487/DEL/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3130 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 8 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 04-05-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 09-06-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: APARNA KARAN
• Keywords: Search and seizure; Document seized; Opportunity of being heard; Principle of natural justice; Documents seized
• Section: 142(1); 153A; 132

Judgement Text

1 ITA NO. 3487/DEL/2014 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: A NEW DELHI BEFORE SHRI G. D. AGRAWAL, PRESIDENT AND MS SUCHITRA KAMBLE, JUDI CIAL MEMBER ITA NO. 3487/DEL/201 4 ( A.Y 2008-09) ARSH HOME PRIVATE LTD. C-126, PREET VIHAR DELHI AAFCA3452N (APPELLANT) VS DCIT CENTRAL CIRCLE-7 NEW DELHI (RESPONDENT) APPELLANT BY SH. ANIL KUMAR JAIN, AR RESPONDENT BY SMT. APARNA KARAN, CIT(DR) ORDER PER SUCHITRA KAMBLE THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER DATED 23/05/2014 PASSED BY CIT(A)-1, NEW DELHI. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE PROVISION OF LAW THE LD CIT APPEAL HAS FAILED TO APPRECIATE THAT THE INITIATION OF THE PROCEEDING U/S 153C OF INCOME TAX ACT IS ILLEGAL AN D BAD IN LAW. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE PROVISION OF LAW THE LD CIT APPEAL HAS FAILED TO APPRECIATE THAT THE ASSESSMENT FRAMED IS AGAINST THE STATUTORY PROVISIONS OF THE ACT AND WIT HOUT COMPLYING THE DATE OF HEARING 05.02.2018 DATE OF PRONOUNCEMENT 28.02.2018 2 ITA NO. 3487/DEL/2014 PROCEDURES PRESCRIBED UNDER SECTION 153C OF THE INC OME TAX ACT. 3. THAT THE LD.CIT(A) HAS FAILED TO APPRECIATE THA T IMPUGNED ASSESSMENT ORDER PASSED BY THE LEARNED ASSESSING OFFICER IS A GAINST THE PRINCIPLES OF NATURAL JUSTICE AND HAS BEEN PASSED WITHOUT AFFORDI NG REASONABLE OPPORTUNITY OF BEING HEARD. 4. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE PROVISIONS OF LAW THE LD.CIT(A) HAS ERRED IN UPHOLDING AN ADDITION OF RS.10,00,000/- U/S 69B OF INCOME TAX ACT. 3. A SEARCH AND SEIZURE WAS INITIATED U/S 132 OF THE I NCOME TAX ACT ON 09.09.2010 IN AMRAPALI GROUP OF CASES WITH WHICH TH E ASSESSEE ENTERED INTO TRANSACTIONS OF BULK INVESTMENT IN FLATS/COMMERCIAL SPACE. DURING SEARCH, A MOU BETWEEN M/S ULTRA HOME CONSTRUCTION PVT. LTD. ( UHCPL) AND THE ASSESSEE WAS FOUND. THE SAID MOU INDICATED THAT INV ESTMENTS BY THE ASSESSEE INTO PROPERTY UNDER CONSTRUCTION BY UHCPL. THE SAID DOCUMENT CONTAINED DETAILS OF PAYMENTS, INCLUDING CASH PAYMENT, AND AS SURED RETURN ON INVESTMENT. BASED ON THIS DOCUMENT, THE ASSESSING O FFICER RECORDED SATISFACTION AND INITIALED PROCEEDINGS U/S 153C IN THE CASE OF THE ASSESSEE. RETURN DECLARING LOSS OF RS. 13,869/- WAS ORIGINALL Y FILED ON 4.09.2008. NOTICE U/S 153C WAS ISSUED ON 29.01 2013, AND IN RESPONSE THE ASSESSEE FILED A LETTER ON 18.02.2013 STATING THAT THE ORIGINAL RETURN BE T REATED AS RETURN IN RESPONSE TO THE SAID NOTICE. NOTICE U/S 143(2) & U/S 142(1) WITH QUESTIONNAIRE WAS ISSUED ON 25.02.2013. ANOTHER NOTICE U/S 142(1) WAS ISSUED ON 22 43.2013. THE CASE WAS ASSESSED AT AN INCOME OF RS.9,86,131/- AFTER MAKING ADDITIONS/ DISALLOWANCES. 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASS SSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE. 5. THE LD. AR SUBMITS THAT THE INITIATION OF ASSESS MENT PROCEEDINGS U/S 153C OF THE INCOME TAX ACT, 1961 ON THE BASIS OF UN SIGNED MOU SEIZED DURING 3 ITA NO. 3487/DEL/2014 THE COURSE OF SEARCH AND SEIZURE OPERATION OF THIRD PARTY ON THE PRESUMPTION THAT THE SAME BELONGED TO THE ASSESSEE IS BAD IN LA W. THE LD. AR SUBMITS THAT THE MOU SEIZED CANNOT BE SAID TO BELONG TO THE AS SESSEE AND BEING UNSIGNED MOU, NO PROCEEDINGS U/S 153C OF THE ACT CAN BE INIT IATED AGAINST THE ASSESSEE. THE LD. AR FURTHER SUBMITS THAT THERE IS NO SATISFA CTION RECORDED AS ASSESSING OFFICER OF THE SEARCHED PERSON. IN THE PRESENT CASE FROM THE EXTRACT OF SATISFACTION NOTE IT WILL BE OBSERVED THAT THIS WAS RECORDED AS ASSESSING OFFICER OF THE THIRD PARTY I.E. ASSESSEE. THE DATE OF THE R ECORDING OF SATISFACTION IS ALSO ABSENT. THE LD. AR RELIED UPON THE HONBLE DELHI HI GH COURT DECISION IN CASE OF CIT VS. RENU CONSTRUCTIONS PVT. LTD. (ITA NO.499/20 11DATED 06.09.2017). 6. THE LD. DR RELIED UPON THE ORDERS OF THE ASSESSI NG OFFICER AND THE CIT(A). THE LD. DR FURTHER RELIED UPON THE DECISION OF PCIT VS. NAU NIDH OVERSEAS PVT. LTD. (ITA NOS. 58,59,82,83/2017 DATED 03.02.2017 DEL. H.C.) WHEREIN IT IS HELD THAT SATISFACTION RECORDED BY TH E OFFICER ISSUING NOTICE U/S 153C IS SUFFICIENT IF THE ASSESSING OFFICER OF THE SEARCHED PERSON AND THIRD PARTY ARE THE SAME. THE LD. DR ALSO RELIED UPON THE DECISION OF THE HONBLE DELHI HIGH COURT IN CASE OF PCIT VS. INSTRONICS LTD . (2017) 82 TAXMANN.COM 357 (DEL.) WHEREIN IT IS HELD THAT WHERE SATISFACTI ON NOTE WAS RECORDED BY THE ASSESSING OFFICER OF SEARCHED PERSON WHO ALSO HAPPE NED TO BE ASSESSING OFFICER OF THE ASSESSEE (OTHER PERSON) TO EFFECT THAT SEIZE D DOCUMENTS BELONGED TO ASSESSEE, ISSUANCE OF NOTICE UNDER SECTION 153C AGA INST ASSESSEE ON BASIS OF SAID NOTE WAS JUSTIFIED. THE LD. DR RELIED UPON THE DECISION PCIT VS. SHEETAL INTERNATIONAL PVT. LTD. (2017-TIOL-1355-HC-DEL-IT) WHEREIN IT IS HELD BY THE HONBLE DELHI HIGH COURT THAT PROCEEDINGS U/S 153C CANNOT BE INVALIDATED, MERELY BECAUSE THE ASSESSING OFFICER OF THE SEARCHE D PARTY WHO WAS ALSO THAT OF THE ASSESSEE, DID NOT RECORD A SEPARATE SATISFAC TION NOTE. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORDS. IT IS PERTINENT TO NOTE THAT IN LETTER DATED 12.02.2013 THE ASSESSI NG OFFICER RECORDED THE EXTRACT OF THE SATISFACTION FOR INITIATION OF PROCE EDINGS U/S 153C OF THE INCOME 4 ITA NO. 3487/DEL/2014 TAX ACT, BUT HAS NOT RECORDED THE FINDING THAT THE SEIZED DOCUMENT I.E. MOU BELONGS TO THE THIRD PARTY I.E. THE ASSESSEE. AS PE R THE PROVISIONS U/S 153C WHERE THE ASSESSING OFFICER IS SATISFIED THAT ANY M ONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE ON THING OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED BELONGS TO A PERSON OTHER THAN THE PE RSON REFERRED TO IN SECTION 153A, THEN THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASS ETS REQUISITIONED SHALL BE HANDED OVER TO THE ASSESSING OFFICER WHO SHALL PROC EED AGAINST SUCH OTHER PERSON AND ISSUE SUCH PERSON NOTICE AND ASSESS OR R EASSESS INCOME OF SUCH OTHER PERSON IN ACCORDANCE WITH THE PROVISIONS OF S ECTION 153A. THE SAID MOU DOES NOT BEAR THE SIGNATURE OF THE ASSESSEE. THUS, FINDING OF DOCUMENT IN THE PREMISES OF AMRAPALI GROUP DOES NOT CONSTITUTE THAT THE DOCUMENT TO BE BELONGING TO THE ASSESSEE. THE RELIANCE OF THE DECI SION OF THE HONBLE DELHI HIGH COURT IN CASE OF CIT VS. RENU CONSTRUCTIONS PVT. LT D. IS APT AS THE HONBLE HIGH COURT HELD THAT IT IS NECESSARY TO SHOW THAT THE SE IZED MATERIAL BELONGED TO THE OTHER PERSON OTHER THAN THE PERSON REFERRED TO IN S ECTION 153A OF THE ACT. THE THUS, THE CIT(A) WAS FAILED TO APPRECIATE THAT THE ASSESSMENT FRAMED IS AGAINST THE STATUTORY PROVISION OF THE ACT. THE ASSESSING O FFICER CANNOT MERELY ON PRESUMPTION STATES THAT THE SEIZED DOCUMENTS ARE TH AT OF ASSESSEE. FIRSTLY, THE ASSESSING OFFICER HAS TO ESTABLISH THAT THE SEIZED DOCUMENTS BELONG TO THE ASSESSEE WHICH THE ASSESSING OFFICER AS WELL AS CIT (A) FAILED TO LOOKED INTO. THE CASE LAWS REFERRED BY THE LD. DR IS ONLY ON THE PRI NCIPLE THAT THE SATISFACTION RECORDED BY THE OFFICER ISSUING NOTICE U/S 153 C IS SUFFICIENT IF THE AO OF THE SEARCHED PERSON AND THIRD PARTY ARE SAME. BUT THE S AME WILL NOT BE APPLICABLE IN THE PRESENT CASE AS THE ASSESSING OFFICER HAS FA ILED TO LOOKED INTO THE SEIZED DOCUMENTS WHETHER BELONGS TO ASSESSEE OR NOT. THUS, THE PROCEEDINGS U/S 153C ITSELF BECOMES BAD IN LAW AND THE ASSESSMENT O RDER IS QUASHED AND THERE IS NO NEED TO ADJUDICATE THE ISSUE ON MERIT. 5 ITA NO. 3487/DEL/2014 8. IN RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH FEBRUARY, 2018 . SD/- SD/- (G. D. AGRAWAL) (SUCHITRA KAMBLE) PRESIDENT JUDICIAL MEMBER DATED: 28/02/2018 R. NAHEED * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE 1. DRAFT DICTATED ON 06/02/2018 PS 2. DRAFT PLACED BEFORE AUTHOR 06/02/2018 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER .2018 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 28.02.2018 PS/PS 6 ITA NO. 3487/DEL/2014 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK 2 8 .02.2018 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.