ACIT, New Delhi V. Sh. Gautam Bhalla, Gurgaon

ITA 3585/DEL/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 8968 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 05-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C S AGGARWAL
• Assessee Lawyers: SUNITA SINGH CIT DR ITA NOS
• Section: 143(3); 153A; 2(22)(e); 153; 68; 148; 132

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C, NEW DELHI , ' # $ , & ' BEFORE MS. SUSHMA CHOWLA, VP & SH. ANIL CHATURVEDI, AM [THROUGH VIDEO CONFERENCING] ( / ITA NOS. 1754 & 1755/DEL/2017 ) / ASSESSMENT YEARS: 2010-11 & 2011-12 GAUTAM BHALLA, PHB, LCG 5, LEBURNUM, SUSHANT LOK, GURGAON PAN-AGMPB8807G ... .......... /APPELLANT VS THE ACIT, CENTRAL CIRCLE-8, NEW DELHI . / RESPONDENT ( / ITA NOS. 3584 & 3585/DEL/2017 ) / ASSESSMENT YEARS: 2010-11 & 2011-12 THE ACIT, CENTRAL CIRCLE-8, NEW DELHI .......... ... /APPELLANT VS GAUTAM BHALLA, PHB, LCG 5, LEBURNUM, SUSHANT LOK, GURGAON PAN-AGMPB8807G . / RESPONDENT / APPELLANT BY: SH. C.S.AGGARWAL, SR.ADV. & SH. RAVI PRATAP MALL, ADV. / RESPONDENT BY: MS. SUNITA SINGH, CIT DR 2 ITA NOS. 1754, 1755, 3584 & 3585/DEL/2017 ) / DATE OF HEARING : 02.07.2020 / DATE OF PRONOUNCEMENT: 31.07.2020 / ORDER PER SUSHMA CHOWLA, VP THIS BUNCH OF CROSS-APPEALS ARE FILED AGAINST THE O RDER OF CIT(A)-24, NEW DELHI DATED 07.03.2017 RELATING TO ASSESSMENT YEARS 2010-11 & 2011-12 AGAINST THE ORDER PASSED UNDER SECTION 153A R.W.S 1 43(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT) ON SIMILAR ISSUES AR E HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER FOR THE SAK E OF CONVENIENCE. 2. FIRST WE ARE TAKING UP THE ASSESSEES APPEALS IN BOTH THE CASES. ITA NOS. 1754 & 1755/DEL/2017 ASSESSMENT YEARS: 2010-11 & 2011-12 3. THE LD.AR FOR THE ASSESSEE AT THE OUTSET POINTED OUT THAT THE CIT(A) WHILE DECIDING THE CAPTIONED APPEAL HAD DECIDED THE ISSU E ON MERITS IN FAVOUR OF THE ASSESSEE. HOWEVER, HE DIRECTED THE ASSESSING OFFIC ER TO INITIATE PROCEEDINGS U/S 148 OF THE ACT AGAINST THE ASSESSEE. THE SAID PROCEEDINGS WERE INITIATED AND MATTER TRAVELLED TO THE CIT(A) AND THEREAFTER, TO THE TRIBUNAL. THE TRIBUNAL HELD THAT NO RE-ASSESSMENT PROCEEDINGS CAN BE INITI ATED AGAINST THE ASSESSEE, CONSEQUENT TO THE DIRECTIONS OF THE CIT(A). THE CA SE OF THE LD.AR FOR THE ASSESSEE IS THAT THE ISSUE BECOMES ACADEMIC IN NATU RE IN THE PRESENT CAPTIONED APPEALS. ACCORDINGLY, BOTH APPEALS OF THE ASSESSEE ARE DISMISSED BEING INFRUCTUOUS AS THE ISSUE HAS BECAME ACADEMIC IN NAT URE. 3 ITA NOS. 1754, 1755, 3584 & 3585/DEL/2017 ITA NOS. 3584 & 3585/DEL/2017 ASSESSMENT YEARS: 2010-11 & 2011-12 4. THE REVENUE HAS FILED APPEALS AGAINST THE ORDER OF THE CIT(A AND THE GROUNDS OF APPEAL RAISED IN ITA NOS. 3584 & 3585/DE L/2017 RELATING TO ASSESSMENT YEARS 2010-11 & 2011-12 RESPECTIVELY REA D AS UNDER:- ITA NO. 3584/DEL/2017 ASSESSMENT YEAR: 2010-11 1. THE ORDER OF LD.CIT(A) IS NOT CORRECT IN LAW AN D ON FACTS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN DELETING THE ADDITION U/S68 OF THE ACT AMOUNTING TO RS.4,95,00,000/-. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN RELYING ON THE ORDER OF HONBLE DELHI HIGH COURT IN CASE OF KABUL CHAWLA AS SEC. 153A DOES NOT RESTRICT THE ASSESSMENT TO SE IZED DOCUMENTS. ITA NO. 3585/DEL/2017 ASSESSMENT YEAR: 2011-12 1. THE ORDER OF LD.CIT(A IS NOT CORRECT IN LAW AND ON FACTS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN DELETING THE ADDITION U/S 68 OF THE ACT AMOUNTING T O RS.4,62,94,000/-. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN RELYING ON THE ORDER OF HONBLE DELHI HIGH COURT IN CASE OF KABUL CHAWLA AS SEC.153A DOES NOT RESTRICT THE ASSESSMENT TO SEI ZED DOCUMENTS. 5. BOTH THESE APPEALS FILED BY REVENUE ON SIMILAR I SSUE WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORD ER FOR THE SAKE OF CONVENIENCE. 6. BRIEFLY IN THE FACTS OF THE CASE SEARCH U/S 132 OF THE ACT WAS CARRIED OUT AT THE PREMISES OF THE ASSESSEE ON 16.01.2013. THE REAFTER, NOTICE U/S 153A OF THE ACT WAS ISSUED TO THE ASSESSEE. THE YEAR UNDER APPEAL BEFORE US ARE ASSESSMENT YEARS 2010-11 & 2011-12. ADDITIONS WERE MADE IN THE HANDS OF 4 ITA NOS. 1754, 1755, 3584 & 3585/DEL/2017 THE ASSESSEE U/S 68 OF THE ACT BY THE ASSESSING OFF ICER AMOUNTING TO RS.4,95,00,000/- AND RS.4,62,94,000/- IN ASSESSMENT YEARS 2010-11 & 2011- 12 RESPECTIVELY. 7. THE CASE OF THE ASSESSEE BEFORE CIT(A) WAS THAT SINCE NO INCRIMINATING MATERIAL HAD BEEN FOUND JUSTIFYING THE AFORESAID AD DITIONS AND ALSO BECAUSE THE ENTRIES IN RESPECT OF THE PARTIES ARE AVAILABLE IN THE BOOKS OF ACCOUNTS, THERE IS NO MERIT IN INVOKING THE PROVISIONS OF SEC TION 153A OF THE ACT AGAINST THE ASSESSEE. RELIANCE IN THIS REGARD WAS PLACED O N THE DECISION OF HONBLE DELHI HIGH COURT IN KABUL CHAWLA 380 ITR 573 (DEL.) . APPLYING THE PROPOSITION LAID DOWN BY THE HONBLE DELHI HIGH COURT IN KABUL CHAWLA (SUPRA), THE CIT(A) HELD THAT SINCE NO INCRIMINATING MATERIAL WAS FOUND DURING THE SEARCH, THERE IS NO MERIT IN THE AFORESAID ADDITION MADE IN THE HAND S OF THE ASSESSEE AS NO INCRIMINATING MATERIAL WAS FOUND IN RELATION TO THE SAME. THE REVENUE IS IN APPEAL AGAINST THE AFORESAID FINDINGS OF THE CIT(A) . 8. THE ISSUE WHICH IS RAISED IN THE PRESENT APPEAL IS AGAINST THE DELETION OF ADDITION MADE U/S 68 OF THE ACT. THE LD. DR FOR TH E REVENUE PLACED RELIANCE ON THE ORDER OF THE ASSESSING OFFICER AND POINTED O UT THAT THERE IS NO MERIT IN THE OBSERVATIONS OF THE CIT(A). 9. THE LD.AR FOR THE ASSESSEE STRESSED THAT THE LIM ITED ISSUE WHICH IS RAISED BY THE REVENUE AUTHORITIES BEFORE THE TRIBUNAL IS ONLY WHETHER IN THE ABSENCE OF ANY INCRIMINATING MATERIAL, CAN ANY ADDITION BE MADE IN THE HANDS OF THE ASSESSEE. HE STRESSED THAT THE TRIBUNAL IS CONSTRA INED TO ONLY DECIDE THE ISSUE WHICH IS RAISED BEFORE IT AND NOT GO INTO ANY OTHER ASPECT OF THE SAID ISSUE. 5 ITA NOS. 1754, 1755, 3584 & 3585/DEL/2017 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE WHICH IS RAISED BY THE REVENUE BY GROUND NO.2 IS A GAINST THE DELETION OF ADDITION MADE U/S 68 OF THE ACT. THE GROUND OF APP EAL NO.2 RAISED BY THE REVENUE COVERS ALL THE ASPECTS OF THE ISSUE RAISED BEFORE THE TRIBUNAL. IN GROUND NO.3, SECOND ASPECT OF ISSUE IS RAISED. IN T HE FACTS OF THE CASE, SEARCH U/S 132 OF THE ACT WAS CARRIED OUT AT THE PREMISES OF ASSESSEE ON 16.01.2013. THEREAFTER, PROCEEDINGS U/S 153A OF THE ACT WERE IN ITIATED; IN RESPONSE TO WHICH THE ASSESSEE FILED RETURN OF INCOME AND THE C ASE OF THE ASSESSEE WAS TAKEN UP FOR SCRUTINY. THE ASSESSING OFFICER IN TH E ASSESSMENT ORDER PASSED U/S 153A R.W.S. 143(3) MADE THE ADDITION U/S 68 OF THE ACT. 11. THE HONBLE DELHI HIGH COURT (SUPRA) WHILE DECI DING THE FATE OF THE PROCEEDINGS U/S 153A OF THE ACT HAD ELABORATED ON T HE VARIOUS ASPECTS OF THE ASSESSMENT PROCEEDINGS WHICH CAN BE TAKEN U/S 153A OF THE ACT. THE ISSUE RAISED BEFORE HONBLE DELHI HIGH COURT (SUPRA) WAS AS UNDER:- WHETHER THE ADDITIONS MADE TO THE INCOME OF THE RE SPONDENT ASSESSEE FOR THE SAID AYS UNDER SECTION 2(22)(E) OF THE INCOME T AX ACT, 1961 WERE NOT SUSTAINABLE BECAUSE NO INCRIMINATING MATERIAL CONCE RNING SUCH ADDITIONS WERE FOUND DURING THE COURSE OF SEARCH AND FURTHER NO ASSESSMENTS FOR SUCH YEARS WERE PENDING ON THE DATE OF SEARCH? 12. SO THE SPIRIT OF THE DECISION OF HONBLE DELHI HIGH COURT (SUPRA) IS TO CONSIDER THE STAGE OF ASSESSMENT STARTING FROM THE YEAR OF SEARCH AND SIX YEARS BEFORE IT. THE HONBLE HIGH COURT VERY CATEGORICAL LY OBSERVED VIDE PARA 37 AS UNDER:- 6 ITA NOS. 1754, 1755, 3584 & 3585/DEL/2017 37. ON A CONSPECTUS OF SECTION 153A(I) 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 UN DER: I. ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF T HE ACT, NOTICE UNDER SECTION 153 A(1) WILL HAVE TO BE MANDATORILY ISSUED 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 DA TE OF 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 RESPECT 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 ORD ERS FOR EACH OF THE SIX YEARS. IN OTHER WORDS THERE WILL BE ONLY ONE ASSESS MENT ORDER IN RESPECT OF EACH OF THE SIX AYS 'IN WHICH BOTH THE DISCLOSED AN D THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX'. IV. ALTHOUGH SECTION 153 A DOES NOT SAY THAT ADDITI ONS 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 AO WHICH CAN BE RELATED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSESSMENT 'CAN BE ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOUSLY AN ASSESSMENT HAS TO BE MADE UN DER THIS SECTION ONLY ON THE BASIS OF SEIZED MATERIAL.' I V. IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE C OMPLETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REAS SESSMENT CAN BE MADE, THE WORD 'ASSESS' IN SECTION 153 A IS. RELATA BLE TO ABATED PROCEEDINGS (I.E. THOSE PENDING ON THE DATE OF SEAR CH) AND THE WORD 'REASSESS' TO COMPLETED ASSESSMENT PROCEEDINGS. VI. INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, THE JURISDICTION 0 MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UND ER SECTION 153A MERGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY FOR EACH A Y ON THE BASIS OF THE FINDINGS OF THE SEARCH AM~ AN Y OTHER MATERIAL 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 DISC OVERED IN THE COURSE OF SEARCH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCL OSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. 7 ITA NOS. 1754, 1755, 3584 & 3585/DEL/2017 13. IN SUCH A SCENARIO, WE HAVE TO SEE THE DISCOVER Y OF INCRIMINATING MATERIAL VIS-A-VIS TWO STAGES OF ASSESSMENT I.E. AB ATED AND NON-ABATED ASSESSMENT. IT IS NOT THE DICTATE OF THE HONBLE H IGH COURT THAT IN THE ABSENCE OF ANY INCRIMINATING MATERIAL, IN ANY OF THE YEARS, NO ADDITIONS CAN BE MADE. THE HONBLE HIGH COURT IS VERY CLEAR IN ITS FINDING S. SO, TO APPLY THE PRINCIPLE LAID DOWN BY THE HONBLE HIGH COURT (SUPRA), IT IS THE FIRST STEP TO FIND WHETHER THE PROCEEDINGS HAD ABATED OR NON-ABATED AND ALSO T O DETERMINE ANY INCRIMINATING MATERIAL WAS FOUND OR NOT. 14. THE LD.AR BEFORE US HAS POINTED OUT THAT NO INC RIMINATING MATERIAL WAS FOUND AND ALSO THAT THE PROCEEDINGS ARE NON-ABATED. IN THESE FACTS AND CIRCUMSTANCES, FOLLOWING THE DICTATE OF HONBLE DEL HI HIGH COURT IN KABUL CHAWLA (SUPRA), WE HOLD THAT NO ADDITION U/S 68 OF THE ACT IS WARRANTED. 15. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE ALLOWED AND APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 1 ST JULY, 2020. SD/- SD/- (ANIL CHATURVEDI) (SUSHMA CHOWLA) & ' / ACCOUNTANT MEMBER / VICE PRESIDENT / ) DATED : 31 ST JULY, 2020 * AMIT KUMAR * 8 ITA NOS. 1754, 1755, 3584 & 3585/DEL/2017 *)+),'#-.)/.#0 COPY OF THE ORDER IS FORWARDED TO : 1. 12) / THE APPELLANT 2. ,312) / THE RESPONDENT 3. ) 4# 5 )6 / THE CIT(A) 4. 7) ) 4#) / THE PR. CIT 5. 6. ) .89),'#' ): )) : ) / DR, ITAT, DELHI 9;<)=))0 GUARD FILE. ) * / BY ORDER , 3.#),'# // TRUE COPY // > ?@'A , )) ): ) ASSISTANT REGISTRAR, ITAT, DELHI