ACIT, New Delhi V. Sh Mahagun Realtors Pvt. Ltd., Delhi

ITA 3664/DEL/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8243 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-04-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 15-02-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 12-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Search and seizure; Procedural lapse
• Section: 143(3); 50C; 133A; 153A; 14A; 37; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH:E NEW DELHI BEFORE SHRI J.S. REDDY, ACCOUNTANT MEMBER & SMT. BEENA A PILLAI, JUDICIAL MEMBER I.T.A .NO. 3664/DEL/2012 (ASSESSMENT YEAR-2006-07) CROSS OBJECTION NO. 300/DEL/2012 (IN ITA NO. 3664/DEL/2012) (ASSESSMENT YEAR-2006-07) I.T.A .NO. 3654/DEL/2012 (ASSESSMENT YEAR-2004-05) ACIT CENT. CIRCLE 3, 3 RD FLOOR, JHANDEWALAN EXTN., NEW DELHI. VS MAHAGUN REALTORS PVT. LTD. (REPRESENTED BY MAHAGUN INDIA P. LTD.) B-66, VIVEK VIHAR, DELHI. AAECM1286B MAHAGUN REALTORS PVT. LTD. (REPRESENTED BY MAHAGUN INDIA P. LTD.) B-66, VIVEK VIHAR, DELHI. AAECM1286B VS ACIT CENT. CIRCLE 3, 3 RD FLOOR, JHANDEWALAN EXTN., NEW DELHI. ACIT CENT. CIRCLE 3, 3 RD FLOOR, JHANDEWALAN EXTN., NEW DELHI. VS MAHAGUN DEVELOPERS LTD. (REPRESENTED BY MAHAGUN INDIA P. LTD.) B-66, VIVEK VIHAR, DELHI. AADCM9580H 2 CROSS OBJECTION NO. 296/DEL/2012 (IN ITA NO. 3654/DEL/2012) (ASSESSMENT YEAR-2004-05) I.T.A .NO. 3655/DEL/2012 (ASSESSMENT YEAR-2005-06) CROSS OBJECTION NO. 297/DEL/2012 (IN ITA NO. 3655/DEL/2012) (ASSESSMENT YEAR-2005-06) I.T.A .NO. 3656/DEL/2012 (ASSESSMENT YEAR-2006-07) CROSS OBJECTION NO. 298/DEL/2012 (IN ITA NO. 3656/DEL/2012) (ASSESSMENT YEAR-2006-07) MAHAGUN DEVELOPERS LTD. (REPRESENTED BY MAHAGUN INDIA P. LTD.) B-66, VIVEK VIHAR, DELHI. AADCM9580H VS ACIT CENT. CIRCLE 3, 3 RD FLOOR, JHANDEWALAN EXTN., NEW DELHI. ACIT CENT. CIRCLE 3, 3 RD FLOOR, JHANDEWALAN EXTN., NEW DELHI. VS MAHAGUN DEVELOPERS LTD. (REPRESENTED BY MAHAGUN INDIA P. LTD.) B-66, VIVEK VIHAR, DELHI. AADCM9580H MAHAGUN DEVELOPERS LTD. (REPRESENTED BY MAHAGUN INDIA P. LTD.) B-66, VIVEK VIHAR, DELHI. AADCM9580H VS ACIT CENT. CIRCLE 3, 3 RD FLOOR, JHANDEWALAN EXTN., NEW DELHI. ACIT CENT. CIRCLE 3, 3 RD FLOOR, JHANDEWALAN EXTN., NEW DELHI. VS MAHAGUN DEVELOPERS LTD. (REPRESENTED BY MAHAGUN INDIA P. LTD.) B-66, VIVEK VIHAR, DELHI. AADCM9580H 3 ASSESSEE BY : DR. RAKESH GUPTA, ADV. SHRI SOMIL AGARWAL, ADV. DEPARTMENT BY : NONE ORDER PER BEENA A PILLAI, JUDICIAL MEMBER : MAHAGUN REALTORS LTD. : THE PRESENT APPEAL FILED BY THE DEPARTMENT ALONG WI TH CROSS OBJECTION FILED BY THE ASSESSEE, ARISES OUT OF CIT(A)-II, DEL HI VIDE ORDER DATED 30/04/2012 FOR THE A.Y. 2006-07 ON THE FOLLOWING GR OUNDS OF APPEAL: GROUNDS OF DEPARTMENTAL APPEAL 1. THAT THE CIT(APPEALS) ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS. 29,35,260/- MADE U/ S 50C/69C OF THE INCOME TAX ACT, 1961 IN RESPECT OF INVESTMENT IN PURCHASE OF PROPERTY AT B-41, CHANDER NAGAR, GHAZIABAD WITHOUT APPRECIATING THE FACT THAT THE RE AL INVESTMENT EXCEEDS THE INVESTMENT SHOWN IN THE ASSE SSEES BOOKS OF ACCOUNTS. 2. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION O F RS. 6,05,71,018/- MADE ON ACCOUNT OF APPORTIONMENT OF SUPPRESSED SALES/RECEIPTS AS WORKED OUT ON THE BASI S OF SEIZED MATERIAL AND THE STATEMENT OF THE DIRECTOR O F THE COMPANY RECORDED U/S 132(4) OF THE INCOME TAX ACT, 1 961 AND AS WORKED BY THE SPECIAL AUDITORS. 3. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION O F RS. MAHAGUN DEVELOPERS LTD. (REPRESENTED BY MAHAGUN INDIA P. LTD.) B-66, VIVEK VIHAR, DELHI. AADCM9580H VS ACIT CENT. CIRCLE 3, 3 RD FLOOR, JHANDEWALAN EXTN., NEW DELHI. DATE OF HEARING 16.02.2016 DATE OF PRONOUNCEMENT 19.0-4.2016 4 4,64,576/- MADE U/S 14A OF THE INCOME TAX ACT, 1961 R EAD WITH RULE 8D OF THE INCOME TAX RULES, 1962. 4. (A) THE ORDER OF THE CIT(A) IS ERRONEOUS AND NOT TENABLE IN LAW AND ON FACTS; (B) THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AM END ANY/ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING T HE COURSE OF THE HEARING OF THE APPEAL. GROUNDS OF CROSS OBJECTION 1. THE LD. CIT(A) IS ERRED UNDER THE LAW WHILE HOLDIN G THAT ASSESSING OFFICER HAS A VALID JURISDICTION U/S 153A O F THE ACT; 2. THE LD. CIT(A) IS ERRED UNDER THE LAW WHILE HOLDING THAT THE SPECIAL AUDITOR APPOINTED U/S 142(2A) OF THE ACT HAS IMPLIED AUTHORITY TO SEEK EXTENSION OF TIME FOR COMPLETING THE AUDIT AND CONSEQUENTIAL FURNISHING OF REPORT; 3. THAT THE LD. CIT(A) IS ERRED UNDER THE LAW WHILE HO LDING THAT THE ORDER FRAMED BY THE ASSESSING OFFICER U/S 153A IS NOT BARRED BY LIMITATION INSPITE OF THE SPECIAL AUDITOR REPORT NOT BEING RECEIVED ON TIME; 4. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES O F THE CASE LD. CIT(A) HAS ERRED UNDER LAW WHILE CONFIRMIN G THE DISALLOWANCE OF RS. 77,000/- & RS. 54,168/- AS MADE B Y THE ASSESSING OFFICER U/S 40(A)(IA) ON ACCOUNT OF A LLEGED NON DEDUCTION OF TDS ON VARIOUS EXPENDITURE IN VIEW OF THE FACTS THAT SUCH EXPENDITURE WERE PAID BY THE APPELLANT DU RING THE YEAR AND THESE WERE NOT PAYABLE AS ON 31 ST MARCH, OF RELEVANT FINANCIAL YEAR AS REQUIRED UNDER THE LAW B EFORE MAKING DISALLOWANCE U/S 40(A)(IA) OF THE ACT; 5. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES O F THE CASE LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION OF RS. 29,35,260/- MADE BY THE ASSESSING OFFICER U/S 50C/69 C OF THE INCOME TAX ACT, 1961 ON ACCOUNT FOLLOWING ACCOUN TS: A) SECTION 50C IS NOT APPLICABLE TO THE APPELLANT BEIN G PURCHASER OF THE PROPERTIES; B) THERE IS NOTHING ON THE RECORDS WHICH MAY SUGGEST A NY INVESTMENT/EXPENDITURE OUTSIDE THE BOOKS AS ALLEGED . 6. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES O F THE CASE LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION OF RS. 6,05,71,018/- MADE BY THE ASSESSING OFFICER. 7. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES O F THE CASE LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION OF RS. 5 4,64,576/- AS MADE BY THE ASSESSING OFFICER U/S 14A R .W.R. 8D OF THE INCOME TAX ACT, 1961 IN VIEW OF THE FACT T HAT RULE 8D WAS NOT APPLICABLE FOR THE YEAR UNDER REVIEW. 8. THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER THE ACTION OF LD. ASSESSING OFFICER IN MAKING ADDITIONS/DISALLOWAN CES IN THE IMPUGNED ORDER AND IN FRAMING THE IMPUGNED ASSESSMENT ORDER IS BAD IN LAW AND AGAINST THE FACT S AND CIRCUMSTANCES OF THE CASE. 9. THAT THE CROSS OBJECTOR CRAVES THE LEAVE TO ADD, AM END, MODIFY, DELETE ANY OF THE GROUNDS OF CROSS OBJECTIO N BEFORE OR AT THE TIME OF HEARING. 2. BRIEF FACTS OF THE CASE ARE AS UNDER: 2.1 THE ASSESSMENT FOR THE YEAR UNDER CONSIDERATION HAS BEEN COMPLETED U/S 153A READ WITH 143(3) OF THE INCOME T AX ACT. THE DEPARTMENT IS IN APPEAL BEFORE US AGAINST THE CERTA IN ADDITIONS BEING DELETED BY THE LD. CIT(A). THE CROSS OBJECTION HOW EVER, RAISES A VERY FUNDAMENTAL ASPECT ABOUT ASSUMPTION OF JURISDICTION BY THE LD. ASSESSING OFFICER. AT THIS JUNCTURE, WE CONSIDER I T APPROPRIATE TO TAKE UP THE CROSS OBJECTION FIRST. 2.2. THE LD. AR SUBMITTED THAT THE ASSESSING OFFICE R HAS ERRED IN LAW IN FRAMING AN ILLEGAL ORDER, WHICH IS ALSO BARRED BY L IMITATION. HE SUBMITTED THAT NO CORRESPONDING SEIZED MATERIAL WAS FOUND IN THE COURSE OF THE SEARCH FOR THE ADDITIONS MADE DURING THE ASSESSMENT PROCEEDINGS. HE ALSO SUBMITTED THAT THE RETURNS FO R THE YEAR UNDER CONSIDERATION WERE FILED PRIOR TO THE DATE OF SEARC H IN THE NORMAL COURSE SUO MOTO, DISCLOSING ALL THE PARTICULARS RELATABLE TO THE SUB JECT ADDITIONS. THE RETURNS OF INCOME WERE PROCESSED U/ S 143(1) OF THE ACT. HE FURTHER SUBMITTED THAT HAVING ACCEPTED THE RETUR NS FILED BY THE ASSESSEE U/S 143(1), AND NO ASSESSMENT PROCEEDING W AS PENDING AS ON THE DATE OF INITIATION OF SEARCH, AND HENCE AS NO N OTICE U/S 143(2) WAS ISSUED WITHIN THE PRESCRIBED TIME UNDER THE ACT NO ASSESSMENT PROCEEDING FOR ANY OF THE ASSTT. YEARS ABATED. HE S UBMITTED THAT THE NOTICE ISSUED U/S 153A IS VOID AB INITIO AS IT SUFFERS FROM LEGAL IRREGULARITIES . THE LD. AR SUBMITS THAT THE ISSUE NOW STANDS SQUARE LY COVERED BY THE DECISION HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA REPORTED IN 380 ITR 573. 3. ON THE CONTRARY THE LD. DR SUPPORTS THE ORDER O F THE AUTHORITIES BELOW. 3.1 WE HAVE PERUSED THE RECORDS BEFORE US THE ORDER S PASSED BY THE AUTHORITIES BELOW. IT CANNOT BE DISPUTED THAT THE ASSESSMENT U/S 153A WAS COMPLETED BY THE LD. ASSESSING OFFICER ON THE BASIS OF THE 6 MATERIAL AND INFORMATION FURNISHED BY THE ASSESSEE IN THE ORIGINAL RETURNS FILED BY THE ASSESSEE. THE LD. DR COULD NO T CONTROVERT THE SUBMISSIONS MADE BY THE LD. AR THAT THERE WAS NO IN CRIMINATING MATERIAL THAT WAS FOUND OR SEIZED DURING THE SEARCH AND SEIZURE PROCEEDINGS. HENCE THE ADDITIONS MADE IN THE ASSTT . ORDER BY THE ASSESSING OFFICER IN ADMITTEDLY NOT BASED ON ANY MA TERIAL FOUND OR SEIZED DURING THE COURSE OF SEARCH. WE ARE, THEREFORE, OF THE OPINION THAT THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE DECISION OF CIT VS. KABUL C HAWLA (SUPRA). FOR THE REASONS SET OUT ABOVE, WE UPHOLD THE LEGAL ISSU E RAISED BY THE ASSESSEE IN THE CROSS OBJECTION AND HOLD THE IMPUGN ED ASSESSMENT AS NULL AND VOID. WE, THEREFORE, WITHOUT GOING INTO T HE MERITS OF THE REVENUES APPEAL THE SAME STANDS DISMISSED. 4. IN THE RESULT, THE CROSS OBJECTION IS ALLOWED A ND THE APPEAL FILED BY THE REVENUE IS DISMISSED. MAHAGUN DEVELOPERS P. LTD ITA NOS. 3654, 3655 & 3656, & CROSS OBJECTIONS BEING 296 TO 298 FILED BY THE ASSE SSEE FOR A.YS. 2004-05 TO 2006-07. 5. THESE APPEALS AND CROSS OBJECTIONS FILED BY THE ASSESSEE ARISES FROM THE ORDER DATED 30/04/2012 PASSED BY THE CIT(A )S-II IN ALL THE ASSESSMENT YEARS, ON THE FOLLOWING GROUNDS OF APPEA L: GROUNDS OF ITA NO. 3654/D/2012 1. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRE D IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION O F RS. 55,235/- MADE ON ACCOUNT OF DISALLOWANCE OF BUSINES S EXPENDITURE AS NO BUSINESS ACTIVITY WAS CARRIED OUT DURING THE YEAR AND EXPENSES CLAIMED WERE NOT COVERED BY T HE PROVISIONS OF SECTION 37 OF THE INCOME TAX ACT, 1961 ; 2. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION O F RS. 43,00,000/- MADE BY THE ASSESSING OFFICER U/S 2(22)( E) OF THE INCOME TAX ACT, 1961; 3. (A) THE ORDER OF THE CIT(A) IS ERRONEOUS AND NOT T ENABLE IN LAW AND ON FACTS. (B) THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AM END ANY/ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURS E OF THE HEARING OF THE APPEAL. 7 GROUNDS OF CO NO. 296/D/2012 1. THE LD. CIT(A) IS ERRED UNDER THE LAW WHILE HOLDIN G THAT ASSESSING OFFICER HAS A VALID JURISDICTION U/S 153A O F THE ACT; 2. THE LD. CIT(A) IS ERRED UNDER THE LAW WHILE HOLDING THAT THE SPECIAL AUDITOR APPOINTED U/S 142(2A) OF THE ACT HAS IMPLIED AUTHORITY TO SEEK EXTENSION OF TIME FOR COMPLETING THE AUDIT AND CONSEQUENTIAL FURNISHING OF REPORT; 3. THAT THE LD. CIT(A) IS ERRED UNDER THE LAW WHILE HO LDING THAT THE ORDER FRAMED BY THE ASSESSING OFFICER U/S 153A IS NOT BARRED BY LIMITATION INSPITE OF THE SPECIAL AUDITOR REPORT NOT BEING RECEIVED ON TIME; 4. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES O F THE CASE LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION OF RS. 55,235/- MADE ON ACCOUNT OF DISALLOWANCE OF BUSINESS EXPENDI TURE AS THE APPELLANT HAS STARTED ITS BUSINESS ACTIVITY DUR ING THE YEAR. THE EXPENSES INCURRED ARE FULLY ALLOWABLE U/ S 37 OF THE ACT; 5. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES O F THE CASE LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION OF RS. 43 LACS AS MADE BY THE ASSESSING OFFICER U/S 2(22)(E) OF THE I NCOME TAX ACT IN VIEW OF THE FOLLOWING FACTS: A) THE APPELLANT IS NOT SHAREHOLDER OF THE LENDING COMPANY; B) ADMITTEDLY, SUCH ADVANCES WERE MADE IN THE ORDINARY COURSE OF BUSINESS. 6. THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER THE ACTION OF LD. ASSESSING OFFICER IN MAKING ADDITIONS/DISALLOWAN CES IN THE IMPUGNED ORDER AND IN FRAMING THE IMPUGNED ASSESSMENT ORDER IS BAD IN LAW AND AGAINST THE FACT S AND CIRCUMSTANCES OF THE CASE; 7. THAT THE CROSS OBEJECTOR CRAVES THE LEAVE TO ADD, A MEND, MODIFY, DELETE ANY OF THE GROUNDS OF CROSS OBJECTIO N BEFORE OR AT THE TIME OF HEARING. GROUNDS OF ITA NO. 3655/D/2012 1. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRE D IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION O F RS. 2,34,61,235/- MADE ON ACCOUNT OF APPORTIONMENT OF SUPPRESSED SALES/RECEIPTS AS WORKED OUT ON THE BASI S OF SEIZED MATERIAL AND THE STATEMENT OF THE DIRECTOR O F THE 8 COMPANY RECORDED U/S 132(4) OF THE INCOME TAX ACT, 1 961 AND AS WORKED BY THE SPECIAL AUDITORS; 2. (A) THE ORDER OF THE CIT(A) IS ERRONEOUS AND NOT T ENABLE IN LAW AND ON FACTS; (B) THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AM END ANY/ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURS E OF THE HEARING OF THE APPEAL. GROUNDS OF CO NO. 297/DEL/2012 1. THE LD. CIT(A) IS ERRED UNDER THE LAW WHILE HOLDIN G THAT ASSESSING OFFICER HAS A VALID JURISDICTION U/S 153A O F THE ACT; 2. THE LD. CIT(A) IS ERRED UNDER THE LAW WHILE HOLDING THAT THE SPECIAL AUDITOR APPOINTED U/S 142(2A) OF THE ACT HA S IMPLIED AUTHORITY TO SEEK EXTENSION OF TIME FOR COMPLETING THE AUDIT AND CONSEQUENTIAL FURNISHING OF REPORT; 3. THAT THE LD. CIT(A) IS ERRED UNDER THE LAW WHILE HO LDING THAT THE ORDER FRAMED BY THE ASSESSING OFFICER U/S 153A IS NOT BARRED BY LIMITATION INSPITE OF THE SPECIAL AUDITOR REPORT NOT BEING RECEIVED ON TIME; 4. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES O F THE CASE LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION OF RS. 2,34,61,235/- MADE BY THE ASSESSING OFFICER; 5. THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER THE ACTION OF LD. ASSESSING OFFICER IN MAKING ADDITIONS/DISALLOWAN CES IN THE IMPUGNED ORDER AND IN FRAMING THE IMPUGNED ASSE SSMENT ORDER IS BAD IN LAW AND AGAINST THE FACTS AND CIRCU MSTANCES OF THE CASE; 6. THAT THE CROSS OBJECTOR CRAVES THE LEAVE TO ADD, AM END, MODIFY, DELETE ANY OF THE GROUNDS OF CROSS OBJECTIO N BEFORE OR AT THE TIME OF HEARING. GROUNDS OF ITA NO. 3656/D/2012 1. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRE D IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITIONS OF RS. 30,17,722/- AND RS. 15,14,087/- MADE U/S 50C/69C OF THE INCOME TAX ACT, 1961 ON ACCOUNT OF UNACCOUNTED INVES TMENT MADE IN PURCHASE OF PROPERTIES AT E-5 & E-6, CHANDE R NAGAR, GHAZIABAD RESPECTIVELY; 2. THAT THE CIT(A) ERRED IN LAW AND ON FACTS OF THE CA SE IN DELETING THE ADDITION OF RS. 6,41,96,022/- MADE ON ACCOUNT OF APPORTIONMENT OF SUPPRESSED SALES/RECEIPTS AS WORKE D OUT ON THE BASIS OF SEIZED MATERIAL AND THE STATEMENT OF T HE DIRECTOR OF THE COMPANY RECORDED U/S 132(4) OF THE INCOME TA X ACT, 1961 AND AS WORKED BY THE SPECIAL AUDITORS; 9 3. (A) THE ORDER OF THE CIT(A) IS ERRONEOUS AND NOT T ENABLE IN LAW AND ON FACTS; (B) THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AM END ANY/ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURS E OF THE HEARING OF THE APPEAL. GROUNDS OF CO NO. 298/D/2012 1. THE LD. CIT(A) IS ERRED UNDER THE LAW WHILE HOLDIN G THAT ASSESSING OFFICER HAS A VALID JURISDICTION U/S 153A O F THE ACT; 2. THE LD. CIT(A) IS ERRED UNDER THE LAW WHILE HOLDING THAT THE SPECIAL AUDITOR APPOINTED U/S 142(2A) OF THE ACT HA S IMPLIED AUTHORITY TO SEEK EXTENSION OF TIME FOR COMPLETING THE AUDIT AND CONSEQUENTIAL FURNISHING OF REPORT; 3. THAT THE LD. CIT(A) IS ERRED UNDER THE LAW WHILE HO LDING THAT THE ORDER FRAMED BY THE ASSESSING OFFICER U/S 153A IS NOT BARRED BY LIMITATION INSPITE OF THE SPECIAL AUDITOR REPORT NOT BEING RECEIVED ON TIME; 4. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES O F THE CASE LD. CIT(A) HAS ERRED UNDER LAW WHILE CONFIRMING THE DISALLOWANCE OF RS. 55,596/- AS MADE BY THE ASSESSING OFFICER U/S 40(A)(IA) ON ACCOUNT OF ALLEGED NON DED UCTION OF TDS ON VARIOUS EXPENDITURE IN VIEW OF THE FACTS THA T SUCH EXPENDITURE WERE PAID BY THE APPELLANT DURING THE Y EAR AND THESE WERE NOT PAYABLE AS ON 31 ST MARCH, OF RELEVANT FINANCIAL YEAR AS REQUIRED UNDER THE LAW BEFORE MAKING DISALL OWANCE U/S 40(A)(IA) OF THE ACT; 5. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES O F THE CASE LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION OF RS. 30,17,722/- AND RS. 15,14,087/- MADE BY THE ASSESSING OFFICER U/S 50C/69C OF THE ACT ON FOLLOWING ACCOUNTS: A) SECTION 50C IS NOT APPLICABLE TO THE APPELLANT BEI NG PURCHASER OF THE PROPERTIES; B) THERE IS NOTHING ON THE RECORDS WHICH MAY SUGGEST ANY INVESTMENT/EXPENDITURE OUTSIDE THE BOOKS AS ALLEGED. 6. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES O F THE CASE LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION OF RS. 6,41,96,022/- MADE BY THE ASSESSING OFFICER; 7. THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER THE ACTION OF LD. ASSESSING OFFICER IN MAKING ADDITIONS/DISALLOWANCES IN THE IMPUGNED ORDER AND IN FRAMING THE IMPUGNED ASSESSME NT ORDER IS BAD IN LAW AND AGAINST THE FACTS AND CIRCU MSTANCES OF THE CASE; 10 8. THAT THE CROSS OBJECTOR CRAVES THE LEAVE TO ADD, AM END, MODIFY, DELETE ANY OF THE GROUNDS OF CROSS OBJECTION BEFORE OR AT THE TIME OF HEARING. 6. IN THESE APPEALS FILED BY THE REVENUE AND THE C ROSS OBJECTIONSFILED BY THE ASSESSEE, THE FUNDAMENTAL ISSUE THAT ARISES, IS IN RESPECT OF THE JURISDICTION ASSUMED BY THE LD. ASSESSING OFFICER W HICH HAS BEEN CHALLENGED BY THE ASSESSEE IN THE CROSS OBJECTIONS. WE, THEREFORE, TAKE UP THE OBJECTION RAISED BY THE ASSESSEE IN CROSS OB JECTION. BRIEF FACTS OF THE CASE ARE AS UNDER: 7. A SEARCH AND SEIZURE OPERATION U/S.132 WAS CARR IED OUT IN THE CASE OF MAHAGUN GROUP. THE LD.AR SUBMITS THAT THE A SSESSMENT PROCEEDING IN THE PRESENT CASE WAS INITIATED BY ISS UING A NOTICE U/S.153A ON 02.03.2009 IN THE NAME OF MAHAGUN DEVEL OPERS PVT. LTD. THE LD. AR SUBMITTED THAT THE ASSESSMENT HAS BEEN C OMPLETED ON A NON-EXISTING PERSON AS M/S MAHAGUN DEVELOPERS P. LT D., THE ASSESSEE WAS AMALGAMATED WITH MAHAGUN INDIA PVT. LTD. VIDE O RDER DT. 01.06.2006, PASSED BY THE HONBLE DELHI HIGH COURT. THE LD. AR SUBMITTED THAT THE ERSTWHILE ASSESSEE, BEING M/S MA HAGUN DEVELOPERS PVT. LTD., DID NOT HAVE A LEGAL EXISTENCE AT THE PO INT OF TIME WHEN THE NOTICE WAS SERVED AND THE SURVEY U/S 133A OF THE AC T WAS CONDUCTED ON THE ASSESSEES PREMISES. THE LD. AR SUBMITTED T HAT THIS FACT WAS BROUGHT TO THE NOTICE OF THE SEARCH TEAM BY THE DIR ECTOR OF THE COMPANY WHILE RECORDING HIS STATEMENT U/S 133 OF TH E ACT. 8. ON THE CONTRARY THE LD. DR SUBMITTED THAT BECA USE THE LIABILITIES OF THE AMALGAMATING COMPANY ACCRUE TO T HE AMALGAMATED COMPANY THE ISSUANCE OF NOTICE AS WELL AS COMPLETIO N OF ASSESSMENT ON THE ASSESSEE IS JUSTIFIED. THE LD. DR SUBMITTED TH AT IT WAS MERELY A TECHNICAL IRREGULARITY WHICH GOT CURED THE MOMENT A SSESSEE PARTICIPATED IN THE ASSESSMENT PROCEEDINGS. THE LD . DR DREW ATTENTION OF THIS TRIBUNAL TO THE PROVISIONS OF SEC. 292BB. THE LD. DR ARGUED THAT THE ASSESSMENT WAS IN SUBSTANCE AND EFFECT, IN CONFORMITY WITH THE ACT, BECAUSE THE ASSESSING OFFICER HAD USED COR RECT NOMENCLATURE IN WRITING THE NAME OF THE ASSESSEE, ALONG WITH THE FACT THAT THE COMPANY HAD AMALGAMATED, AS WELL AS THE CORRECT ADD RESS OF THE AMALGAMATED COMPANY. CONSEQUENTLY, THEY CONTEND TH AT THE MERE OMISSION, IF ANY, ON THE PART OF THE ASSESSING OFFI CER TO MENTION THE NAME OF THE AMALGAMATED COMPANY, IN PLACE OF M/S MA HAGUN INDIA P. LTD., THEREFORE, IS A PROCEDURAL DEFECT. 11 8.2 THE ASSESSEE IN REBUTTAL RELIES UPON THE ORDER OF THE COORDINATE BENCHES OF THIS TRIBUNAL IN A GROUP COMP ANY CASE IN ITA NO. 4314/DEL/2011 ACIT VS. ADR HOME DCOR PVT. LTD. 9. WE, HAVE PERUSED THE ORDERS OF THE AUTHORITIES BELOW, THE ARGUMENTS ADVANCED AND THE JUDGMENTS RELIED UPON BY BOTH THE PARTIES. BEFORE US, A LEGAL GROUND HAS BEEN TAKEN BY LD. AR REGARDING THE VALIDITY OF THE ASSESSMENT AS THE NOTICE U/S 15 3A HAS BEEN ISSUED AND THE ASSESSMENT HAS BEEN COMPLETED ON A NON EXIS TING ENTITY. WE SHALL REFER TO THE LEGAL PROVISIONS THAT ARE APP LICABLE FOR FRAMING ASSESSMENT IN CASES OF ANY ARRANGEMENT ARRIVED BETW EEN COMPANIES. 9.1 SECTION 170(2) OF THE I.T. ACT, 1961, MAKES IT CLEAR THAT IN THE CASE OF AMALGAMATION, THE ASSESSMENT MUST BE MADE O N THE SUCCESSOR (I.E., THE AMALGAMATED COMPANY). SECTION 176 CONTA INS PROVISIONS PERTAINING TO A DISCONTINUATION OF BUSINESS, DOES N OT APPLY TO A CASE OF AMALGAMATION. THE LANGUAGE OF SEC. 159 EVIDENTLY O NLY APPLIES TO NATURAL PERSONS, AND CANNOT BE EXTENDED THROUGH A L EGAL FICTION, TO COMPANIES. A COMPANY, INCORPORATED UNDER THE INDIA N COMPANIES ACT IS A JURIDICAL PERSON. IT TAKES ITS BIRTH AND GETS LIFE WITH INCORPORATION. IT DIES WITH THE DISSOLUTION, AS PER THE PROVISIONS OF THE COMPANIES ACT. IT IS TRITE LAW THAT THE AMALGAMATING COMPANY CEASE S TO EXIST IN THE EYES OF LAW. HAVING REGARD TO THIS CONSEQUENCE PRO VIDED IN LAW, ASSESSMENT UPON A DISSOLVED COMPANY IS IMPERMISSIBL E AS THERE IS NO PROVISION IN INCOME TAX TO MAKE AN ASSESSMENT THERE UPON. 9.2 HONBLE JURISDICTIONAL HIGH COURT IN THE CASE O F CIT VS. DIMENSION APPARELS P. LTD., REPORTED IN 370 ITR 298 HAS HELD AS UNDER: SECTION 170(1) AND 170(2) OF THE ACT DOES NOT ASSIS T THE REVENUE IN THEIR CASE. THE REVENUE DOES NOT CONTEST THAT IN A CASE OF AMALGAMATION, THE PREDECESSOR (BEING A DISSOLVED COMPANY), CANNOT BE FOUND. CONSEQUENTL Y, SECTION 170(2) APPLIES. THIS PROVISION CLARIFIES T HAT WHERE THE PREDECESSOR CANNOT BE FOUND: THE ASSESSMENT OF THE INCOME OF THE PREVIOUS YEAR IN WHICH THE SUCCESSION TOOK PLACE UP TO THE DATE OF THE SUCCESSION AND OF THE PREVIOUS YEAR PRECEDING THAT YEAR SHALL BE MADE ON THE SUCCESSOR IN LIKE MANNER AND TO THE SAME EXTENT AS IT WOULD HAVE BEEN MADE ON THE PREDECESSOR. 12 (EMPHASIS SUPPLIED) 9.3 THE LD. DR HAS ARGUED THAT THE ASSESSMENT IS JU STIFIED BECAUSE THE LIABILITIES OF THE AMALGAMATING COMPANY ACCRUE TO THE AMALGAMATED (TRANSFEREE) COMPANY. WHILE THAT IS TR UE, THE QUESTION HERE IS, WHICH ENTITY THE ASSESSMENT MUST BE MADE O N. THE TEXT OF SECTION 170(2) MAKES IT CLEAR THAT THE ASSESSMENT M UST BE MADE ON THE SUCCESSOR (I.E., THE AMALGAMATED COMPANY). 9.4 THE HONBLE SUPREME COURT, IN SARASWATI INDUSTR IAL SYNDICATE LTD. VS. CIT [1990] 186 ITR 278 HELD THAT: .AFTER THE AMALGAMATION OF THE TWO COMPANIES THE TRANSFEROR COMPANY CEASED TO HAVE ANY IDENTITY AND THE AMALGAMATED COMPANY ACQUIRED A NEW STATUS AND IT WAS NOT POSSIBLE TO TREAT THE TWO COMPANIES AS PART NERS OR JOINTLY LIABLE IN RESPECT OF THEIR LIABILITIES A ND ASSETS. (EMPHASIS SUPPLIED) 9.5 THE QUESTION OF WHETHER AN ASSESSMENT UPON AN A MALGAMATED COMPANY IS A TECHNICAL MISTAKE, WITHIN THE MEANING OF SECTION 292B WAS RAISED AND ANSWERED BY THE DELHI HIGH COURT IN SPICE ENTERTAINMENT LTD. VS. COMMISSIONER OF SERVICE TAX IN ITA NO. 475 OF 2011, HELD AS UNDER: ..IT (BECOMES) INCUMBENT UPON THE INCOME TAX AUTHORITIES TO SUBSTITUTE THE SUCCESSOR IN PLACE OF THE SAID DEAD PERSON. SUCH A DEFECT CANNOT BE TREATED AS PROCEDURAL DEFECT..ONCE IT IS FOUND THAT ASSESSMEN T IS FRAMED IN THE NAME OF NON-EXISTING ENTITY IT DOES N OT REMAIN A PROCEDURAL IRREGULARITY OF THE NATURE WHIC H COULD BE CURED BY INVOKING THE PROVISIONS OF SECTIO N 292B OF THE ACT. (EMPHASIS SUPPLIED) 9.6 THE HONBLE JURISDICTIONAL HIGH COURT IN SPICE (SUPRA) HELD THAT WHILE SECTION 292B CAN CURE TECHNICAL DEFECTS, IT CANNOT CURE A JURISDICTIONAL DEFECT IN THE ASSESSMENT NOTICE. FURTHER HONBLE HIGH COURT EXPRESSLY CLASSIFIED THE FRAMING OF ASSESSME NT AGAINST A NON- EXISTING ENTITY/PERSON AS A JURISDICTIONAL DEFECT. THIS HAS BEEN A CONSISTENT POSITION. 10. IN RESPECT OF THE CONTENTION, RAISED BY THE LD. DR I.E., WITH RESPECT TO PARTICIPATION BY THE ASSESSEE, I.E., THE AMALGAMATING 13 COMPANY (WHICH CEASES TO EXIST), AGAIN SPICE (SUPRA ) IS CATEGORICAL. IT HAS BEEN RULED THAT SUCH PARTICIPATION BY THE AMALG AMATED COMPANY IN PROCEEDINGS DID NOT CURE THE DEFECT BECAUSE THE RE CAN BE NO ESTOPPELS IN LAW. 10.1 IT IS THUS CLEAR THAT ALL CONTENTIONS SOUGHT T O BE URGED BY THE LD. DR HAS BEEN RULED UPON, AGAINST IT, CONSISTENTL Y IN TWO DECISIONS BY THE JURISDICTIONAL HIGH COURT IN DIMENSION APPAR ELS P. LTD. (SUPRA) AND SPICE (SUPRA). 10.2 RESPECTFULLY FOLLOWING THE DECISIONS OF THE HO NBLE DELHI HIGH COURT, WE ALLOW THE LEGAL ISSUE RAISED BY THE ASSES SEE IN ITS CROSS OBJECTION WITHOUT GOING INTO MERITS OF THE CASE AND QUASH THE ASSESSMENT MADE UNDER 153A ON THE ASSESSEE AS ILLEG AL AND WITHOUT JURISDICTION. THE APPEALS FILED BY THE REVENUE THU S BECOME INFRUCTUOUS. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 19.04.2 016 SD./- SD./- (J.S. REDDY) (BEENA A PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMB ER DATED: *KAVITA ARORA COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI