DCIT, New Delhi V. M/s. Ultimate Flexipack Ltd., New Delhi

ITA 3726/DEL/2010

• Counselvise Citation: 372620114 RSA 2010
• Duration Of Justice: 5 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-11-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 26-10-2015
• Assessment Year: 2002-2003
• Appeal Filed On: 04-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JYOTHI KUMARI
• Assessee Lawyers: SURESH ANANTHARAMAN
• Section: 142(1); 153A; 133(6); 68; 132; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : H : NEW DELHI BEFORE SHRI J. SUDHAKAR REDDY, AM AND SHRI SUDHANSHU SRIVASTAVA, JM ITA NOS.3724 TO 3726/DEL/2010 ASSESSMENT YEARS : 2000-01 TO 2002-03 DCIT, CENTRAL CIRCLE-18, NEW DELHI. VS. ULTIMATE FLEXIPACK LTD., 110, 1 ST FLOOR, BHANOT CORNER, PAMPOSH ENCLAVE, GK-I, NEW DELHI. PAN: AAACA0279Q (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SURESH ANANTHARAMAN, CA DEPARTMENT BY : SMT. JYOTHI KUMARI, CIT, DR DATE OF HEARING : 26.10.2015 DATE OF PRONOUNCEMENT : 17.11.2015 ORDER PER J. SUDHAKAR REDDY, AM: ALL THESE APPEALS BY THE REVENUE ARE DIRECTED AGAI NST THE SEPARATE IDENTICAL ORDERS PASSED BY THE CIT(A)-III, NEW DELH I, DATED 07.05.2010 FOR THE ASSESSMENT YEARS 2000-01 TO 2002-03. ITA NOS.3724 TO 3726/DEL/2010 2 2. THE FACTS IN BRIEF ARE THAT A SEARCH U/S 132 OF THE IT ACT, 1961 WAS CONDUCTED IN THE FLEX GROUP OF CASES ON 23.02.2006 IN THE COURSE OF WHICH PREMISES OF THE ASSESSEE COMPANY WERE ALSO CO VERED. ACCORDINGLY, NOTICE U/S 153A OF THE ACT WAS ISSUED BY THE ASSESSING OFFICER ON 4.9.2006 CALLING UPON THE ASSESSEE TO FI LE RETURNS OF INCOME FOR THE IMMEDIATELY PRECEDING SIX ASSESSMENT YEARS INCLUDING THE ASSESSMENT YEAR UNDER CONSIDERATION. THEREAFTER, AS SESSMENT PROCEEDINGS, AS PROVIDED UNDER SECTIONS 142(1) AND 143(2) OF THE IT ACT, 1961, WERE TAKEN UP. IN THE COURSE OF ASSESSMENT PR OCEEDINGS, THE LD. ASSESSING OFFICER NOTICED THAT THE ASSESSEE COMPANY HAS CLAIMED ADVANCES OF RS. 10,42,786/- RECEIVED FROM ITS CUSTO MERS. ACCORDINGLY, NECESSARY ENQUIRIES IN THIS REGARD WERE MADE BY HIM AND BEING NOT SATISFIED WITH REGARD TO THE GENUINENESS OF THE AFO RESAID CLAIM OF ADVANCES, ADDITION OF IDENTICAL AMOUNT WAS MADE U/S 68 OF THE ACT AS UNDER:- 'FROM THE PERUSAL OF THE BALANCE SHEET OF THE YEAR UNDER CONSIDERATION, IT IS SEEN THAT THE ASSESSEE HAS REC EIVED RS. 10,42,786/- ON ACCOUNT OF ADVANCES FROM CUSTOMERS. THE ASSESSEE WAS ASKED VIDE ORDER SHEET ENTRY DATED 7.11.2007 TO FILE ITA NOS.3724 TO 3726/DEL/2010 3 CONFIRMATION FROM THE CUSTOMERS FROM WHOM ADVANCES HAVE BEEN RECEIVED DURING THE YEAR ALONG WITH THEIR LEDGER AC COUNT, DATE AND MODE OF PAYMENTS. FURTHER, NOTICES U/S 133(6) OF T HE IT ACT FOR INFORMATION WERE ISSUED TO PARTIES TO WHOM THE ASSE SSEE COMPANY HAS BEEN MAKING SALES. HOWEVER, NEITHER THE ASSESSE E HAS FURNISHED ANY CONFIRMATION ASKED FOR. THERE ARE ALS O NO DETAILS REGARDING THE PARTIES FROM WHOM ADVANCES HAVE BEEN RECEIVED. MOST OF THE SALE PARTIES ARE THUS FOUND TO BE NON-T RACEABLE. IT MAY BE PERTINENT TO MENTION THAT MAJORITY OF THE SALES MADE BY THE ASSESSEE IS IN CASH WHICH IS KNOWN AS 'COUNTER SALE '. THUS RS. 10,42,786/- IS ADDED BACK TO THE TOTAL INCOME OF TH E ASSESSEE U/S. 68 OF THE IT ACT AND TAXED UNDER THE HEAD 'INCOME FROM OTHER SOURCES'. 3. BEING AGGRIEVED BY THE AFORESAID ACTION OF THE A .O., THE ASSESSEE COMPANY CHALLENGED THE ADDITION MADE BY THE ASSESSI NG OFFICER BEFORE THE LEARNED CIT(A)-III, NEW DELHI. A PERUSAL OF THE IMPUGNED APPELLATE ORDER REVEALS THAT DURING THE APPELLATE PROCEEDINGS , THE APPELLANT COMPANY RAISED ADDITIONAL GROUND IN ORDER TO CHALLE NGE THE VALIDITY OF THE ASSESSMENT MADE BY THE ASSESSING OFFICER U/S 15 3A OF THE ACT. THE ADDITIONAL GROUND RAISED BY THE APPELLANT COMPANY W AS ACCEPTED BY THE LEARNED FIRST APPELLATE AUTHORITY AND AFTER TAKING INTO CONSIDERATION THE VARIOUS SUBMISSIONS AND CASE LAWS RELIED UPON BY TH E ASSESSEE COMPANY, THE LEARNED CIT(A) IN PARA 5 OF HIS ORDER DATED 07- 05-2010, HELD THAT NO ADDITION CAN BE MADE TO THE INCOME OF THE APPELLANT COMPANY U/S. 153A ITA NOS.3724 TO 3726/DEL/2010 4 IN THE ABSENCE OF INCRIMINATING MATERIAL FOUND OR SEIZED DURING THE COURSE OF SEARCH. 4. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD THE PARTIES AND PERUSED THE RELEVA NT MATERIAL ON RECORD. THE UNDISPUTED FACT IS THAT THE ASSESSMENTS IN THESE CASES HAVE NOT ABATED AND THE FINDINGS OF THE LD.CIT(A) THAT T HE ADDITIONS IN QUESTION ARE NOT BASED ON INCRIMINATING MATERIAL IS NOT CONTROVERTED ON FACTS. THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT, CENTRAL-III VS. KABUL CHAWLA IN ITA NO.707/2014 VIDE JUDGMENT DATED 20 TH APRIL, 2015, AT PARAS 37 AND 38 HELD AS FOLLOWS:- 37. ON A CONSPECTUS OF SECTION 153A(1) OF THE ACT, READ WITH THE PROVISOS THERETO, AND IN THE LIGHT OF THE LAW EXPLA INED IN THE AFOREMENTIONED DECISIONS, THE LEGAL POSITION THAT E MERGES IS AS UNDER: I. ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF THE ACT, NOTICE UNDER SECTION 153 A (1) WILL HAVE TO BE MANDATORILY ISSUED TO THE PERSON SEARCHED REQUIRING HIM TO FILE RETURNS FOR S IX AYS IMMEDIATELY PRECEDING THE PREVIOUS YEAR RELEVANT TO THE AY IN WHICH THE SEARCH TAKES PLACE. 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 SEARCH TAKES PLACE. ITA NOS.3724 TO 3726/DEL/2010 5 THE AO HAS THE POWER TO ASSESS AND REASSESS THE 'TO TAL INCOME' OF THE AFOREMENTIONED SIX YEARS IN SEPARATE ASSESSMENT ORD ERS FOR EACH OF THE SIX YEARS. IN OTHER WORDS THERE WILL BE ONLY ON E ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX AYS 'IN WHICH BOTH TH E DISCLOSED AND 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 INFORMATIO N AVAILABLE WITH THE AO WHICH CAN BE RELATED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSESSMENT 'CAN BE ARBITRARY OR MADE WITHO UT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOUSLY AN ASS ESSMENT HAS TO BE MADE UNDER THIS SECTION ONLY ON THE BASIS OF SEIZED MATERIAL.' V. IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE CO MPLETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSM ENT OR REASSESSMENT CAN BE MADE. THE WORD 'ASSESS' IN SECT ION 153 A IS RELATABLE TO ABATED PROCEEDINGS (I.E. THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD 'REASSESS' TO COMPLETED ASSESS MENT PROCEEDINGS. VI. INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, T HE JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UND ER SECTION 153A MERGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY FOR EACH AY ON THE BASIS OF THE FINDINGS OF THE SEA RCH AND ANY OTHER MATERIAL EXISTING OR BROUGHT ON THE RECORD OF THE A O. VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WITH B Y THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153 A ONLY ON T HE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE CO URSE OF SEARCH OR REQUISITION OF DOCUMENTS OR UNDISCLOSED INCOME OR P ROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH WERE NOT P RODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF OR IGINAL ASSESSMENT. CONCLUSION 38. THE PRESENT APPEALS CONCERN AYS, 2002-03, 2005- 06 AND 2006- 07.ON THE DATE OF THE SEARCH THE SAID ASSESSMENTS A LREADY STOOD COMPLETED. SINCE NO INCRIMINATING MATERIAL WAS UNEA RTHED DURING THE SEARCH, NO ADDITIONS COULD HAVE BEEN MADE TO THE IN COME ALREADY ASSESSED. ITA NOS.3724 TO 3726/DEL/2010 6 6. RESPECTFULLY FOLLOWING THE JUDGEMENT OF THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF KABUL CHAWLA (SUPRA), WE UPHOLD THE DECISION OF THE LD.CIT(A). 7. IN THE RESULT, THE APPEALS OF THE REVENUE ARE DI SMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 17.11.201 5. SD/- SD/- [SUDHANSHU SRIVASTAVA] [J. SUDHAKAR REDDY] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED, 17 TH NOVEMBER, 2015. DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.