ACIT, New Delhi V. Sh. Pradeep Kumar, New Delhi

ITA 4016/DEL/2011

• Counselvise Citation: 401620114 RSA 2011
• Duration Of Justice: 2 year(s) 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-11-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 09-10-2013
• Assessment Year: 2002-2003
• Appeal Filed On: 05-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VEENA JOSHI
• Assessee Lawyers: SHAILESH GUPTA S
• Keywords: Gift; Salary income
• Section: 153A; 68; 132; 139

Judgement Text

ITA NO.4016/DEL/2011 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : F : NEW DELHI BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER AND SHRI A.D. JAIN, JUDICIAL MEMBER ITA NO.4016/DEL/2011 ASSESSMENT YEAR : 2002-03 ACIT, CENTRAL CIRCLE, 3 RD FLOOR, ARA CENTRE, JHANDEWALAN EXTN., NEW DELHI. VS. PRADEEP KUMAR KUMRA, 101, PAL MOHAN SADAN, 26/32, EAST PATEL NAGAR, NEW DELHI. PAN : AAMPK7496E APPELLANT RESPONDENT ASSESSEE BY : SHRI SALIL AGARWAL & SHRI SHAILESH GUPTA, ADVOCATES DEPARTMENT BY : SMT. VEENA JOSHI, CIT, DR ORDER PER A.D. JAIN, JUDICIAL MEMBER: THIS IS DEPARTMENTS APPEAL FOR ASSESSMENT YEAR 20 02-03 AGAINST THE ORDER PASSED BY THE LD. CIT (A)-III, DELHI, DATED 09.06.2011, TA KING THE FOLLOWING GROUNDS OF APPEAL:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE CIT (A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.17,00,0 00/- MADE BY THE ASSESSING OFFICER U/S 68 OF THE INCOME TAX ACT, 1961, ON ACCO UNT OF UNEXPLAINED GIFT RECEIVED BY THE ASSESSEE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE CIT (A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.50,000/ - MADE BY THE ASSESSING OFFICER U/S 68 OF THE INCOME TAX ACT, 1961, ON ACCOUNT OF U NEXPLAINED LOAN RECEIVED BY THE ASSESSEE. ITA NO.4016/DEL/2011 2 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE CIT (A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF RS.56, 791/- MADE BY THE ASSESSING OFFICER U/S 24 (B) OF THE INCOME TAX ACT, 1961 WITH OUT APPRECIATING THE FACT THE SAME WAS ACCEPTED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE CIT (A) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT NO ADDITION/DISALLOWAN CE CAN BE MADE TO THE INCOME OF THE APPELLANT U/S 153A OF THE ACT WHICH IS NOT BASE D ON ANY INCRIMINATING MATERIAL FOUND AND SEIZED DURING THE SEARCH. 2. THE FACTS ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND HAS BEEN REGULARLY ASSESSED TO TAX. IN THE INSTANT YEAR, HE RECEIVED SALARY INCOME FROM M/S DELHI HOSPITAL SUPPLY PVT. LTD. AS A DIRECTOR OF THE SAID COMPANY APART FROM INCOME FROM INTEREST AND INCOME FROM OTHER SOURCES. FOR THE IMPUGNED ASSESSMENT YEAR, THE ASSE SSEE HAD FILED RETURN DECLARING AN INCOME OF RS.11,12,890/- ON 30.10.2002 WHICH HAS BE EN ACCEPTED AS SUCH. THEREAFTER, SEARCH WAS CARRIED ON 14.02.2008 AT THE RESIDENTIAL PREMISES OF THE ASSESSEE AND NOTICE U/S 153A OF THE ACT WAS ISSUED ON 15.01.2009. IN CO MPLIANCE, A RETURN OF INCOME WAS FILED BY THE ASSESSEE ON 09.02.2009 DECLARING INCOME OF R S.11,12,890/-. HOWEVER, THE AO VIDE ASSESSMENT ORDER U/S 143(3)/153A DATED 29.12.2009 D ETERMINED THE INCOME OF THE ASSESSEE AT RS.29,19,678/-. 3. BY VIRTUE OF THE IMPUGNED ORDER, THE LD. CIT (A) DELETED THE ADDITIONS MADE BY THE AO, HOLDING THEM TO HAVE BEEN MADE IN THE ABSENCE O F ANY MATERIAL FOUND AS A RESULT OF SEARCH. THIS ACTION OF THE LD. CIT (A) HAS BROUGHT THE DEPARTMENT IN APPEAL BEFORE US. 4. THE FATE OF GROUND NOS.1-3, I.E., THE ADDITIONS ON MERITS, DEPENDS ON THE OUTCOME OF THE LEGAL ISSUE RAISED BY WAY OF GROUND NO.4. AS SUCH, GROUND NO.4 IS BEING DEALT WITH FIRST. 5. THE LD. DR HAS CONTENDED, QUA GROUND NO.4, THAT THE LD. CIT (A) HAS ERRED IN HOLDING THAT NO ADDITION/DISALLOWANCE CAN BE MADE T O THE INCOME OF THE ASSESSEE U/S 153A OF THE IT ACT, IF SUCH ADDITION IS NOT BASED ON ANY INCRIMINATING MATERIAL FOUND AND SEIZED DURING THE SEARCH. PLACING RELIANCE ON THE ASSESSME NT ORDER, THE LD. DR CONTENDED THAT UNDER SECTION 153A OF THE ACT, THERE IS NO REQUIREM ENT OF FINDING OF INCRIMINATING MATERIAL DURING THE SEARCH FOR FRAMING ASSESSMENT. SHE SUBMI TTED THAT IN THE CASE OF CIT VS. ANIL BHATIA, 211 TAXMAN 453 (DEL), THE HONBLE HIGH CO URT HAS NOT INTERPRETED THE PROVISIONS ITA NO.4016/DEL/2011 3 OF SECTION 153A OF THE ACT AND, THUS, THIS DECISION IS NOT APPLICABLE TO THE ISSUE RAISED HEREIN REGARDING THE VALIDITY OF THE ADDITIONS MADE U/S 153A OF THE ACT, IN THE ABSENCE OF ANY MATERIAL FOUND DURING THE SEARCH; THAT IN ANIL BHATIA (SUPRA), THE ISSUE HAS BEEN KEPT OPEN; THAT THERE IS A DISTINCTION BETWEEN SEIZED MA TERIAL AND INCRIMINATING MATERIAL AND FOR INVOKING THE PROVISIONS OF SECTION 153A OF THE ACT, THE ONLY REQUIREMENT IS THAT OF CONDUCTING A SEARCH U/S 132 OF THE ACT; THAT IN THE PRESENT CASE, THERE IS NO DENYING THAT THE SEARCH WAS CONDUCTED; THAT THEREFORE, INVOCATIO N OF THE PROVISIONS OF SECTION 153A OF THE ACT ARE VALID; THAT IN THE PRESENT CASE, THE OR IGINAL RETURN WAS FILED IN 2003 AND THERE WAS NO SCRUTINY ASSESSMENT. RELIANCE HAS ALSO BEEN PLACED ON GOPAL LAL BHADRUKA VS. DCIT, 346 ITR 106 (AP), WHEREIN, IT HAS BEEN HELD THAT THE EFFECT OF INSERTION OF SECTION 158BI IN THE IT ACT W.E.F. 01.06.2003 IS THAT THE V ARIOUS PROVISIONS OF CHAPTER XIV-B OF THE ACT ARE MADE INAPPLICABLE TO PROCEEDINGS U/S 153A O F THE ACT AND THEREBY, FOR THE PURPOSES OF SECTION 153A OF THE ACT, THE AO CAN TAK E INTO CONSIDERATION MATERIAL OTHER THAN WHAT WAS AVAILABLE DURING THE SEARCH FOR MAKIN G AN ASSESSMENT OF THE UNDISCLOSED INCOME OF THE ASSESSEE. 6. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER H AND, HAS PLACED STRONG RELIANCE ON THE IMPUGNED ORDER. IT HAS BEEN CONTENDED THAT IN T HE PRESENT CASE, THE ASSESSMENT YEAR INVOLVED IS A.Y. 2002-03; THAT A SEARCH WAS ADMITTE DLY CONDUCTED ON THE ASSESSEE ON 14.02.2008; THAT NOTICE U/S 153A WAS ISSUED ON 15.0 1.2009; THAT RETURN IN RESPONSE THERETO WAS FILED ON 09.02.2009 RETURNING INCOME OF RS.11,02,890/-, AS ORIGINALLY RETURNED; THAT THE SAME WAS ACCEPTED U/S 143 (1) OF THE ACT; THAT NO NOTICE U/S 143(2) OF THE ACT WAS ISSUED; THAT SO, THE RETURN FILED AND PROCESSED BEC AME FINAL; THAT AS CORRECTLY HELD BY THE LD. CIT(A), THE AO, IN THE ABSENCE OF ANY INCRIMINA TING MATERIAL FOUND IN THE SEARCH FOR ALL THE CONCERNED SIX YEARS, I.E., FROM AY 2002-03 TO A Y 2007-08, COULD NOT HAVE MADE ANY ADDITION; THAT THE DECISION IN ANIL BHATIA (SUPRA ) HAS BEEN DEALT WITH BY THE TRIBUNAL IN KUSUM GUPTA VS. DCIT AND VICE VERSA FOR AYS 2003- 04 TO 2006-07, VIDE ORDER DATED 28.03.2013 (COPIES PLACED ON RECORD); THAT IN THE P RESENT CASE, THE ASSESSMENT ORDER DOES NOT FIND MENTION OF ANY INCRIMINATING MATERIAL FOUN D, NOR HAS ANY ADDITION BEEN MADE, NOR ANY DISALLOWANCE MADE IN ANY OF THE SIX ASSESSMENT YEARS INVOLVED. COPIES OF THE ASSESSMENT ORDERS FOR ALL THE CONCERNED SIX ASSESSM ENT YEARS HAVE BEEN PLACED ON ITA NO.4016/DEL/2011 4 RECORD. APROPOS GOPAL LAL BHADRUKA (SUPRA), THE S AME HAS BEEN SOUGHT TO BE DISTINGUISHED ON FACTS. 7. HAVING HEARD THE PARTIES ON THIS ISSUE IN THE LI GHT OF THE MATERIAL PLACED ON RECORD, WE FIND THAT INDEED, THE ORIGINAL RETURN FILED BY T HE ASSESSEE, DECLARING AN INCOME OF RS.11,12,890/-, WAS ACCEPTED AS SUCH. THE SAID RETU RN HAD BEEN FILED ON 30.10.2002. A SEARCH WAS CONDUCTED ON THE RESIDENTIAL PREMISES OF THE ASSESSEE, ON 14.02.2008. A NOTICE U/S 153A OF THE ACT WAS ISSUED ON 15.01.2009 . ON 09.02.2009, IN COMPLIANCE, THE ASSESSEE FILED A RETURN OF INCOME, DECLARING INCOME AS EARLIER RETURNED. 8. THE DEPARTMENT CONTENDS THAT THE ASSESSMENT U/S 153A OF THE ACT HAS BEEN CORRECTLY MADE, WHEREAS IT IS MAINTAINED BY THE ASS ESSEE THAT SINCE NO INCRIMINATING MATERIAL WAS FOUND IN THE SEARCH, SUCH ASSESSMENT I S BAD IN LAW. 9. AS NOTED BY THE DELHI BENCH OF THE TRIBUNAL IN KUSUM GUPTA (SUPRA), IN ANIL BHATIA (SUPRA), THE HONBLE HIGH COURT DID NOT LAY DOWN ANY CLEAR RATIO TO THE EFFECT THAT IN THE ABSENCE OF ANY MATERIAL FOUND DURING THE SEARCH , NO ADDITION CAN BE MADE U/S 153A OF THE ACT, WHERE ASSESSMENT HAS ALREADY BEEN FRAMED U /S 143 (3) OF THE ACT OR WHERE THE RETURN FILED U/S 139 THEREOF HAS BEEN PROCESSED U/S 143(1)(A) THEREOF. IN THAT CASE, THE TRIBUNAL HAD HELD THAT IN RESPECT OF AN ASSESSMENT U/S 153A OF THE ACT, WHERE PROCESSING OF RETURN U/S 143(1)(A) STOOD COMPLETED IN RESPECT OF RETURNS FILED IN DUE COURSE BEFORE SEARCH AND NO MATERIAL IS FOUND IN THE SEARCH THERE AFTER, NO ADDITION CAN BE MADE. THE HONBLE HIGH COURT, HOWEVER, HELD THAT WHERE ASSESS MENT ORDER HAD ALREADY BEEN PASSED IN RESPECT OF ALL OR ANY OF THE ASSESSMENT YEARS CO NCERNED, EITHER UNDER SECTION 143(1)(A) OR SECTION143(3) OF THE ACT, PRIOR TO INITIATION OF SEARCH, STILL THE AO IS EMPOWERED TO REOPEN THOSE PROCEEDINGS U/S 153A, WITHOUT ANY FETT ERS AND TO REASSESS TOTAL INCOME, TAKING NOTE OF UNDISCLOSED INCOME, IF ANY, UNEARTHE D DURING THE SEARCH. IN KUSUM GUPTA (SUPRA), THE TRIBUNAL FOUND THAT THE ISSUE AS TO WH ETHER IN A CASE WHERE NO INCRIMINATING MATERIAL WAS FOUND, THE AO HAD NO JURISDICTION TO M AKE ADDITION IN ASSESSMENT OR RE- ASSESSMENT U/S 153A, HAS BEEN DEALT WITH BY THE SPE CIAL BENCH OF THE TRIBUNAL IN ALCARGO GLOBAL LOGISTICS LTD. VS. DCIT, 137 ITD 287 (MUM) (SB), WHICH WAS FOLLOWED BY THE BOMBAY BENCH OF THE TRIBUNAL IN GURINDER SINGH BAW A VS. CIT; THAT THE SPECIAL BENCH HAS CONCLUDED THAT WHERE THE ASSESSMENT HAS ABATED THE AO RETAINS ORIGINAL JURISDICTION ITA NO.4016/DEL/2011 5 AS WELL AS JURISDICTION U/S 153A OF THE ACT AND WHE N NO ASSESSMENT HAS ABATED ASSESSMENT U/S 153A CAN BE MADE ONLY ON THE BASIS O F INCRIMINATING MATERIAL FOUND DURING SEARCH; THAT SINCE IN VIEW OF THAT CASE, THE ASSESS MENT HAD BEEN COMPLETED U/S 143(1) AND TIME LIMIT FOR ISSUANCE OF NOTICE U/S 143(2) HA D EXPIRED ON THE DATE OF SEARCH, THERE WAS NO ASSESSMENT PENDING AND AS SUCH, THERE WAS NO QUESTION OF ABATEMENT OF ASSESSMENT AN ADDITION IN ASSESSMENT U/S 153A COULD BE MADE ONLY ON THE BASIS OF INCRIMINATING MATERIAL FOUND DURING SEARCH [FOLLOWI NG THE SPECIAL BENCH DECISION IN ALCARGO (SUPRA) AND THAT OF THE BOMBAY BENCH OF T HE TRIBUNAL IN GURINDER SINGH BAWA (SUPRA) AND KUSUM GUPTA (SUPRA)]. 10. IN KUSUM GUPTA (SUPRA), THE TRIBUNAL NOTED TH AT FOLLOWING THE SPECIAL BENCH DECISION IN ALCARGO, THE BOMBAY BENCH OF THE TRIB UNAL IN GURINDER SINGH BAWA (SUPRA) HELD THAT IN SEARCH ASSESSMENT PERTAINING TO THE SI X IMMEDIATELY PRECEDING ASSESSMENT YEARS, WHICH ABATE DUE TO PENDENCY, THE AO CAN MAKE ADDITION EVEN IF NO INCRIMINATING MATERIAL IS FOUND DURING SEARCH, BUT WHEN ALL ASSES SMENTS ARE COMPLETE AND NO ASSESSMENT HAS ABATED, THE AO CAN MAKE ADDITION ONL Y ON THE BASIS OF EITHER INCRIMINATING MATERIAL FOUND DURING SEARCH, OR UNDISCLOSED INCOME /PROPERTY DISCLOSED DURING SEARCH. IT WAS NOTED THAT IN GURINDER SINGH BAWA (SUPRA), TH E ADDITION MADE IN THE ASSESSMENT FRAMED U/S 153A OF THE ACT WAS DELETED AS BEING MAD E WITHOUT JURISDICTION, SINCE THE SAID ASSESSMENT U/S 153A HAD BEEN MADE ON THE BASIS OF M ATERIAL AVAILABLE IN THE RETURN OF INCOME AND THERE WAS NO REFERENCE TO ANY INCRIMINAT ING MATERIAL FOUND DURING THE SEARCH AND SINCE NO ASSESSMENT HAS ABATED. IN KUSUM GUPT A (SUPRA) IT WAS, THUS, NOTED THAT THE RATIO LAID DOWN BY THE SPECIAL BENCH OF THE TRI BUNAL IN ALCARGO (SUPRA) IS THAT WHEN NO ASSESSMENT HAS ABATED, ADDITION IN THE ASSESSMENT U /S 153A OF THE ACT CAN BE MADE ONLY ON THE BASIS OF INCRIMINATING MATERIAL RECOVERED DU RING SEARCH. 11. IN VIEW OF THE AFORE-DISCUSSED OBSERVATIONS AND FINDINGS OF THE DELHI BENCH OF THE TRIBUNAL IN KUSUM GUPTA (SUPRA), ANIL BHATIA (S UPRA) IS OF NO AVAIL TO THE DEPARTMENT. IN KEEPING WITH THE SPECIAL BENCH DECISION IN ALCARGO (SUPRA), AS CONSIDERED IN KUSUM GUPTA (SUPRA), PARTICULARLY IN THE ABSENCE OF ANY JUDGEMENT TO THE CONTRARY HAVING BEEN BROUGHT TO OUR NOTICE, FOLLOWING THE SAID DECISIONS , WE HOLD THAT SINCE UNDISPUTEDLY IN THE PRESENT CASE, NO INCRIMINATING MATERIAL WAS RECOVER ED DURING THE SEARCH AGAINST THE ITA NO.4016/DEL/2011 6 ASSESSEE, AS IS ALSO EVIDENT FROM THE ASSESSMENT OR DERS FOR THE ALL THE CONCERNED SIX ASSESSMENT YEARS, COPIES WHEREOF HAVE BEEN PLACED O N RECORD BEFORE US BY THE LD. COUNSEL FOR THE ASSESSEE, NO ADDITION WAS CALLED FO R IN THE ASSESSMENT U/S 153A OF THE ACT. 12. GOPAL LAL BHADRUKA (SUPRA) ALSO DOES NOT FURT HER THE CASE OF THE DEPARTMENT. THAT DECISION IS NOT APPLICABLE TO THE FACTS OF THE PRES ENT CASE. THEREIN, IT HAS BEEN HELD THAT FOR THE PURPOSES OF SECTION 153A OF THE ACT, THE AO CAN TAKE INTO CONSIDERATION MATERIAL OTHER THAN THAT FOUND DURING THE SEARCH, FOR MAKING ASSES SMENT OF THE UNDISCLOSED INCOME OF THE ASSESSEE. IN THAT CASE, THERE WAS EVIDENCE OF PAYME NT OF ON MONEY. HEREIN, HOWEVER, NO SUCH EVIDENCE HAS BEEN POINTED OUT. THEREFORE, GOP AL LAL BHADRUKA (SUPRA), IS ALSO NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. 13. ACCORDINGLY, THE GRIEVANCE OF THE DEPARTMENT BY WAY OF GROUND NO.4 DOES NOT HOLD ANY WATER AND THE SAME IS REJECTED. THE DEPARTMENT HAS NOT BEEN ABLE TO UNHINGE THE CATEGORICAL FINDING RECORDED BY THE LD. CIT (A) AT PAGE 15 OF THE IMPUGNED ORDER THAT IN THE INSTANT CASE, THE ADDITIONS/DISALLOWANCES HAVE BEEN MADE IN THE ABSENCE OF ANY MATERIAL FOUND AS A RESULT OF THE SEARCH. THE DELETION AT TH E HANDS OF THE LD. CIT (A) OF THE ADDITIONS MADE BY THE AO IS, AS SUCH, CONFIRMED REJECTING GRO UND NO.4. 14. IN VIEW OF THE ABOVE FINDINGS ON GROUND NO.4, T HE REMAINING GROUNDS, I.E., GROUND NOS.1-3, CHALLENGING THE MERITS OF THE ADDITIONS/DI SALLOWANCES, DO NOT REQUIRE ANY ADJUDICATION, HAVING BEEN RENDERED INFRUCTUOUS AND OF ACADEMIC INTEREST ONLY. 15. IN THE RESULT, THE APPEAL FILED BY THE DEPARTME NT IS DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 07.11.201 3. SD/- SD/- [S.V. MEHROTRA] [A.D. JAIN] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED, 07 TH NOVEMBER, 2013. DK ITA NO.4016/DEL/2011 7 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.