ACIT, New Delhi V. M/s. NY Dox Services Ltd., New Delhi

ITA 4065/DEL/2014

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8504 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 14-06-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 18-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Loose papers; Document seized; Difference of opinion; Documents seized; Change of opinion; Reassessment proceedings
• Section: 143(3); 153A; 208; 68; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: E, NEW DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER ITA NO.4065/DEL/2014 ASSESSMENT YEAR: 2006-07 ACIT, CENTRAL CIRCLE-19, NEW DELHI VS. M/S. NY DOX SERVICES LTD., 506, HEMKUNT TOWER, 98, NEHRU PLACE, NEW DELHI PAN :AAACN9378D (APPELLANT) (RESPONDENT) ORDER PER O.P. KANT, AM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST OR DER DATED 30/04/2014 PASSED BY THE LD. COMMISSIONER OF INCOM E-TAX (APPEALS)-XII, NEW DELHI [IN SHORT THE LD. CIT(A) ] RAISING FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 1,84,92,000/- MADE BY THE A.O. U/S 68 OF THE IT ACT, 1961,. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE CIT(A) HAS ERRED IN HOLDING THAT NO ADDITION CAN BE MADE IN TH E SEARCH ASSESSMENT UNDER THE PROVISIONS OF SECTION 153C/153 A WHEN NO INCRIMINATION MATERIAL RELATING TO THE ISSUE IS FOU ND. 3. THE ORDER OF THE CIT(A) IS ERRONEOUS AND IS NOT TENABLE ON FACTS AND IN LAW. APPELLANT BY MS. PRAMITA M. BISWAS, CIT(DR) RESPONDENT BY NONE DATE OF HEARING 14.01.2020 DATE OF PRONOUNCEMENT 21.01.2020 2 ITA NO.4065/DEL/2014 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AME ND ANY/ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF TH E HEARING OF THE APPEAL. 2. AT THE OUTSET, WE MAY LIKE TO MENTION THAT THE ASS ESSEE WAS NOTIFIED BY REGISTERED POST FOR DATE OF HEARING ON 28/04/2017; 14/06/2017; 23/08/2017; 02/11/2017; 05/04/2018; 25/09/2018; 17/12/2018; 23/09/2019; 21/11/2019. THE HEARING DATED 14/01/2020 WAS ALSO INFORMED IN THE O PEN COURT. DESPITE REPEATEDLY NOTIFYING THE DATE OF HEARING, N EITHER ANYONE APPEARED ON BEHALF OF THE ASSESSEE, NOR ANY ADJOURN MENT APPLICATION WAS FILED. IN VIEW OF THE FACTS AND CIR CUMSTANCES, WE WERE OF THE OPINION THAT THE ASSESSEE IS NOT INTERE STED IN PROSECUTING/RESPONDING THE APPEAL FILED BY THE REVE NUE. ACCORDINGLY, WE HEARD THE APPEAL EX-PARTE QUA THE A SSESSEE AFTER HEARING ARGUMENTS OF THE LD. DEPARTMENT REPRESENTAT IVE. 3. BRIEFLY STATED FACTS OF THE CASE ARE THAT THAT IN VIEW OF THE CERTAIN DOCUMENTS BELONGING TO THE ASSESSEE SEIZED DURING THE COURSE OF SEARCH ACTION UNDER SECTION 132 OF THE IN COME-TAX ACT, 1961 (IN SHORT THE ACT) AT THE PREMISES OF THE TH IRD-PARTY, ACTION UNDER SECTION 153C READ WITH SECTION 153A OF THE AC T WAS INITIATED IN THE CASE OF THE ASSESSEE AND ASSESSMEN T WAS COMPLETED AT TOTAL INCOME OF RS. 1,84,92,000/-. ON FURTHER APPEAL, THE LD. CIT(A) AFTER CONSIDERING DETAILED SUBMISSIO N OF THE ASSESSEE HELD THAT IN ABSENCE OF INCRIMINATING MATE RIAL NO ADDITION COULD HAVE BEEN MADE IN THE CASE OF THE AS SESSEE UNDER SECTION 153C PROCEEDINGS. THE LD. CIT(A) ALSO DELET ED THE ADDITION ON THE MERIT. 3 ITA NO.4065/DEL/2014 3.1 AGGRIEVED THE REVENUE, IS IN APPEAL BEFORE THE TRI BUNAL RAISING THE GROUNDS AS REPRODUCED. 4. THE LD. DR SUPPORTED THE ORDER OF THE ASSESSING OF FICER AND RELIED ON THE VARIOUS DECISIONS FILED ON 24/12/2017 . A LIST OF THE DECISIONS RELIED UPON BY THE LEARNED DR IS REPRODUC ED AS UNDER: 1. COMMISSIONER OF INCOME-TAX VS PRECISION FINANCE (P) LTD. 208 ITR 465 (CAL) 2. COMMISSIONER OF INCOME-TAX VS UNITED COMMERCIAL & I NDUSTRIES CO. (P) LTD. 187 ITR 596 (CAL) 3. COMMISSIONER OF INCOME-TAX VS NIPUN BUILDERS & DEVE LOPERS (P) LTD. 350 ITR 407 (DELHI) 4. COMMISSIONER OF INCOME-TAX VS NOVA PROMOTERS & FINL EASE (P) LTD. 342 ITR 169 (DELHI) 5. MUKESH SHAW VS INCOME-TAX OFFICER 204 TAXMAN 615 (J HARKHAND) 6. COMMISSIONER OF INCOME - TAX VS N.R. PORTFOLIO (P) LTD. 29 TAXMANN.COM 291 (DELHI) 7. COMMISSIONER OF INCOME-TAX VS EMPIRE BUILDTECH (P) LTD. 366 ITR 110 (DELHI) 8. COMMISSIONER OF INCOME-TAX VS FOCUS EXPORTS (P) LTD . 228 TAXMAN 88 (DELHI) 9. BHAGIRATH AGGARWAL VS COMMISSIONER OF INCOME-TAX 35 1 ITR 143 (DELHI) 10. DY. COMMISSIONER OF INCOME-TAX VS APOORVA EXTRUSION PVT. LTD. ITA NO 3308/DEL/2010 DATED 09.10.2014 5. WE HAVE HEARD THE SUBMISSION OF THE LD. DEPARTMENT REPRESENTATIVE AND PERUSED THE RELEVANT MATERIAL ON RECORD. BEFORE THE LD. CIT(A), THE ASSESSEE RELIED ON THE D ECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF SINHGAD T ECHNICAL EDUCATION SOCIETY VS. ACIT, 140 TTJ 223 TO SUPPORT THE CONTENTION THAT NO SETTLED ASSESSMENT CAN BE DISTUR BED WITHOUT ANY INCRIMINATING INFORMATION. THE RELEVANT FINDING OF THE TRIBUNAL IS REPRODUCED AS UNDER: 11. IN THIS REGARD, WE HAVE PERUSED VARIOUS LEGAL PROPOSITIONS. FIRST, WE HAVE PERUSED THE DECISION OF THIS TRIBUNA L IN THE CASE OF KUMAR COMPANY FOR THE AY 2000-01 (SUPRA) AND PARA 2 6 OF THE M/S. KUMAR AND COMPANY VIDE ITA NO. 463/PN/08 FOR THE A. Y 2000-01 AND THE SAME READS AS FOLLOWS:- 4 ITA NO.4065/DEL/2014 25. THUS, WE FIND THAT THE SEIZED DOCUMENTS BELONG TO THE ASSESSEE BY WAY OF LIMITED OWNERSHIP AND THEY ARE N OT DUMB DOCUMENTS AS ADVOCATED BY THE LD COUNSEL FOR THE RE ASON MENTIONED ABOVE. HOWEVER, THEY ARE NOT FOUND TO BE INCRIMINATING DOCUMENTS FOR THE AY 2000-01. THE DOC UMENT MAY NOT BE A DUMB DOCUMENT AND THEREFORE A SPEAKING ONE, BUT THEY MUST BE THE DOCUMENT WITH PRIMA FACIE INCR IMINATING INFORMATION TOO. SUCH INCRIMINATING NATURE OF THE S EIZED DOCUMENT IS AN ESSENTIAL FACTOR FOR SWITCHING ON TH E PRECEDING U/S 153C. IN OTHER WORDS, THE DOCUMENT SEIZED MUST NOT ONLY BE A SPEAKING ONE BUT ALSO BE PRIMA FACIE INCRIM INATING ONE FOR IGNITING THE PROCEEINDGS U/S 153C. UNLIKE OTHER AYS, THERE IS NOTHING MADE OUT BY THE AO WHAT IS CALLED INCRIM INATING FOR THE CURRENT AY UNDER CONSIDERATION. WHEN THE IMPUGN ED DOCUMENTS MERELY CONTAINS THE NOTINGS OF ENTRIES, W HICH ARE ALREADY FOUND PLACE IN THE BOOKS OF ACCOUNTS OR SUB JECTED TO SCRUTINY OF THE AO IN THE PAST IN REGULAR ASSESSMEN T U/S 143(3) OF THE ACT, SUCH DOCUMENT CANNOT BE SAID TO BE CONTAINING THE INCRIMINATING INFORMATION. WHAT IS T HE POINT IN DISTURBING THE SETTLED ASSESSMENT WHEN THE REVENUE DOES NOT HAVE INCRIMINATING INFORMATION FOR AN AY AND THE IN FORMATION WHAT IS AVAILABLE IS ONLY ROUTINE ONE AND WHEN THE AO MERELY MAKES AN ADDITION IN THE ASSESSMENT U/S 153C BASED ON CHANGE OF OPINION AND WHEN SUCH ADDITIONS ARE LIKEL Y TO BE DELETED IN VIEW OF THE SETTLED NATURE OF THE ISSUES ? INCOME TAX PROVISIONS ARE NOT MERELY FOR THE ISSUE OF NOTICE U /S 153C BUT IT IS ESSENTIALLY FOR TAXING THE INCOME OF THE PERS ON. WHAT IS POINT IN ISSUING NOTICE U/S 153C ON FLIMSY GROUNDS AND FINALLY TAX NOTHING? SUCH PROCEEDINGS ONLY CREATES AVOIDABL E NUISANCE BOTH TO THE OVER-BURDENED TAXMAN AND THE M UCH HAZZLED TAXPAYERS. IN THE INSTANT CASE, PROVISIONS OF SECTION 153C ARE INVOKED MERELY TO APPLY THE PROVISIONS OF SECTION 45(4) IN THIS YEAR, THE ISSUE WHICH WAS ALREADY EXA MINED AND CONCLUDED AS INAPPLICABLE TO THE FACTS OF THE CASE. SUCH ISSUE OF NOTICE IS UNWARRANTED AND SUCH REOPENING OF THE ASSESSMENT FOR THE AY 2000-01 IS UNCALLED FOR. 26.THEREFORE, THE PROCEEDINGS INITIATED U/S 153C IS NOT VALID IN VIEW OF THE DECISION IN THE CASE OF LMJ INTERNAT IONAL (SUPRA). UNDER THESE CIRCUMSTANCES, WE ARE OF THE OPINION, T HE AO HAS INVALIDLY ISSUED THE NOTICE U/S 153C FOR THE AY 200 0-01 ON THE WRONG PRESUMPTION THAT AO CAN ASSUME JURISDICTI ONAL IN RESPECT ALL THE SIX AYS AUTOMATICALLY EVEN WITHOUT ANY INCRIMINATING DOCUMENTS IN RESPECT OF THE CONCLUDED ISSUES TOO. ACCORDINGLY, THE RELEVANT GROUNDS OF THE ASSES SEE ARE ALLOWED. 12. FROM THE ABOVE, IT IS OUR FINDING THAT THE REAS ONS RECORDED BY THE AO AS EXTRACTED ABOVE DO NOT CONTAIN ANYTHING INCRI MINATING FOR THE 5 ITA NO.4065/DEL/2014 AYS UPTO 2003-04. IT IS THE SETTLED POSITION OF THE LAW BASED ON THE DECISION OF THE TRIBUNAL IN THE CASE OF LMJ INTERNA TIONAL (SUPRA) THAT THE ISSUE OF NOTICE UNDER THE PROVISIONS OF THE FIR ST PROVISO TO SECTION 153A(1) OF THE ACT IS NOT AUTOMATIC AND THERE IS NE ED FOR AY-SPECIFIC INCRIMINATING INFORMATION (ASII) IN THE POSSESSION OF THE AO TO BE THE FOUNTAIN HEAD FOR SPRINGING SATISFACTION TO HIM THA T THERE EXISTS SOME INCOME OR ASSET TO BE ASSESSED IN THE HANDS OF ANY OTHER PERSON, WHO ARE REFERRED TO IN SECTION 153C OF THE ACT. REA SON FOR THIS KIND OF INTERPRETATION WAS ALREADY GIVEN IN PARA 25 AND 26 OF OUR ORDER IN THE CASE OF KUMAR COMPANY FOR THE AY 2000- 01. IN T HIS REGARD, WE POSED QUESTION TO OURSELVES IF IT IS FAIR TO REOPEN THE ASSESSMENT WHICH IS ALREADY CONCLUDED WITHOUT ANY REASON OR LO GIC THEREBY ENCROACH ON THE RIGHTS OF THE TAX PAYERS? SHOULD TH E AO BE GIVEN UNFETTERED OR ARBITRARY POWERS TO ISSUE NOTICE FOR THE SIX AYS SPECIFIED IN THE FIRST PROVISO TO SECTION 153A(1) O F THE ACT WHEN THE IMPUGNED ASSESSMENTS FOR THE SAID SIX AYS ARE OTHER WISE REACHED FINALITY AFTER DUE PROCESS OF LAW. IN OUR OPINION, THE ANSWER IS NEGATIVE AND IT IS IN FAVOUR OF THE ASSESSEE. (EM PHASIS SUPPLIED). 5.1 THE LD. CIT(A) HELD THAT ADDITION WAS OUTSIDE THE S COPE OF PROCEEDING UNDER SECTION 153C OF THE ACT OBSERVING AS UNDER: 1.1 I HAVE CONSIDERED THE GROUNDS RAISED IN APPEAL AND THE FACTS OF THE CASE. I HAVE ALSO CONSIDERED THE SUBMISSION FIL ED BY THE AR OF THE APPELLANT. 1.2 THUS THE POSITION THAT EMERGES, IS THAT WHERE A SSESSMENT OR REASSESSMENT PROCEEDINGS ARE PENDING COMPLETION WHE N THE SEARCH IS INITIATED OR REQUISITION IS MADE, THEY WILL ABAT E MAKING WAY FOR THE ASSESSING OFFICER TO DETERMINE THE TOTAL INCOME OF THE ASSESSEE IN WHICH THE UNDISCLOSED INCOME WOULD ALSO BE INCLU DED. 1.3 HOWEVER IN CASES WHERE THE ASSESSMENT OR REASSE SSMENT PROCEEDINGS HAVE ALREADY BEEN COMPLETED AND ASSESSM ENT ORDERS HAVE BEEN PASSED DETERMINING THE ASSESSEE'S TOTAL I NCOME AND SUCH ORDERS ARE SUBSISTING AT THE TIME WHEN THE SEARCH O R THE REQUISITION IS MADE, THERE IS NO QUESTION OF ANY ABATEMENT SINC E NO PROCEEDINGS ARE PENDING. 1.4 IN THIS LATTER SITUATION, THE ASSESSING OFFICER WILL REOPEN THE ASSESSMENTS OR REASSESSMENTS ALREADY MADE AND DETER MINE THE TOTAL INCOME OF THE ASSESSEE. SUCH DETERMINATION IN THE ORDERS PASSED UNDER SECTION 153A WOULD BE SIMILAR TO THE O RDERS PASSED IN ANY REASSESSMENT, WHERE THE TOTAL INCOME DETERMINED IN THE ORIGINAL ASSESSMENT ORDER AND UNDISCLOSED INCOME, IF ANY, UN EARTHED DURING THE SEARCH ARE CLUBBED TOGETHER AND ASSESSED AS THE TOTAL INCOME. 6 ITA NO.4065/DEL/2014 1.5 AS FAR AS COMPLETED ASSESSMENTS ARE CONCERNED, THE ISSUES ALREADY EXAMINED BY THE ASSESSING OFFICER IN SUCH C OMPLETED ASSESSMENT WOULD BE DIFFICULT FOR RE-EXAMINING IN A SSESSMENTS U/S.153A UNLESS SOME MATERIAL IS FOUND IN THE COURS E OF SEARCH ACTION. 1.6 APPLYING THE AFORESAID LEGAL POSITION, ADDITION HAS BEEN MADE WITHOUT REFERENCE TO ANY MATERIAL HAVING BEEN FOUND DURING THE COURSE OF SEARCH AND THEREFORE IS CLEARLY OUTSIDE T HE SCOPE OF PROCEEDINGS UNDER SECTION 153C OF THE ACT. 5.2 BEFORE US, THE LEARNED DR RELIED ON VARIOUS DECIS IONS MENTIONED ABOVE, HOWEVER, COULD NOT CONTROVERT THAT NO ASSESSMENT WAS PENDING IN THE CASE OF THE ASSESSEE ON THE DATE OF THE SEARCH AT THIRD PARTY AND NO INCRIMINATING MATE RIAL BELONGING TO THE ASSESSEE WAS FOUND DURING THAT SEARCH. WE AL SO NOTE THAT IN THE CASE OF SINHGAD TECHNICAL EDUCATION SOCIETY, HONBLE SUPREME COURT, IN 397 ITR 0344 HAS UPHELD THE FINDI NG OF THE TRIBUNAL OBSERVING AS UNDER: 18. THE ITAT PERMITTED THIS ADDITIONAL GROUND BY G IVING A REASON THAT IT WAS A JURISDICTIONAL ISSUE TAKEN UP ON THE BASIS OF FACTS ALREADY ON THE RECORD AND, THEREFORE, COULD BE RAIS ED. IN THIS BEHALF, IT WAS NOTED BY THE ITAT THAT AS PER THE PROVISIONS OF SECTION 153C OF THE ACT, INCRIMINATING MATERIAL WHICH WAS SEIZED HAD TO PERTAIN TO THE ASSESSMENT YEARS IN QUESTION AND IT IS AN UNDIS PUTED FACT THAT THE DOCUMENTS WHICH WERE SEIZED DID NOT ESTABLISH A NY CO-RELATION, DOCUMENT-WISE, WITH THESE FOUR ASSESSMENT YEARS. SI NCE THIS REQUIREMENT UNDER SECTION 153C OF THE ACT IS ESSENT IAL FOR ASSESSMENT UNDER THAT PROVISION, IT BECOMES A JURIS DICTIONAL FACT. WE FIND THIS REASONING TO BE LOGICAL AND VALID, HAVING REGARD TO THE PROVISIONS OF SECTION 153C OF THE ACT. PARA 9 OF TH E ORDER OF THE ITAT REVEALS THAT THE ITAT HAD SCANNED THROUGH THE SATIS FACTION NOTE AND THE MATERIAL WHICH WAS DISCLOSED THEREIN WAS CULLED OUT AND IT SHOWED THAT THE SAME BELONGS TO ASSESSMENT YEAR 200 4-05 OR THEREAFTER. AFTER TAKING NOTE OF THE MATERIAL IN PA RA 9 OF THE ORDER, THE POSITION THAT EMERGES THEREFROM IS DISCUSSED IN PARA 10. IT WAS SPECIFICALLY RECORDED THAT THE COUNSEL FOR THE DEPA RTMENT COULD NOT POINT OUT TO THE CONTRARY. IT IS FOR THIS REASON TH E HIGH COURT HAS ALSO GIVEN ITS IMPRIMATUR TO THE AFORESAID APPROACH OF T HE TRIBUNAL. THAT APART, LEARNED SENIOR COUNSEL APPEARING FOR THE RES PONDENT, ARGUED 7 ITA NO.4065/DEL/2014 THAT NOTICE IN RESPECT OF ASSESSMENT YEARS 2000-01 AND 2001-02 WAS EVEN TIME BARRED. 5.3 IN VIEW OF THE DECISION OF THE HONBLE SUPREME COU RT IN THE CASE OF SINHGAD TECHNICAL EDUCATION SOCIETY (SUPRA) , WE DO NOT FIND ANY ERROR IN THE ORDER OF THE LD. CIT(A) ON TH E ISSUE IN DISPUTE AND ACCORDINGLY, WE UPHOLD THE SAME. THE GR OUNDS OF APPEAL OF THE REVENUE ARE ACCORDINGLY DISMISSED. SI NCE WE HAVE ALREADY UPHELD IN THE CASE OF THE ASSESSEE THAT NO ADDITION COULD HAVE BEEN MADE UNDER SECTION 153C OF THE ACT. THUS, WE ARE NOT ADJUDICATING THE GROUNDS CHALLENGING THE MERIT OF A DDITION DELETED BY THE LD. CIT(A). 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMIS SED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 21 ST JANUARY, 2020. SD/- SD/- (BHAVNESH SAINI) (O.P. KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 21 ST JANUARY, 2020. RK/-(D.T.D.) COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI