M/s L.T. Foods Ltd., New Delhi V. ACIT, New Delhi

ITA 4163/DEL/2013

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1536 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 17-05-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 05-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Income from undisclosed sources; Search and seizure; Document seized; Documents seized; Rule 8D
• Section: 40A(3); 143(3); 153A; 14A; 115JB; 40(a)(ia); 80IB; 139(1); 142(2A); 69; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D, NEW DELHI BEFORE SHRI G.S. PANNU, HONBLE VICE PRESIDENT AND SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER ITA NO.4045/DEL/2013 ASSESSMENT YEAR: 2006-07 DCIT, CENTRAL CIRCLE-19, NEW DELHI VS. M/S. L.T. FOODS LTD., UNIT NO. 134, FIRST FLOOR, RECTANGLE-I, SAKET DISTRICT CENTRE, NEW DELHI PAN: AAACL0259K (APPELLANT) (RESPONDENT) AND ITA NO. 4163/DEL/2013 ASSESSMENT YEAR: 2006-07 M/S. L.T. FOODS LTD., UNIT NO. 134, FIRST FLOOR, RECTANGLE-I, SAKET DISTRICT CENTRE, NEW DELHI VS. DCIT, CENTRAL CIRCLE-19, NEW DELHI PAN: AAACL0259K (APPELLANT) (RESPONDENT) DEPARTMENT BY : SHRI J.K. MISHRA, CIT(DR) ASSESSEE BY : SHRI AJAY VOHRA, SR. ADV.; SHRI ROHIT JAIN, ADV. MS. DEEPASHREE RAO, CA MS. MEENAL GOYAL, CA DATE OF HEARING: 05/11/2019 DATE OF ORDER : 12/12/2019 2 ITA NOS.4045/DEL/2013 & 4163/DEL/2013 ORDER PER K. NARASIMHA CHARY, J.M. AGGRIEVED BY THE ORDER DATED 25/3/2013 IN APPEAL NO . 29/11- 12/714, PASSED BY THE LEARNED COMMISSIONER OF INCOM E TAX (APPEALS)- XXXIII, NEW DELHI (LD. CIT(A)) IN THE CASE OF LT FOODS LTD. (PREVIOUSLY M/S LT OVERSEAS LTD) (THE ASSESSEE) FOR THE ASSES SMENT YEAR, 2006-07, BOTH THE REVENUE AND THE ASSESSEE PREFERRED THESE T WO APPEALS. SINCE THE APPEALS EMANATE FROM THE VERY SAME ASSESSMENT P ROCEEDINGS AND THE IMPUGNED ORDER, WE DEEM IT JUST AND CONVENIENT TO DISPOSE OF THESE TWO APPEALS BY WAY OF THIS COMMON ORDER. 2. BRIEF FACTS OF THE CASE AS COULD BE CULLED OUT F ROM THE RECORD ARE THAT THE ASSESSEE IS A COMPANY, ENGAGED IN THE BUSI NESS OF MANUFACTURING AND TRADING OF RICE. FOR THE ASSESSME NT YEAR 2006-07, IT HAD FILED ITS RETURN OF INCOME UNDER SECTION 139(1) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT) ON 30/11/2006, DECLARING NIL INCOME AND BOOK PROFIT UNDER SECTION 115JB OF THE ACT AT RS.11,84,5 1,099/-. ASSESSMENT UNDER SECTION 143(3) OF THE ACT WAS COMPLETED ON 22 /12/2008 AT A TOTAL INCOME OF NIL, BUT THE ADDITIONS WERE MADE BY THE L EARNED ASSESSING OFFICER ON ACCOUNT OF STAFF TRAINING EXPENSES ETC. AND THE ASSESSEE CARRIED THE MATTER IN APPEALS. 3. THERE WAS A SEARCH AND SEIZURE OPERATION UNDER S ECTION 132 OF THE ACT CONDUCTED ON 10/02/2009 ON THE GROUP OF CASES I NCLUDING THE ASSESSEE COMPANY, PURSUANT TO WHICH NOTICE UNDER SE CTION 153A OF THE ACT WAS ISSUED ON 7/10/2009 REQUIRING THE ASSESSEE COMPANY TO FILE THE 3 ITA NOS.4045/DEL/2013 & 4163/DEL/2013 RETURN OF INCOME. ASSESSEE FILED THE RETURN OF INCO ME UNDER SECTION 153A OF THE ACT DECLARING AN INCOME OF RS.91,320/-. LEAR NED ASSESSING OFFICER, VIDE ORDER DATED 24/12/2010 CALLED FOR A SPECIAL AU DIT REPORT UNDER SECTION 142(2A) OF THE ACT FOR THE ASSESSMENT YEAR 2006-07 AND THE SPECIAL AUDITOR SUBMITTED THE REPORT ON 22/6/2011. AFTER CONSIDERING THE SAME VIDE ORDER DATED 31/12/2011 THE LEARNED ASSESS ING OFFICER ASSESSED THE TAXABLE INCOME OF THE ASSESSEE AT RS.2 0,51,94,631/-BY MAKING SEVERAL ADDITIONS. 4. ASSESSEE PREFERRED AN APPEAL AGAINST THE ADDITIO NS BEFORE THE LD. CIT(A) AND CHALLENGED THE ASSUMPTION OF JURISDICTIO N OF THE ASSESSING OFFICER UNDER SECTION 153A OF THE ACT ALSO. BY WAY OF IMPUGNED ORDER, LD. CIT(A), ALLOWED THE CLAIM FOR DEDUCTION UNDER SECTI ON 80IB (11A) OF THE ACTAND DELETED THE ADDITION OF RS.1,74,82,760/- MAD E BY THE ASSESSING OFFICER UNDER SECTION 69 OF THE ACT. CHALLENGING TH ESE TWO ASPECTS, REVENUE PREFERRED ITA NO. 4045/DEL/2013. LD. CIT(A) NEGATIVED THE OBJECTIONS RAISED BY THE ASSESSEE IN RESPECT OF JUR ISDICTION UNDER SECTION 153A OF THE ACT EXERCISED BY THE LEARNED ASSESSING OFFICER AND ALSO REFERENCE TO SPECIAL AUDIT IN SECTION 142 (2A) OF T HE ACT AND SUSTAINED THE ADDITIONS MADE BY THE LEARNED ASSESSING OFFICER BY WAY OF DISALLOWANCE UNDER SECTION 40A(3) OF THE ACT, 40(A)(IA) OF THE A CT, PERSONAL EXPENSES AND DISALLOWANCE UNDER SECTION 14A OF THE ACT. ASSE SSEE, THEREFORE, FILED ITA 4163/DEL/2013. ITA 4045/DEL/2013 (REVENUES APPEAL) 4 ITA NOS.4045/DEL/2013 & 4163/DEL/2013 5. COMING TO THE GROUNDS NO. 1 TO 3 OF THE REVENUE S APPEAL, THESE GROUNDS RELATE TO THE ALLOWANCE OF DEDUCTION UNDER SECTION 80IB (11 A) OF THE ACT BY THE LD. CIT(A). AT THE OUTSET, IT IS BRO UGHT TO OUR NOTICE BY THE LD. AR THAT THIS ISSUE WAS DIRECTLY AND SUBSTANTIAL LY INVOLVED IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2004-05 AND 2005- 06 AND IT WAS DECIDED IN FAVOUR OF THE ASSESSEE BY GRANTING RELIE F. HE PRODUCED THE COPY OF THE ORDER DATED 3/7/2019 IN ITA NO. 838/DEL /2014, 4161 AND 4162 /DEL/ 2013 PASSED BY A COORDINATE BENCH IN ASS ESSEES OWN CASE FOR ASSESSMENT YEARS 2003-04 TO 2005-06. 6. WE HAVE GONE THROUGH THE ORDER OF THE TRIBUNAL F OR ASSESSMENT YEARS 2004-05 AND 2005-06. VIDE PARAGRAPH NOS. 31 A ND 41, THE TRIBUNAL OBSERVED THAT THE DISALLOWANCE WAS MADE BY THE LEAR NED ASSESSING OFFICER WITHOUT HAVING ANY INCRIMINATING MATERIAL F OUND DURING THE COURSE OF SEARCH AND THEREFORE, WHILE FOLLOWING THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA, 380 ITR 573, THE TRIBUNAL REACHED A CONCLUSION THAT SUCH A DISA LLOWANCE CANNOT BE SUSTAINED. 7. INSOFAR AS THIS PARTICULAR YEAR 2006-07 IS CONCE RNED, THERE IS NO DISPUTE THAT THE FACTS ARE IDENTICAL. IT IS NOT THE CASE OF THE REVENUE THAT ANY INCRIMINATING MATERIAL WAS SEIZED AT THE TIME O F SEARCH THROWING SOME LIGHT ON THE ASPECT OF ALLOWABILITY OF 80IB (1 1A) OF THE ACT. ASSESSMENT ORDER SPEAKS THAT IT IS ONLY BASING ON T HE REVENUE AUDITED REPORT, HE REOPENED THIS ISSUE AND IN VIEW OF THE D ECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF KABUL CHAWLA (SUPRA), SUCH A COURSE IS IMPERMISSIBLE. WE, THEREFORE, WHILE RESPE CTFULLY FOLLOWING THE 5 ITA NOS.4045/DEL/2013 & 4163/DEL/2013 DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CA SE OF KABUL CHAWLA (SUPRA) , AS WAS FOLLOWED BY A COORDINATE BENCH OF THIS TRI BUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2004-05 AND 2005-06, REACH A CONCLUSION THAT THE DISALLOWANCE OF DEDUCTION UND ER SECTION 80IB (11A) OF THE ACT IS BAD UNDER LAW AND CANNOT BE SUSTAINED . WE, ACCORDINGLY, UPHOLD THE FINDINGS OF THE LD. CIT(A) AND DISMISS T HESE GROUNDS OF APPEAL. 8. COMING TO GROUND NO. 4 OF REVENUES APPEAL, IT P ERTAINS TO THE ADDITION OF RS.1,74,82,760/-. FACTS ON THIS ASPECT ARE THAT THE ASSESSING OFFICER MADE THIS ADDITION ON THE BASIS OF CERTAIN NOTING IN THE SEIZED PAPERS AS POINTED OUT BY THE SPECIAL AUDITOR. RECOR D REVEALS THAT ON GOING THROUGH THE WORKING MADE AVAILABLE BY THE ASSESSEE, SPECIAL AUDITORS POINTED OUT THAT THE ASSESSEE HAD DEVISED A UNIQUE SCHEME TO AVOID/EXPLAIN THE UNACCOUNTED INCOME/EXPENDITURE FO UND RECORDED ON THE SEIZED PAPERS AND CREATED AN ENTITY OF FOUR MAI N PROMOTERS OF THE GROUP, CLAIMED TO BE INDULGED IN UNACCOUNTED TRANSA CTIONS/SIPHONING OF MONEY, WHEREIN ALL THE DOCUMENTS FOUND RECORDED ON THE CREDIT SIDE WERE TREATED AS BUSINESS RECEIPTS AND ALL THE AMOUN TS ON THE DEBIT SIDE AS EXPENDITURE AND THE BALANCE, IF ANY LEFT, WAS TR EATED AS BUSINESS LOSSES/BUSINESS PROFIT WHICH WERE DISTRIBUTED AMONG BEFORE PERSONS AND OFFERED FOR TAXATION. 9. ASSESSEE CONTENDED THAT THE QUERIES WERE RAISED BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT OF PROMOTER S/DIRECTORS (INDIVIDUAL CASES) IN RESPECT OF ALL THE ENTRIES/TR ANSACTIONS NOTED IN THE SEIZED DOCUMENTS AND IT WAS REPLIED THAT THE PROMOT ERS/DIRECTORS OF THE EARTH GROUP WERE INVOLVED IN THE BUSINESS OF TRADIN G OF VARIOUS ITEMS AND 6 ITA NOS.4045/DEL/2013 & 4163/DEL/2013 TRADING IN REAL ESTATE; THAT IT WAS ALSO POINTED OU T THAT ALL THE ENTRIES NOTED IN ALL THE SEIZED PAPER WHICH WERE NOT RECORD ED IN THE BOOKS OF ACCOUNTS OR IN RESPECT OF AND RELATED TO THE SAID T RADING BUSINESS IS DONE BY THE FOUR BROTHERS WHO ARE PROMOTERS/DIRECTORS, N AMELY, VIJAY KUMAR ARORA, ASHWINIE KUMAR ARORA, SURINDER KUMAR ARORA A ND ASHOK ARORA. ASSESSEE FURTHER CONTENDED THAT FIRST OF THESE TRAD ING TRANSACTIONS WERE DONE THROUGH MR PRADEEP. ASSESSEE FURTHER CONTENDED THAT THE INCOME IN RESPECT OF THE SAID ENTRIES IN THE SEIZED DOCUME NTS WAS DECLARED IN THE INDIVIDUAL CASES TO THE TUNE OF RS.3,72,55,611/-WHI LE FILING THE RETURN UNDER SECTION 153A OF THE ACT AND A FURTHER SUM OF RS.5,21,50,000/-WAS DECLARED ON THE BASIS OF PEAK OF ALL THE TRANSACTIO NS IN THE HANDS OF SAID FOUR BROTHERS; THAT THE TOTAL INCOME DECLARED/SURRE NDERED IN RESPECT OF ALL THE ENTRIES/TRANSACTIONS NOTED IN ALL THE SEIZE D DOCUMENTS WAS RS.8,94,05,611/-; THAT THE DECLARING/SURRENDERING W AS MADE AFTER DISCUSSION WITH THE ASSESSING OFFICER AND THE TAXES INCLUDING THE INTEREST WERE PAID ACCORDINGLY; THAT THE SAID DECLARATION WA S DULY ACCEPTED IN THE HANDS OF THE SAID FOUR INDIVIDUALS FOR ASSESSMENT Y EARS) AND 2009-10, WITHOUT REVENUE PREFERRING ANY APPEAL IN THE CASES OF SUCH INDIVIDUALS. IT WAS, THEREFORE, CONTENDED THAT SINCE THE INCOME ON THE BASIS OF THE TRANSACTIONS NOTED IN THE SEIZED DOCUMENTS WAS ALRE ADY TAXED IN THE HANDS OF THE INDIVIDUAL CASES, IT IS NOT OPEN TO TH E LEARNED ASSESSING OFFICER TO TAX THE SAID INCOME AGAIN IN THE HANDS O F THE COMPANY, DESPITE THE FACT THAT THE SAID ENTRIES DO NOT RELATE TO THE COMPANY AS THE MENTIONING OF LT OR DAAWAT WAS ONLY FOR THE SAKE OF NOTING AND IT BELONGS TO THE INDIVIDUALS WHO ARE THE PROMOTERS/DIRECTORS OF THE DAAWAT GROUP. 7 ITA NOS.4045/DEL/2013 & 4163/DEL/2013 10. LD. CIT(A), HAVING CONSIDERED THE CONTENTIONS O F THE ASSESSEE AND ALSO THE ORDER DATED 4/9/2012 FOR ASSESSMENT YEARS 2008-09 AND 2009-10 PASSED BY THE LD. DISPUTE RESOLUTION PANEL (DRP)-I IN THE CASE OF THE ASSESSEE, OBSERVED THAT THE ENTRIES ON THE BASIS OF WHICH 40A(3) OF THE ACT WAS INVOKED WERE TAKEN FROM THE SEIZED MATERIAL , PEAKOF SUCH CASH ENTRIES WAS OFFERED TO TAX AS UNDISCLOSED INCOME BY THE PROMOTERS OF THE COMPANY, NAMELY, VIJAY KUMAR ARORA, ASHWINI KUMAR A RORA, SURINDER KUMAR ARORA AND ASHOK ARORA WHO WERE ASSESSED BY TH E LEARNED ASSESSING OFFICER FOR SUCH UNDISCLOSED INCOME AND T HE LD. DRP ALSO DIRECTED THE ASSESSING OFFICER NOT TO MAKE ADDITION ON THIS ISSUE IN THEIR ORDER DATED 4/9/2012. LD. CIT(A) OBSERVED THAT SINC E THE ISSUE EMANATES FROM THE SAME SEIZED MATERIAL, AND WHILE AGREEING W ITH THE LD. DRP, REACHED THE SAME CONCLUSION. HE, THEREFORE, WHILE A LLOWING THIS GROUND DIRECTED THE ASSESSING OFFICER TO DELETE THE ADDITI ON. 11. LD. AR SUBMITTED THAT THE ISSUE IN THE PRESENT CASEEMANATE FROM THE SAME SEIZED MATERIAL WHICH WAS CONSIDERED BY TH E LD. DRP FOR THE ASSESSMENT YEAR 2008-09 AND 2009-10 AND LD. CIT(A) DID NOT COMMIT ANY ILLEGALITY WHILE APPRECIATING THE CONTENTIONS OF TH E ASSESSEE IN THE LIGHT OF THE FINDINGS OF THE LD. DRP BY ORDER DATED 4/9/2012 FOR ASSESSMENT YEARS 2008-09 AND 2009-10. LD. AR SUBMITTED THAT SINCE NO APPEAL WAS PREFERRED BY THE REVENUE AGAINST THE FINDINGS OF TH E LD. DRP, THE REVENUE CANNOT TAKE A DIFFERENT STAND IN THIS APPEA L AGAINST THEIR CONDUCT IN ACCEPTING THE FINDINGS OF THE LD. DRP. 12. LD. DR PLACED HEAVY RELIANCE ON THE ASSESSMENT ORDER AND SUBMITTED THAT IT WAS AN ERROR TO TAX THE UNDISCLOS ED INCOME IN THE HANDS 8 ITA NOS.4045/DEL/2013 & 4163/DEL/2013 OF THE INDIVIDUALS WHEN IT PERTAINS TO THE COMPANY AND MERELY BECAUSE THE INDIVIDUALS PAID THE SAME IT DOES NOT ABSOLVE T HE COMPANY OF ITS LIABILITY TO TAX. 13. WE HAVE GONE THROUGH THE RECORD IN THE LIGHT OF THE SUBMISSIONS MADE ON EITHER SIDE. IT IS AN ADMITTED FACT THAT TH E ADDITION IN THIS CASE WAS MADE ON THE BASIS OF THE VERY SAME SEIZED MATER IAL THAT WAS CONSIDERED BY THE LD. DRP IN ASSESSEES OWN CASE FO R THE ASSESSMENT YEARS 2008-09 AND 2009-10 BY ORDER DATED 4/9/2012. IT IS ALSO AN ADMITTED FACT THAT THE LD. DRP DIRECTED THE ASSESSI NG OFFICER NOT TO MAKE THE ADDITION ON THIS ISSUE. SUCH A FINDING HAS BECO ME FINAL AND AS ON THE DATE IT IS NOT GET DISTURBED. FURTHER, THE REVENUE DOES NOT DISPUTE THE FACT THAT THE FOUR INDIVIDUALS DECLARED SUCH INCOME AND SURRENDERED THE SAME WHILE DULY PAYING THE TAXES THEREON. IF AT ALL THOSE FOUR INDIVIDUALS WERE NOT LIABLE TO PAY SUCH AMOUNT, THE REVENUE SHO ULD NOT HAVE ACCEPTED THE SAME IN THEIR HANDS. HAVING ACCEPTED T HE CONTENTION OF THOSE FOUR INDIVIDUALS AND COLLECTING THE TAX IN TH EIR HANDS, ITIS NOT OPEN FOR THE REVENUE NOW TO SAY THAT SUCH INDIVIDUALS WE RE NOT LIABLE TO PAY TAX,BUT IT IS THE COMPANY AND COMPANY ALONE THAT IS LIABLE TO PAY TAX. REVENUE CANNOT APPROBATE AND REPROBATE AND SHIFT IT S STANDS. 14. WHILE ACCEPTING THE STAND TAKEN BY THE ASSESSEE THAT SINCE THE TAX WAS COLLECTED IN THE HANDS OF THE FOUR INDIVIDUALS WHO ARE THE PROMOTERS OF THE COMPANY AND THIS FACT WAS TAKEN NOTICE BY TH E LD. DRP WHILE PASSING THE ORDER DATED 4/9/2012 IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2008-09 AND 2009-10 AND TO DIRECT THE ASSESSING OFFICER NOT TO MAKE ANY ADDITION ON THIS ISSUE, WE HOLD THAT THE 9 ITA NOS.4045/DEL/2013 & 4163/DEL/2013 IMPUGNED ADDITION CANNOT BE SUSTAINED. WE, ACCORDIN GLY, DISMISS THIS GROUND. GROUNDS NO. 5 AND 6 ARE GENERAL IN NATURE A ND DO NOT REQUIRE ANY ADJUDICATION. ITA NO. 4163/DEL/2013 (ASSESSEES APPEAL ) 15. THIS APPEAL RELATES TO THE OBJECTIONS OF THE AS SESSEE IN RESPECT OF JURISDICTION UNDER SECTION 153A OF THE ACT EXERCISE D BY THE LEARNED ASSESSING OFFICER (GROUNDS NO. 1 TO 5) AND ALSO REF ERENCE TO SPECIAL AUDIT IN SECTION 142 (2A) OF THE ACT (GROUNDS NO. 6 TO 8) AND ADDITIONS MADE BY THE LEARNED ASSESSING OFFICER BY WAY OF DISALLOWANC E UNDER SECTION 40A(3) OF THE ACT (GROUND NO. 10 AND 11), 40(A)(IA) OF THE ACT (GROUNDS NO. 12 TO 15, PERSONAL EXPENSES (GROUND NO. 16) AND DISALLOWANCE UNDER SECTION 14A OF THE ACT READ WITH RULE 8D OF THE INC OME TAX RULES, 1962 (GROUNDS NO. 17 TO 20). GROUNDS NO. 9 AND 21 ARE GE NERAL IN NATURE AND FOLLOW THE RESULT ON THE OTHER GROUNDS. 16. AT THE OUTSET, LD. AR SUBMITTED THAT AS ON THE DATE OF SEARCH UNDER SECTION 132 OF THE ACT IN THE CASE OF THE GRO UP INCLUDING THE ASSESSEE ON 10/02/2009, NO PROCEEDINGS WERE PENDING BEFORE THE ASSESSING OFFICER, AND THEREFORE, IN TERMS OF THE D ECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF KABUL CHAW LA (SUPRA) NO PROCEEDINGS STOOD ABATED, RELATING TO THIS YEAR. BA SING ON THIS, HE SUBMITTED THAT INASMUCH AS NO INCRIMINATING MATERIA L WAS FOUND DURING THE COURSE OF SEARCH, THE IMPUGNED ASSESSMENT COMPL ETED UNDER SECTION 153A OF THE ACT AND THE ADDITIONS/DISALLOWANCES WER E MADE IN DE HORS 10 ITA NOS.4045/DEL/2013 & 4163/DEL/2013 ANY MATERIAL/EVIDENCE FOUND AND SEIZED DURING THE C OURSE OF SEARCH AND, THEREFORE, CANNOT BE SUSTAINED. FOR THIS PROPOSITIO N, HE PLACED RELIANCE ON THE DECISIONS OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF KABUL CHAWLA (SUPRA), CHINTELS INDIA LTD VS. DCIT, 397 ITR 416 (DEL), PCIT VS. BEST INFRASTRUCTURE (INDIA) LTD., 397 ITR 82 (D EL), PCIT VS. MEETAGUTGUTIA, 395 ITR 526 (DEL), LD. PCIT VS. MS L ATA JAIN, 384 ITR 543 (DEL), ETC. 17. HE FURTHER SUBMITTED THAT UNDER VERY SIMILAR CI RCUMSTANCES IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2004-0 5 AND 2005-06, A COORDINATE BENCH OF THIS TRIBUNAL DEALT WITH THE IS SUE AND WHILE FOLLOWING THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COU RT IN THE CASE OF KABUL CHAWLA(SUPRA)HELD THAT IN CASE OF CONCLUDED ASSESSM ENTS, NO ADDITIONS/DISALLOWANCES CAN BE MADE IN THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. 18. LD. DR SUBMITTED THAT THE SPECIAL AUDIT REPORT WAS CONSIDERED BY THE LEARNED ASSESSING OFFICER AND IN THE ABSENCE OF ANY ACCEPTABLE EXPLANATION FROM THE ASSESSEE, LEARNED ASSESSING OF FICER WAS JUSTIFIED IN MAKING THE ADDITION AND THE LD. CIT(A) IS JUSTIFIED IN SUSTAINING SUCH ADDITIONS. 19. WE HAVE GONE THROUGH THE RECORD IN THE LIGHT OF THE SUBMISSIONS MADE ON EITHER SIDE. ASSESSMENT ORDER DOES NOT REVE AL ANY MATERIAL THAT WAS SEIZED DURING THE SEARCH CONDUCTED ON 10/02/200 9, FOLLOWING BASIS FOR ANY OF THE ADDITIONS COVERED BY GROUNDS NO. 10 TO 20. IT IS ALSO NOT IN DISPUTE THAT AS ON THE DATE OF SEARCH, NO PROCEEDIN GS RELATING TO THIS YEAR 11 ITA NOS.4045/DEL/2013 & 4163/DEL/2013 WERE PENDING BEFORE THE ASSESSING OFFICER.IN TERMS OF THE JUDGEMENT IN KABUL CHAWLA (SUPRA),ASSESSMENTS AND REASSESSMENTS PENDING ON THE DATE OF THE SEARCH SHALL ABATE AND THE TOTAL INCOME FOR SUCH ASSESSMENT YEARS WILL HAVE TO BE COMPUTED BY THE ASSESSING OFF ICERS AS A FRESH EXERCISE; AND THAT ALTHOUGH SECTION 153A OF THE ACT DOES NOT SAY THAT ADDITIONS SHOULD BE STRICTLY MADE ON THE BASIS OF E VIDENCE FOUND IN THE COURSE OF THE SEARCH, OR OTHER POST-SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE AO WHICH CAN BE RELATED TO THE E VIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSESSMENT 'CAN BE ARBITRARY OR M ADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOU SLY, AN ASSESSMENT HAS TO BE MADE UNDER THIS SECTION ONLY ON THE BASIS OF SEIZED MATERIAL.' OBVIOUSLY ASSESSMENT FOR THE ASSESSMENT YEAR 2006-0 7 WAS A CONCLUDED ASSESSMENT. 20. AS A MATTER OF FACT, IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2004-05 AND 2005-06, WHILE DEALING WITH THE S IMILAR SITUATION AND SAME SET OF FACTS, A COORDINATE BENCH OF THIS TRIBU NAL HELD THAT IN THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH, NO ADDITION/DISALLOWANCE CAN BE MADE IN CASES OF CO NCLUDED ASSESSMENTS. NO CHANGE OF CIRCUMSTANCESTO PROMPT US TO TAKE A DIFFERENT VIEW FROM THE VIEW TAKEN BY THE COORDINATE BENCH IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2004-05 AND 2005-06 AND NO T TO FOLLOW THE DECISION OF THE HONBLE JUDICIAL HIGH COURT IN THE CASE OF KABUL CHAWLA (SUPRA) ARE BROUGHT TO OUR NOTICE. WE, THEREFORE, W HILE RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE JURISDICTIONA L HIGH COURT IN THE CASE OF KABUL CHAWLA (SUPRA) HOLD THAT THE ASSUMPTION OF JURISDICTION BY THE 12 ITA NOS.4045/DEL/2013 & 4163/DEL/2013 LEARNED ASSESSING OFFICER(GROUNDS NO. 1 TO 5)TO MAK E REFERENCE TO SPECIAL AUDIT IN SECTION 142 (2A) OF THE ACT (GROUNDS NO. 6 TO 8) AND TO MAKE THE ADDITIONS IN RESPECT OF DISALLOWANCE UNDER SECTION 40A(3) OF THE ACT (GROUNDS NO. 10 AND 11), UNDER SECTION 40(A)(IA) OF THE ACT (GROUNDS NO. 12 TO 15, PERSONAL EXPENSES (ROUND NO. 16) AND DISA LLOWANCE UNDER SECTION 14A OF THE ACT READ WITH RULE 8D OF THE RUL ES (GROUNDS NO. 17 TO 20), IS BAD UNDER LAW AND CANNOT BE SUSTAINED. WE, THEREFORE, ALLOW THE GROUNDS OF APPEAL OF THE ASSESSEE. 21. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED AND THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 12 TH DECEMBER, 2019. SD/- SD/- (G.S. PANNU) (K. NARASIMHA CHARY) VICE PRESIDENT JUDICIAL MEMBER DATED: 12/12/2019 RK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI