DCIT, New Delhi V. M/s. Nova Corporation Ltd., New Delhi

ITA 4703/DEL/2014

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 6233 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 11 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-08-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2006-2007
• Appeal Filed On: 27-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Search and seizure; Document seized; Accommodation entries; Documents seized; Reassessment proceedings
• Section: 153A; 147; 68; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI E BEN CH, NEW DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER, AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER, ITA NO. 4703/DEL/2014 [ASSESSMENT YEAR: 2006-07] ACIT, CC-19, ROOM NO.319, E-2, ARA CENTRE, JHANDEWALAN EXTN. NEW DELHI M/S NOVA CORPORATION LTD. 10, TODARMAL LANE, 02 ND FLOOR, BENGALI MARKET, NEW DELHI PAN - AAACN3931C APPELLANT RESPONDENT REVENUE BY SHRI SANDEEP JAIN CIT - DR ASSESSEE BY NONE DATE OF HEARING 05/08 / 2019 DATE OF PRONOUNCEMENT 06 /08 /2019 ORDER PER T. S. KAPOOR, ACCOUNTANT MEMBER, THIS APPEAL FILED BY THE REVENUE PREFERRED AGAINST THE ORDER OF THE LD. CIT(A)-XII, NEW DELHI, DATED 14/07/2014. THE GR OUNDS OF APPEAL TAKEN BY THE REVENUE ARE REPRODUCED HEREUNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT THE ADDITIONS M ADE WITHOUT ANY MATERIAL FOUND DURING THE COURSE OF SEARCH ARE OUTS IDE THE SCOPE OF SECTION 153A/153C OF THE ACT, WHEN SECTION 153A MAN DATES THE AO TO ASSESS OR REASSESS THE TOTAL INCOME AS AGAINST A SSESS OR REASSESS SUCH INCOME (ESCAPING ASSESSMENT) U/S 147. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT PRIMARY ONUS U/ S 68 WAS DISCHARGED BY SIMPLY FURNISHING THE COPY OF CERTAIN DOCUMENT W HICH IN FACT DO NOT PROVE THE IDENTITY AND CREDITWORTHINESS OF THE CRED ITOR IN THE LIGHT OF CLEAR FINDING THAT SUCH CREDITORS WERE SIMPLY PAPER COMPA NIES USED TO GIVE ACCOMMODATION ENTRIES ONLY. 2 ITA NO.4703/DEL/2014 3. THE ORDER OF THE CIT(A) IS ERRONEOUS AND IS NOT TE NABLE ON FACTS AND IN LAW. 2. AT THE TIME OF HEARING, NONE WAS PRESENT ON BEHA LF OF THE ASSESSEE. THE LD. DR AT THE OUTSET, SUBMITTED THAT IN VIEW OF THE DIRECTIONS OF THE HONBLETRIBUNAL, THE REVENUE HAS TRIED TO SERVE NOT ICE OF HEARING TO THE ASSESSEE BUT THE ASSESSEE WAS NOT FOUND AT HIS PLAC E AND THEREFORE, THE NOTICE WAS SERVED THROUGH AFFIXTURE AND IN THIS RES PECT FILED A COPY OF SUCH AFFIXTURE NOTICE. ON GOING THROUGH THE ORDER SHEET RECORDED BY THE TRIBUNAL ON VARIOUS DATES, STARTING FROM NOVEMBER, 2017, WE OBSERVED THAT NONE WAS APPEARING ON BEHALF OF THE ASSESSEE A ND THEREFORE, WE DECIDED TO DISPOSE OF THE APPEAL BY HEARING THE REV ENUE AND THEREFORE, THE REVENUE WAS ASKED TO PROCEED WITH THEIR ARGUMEN TS. THE LD. DR SUBMITTED THAT THE ADDITIONS WERE MADE IN VIEW OF R EOPENING OF THE CASE OF THE ASSESSEE U/S 153A OF THE ACT AND U/S 153A OF THE ACT, THE ASSESSING OFFICER IS EMPOWERED TO ASSESSEE OR REASS ESS THE TOTAL INCOME AND THEREFORE, THE ASSESSING OFFICER HAD RIGHTLY MA DE THE ADDITIONS U/S 68 OF THE ACT AND WHICH THE LD. CIT(A) HAD WRONGLY DEL ETED BY HOLDING THAT ADDITION WAS NOT MADE ON THE BASIS OF DOCUMENTS SEI ZED DURING SEARCH. IT WAS ARGUED THAT SECTION 153A MANDATES THE AO TO ASS ESS OR REASSESS THE TOTAL INCOME AS AGAINST ASSESS OR REASSESS SUCH INCOME ESCAPING ASSESSMENT U/S 147 OF THE ACT AND THEREFORE IT WAS ARGUED THAT THE ORDER OF THE LD. CIT(A) SHOULD BE SET-ASIDE. 3 ITA NO.4703/DEL/2014 3. WE HAVE HEARD THE LD. DR AND HAVE GONE THROUGH T HE MATERIAL PLACED ON RECORD. WE FIND THAT THE PREMISES OF THE ASSESSEE WERE SEARCHED ON 26/11/2009 AND WHICH WAS FINALLY CONCLU DED ON 25/01/2010. THE ASSESSEE IS ONE OF THE GROUP CONCERNS OF TODAY GROUP OF ASSESSEES AND DURING SEARCH AND SEIZURE OPERATION AT VARIOUS PREMISES OF TODAY GROUP MANY BOOKS OF ACCOUNTS OR DOCUMENTS BELONGING TO THE ASSESSEE COMPANY WERE FOUND AND SEIZED AND THEREFORE PROCEED INGS U/S 153C OF THE ACT WERE INITIATED AGAINST THE ASSESSEE. IN VIE W OF NOTICE U/S 153C, THE ASSESSEE SUBMITTED THAT THE ORIGINAL RETURN FIL ED BY IT MAY BE TREATED AS RETURN FILED U/S 153C OF THE ACT. THE ASSESSING OFFICER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, OBSERVED THAT THE ASSESSEE HAD MADE CERTAIN CASH DEPOSITS DURING THE FINANCIAL YEA R 2005-06 AMOUNTING IN ALL TO RS.4,54,80,000/- AND THEREFORE THE ASSESS ING OFFICER HELD THAT ASSESSEE HAD RECEIVED SUCH AMOUNTS IN THE BOOKS OF ACCOUNTS AND THEREFORE THE ASSESSEE WAS ASKED TO PROVE THE IDENT ITY AND CREDITWORTHINESS OF THE CREDITORS. IN RESPONSE, THE ASSESSEE DID NOT GIVE ANY EXPLANATION AND THEREFORE, THE AO RELYING UPON VARIOUS CASE LAWS MADE THE ADDITION U/S 68 OF THE ACT. WHILE MAKING THE ADDITION, THE AO DID NOT REFERRED TO ANY SEIZED MATERIAL ON THE BASI S OF WHICH THE ADDITION WAS MADE AND IT WAS MADE ONLY ON THE BASIS OF ENTRI ES IN THE CASH BOOK. 4. BEFORE THE LD. CIT(A), THE ASSESSEE FILED DETAIL ED SUBMISSION WHICH WERE BOTH ON LEGAL GROUNDS AS WELL AS ON MERITS. TH E LD. CIT(A) ON THE 4 ITA NO.4703/DEL/2014 BASIS OF VARIOUS SUBMISSIONS OF THE ASSESSEE DECIDE D THE ISSUE IN FAVOUR OF THE ASSESSEE BY HOLDING AS UNDER:- 1.1 I HAVE CONSIDERED THE GROUNDS RAISED IN APPEAL AND THE FACTS OF THE CASE. I HAVE ALSO CONSIDERED THE SUBMI SSION FILED BY THE AR OF THE APPELLANT. 1.2 THUS THE POSITION THAT EMERGES, IS THAT WHERE ASSE SSMENT OR REASSESSMENT PROCEEDINGS ARE PENDING COMPLETION WHEN THE SEARCH IS INITIATED OR REQUISITION IS MADE, THE Y WILL ABATE MAKING WAY FOR THE ASSESSING OFFICER TO DETER MINE THE TOTAL INCOME OF THE ASSESSEE IN WHICH THE UNDIS CLOSED INCOME WOULD ALSO BE INCLUDED. 1.3 HOWEVER IN CASES WHERE THE ASSESSMENT OR REASSESSM ENT PROCEEDINGS HAVE ALREADY BEEN COMPLETED AND ASSESSM ENT ORDERS HAVE BEEN PASSED DETERMINING THE ASSESSEE'S TOTAL INCOME AND SUCH ORDERS ARE SUBSISTING AT THE TIME W HEN THE SEARCH OR THE REQUISITION IS MADE, THERE IS NO QUESTION OF ANY ABATEMENT SINCE NO PROCEEDINGS ARE PENDING. 1.4 IN THIS LATTER SITUATION, THE ASSESSING OFFICER WI LL REOPEN THE ASSESSMENTS OR REASSESSMENTS ALREADY MADE AND DETERMINE THE TOTAL INCOME OF THE ASSESSEE. SUCH DETERMINATION IN THE ORDERS PASSED UNDER SECTION 15 3A WOULD BE SIMILAR TO THE ORDERS PASSED IN ANY REASSESSMENT, WHERE THE TOTAL INCOME DETERMINED IN THE ORIGINAL ASSESSMENT ORDER AND UNDISCLOSED INCOME, I F ANY, UNEARTHED DURING THE SEARCH ARE CLUBBED TOGETH ER AND ASSESSED AS THE TOTAL INCOME. 1.5 AS FAR AS COMPLETED ASSESSMENTS ARE CONCERNED, THE ISSUES ALREADY EXAMINED BY THE ASSESSING OFFICER IN SUCH COMPLETED ASSESSMENT WOULD BE DIFFICULT FOR RE-EXAM INING IN ASSESSMENTS U/S,153A UNLESS SOME MATERIAL IS FOU ND IN THE COURSE 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 CLEARL Y OUTSIDE THE SCOPE OF PROCEEDINGS UNDER SECTION 153C OF THE ACT. 5. THE LD. CIT(A) HAS ALLOWED RELIEF TO THE ASSESSE E ON THE BASIS THAT THE ASSESSMENT OF THE ASSESSEE STOOD COMPLETED AT T HE TIME OF SEARCH AND NO MATERIAL HAVING RELATION WITH THE ADDITION W AS FOUND DURING THE 5 ITA NO.4703/DEL/2014 SEARCH AND THEREFORE HE HAS ALLOWED RELIEF TO THE A SSESSEE. WE FIND THAT THE YEAR UNDER CONSIDERATION RELATES TO AY 2006-07, WHEREAS THE SEARCH TOOK PLACE ON 26/11/2009. THEREFORE, AT THE TIME OF SEARCH, THE ASSESSMENT OF THE ASSESSEE STOOD COMPLETED AND THER EFORE LD. CIT(A) HAS RIGHTLY ALLOWED RELIEF TO THE ASSESSEE BY HOLDI NG THAT IN A COMPLETED ASSESSMENT THE ADDITION CAN ONLY BE MADE ON THE BAS IS OF SOME SEIZED DOCUMENTS. THE CASE LAW OF KABUL CHAWLA DECIDED BY THE HONBLE DELHI HIGH COURT IS SQUARELY APPLICABLE TO THE FACTS OF C IRCUMSTANCES OF THE CASE. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY INF IRMITY IN THE ORDER OF THE LD. CIT(A). 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 06/08/ 2019. SD/- SD/- [BHAVNESH SAINI] [T.S. KAPOOR] JUDICIAL MEMBER ACCOUNTANT MEMBER DELHI; DATED: 06/08/2019. F{X~{T? F{X~{T? F{X~{T? F{X~{T? FA FA FA FA P.S P.SP.S P.S COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI