Late. Sh. Vinay Puri through Legal heir Smt. Shashi Puri, New Delhi V. ACIT, New Delhi

ITA 482/DEL/2012

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3379 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 05-04-2017
• Assessment Year: 2001-2002
• Appeal Filed On: 31-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NAVEEN CHANDRA
• Assessee Lawyers: V K AGGARWAL
• Keywords: Gift
• Section: 143(3); 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH D : NEW DELHI) BEFORE HONBLE PRESIDENT, SHRI G.D. AGRAWAL & SHRI AMIT SHUKLA, JUDICIAL MEMBER ITA NO.482/DEL./2012 (ASSESSMENT YEARS : 2001-02) ITA NOS.5835 & 5836/DEL./2011 (ASSESSMENT YEARS : 2004-05 & 2005-06) LATE SHRI VINAY PURI VS. ACIT, CENTRAL C IRCLE 13, (THROUGH LEGAL HEIR NEW DELHI - SMT. SHASHI PURI), A 1/36, PANCHSHEEL ENCLAVE, NEW DELHI 110 017. (PAN : AFWPP8805K) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI V.K. AGGARWAL, AR REVENUE BY : SHRI NAVEEN CHANDRA, CIT DR DATE OF HEARING : 05.04.2017 DATE OF PRONOUNCEMENT : 06.04.2017 O R D E R PER BENCH : THE AFORESAID APPEALS HAVE BEEN FILED BY THE ASSESS EE AGAINST COMMON ORDER DATED 13.10.2011 FOR THE ASSES SMENT YEARS 2004-05 AND 2005-06; AND ORDER DATED 22.11.20 11 FOR THE ASSESSMENT YEAR 2001-02, PASSED BY LD. CIT (APPEALS )-I, NEW DELHI FOR THE QUANTUM OF ASSESSMENT PASSED UNDER SE CTION 143(3) R.W.S.153A OF THE INCOME-TAX ACT, 1961. SINCE COMMO N ISSUES ARE ITA NO.482/DEL./2012 ITA NOS.5835 & 5836/DEL./2011 2 INVOLVED IN ALL THE APPEALS ARISING OUT OF IDENTICA L SET OF FACTS, THEREFORE, SAME WERE HEARD TOGETHER AND ARE BEING D ISPOSED OFF BY WAY OF THIS CONSOLIDATED ORDER. 2. WE WILL FIRST TAKE UP APPEAL FOR THE ASSESSME NT YEAR 2004- 05, WHEREIN THE ASSESSEE HAS RAISED FOLLOWING GROUN DS :- 1. THE LD. CIT(A) HAS GROSSLY ERRED ON FACTS AS WE LL AS IN LAW IN HOLDING THAT THE ASSESSMENT ORDER IN T HE NAME OF THE APPELLANT U/S 153A IS NOT ILLEGAL INSPI TE OF THE FACT THAT THERE WAS NO SEPARATE SEARCH WARRANT IN THE NAME OF THE APPELLANT, THERE BEING SEARCH WARRA NT ONLY IN THE JOINT NAME OF THE APPELLANT AND SMT. SH ASHI PURI. 2. THE LD. CIT(A) HAS GROSSLY ERRED ON FACTS AS WEL L AS IN LAW IN HOLDING THAT THE ASSESSMENT ORDER U/S 153A IS NOT ILLEGAL INSPITE OF THE FACT THAT NO INCRIMINATING MATERIAL WAS FOUND DURING THE SEARCH TO ENABLE THE AO TO FRAME REASSESSMENT U/S 153A AGAINS T THE ALREADY COMPLETED ASSESSMENT. 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, MODIFY AND WITHDRAW ANY GROUND OF APPEAL BEFORE OR DURING THE APPELLATE PROCEEDINGS. 3. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSE E SUBMITTED THAT SO FAR AS THE ISSUE RAISED IN GROUND NO.2 IS C ONCERNED, THE SAME STANDS COVERED BY THE DECISION OF THIS TRIBUNA L IN THE CASE OF SHASHI PURI VS. ACIT IN ITA NO.990 & 991/DEL/2012 F OR THE AY 2001-02 & 2004-05, DECIDED VIDE ORDER DATED 14.0 2.2017, WHEREIN THE TRIBUNAL HAS HELD THAT IN ABSENCE OF AN Y INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH, NO ADDITION CAN BE ROPED IN WHILE REFRAMING THE REASSE SSMENT U/S 153A. THIS DECISION OF THE TRIBUNAL IS BASED ON THE RATIO AND THE PRINCIPLE LAID DOWN BY THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA - (2016) 380 ITR 573 (DEL). DRAWING OUR ITA NO.482/DEL./2012 ITA NOS.5835 & 5836/DEL./2011 3 ATTENTION TO THE RELEVANT OBSERVATION AND FINDING O F THE AO, HE POINTED OUT THAT IN THE ASSESSMENT YEAR 2004-05, TH E SOLE ADDITION MADE BY THE AO, RELATES TO GIFT RECEIVED B Y THE ASSESEE WHICH ALREADY STOOD DISCLOSED IN THE RETURN OF INCO ME WHICH WAS FILED ORIGINALLY ON 14.02.2005. NO MATERIAL WHATSOE VER WAS FOUND RELATING TO THE GIFT DURING THE COURSE OF SEARCH CA RRIED ON 28.02.2007. EVEN THE LD. AO HAS NOT REFERRED TO ANY INCRIMINATING MATERIAL WHILE ADDING THE AMOUNT OF GIFTS. THE LD. CIT (A) HAS REJECTED THE ASSESSEES CONTENTION RELYING UPON CER TAIN TRIBUNAL DECISIONS WHICH NO LONGER HAVE ANY PERSUASIVE VALUE IN THE LIGHT OF THE DECISION OF HONBLE JURISDICTIONAL HIGH COUR T IN THE CASE OF KABUL CHAWLA (SUPRA). 4. ON THE OTHER HAND, THE LD. CIT DR, STRONGLY RELI ED UPON THE ORDER OF THE CIT (A), SUBMITTED THAT ONCE REASSESSM ENT IS BEING MADE U/S 153A THEN IT IS OPEN TO THE AO TO ASSESS A NY SUCH INCOME EMANATING FROM EITHER THE SEIZED MATERIAL OR THE RETURN OF INCOME. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RELEVANT FINDING GIVEN IN THE IMPUGNED ORDERS. HERE IN THIS CASE, ORIGINAL RETURN OF INCOME WAS FILED ON 14.02.2005 W HEREIN THE GIFTS AMOUNTING TO RS. 19,17,443/- WAS DULY DISCLOS ED AND SUCH A RETURN OF INCOME HAD ATTAINED FINALITY AT THE TIME OF SEARCH WHICH TOOK PLACE ON 28.02.2007. THUS, IN VIEW OF THE SECOND PROVISO TO SECTION 153A, SUCH ASSESSMENT WILL NOT GET ABATED, BECAUSE NO ASSESSMENT OR REASSESSMENT WAS PENDING ON THE DATE OF INITIATION OF SEARCH. ADMITTEDLY NO INCRIMINATING MATERIAL QUA THE GIFTS WAS FOUND DURING THE COURSE OF SEARCH SO AS TO TINKER W ITH ALREADY COMPLETED ASSESSMENT, THAT IS, DISTURB THE RETURN I NCOME WHICH HAS ATTAINED FINALITY AS PER THE PROVISIONS OF LAW. IN SUCH SITUATION, THE LAW AS LAID DOWN BY THE VARIOUS HIGH COURTS ITA NO.482/DEL./2012 ITA NOS.5835 & 5836/DEL./2011 4 INCLUDING THAT OF THE JURISDICTIONAL HIGH COURT IN CASE OF KABUL CHAWLA (SUPRA) WOULD GET SQUARELY APPLICABLE, WHERE IN IT HAS BEEN PROPOUNDED THAT, IF THERE IS NO INCRIMINATING MATER IAL FOUND DURING THE COURSE OF SEARCH INDICATING ANY UNDISCLO SED INCOME, THEN NO ADDITION CAN BE ROPED IN THE ASSESSMENT/REA SSESSMENT U/S 153A. ONCE THE ASSESSMENT/S OF ANY OF THE ASSES SMENT YEARS COVERED UNDER SECTION 153A WHICH HAVE ATTAINED FINA LITY AND DO NOT GET ABATED IN TERMS OF SECOND PROVISO , THEN IN ABSENCE OF ANY INCRIMINATING MATERIAL, NO FURTHER ADDITION CAN BE MADE AND THE ASSESSMENT WHICH ALREADY STANDS COMPLETED NEED TO B E REITERATED. THE COMPLETED ASSESSMENT CAN ONLY BE INTERFERED OR TINKERED WITH BY THE AO WHILE MAKING THE ASSESSMENT U/S 153A, IS ONLY WHEN THERE IS SOME INCRIMINATING MATERIAL UNEARTHED DURI NG THE COURSE OF SEARCH. THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA (SUPRA), AFTER DISCUSSING THE ENTIRE L AW ON THIS POINT AND AFTER REFERRING TO THE VARIOUS DECISIONS OF DELHI HIGH COURT AS WELL AS OTHER HIGH COURTS INCLUDING THAT O F HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. CONTINENTA L WAREHOUSING CORPORATION, CAME TO THE FOLLOWING CONC LUSION :- 37. ON A CONSPECTUS OF SECTION 153A (1) OF THE AC T, READ WITH THE PROVISOS THERETO, AND IN THE LIGHT OF THE LAW EXPLAINED IN THE AFOREMENTIONED DECISIONS, THE LEGAL POSITION THAT EMERGES 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 MAND ATORILY ISSUED TO THE PERSON SEARCHED REQUIRING HIM TO FILE RETURNS FOR SIX AYS IMMEDIATELY PRECEDING THE PREVIOUS YEAR RELEVANT TO THE AY IN WHICH THE SEARCH TAKES PLACE. ITA NO.482/DEL./2012 ITA NOS.5835 & 5836/DEL./2011 5 II. ASSESSMENTS AND REASSESSMENTS PENDING ON THE DATE OF THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH A YS WILL HAVE TO BE COMPUTED BY THE AOS AS A FRESH EXERCISE. III. THE AO WILL EXERCISE NORMAL ASSESSMENT POWERS IN R ESPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT AY IN WHI CH THE SEARCH TAKES PLACE. THE AO HAS THE POWER TO ASSESS AND REASSESS THE 'TOTAL INCOME' OF THE AFOREMENTIONED S IX YEARS IN SEPARATE ASSESSMENT ORDERS FOR EACH OF THE SIX Y EARS. IN OTHER WORDS THERE WILL BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX AYS IN WHICH BOTH THE D ISCLOSED AND THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX . IV. ALTHOUGH SECTION 153 A DOES NOT SAY THAT ADDITIONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SEARCH, OR OTHER POST-SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE AO WHICH CAN BE RELA TED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSESSMENT CAN BE ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOUSLY AN ASSESSMENT HAS TO BE MADE UNDER THIS SECTION ONLY ON THE BASIS OF SEIZED MATERIAL. V. IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPLETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESSMENT CAN BE MADE. THE WORD 'ASSESS' IN SECTION 153 A IS RELATABLE TO ABATED PROCEEDINGS (I.E. THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD 'REASSESS' TO COMPLETED ASSESSMENT PROCEEDINGS. ITA NO.482/DEL./2012 ITA NOS.5835 & 5836/DEL./2011 6 VI. INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, THE JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND TH E ASSESSMENT UNDER SECTION 153A MERGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY FOR EACH AY ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTHER M ATERIAL EXISTING OR BROUGHT ON THE RECORD OF THE AO. VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153 A ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITIO N OF DOCUMENTS OR UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. [EMPHASIS ADDED IS OURS] MOREOVER, WE FIND THAT ON SIMILAR FACT AND ON SAME ISSUE IN THE CASE OF SHASHI PURI (WIFE OF LATE SHRI VINAY PURI), THE TRIBUNAL HAS REACHED TO A SIMILAR CONCLUSION. THUS, WE HOLD THAT IN ABSENCE OF ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH QUA THE GIFTS DISCLOSED IN THE ORIGINAL RETURN OF INCOM E, NO ADDITION CAN BE MADE IN THE ASSESSMENT MADE U/S 153A. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE FOR AY 2004-05 IS ALLOWED. 7. SIMILARLY, IN THE APPEAL FOR THE AY 2005-06 ALSO , THE SIMILAR ISSUE OF GIFT DISCLOSED IN THE ORIGINAL RETURN OF I NCOME OF RS. ITA NO.482/DEL./2012 ITA NOS.5835 & 5836/DEL./2011 7 4,09,983/- IS THE SUBJECT MATTER OF ADDITION IN THE IMPUGNED PROCEEDINGS U/S 153A. HERE, IN THIS CASE ALSO, ADMI TTEDLY THE RETURN OF INCOME FILED ORIGINALLY HAD ATTAINED FINA LITY AND IN TERMS OF SECTION 153A READ WITH SECOND PROVISO , HENCE THE ASSESSMENT FOR THE AY 2005-06 WAS UNABATED AT THE TIME OF SEAR CH CONDUCTED ON 28.02.2007. FOR THE SAID GIFT ALSO NOTHING INCRI MINATING WAS UNEARTHED DURING THE SEARCH AND THEREFORE, IN ABSEN CE OF ANY INCRIMINATING MATERIAL RELATING TO GIFT FOUND DURIN G THE COURSE OF SEARCH, WE HOLD THAT SUCH AN ADDITION CANNOT BE ROP ED IN WHILE COMPLETING THE REASSESSMENT U/S 153A. ABOVE FINDING GIVEN IN THE AY 2004-05 WILL APPLY MUTATIS MUTANDIS AND ACCORDINGLY, APPEAL FOR ASSESSMENT YEAR 2005-06 IS ALLOWED. 8. IN THE APPEAL FOR THE AY 2001-02, THE ADDITION RELATES TO OPENING BALANCE AS ON 01.04.2001 OF RS.3,03,309/- A S REFLECTED IN BALANCE SHEET. FOR THIS ADDITION ALSO, FROM THE PER USAL OF THE ASSESSMENT ORDER, IT IS QUITE APPARENT THAT NO INCR IMINATING MATERIAL HAS BEEN FOUND DURING THE COURSE OF SEARCH THAT THE OPENING BALANCE AS SHOWN IN THE BALANCE SHEET AS ON 31.03.2001 IN THE FORM OF CASH IN HAND OR BANK BALANCE OF RS.3 ,03,309/- IS AN UNDISCLOSED INCOME WHICH HAS BEEN UNEARTHED ON T HE BASIS OF ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. MOREOVER, THE AMOUNT OF OPENING BALANCE CANNOT BE A DDED UNLESS SOMETHING INCRIMINATING IS FOUND QUA THE SAME AMOUN T OF CLOSING BALANCE AS REFLECTED IN THE BALANCE SHEET OF THE EA RLIER YEAR. THUS, THIS ADDITION CANNOT BE MADE WHILE MAKING REASSESSM ENT UNDER THE PROVISIONS OF SECTION 153A. HERE AGAIN OUR FIND ING GIVEN AS ABOVE IN THE EARLIER TWO YEARS WILL ALSO APPLY TO T HIS YEAR ALSO AND ACCORDINGLY, THE ADDITION MADE BY THE AO AND AS SUS TAINED BY THE ITA NO.482/DEL./2012 ITA NOS.5835 & 5836/DEL./2011 8 LD. CIT (A) IS DIRECTED TO BE DELETED. CONSEQUENTLY , THE APPEAL OF THE ASSESSEE FOR AY 2001-02 IS ALLOWED. 10. TO SUM UP: ALL THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 06 TH DAY OF APRIL, 2017. SD/- SD/- (G.D. AGRAWAL) (AMIT SHUK LA) PRESIDENT JUD ICIAL MEMBER DATED THE 6 TH DAY OF APRIL, 2017. TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A), MEERUT. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.