DCIT, New Delhi V. Sh. Shiv Priya, Noida

ITA 4838/DEL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3090 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-05-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 04-05-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 04-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S RANA
• Keywords: Deemed dividend
• Section: 143(3); 142(1); 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER I.T.A. NO.4838/DEL/2014 A.Y. : 2008-09 DCIT, CENTRAL CIRCLE-7, NEW DELHI ROOM NO. 363, E-2, ARA CENTRE, JHANDEWALAN EXTN., N NEW DELHI VS. SHRI SHIV PRIYA C-56/40, SECTOR-62, NOIDA (UP) (PAN:AGDPS2265G) (ASSESSEE) (RESPONDENT) AND C.O. NO. 157/DEL/2015 (IN ITA NO. 4838/DEL/2014) A.Y. : 2008-09 SHRI SHIV PRIYA C-56/40, SECTOR-62, NOIDA (UP) (PAN:AGDPS2265G) VS. DCIT, CENTRAL CIRCLE-7, NEW DELHI ROOM NO. 363, E-2, ARA CENTRE, JHANDEWALAN EXTN., N NEW DELHI (ASSESSEE) (RESPONDENT) REVENUE BY : SH. S.S. RANA, CIT(DR) ASSESSEE BY : SH. AMIT GOYAL, CA ORDER PER H.S. SIDHU : JM THE REVENUE HAS FILED THE APPEAL AND ASSESSEE HAS FILED THE CROSS OBJECTION AGAINST THE ORDER DATED 18.6.2014 OF THE LD. CIT(A)-I, NEW DELHI RELEVANT TO ASSESSMENT YEAR 2008-09. 2. THE GROUNDS RAISED IN THE REVENUE S APPEAL RE AD AS UNDER:- 1. THE ORDER OF THE LD. CIT(A) IS NOT CORRECT IN L AW AND FACTS. 2 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE L D. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 1,46,38,000/- MADE BY AO ON ACCOUNT OF DEEMED DIVIDEND U/S. 2(22)(E) OF T HE I.T. ACT. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 18,72,000/- M ADE BY THE AO ON ACCOUNT OF BENEFIT/ PERQUISITE U/S. 2(24)(IV) OF THE I.T. ACT. 4. THE APPELLANT CRAVES LEAVE TO ADD, AMEND ANY / A LL THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF HE ARING OF THE APPEAL. 3. THE GROUNDS RAISED IN THE ASSESSEES CROSS OBJE CTION READ AS UNDER:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE NOTICE U/S 153A ISSUED IN THIS CASE IS ILLEGAL & WITHOUT JURISDICTION AND ACCORDINGLY, THE ASSESSMENT ORDER PASSED ON THE FOUNDATION OF SUCH NOTICE IS NOT SUSTAINABLE AN D IS LIABLE TO BE QUASHED. ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW, THE COMMISSIONER OF INCOME TAX (APPEALS) SH OULD HAVE HELD THAT THE ASSESSMENT ORDER PASSED BY THE A SSESSING OFFICER IS BAD-IN-LAW AND VOID. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE INITIATION OF ASSESSMENT PROCEEDINGS AND ISSUE / SE RVICE OF NOTICES BY THE ASSESSING OFFICER IS NOT IN ACCORDAN CE WITH THE PROVISIONS OF LAW AND ACCORDINGLY THE ASSESSMENT OR DER PASSED IS LIABLE TO BE QUASHED. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE ADDITION OF RS.1,46,38,000/- MADE BY AO BY APPLYING 3 PROVISIONS OF SECTION 2(22)(E) OF INCOME TAX ACT, 1 961 IS TOTALLY ERRONEOUS. ON THE FACTS AND CIRCUMSTANCES O F THE CASE AND IN LAW, THE ASSESSING OFFICER HAS MISAPPLIED TH E PROVISIONS OF SECTION 2(22)(E) OF INCOME TAX ACT, 1961. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE ADDITION OF RS.1,46,38,000/- MADE BY AO BY THE ASSE SSING OFFICER IS BEYOND THE SCOPE OF PROVISION OF SECTION 153A OF INCOME TAX ACT, 1961. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE ADDITION OF RS.18,72,000/- MADE BY AO BY APPLYING P ROVISIONS OF SECTION 2(24)(IV) OF INCOME TAX ACT, 1961 IS TOT ALLY ERRONEOUS. ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE ASSESSING OFFICER HAS MISAPPLIED THE PROVI SIONS OF SECTION 2(24 )(IV) OF INCOME TAX ACT, 1961. 6. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE ADDITION OF RS.18,72,000/- MADE BY AO BY THE ASSESS ING OFFICER IS BEYOND THE SCOPE OF PROVISION OF SECTION 153A OF INCOME TAX ACT, 1961. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, MODIFY OR DELETE ONE OR MORE GROUND BEFORE OR AT THE TIME OF HEARING OF APPEAL. 4. THE BRIEF FACTS OF THE CASE ARE THAT A SEARCH AN D SEIZURE OPERATION U/S. 132 OF THE I.T. ACT, 1961 IN THE AMARPALI GRO UP OF CASES ON 09/09/2010. THE ASSESSEE WAS ALSO COVERED IN THE S EARCH. RETURN DECLARING INCOME OF RS. 91,10,630/- WAS FILED ON 20 .8.2008. NOTICE U/S. 153A WAS ISSUED ON 20.7.2011, IN RESPONSE TO WHICH THE ASSESSEE FILED A LETTER DATED 8.8.2011 STATING THAT RETURNS FILED OR IGINALLY BE TREATED AS RETURN IN RESPONSE TO THE SAID NOTICE. NOTICE U/S. 142(1) WITH 4 QUESTIONNAIRE WAS ISSUED ON 8.2.2012. NOTICE U/S. 143(2) AND 142(1) OF THE I.T. ACT, 1961 WITH QUESTIONNAIRE WAS ISSUED O N 12.9.2012. FURTHER NOTICES WERE ISSUED ON 29.10.2012, 8.11.2012 AND 17 .1.2013. THE CASE WAS ASSESSED AT AN INCOME OF RS. 2,56,20,630/- AFTE R MAKING ADDITIONS VIDE ORDER DATED 26.3.2013 PASSED U/S. 153(A) R.W.S . 143(3) OF THE I.T. ACT, 1961. 5. AGAINST THE AFORESAID ASSESSMENT ORDER DATED 26. 3.2013, ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO VIDE IMPUGNED ORDER DATED 18.6.2014 HAS ALLOWED THE APPEAL OF THE ASSE SEEE FOR STATISTICAL PURPOSES. 6. AGGRIEVED WITH THE ORDER OF THE LD.CIT(A), REVEN UE IS IN APPEAL AND ASSESSEE IS IN CROSS OBJECTION BEFORE THE TRIB UNAL. 7. AT THE THRESHOLD, LD. COUNSEL OF THE ASSESSEE HA S STATED THAT THE CROSS OBJECTION FILED BY THE ASSESSEE HAS INVOLVED THE LEGAL ISSUE AND THEREFORE, THE SAME MAY BE FIRST DECIDED. HENCE, WE FIRST DEAL WITH THE ASSESSEES CROSS OBJECTION AND ADJUDICATE UPON THE LEGAL ISSUE. 8. AT THE THRESHOLD, LD. COUNSEL OF THE ASSESSEE ST ATED THAT THE ISSUES IN DISPUTE RELATING TO UPHOLDING THE VALIDITY OF TH E ORDER OF ASSESSMENT PASSED U/S. 153A ON 26.3.2013, IS SQUARELY COVERED IN FAVOR OF THE ASSESSEE BY THE DECISION DATED 28.8.2015 OF THE HON BLE DELHI HIGH COURT PASSED IN THE CASE COMMISSIONER OF INCOME TAX VS. KABUL CHAWLA REPORTED (2016) 380 ITR 573 (DEL.) WHEREIN THE HON BLE HIGH COURT HAS HELD THAT IF THE ADDITIONS ARE MADE, BUT NOT BASED ON ANY INCRIMINATING 5 MATERIAL FOUND DURING SEARCH OPERATION, THEN THESE ADDITIONS ARE NOT SUSTAINABLE IN THE EYES OF LAW. HE FURTHER STATED IN THE PRESENT CASE THE AO HAS MADE THE ADDITION IN A PROCEEDING UNDER SECT ION 153A, WITHOUT THERE BEING ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF THE SEARCH IN RESPECT OF SUCH ADDITION. HE FURTHER STAT ED THAT THE ADDITIONS HAVE NO RELATION WITH ANY INCRIMINATING MATERIAL FO UND AND UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEAR CH AND AS SUCH ARE BAD IN LAW BEING BEYOND THE SCOPE OF JURISDICTION U /S. 153A OF THE I.T. AND THEREFORE, THE ASSESSMENT ORDER PASSED BY THE AO, I S BAD IN LAW AND IS LIABLE TO BE QUASHED. 9. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDER OF THE AUTHORITIES BELOW AND STATED THAT THE PROVISION OF SECTION 153A HAS RIGHTLY BEEN APPLIED IN THE CASE OF THE ASSESSEE ON THE MATERIAL AVAILABLE WITH THEM. 10. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RELEVANT RECORDS AVAILABLE WITH US, ESPECIALLY THE ORDERS OF THE REV ENUE AUTHORITIES AND THE CASES REFERRED BY THE LD. COUNSEL OF THE ASSESSEE. WE FIND THAT THE ADDITIONS MADE BY THE AO ARE BEYOND THE SCOPE OF SE CTION 153A OF THE INCOME TAX ACT, 1961, BECAUSE NO INCRIMINATING MATE RIAL OR EVIDENCE HAD BEEN FOUND DURING THE COURSE OF SEARCH SO AS TO DOU BT THE TRANSACTIONS. IT WAS NOTICED THAT AS ON THE DATE OF SEARCH I.E. 09.9 .2010, NO ASSESSMENT PROCEEDINGS WERE PENDING FOR THE YEAR UNDER CONSIDE RATION AND THE AO WAS NOT JUSTIFIED IN DISTURBING THE CONCLUDED ASSES SMENT WITHOUT THERE BEING ANY INCRIMINATING MATERIAL BEING FOUND IN SEA RCH. IN FACT, IN THE 6 ENTIRE ASSESSMENT ORDER, THE AO HAS NOT REFERRED TO ANY SEIZED MATERIAL OR OTHER MATERIAL FOR THE YEAR UNDER CONSIDERATION HAVING BEING FOUND DURING THE COURSE OF SEARCH IN THE CASE OF ASSESSE E, LEAVE ALONE THE QUESTION OF ANY INCRIMINATING MATERIAL FOR THE YEAR UNDER APPEAL. THEREFORE, IN OUR CONSIDERED OPINION, THE ACTION OF THE AO IS BASED UPON CONJECTURES AND SURMISES AND HENCE, THE ADDITIONS MADE IS NOT SUSTAINABLE IN THE EYES OF LAW, BECAUSE THIS ISSUE IN DISPUTE IS NOW NO MORE RES-INTEGRA, IN VIEW OF THE DECISION DATED 28 .8.2015 OF THE HONBLE DELHI HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. KABUL CHAWLA (2016) 380 ITR 573 (DEL.) WHEREIN THE HONBLE HI GH COURT OF DELHI HAS HELD HAS UNDER:- 37. ON A CONSPECTUS OF SECTION 153A(1) OF THE ACT, READ WITH THE PROVISOS THERETO, AND IN THE LIGHT OF THE LAW EXPLA INED IN THE AFOREMENTIONED ITA NOS. 707, 709 AND 713 OF 2014 OF DECISIONS, THE LEGAL POSITION THAT EMERGES IS AS UNDER: I. ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF T HE ACT, NOTICE UNDER SECTION 153 A (1) WILL HAVE TO BE MANDATORILY ISSUED TO THE PERSON SEARCHED REQUIRING HIM TO FILE RETURNS FOR S IX AYS IMMEDIATELY PRECEDING THE PREVIOUS YEAR RELEVANT TO THE AY IN WHICH THE SEARCH TAKES PLACE. II. ASSESSMENTS AND REASSESSMENTS PENDING ON THE DA TE OF THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH AYS W ILL HAVE TO BE COMPUTED BY THE AOS AS A FRESH EXERCISE. 7 III. THE AO WILL EXERCISE NORMAL ASSESSMENT POWERS IN RESPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT AY IN WHICH THE SEARCH TAKES PLACE. THE AO HAS THE POWER TO ASSESS AND REASSESS THE 'TOTAL INCOME' OF THE AFOREMENTIONED SIX YEARS IN SEPARATE ASSESSMENT ORDERS FOR EACH OF THE SIX YEARS. IN OTHER WORDS TH ERE WILL BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX AYS IN WHICH BOTH THE DISCLOSED AND THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX. IV. ALTHOUGH SECTION 153 A DOES NOT SAY THAT A DDITIONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SEARCH, OR OTHER POST-SEARCH MATERIAL OR INFORMATI ON AVAILABLE WITH THE AO WHICH CAN BE RELATED 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. OBVIOU SLY AN ITA NOS. 707, 709 AND 713 OF 2014 OF ASSESSMENT HAS TO BE MA DE 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 ASSESSM ENT OR REASSESSMENT CAN BE MADE. THE WORD 'ASSESS' IN SECT ION 153 A IS RELATABLE TO ABATED PROCEEDINGS (I.E. THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD 'REASSESS' TO COMPLETED ASS ESSMENT PROCEEDINGS. 8 VI. INSOFAR AS PENDING ASSESSMENTS ARE CONCERN ED, THE JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UNDER SECTION 153A MERGES INTO ONE. ONLY ONE ASSES SMENT SHALL BE MADE SEPARATELY FOR EACH AY ON THE BASIS OF THE FIN DINGS OF THE SEARCH AND ANY OTHER MATERIAL EXISTING OR BROUGHT O N THE RECORD OF THE AO. VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WI TH BY THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153 A ONL Y ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS OR UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH W ERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. 38. THE PRESENT APPEALS CONCERN AYS, 2002-03, 2005 -06 AND 2006- 07.ON THE DATE OF THE SEARCH THE SAID ASSESSMENTS A LREADY STOOD COMPLETED. SINCE NO INCRIMINATING MATERIAL WAS UNEA RTHED DURING THE SEARCH, NO ADDITIONS COULD HAVE BEEN MADE TO THE INCOME ALREADY ASSESSED. 11. RESPECTFULLY FOLLOWING THE PRECEDENT OF THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA, AS AFORESAID, WE QUASH THE ASSESSMENT MADE U/S. 143(3) R.W.S. 153A OF THE I.T. ACT AND DECIDE THE LEGAL ISSUE IN FAVOUR OF THE ASSESSEE AND ACCOR DINGLY, ALLOW THE CROSS OBJECTION FILED BY THE ASSESSEE. 9 12. AS REGARDS, THE REVENUES APPEAL IS CONCERNED, SINCE WE HAVE ALREADY QUASHED THE ASSESSMENT WHILE DEALING WITH A SSESSEES CROSS OBJECTION, AS AFORESAID, HENCE, THE REVENUES APPEA L HAS BECOME INFRUCTUOUS AND AS SUCH THE SAME IS DISMISSED. 13. IN THE RESULT, THE ASSESSEES CROSS OBJECTIO N STANDS ALLOWED AND REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED ON 19/05/2017. SD/- SD/- [PRASHANT MAHARISHI] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 19/05/2017 SRBHATNAGAR COPY FORWARDED TO: - 1. ASSESSEE - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES